Expanding scope of solar energy in Malaysia-

Despite solar photovoltaic (PV) being a relatively new source of growth in Malaysia’s energy sector, the country has been making strides in the solar industry in recent years. According to industry sources, the country is already the second largest manufacturer of PV modules and the third largest producer of PV cells in the world. While solar module and cell manufacturers export over 80 per cent of PV products to Europe, the US and Asia, the demand for this equipment in the domestic market is also on the rise. Further, despite being known as a supplier of oil and natural gas in the world, Malaysia has started having a hard time fulfilling the huge demand from the domestic and international energy sectors. Hence, Malaysia has little option but to develop renewable energy.

The Malaysian government has introduced various incentives and strategies to encourage the growth of renewables in Malaysia. The Ministry of Energy, Green Technology, and Water (KeTTHA) oversees the energy sector in the country. In 2011, the government introduced the National Renewable Energy Policy and Action Plan, which governs major initiatives undertaken in the renewable energy market in the country. Further, the Renewable Energy Act, 2011, paved the way to establish and implement a special tariff system to ensure that the development of the energy sector is well governed from the start. It provides for a feed-in tariff (FiT) system regulated by the Sustainable Energy Development Authority of Malaysia (SEDA). Further,  KeTTHA launched the Net Energy Metering (NEM) scheme in October 2016 to complement the FiT mechanism and encourage the deployment of renewables. The NEM is a mechanism in which an eligible consumer installs a PV system primarily for his own use and exports excess energy to the grid.

In comparison to other sources of renewable energy, solar energy is more popular mainly because of its “plug-and-play” features, unlike other resources which need mechanical support such as motors or generators (hydro, wind, wave) or chemical support (biofuels) which are mostly circumstance-oriented. Moreover, given Malaysia’s location in the equatorial region, where sunshine is in abundance all year round, solar energy is naturally positioned to play a crucial role in the future energy mix of the country. Plenty of solar PV sites can be found throughout Peninsular Malaysia, Sabah and Sarawak. Most solar PV sites are located in the eastern part of Malaysia.

According to SEDA, growth in the solar energy market has been higher compared to other renewable energy technologies. As of July 2016, 9,406 applications out of 9,586 approved applications under its FiT programme were for solar PV alone. About 95 per cent of the applications were for small installations of less than 72 kWp. As of 2016, there were a total of 8,606 solar PV systems in the FiT programme under SEDA. The installed capacity of commissioned solar PV plants under the FiT scheme stands at 256.5 MW as of 2016, resulting in power generation of around 45.12 GWh during the year.

A BMI report, “Asia Renewables RRI: Investment Opportunities”, published in February 2017, lists Malaysia, Singapore and Australia as the best countries for renewable energy investments. In 2016, roughly MYR 2.42 billion ($555 million) of solar-related investments were approved in Malaysia, according to statistics from the Malaysian Investment Development Authority (MIDA). MIDA is also trying to turn the Southeast Asian country into a regional hub for production of solar cells and modules.

Further, SEDA has set long-term targets that will see 24 per cent of all the electricity generated in the country from renewable energy sources by 2050. Notably, the country, under the National Renewable Energy Policy and Action Plan, aims to achieve 2,080 MW of renewable energy by 2020. For solar power, the target is to achieve a capacity of 1,250 MW connected to the grid by 2020. KeTTHA targets to achieve 30 per cent of the country’s power generation through renewables by 2025.

The Malaysian government seems to be taking serious measures to increase the share of renewables in the country’s energy generation mix and solar energy has been identified as the main contributor. The following is a list of planned/ongoing solar power projects in the country:

  • Jawatankuasa Perancangan dan Pelaksanaan Pembekalan Elektrik dan Tariff in August 2015 agreed on the Large Scale Solar Photovoltaic Plant (LSSPV) programme for a duration of four years, from 2017 until 2020. The Energy Commission of Malaysia was entrusted by the Government to conduct the bidding process by inviting private sector companies to build, own and operate LSSPV plants to supply and sell energy to the utilities under  long-term power purchase agreements. This initiative is being implemented in phases and at suitable locations with appropriate capacities. The capacity allocated for the LSSPV programme is 1,000 MW by 2020. The capacity procured is being implemented through the competitive bidding process. To ensure the successful and timely completion of these LSSPV plants to meet the capacity target for the power sector, the Energy Commission conducted a pre-qualification exercise in March 2016 to shortlist industry players with suitable technical and financial capabilities as per the criteria set forth in the request for quotation document.
  • In early 2017, the Energy Commission of Malaysia called for bids from prospective project developers for 460 MW of grid-connected solar power capacity. This competitive bid process for large-scale PV projects in Malaysia was oversubscribed, attracting 1,632 MW of submissions. For the 360 MW of solar capacity offered in the Malaysian peninsula, 1,442 MW of project proposals were submitted, including nearly 1,200 MW of 10-30 MW projects, 172 MW of 6-10 MW projects and 72 MW of 1-6 MW projects. Bids accruing to 190 MW of projects were received in the Sabah-Labuan territory, while the offered capacity stood at 100 MW. Prices ranged from MYR 0.34 per kWh to MYR 0.53 per kWh. The Malaysian Energy Commission will now shortlist bidders based on the RFP requirements. Each bidder will be able to offer bids for up to three plants. Power generated from these projects will be sold to the two utilities, Tenaga Nasional Berhad (TNB) and Sabah Electricity Sdn Bhd (SESB). Most of this capacity (360 MW) is to be located in Peninsular Malaysia while 100 MW of capacity is for the Sabah and Labuan regions.
  • Cypark intends to develop a 10.5 MW (DC) solar array for power producer Selasih Mentari in Ladang Tanah Merah, Negeri Sembilan, for MYR 53.4 million ($12.4 million). The project is scheduled for completion by November 2018. Separately, Cypark will install 3.95 MW of PV capacity for Revenue Vantage in Jelebu, Negeri Sembilan, for MYR 21.6 million ($5 million). It aims to finish the project by September 2018.
  • In October 2017, KeTTHA expressed its desire to award LSSPV plants to 18 companies with a total capacity of 402 MW in the next two years.

 

Malaysia’s renewable energy sector has gained momentum following the country’s National Renewable Energy Policy and Action Plan and the government’s FiT scheme. These supportive energy policies, alongside relatively good access to finance and well-developed grid infrastructure, results in Malaysia’s risk profile outperforming the regional average as well. The net energy metering mechanism and various large-scale solar programmes that have been announced are likely to boost the number of solar power plants and demand in the coming years. In this backdrop, Malaysia is sure to shine brighter in the Southeast Asian region in the coming years.