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PV Demand Analysis of The Belt and Road Initiative: Malaysia of Southeast Asia

1. Basic Information of Malaysia

Malaysia has a population of 31.6 million. In 2017, the GDP growth rate reached 5.9%, up 40% from the year before the last. Both Fitch and S&P have given an A- to Malaysia’s credit rating. They hold optimistic attitudes about the economic condition in Malaysia. However, the debt issue has been an urgent problem for the Malaysian government.

The geographical location of Malaysia is at Southeast Asia with abundant sunshine. The average daily solar radiation in Malaysia reached 4.21kWh to 5.56kWh per square meter. PV is also a sector with the best development in Malaysia. The cumulative grid-connected installation reached 380MW under the 2017 FiT Policy.

2. Renewable Energy Development in Malaysia

Malaysia’s renewable energy development plan is implemented according to the Action Plan 2009. There are two major plans under the Action Plan 2009: One is Renewable Energy Act 2011 (Act 725) - to promote renewable energy development through FiT and the related supporting methods.

Another one is Sustainable Energy Development Authority Act 2011 (ACT 726) – to establish Sustainable Energy Development Authority (SEDA) in order to manage and promote renewable energy development.

By late-2017, the cumulative renewable energy installation that is applicable to the FiT reached 563MW, of which PV has the best development. The cumulative PV installation reached 380MW, taking up 67% of the total installation in Malaysia. Next is biomass, with a cumulative installation of 96.8MW, representing 17% of the total installation. On the other hand, PV also has the best performance in power generation among all renewable energy projects.

Malaysia Cumulative installed capacity of renewable energy

Source:Seda Malaysia

3. PV Policy of Malaysia

Malaysia has put a lot of emphasis on the PV development. In addition to the FiT that’s applicable to all renewable energy projects, Malaysia also introduced the Net Energy Metering and Large-Scale Solar (LSS) Plans in 2016 to promote the industry development.

Feed-in Tariff, FiT (Application ended in late-2017)

Malaysia’s FiT is applicable to all renewable energy projects, of which, PV has the highest subsidy. But due to the capital limitation and in pursue of a balanced renewable energy development, the FiT has slowly declined on a yearly basis. Take project with an installed capacity of below 4kW for example, the FiT has dropped from 1.23 ringgit/kWh (about US$29.4 cents/kWh) in 2012 to 0.6682 ringgit/kWh (about US$16 cents/kWh) currently, a 45% dip.

Malaysia Fit policy

However, pressured by the capital, the Malaysian government announced in September 2016 that it will close the FiT application for PV by late-2017. FiT will be replaced by the Net Energy Metering and LSS plans which were launched in 2016.

Net Energy Metering, NEM

The Sustainable Energy Development Authority (SEDA) launched the Net Energy Metering plan in 2016. The plan aims to install 500MW of capacity by 2020. The purpose of the policy is to put into practice self-consumption and reduce financial burden. But by now, two years after the policy was announced, the actual approved installation only reached 8MW. In other words, it was a poor policy implementation.

Large Solar Scale, LSS

The Sustainable Energy Development Authority (SEDA) launched the Net Energy Metering plan in 2016. The plan aims to install 500MW of capacity by 2020. The purpose of the policy is to put into practice self-consumption and reduce financial burden. But by now, two years after the policy was announced, the actual approved installation only reached 8MW. In other words, it was a poor policy implementation.

4. PV Development in Malaysia

Malaysia is positioned as an OEM role in the global PV supply chain. More than 90% of the local PV products are exported to Europe, the US, and Asia. Many PV companies like Longi, JA, Jinko, First Solar, Hanwha, and OCI have built production sites in Malaysia as a base for export.

Stimulated by the Act 725 in the past, PV enjoys a high subsidy rate, leading to stable demand for PV every year. But new policies were not announced until mid-to-late 2016 and it takes time for new policy to emerge, and therefore most of the installation was supported by the FiT before late-2017.

Malaysia Cumulative PV Capacity in Fit Policy

Source:整理自 Seda Malaysia 官方网站

5. Import Analysis in Malaysia

Analysis of Mono and Multi

From January 2017 to August 2018, Malaysia has high demand for Chinese multi products, taking up 61% of the total Chinese export to Malaysia. Mono products represent 39% of the total export.

Malaysia Multi Mono proportion

Analysis of the Type of Chinese Module Export to Malaysia

If conducting a comparison between the entire 2017 and January-August 2018, we can see that shipment has increased significantly. By August 2018, the shipment has increased 215MW from the entire 2017. Meanwhile, the production ratio of multi products has also scaled up substantially. It’s estimated that PV installation will grow significantly in 2018 and 2019 in Malaysia.

China Export to Malaysia Shipment

6. Conclusion

Malaysia’s PV development has gone on for 6 years, starting with the launch of Act 2011. PV is also the sector with the best development among all renewable energies. Currently, PV can no longer enjoy high subsidies but new policies. Future demand will focus on self-consumption and LSS.

2020 is the deadline for projects to complete grid-connection, and thus we can look forward to a boom in installation that year. To conclude all of the above, Malaysia’s prospect is promising. Demand will remain stable before late-2020. Malaysia will come up with new policies to promote PV development after 2020 too.

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