Malaysia is emphasizing greater importance for Renewable Energy (RE) generation through specifically formulated policies and initiatives to spur the growth of the sector as a major step towards green economy. Other than the Feed-in-Tariff (FiT) mechanism, the Net Energy Metering (NEM) and Large Scale Solar (LSS) Photovoltaic plant schemes were introduced in 2016 to boost RE generation. NEM benefits users in terms of savings in electricity bill through lower electricity usage and energy credit from solar power generation while LSS allows developers to produce renewable energy in larger capacities.
In 2016, a total of 111 projects in renewable energy with total investments of RM1.9 billion were approved incentives. Out of the total, RM1.7 billion (88%) were from domestic sources and RM233.8 million (12%) were from foreign sources. These projects are expected to create 615 employment opportunities in this sub-sector.
The approved investments include 81 projects (RM588.8 million) that will generate energy from solar power, 12 projects (RM145.7 million) from biogas, 10 projects (RM806.6 million) from mini-hydro and six (6) projects (RM343.6 million) from biomass as the sources of energy generation.
As price of energy steadily increases over the years, there is a need to adopt energy efficiency measures to ensure productive use of energy and minimize waste. The use and adoption of energy efficiency systems and technology is encouraged through introduction of incentives and import duty exemptions on qualified machines and components. Consecutively, energy efficiency activities also open up opportunities for energy service companies (ESCOs) to provide energy efficiency services to potential clients.
In 2016, a total of 19 projects in energy efficiency with total investments of RM248.5 million were approved incentives. Investments were mainly from domestic sources i.e. RM235.6 million (95%) meanwhile RM12.9 million (5%) were from foreign sources. These investments are expected to provide 142 employment opportunities in the sub-sector.
Green Technology Incentive
Under the provision of Budget 2014, tax incentives for Green Technology in the form of Green Investment Tax Allowance (ITA) for the purchase of green technology assets and Income Tax Exemption (ITE) on the use of green technology services and system were introduced to further strengthen the development of green technology.