Solarvest Budget Wishlist: Liberalise Solar Power Industry To Meet 2050 Target

Solarvest has grown in stature as a key renewable energy player in the country especially in the solar power space, the company recently seconded itself up into the Main Board as its reputation and business expanded.

So when its CEO, Davis Chong has something to say about the carbon neutral and zero emission targets set by the Malaysian Government, there should be some attention given to his observation. After all what better feedback can the government receive but from the industry who will be assisting the government in achieving those goals.

The recently tabled 12th Malaysian Plan there was quite a bit of emphasis on getting the nation to become a carbon-neutral nation as early as 2050, besides there was also the ambition to reduce greenhouse gas emission intensity per unit of Gross Domestic Products (GDP) by 45% in 2030, compared to the base year of 2005.

Partly there was also mention of introducing carbon pricing and carbon tax which is rather interesting on what methodology will be used to measure and price them. However do note there are already many nations having adopted the process including Singapore. Malaysia wants to pay greater emphasis towards environmental, social, and governance (ESG) principles in all its decision-making process and will be looking at corporates playing their role as well.

David acknowledges and is grateful for the positive direction of the Government in implementing a circular economy model to reduce the nation’s dependence on non-renewable resources, however he feels there is still a lot of work to be done on the ground to attain these targets.

In an unsolicited commentary, the passionate CEO has listed various propositions for a more comprehensive renewable energy (RE) strategy for the upcoming Budget 2022.

1.     Generation Development Plan 2020:

a)     Increase the target RE capacity mix from the previous goals of 31% by 2025 and 40% 2035. Looking at the current plan, Malaysia needs another 3.3 gigawatts (GW) of new RE to reach the 31% target, out of which, 2.2 GW is occupied by the large hydro segment. We believe the target is too modest especially given the nation’s goal of achieving net-zero carbon by 2050.  

b)     Increase of quota allocated for solar to 8 GW by 2025 and 20 GW by 2035. Based on the current plan, the existing allocation for solar is only around 1.1 GW by 2025. This target is easily fulfilled, given that one Large Scale Solar (LSS) programme and one Net Energy Metering (NEM) programme can already generate an estimated 1.5 GW worth of power.

2.     Commercial and Industrial:

a)     Allocate 3,000 megawatts (MW) under the NEM Net Offset Virtual Aggregation (NOVA) programme to allow for greater participation, especially amongst ESG-focused multinational companies operating in Malaysia. The demand is extremely robust as witnessed in the quick take-up of the recent 300 MW NOVA quota within just three months.

b)     Liberalisation of the solar power industry by enabling peer-to-peer (P2P) trading and third-party access (TPA) through paid utilisation of the national grid to transmit electricity generated from solar systems. In turn, this will attract more foreign investments into the local solar industry.

c)     Re-open the New Enhanced Dispatch Arrangement (NEDA) programme to improve cost efficiency in power generation and encourage greater participation in the energy market.

d)     Introduce further incentives and grants for growing RE verticals on top of the Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) to boost demand for green technology equipment like solar battery storages. This will strengthen the supply chain and create a better RE ecosystem in Malaysia.   

3.     Residential:

a)     Offer Individual tax rebates of up to RM10,000 to incentivise installations of rooftop solar photovoltaic (PV) panels. The reduction in initial costs will create greater interest in the residential segment.

b)     Special quota allocation for the property developers of 3,000 MW to include solar PV panels in their housing projects. The participation of more property developers will speed up the growth of solar adoption.

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