Malaysia Solar FiT Degression Rate Increases To 20% Per Year

Malaysia’s photovoltaic (PV) feed-in tariff (FiT) degression rate for installations above 24kW will be increased to 20%, compared to the current 8%. This revised degression rate is expected to take effect in March 2013 and is said to be the final revision for 2013.

Ministry of Energy, Green Technology and Water (KeTTHA) deputy secretary-general Datuk Badaruddin Mahyuddin announced this at a dialogue organised by SEDA at Universiti Tenaga Nasional in Kajang, Selangor on February 26th. He cited the following reasons for the steep hike in degression rates:

• the drastic drop in global prices of PV modules in recent years.
• an anticipated price decline of 5% to 10% annually in overall cost for solar PV technology in Malaysia over the next two to three years.
• to reflect current market conditions that could translate into a lower amount of subsidies required for the same capacity.
• to expand and diversify the RE portfolio in the country, especially for new resources such as wind and geothermal.
• to ensure the RE sector remains competitive and innovative to become more sustainable and profitable for all, taking into account that the RE Fund under the feed-in tariff mechanism is funded by citizens and needs to be managed prudently.
• to tackle the issue of windfall profit, which is perceived to have largely profitted the PV service providers.

Badaruddin adds that the degression rate for small capacity solar PV projects of up to 24 kW is retained at the current rate 8%, while the bonus degression rates for use of locally manufactured PV modules and inverters have been reduced to 0%.

The PV industry has a mixed response to the hike. Malaysian Photovoltaic Industry Association secretary John Hng believes that the 20% degression rate will “kill the industry”, while some others indicated that this move could trigger their withdrawal from the industry. However, one industry observer lauded the move towards a higher degression rate because the FiT rate set on December 2011 were based on 2009 PV prices, which were then high and prices have since plummeted. 

Since the implementation of the FiT mechanism on December 1st, 2011, SEDA has received a total of 1,569 applications for a total capacity of 655 MW as of January 31st, 2013. Solar PV received an overwhelming response with 1,505 applications or 96% of the total applications received.

Of the total, 993 applications, for an equivalent capacity of 437 MW, have been approved, of which solar accounts for 169 MW or 38.7%.

Source: http://www.greenprospectsasia.com/content/malaysia%E2%80%99s-fit-degression-rate-solar-pv-jumps-20