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CURRENT SOLAR ENERGY POLICY AND

POTENTIAL IN MALAYSIA
Conference Paper December 2010

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3rd International Conference on Science & Technology: Applications in Industry & Education
Universiti Teknologi MARA, Pulau Pinang, MALAYSIA

CURRENT SOLAR ENERGY POLICY AND POTENTIAL IN MALAYSIA

1

K.H. Solangi*, 1R. Saidur, 2N.A. Rahim, 1M.R. Islam, 1H. Fayaz

Department of Mechanical Engineering University of Malaya, 50603 Kuala Lumpur, Malaysia

2
Department of Electrical Engineering University of Malaya, 50603 Kuala Lumpur, Malaysia
e-mail: solangi.quest@gmail.com*

Abstract. Solar energy is one of the cleanest energy resources that does not compromise or add to the global warming.
The benefits of properly using solar energy are plentiful. It does not cost anything except for the initial installation of the
equipment. Malaysia has an abundance of renewable energy resources such as solar, biomass and wind energy etc. Solar
energy has a great potential for electricity generation; however more incentives have to be formulated to boost its
economical feasibility. It is estimated that the maximum demand of electricity will be at 23,099 MW in 2020, which is
nearly twice the current demand. It is estimated that the potential of solar photovoltaic (PV) in Malaysia is 6,500 MW. In
2008, the total installed grid-connected PV systems were 775.73 kW and off-grid PV systems are estimated to be 8 MW.
This paper discusses the different solar energy policies implemented on the Malaysia country. The main purpose of this
paper is to suggest sufficient methods and policies to provide safe and cost effective provision of quality energy to the
population. Moreover, this paper examines the environmental sustainability and diversification of solar energy resource.
Keywords: solar energy, photovoltaic, thermal, Malaysia

1.0

Introduction

Renewable energies are sustainable and clean energies, which are regarded as the potential candidates that can
get over the problems of the gradual depletion of fossil fuels as well as the global worming caused by the
greenhouse gas emission [1, 2]. Hence, the development of renewable energy has received great attention, and the
application of renewable energy has been intensified in the past few years [3]. During the next decades, solar energy
is likely to be one of the most promising sources of clean energy [4]. A major obstacle to the development of using
solar energy is a presence of a large void in education process. This void can be filled by putting hectic efforts to
improve the overall understanding and knowledge of reliable and environmentally sound solar energy [5-7]. Solar
irradiation is so abundant that the worlds electricity demands can be provided to a large extent by solar power
technologies. Energy experts expect that in the year 2050, over 50% and 80% of all electricity could be generated by
renewable energy. Among the potential sources of renewable energy, solar thermal power plants are considered to
be one of the most economic. Solar thermal power plants are expected to provide about 10% of the worlds
electricity by 2050 [8].
Renewable Energy
Hydropower
Solar PV
Biomass/biogas (oil palm mill waste)
Mini-hydro
Municipal solid waste
Wind

Table 1. Renewable energy potential in Malaysia [11]

Potential (MW)
22,000
6,500
1,300
500
400
Low wind speed

Currently Malaysia with a total of 20,493MW installed capacity, the energy reserve margin of Peninsular
Malaysia stands at 47%. With an average of 4% annual growth, it is estimated that the maximum demand of
electricity will be at 23,099MW in 2020, which is nearly twice the current demand. At present, every 1% growth in
gross domestic product (GDP) is accompanied by a growth in energy demand (and associated greenhouse gas
emissions) of 1.21.5%. With increasing industrialization, electricity consumption has increased from 19,932 GWh
in 1990 to 87,164 GWh in 2007, an increase of 337%. In fact, the period from 1990 to 2000 marked the period of
rapid economic growth where demand for electricity recorded double digit growth [9-11]. Malaysia has a grand
vision of being a developed country by 2020 [12]. Table 1 summarized the rough estimation of the solar energy and
other RE potential in Malaysia in the long run.

