Ups and downs of solar

JUST when Malaysia’s solar manufacturing industry was riding high – a billion ringgit ecosystem which produced 12% of total global output in 2016 – the sector seems to be falling out of grace again. The US’ move to slap a 30% import tariff on solar panel imports is hitting major producers around the world.

Malaysia is the third largest exporter of solar panels to the US, after China and Taiwan. It is the largest photovoltaic (PV) exporter to the US with a market share of 30%. Going back into history, a number of international players had set up shop in Malaysia years ago, however they did not enjoy much success. The market may not have been ready for green energy at that time. Also there was rampant dumping by China. Solar prices were hit severely after China factories increased production in 2009, making solar manufacturers from the US and Europe to close factories.

But Malaysia’s National Renewable Energy Policy and Action Plan of 2009 changed things in some way and attracted a new group of big players here. With these accommodative policies, Malaysia emerged as a top solar producer in the world in 2014. What also helped was the US’ 2012 anti-dumping duties imposed on China produced solar panel products. In 2016, Malaysia attracted almost RM2bil worth of investments in the sector last year. But now, following the move by the US imposing stiff tariffs on all imported solar panels, how will this impact the growth of Malaysia’s solar industry? The outlook is bleak. Manufacturers both locally and abroad are likely to see their profit margins squeezed if they continue to try to sell into the US. The players may look to sell their products into new markets and a price war could ensue. It will be interesting to see how the new US tariff rule will impact the major US owned panel producers based in Malaysia such as First Solar. It is also noteworthy that a number of China manufacturers have also set up shop in Malaysia in recent times and new investments have been announced.