KUALA LUMPUR (May 10) - The Malaysian government has decided to lift the 18-month ban on the export of renewable energy (RE). This move aims to capitalize on the increasing demand in Singapore and simultaneously expedite the development of local RE generation capacity.
During the announcement, Minister of Economy Rafizi Ramli emphasized the government's commitment to introduce "more RE programs based on a willing buyer, willing seller basis" to encourage participation from the private sector.
The concept of a willing buyer, willing seller basis implies that the generated RE will be sold at a negotiated rate agreed upon by the producer and the buyer.
Rafizi further stated that the government aims to double the speed of its initial RE installation target and achieve a 70% generation capacity by 2050, surpassing the previous target of 40%.
The decision to lift the export ban has received praise from industry players as it provides them with access to the lucrative Singapore market. For comparison, Singapore's average regulated household electricity tariff currently stands at 29.62 cents/kWh (99.29 sen/kWh), while Malaysia's is 39.95 sen/kWh before rebate.
The export ban was implemented in October 2021 by the previous government to ensure a domestic supply of RE and incentivize foreign and domestic direct investments from businesses seeking clean energy solutions.
However, attracting investments in RE has been challenging due to Malaysia's low regulated electricity tariff, driven by a high generation mix from coal and below-market pricing for domestically sourced gas.
When the new government took office, a review of the RE export ban was initiated in March with the aim of promoting and funding the expansion of local RE capacity.
During a joint press conference, Minister of Natural Resources, Environment, and Climate Change Nik Nazmi Nik Ahmad stated that RE exports would be subject to "certain conditions," without providing specific details.
A ministry official mentioned that the mechanisms for RE export are still being finalized, referring to the recent policy change approved by the Cabinet.
"The RE can be exported anywhere, but it must comply with our rules and regulations," the official briefly explained.
In response to the announcement, Davis Chong, the president of the Malaysia Photovoltaic Industry Association (MPIA), expressed his belief that the industry would move closer to liberalization.
To facilitate electricity exports, new mechanisms such as wheeling charges, which involve a toll imposed by grid operator Tenaga Nasional Bhd for the transmission of electricity from an independent power plant to its customer via third-party access (TPA) of the grid, need to be introduced.