2.0

Energy policies and outlook

A variety of policies like tax credits, pricing laws, production incentives, quota requirements, trading systems
etc. have been developed and implemented to promote the use of renewable energy (RE). In Malaysia National
Energy Policy was actually introduced in 1979 with three primary objectives; supply, utilization and environmental.
There are three objectives of Malaysian energy policy, the first objective is to ensure the provision of adequate,
secure, and cost-effective energy supplies through developing indigenous energy resources both non-renewable and
renewable energy resources using the least cost options and diversification of supply sources both from within and
outside the country. The second objective is to promote the efficient utilization of energy and to discourage wasteful
and non-productive patterns of energy consumption, and the last objective is aimed to minimize the negative impacts
of energy through efficient energy utilization.
In the 9th Malaysian Plan (20062010), the emphasis on energy efficiency is intensified to address the nations
energy challenge in line with the sustainable development agenda. In April 2009, the launch of the new National
Green Technology Policy by the current Prime Minister, Datuk Seri Najib Tun Razak, that shall provide guidance
and create new opportunities for businesses and industries to bring a positive impact to the economic growth [10].
Malaysia has a grand vision of being a developed country by 2020, by focusing to achieve betterment in various
social, environmental and economic parameters. It also includes elimination of subsidies for nonrenewable energy
sources and instead providing some initial handholding for renewable energy sources should help among other
things in rural electrification, environmental betterment and sustainable development. Needless to say that solar
being the second major renewable energy source after biomass, would get a big boost. In this case, the policy for
developing countries[13] for instance is always available as a mechanism to enhance the utilization of RE, which
include solar, apart from the local National Energy Policy drafted since the Fifths Malaysia Plan [14].

3.0

Photovoltaic policy of Malaysia

Malaysia became a full member of the International Energy Agency Photovoltaic Power System Program (IEA
PVPS) on 23rd October 2008. Photovoltaic (PV) applications in Malaysia are dominated by the off-grid market
since 1980s, while the grid connected PV applications only started in 1998. This papers covers data mainly for grid
connected PV systems in Malaysia, because, at present, there is no consolidated data on off-grid PV installations.
While the PV market in Malaysia is extremely small, the PV industry in Malaysia is starting to gain significance;
this is largely fuelled by the presence of key international PV manufacturers in Malaysia, namely First Solar Inc, QCells AG, SunPower Corporations, and Tokuyama Corporation [15].
On the policy front, grid-connected PV systems have been receiving capital incentives from the Government
since 2006. The capital incentives will end by 2010. By 2011, the Government is planning to apply a new
Renewable Energy Policy which will further operate the PV industry development; soft infrastructure is
continuously taking shape. These include capacity enhancement for local PV service providers, quality control
scheme, and awareness program for general public and commercial sectors. This is a three-prong strategy which will
address energy security, climate change mitigation and creating a new economy in green technology [16]. As at the
end of 2008, the total installed grid-connected PV systems capacity was 775.73 kW and off-grid PV systems is
estimated to be 8 MW. The total PV systems installed in 2008 for grid connected application was 135. 25 kW and
for off-grid, the estimate was 1.625 MW [15].

4.0

Limitation and barriers developing solar energy in Malaysia

There are many limitations and barriers that should be overcome by implementing solar energy in Malaysia.
Here are some critical points that can be highlighted.
Implementing supportive solar energy policies and giving practical support to those who implement
renewable energy technology.
Establishing dedicated credit or loan facilities that make solar power attractive and reducing the taxes and
customs duties on equipment related to solar energy.
The most important thing is that Government and Non- Governmental Organization (NGO) can do is
creating awareness among the public such as benefits of solar energy legal requirements, financial aspects
and environmental advantages.
Government can also provide details of information regarding implementation of the solar technology and
build technical capacity.

5.0

Its essential to reduce the subsidies for fossil fuel as a prerequisite for technological development of solar
technology and develop a market for solar energy with attractive prices for users as well as suppliers.
Although Malaysia set a clear and ambitious target of 5% for the use of renewable energy use out of total
electricity production in Eighth Malaysian Plan, it does not materialize due to poor implementation.
Independent power producers must get access to national power grid and Tenaga Nasional Berhad (TNB)
should give preference on renewable energy projects.

Conclusion

Malaysian government has formulated a series of policies on renewable energy development, including laws,
regulations, economic encouragement, technical research and development, industrialized support and renewable
energy model projects, etc. These policies provide significant motivation and interest for the development and use of
renewable energy technologies. The Solar energy policy provides the rules and funds to make solar energy an
important component of the countrys energy mix, overcome technological barriers, address existing market failures,
create a level playing field for these technologies and drive down costs.
Regarding the particular solar energy policy Malaysia became a full member of the International Energy Agency
Photovoltaic Power System Program (IEAPVPS) on 23rd October 2008. The PV market in Malaysia is still
extremely small as compared to other developed countries. The grid-connected PV market began in 2006 and this is
attributed by capital subsidies available under the Malaysian Building Integrated Photovoltaic (MBIPV) Project. The
government must take the lead and find ways to generate public will in supporting the sustainable energy agenda. So
far, the arguments in favor of supporting solar energy have been overwhelmingly environmental. For any green
technology industry to succeed, the right support mechanisms must be in place to create the market. One of the key
stumbling blocks is the prohibitive pricing of solar energy that gives households and businesses little incentive to
adopt the technology.

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