Renewable Energy in Malaysia 2022: Extensions, Expansions & Expectations
Updated: Feb 21
As a new year approaches, it is only reasonable to anticipate and prepare for a mass update of national policies and market appetite, especially with regards to topics on sustainability. Pressing discussions on climate change mitigation is accelerating as we speak, with many countries now pressing for greener initiatives and swift action amidst the alarming temperature rise from cumulative carbon emissions, stressed in IPCC’s 2021 Assessment Report. Deals on decarbonization, fossil fuel and coal phase-outs as well as halts to deforestation are now forcing large market players and authorities to delve deeper into green investments, with a focus on carbon capture and storage, energy efficiency as well as renewable and alternative energy resources.
Malaysia will not be discounted from the changes that are coming (or are already here) with the heightened focus on environmental sustainability. Budget 2022, the 12th Malaysia Plan, the Nationally Determined Contributions (NDCs) as well as the country’s collective pledges during COP26 carry much commitment towards adoption and expansion of multiple climate mitigation initiatives, some already announced to be implemented as soon as 2022. Attention then, is now on how one can significantly reduce and offset greenhouse gases, first by analysing the main factor of production – energy consumption.
Renewable Energy in Malaysia
Malaysia as a developing country demands more energy than developed countries for its rapid economic growth. Posing an energy crisis to long-term viability and producing vast amount of carbon emissions to the environment. The primary energy source used in Malaysia’s power sector for generating electricity are fossil fuels. Fossil fuels cannot be sustained in the near future due to environmental consequences and resource depletion. Malaysia's population and economy are rapidly expanding, necessitating the exploration of alternative energy sources to meet the country's population and commercial energy demands. Renewable and alternative energy consumption in Malaysia only covers 10% of the total capacity of energy usages.
There are two (2) major types of renewable natural resources currently consumed in Malaysia; hydropower and solar energy. These average from 5-6% of the country’s energy consumption source in the past 5 years. Other lists of renewable natural sources in Malaysia come from geothermal, biomass and waste – though this makes up less than 1% of the pie. By 2025, the Malaysian government is targeting a 31% of the total installed capacity of sustainable energy, as compared to the current 23%. This signals that there is a growing market for alternative sources of energy amidst the ongoing advancements in technology that will likely reduce the cost of purchasing accessible energy systems for convenient utilization.
While increasing hydropower capacity in Malaysia is likely to be the main focus for the government, solar PV installation and investment by private companies have been gaining traction in recent years due to increasing service providers and the implementation of several schemes and programmes. Such incentives, including the Large-Scale Solar programme (LSS) and the Net Energy Metering 3.0 (NEM) scheme and the upcoming implementation of carbon markets are major government initiatives to incentivise a wider adoption of solar power into business operations and residential consumption all implemented under Sustainable Energy Development Authority (SEDA) Malaysia. Its key role is to promote and implement the national policy objectives for renewable energy projects.
According to The Edge Markets news, The Malaysian Electricity Supply Industry (MESI 2.0) implemented by Ministry of Science, Technology & Innovation (MOSTI) from 2019 to 2025 allows generators to source their own fuel to optimize cost and facilitate green energy for a better consumer experience and generate additional economic activity. MESI 2.0 aims to drive the electricity supply industry through energy transition into a more efficient structure that encourages more competition and higher renewable energy mix, while maintaining the security of electricity supply in the country.
Why Is Renewable Energy in Malaysia So Important?
For the past 60 years, at least 90% of Malaysia’s energy consumption is from the use of coal, oil and gas. This has to change. The burning of such non-renewables account for 90% share of CO2 emissions produced by the country, especially for Peninsular Malaysia, it is the densest population of entire Malaysia as compared to Sabah and Sarawak, highly contributing to the effects of climate change. While there have been recent government statements and pledges to improve Malaysia’s adoption of renewable energy to meet its NDCs, consumption of fossil fuels has yet to see a significant reduction, even with increasing amount of installed total capacity of renewable energy. The trend is worrisome, considering that global emissions must decline by 7.6% per year from 2020 to 2030 in order to limit warming to 1.5°C – the upper limit before potentially devastating climate change effects hit the globe and distort natural ecosystems.
According to TheStar news report, PM Datuk Seri Ismail Sabri Yaakob announced the climate change scheme to reduce the intensity of Greenhouse Gas (GHG) emissions across the economy by 45% on its overall GDP in 2030 and achieve net-zero GHG emissions as early as 2050.
As such, renewable energy plays one of the most important roles in reducing greenhouse gas emissions. It is one of the few clean, safe and viable forms of alternative resource to fossil fuels. As more investment is placed on renewable energy research and development in Malaysia toward a lower carbon pathway, it will evolve into a much more competitive product as technology advances, becoming more accessible and affordable for the masses. The lower environmental impact that comes from using hydropower, solar power and other viable forms of sustainable energy is pivotal in ensuring a significant reduction in pollution being emitted from commercial production and consumption of and for the population.
What Are The Benefits Of Using Renewable Energy?
Investments in more sustainable practices will continue to grow as more action is taken to reduce carbon emissions. From the outcome of the COP26, pledges by many economic powerhouses to phase-out fossil fuel subsidies and reduce coal earliest by 2040 signals a drastic change in market appetite towards more sustainable solutions. This will force many private companies to accelerate their operation in searching for alternative energy sources and green investments in order to stay afloat in the transitioning market. Fortunately, the provision of renewable energy is enhancing and expanding at a fast pace, including the advantages that come with its adoption:
First and foremost, the source of clean energy benefits everyone’s current and future wellbeing; by switching from fossil fuels to cleaner energy, such as high-efficiency solar panels help to increase renewable energy capacity, it significantly reduces your carbon footprint and subsequent contribution to global warming.
Electricity generated by hydropower or solar PV produces less carbon, toxic waste and reduces water consumption. Such convenience is intrinsic and also reflects well in organisations’ sustainability reports, highlighting to the public on the efforts and commitment towards environmental-friendly business practices – especially in industries that operates on high energy.
To encourage renewable energy adoption, financial incentives are abundant in Malaysia. At least 50% electricity bill savings per month can be achieved by installing rooftop solar and applying for the NEM scheme, as well as tax allowances and exemptions for purchasing locally sourced, green technology. The list is not exhaustive as the government continues to enhance its plans to encourage individuals and businesses to reduce their carbon footprint to protect our environment.
Future Expectations and Our Commitment to Help
In Malaysia's renewable power sector, there are plenty of opportunities for the market to enjoy such benefits that could outstrip early investment cost. They should and will likely be taken advantage of in abundance in the current and forecasted search for sustainable sources of energy. With large economic players pledging to end fossil fuel finance by the end of 2022, this projected the wave of investment in renewable energy and offsets have only just begun.
Looking for a committed service provider in the renewable energy sector that shares the same concerns and vision can be difficult to find. As a cleantech energy solutions provider focus on enhancing solar PV accessibility in-term of financial aspect in Southeast Asia, our purpose is to advance developing nations toward a more environmentally responsible pathway of energy production and consumption.
Progressture Solar understands the urgency to transition to renewable energy in order to achieve net zero by 2050, aligned with our philosophy to provide efficient, reliable and comprehensive solutions for those in need.
We believe that by combined effort and swift initiation, it is possible to simultaneously operate sustainably and achieve the ambitious targets of climate change mitigation in order to conserve the future of our planet.