Malaysia's 2025 renewable target to be backed by strong solar power growth: Fitch Solutions

THE Malaysian government's renewable target for 2025 has risen from 20 per cent in the 2018 National Energy Plan to 31 per cent in its recent Twelfth Malaysia Plan. Its aim to have 31 per cent of total power capacity come from renewables is supported by strong solar power growth, said Fitch Solutions Country Risk and Industry Research in a Dec 3 report.

The research team expects solar power growth to be the "main driver" of the revised renewables target as it predicts solar power capacity growth will be stronger than hydropower capacity growth.

Nevertheless, improved hydropower capacity will still be a contributor, particularly with the upcoming 1,285 megawatt (MW) Baleh Hydroelectric Project set to go online in 2026. In addition, the government noted that it is encouraging industries to explore the use of floating solar farms and waste-to-energy projects, although no concrete action has been taken yet.

As Malaysia currently does not have plans to construct new coal power plants, the country will have greater capacity to focus on non-hydropower renewables to meet an increasing power demand amid the closure of thermal power plants. Fitch Solutions noted that solar power dominates non-hydropower renewables growth.

"Our current forecast for non-hydropower renewables growth remains skewed towards solar power, as we have yet to notice any strong move by the government to advance biomass and waste growth and introduce wind power."

Malaysia has implemented several programmes and schemes to spur solar power growth in hopes to reach its 2025 target, namely the Large Scale Solar programme and the Net Energy Metering 3.0 scheme.

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Under the Large Scale Solar programme, the government issued solar project tenders in 2020 and 2021. The programme met great interest despite being launched during the Covid-19 pandemic - there were 112 bids for 20 projects. Fitch Solutions expects increased capacities of 490 MW by the end of 2021 and 823 MW by the end of 2023, as a result of the programme.

Through its Net Energy Metering 3.0 scheme, the Ministry of Energy and Natural Resources is encouraging locals, businesses and government agencies to install solar panels on their properties. It allows participants to offset their electricity bills by sending excess solar power to the grid. The scheme will increase solar power growth by at least 500 MW.

Additionally, Malaysia's Green Electricity Tariff (GET) programme, which was launched in November 2021, will contribute to renewables growth. Its objective is for consumers to reduce carbon emissions by purchasing renewable energy. The government has set aside 4,500 gigawatt hours to be distributed to the programme.

The GET programme has already garnered commitment from 9 companies including Tenaga Nasional Berhad, HSBC, Nestle and CIMB Bank, as well as several government agencies.

"We believe that this initiative will set the precedence for more renewable energy generation to come online given the support from private companies," said Fitch Solutions.

READ MORE:

• Renewable energy additions on track for record high in 2021: IEA
• Why South-east Asia must choose a renewable energy future
• Three Asean markets make it to world leaderboard for renewable energy prospects