You’ve probably heard of the expression “Make hay while the sun shines”. But have you heard of making money while the sun shines?
Yes, it is indeed possible to do so – thanks to the Sustainable Energy Development Authority (SEDA). SEDA is a statutory agency set up under the Ministry of Energy, Green Technology and Water, for the purposes of serving as a one-stop Renewable Energy Centre.
SEDA’s Feed-In-Tariff (FiT) programme was designed to kick-start the green revolution towards renewable energy, for Malaysia. The FiT programme facilitates the sale of electricity produced from renewable clean energy resources, such as biomass, biogas, small hydro and solar photovoltaic (PV), to be sold back to utility companies at a fixed price for a specific period of time.
This article focuses on the Solar PV aspect.
Malaysia is a land of eternal sunshine – though we have our share of rainy, cloudy and more recently, hazy, days – it still enjoys a very high concentration of strong sunlight on an annual basis.
So, how can you leverage off this geographical advantage, to increase your positive cashflow?
The answer may lie in the Solar PV system.
What is it and how does it work?
In simple terms, individuals can install solar panels on the rooftops of residential dwellings, which absorb radiation energy from the sun. Once this energy goes through a process known as a photovoltaic process, electricity is generated. The system can be linked to an electricity grid so that electricity generated is exported back to the grid. A utility company such as TNB then pays the individual, a fixed premium rate per kilowatt hour (kWh) of electricity.
Programmes such as this, serve the dual purpose of allowing Malaysia to pursue a renewable energy agenda, while simultaneously making optimum use of its abundant solar energy available all year round.
How does the individual house owner benefit?
The system provides the average home owner with an opportunity to generate passive income. According to information available online, a system under 4Kw can earn RM 1.3708 per unit of electricity generated; translating to approximately RM 7000-odd. Output is supposedly guaranteed for a period of 21 years.
For years the technology was available but the cost and lack of financial incentives rendered it an unworkable option for the average person. Now, with the new incentives implemented by the government, the option is available to everyone.
The take-up rate for the programme launched some years ago, has been very promising – and there is room for much more expansion of this market. In fact, in a recent press release, a TNB spokesman encouraged more Malaysians to participate in the programme. Details of the programme are available at http://seda.gov.my/.
Solar PV System Supplier
You could also check out the website of any supplier of the PV system, such as Senheng Electric (KL) Sdn Bhd. Recently, Senheng launched its own product known as the Senheng Residential Solar PV System.
Taking the solution provided by Senheng as an example, according to information available in online press releases, Senheng will offer 3 residential solar PV system packages – 4kWp at a cost of around RM40,800, 8kWp at a cost of around RM81,600 and 12kWp at a cost of around RM122,400 to set-up. Maintenance services are free, for the first 3 years.
For those who are interested but might not be able to finance the set up costs, Senheng even provides an 85% financing solution with a special low interest rate and an added incentive of a 15% cash rebate after full installation. It also provides an end-to-end solution to its customers, comprising design, consultation, installation and project management, monitoring and maintenance.
Consider these before you jump in
On paper at least, it seems like a great idea. However, a variety of factors do come into play, in determining how much money you can make from this initiative. You should carefully understand the contractual details contained in the agreement you would enter into with SEDA and TNB when your PV panel is connected to the power grid. You’ll also need to work out how many peak sun hours you will get, that is, when direct sunlight to the PV is not blocked. It should receive direct sunlight from at least 11am to 3pm. There’s also the issue of set-up costs, maintenance and cleaning of the PV. It may take several years, to recoup upfront costs and generate clean profits.
Alliance Bank is the first financial institution to provide financing option for ordinary Malaysians who plan to install the solar system on their roof. I’ve conducted a webinar featuring expert speaker William Lean who explained the whole process of how you can participate in this program and get double digit yearly return rate. For Premium Webinar Members, you can watch the full recording here:
When viewed as a long term investment, it does sound like a viable proposition worth exploring. But as with all investments, carefully study the plans, do the calculations, obtain all the necessary background information, and consult with homeowners who have already installed the PV system, to get tips on the do’s and don’t.
My blog subscriber, Arjunaidi Jamaludin had successfully installed the solar panel and he was being featured in Astro Awani. You can watch the video clip of the interview here.