Malaysia Solar Energy Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Malaysia Solar Energy Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The solar energy installed capacity in Malaysia is expected to register a CAGR of more than 10% in the forecast period of 2021-2026, reaching 2.07 GW of installed capacity in 2026 from 882 MW in 2019. The COVID-19 has slightly affected the solar PV installations in the country during Q1 and Q2 2020 due to the lockdown restrictions, supply chain disruptions, solar PV production, and project implementation delays. Moreover, the government also postponed ambitious solar tenders, including a tender of capacity 1 GW in 2020. However, with the increasing investments in the renewable energy sector, and the country's efforts to shift from fossil fuel-based power generation, the solar energy market is expected to grow significantly during the forecast period. Moreover, Malaysia's government has implemented various supportive policies and incentives for the growth of solar energy, which is further expected to drive the market.

Key Highlights

• The utility segment is expected to dominate the solar energy market in Malaysia, owing to the upcoming large-scale solar power projects in the country.
• Malaysia is aiming to install 9 GW of solar energy capacity by 2050. Therefore, the country's ambitious solar energy targets coupled with business models such as solar leasing are expected to create a significant amount of opportunities in the near future.
• The solar market is expected to grow significantly, owing to the supportive government policies and initiatives at different end-user segments like residential or commercial & industrial (C&I).

Key Market TrendsUtility Sector to Dominate the Market

• In Malaysia, the growth in the solar energy installed capacity can be attributed to the large-scale solar program, which is an auction program that has a target of 1 GW by 2020 and has already procured 882 MW as of 2019.
• Further, in January 2020, the energy commission of Malaysia (Suruhanjaya Tenaga) awarded nearly 491 MW of large-scale solar projects to five companies (Cypark Resources Berhad and Impian Bumiria, JKH Renewables and Solarpack Asia, ib Vogt GmbH and Coara Solar, ENGIE Energie Services and TTL Energy, and Konsortium Beseri Jaya and Hanwha Energy Corporation Singapore). The commercial operation of these projects is expected to start in 2021.
• In January 2020, the energy commission of Malaysia (Suruhanjaya Tenaga) awarded nearly 491 MW (490.88 MW) of large-scale solar projects to five companies. The winning companies include ib vogt GmbH and Coara Solar, Cypark Resources Berhad and Impian Bumiria, JKH Renewables and Solarpack Asia, ENGIE Energie Services and TTL Energy, and Konsortium Beseri Jaya, and Hanwha Energy Corporation Singapore.
• Malaysia is expected to witness substantial growth due to the rush to qualify for the last of the feed-in-tariffs (FITs) for solar power and the second large-scale solar photovoltaic (PV) tender projects coming online. Additionally, to overcome the negative impact of COVID-19, in May 2021, the Malaysian government opened a 1-GW tender for solar projects under the fourth round of its Large Scale Solar (LSS) procurement program.
• Due to the wide acceptance of solar energy, the net installed capacity of installed solar reached 882 MW in 2019, in comparison to 229 MW in 2015.

Supportive Government Policies and Initiatives Driving the Market

• Malaysia has various solar FiTs for systems less than 1 MW, though this program's quotas appear to be fully subscribed. At the same time, Malaysia is working toward its long-term target of approximately 9 GW by 2050, which is expected to drive its growth in the solar power sector.
• In 2018, Malaysia announced that it had set a target of 20% renewable energy in its generation mix by 2025. To achieve its 2025 target, it is estimated that Malaysia will require USD 8 billion worth of investments in its renewable energy sector. The expected investments would not only come from the government but public-private partnerships and private financing.
• The government is planning to incentivize private financing to increase private participation. Apart from the continuation of government incentives, such as the Green Technology Financing Scheme, the Green Investment Tax Allowance, and the Green Income Tax Exemption, the focus should be on institutional reforms.
• In addition to the NEM scheme, Malaysia has also introduced the Large-Scale Solar (LSS) competitive bidding program to drive down the energy cost to develop large-scale solar photovoltaic plants (LSS).
• As of 2019, the country generated 1.7 TWh of electricity from renewables, in which solar power produced 0.8 TWh. Therefore, supportive government policies and initiatives are expected to drive the share of solar and renewable energy.

Competitive Landscape

The Malaysian solar energy market is moderately fragmented. Some of the major companies include JA Solar, Solarvest Holdings Berhad, TNB Engineering Corporation Sdn Bhd, Canadian Solar, PLUS SOLAR SYSTEMS SDN BHD, and other companies.

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