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4 August 2, 2009

MEMORANDUM
TO: Y.B. DATUK PETER CHIN FAH KUI,
MINISTER OF ENERGY, GREEN TECHNOLOGY AND WATER.

FROM: PERSATUAN INDUSTRI FOTOVOLTAIK MALAYSIA


( MALAYSIA PHOTOVOLTAIC INDUSTRY ASSOCIATION OR
MPIA)

Subject: FUTURE DIRECTION OF SOLAR PV INDUSTRY IN


MALAYSIA.

Y.B DATUK,

1.0 First of all, as the President of MPIA and on behalf of its members, I would like
to extend and express our heartfelt congratulations for your pioneering effort in
pursuing and coming up with a National Green Technology Policy ( NGTP),
successfully launched on 24th July 2009 by the our Honorable Prime Minister
Y.A.B Dato’ Seri Mohd Najib bin Tun Hj Abdul Razak.

2.0 That momentous event and the firm commitment made mark a new era and a new
milestone set for the country and its citizens to embrace that will usher Malaysia
into a balanced and sustainable development by 2020 and beyond. We in the
MPIA believe the launching of NGTP is a very timely and the noble effort by
Y.B. Datuk, taken at the time when the world is now grappling with several
critical issues affecting humanity, notably, the serious environmental problems
caused by global warming.

3.0 To respond and supplement this noble and culminating effort by the government
in spearheading the full realization of the NGTP in the coming and challenging
years ahead, we the MPIA and its about forty members, representing a cross
section of industries – multinational PV and cables manufacturers, PV service
providers, corporate companies, private and public educational institutions -
most of whom have been involved directly and indirectly in solar PV activities in
Malaysia in the last decades, would like to extend our helping hands to the
government to ensure its effective and successful implementation of the NGTP.
4.0 With all humility, here are our industry’s wish list and key ideas for the kind
consideration of Y.B. Datuk:-

4.1 Post MBIPV and SURIA 1000 – The Implementation of Feed –In
Tariff Program (FIT).

In line with the stated objectives of National Green Technology Policy


(NGTP), to accelerate sustainable growth of Malaysia’s PV industry and
the needs to supplement the growing electricity demand in Malaysia, we
call upon for the speedy implementation of Feed-In-Tariff program (FIT).
Worldwide, the FIT has proven to be very successful mechanism in
bolstering PV industry, creating huge job opportunities and provides new
economic growth for the implementing countries.

A new report released by National Renewable Energy Laboratory


(NREL), USA in May 2009, concluded that a well – designed FIT could
be effectively used to meet Green Policy goals, job creation, economic
development and meeting national renewable energy targets. Elsewhere in
Europe, FIT has been so successful that it has now become a benchmark
for other countries to follow.

It is gratifying for us to know that the KTTHW has finalized the


appointment of a legal consultant company to prepare a comprehensive
draft legal document for a new all-encompassing Renewable Energy Law,
FIT included, which would be table in the Parliament by year’s end. This
is a very encouraging development for the solar PV industry.

We hope that the FIT could be implemented as early in 2011, under the
next 10th Malaysia Plan, as announced by the Y.A.B Dato’ Sri Mohd.
Najib bin Tun Hj Abdul Razak in his speech during the launching of the
National Green Technology Policy.

4.2 A Proposal for an Establishment of RM 1.0 Billion Solar Initiative


Fund (SIF).

We foresee a possible long lead time period in enacting RE Law in


Parliament, and with the impending end of MBIPV’s SURIA 1000
program in 2010 and with no new indicators in sight as to where the PV
industry is heading, the PV industry players are now very concerned
about possible contraction in numbers of new solar PV projects especially
grid connected solar PV projects, that might force many young and
entrepreneurial companies to close its business. This scenario offers a
rather uncertain future for the Malaysia’s PV industry.

To address this impending problem, the MPIA proposes the setting up of


Solar Initiative Fund with initial allocation of RM 1.0 billion. This
allocation could be included as an extension of National Economic
Stimulus Package, initially presented by our Honorable Prime Minister
and approved by the Parliament early this year.

This fund, to be parked in financial institutions, is available either as long


term loan (not less than 15 years) loan or a subsidy to individuals and
commercial companies who wish or plan to own and install small scale PV
system ( from 3 to 20 KW peak capacity) covering both grid connected,
building integrated PV system on their existing or new buildings roof tops
for their own use and also for off grid applications as well, such as small
remote resort operators who have been struggling and hard hit by
fluctuating oil prices and high maintenance cost s in as many years.

The detailed financial scheme, whether in the form of subsidy, long term
loan or combination of both should be worked out by MOF and KTTHW
with participation and inputs from MPIA.

