Malaysian Photovoltaic Industry Association : Malaysia Needs More NEM Quota To Drive The Solar Agenda


As of 6.00 pm on 30 June 2021, only 0.03 megawatt (MW) out of the 300 MW quota allocated for the Net Offset Virtual Aggregation (NOVA) programme under the existing Net Energy Metering programme (NEM 3.0) was left for application, as most of the quota had been applied by energy consumers, particularly those from the commercial and industrial sectors.


The Malaysian Photovoltaic Industry Association (MPIA) would like to categorically state that this is indeed a very positive and encouraging sign, given the fact that the NOVA programme only commenced on 1 April 2021 and the uptake in three months is higher than the total NEM uptake in its first three years after its commencement in 2016.

This is a testimony of high awareness among the energy consumers in solar energy adoption and the success of government’s programme in driving the national renewable energy agenda.


Amid the COVID-19 pandemic and movement control orders, the NOVA uptake is a notable development that signifies the robust investment interest in solar, as every 1 MW of NOVA uptake would require an investment of RM3 million to RM4 million by the applicants, depending on the solar photovoltaic (PV) system size and design.


Therefore, the nearly full uptake of 300 MW in NOVA programme translates to about RM1 billion direct contribution to the national GDP. MPIA would like to highlight that the government also share the pecuniary benefit in terms of SST (sales and service tax) and corporate income tax collection from the solar PV system procurement by energy consumers.

Coupled with the over RM42 billion investment in Malaysia by renowned solar panel manufacturer Risen Energy recently announced by YAB Prime Minister, the development of the local solar PV industry will be  a boost of morale to the challenging economy amid the pandemic.

According to studies, every megawatt of rooftop solar system procurement provides 4.36 direct jobs and 28.5 in direct jobs. Hence, having more programmes such as NOVA as well as other programmes under NEM 3.0 will boost job creations in the domestic market.

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MPIA is in view that Malaysia should capitalize on our own advantages to establish ourselves as not only a global solar panel manufacturing hub, which we already are, but also a global hub of solar service providers, solar energy adoption and investment, as well as role model of solar policy and programmes.

Therefore, MPIA is also strongly suggesting that the government re-open the New Enhanced Dispatch Arrangement (NEDA) for solar energy and enable the Third Party Access (TPA) for paid utilization of the national grid to transmit electricity generated from solar systems.

We have witnessed how the local telecommunications industry has been thriving since the enabling of TPA. In fact, TPA is now also in place for our regasification terminals and gas transmission pipelines due to market demand, and the demand for TPA has also emerged in our power generation sector and we can leverage on the TPA to propel our local solar industry to the next level of growth.

In his statement after the ASEAN Energy Ministers Meeting earlier this month, Minister of Energy and Natural Resources YB Datuk Seri Dr. Shamsul Anuar Nasarah shared the plan to utilize solar potential in the country to deploy 500 MW energy storage system, and revealed that the power purchase agreements of 7,000 MW coal power plants in the country would expire by 2033 and be replaced by mostly gas and renewable energy to lower Malaysia’s carbon emission.

MPIA would like to commend the renewable energy plan and national agenda for sustainability, and MPIA members are always ready to participate and assist the government to accomplish the national aspiration.

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In fact, the establishment of MPIA in 2006 was an initiative of the government under the then Ministry of Energy, Green Technology and Water (KeTTHA) to create an industry voice to advise the government and bridge communication among the stakeholders.

In the immediate term, the depleted NOVA quota needs replenishment in order to continue driving the solar energy adoption among the energy consumers, particularly the adoption of solar energy through installation of rooftop solar systems.

While the development of the Malaysian solar industry deserves compliment, the utilization rate of our building rooftops for solar system is still very low; as a comparison, Australia which has a smaller population has more than 2 million buildings installed with solar systems, while it is estimated that there are less than 20,000 in Malaysia.

MPIA would like to emphasize that the NEM programme, which includes the NOVA programme, is so far the most effective tool in driving the deployment of rooftop solar systems in the country, we are hopeful that the 3,000 MW NEM quota proposed by MPIA earlier can be reconsidered.

As elaborated above, the impact of NEM is positive to our GDP, national coffers as well as in job provisions. Given that unemployment is of pressing issue as a result of the COVID-19 pandemic, the solar industry is well poised to provide green employment and can help reduce social burden to the government.

In the meantime, there are also hurdles to be overcome as they are constraining the adoption of solar energy in the country, these are the technical guidelines set by the authorities on the design and installation of solar systems.

Among the hurdles that have created tremendous ripple effect to the local solar industry are the limitation of power factor (limited to 0.85 instead of 1.00) used in the calculation for the solar system design and the limitation of inverter size used for solar systems.

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In brief, these hurdles are preventing the energy consumers from installing solar systems of bigger size. Consequently, the energy consumers will be generating smaller amount of solar energy than what they have desired; on the other hand, such constraints are expected to increase the prices of solar systems due to the lack of economies of scale. All this will ultimately discourage the burgeoning interest of consumers to invest in solar systems.

The hurdle that concerns the solar industry players the most is the power factor limitation, which was enforced on 11 June 2021 without an appropriate grace period given, resulting in many installed solar projects failing to receive licences even though the projects had been approved by SEDA and Tenaga Nasional (TNB). Meanwhile, new solar project applications are being rejected, resulting in many solar procurement contracts to be defaulted and causing commercial disputes.

MPIA sincerely hopes that the Ministry of Energy and Natural Resources (KeTSA) and relevant authorities will take immediate actions to salvage the affected industry players and energy consumers from the repercussions especially during this challenging time. MPIA is ready to provide constructive feedback and support.

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