Powering The Nation’s Progress 1

Keynote Address

OSIsoft Asia Technology Conference 2007The Westin Kuala Lumpur

24th October 2007

Dato’ Abdul Razak bin Abdul MajidVice President (TNB Generation)

MANAGING ASSETS & CHALLENGES IN POWER GENERATION SECTOR

For Discussion Only

2

CONTENTS

Energy for Society

Energy Demand and Source of Supply

Asset Value Chain

Challenges in Generating Power

Energy Efficiency

Comparative Generation Cost

Managing TNB’s Business Portfolio

TNB’s Current Performance Highlights

Summary/Conclusion

For Discussion Only

3

OUR SOCIETY REQUIRES ENERGY

For Discussion Only

4

WHAT DO THESE TRENDS TELL US?

World Marketed Energy Use by Fuel Type, 1980-2030

Source: EIA, IEO2006

0

50

100

150

200

250

300

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Qua

drill

ion

Btu Oil

Natural Gas

Coal

33%

27%

9%Renewables

Nuclear

26%

5%

Share of WorldTotal

History Projections

38%

24%

24%

8%

6%

For Discussion Only

5

SOURCE OF ENERGY TO MEET DEMAND

Renewable Non-renewable

For Discussion Only

6

HOW BIG IS 1MW

100 W

1000 W

150 W

250 W

800 W

100 W X 1 hr = 100 Wh

100 W x 10 hr = 1000 Wh = 1 kWh

Lighting

Freezer

Water Heater

A/ Conditioning

100W

250W

350W

750W

416 days

167 days

119 days

55 days

Toaster

Electric Kettle

1000W

800W

41 days

52 days

Appliance Rating Operation*

* 24hrs Operation

For Discussion Only

7

ASSET VALUE CHAIN- CONVERTING FUEL INTO ELECTRICITY

FUEL• Coal• Oil• Gas• Distillate

GENERATOR

GRID

PUBLIC–AT-LARGE

Cheapest

Most Flexible

Most Reliable

For Discussion Only

8

ELECTRICITY BASICS: TURNING A ROTOR IN A MAGNETIC FIELD USING A GENERATOR

TURBINEGWATER

WATER

1. Hydro – uses water to turn turbine

GENERATOR SHAFT PRIME MOVER 3. Steam Plant using different fuels produces steam to turn turbine

4. Combined cycle- combines thermal and gas turbine cycles

2. Gas turbine – uses fuel to turn generator

Different ways of turning the generator shaft

G GAS TURBINE

fuel

BOILERTURBINEG

STEAM fuel

BOILER

G

TURBINEG

GAS TURBINEExhaust heat

fuel

UNIQUE INDUSTRY• TO MEET EXTERNAL DEMAND• ELECTRICITY NOT STOREABLE

Exhaust heat

For Discussion Only

MOST COMMON METHOD OF GENERATING ELECTRICITY

Thermal

Wind

Hydro

Solar

For Discussion Only

10

Example: TNB Hydro (SG. PERAK RIVER SYSTEM)

25km25km22

TEMENGORDAM

TEMENGORTEMENGORDAMDAM

CHENDEROHDAM

CHENDEROHDAM

KENERINGDAM

KENERINGKENERINGDAMDAM

BERSIADAM

BERSIABERSIADAMDAM

80km 48km51km19km

174km174km22

40.2km40.2km22

5.7km5.7km22

Hei

ght F

rom

Sea

Lev

el( m

)

240

160

120

60

0

345 Mm3

6000 Mm3

95 Mm3

72 Mm3

127127 mm

HYDRO SCHEME

For Discussion Only

11

CHALLENGES FOR GENERATING POWER

Rising Demand of Developing Countries

Higher Usage of Energy per capita

Reliability and Quality of Supply

Technology limitation – Cannot store

Rising in Fuel Cost – Location of fuel source

Environmental Concern & Mitigation –KYOTO Protocol

Scarcity of Project Site

Project Funding and Risk

Country Policy – Import of technology (e.g Nuclear) & fuels

For Discussion Only

12

• Measures the amount of energy in the raw fuel needed to produce a specifiedamount of electricity.

• Measured using a measure called the Heat Rate.

Ene

rgy

Con

vers

ion

%

100% Energy Input

Steam Exhaust, Reheat, Drains

Turbine (friction, windage, noise)

Condenser, Heat exchanger, Auxiliaries

Boiler Losses, Stack, Heat Exchanger

Gross Electricity

Typical Coal Fired Plant

Plant Type

Gross Efficiency

OCGT 35%

COAL 42%

CCGT 55%

ENERGY EFFICIENCY

20%

30%

10%

42%- 45%

Boiler Turbine Condenser

For Discussion Only

13

TECHNOLOGY LIMITATION

Efficiency By Plant Type

3842

37

56

0

10

20

30

40

50

60

CSP Coal CSP Oil/Gas CCGT OCGT

CSP: Conventional Steam Plant CCGT: Combined Cycle Gas Turbine OCGT: Open Cycle Gas Turbine

