The energy policy of Malaysia is determined by the Malaysian Government, which addresses issues of energy production, distribution, and consumption. The Energy Commission acts as the regulator while other players in the energy sector include energy supply and service companies, research and development institutions and consumers. Government-linked companies, Petronas and Tenaga Nasional Berhad are major players in Malaysia’s energy sector. Governmental agencies that contribute to the policy are the Ministry of Energy, Green Technology and Water, the Energy Commission (Suruhanjaya Tenaga), and the Malaysia Energy Centre (Pusat Tenaga Malaysia). Among the documents that the policy is based on are the 1974 Petroleum Development Act, 1975 National Petroleum Policy, 1980 National Depletion Policy, 1990 Electricity Supply Act, 1993 Gas Supply Acts, 1994 Electricity Regulations, 1997 Gas Supply Regulations and the 2001 Energy Commission Act (“National Energy Policy”; Ministry of Energy, Green Technology and Water, 2013).

The Energy Commission was created under the Energy Commission Act 2001 as a new regulator for the energy industry in Peninsular Malaysia and Sabah. The Commission was established to ensure that the energy industry is developed in an efficient manner so that Malaysia will be ready to meet the new challenges of globalization and liberalization, particularly in the energy supply industry. The commission regulates and promotes all matters relating to the electricity and gas supply industry within the scope of applicable legislation namely the Electricity Supply Act 1990, License Supply Regulation 1990, Gas Supply Act 1993, Electricity Regulation 1994, and Gas Supply Regulation 1997. In performing its role the commission takes the self-regulation approach (The Energy Commission of Malaysia, 2009).

The electrical energy consumption in Malaysia has increased sharply in the past few years, and modern energy efficient technologies are desperately needed for the national energy policy to increase public awareness. Figure 1.1 indicates the energy consumption by fuel type in Malaysia. It is very clear that electrical energy consumption is the highest and the increase during the 35 year period (1978-2013) is about ten times (increasing from about 5,000 KTOE (Kilo Tons of Oil Equivalent) to about 50,000 KTOE). It is very clear that electrical energy consumption has increased during the 40 year period (1971-2014) by more than two fold, i.e. from about 4,000 GTOE (Giga Tons of Oil Equivalent) to about 9,000 GTOE. Surveys are continuously being performed to assess the consumption pattern and the existing techniques for energy efficiency. Based on past surveys, the extent of the feasibility of improving the available systems and adopting new programs in different sectors was not investigated in depth. Studies reveals the fact that the energy conservation policy of Malaysia has been fairly improved in the last ten years. However the country has to pay more attention to this area and make urgent measures to adopt more energy efficient technologies in various sectors.