Solar Energy Seen to be a Key Investment for Malaysia During Pandemic

24 Jul 2020

As business owners prepare to bounce back during this pandemic, research and industry leaders continue to point towards solar as a solution to minimise OPEX and lower their carbon footprint. With the Net Energy Metering (NEM) quota ending this December, a scheme that allows users with a solar photovoltaic (PV) system to export excess solar energy to the grid on a “one-on-one” offset basis, so does the deadline to install solar for business owners.

Malaysia is an ideal location to harvest solar energy due to its geographical position near the equator which enables her to receive a higher level of solar irradiance. However, in the early 2000s, solar energy was still a mystery as it had yet to come to light in Malaysia. In 2011, the feed-in tariff (FiT) was passed after years of being introduced, leading the nation to move towards a new era of sustainable energy as well as a step forward in combatting the effects of climate change. As the need to build upon the nation’s resources and reduce dependency increased, the ministry introduced the concept of the Net Energy Metering (NEM) scheme to improve the investment of solar photovoltaic (PV) energy for those who invested.

What is FiT?

The FiT system obliges Distribution Licensees (DLs) to buy from Feed-in Approval Holders (FIAHs) where the electricity produced from RE sources will set the FiT rate. Then, the DLs would pay for the renewable energy supplied to the grid for a specific period of time. With this mechanism, RE would be set to become a viable long-term investment for many industry players as well as individuals.

Why Was NEM Introduced and What is it?

In 2018, with the goal to increase the RE power mix from 2% to 20% by 2025, the NEM scheme was introduced. This was because NEM would complement the FiT and Large-Scale Solar (LSS) programs.

With NEM, the solar energy generated will be consumed by your building first and the excess energy will be exported into the national grid to offset your TNB bill. This excess energy will be recorded in a credit form by a bi-directional meter and energy credit will be then offset on a “one-on-one” basis per kWh unit. The validity period for this energy credit is 24 months.

Additionally, under the NEM scheme, there is a quota allocation of 500MWp up to the year 2020 which has been divided into a domestic and non-domestic category. As climate change continues to take on the form of natural disasters, thinning of the ozone layer, the extinction of animals and more, NEM is a policy the Malaysians can do their part in addressing the climate effects. Through this scheme, the public can generate renewable energy and reduce national dependency on fossil fuels.

That’s Not All...

Ministry of Energy & Natural Resources Announce 1GWac Worth of Tender Contracts Under LSS@MEnTARI

In the wake of the economic impact of COVID-19, the nation’s Ministry of Energy and Natural Resources announced that the fourth round of the large-scale solar program is offering 1GWac worth of tender contracts to reactivate the economy. As experts have singled out Malaysia to be a promising market for solar energy, the tender is expected to unlock RM4 bill (US$927 million) in investment and create 12,000 new jobs, according to the Ministry’s estimates.

Based on the amount of initiatives Malaysia has conducted in the past decade, renewable energy is no longer a stranger to many of us. However, it is a resource we can use to improve business operations, lower the level of carbon emissions and utilise as an engine of growth. As the market has become more liberalised than ever before, the development of solar energy will continuously require effort from the public and private sector. While renewable energy has a long way to go before becoming fully liberalised, Malaysia is showing promising growth to not only survive the current pandemic with the initiative in solar energy but thrive in the future.

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Sources: Sustainable Energy Development Authority (SEDA) Malaysia and EdgeProp

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