Malaysia’s clean energy industry is in a state of flux. Ambiguity remains with the end of the Net Energy Metering (NEM) 2.0 scheme and the entry of big players.
Here we unravel some of the scenarios happening within the clean energy sector in Malaysia and reveal an independent player’s perspective, even amidst rising COVID-19 cases which have impacted all businesses.
End of Net Energy Metering Scheme (NEM) 2.0 signals uncertainty
Since January 2019, Malaysia’s current NEM2.0 scheme has allowed excess solar photovoltaic (PV) generated energy to be exported back to the grid on a “one-on-one” offset basis, meaning full returns on every kiloWatt generated. Its quota of 500 MWp ends December 31 this year.
It is highly beneficial to end-users operating in industrial, commercial, residential and agricultural sectors as excess solar energy will be directly offset to one’s electricity bill. The excess energy will then be recorded in credit form with the validity for 24 months.
Suffice to say, the uptake of NEM has grown steadily resulting in 102 megawatts (MW) generated in 2019, compared to only 27.8MWp produced in 2016 and 2018.
However, though NEM3.0 has been brought up, no further details were released. Are businesses better off signing up for NEM now and enjoy its perks or are they better off waiting to see details of its next iteration?
Household names join the clean energy bandwagon
Big players who see potential in clean energy are jumping on the bandwagon, as they see the possibility that it could one day replace traditional oil and gas.
The national oil company, Petronas, is already pivoting to clean energy after it posted an MYR21 billion (US$5 billion) loss due to weak oil prices.
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In addition, TNB has also made its move. Their latest ventures are a gain of majority equity interest in one of the largest solar platforms in the UK, Vortex Solar, and the commencement of operations of its second large-scale solar (LSS) project in Kedah just this month.
Going into Smart Energy Management
With uncertainty looming in all directions, how do independent players such as Plus Solar operate within the increasingly competitive clean energy landscape as uncertainties caused by the pandemic?
As a clean energy solutions provider which began with an investment of MYR100,000 (US$24,000) in 2012, it was with much toil, sweat and tears that we moved up to MYR150 million (US$36 million) revenue in just eight years.
Now 150 people strong, FYR 2020 was a big year for us as we recorded a 200 per cent jump in revenue but the pandemic came forcefully and created uncertainty within the ecosystem. This made us realise the need to go beyond traditional solar to survive.
In one of our key pivots which was accelerated by the pandemic, we took to tech, not limiting our offerings to just traditional solar solutions. We were able to create a smart energy performance management system (EPMS) called Source.
Though it was in the works for a few years, the pandemic showed again to be the true catalyst, expediting its roll-out to just weeks after the movement control order (MCO).
Source makes use of AIoT (AI and IoT), through sensors feeding real-time data to a central computer that learns and adapts, then eventually making smart, automatic energy decisions possible for any building. It is akin to a Fitbit, always monitoring and making improvements, and in this case, it is to a building’s energy usage performance.
Since then, many of our clients have managed to save up to 25 per cent of their operational costs by leveraging this system, and either save on bottom lines or channel their funds to more urgent areas of their businesses.
The next iteration
We have also been actively seeking to educate clients about the end of the Net Energy Metering (NEM) 2.0 scheme and take advantage of its 500 MWp quota, before it ends this December 2020.
Barely three months to go to the end of the year, NEM applications must be approved by year-end to qualify for the one-on-one compensation basis for surplus solar energy. It takes approximately 60 days for an application process thus applicants have barely 30 days before the end of the year to take advantage of the NEM2.0 scheme.
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The offset of excess energy generated to the national grid is the main benefit to end-users, from residential to those operating in energy-intensive applications such as the industrial, commercial, and agricultural sectors.
Users can look forward to reduced electricity bills by generating one’s own clean energy, an increase in property value, as well as a reduction in carbon footprint.
In the months following the movement control order caused by the COVID-19 pandemic, we have successfully secured many notable brands who are taking advantage of the NEM quota to secure their cost savings and hedge against escalating electricity tariffs. Any brands that wish to ensure the same for themselves are encouraged to act on this opportunity for long-term benefits.
Though it will end, SEDA has announced the next version of this scheme, NEM3.0, though its details are not. We hope it comes as close to the same one-on-one offset basis as before so that solar energy is made even more accessible to Malaysians.
Seizing opportunity in uncertainty
Truth be told, the clean energy industry has never been more vibrant – with competition rife, end consumers will be the beneficiaries of price wars.
While we are just one of the many players here, we have managed to remain relevant to our clientele through constant innovation in our “Fitbit for buildings” as well as seizing opportunities by our push towards securing the NEM quota for clients before the end year.
These past months, we have received very good feedback from customers on our innovation with notable clients such as Tan Kian Huat Fishery and Shell MarkMaju who have experienced savings of up to 25 per cent when it comes to heating, ventilation and air conditioning (HVAC).
What the industry begs for is a supportive ecosystem, which we hope to see rolled out by the Sustainable Energy Development Authority (SEDA), with NEM 3.0 announced officially as well as further positive allocations and policies announced in the upcoming Budget 2021 by the Government.
As the pandemic goes on, Plus Solar has seized opportunities through pivoting, always towards client needs. It is clear that willingness to adapt is the answer to keeping and gaining market share for industry players of any size.
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