SHAH ALAM, April 3 — The state could face mounting cost pressures in its push to expand renewable and alternative energy amid the ongoing global oil crisis triggered by escalating tensions in West Asia.
The Association of Water and Energy Research’s (AWER) president Piarapakaran Subramaniam said the notion that the crisis could accelerate renewable energy investments may be misplaced, given the sector’s continued reliance on fossil fuel-linked systems.
“This is a misconception. We must recognise that the renewable energy sector, as well as other alternatives, is still highly reliant on fossil fuels and has yet to fully decouple from them.
“The cost of investment will rise amid surging energy prices driven by crude oil, electricity generation, and other logistics costs. The compounding effect will push up capital expenditure and make it less attractive,” he told Media Selangor.
Piarapakaran was commenting on the extent to which the current global oil crisis can be leveraged to accelerate Selangor’s investment in renewable and alternative energy sources.
The state has been positioning itself as a leader in renewable energy adoption, with initiatives to promote solar installations, green technology investments, and sustainable urban development as part of its long-term low-carbon agenda.
In October last year, Selangor intensified its efforts to advance its green initiatives through the Selangor Agenda for Green Economy (SAGE), a 10-year roadmap to transform the state into a leader in sustainable economic growth, with the aim of achieving carbon neutrality by 2050.
The initiative focuses on expanding renewable and sustainable energy sources while strengthening Selangor’s position as a leading trade and investment hub in the region.
It is also developing waste-to-energy plants and a 300MW floating solar project, as well as exploring a pilot green hydrogen initiative as part of its renewable energy efforts.
Selangor highly exposed
Piarapakaran added that the current geopolitical climate, including disruptions along main global shipping routes such as the Strait of Hormuz, has raised concerns over supply chain stability, fuel prices, and broader inflationary pressures.
Consequently, Selangor remains highly exposed to such external shocks due to its economic structure.
“As a centre of a developed economy with high population density, extensive industrial activities, and a water-stressed environment, Selangor is very exposed.
“Spikes in natural gas and transportation fuel prices, as well as potential increases in electricity cost through the monthly Automatic Fuel Adjustment, mean operating cost pressures are likely to persist.
“What we need is transparency from the Federal government on how it passes the cost through to all the receiving sectors,” he said.
Ongoing tensions in West Asia have heightened concerns over potential disruptions to global energy supplies and major shipping routes, affecting regional oil and gas production as well as supply chains and logistics.
The closure of the Strait of Hormuz, which handles nearly 20 per cent of the world’s daily oil supply, along with attacks on critical infrastructure, has disrupted global oil market stability and regional energy security, while driving up freight rates and logistics costs and putting pressure on trade flows.
Piarapakaran, who is also the Centre for Water and Energy Sustainability’s (CWES) chief executive officer, cautioned that prolonged conflict in West Asia could disrupt supply chains and industrial activity in the state.
Downstream manufacturing could also be affected as imports of key components and by-products linked to the oil and gas sector face disruptions.
“Some countries have halted exports of certain vital by-products from the oil and gas sector. This may impact different manufacturing sectors,” he said.
Apart from energy prices, a potential El Nino event could further strain resources.
“This is probably the first of its kind exposure for Selangor’s economy. The state government must look into potential preparation to face issues that are under its direct powers to minimise risk to the public and business sector,” Piarapakaran said.
