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Malaysian Solar Tech Project to Boost Economy

Malaysia is set to provide some 3,000 employment opportunities and reap at least RM42.2 billion in foreign investment through the manufacturing of photovoltaic modules in the next five years, the nation’s Prime Minister announced on 24 June 2021.

In a statement, the PM said that an international solar tech firm had successfully obtained a Manufacturer’s Licence and Incentive under the National Economic Recovery Plan (Penjana) for the designing, development and manufacturing of solar cells and solar modules in Malaysia under its local subsidiary. The new venture will add to the several other global manufacturers for solar products operating in Malaysia.

The five-year investment period from 2021 to 2025 is expected to generate 3,000 employment opportunities for Malaysians while the company would also collaborate with local universities and learning institutions in conducting research and development (R&D) activities, including internships. The presence of the solar tech firm will transform Malaysia into an integrated manufacturing hub for solar technology.

The investment from the tech firm is a resounding success for the country and at the same time demonstrates the nation’s capability in managing the country’s economy while the world grapples with challenges brought about by Covid-19.

The Prime Minister confirmed that the Malaysian government practised an investment-friendly approach and always welcomed the inflow of new investments through various incentives offered to investors.

Growing demand for solar tech

The global solar power market size was US$170.55 billion in 2020. The global impact of COVID-19 has been unprecedented and staggering, with solar power witnessing a negative demand shock across all regions amid the pandemic.

However, analysis shows that this market will exhibit a stagnant growth of 4.18% in 2020 as compared to the average year-on-year growth during 2017-2019. The market is expected to grow from US$184.03 billion in 2021 to US$293.18 billion in 2028 at a CAGR of 6.9% in the 2021-2028 period. The sudden rise in CAGR is attributable to this market’s demand and growth returning to pre-pandemic levels once the pandemic is over.

Solar power is the cleanest and most plentiful renewable energy source present on this planet. Countries such as China, Germany, Spain, and the United States (U.S.) have some of the largest solar resources all over the world.

There are two key ways to harness solar energy: photovoltaic (PV) and concentrated solar power (CSP). Developed and developing countries across the globe are strongly promoting solar as an alternative to conventional energy sources and are hence positively contributing to the market growth.

Lockdowns in most of the countries globally due to the COVID-19 have made economies squelch, disturbing supply chains, and suspending most of the projects. However, due to environmental regulations, several companies are installing renewable energy plants. Several countries are also focused on eco-friendly power generation solutions to reduce their carbon emissions.

Solar energy is a low-cost renewable energy solution. Hence, many nations are investing heavily in solar energy. In 2019, Asia Pacific installed more than 67 GW of new solar projects. Moreover, supportive government policies play a key role in renewable energy installation.

In numerous countries like U.S., China, and EU countries, policies like FiT, investment tax credits, and capital subsidies are key policies boosting solar installation. For example, in May 2019, China’s National Development and Reform Commission (NDRC) declared solar FIT payments for large-scale projects. Commercial and industrial solar photovoltaic projects originated for individual consumption and extra power sent back into the grid is subject to a FiT of RMB 0.10/kWh.

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