Solar energy in Malaysia is at its early stage. As climate change accelerates, Southeast Asia is focusing increasingly on clean and renewable energy to reduce greenhouse gas emissions. This starkly contrasts the region''s historically heavy reliance on fossil fuels, which has fueled major economic growth over the last two decades. Southeast Asia''s energy demandhas doubledsince 2000, and renewable capacity has nearly tripled.
Malaysia has followed this trend, with renewable energy capacity increasing by over 3.5 times since 2000. However, even with this significant increase, renewable energyonly makes upabout 8% of its total energy mix. This is heavily dependent on hydropower (6.3% of the energy mix), a reliable source of low-carbon energy. However, its use isregionally specificand primarily in Borneo Malaysia.
The country is looking for alternative options to to generate electricity and increase renewable energy access, and solar iscoming into the spotlight.
Solar power in Malaysia is still in its nascent stages, contributing toless than 1%of the country''s total energy consumption. However, thegovernment''s goalof increasing the country''s share of renewable energy to 31% by 2025 places a significant emphasis on solar.
This growth will hinge on three leading considerations. First, there will be a major revamp ofgovernment policiesto facilitate utility-scale solar projects. Second, the country''s solar PV module production capacity, thethird-largestin the world, will focus on domestic use instead of lucrative external markets. Third, an investment ofUSD 375 billionby 2050 will be made in renewable energy infrastructure.
If successful, Malaysia can tap intoa valuable portionof its 337 GW of potential solar capacity available.
Malaysia''s high solar energy capacity is primarily due to its geographic location. Straddling the equator, it receives solar radiation at adirect 90-degree angle. This allows solar radiation to reach Earth more densely than at higher latitudes – providing more energy per square metre.
However, the country''s tropical climate counterbalances this with frequent cloud cover, leading to an average of6 hoursof sunlight daily. Malaysiareceives approximately4-5 kWh/m2 of solar irradiance per day,one of the highestrates in Southeast Asia.
Even with a high capacity for solar, adoption remains low for both residential and utility-scale systems. In both cases, costs for implementing solar are still higher than alternatives. While solar prices have steadily declined, theymust competewith already subsidised electricity costs and a government-supported fossil fuel industry. Reducing this gap will rely on solar-specific subsidies and incentives.
On the residential side, another major roadblock is thelack of knowledge and preparednessfor solar energy adoption. Studies show that many homeowners are unaware of where to get solar panels, installation cost, the benefits they can provide and any government incentives for installing a solar system. Not only does the government need to offer financial incentives for the residential sector, but it needs to develop awareness campaigns and provide education.
Focusing on the pricing issue, the cost to install solar panels is disproportionately higher than in other countries.
For example, the average solar panel system cost in Malaysia is aboutUSD 1.50per watt compared toUSD 3.00in the U.S. However, the per capita GDP of the U.S. isover six timesas large as Malaysia. This makes the real cost of solar installation significantly more expensive in Malaysia.
Improving the domestic supply of locally produced solar PV panels and government tax incentives or subsidies can help drive down these costs and can motivate adopting solar energy in Malaysia.
Looking at Malaysia''s existing solar PV systems and infrastructure helps determine where government investment should flow.
Currently, Malaysia''s solar energy systems areprimarily dominatedby grid-connected systems. Grid-connected systems are directly tied to the local electricity grid, which allows excess energy to be sent back into the power grid for use elsewhere. This is what most urban and utility-scale facilities use.
Hybrid systems also tie into the grid but include a local energy storage system, like a battery. This allows energy to be stored on site for future use. While more expensive than grid-connected systems, they are gaining popularity due to their ability to limit issues with variability in solar electricity generation.
Off-grid systems are the least common but are ideal for rural or remote areas. They are self-contained, including battery storage, but without a grid connection. Energy generated on site is stored and used without running an expensive power line to a far-away grid connection.
It makes sense for government incentives to relate to regional requirements. Urban areas should rely on grid-connected systems, where it is cost-effective to tie into the existing grid. However, Malaysia’s government support for off-grid systems in remote parts of the country is crucial in decarbonising these regions, like mountainous Borneo or the country''s islands.
While solar energy in Malaysia is still in its infancy, there arepromising signs of growth. The government''s commitment to increasing the share of renewable energy is a step in the right direction. Additionally, the government has released severalincentive programsin the last few years, like the Green Investment Tax Allowance (GITA), Green Income Tax Exemption (GITE) and the Green Technology Financing Scheme (GTFS).
However, these programs are only a small step in the larger plan. For solar energy capacity to meet future targets, the governmentmust doubleits planned investment. Solar energy systems are long-term investments that need to begin soon to meet further goals.
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Govt will focus on Peninsular Malaysia in its bid to increase RE in the power capacity mix as it accounts for 80% of the country''s electricity demand
Malaysia plans to increase the share of renewable energy (RE) in its installed capacity to 31% in 2025 and 40% in 2035 under its power generation plan.
Minister of Energy and Natural Resources Datuk Seri Dr Shamsul Anuar Nasarah said to date, the installed capacity for RE in the country stands at 7,995 megawatt (MW) and it is projected to increase to 18,000MW by 2035.
The minister shared Malaysia''s energy transition plans until 2040 with other energy ministers of Asean countries during the virtual meeting of Asean Ministers on Energy and the Minister of Economy, Trade and Industry of Japan recently.
He explained that the government will focus on Peninsular Malaysia in its bid to increase RE in the power capacity mix as it accounts for 80% of the country''s electricity demand.
"RE capacity in peninsula is projected to increase from the current 4,430MW to 10,944MW in the next 15 years. As solar has the highest potential, Malaysia plans to introduce battery energy storage systems, with a total capacity of 500MW from 2030 onwards," the ministry said in a statement.
With the targets in place, Shamsul Anuar said carbon emission intensity from the power sector is set to decline by 45% in 2030 and a further 60% in 2035, compared to the 2005 level, in line with Malaysia''s Nationally Determined Contributions targets under the Paris Climate Agreement.
He noted that Malaysia''s energy transition plan should be affordable in line with the Sustainable Development Goal 7 of ensuring access to affordable, reliable, sustainable and modern energy for all.
"Therefore, while Malaysia is pushing for a higher target of RE in its capacity mix, the ministry also takes into account the affordability of the energy transition to the rakyat and the resiliency of Malaysia''s energy system.
More than 7,000MW of coal power plant''s power purchase agreements will expire by 2033 and be replaced mostly by gas and RE which would lower Malaysia''s carbon emissions.
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