Renewable Energy (RE) is not exactly a new concept. Governments around the world have acknowledged the need to harness the use of RE or a larger scale. Though most of these renewable energies are cheap to operate, the high capital cost required to set up the facilities alone could be prohibitive. This, along with socio-economic resistance from user expectation, technical aspects of producing RE and misconception on the reliability of renewable energy, among other things.1
Meanwhile, the over-reliance on fossil fuels such as oil, coal and natural gas has caused significant impact over the years. These sources are depleting, non-renewable and harmful to the environment in the form of greenhouse gases emitted. Hence, there is an urgent need to develop the use of clean energy to eventually replace fossil fuels. A recent report by International Renewable Energy Agency (IRENA) indicated that RE could be even cheaper, if not comparable to fossil fuels as early as 2020.2
Such prediction, if proven accurate will present businesses with an exciting option especially those that rely on fossil fuels to power their daily operation.
Renewable Energy – from the Malaysian Perspective
Malaysia too, has been exploring the use of RE in the long run. As a nation blessed with many renewable energy sources that can be harnessed such as wind, solar, hydro, biomass, geothermal and tidal wave, it is worth mentioning that these resources have yet to be exploited on a larger scale for reasons stated above.
Since 2001, Malaysia has made substantial efforts to utilise RE resources. A number of legislative acts and policies were introduced, namely Renewable Energy Act 2011 and Sustainable Energy Development Authority Act 2011 to push and protect the national RE agenda. The latter led to the formation of the Sustainable Energy Development Authority (SEDA) Malaysia.
Meanwhile, the National Renewable Energy Policy and Action Plan (2009) was introduced to enhance the utilisation of renewable energy resources in order to contribute towards the nation’s electricity supply security and sustainable socio-economic development. The five (5) policy objectives are: 3
i. To increase the contribution of renewable energies in the national power generation mix;
ii. To facilitate the growth of the RE industry;
iii. To ensure reasonable RE generation costs;
iv. To conserve the environment for future generations;
v. To enhance awareness on the role and importance of RE.
Where SMEs Could Fit In
Looking at the policy objectives above, there are massive opportunities for companies and SMEs in particular to participate in the entire RE life cycle – either directly or in support roles – in areas such as:
i. Small equipment and product manufacturing such as battery cell for electric vehicles, water conservation, solar chargers and roof panels;
ii. Installation and maintenance/after sales services;
iii. Engineering and civil works; and
iv. Retail sales.
Larger corporations also create job opportunities and vendor development programmes especially in the local community where they operate, thus contributing to the local economy. For instance, First Solar Malaysia, a wholly-owned subsidiary of US-based First Solar currently employ over 4,000 employees on its 160-acre site in Kulim, Kedah since it began its Malaysian operation in 2008.4 Similarly in Gambang, Pahang, Universiti Teknologi Mara (UiTM) expects its solar photovoltaic plant in Gambang to generate over RM650 million revenue over 21 years. It will be the first university in Malaysia, and perhaps in the world to own and operate a solar power plant. Apart from commercial consideration, it also serves its academic purpose with the creation of a purpose-built, on-site research centre. 5
In order to reach the 20% utilisation of RE by 2030 as targeted by the Government 6 7 recently SMEs should be encouraged to look beyond participating in large-scale physical development projects. Other measures include:
i. Incentives such as tax credits or rebates on energy investment and energy production;
ii. Attractive financing scheme or low interest/interest-free loans extended by government agencies and selected financial institutions; and
iii. Develop start-up accelerator programmes with easier access to Series A and B* round funding towards RE sector.
The potential of RE is enormous. Malaysia could take full advantage of its existing resources and ready talents to develop its RE sector more aggressively with foreign partners, namely Tesla and Dyson to become a global clean technology player. Incidentally, these companies are making their presence felt in Asia, with the latter poised to produce its first electric car in 2021 from its Singapore hub, while Tesla also introduced its Powerwall and Solar Roof technology to the masses 8. With the right partner and right ecosystem, Malaysian SMEs, in particular could benefit immensely from this initiative.
* Series A and B round funding refers to the early stages of funding, with A being the earliest stage, often in exchange for equity or partial ownership of the venture.
1 Shah Alam, S., Omar, N.A., Ahmad, M.S., Siddiquei, H.R., & Mohd. Nor, S. (2013). Renewable Energy in Malaysia: Strategies and Development. Environmental Management and Sustainable Development. Vol. 2, No. 1. P.52-54 (http://www.macrothink.org/journal/index.php/emsd/article/viewFile/3197/2723).
2 Leary, K. (2018, Jan. 17). Business Insider. Renewable energy will be cheaper than fossil fuels by 2020, according to a new report. (https://www.businessinsider.com/renewable-energy-will-be-cheaper-than-fossil-fuels-by-2020-2018-1/?IR=T).
3 Sustainable Energy Development Authority Malaysia (SEDA). Policies. (www.seda.gov.my).
4 American Malaysian Chamber of Commerce (AMCHAM). (2017, May 17). First Solar Malaysia, Kulim High Tech Park. (https://amcham.com.my/2017/05/17/first-solar-malaysia-kulim-high-tech-park/).
5 Mohd Shahar, F. (2018, April 18). New Straits Times. UiTM’s solar photovoltaic plant in Gambang will generate over RM650m revenue over 21 years. (https://www.nst.com.my/business/2018/04/358836/uitms-solar-photovoltaic-plant-gambang-will-generate-over-rm650m-revenue).
6 Business News (2018, Oct 11). The Star. New energy initiative targets to accomplish three objectives (www.thestar.com.my/business/business-news/2018/10/11/new-energy-initiative-targets-to-accomplish-three-objectives/#I5zxSdLcfu3IqvgZ.99).
7 Eusoff, N, E. (2018, Sept 18). The Edge Markets. Malaysia sets new goal of 20% clean energy generation by 2030 (http://www.theedgemarkets.com/article/malaysia-sets-new-goal-18-clean-energy-generation-2030).
8 Tesla Energy main page. (2019). (www.tesla.com/energy).Last modified on Friday, 26 April 2019 15:15