KUALA LUMPUR: The Malaysian government should allocate more resources to improve the national grid and substations, said Singapore's Asiarecs Pte Ltd.
Its head of trader Louis Looi said this would help prevent issues like those faced by Vietnam, which despite being the largest solar energy producer in Southeast Asia, struggles with energy grid limitations that curtail renewable energy production.
"Since Renewable Energy Certificates (RECs) depend on renewable energy production, improving grid infrastructure is crucial," he told Bernama in an interview recently, in response to Asiarecs' expectations in Malaysia’s Budget 2025 that would be tabled on Oct 18.
Asiarecs specialises in helping corporate clients achieve their Sustainable Goal Scope 2 Emission through RECs. It helps clients procure, hold and redeem their RECs.
Looi said currently, some corporations were hesitant to install extra solar panels because there were insufficient substations to support them. This has led to fewer installations and, ultimately, less supply of RECs.
"Strengthening the grid and supporting infrastructure would help address this and increase the uptake of renewable energy sources," he added.
Looi noted that market awareness of RECs has risen significantly in Malaysia since commercial trading of RECs was launched via the Malaysian Green Attribute Trading System (mGATS) in May this year.
Although mGATS is currently limited to Tenaga Nasional Bhd
(TNB) and traders like Asiarecs are not yet able to trade directly, the platform has sparked broader interest in RECs, he added.
"As a company, our goal is to make it easier for companies to manage and reduce their Scope 2 emissions through innovative solutions and the facilitation of REC purchases," Looi said.
For context, Malaysia generated 30,627 gigawatt hours (GWh) of renewable energy in 2022; only 11,602 GWh were issued as RECs, representing just 37 per cent of the total. The remaining 63 per cent went unissued, largely due to limited awareness of RECs.
Looi said more is needed to be done and word of mouth can become a key driver as more businesses recognise the financial benefits of participating in RECs, which in turn reduces the reliance on grid energy, which is often produced from polluting sources.
To date, Asiarecs has registered over 150 projects in Singapore. The company is focused on helping Malaysian renewable energy asset owners, regardless of project size, to get accredited.
Strategic impact on Malaysia's REC system influences the nation's energy transition
Looi said RECs have the potential to accelerate Malaysia’s energy transition by allowing renewable energy asset owners to earn additional income via the sale of unused RECs.
Companies in Malaysia that need renewable energy can purchase RECs to demonstrate their commitment to sustainability, supporting the country’s renewable energy sector, he said.
"Malaysia's strategic position in Southeast Asia, combined with neighbouring countries like
Singapore and Thailand, with (their) high energy consumption, puts it in a unique position. With a surplus
of renewable energy, Malaysia has the potential to become an exporter, and bundled with RECs, reshape the nation's energy market in the long run," he added.
Looi noted that RECs are already recognised as one of the initiatives to accelerate the transition towards a low-carbon nation in Malaysia’s Renewable Energy Roadmap 2021- 2035.
Malaysia's approach to RECs trading
Looi pointed out that Malaysia's REC trading market is still fragmented, with three main platforms: Bursa Malaysia, TNB’s mGATS, and over-the-counter (OTC) trading.
There is a lack of liquidity, and only 37 per cent of renewable energy was converted into RECs in 2022, he said.
A key lesson is the need to increase awareness of RECs among renewable energy asset owners, Looi said.
"One way to achieve this is by making it mandatory for corporations to support a certain percentage of their energy consumption with RECs and align it with the government’s net zero emission 2050 goals. Increased demand would drive up REC prices, encouraging participation," he added.
On a broader perspective, Looi noted that the primary challenge with RECs in Southeast Asia is the lack of active cross-border energy import and export, unlike the European Union, where energy grids are more integrated.
"If Southeast Asia's energy grids were fully interconnected and the free trade of energy allowed, it would significantly benefit the REC industry. Opportunities in this industry are vast but it is still in its early stages," he added.
Looi said there was ample room for growth and innovation such as the recent launch of Energy Exchange Malaysia which allows renewable energy to be bought and sold between Malaysia and Singapore, bundled with RECs.
He added that initiatives like this showcase that there’s still room for further growth and development in the region's energy markets.
Advancing Malaysia's clean energy initiatives
Apart from Singapore, Looi said Malaysia is ahead of many of its neighbours in clean energy initiatives.
He noted that recent improvements in policies and mechanisms, such as the Corporate Renewable Energy Supply Scheme (CRESS), were creating more opportunities for corporations to adopt renewable energy solutions.
"This new programme aims to enhance corporate consumers' access to green electricity by providing them the opportunity to directly source their electricity supply from a renewable energy power producer.
"This marks a significant shift away from the single buyer model towards the development of a liberalised electricity market. CRESS is expected to lower the risks and costs of Malaysia’s electricity supply system while offering industry players a chance to compete," said Looi. - Bernama
