PETALING JAYA: Malaysia’s adoption of renewable energy (RE) at both commercial and consumer level has put the country on the right track as it aligns to other neighbouring countries in which South East Asia collectively plays its part in energy transition, according to Plus Xnergy Holding Sdn Bhd group CEO & co-founder Ko Chuan Zhen.
As a whole, he said that RE consumption will surge by 11%, with Asia leading the way while solar and wind capacity addition will remain strong. Prospects for RE engineering, procurement, construction and commissioning contractors, he added are also on an uptrend as the government strives to achieve the target of RE generation capacity to comprise 31% of total electricity generation capacity by 2025.
In line with Mordor Intelligence, he said that the solar energy market is expected to grow at a compound annual growth rate of 2.5% between 2019 and 2026.
In terms of the solar photovoltaic (PV) system adoption, the report pointed out that Vietnam and Malaysia have the highest number of installations, with 12.2 GW of solar PV projects being installed in 2020.
Ko said that beyond the consumer market, businesses also play a part in promoting the usage of renewable energy.
He added that overall, a strong environmental, social and corporate governance (ESG) proposition helps companies to tap into new markets, attract businesses and consumers and maintain a competitive advantage. Along with the supportive electric vehicle (EV) measures many more will be able to enjoy double savings, first from their homes and second from their cars.
“As the government has begun implementing targeted subsidies, medium voltage and high voltage users will be charged a surcharge of 20 sen per kWh from Jan 1, 2023.
“Based on calculation, this will be an increase from RM0.0037 per kWh, making it an average 40.5% of cost increase to businesses. The rising production cost has escalated the need for business owners to shift to renewable energy solutions, which not only reduces energy cost, but also fulfils ESG objectives,” he said in a statement today.
In promoting corporations to adopt ESG initiatives, he opined that the government plays a crucial role in setting up guidelines and pushing for ESG compliance. To achieve the objective, Malaysia can look towards aligning to international standards such as the Global Reporting Initiative Standards, Task Force on Climate-related Financial Disclosures and SASB Standards.
Existing policies such as Net Energy Metering (NEM) 3.0, Smart Automation Grants and Green Investment Tax Allowance (GITA) have been effectively promoting the clean energy industry in Malaysia.
The NEM scheme allows electricity bill rebates with solar setups leading to attractive return on investment offers. The scheme’s quota for businesses, NEM Net Offset Virtual Aggregation, was quickly oversubscribed proving its popularity. The GITA and Capital Allowance (CA) are great motivators for business owners as they are eligible for these tax incentives of up to 48%.
He remarked that the GITA and CA also encourages businesses to invest in green solutions, which is financially beneficial given that the 60% GITA for green assets are set off against 70% statutory income – a considerable sum that will entice adopters. It would be beneficial for these incentives to be extended beyond 2023.