PRESS RELEASE
Kuala Lumpur, Malaysia — Weak policy support for renewable energy blocks energy development in Malaysia and disincentivises foreign investment in Malaysia’s energy sector, despite Malaysia having perhaps the highest technical capability in the region, a Southeast Asia power sector scorecard report from Greenpeace Southeast Asia shows.
“Solar energy is going to play a major role in Malaysia’s energy economy in the future. What remains unclear is how much foreign investment can be brought in and how fast it develops. Malaysia’s solar energy manufacturing is a great asset. The national economy and the global climate both hinge on how we bring investment into solar,” said Greenpeace Malaysia campaigner Heng Kiah Chun.
The scorecard maps business-as-usual and best-case-renewable-energy scenarios for eight countries — Indonesia, Vietnam, Thailand, the Philippines, Malaysia, Laos, Cambodia, and Myanmar — using the International Panel on Climate Change’s (IPCC) recommendation of a 1.5 degrees pathway. This graded snapshot of each country’s energy transition, fossil fuel exclusions, solar and wind market development, policies and pricing, competition, and Covid-19 stimulus benchmarks progress.
Vietnam is a leader in solar and wind market design — feed-in-tariffs brought Vietnam’s solar capacity from 134 megawatts (MW) in 2018 to 5,500 MW by the end of 2019. The country’s solar and wind industry absorbed economic shock from the Covid-19 pandemic and protected its economy from global volatility in gas, coal, and oil fuel pricing. Renewable energy also creates three times more jobs than coal across the respective value chains.
A key difference between Malaysia’s business-as-usual and best-case-renewable-energy scenarios came down to how solar panel manufacturing potential expands before 2030. The modeling shows that only by setting up exclusion policies for coal and gas will solar energy start to expand throughout Malaysia, the way it has in Vietnam, rather than only serving as an export. Because of high reliance on natural gas, excluding new gas plants poses a political challenge.
But Malaysia has started to use solar as a vehicle for post-Covid economic recovery, targeting smaller and local projects in the fourth and latest round of tender contracts. The solar program is expected to open up nearly $1 billion USD in investment and create 12,000 new jobs. Low energy demand, one aspect of Covid-19’s economic shock, presents a strategic time to redirect energy systems towards a more sustainable energy mix.
“Natural gas alone cannot deliver energy security. Only a diversified energy sector can do that. The gas price fluctuations we’ve seen in 2020 as a result of Covid-19 pose a risk that we will see again in the future. A large solar energy market, at least in Vietnam’s case, helped buffer the economy from that type of price fluctuation. Solar has no fuel price and Malaysia already enjoys strong manufacturing capacity,” Heng said.
To incentivise investment in the solar industry and diversify the energy sector, the government should add even more solar into its Covid-19 stimulus package. The current lull in energy demand, brought on by Covid-19, is an ideal time to put new projects on the grid. This is particularly true for solar energy, which goes online fast and provides more jobs than coal.