- Fitch Solutions sees Malaysian solar PV capacity till the end of 2030 to exceed 4 GW
- Continued success of tenders and large scale solar projects being planned is one of the reasons for this optimism
- Strong regulatory support that’s likely to grow in the near future is another factor that makes Malaysia an attractive destination for solar power
A new market research from Fitch Solutions Country Risk & Industry Research estimates the cumulative installed solar power capacity of Malaysia to exceed 4 GW by 2030, going up from around 996 MW at the end of 2020.
Analysts see the market growing dramatically with strong regulatory support and improved financing for the solar sector, along with continued success of tenders the government has been launching, making the country an attractive destination for renewables investment.
Due to these factors, Fitch Solutions revised their previous guidance for Malaysia to over 4 GW by 2030, from previous forecast of 1.7 GW by 2029, the analysts shared with TaiyangNews.
They point out the latest round of solar auctions in the country managed to attract interest despite COVID-19 pandemic, even though the large scale solar (LSS) round 4 was undersubscribed. The 1 GW AC tender received bids for 823 MW capacity, with the lowest and winning bid coming in at RM 0.1768 per kWh. “These prices are already competitive with gas-fired power in Malaysia,” according to the analysts (see RM 0.1768/kWh Lowest Bid For Malaysia’s LSS4 Round).
All of these projects are expected to enter commercial operations in 2022 and 2023. With more tenders likely to be launched over the coming years, possibly with larger target capacities Fitch Solutions analysts see a stronger market. At the same time, the state of Johor has announced the largest solar project in Malaysia with 450 MW capacity in Pengerang which will come online in 2023 (see Malaysia’s Largest Solar Project Planned for Johor State).
Regulatory support is coming in the form of Green Investment Tax Allowance and Green Income Tax Exemption incentives, part of the budget for 2021 to be extended to 2025. Renewables should get much stronger support with the expected inclusion of green energy trading with the private sector to be included in the Renewable Energy Transition Roadmap 2035 that the government is planning to launch in line with its target to increase the renewables share to 20% in the energy mix by 2025.
“This is in line with its Generation Development Plan 2020-2030, where they intend to build more renewables capacity to replace retiring thermal power plants. We believe that the roadmap will contain provisions and more specific actions to accelerate renewables growth, and may include strategies such as peer-to-peer electricity trading or transitioning towards a mandatory renewable energy certificate market.”
Investing in this attractive market are some international players as Masdar that recently joined hands with Petronas to explore utility scale renewable energy projects, including floating solar in Asia and beyond, with Malaysia as one of the target markets (see Masdar & Malaysia’s Petronas Join Hands For RE).