Malaysia Drive To build a Renewable Energy Industry

Malaysia’s Drive to build a Renewable Energy industry
By: Spire Research and Consulting


Many local companies are already taking advantage of RE technologies to begin reducing energy costs and earning revenue. For example, as the first biomass RE project using empty fruit bunches as fuel, TSH Bio Energy Sdn. Bhd. sold electricity to Tenaga Nasional Berhad (TNB) at 21.25 sen/kwh. The Malaysian government anticipates that as Malaysian industry becomes increasingly aware of the eventual benefit of EE equipment and applications, demand for them should increase as well.

According to one study , the total market size in 2005 for RE in Malaysia is estimated at USD 380 Mn and is expected to grow by 10% per annum as a result of the government's energy strategy. The total imports of renewable energy equipment in 2004 were estimated at USD 317 Mn, increasing 19% from a year before. Hence, commercial opportunities are available to OEMs which produce equipment related to direct combustion, boilers and furnaces, steam turbines and generators, fuel handling and storage systems, and environmental control systems. Existing major foreign players in the sector include GE Energy, Babcock & Wilcox, Volund ApS and Vyncke NV.

The solar sector, in particular, has the strongest potential for growth. Malaysia 's location in the equatorial region is ideal for large scale solar power installations. Some companies in the solar power sector such as First Solar Inc. have already made announcements on manufacturing plant expansion in Malaysia in 2007. Nonetheless, for sectors such as biofuel, moderate growth is expected in the next few years. This is due to growing international pressure for stricter environmental standards in the production of biofuel, making industry prospects more difficult to forecast. It is also worth noting that while the EU has introduced regulations mandating the use of biofuel, other countries have been more circumspect. Even in the EU, there are growing pressures for a rethink of its mandatory biofuel targets.

The Ministry of Energy, Water and Communications estimated the combined energy value for the two segments, palm oil biomass and solar, to be USD 2.7 Bn per annum. A study conducted by an American university confirmed this when it ranked Malaysia as one of the top five developing nations most likely to attract biodiesel investments. The reasons cited were that Malaysia has a strong agricultural industry, as well as relative economic and political stability. As Malaysia doggedly pursues its vision of becoming a developed country by 2020, the demand for energy, and with it RE, will ascend even greater heights.

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