Positive outlook for renewable energy

Renewable energy sources – such as solar panels like these at the Langat Centralised Sewage Treatment Plant in Kajang, Selangor – are becoming increasingly cheaper and are more efficient than coal. — Filepic/The Star

KUALA LUMPUR: The outlook remains positive for the renewable energy (RE) sector despite growth being halted by stalled business activities resulting from the Covid-19 pandemic.

Industry players believe the pause is temporary, and that it is already on the rebound.

They noted that the long-term drivers for investment remain strong. There is also rising pressure for corporates to comply with environment, social and governance (ESG) policies. The movement control order (MCO) has curbed investments, installation and financing for projects.

The Sustainable Energy Development Authority (SEDA) Malaysia said in an email that it had several virtual meetings with RE players to understand their pain.

Their challenges:

> tight cash flow situation

> difficulties raising financing for new RE projects which subsequently leading to project delays

SEDA has been able to help address some of these challenges. This included providing supporting letters to developers to be submitted to the relevant authorities seeking work continuity, relaxing financial criteria and the timeline for submission of feed-in tariff (FiT) applications.

Extension of time to commission both FiT and net energy metering (NEM) projects were also given.

A recent International Energy Agency (IEA) report said among all forms of renewable resources, the most severely impacted could be solar photovoltaic (PV) for rooftops.

Businesses and households will re-prioritise financial commitments in order to preserve cash.

The IEA also revised projected annual capacity addition for 2020 to drop 10% from its original prediction. By 2021, projected annual capacity addition should match the 2019 level.

SEDA said because Covid-19 is hitting parts of the world at different pace, the global supplier chain for renewables will not recover at the same rate.

“This year, we will witness, in particular for the solar PV market, an oversupply of PV modules especially from China in contracting global PV markets by around 10-15GW.

“This will result in prices of PV modules to drop. Importing countries will benefit on a proviso that their currencies can hold their value, ” SEDA said.

Recovery with 1GW new solar tender

Energy and Natural Resources Ministry recently announced the fourth round of the large-scale solar (LSS) programme. It is offering 1GW worth of tender contracts to help reactivate Malaysia’s economy.

The ministry said the overall capacity will be split into two 500MW baskets, respectively earmarked for projects in the 10-30MW and 30-50MW ranges.

It added that only fully-owned local companies or with at least 75% local shareholding Bursa-listed will be able to bid, to ensure the boost to the country’s economy is immediate.

The quota offered this time is the biggest under the LSS programme; during LSS-1 some 450MW solar were offered, LSS-2 (560MW), and for LSS-3 (500MW).

These moves are aimed at reviving and stimulating the economy affected by the pandemic.

The LSS programme is expected to attract investments totalling RM4bil and generateing 12,000 job. SEDA said of the 1GW, 400MW will be for rooftop installations under NEM while 1,000MW has been rolled out under the LSS.

“Importantly for the rooftop installations, 300 MW is for domestic, commercial, industrial and agricultural sectors of TNB’s consumers while 100MW is allocated for government buildings.

“At this juncture, SEDA would like to remind that the 300MW under the NEM will only be valid until the end of 2020 and that the NEM applications must be approved by year-end in order to qualify for the existing one-on-one compensation basis for surplus solar energy, ” SEDA said. Some companies have also stepped up their RE projects. Tesco Stores (M) Sdn Bhd is collaborating with NE Suria Satu Sdn Bhd, a joint-venture company of Petronas and Nefin Group, to install solar panels over its stores nationwide

Tesco said the project’s first phase would see solar PV panels installed on rooftops of 15 Tesco stores by October, 2020.

The solar PV panels will collectively generate about 18GWh of clean energy per year.

FGV Holdings Bhd also announced plans to step up its RE projects. In its 2019 annual report, Malaysian Resources Corp Bhd announced plans to venture into the RE segment as it diversifies its presence and strengthen revenue streams.

The most positive outcome of this global pandemic is a significant improvement in our air quality. For example, for the first time in thirty years, the peaks of Himalayas are visible from India at over 200km range. Some cities in Europe witnessed more than 50% reduction in pollution.

In Malaysia, the share of stations which recorded “good” air quality readings doubled from 28% to 57% within two weeks after the MCO was implemented.

Meanwhile, SEDA said 2019 largely saw the development of the Renewable Energy Transition Roadmap (RETR) 2035.

The objectives of the RETR are to formulate strategies to achieve the government’s committed RE target by 2025 and to develop possible RE scenarios for 2035. The RETR is expected to be completed by the end of the third quarter 2020.

“The RETR is expected to resonate with the government’s Shared Prosperity Vision 2030 and provide inputs to the 12th Malaysia Plan, ” SEDA said.

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