Besides providing a new lifeline for our nascent solar PV industry, the
availability of the SIF would result in an additional 40 MW of roof
mounted, grid connected and off-grid solar PV systems that could be
installed, boosting our declared commitments towards sustainable
development as clearly envisaged in NGTP.

4.3 Implementation of Multi-Megawatts of Grid-connected solar PV


systems for Peak Load Leveling.

MPIA believes that Malaysia could achieve multi-megawatts installations


which can be implemented in the same way as as Independent Power
Producer (IPP) does but with one main objective i.e using these multi
megawatts PV power stations as Peak Load leveling or Peak Demand
Shaving of national power grids.
With this multi megawatt PV capacity connected to TNB grid, it can
easily meet national peak demand which normally occurs at around noon
during which PV power output is at its highest. This will save TNB’s
billions of Ringgit annually as a result of not having to run highly
subsidized gas turbines during the peak period.

Installing multi megawatts PV power stations or system require large land


or space area. However, we can use huge and unutilized roof tops of
domestic houses, commercial buildings and factories or large tracts of
abandoned land, to generate the required amount of power. Pusat Tenaga
Malaysia (PTM) and its IEA international consultant, estimated that 6,500
MW power can be generated by using 40% of nation’s house roof tops
( 2.5 million houses) and 5% of commercial buildings alone.

To meet this multi megawatts target also requires the supply of large
number of solar PV modules and inverters. Again this can easily be met if
Malaysia takes full benefits from the presence of three world leading solar
cells and modules manufacturers, namely First Solar, Q Cells of Germany
and Sunpower of US, who had decided to setup their respective
manufacturing plants in Malaysia , with total investments of RM 12
billions, production capacities of 2,000 MW and would create 11,000 new
jobs. When fully operational, Malaysia will be the world 6th largest
producer of solar cells and modules.

For the inverters supply, in Germany alone, a Gigawatt – capacity PV


inverter manufacturing plant is already operational and with other
inverters manufacturers worldwide combined together, they could anytime
meet ever increasing demand for large scale and centralized solar PV
inverters worldwide.

All these factors stated above seem to indicate that building multi
megawatts PV power station in Malaysia is not a pipe dream but could be
in the pipeline. Properly planned and executed, and with FIT and other
fiscal incentives, we can attract both domestic and international investors
in planting up multi megawatts PV power systems and power plants in
Malaysia in the immediate future.

We the MPIA would like to propose the government conducts in depth


feasibility studies to consider the implementation of multi-megawatts PV
power stations for country not only for peak load leveling but also for
meeting growing electricity needs for the country, taking into account the
enormous financial benefits the country and the government would gain
from significant reduction of gas subsidies for electricity generation
currently enjoyed by TNB and the IPP’s.

4.4 Issues on Nuclear Energy.

In the past weeks and months, reports on possible nuclear energy option
have been publicized in local printing and TV media. It is now quite clear
that nuclear power seems to be already included in TNB’s future power
supply plan. It is reliably reported that in 2030, the TNB’s energy mix is
said to be consisting of 30% Gas, 30% coal, 30% nuclear and 10% hydro.
It seems Solar PV is not in on the radar screen of TNB. This scenario of
energy mix is obviously not in line with the just announced Green
Technology Policy.

From our standpoint, nuclear power should only be considered as a last


resort after we have exhausted all options including solar PV.

4.5 FORMATION OF GREEN TECHNOLOGY COUNCIL.

One of the strategic thrusts to promote Green Technology applications is


the formation of Green Technology Council to be chaired by Y.A.B.
Prime Minister or Y.A.B Deputy Prime Minister whose main function is
for high level coordination among various ministries, private sector and
key stakeholders for effective implementation of the Green Technology
Policy.

We humbly request the MPIA be accorded a representation in the


proposed Green Technology Council.

5.0 As a closing remark, we would like to take this opportunity to express our deep
appreciation for the outstanding contributions Y.B Datuk and your Ministry had
achieved so far in promoting Green Technology applications including solar PV
and we MPIA will continue to give full cooperation and undivided support to the
government in the adoption and implementation of the National Green
Technology Policy that will ensure balanced and sustainable development in the
coming decades for Malaysia.

I sincerely hope that Y.B. Datuk give due considerations to the ideas, suggestions
and proposals outlined above, and we are at your disposal should Y.B. Datuk
require elaborations.
Let us utilize to the maximum this enormous but free energy from the sun to
provide a safe, clean and sustainable future for our country and as the saying goes,
we do not inherit the planet earth from our forefathers but we only borrow it from
our future generation.

Yours truly,

Shamsudin Khalid
President
Malaysia Photovoltaic Industry Association

“ Lets change the world, use renewable energy”.

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