SMEs turn to solar power - MIDA | Malaysian Investment Development Authority
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SMEs turn to solar power

SMEs turn to solar power

09 Apr 2023

Many companies, especially small and medium enterprises (SMEs), are adopting solar energy, saving up to thousands of ringgit each month in electricity.

This comes in the wake of the hike in electricity tariffs to 20sen per kW-h (kilowatt hour) for medium-voltage and high-voltage users from Jan 1 to June 30.

SME Association of Malaysia president Ding Hong Sing said many SMEs had begun to use green technology, citing the example of a steel production factory in Johor whose monthly electricity cost was RM1mil before the installation of solar panels.

Its bills now are about RM600,000.

“The government has granted tax breaks to encourage renewable energy and green technology. Additionally, banks offer low-interest loans to businesses interested in installing solar energy,” he said.

Ding said that solar panels were not as expensive now compared with about 10 years ago.

“However, many SMEs still do not understand the benefits of solar energy, so the SME Association is actively promoting it to encourage more companies to use it,” he said.

He cited his own food factory as an example, where it partly installed solar panels in 2021, saving RM3,000 per month, or about 3.4%, on its electricity bills.

“The electricity bill for the frozen food factory was more than RM1mil per year because it requires 24-hour activation of electricity for cold storage.

“The factory’s electricity bill was RM960,000 last year after the installation of solar panels.

“I intend to install solar panels throughout the factory. I have calculated that this will save 6.7% of our electricity bill in a year,” he said.

SMEs, which made up 98.5% of business establishments in the country in 2021, contribute 38% or over RM500bil to the country’s economy.

From Jan 1 to June 30, all medium and high-voltage users and multinational corporations pay a 20sen per kWh electricity tariff rate, up from 3.7sen.

The increase came about after the government implemented the Imbalance Cost Pass-Through (ICPT) surcharge, which takes place every six months.

Businesses affected by the new surcharge had hoped for a moratorium but the government maintained its stance to provide targeted subsidies to Malaysians.

Besides environmental benefits, Ding said the adoption of solar energy in Malaysia was a positive trend that could bring many benefits to businesses, including cost savings, and even their reputation as a socially responsible and sustainable organisation.

He added that businesses could also reduce their reliance on traditional energy sources, often derived from non-renewable sources such as coal and fuel, that were significant contributors to greenhouse gas emissions.

In the revised Budget 2023, Prime Minister Datuk Seri Anwar Ibrahim said Bank Negara Malaysia would provide RM2bil in funding for sustainable technology start-ups and to help SMEs implement low-carbon practices.

This was part of the government’s measures to encourage green practices among businesses.

Muda Holdings Bhd’s paper mill is able to meet a portion of its electricity needs through solar energy.

“As solar power becomes more popular and technology advances, the installation cost has also decreased,” said group managing director Datuk Lim Chiun Cheong.

He said the lifespan of solar panels had also significantly increased over the past decade, making them a much more viable and cost-effective option for businesses.

“Ten years ago, solar panels had a lifespan of only 12 years and the payback came in eight to 10 years, which was not worth the investment.

“Today, solar panels last about 25 years and we are seeing returns in the fifth year of installation,” he added.

Lim urged the government to do more to promote solar panels.

Tera Va Sdn Bhd managing director Michael Leong said the cost of installing solar panels had gone down by about 70% to 80% in the past decade.

“The decline in cost is primarily due to advances in technology and manufacturing processes, as well as increased competition in the market,” he said.

According to him, many businesses have begun to enquire about installing solar panels.

Such enquiries tripled between January and February this year, indicating a willingness by companies to install solar panels, he said.

“Solar energy is a renewable energy source that doesn’t require the use of fossil fuels, which makes it an attractive option for those looking to reduce their carbon footprint and dependence on non-renewable resources,” he added.

Source: The Star