Chong said the industry no longer needs incentives for large solar power generation.
PETALING JAYA: Malaysia may have set ambitious targets of 70% renewable energy (RE) capacity and net-zero emission by 2050, but its policies are still lagging behind, according to an industry leader.
Malaysian Photovoltaic Industry Association president Davis Chong said there continues to be various constraints in the domestic RE space, despite the government’s positive move to introduce the National Energy Transition Roadmap in July.
“One such area is rooftop solar projects, especially for the business-to-business segment.
“This includes unnecessary limits that are set by the government in programmes like the Net Energy Metering and Self-Consumption,” said Chong, who is also the chief executive officer of Solarvest Holdings Bhd
.
He was speaking at a panel discussion during the 25th Malaysian Finance Association International Conference held at Taylor’s University in Subang Jaya.
Chong also said the industry no longer needs incentives for large solar power generation.
“The whole ecosystem works very well, with a low levelised cost of energy right now, attractive solar panel prices and all industry stakeholders provide a very competitive cost to undertake projects.
“So, we don’t need tax incentives for utility-scale solar projects,” he added.
However, Chong highlighted the importance of channelling more incentives to households to encourage the adoption of rooftop solar panels.
In addition, banks must also provide more green financing options for households with cheaper interest rates.
“We don’t see this kind of assistance being given to the households. That’s why the adoption of residential solar is not at the level we want,” he said.
Another panel speaker, Bintang Capital Partners founder and CEO Johan Rozali-Wathooth, also called for more incentives to be offered directly to small and medium enterprises (SMEs) to kick off their sustainability journey.
The effectiveness of these incentives, according to Johan, will depend on several factors.
This includes increasing SMEs’ awareness on available incentives as well as improving governance by ensuring that the incentives are put to good use and the act of greenwashing is minimised.
He also noted the importance of expediting the rollout of incentives to deserving SMEs.
Describing SMEs as the “big-caps of the future”, Johan said it is important to have a strong bench of sustainability-ready medium-sized enterprises would give Malaysia a huge advantage.
Looking ahead, Johan foresees huge investment opportunities in the sustainability and energy transition space.
“As the push towards energy transition goes mainstream and accelerates, the growth prospects for the companies that are facilitating the transition are also very bright,” he added.
Datuk Hanafi Sakri, the deputy secretary-general of the Investment, Trade and Industry Ministry (Miti), said many Malaysian SMEs have the capacity to comply with environmental, social and governance (ESG) standards.
He pointed out that ESG-compliance is unavoidable if SMEs forge business relationships with larger firms, including foreign multinational corporations (MNCs), that are stringent on ESG requirements.
“I believe that if the industry is required to do that (be ESG compliant), they will do it for survival.
Hanafi represented the deputy minister of Miti, Liew Chin Tong, at the conference.
In his keynote speech, Hanafi said that Miti is determined to help the country to achieve its carbon-neutrality goal.
He also mentioned that the country’s move towards net-zero emissions can be used as a strategic advantage by local industry players and MNCs.
“While there will be initial capital investment needed for the green transition, companies can effectively get ahead of the curve and be in a better position to meet the ESG challenges and opportunities in the future.
“For example, companies that invested in solar RE projects before 2023 would have been less negatively impacted by the increase in electricity tariff that took place at the beginning of the year,” he added.
Meanwhile, OCBC Singapore chief sustainability officer Mike Ng refuted a common complaint in the market that banks are not putting enough capital into sustainable projects.
In fact, he insisted that there is no lack of capital in the market.
As a bank, Ng said OCBC is always looking for ways to deploy its capital towards sustainable investments.
“However, there is a lack of bankable projects due to various factors.
“One factor is the lack of a common definition on what is a green or sustainable project.
“In recent times, there have been some improvements in this area, with Singapore, Malaysia and Asean having their own taxonomies.
“But, the issue is the interoperability because different taxonomies say different things.
“I’m hoping that at some point, there will be a convergence and the taxonomies will be consistent across Asean or Asia,” he said.
Another way to accelerate sustainable investments is to have standardised templates or agreements for countries or governments to work together, according to Ng.
“There are instances in which some countries where RE projects are developed, we are given power purchase agreements that very much favours the government.
“The government has developed its own agreement structure without consulting anyone. From a bank’s perspective, such projects are not bankable just because of the contractual agreements underlying it,” Ng said.
