Powering the nation at a distance

Special thanks to our grid system operator and power plant operators, who are working round the clock to keep the power flowing in Malaysia.

By Crystal Wong Wai Chin[1]

Pandemic Risk in the Power Industry

The Malaysian grid system is capable of operating under a wide variety of expected system conditions (e.g. fluctuation in customer demands, generation reduction, forced and scheduled outages) with built-in capabilities to withstand sudden system disturbances and more probable unanticipated loss of generation and/or certain parts of the transmission system. However, the pandemic risk varies from many other contingent events[2] faced by the power industry as it is a people-driven event.

The real threat to the power system is not in the form of material damage to the transmission system or the power plant, but rather the absence of critical staff, i.e. the Grid System Operator (GSO) and power plant operators. The loss of these critical personnel will result in unsafe operations of the power plants in general and the grid system in particular. Consequently, the power industry may suffer from a lack of skilled manpower during a pandemic which may result in power supply disruptions causing brownouts, or under more severe circumstances, a partial or complete blackout.

During a pandemic, the power industry is faced with exceptional threats due to, among others:

a.    Permanent and confined workstations such as the National Load Dispatch Centre (NLDC) and power plant control rooms where groups of personnel share the same workstations; and

b.    The industry’s heavy reliance on highly trained and experienced technical operators to perform day-to-day operations, including troubleshooting any unexpected equipment failures at power plants or interconnection facilities. 

According to Ir. Dr Philip Tan, a pioneer of the Malaysia Power Industry and former member of the Energy Commission, following Nipah Virus outbreak in 1998, SARS outbreak in 2003 and A/H1N1 or “Swine Flu” outbreak in 2009, regulator and power producers have developed advanced pandemic contingency plans, necessary to ensure the supply, adequacy and reliability of the electricity. Indeed, many of the grid system and power plant operators all around the world remain isolated from their families and the outside world while managing the reliable and continuous supply of electricity during the COVID-19 pandemic. In New York, 37 employees of the New York Independent System Operator (NYISO), embarked on a voluntary sequestration at the state’s two grid control centres.[3] In Malaysia, TNB’s critical operations team, including operators at the National Load Dispatch Centre (NLDC), have been split into separate teams to fully function out of TNB’s main and alternative locations. According to Dr Tan it may be prudent for such measures to be extended to local power producers.

Pandemic Planning, Preparedness, Response and Recovery for the Power Industry

Power Purchase Agreements[4] – None of the Malaysian PPAs have identified “disease”, “epidemic” or “pandemic” as an example of a force majeure event. Albeit less explicitly, events affecting the performance of personnel in relation to the construction, operation or maintenance of the power plant as a result of market conditions or government action is described as one of the possible force majeure events in PPAs. It is therefore arguable that the Movement Control Order implemented by the Malaysian Government, may constitute force majeure.

As required by the Malaysian Grid Code and indeed PPAs, timely notifications should be given  to TNB, the GSO and the Energy Commission regarding any limitations, restrictions or outages affecting the power plant. This includes any deration in the available capacity and rescheduling on approved scheduled maintenance. This information is pertinent to the schedule and real-time dispatch of electricity.

Fuel Supply and Transportation Agreements – A pandemic could potentially disrupt the supply of conventional resources such as coal and natural gas (e.g. local supply from Petronas and imported LNG). While coal plants generally stock up to two months’ worth of coal in the coal yard, substantial delay in coal production, loading, shipping and delivery will threaten the operations of coal-fired power plants, thereby endangering coal-dependent countries, including Malaysia.

The power producers are required to report the compliance of their fuel stock with the obligations in power purchase agreements to TNB and the GSO. In the event of an imminent or possible fuel shortage or curtailment of supplies, TNB or the GSO shall instruct the power producers to increase their fuel stock to the full extent of their capacity available at the power plant to ensure continued endurance.[5]

Many of the power producers are highly dependent on contracted fuel suppliers for coal supply and transportation. Most agreements impose an obligation on the supplier to promptly inform power producers of any reduction in availability of coal or delay in the arrival of shipment at discharge port. Breach of contract situations may occur during a pandemic, which would further impact affected power producers. Therefore, it is imperative that power producers work closely with their suppliers to properly understand any disruptions to the supply chain, their resupply rates and formulate a remedial plan.

Technical Service Agreements – The power industry has a long history of relying on original equipment manufacturers (OEM) to provide major maintenance to power plants. In the event of a pandemic or a movement control order, power producers may run the risks of not being able to make use of these arrangements due to travel restrictions or hesitations of service providers to unnecessarily expose their employees.

As such, power producers together with the GSO should prudently:

A. review all equipment standard maintenance and repair schedules, maintenance history, and equipment life expectancy to ensure all essential and critical pieces are capable of sustained operations;

B. ensure the uninterrupted supply and maintenance resources available on-site or in reserves; and

C. identify changed risks to routine, planned, and contingency operations to appropriately prioritize efforts.

Local Regulations – It would be prudent to place specific attention on the requirement of periodic renewal of permits, licences, approvals under law, generation licence standards and legislations, as well as any order, instruction or requirement issued by the Energy Commission, which would otherwise lapsed if renewal could not be obtained under the lockdown situation. The power industry players should also coordinate closely with local government and local emergency response entities to stay abreast with any localised disruptions with specific procedures for doing so and also with defined responsibilities.

Further, temporal regulatory relief during this critical period may be appropriately considered by the regulator.

Conclusion

The spore war will not vanish overnight. Indeed, scientists have warned governments on the threat of a second wave of Covid-19. It is therefore essential for companies to consider the risk of this potential second wave and step up efforts to avoid any impact on their contractual performance. 

While the Covid-19 pandemic upends productivity activity across the world, it has provided a new spur for the power sector to approach and embrace new technology including new generation dispatch systems with real-time monitoring, automation and self-controlling issues.

Perhaps, that new distancing between human and machine is likely to long outlive the disease itself.

[1] Partner of Energy, Infrastructure & Projects Practice, Lee Hishammuddin Allen & Gledhill. The author is grateful to Mr. Peter Buxton, BSc (Eng), MSc, CEng, FIET, a retired energy consultant based in England and Ir. Dr Philip Tan Chee Lin, a pioneer of the Malaysia Power Industry and former member of the Energy Commission, for their incredibly helpful comments on an earlier draft. The views expressed herein do not in any way reflect the views of any of the author’s current employer and/or her clients. Any errors herein remain the author’s.

[2] E.g. unexpected automatic or manual disconnection or the unplanned reduction in capacity of power plants, or unexpected disconnection of transmission line, etc.

[3] https://www.bloomberg.com/news/articles/2020-03-26/new-york-grid-operators-now-living-onsite-to-keep-power-flowing

[4] The author and her colleague have explored the impact of COVID-19 on the performance of Power Purchase Agreement in an earlier publication.

[5] Malaysian Grid Code, OC7.4.9 Fuel Supply Emergency.