Malaysia’s solar capacity could cross 4GW in 2030, Fitch estimates
MALAYSIA’S solar capacity could more than quadruple to surpass 4 gigawatts (GW) in 2030, up from the 996 megawatts (MW) level it was at at the end of last year, analysts have estimated.
The projection, revised from an earlier estimate of 1.7GW by 2029, would take solar power to more than 7.5 per cent of energy capacity, said Fitch Solutions.
The research outfit expects the solar industry’s growth to recover from this year, after political uncertainties and last year’s pandemic-related downturn. Its analysts think Malaysia could ramp up renewables growth through strategies such as peer-to-peer electricity trading or a mandatory renewable energy certificate market.
The analysts wrote in a report, citing results of government auctions from May last year: “We continue to see significant investor interests and project announcements.”
Winning bids have come down to touch prices that Fitch finds “already competitive with gas-fired power in Malaysia”, which could encourage more solar tenders with larger capacities.
Various developments, including a separate 450MW solar park backed by the Sultan of Johor, are expected to come onstream in 2023, the report also noted.
Power and renewables analyst Daine Loh told The Business Times that the forecast upgrade came on the tender outcomes and the newly-announced Johor solar project.
“Broadly, the regulatory support and investor interest for renewables in general are improving, so we see the potential for stronger growth even without specific projects announced in the longer term,” she added.
Meanwhile, the Green Investment Tax Allowance and Green Income Tax Exemption have extended incentives, and there are plans to raise renewables’ share of national energy sources.
The Fitch report said: “Stronger regulatory support and improved financing for the solar sector, as well as continued success of solar tenders, further underlines our view of Malaysia being an attractive investment destination for renewables developers.”
Ms Loh also told BT: “We are also optimistic on biomass growth, as we believe Malaysia will look to leverage waste and by-products from its substantial agricultural and forestry industry to generate biomass-fired power over the coming years.”
Separately, Moody’s Investors Service expects the ongoing carbon transition away from fossil fuels to support renewable energy expansion in the region.
It noted in a new report that renewable energy growth will be supported by improving cost-competitiveness, and the development of supporting facilities such as battery storage, long-distance transmission lines and smart grid technology.
“In particular, coal-fired power currently accounts for a significant share of power generation for many Asian countries, leaving ample room for renewable energy expansion to support decarbonisation,” Moody’s said.
But the pace of renewable adoption is projected to be slower in Indonesia and Vietnam than in China and India; Moody’s noted that “coal still remains the preferred fuel for new capacity additions for these countries”.
Source: businesstimes
