Having the right strategy has positioned solar power player for regional expansion
FORMED five years ago with only four workers, Solarvest Energy Sdn Bhd has now grown into a formidable solar power player on the cusp of expanding beyond Malaysia.
It now has offices located in Kuala Lumpur, Alor Star and Seberang Prai, employs 80 workers and expects sales to double this year.
But success did not come overnight.
“We worked hard to find the niche market that had been overlooked.
“And we found that market in the residential segment, where demand for solar projects was on a smaller scale compared to industrial solar projects,” says managing director Davis Chong.
Back then, the company was operating out of a rented space in Alor Star in 2012.
Solarvest had a hard time securing big projects under the Sustainable Energy Development Authority of Malaysia’s (SEDA) Feed-in-Tariff (FiT) programme because it was a new company and was still small in size.
Chong notes that it was normal for only two out of 10 industrial applicants to get the approval to install solar panels under the FiT programme.
Competing for a slice of the pie with already established players wouldn’t have worked out well for a newcomer like Solarvest. So the company shifted its focus to a different segment – the residential market.
“Solarvest was the first photovoltaic (PV) engineering, procurement and construction company in the country to install solar panels for residential properties,” says Chong.
Thanks to its strategy of marketing solar power to the residential sector, Solarvest’s fortunes turned around in 2013.
Chong says the company started developing customised solar power installation packages that were suitable for household needs.
“We used German solar panels and inverters and provided a longer warranty period under the package.
“We also put much effort into educating the residential sector on the economic and environmental benefits that they can get by using solar energy,” he says.
According to Chong, the adoption of solar power could reduce electricity bills quite significantly for both industrial and residential users.
In the initial stage of consultation, Solarvest would advise its customers to install just enough solar panels to generate at least a 20%-30% savings on their electricity bills.
This will be followed by close monitoring and analysis of their usage to determine whether additional solar panels are required.
To optimise its solar projects, Solarvest emphasises on energy output performance to meet the power consumption of its customers to ensure that they don’t over invest into generating solar power that they don’t need.
“Depending on their energy needs, they could potentially save up to 75% on their electricity bills with solar energy solutions,” Chong adds.
The strategy worked well for Solarvest and the company won many projects from the residential segment in 2013.
This also prompted other solar energy providers in Malaysia to follow in its footsteps.
But Solarvest, says Chong, has the first-mover advantage and this has enabled the company to build its presence in the residential market and subsequently expand into the commercial and industrial segments.
The company now has about 13%-15% share of the country’s solar energy market.
With its years of experience serving the local market, Chong reckons that the company is now well positioned for plans to expand overseas. He is looking at penetrating the South-East Asian solar energy market over the next two years.
Chong also notes that the team at Solarvest has the right skillsets and synergy to bring the company into the region.
Prior to founding Solarvest, Chong had worked as a marketing manager with various multinational companies. His co-founders, CS Lim and Edmund Tan, were from the construction and recycling industries respectively.
“Our passion was to start a green energy company, which would help reduce the carbon footprint in the country.
“Our diverse work background helped to formulate an appropriate business strategy responsible for our success today,” Chong says.
With its business on firm footing, Chong expects Solarvest’s business to grow two-fold in 2017 as more industrial and residential properties turn to solar power as a means of reducing their electricity bills.
The company is targeting revenue of RM80mil this year, compared to RM40mil in 2016.
Chong notes another growth driver for solar energy adoption is the declining cost of solar panel installations.
According to Chong, the cost of installing solar panels on a landed property has dropped by about 40% since 2012.
“Before 2012, it costs about RM100,000 to install 12kW solar panels for a terrace house.
“Now the cost is around RM60,000 due to the decline in solar module pricing.
“The selling price per Watt of a solar module is now US$0.40 compared to US$1 before 2012. This means a 320W solar module would cost US$128,” he explains.
Additionally, the new Net Energy Metering (NEM) mechanism, which was introduced late 2016 to replace the FiT programme, will drive the growth of solar panel installation in the country.
While FiT only approved a limited number of applicants, particularly to those from the industrial sector, to install solar panels, the NEM mechanism enables everyone to get the approval to install solar panels and facilitates self-consumption of solar energy and the selling back of excess solar energy to the grid to offset part of their electricity bill.
NEM also provides double tax deduction for businesses using solar energy.
“The owners of business premises have until 2020 to register with the Malaysian Investment Development Authority (Mida) for double tax deductions,” says Chong.
To date, Solarvest has installed about 35MW of solar power, which is sufficient to supply power to 4,500 houses every day.
“We have also invested RM14mil for two 2MW solar farm projects in Kedah, which is sufficient to generate power supply for some 300 houses per day.“About 70% of solar projects secured by our company comes from the northern region,” he says.
A growing solar industry