Plus Solar suggests tax waivers to spur solar devt
KUCHING: Individual tax exemption for solar investments, sales tax waiver for import panels and a carbon tax are among suggestions put forward by Plus Solar in its Budget 2021 Wishlist.
According to Plus Solar cofounder and chief executive officer Ko Chuan Zhen, when investing in solar, individuals are not granted the same tax breaks enjoyed by industrial and commercial entities.
“If the government were to implement a similar benefit to individuals, it could compare to the RM2,500 in tax relief for the purchases of books, journals and personal tech devices.
“As those items are considered necessities for an informed life, so would incentivizing domestic solar adoption mean a more sustainable one,” he said in a statement.
“Solar setups rely heavily on imported panels. As part of Malaysia’s Import Tariff, import of taxable goods is subject to the Sales and Services Tax (SST) at a rate of five to 10 per cent depending on the nature of the product.
“Given the high upfront costs of solar setups, these taxes then burden potential adopters, as it is a cost for any solar players in the market. As a long-term strategy, the tax could be waived by the government for imported solar panels to encourage further adoption.”
Malaysia’s current Net Energy Metering (NEM 2.0 scheme) has allowed excess solar photovoltaic (PV) generated energy to be exported back to the grid on a “one-on-one” offset basis, meaning full returns on every kiloWatt generated.
Its quota of 500 MW ends December 31 this year, with only 30 per cent of the quota remaining for applications. It is highly beneficial to endusers operating in industrial, commercial, residential and agricultural sectors as excess solar energy will be directly offset to one’s electricity bill.
“The uptake of NEM has grown steadily resulting in 102 megawatts ( MW) generated in 2019, compared to only 27.8MWp produced in 2016 and 2018. An extension of the NEM 1:1 tariff quota would be beneficial for both the Government and solar adopters alike,” Ko continued.
Smart grids will form as clean energy continues to be adopted. An energy grid is “smart” when it balances supply and demand on its own, through a combination of sensors and artificial intelligence. Together, digital signals would automatically trigger actions with almost no human intervention.
A challenge in this area is fluctuations in energy supply ? off-peak sunshine for example. There, battery energy storage systems will be a key component to these grids being realised.
Tax exemptions for these systems would soften the impact of their high upfront costs and allow our energy grid to take its next form to be sophisticated enough to recognise various forms of clean energy, which is the future of the energy industry.
“In line with the first theme of the budget announced, caring for the people, it is our hope that rural and remote areas without access to electricity be outfitted with solar solutions to improve their quality of life.
“We propose action here through direct investment by the government towards these previously unpowered areas. As it stands, there are programmes like MySuria, and the Sarawak Alternative Rural Electrification Scheme (SARES), which aims to power 22,360 rural homes in the vast state with solar power.
“We support a tax on the carbon content of fossil fuels, where its users are charged for the climate damage caused by the release of carbon dioxide into the atmosphere. Upon being taxed, players in traditional energy sources would be inclined to reinvest their considerable assets to renewable energy instead.
“Besides its environmental benefits, it would bring clean energy sources like solar closer to economic parity with fossil fuels. We motion for the government to introduce it by emulating the success of other countries.”
If the government were to implement a similar benefit to individuals, it could compare to the RM2,500 in tax relief for the purchases of books, journals and personal tech devices. Ko Chuan Zhen