NEM 3.0 to be Better if Quota Allocation was Revised Upwards to 1GW

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With the recent release of the official NEM guidelines for NEM Rakyat (domestic users) and NEM GoMEN (government buildings), industry players within clean energy look forward to the official guidelines for NEM NOVA. Solar has become the cheapest form of power due to new tech according to analysts Wood Mackenzie, in addition to the higher awareness and adoption of solar within Malaysians.

As the Malaysian solar industry continues to reach new heights, Ko Chuan Zhen, our CEO and co-founder, shared with Bernama on how NEM NOVA would be a success if the quota allocation of the overall NEM could be revised in addition to the export offset rate. This news was picked up by media outlets such as Borneo Post KK, Borneo Post Kuching and more.

Since there is more awareness, adoption and demand from the market for solar energy, the quota allocation of 500 megawatts (MW) for the new Net Energy Metering (NEM) 3.0 would have been even better if it was revised upwards to 1 GW as solar has already evolved.

Plus Solar Systems Sdn Bhd co-founder and chief executive officer Ko Chuan Zhen said this was given past precedence in NEM 2.0, which was a resounding success in the renewable energy industry, as the 500MW quota was fully subscribed weeks ahead of the scheme’s expiry date of Dec 31, 2020.

“The government is far sighted in continuing in NEM 3.0 which will certainly encourage more individuals and corporates to align towards the United Nations Sustainable Development Goals (UN SDGs) and uphold our nation’s goal to meeting overall sustainable development and combating the effects of climate change.

“That being said, for NEM Net Offset Virtual Aggregation (NOVA) for commercial and industrial buildings, it is a system marginal price where the export rate is not as attractive compared to the 1:1 offered by NEM GoMEn (Government Ministries and Entities) and NEM Rakyat,” he told Bernama in an interview recently.

Ko  said while the official guidelines have yet to be announced, it would have been better to allocate 1:1 or more to encourage the adoption of solar among manufacturers and such. “This is after all, the direction which the country is heading towards, especially in meeting overall sustainable development standards as outlined in Budget 2021,” he added.

In December 2020, Energy and Natural Resources Minister Datuk Dr Shamsul Anuar Nasarah announced NEM 3.0, which effective from 2021 to 2023 would have three new programmes NEM Rakyat, NEM GoMEn and NOVA.

Under NEM Rakyat, residential users, who have installed the photovoltaic (PV) system, will enjoy an offset rate of “one-to-one” for 10 years and they will practise the concept of self-consumption after the period ends.

The one-to-one offset ratio means that one credit equals up to RM0.51 per kilowatt for domestic tariffs. Quoting a news report released by Wood Mackenzie, [Ko] said solar is now the cheapest form of new electricity in a host of countries, and the cost of solar PV could fall by a further 25 per cent in the next decade.

The energy research and consultancy firm [Wood Mackenzie] also points outs that the cost of solar has fallen by 90 per cent over the last two decades and is forecast to fall by a further 15 per cent to 25 per cent by 2030.

“Domestically, as a local renewable energy player in the market, we also feel the wind of change with the payback period of solar shortened from 10 years to three years. “This was made possible through the government subsidies, technological advancement of solar panels and the mutual effort of policymakers, media outlets, financial institutions and renewable energy industry players,” he said.

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