For Discussion Only

14

COMPARATIVE GENERATION COST PER kWh

0

5

10

15

20

25

30

Geothe

rmal

Coal

IGCC

Gas C

CNuc

lear

Hydro

WindGas

CT

Solar T

herm

alFu

el Cell

Solar P

V

USD

Cen

t/kW

h

Source: Paper ‘The Economics of Generation Tecnologies’ (Lockwood Greene consulting study) 2003

CASE STUDY: (based on 35 Power Organizations)

0

5

10

15

20

25

30

Geothe

rmal

Coal

IGCC

Gas C

CNuc

lear

Hydro

WindGas

CT

Solar T

herm

alFu

el Cell

Solar P

V

USD

Cen

t/kW

h

Source: Paper ‘The Economics of Generation Tecnologies’ (Lockwood Greene consulting study) 2003

CASE STUDY: (based on 35 Power Organizations)

For Discussion Only

15

MANAGING GENERATION BUSINESS PORTFOLIO- Building Block of Decision Support System (DSS)

Information Assembly What-if-Scenario

Business Decision

External Industry Risks Financing

Bu

sin

ess

O

pti

mis

ati

on

Facilities and measures Data Base

Fuel Management

Energy Billing

Operation Management

Maintenance & Facilities Life Mgmt

Environment Management

Pla

nt

Op

tim

isati

on

For Discussion Only

16

Main Modules

Plant Historians and Analysis

Business Analysis and Reporting

Real Time Plant Modellingand Optimisation

SJ Sultan Azlan Shah, Manjung

OUR PILOT INTEGRATED PROJECT (PHASE I) – Started in 2004

For Discussion Only

17

Full Turnkey approach for Phase I

implementation at SJSAS Manjung

Using PI as the solution

Central team with owner’s team at site

TNB own technical & commercial advisors

SKILL

KNOWLEDGE

PHASE 2 : EXTENSION TO ALL OTHER TNB’S PLANTS- Full Completion by End 2008

EXPERIENCE

- Thermal

- Hydro

Legend

Federated In-Houseimplementation

approach

For Discussion Only

18

Effective Proactive

Maintenance

Efficient Outage

Planning Total Regulatory Compliance

Total PPACompliance

Improved Internal Business Processes

Accurate & Real-Time Decision Support System

Near Zero UOR

Improved Plant

ReliabilityImproved

Plant Efficiency

Lowest CPU Possible

PROVIDING REAL TIME DATA PLATFORM TO TRACK AND MONITORING OUR KEY PERFORMANCE INDEX (KPIs)

For Discussion Only

19

AVAILABILITY AND UNPLANNED OUTAGE TRENDINGTNB Plant Availability achieved 91.15%, with 8 stations exceeding 90% TNB plant UOR achieved 2.15%, with majority of plants below 4%

14.20

9.00 9.50

6.103.12 2.15

91.1580.4

90.285.6

81.785

0

5

10

15

20

25

30

35

FY02 FY03 FY04 FY05 FY06 FY07

UO

R P

erce

ntag

e %

20

30

40

50

60

70

80

90

100

Ava

il. P

erce

ntag

e %

CCP Conv Coal Con oil/gas OCGTHydro Overall UOR Availability

For Discussion Only

20

AGGREGATE EFFICIENCY (%) TRENDING

TNB Plant Thermal Efficiency increased by >4% in 5-Years

33.3833.67

34.07

36.8736.23

37.58

31.00

32.00

33.00

34.00

35.00

36.00

37.00

38.00

FY02 FY03 FY04 FY05 FY06 FY07

Ther

mal

Effi

cien

cy %

Average Annual Growth = 0.84%

33.3833.67

34.07

36.8736.23

37.58

31.00

32.00

33.00

34.00

35.00

36.00

37.00

38.00

FY02 FY03 FY04 FY05 FY06 FY07

Ther

mal

Effi

cien

cy %

33.3833.67

34.07

36.8736.23

37.58

31.00

32.00

33.00

34.00

35.00

36.00

37.00

38.00

FY02 FY03 FY04 FY05 FY06 FY07

Ther

mal

Effi

cien

cy %

Average Annual Growth = 0.84%

For Discussion Only

21

SUMMARY & CONCLUSION

TNB’s Drive Towards Efficient Asset Management & Profitability. - Thru Several Initiatives Includes T7, KPI and Continuous Monitoring

OPERATIONAL EXCELLENCE – Efficient and FlexibleOperating at most efficient manner – [Benchmarking with designed data]High availability and reliability – [Early detection of wear and tear]Moving towards real-time enterprise – [Remote operation monitoring]Ability to track maintenance requirement.Improve Technical know-how.

COMMERCIAL EXCELLENCE – Investment and Cost

Separate plant accounting and reporting Economics and overall competitivenessImprove Business know-how.

REGULATORY COMPLIANCE – Reliability & Environmental

KTAK - Reliability of supply and Energy mix EC - Technical & Financial Performance ReportingDOE - Continuous On-Line Emission monitoringDOSH - Safe operation and Early warning

Powering The Nation’s Progress 22

THANK YOUwww.tnb.com.my

Powering The Nation’s Progress