Malaysia's solar market: a long way to go, a long way to go, a bright future

In recent years, Malaysia has continued to recognise the critical role of renewable energy in achieving sustainable development goals and reducing carbon emissions, and has made great strides in driving the development of the solar energy industry. As a result, in its National Energy Transition Roadmap (NETR), Malaysia proposes to increase its solar power capacity from the current 4% to 58% by 2050. And that would be enough to shock the outside world.

In line with this vision, the Malaysian government has also pledged to increase renewable energy generation capacity to 70% by 2050 to achieve its national target of net-zero greenhouse gas emissions by 2050. However, despite the year-round sunshine and huge potential for solar power generation, Malaysia still faces a series of challenges that have hindered the accelerated adoption of solar energy.

While Malaysia is already the world's third-largest producer of solar panels and has abundant sunshine, the country's transition to renewable energy has been slow. At the same time, Malaysia's own energy mix is heavily reliant on non-renewable energy sources such as coal and natural gas. As a reflection of a recent statistic, renewables account for only a tiny fraction of Malaysia's electricity production, leaving it behind other countries in the Southeast Asia region.

Against this backdrop, the International Renewable Energy Agency (Irena) has issued a warning highlighting the urgent need for Malaysia to double its investment in the transition to renewable energy in order to meet its international climate commitments. As mentioned above, despite the potential of solar power generation at both the industrial and domestic levels, there is still a huge gap between Malaysia's solar panel production and the domestic renewable energy adoption rate. This means that Malaysia needs to accelerate the pace of embracing solar energy and transitioning to sustainability.

Under the leadership of Minister Nik Nazmi Nik Ahmad, Malaysia's Ministry of Natural Resources, Environment and Climate Change is accelerating the country's transition to renewable energy. However, these efforts remain challenged by Malaysia's dependence on fossil fuels and its status as an oil exporter. In order to increase renewable energy capacity, the ministry is now considering lifting the ban on renewable energy exports – especially in Singapore. Of course, this strategy has also sparked discussions among industry stakeholders about its potential pros and cons.

Malaysia has set ambitious renewable energy targets to increase renewable energy to 31% of the country's total electricity generation by 2025 and 40% by 2035. In the process, taking the 2050 target as an example, Malaysia's installed solar capacity will reach 4,706 megawatts, a large part of which is likely to come from rooftops in residential and commercial buildings.

As a result, some experts emphasise that Malaysia's government policies will play a crucial role in creating an enabling environment for solar energy development – and that cost will be an important consideration for residential residents. It is reported that in Malaysia, the cost of installing solar panels often varies depending on factors such as roof size and type of house, ranging from an average of RM45,000 (terraced houses) to 95,000 ringgit (bungalows).

These views suggest that the government should focus on initiatives that will enable all Malaysians, including those in rural or underserved areas, to have access to renewable energy. This will not only help the country reduce its dependence on fossil fuels, but also promote the country's sustainable development and economic growth. From this point of view, providing incentives and subsidies for renewable energy projects in these regions will help accelerate the transition to a more sustainable energy system, which will ultimately lead to more solar panel sales and installations.

It cannot be overlooked that securing financing for solar PV installations in Malaysia has also been a challenge for individuals due to the lack of awareness of the risks and responsibilities of the sector by banking institutions. To address this challenge, the Malaysian government launched the Green Technology Fund (GTFS) scheme in 2010, allocating RM1.5 billion to fund green projects. Businesses that receive loans from banks receive a 2% interest subsidy, while the government guarantees 60% of the approved loans.

On the other hand, the Malaysian government has also provided green technology incentives such as the Green Investment Tax Allowance (GITA) and the Green Income Tax Exemption (GITE) to encourage enterprises to participate in green projects. However, these incentives are often difficult for individual or family investors to enjoy in Malaysia, and it is not difficult to see that the current green financial support and fiscal incentives in Malaysia are largely limited to corporate institutions.

Of course, local companies in Malaysia's solar industry are also actively working to overcome the challenges that hinder the country's solar adoption. From innovative technologies and advocating for policy reform to strategic partnerships and community engagement, these companies are also making solar energy more accessible to the public.

To accelerate this, solar solutions provider Verdant Solar believes industry players should focus on raising public awareness and understanding of the benefits of solar energy. This can be done through market education to educate the public about the economic and environmental benefits of solar energy, and what kind of advances the technology has brought about in terms of economic and efficiency aspects.

The company further noted that increased investment and policy support for the solar industry, including job creation and economic diversification, could bring significant economic benefits to Malaysia. The widespread use of solar energy will help reduce carbon emissions, improve energy security and create a more sustainable future for Malaysia. "There's no denying that the future of Malaysia's solar market is bright for the industry, despite the challenges, thanks to the concerted efforts of the local government, industry stakeholders and local communities. ”

注：本文作者为Verdant Solar首席执行官Zeth Lim，原文《MALAYSIA’S SOLAR SURGE: FROM 4% TO 58% BY 2050, CAN THE NATION SHINE BRIGHT?》授权发布于动点国际（TNGlobal），动点出海出海经编译后发布。