Modelling base electricity tariff under the Malaysia incentive-based regulation framework using system dynamics

Abstract

In the context of a single buyer (SB) electricity market, this study provides an electricity tariff model developed using system dynamics (SD). Using data from the Malaysian electricity supply industry (MESI), the model was developed with the intent of evaluating the influence of load variation on Malaysia’s base electricity tariff. Given that Malaysia’s electricity demand has increased significantly over the past few years in unison with the country’s economic growth and modernization, this model is developed to investigate the relationship between the two. Moreover, the lack of a comprehensive MESI upstream market model that can monitor this issue was the impetus for this research. This study employed an SD approach, as it is a well-known technique for simulating complex systems and analyzing the existing dynamism between each variable and each system. This model can be a valuable tool for developing an electrical tariff model. Findings revealed that the base electricity pricing on the MESI upstream market is affected by load growth variation during the 30-year time. Since new power sources are needed to meet demand, the tariff becomes more expensive as the load increases. This model may benefit the utility or generating company plan for future generation.