Solar Energy in Malaysia

Solar Energy in Malaysia

Malaysia has emerged as an international hub for the manufacture of solar photovoltaic (PV) cells, wafers and modules, for the development of solar energy in Malaysia.

Right now, renewable energy accounts for just two percent (2%) of Malaysia’s total electricity generation capacity.

Hence, to develop and promote the use of solar energy in Malaysia, Malaysia’s government has set a goal of renewables accounting for national power generation capacity by 2030. Large-scale solar energy auctions continue to be conducted, and in 2018, the government introduced a revised, 500-megawatt (MW) net energy metering (NEM) scheme aimed primarily at boosting solar and renewable power generation in the commercial and industrial (C&I) sector.

Large-Scale Solar Tender Round 3 & Net Energy Metering (NEM)

In addition to the third round of its Large-Scale Solar (LSS-3) tenders and introduction of the revised NEM scheme, Malaysia recently reinforced its commitment to reduce greenhouse gas (GHG) emissions 45% by 2030

There is no doubt that conventional power has been the mainstay and contributes to most of the power demand. However, the government has in recent years emphasized on the need to expand the renewable energy mix.

The government also announced it has begun drafting a Climate Change Act, a process that’s expected to take 24–30 months to fruition, and said it will establish a climate change center soon.

Utility-scale and mid-tier projects predominate in Malaysia’s solar power market. Following two previous iterations in 2016 and 2017, the government launched the third round of Malaysia’s LSS-3 auction in February and it’s still underway. A prospective total of 500MWac of large-scale solar power capacity is up for bidding according to the LSS-3 request for proposals (RFP).

Developing Solar Energy Market in Malaysia

With the introduction of the revised, 500-MW NEM scheme, Malaysia’s government appears committed to expanding the country’s solar energy market by fostering growth of mid-tier C&I, as well as residential solar power capacity. A total 450-MW is allocated for C&I solar projects and 50 MW for residential installations.

NEM, which has only been available to TNB customers in Peninsular Malaysia, has been slow to catch on up until recently, Jack pointed out. Applications for just 4% of the 500-MW quota allocated for the 2016–2020 period had been received.

This was due to the lower selling price of RM0.31/kWh compared to the tariffs charged by the utilities ranging from RM0.218/kWh to RM0.571/kWh,

Beginning 1 January 2019, excess electricity will be exported back to the grid on a one-to-one basis, i.e. there will be no difference between the selling and buying price of the electricity. This is expected to stimulate solar energy growth particularly in the commercial & industrial sectors.

Former Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin recently highlighted that Malaysia’s electricity generation capacity would increase 140%, a whopping 34.2 gigawatts (GW)—if the rooftops of the 4.12 million buildings in Peninsular Malaysia with good solar energy potential were outfitted with solar PV systems.

Alternative forms of solar financing, such as solar PPAs and third-party solar leases, are now available in Malaysia as a result of the introduction of the new NEM scheme and the government’s intention of “democratizing the market.

These models allow third-party investors and asset owners to finance the development of the plant and continue owning the asset. In return, the consumer enters into a power purchase agreement or lease agreement with the investor or asset owner to purchase energy generated by the plant or utilize the plant to generate electricity at an agreed rate

In addition to PPAs and solar leases, the NEM scheme offers lower tariffs to those who install solar energy systems, as well as tax incentives and reduced electricity bills through the one-to-one offsets, where every 1 kilowatt-hour (kWh) of energy consumed from the grid is offset by a 1-kWh credit for the energy exported to the grid

If you are interested in Net Energy Metering (NEM) services, please contact us, MAQO Solar for more information. We are pleased to serve and answer your questions.