KUALA LUMPUR, Sept 24 — Clean energy specialists have proposed that the government waive import duty on solar panels and inverters in Budget 2023, as solar installations rely heavily on both.

This will encourage renewable energy (RE) adoption and propel Malaysia towards achieving net zero goals by 2050, Plus Xnergy group chief executive officer (CEO) and co-founder Ko Chuan Zhen told Bernama.

He said the import of taxable goods is subject to the sales and services tax (SST) at a rate of 10 per cent and this is passed on to the consumer, which ultimately contributes to the upfront cost.

“Under Joe Biden’s administration, the United States has waived taxes on solar panel imports from Cambodia, Thailand, Vietnam and Malaysia for up to two years,” he said.

This two-year suspension is meant to ensure access to an adequate supply of resources to satisfy demands for power generation.

He said the US sales tax exemption may give potential American solar players a reason to adopt components to drive growth.

“Similarly, Malaysia could also emulate this to further stimulate the RE industry,” he said.

Solarvest Holdings Bhd would also like the government to introduce financial subsidies to encourage battery energy storage system (BESS) adoption.

This could be in the form of SST, import and excise duties, or tax incentives like Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE), said the solar energy solutions company.

GITA is an allowance on qualifying capital expenditure incurred on a green project. This allowance can be offset against 70 per cent of statutory income in the year of assessment with unutilised allowances carried forward until they are fully absorbed.

GITE is a 70 per cent tax exemption for green services providers for qualifying services.

Solarvest group CEO-cum-executive director Davis Chong Chun Shiong said this will allow energy producers to adopt BESS to overcome current intermittency issues.

He said tax incentives such as GITA and GITE should also be given to property developers to integrate solar photovoltaic (PV) panels in housing projects.

“Property developers’ involvement will stimulate wide-scale solar adoption in the residential sector,” he said.

In the same vein, Ko would like the government to extend GITA and GITE beyond 2023 to enable businesses to enjoy the second round of tax allowance for second-phase installations.

“Businesses planning to install solar PV systems after 2023 will also benefit. We would also like to seek for a rise in the GITE cap from 30 megawatts (MW) to 80MW per company and to increase the number of companies granted GITE,” he said.

The Sustainable Energy Development Authority’s (SEDA) net energy metering (NEM) 3.0 scheme has seen uptake from business and residential segments (as in-house owners) and Plus Xnergy would like the incentives to be maintained.

Ko said the export rate for the NEM Net Offset Virtual Aggregation (NOVA) for commercial and industrial buildings is not as attractive as compared to the 1:1 offered by NEM Government Ministries and Entities (Gomen) and NEM Rakyat initiatives.

“It would have been good to allocate 1:1 or more to encourage solar adoption among manufacturers.

“So far, large portions of their quotas are taken up, an indication of interest from businesses and residential segments. We are keen to help both segments enjoy energy savings and attractive rebates from this scheme,” Ko said.

Currently, under each power purchase agreement (PPA), if an investor has a few companies, only one company will be granted GITE based on certain conditions.

Both Solarvest and Plus Xnergy propose that the government consider incentives to spur the residential solar PV market.

Chong said despite the best efforts to implement “zero down payment” financing programmes for solar PV installers, the overall costs may still be a barrier to many.

“We are proposing personal income tax relief for solar PV system installation of up to RM50,000 of total expenditure, broken down to RM10,000 annually over a maximum period of five years, interest-free loans to the B40 group and interest subsidy loans for the M40 group.

“This is to encourage a higher participation rate in the NEM Rakyat Programme and tax incentives such as the GITA/GITE or something similar for property developers who are building solar-ready developments,” he said.

Ko said the company is boosting residential solar adoption with the country’s first rent-to-own solar scheme with a monthly repayment rate starting from RM398, along with a five-year repayment plan.

“The scheme minimises household monthly electricity bills by up to 90 per cent. Tax relief or a rebate will help to increase the rate of solar adoption,” he said. — Bernama