-In Peninsular Malaysia alone, there is enormous market potential, from approximately 4 million residential buildings, 115,000 industrial buildings, and 520,000 commercial buildings.
-We rolled out Malaysia’s first residential rent-to-own solar scheme with monthly repayments ranging from RM398 per month.
-Plus Xnergy signed a joint venture with energy infrastructure and technology company Yinson, aiming to develop 250 megawatts of commercial solar PPAs over the next five years.
With the ongoing energy crisis and inflation, how would you say that has impacted the solar energy industry locally?
Businesses throughout Malaysia are looking to kickstart their Environmental, Social & Governance (ESG) journeys while keeping a constant watch over their spending. The energy crisis, inflation, manpower shortages are all pushing factors for businesses to pivot sustainability practices which include our business.
For us, challenges include:
Rising costs- Prices of goods in all sectors are on the rise, including those for materials and components of solar photovoltaics. From record lows in 2020, solar panel prices, which make up more than half of project costs, have risen 18% since the start of the year after falling by 90% over the previous decade as prices of polysilicon and aluminum jumped multi-fold to near decade highs.
Manpower- As seen widely in other sectors, there is a shortage of skilled manpower. As such we have begun taking in those with the right qualifications and providing them with proper training to absorb them into our firm. Winning more clients means we must be able to install for and service them, hence our drive towards acquiring talent.
Energy crisis- Amid a climate of war in the Ukraine, energy prices have increased worldwide, affecting other commodities. Whilst this presents opportunities for us to offer an alternative energy source, the inflation created by this situation does affect us in other areas/costs. The inflation in Malaysia is expected to remain high for at least the third or fourth quarter of the year before tapering off.
Since Plus Xnergy rebranded to deviate from just providing pure solar solutions, has it improved the agility?
This helps us have varied revenue streams by providing solutions in line with the Energy Trilogy, which consists of Energy Generation, Energy Efficiency, and Energy Storage.
We believe that our restructuring will help us drive revenue in the various segments from home solar, to commercial and power purchase agreements.
What inspired the venture towards residential home solutions?
The inspiration came as we saw that Malaysia aims to triple its installed solar capacity in 2025 from 2020, according to the Sustainable Energy Development Authority Malaysia (SEDA).
In Peninsular Malaysia alone, there is enormous market potential, from the approximately 4 million residential buildings, 115,000 industrial buildings, and 520,000 commercial buildings.
Recognizing this market potential and the fact that many Malaysians face accessibility challenges in owning a solar PV system which can also include average income earners. In order to address this, we rolled out Malaysia’s first residential rent-to-own solar scheme with monthly repayments ranging from RM398 per month.
The scheme is touted to save up to 90% of a household’s monthly electricity bills, resulting in minimal to zero ncreases in monthly expenses for consumers.
Responses have been positive thus far and we hope to ramp up their efforts in awareness for this new revenue segment.
Plus Xnergy just launched the first rent-to-own solar solution in Malaysia, what has the market response been like?
The response is good, many customers from local families didn’t know about rent-to-own (new payment/ subscription concept), which is an eye-opener for them not only for solar for homes but also rent-to-own.
Xnergy Home, the first rent-to-own solar program, starts from RM398 per month for a period of five (5) years where consumers will not need to pay upfront cash or take out a bank loan.
We tell our customers they have more options for energy and do not have to keep paying electricity bills to electricity providers indefinitely but reduce up to 90% of their bills by renting a solar PV system, which can start from RM398 per month.
Responses have been positive thus far, with great customer testimonials and we hope to ramp up their efforts in awareness for this new revenue segment.
As of today, we (Xnergy Home) have over 80% of RTO subscription customers. Not only is the solution affordable but also worry-free with our inclusive warranties.
We will continue to strive towards our goal of “everyone can go solar”, and ensure every household can access affordable solar energy.
Can you share more about the new joint venture with Yinson?
Just in May, Plus Xnergy signed a joint venture with energy infrastructure and technology company Yinson, aiming to develop 250 megawatts of commercial solar PPAs over the next five years.
Plus Xnergy Services Sdn. Bhd. (“PXS”) has formed a joint venture with Yinson Holdings Berhad (“Yinson”) through its subsidiary, YR C&I Pte Ltd, to develop and implement commercial and industrial (“C&I”) rooftop solar photovoltaic (“PV”) projects in Malaysia. The joint venture will enable Plus Xnergy Asset, a subsidiary of PXS, to invest in and develop power purchase agreement (PPA) projects. Since last August, they have now secured PPA projects with a total value of RM43 million over the PPA tenure.
We sought to merge Yinson’s experience as an energy infrastructure and technology firm with a worldwide presence, and our strength as a leading solar PV system provider and Engineering, Procurement, Construction, and Commissioning (EPCC) solutionist in Malaysia. We felt their particular experience made the most sense to us.
How will the JV for power purchase agreements (PPAs) efforts benefit businesses during this endemic phase and the state of inflation?
The two firms have jointly invested in solar PV projects via power purchase agreement (“PPA”) schemes and together, have successfully secured PPA projects with a total value of RM43 million over the PPA tenure.
Businesses can benefit from the PPA during this period of time as businesses will not incur capital expenditure (zero CAPEX) when adopting a solar solution. Aimed at optimizing cash flow, businesses gain reduced electricity tariffs over a 15-20-year tenure. Once mature, business owners take full ownership of the solar setup and its savings benefits.
This is especially useful for factories that operate 24/7 who can enjoy the full benefits a there is no upfront capital and get closer to net-zero in light of Bursa Malaysia’s goal to go carbon neutral as early as 2022.
Other benefits of PPA include:
Businesses would like to optimize their cash flow in different areas based on the nature of the business. For example, businesses in construction material.
Lower commitments in terms of asset ownership – most MNCs would prefer lower commitment assets as they would prefer to have an easy aftercare process.
If clients are looking for ways to kickstart ESG but are unable to commit to a sizeable investment, PPA is a great option.
Simplified process – There tend to be many approvals in place when it comes to procurement which can require approvals from the boards when it comes to investing in big assets and PPA would simplify them.
NEM – Businesses can enjoy the scheme even if they adopt PPA.
You mentioned working with companies on their ESG journeys. Can you re-elaborate why more companies should take ESG more seriously?
Even with the ongoing challenges such as the global energy crisis, inflation and labour shortage, we still see the need and commitments from businesses to strengthen their ESG journey by implementing clean energy to future-proof their businesses. In fact, we’ve had local large corporations and SMEs as clients who want to embark on ESG journeys, as well as successfully helping over clients such as Jooi Brothers (Asadi), KHIND and UWC adopt clean energy.
Businesses can create market value with clean energy sources through ESG such as:
More CAPEX Use for More Company Activities Which Include:
- Reducing energy consumption leads to lowering overall OPEX.
- Reduce corporate tax.
- More cash flow to invest in industrial automation and AIoT that can help businesses resolve labor shortages.
- Diversification of Investment Portfolio:
- Enhance investment portfolio with more allocation of capital in the long run.
- Making full use of the building’s rooftop as the unused rooftop accumulates dust, but solar rooftops help reduces energy bills & taxes (CAPEX) while increasing the property value of the building.
- Strong ESG proposition that helps companies tap into new markets.
- Attract businesses and consumers and strengthen the companies’ competitive advantage, especially when the business has a global audience.
Increase Employee Productivity and Wellbeing:
- Implementing ESG will help employees to focus on more crucial areas within the organization.
- Today’s growing workforce define their sense of purpose through work and are looking for opportunities to contribute to what they believe is their wider purpose so having a long-term purpose such as ESG keeps employees motivated.