Malaysia Needs USD 7.9 Billion to Achieve Renewable Energy Target by 2025

September 2019

Malaysian Minister of Energy, Technology, Science, Climate Change and Environment (MESTECC) Yeo Bee Yin stated that Malaysia will need MYR 33 billion (USD 7.9 billion) worth of investments to reach its target of 20% electricity generation from renewable Energy (RE) sources by 2025. This is part of the country’s green financing roadmap to attract green investment via contribution from government, public-private partnerships and private financing.

Yeo said that MESTECC will focus primarily on encouraging more RE investments through institutional reforms, in addition to existing government incentives like the Green Technology Financing Scheme, Green Investment Tax Allowance and Green Income Tax Exemption. Other efforts may also include the 21 action items of the green financing report suggested by the Securities Commission (SC), a federal statutory body that was tasked to study Malaysia’s Infrastructure needs and green financing.

MESTECC expected the local Energy industry to be more competitive with diversified power generation mix offering affordable, reliable and sustainable electricity. This is following the recent outcome of the third round of large-scale solar (LSS3) bidding worth around MYR 2 billion (USD 479 million) for 500 MW of projects, which demonstrated that solar-based electricity generation is cheaper than gas-based power production. Out of 500 MW, four projects with total capacity of 365 MW bid below the gas generation price of USD 0.056 per kWh.  

The first LSS tender was released in 2016 with an aggregate capacity of 200 MW in peninsular Malaysia and 50 MW in Sabah. The second round was launched in 2017 with a total capacity of 360 MW in peninsular Malaysia and 100 MW in Sabah/Labuan.  

Malaysia also introduced the Net Energy Metering (NEM) programme for solar PV in late 2018, wherein excess solar Energy after consumption will be delivered to national utility company, Tenaga Nasional Berhad (TNB), on a one-on-one offset basis. All TNB customers, whether from the domestic, commercial, industrial and agricultural sectors are eligible for the NEM. MESTECC has allocated 500 MW as the 2019 NEM quota out of which 450 MW is for commercial and industrial buildings and the remaining 50 MW is for residential buildings. In addition to solar power, the Malaysian government is also attempting to make the pricing for other renewable Energy technologies competitive with gas-based projects. Competitive bidding has been introduced for small hydropower and biopower technologies. 

 (Sources: The Edge Markets; Daily Express; New Straits Times)  

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