Malaysia: Assessing Policy Trade-offs and Options to Inform FIT Design

The Clean Energy Solutions Center partnered with the Government of Malaysia to support adjustments to their FIT policy in light of the rapid cost reductions taking place in the solar industry worldwide. The Malaysia Sustainable Energy Development Authority, with assistance from the Clean Energy Solutions Center, held several workshops to assess the trade-offs of FITs and competitive tendering for solar PV projects based on global experiences. To ensure smaller scale developers were not excluded, the partnership assessed approaches to avoid the consumption of all available capacity by large solar PV projects (i.e., greater than 5 MW) and facilitate competition of larger scale developers outside the FIT quota.

The workshops were instrumental in establishing a clear pathway toward competitive tendering for larger solar PV projects, outside of the existing FIT framework, and they built on global experience with renewable energy policies, as well as with competitive tendering to avoid some of the pitfalls and risks of tendering processes, such as high contract failure rates. Ultimately, FIT revisions will ensure a more sustainable footing for larger-scale solar PV development in the country, an essential part of reaching higher levels of renewable energy penetration in the years ahead.