A bright future: The growing solar industry is being supported by the government

Requiring sophisticated manufacturing techniques, skilled labourers, reliable power supply and developed infrastructure, solar manufacturing fits neatly into the Malaysian government’s strong push into the development of value-added industrial capabilities. In addition, the government implemented a new feed-in tariff renewable energy incentive scheme in 2011, which should also boost domestic demand for high-tech devices.

INCENTIVES: As one of four key industries in the electronics and electrical sector specified in the Economic Transformation Programme, companies operating in the solar value chain are eligible to be considered for incentives to encourage them to take up work in segments such as research and development and manufacturing. These benefits operate in tandem with demand-side enticements such as the feed-in tariff, which provides renewable energy power producers with more generous electricity tariffs, along with an additional bonus rate for power providers using solar installations manufactured in the country.

DRAWING A CROWD: Eager to capitalise on the growing local market and gain a base for regional operations, numerous international solar cell manufacturers have already set up in Malaysia. These include: First Solar, with a facility in Kedah; Q-cells in Selangor; Hangzhou Energy Solar subsidiary EQ Solar Technology International in Senai Hi-Tech Park in the southern state of Johor; Monsanto Electronic Materials based in Sarawak, on the island of Borneo; and IRM Solar. Some of these firms – including IRM Solar – are maximising the benefits of the feed-in tariff by reaping the rewards of increased demand for photovoltaic hardware while also receiving approval for feed-in tariff rates for generating their own renewable electricity at their production sites. Many other projects are either under way or have been announced. One of the most advanced is a solar production facility being built by AU Optronics and SunPower at Melaka. After initiating production on a limited basis in September 2011, the plant is expected to be running at full capacity by 2015, and will produce 1400 MW per year through 28 solar production lines when fully operational.

INTERNATIONAL INTEREST: In November 2011 Japanese electronics firm Panasonic joined in, announcing its plan to establish a $573m manufacturing base operated by its subsidiary Panasonic Energy Malaysia. The vertically integrated facility in Kulim Hi-Tech Park, Kedah, will produce wafers, cells and modules at a rate of 300 MW per year upon start up at the end of 2012. The move was made in conjunction with the closure of subsidiary Sanyo Electric’s nine-year-old solar wafer factory in the US.

Another cutting-edge addition to Malaysia’s solar stable is US-based Solexel, which is developing high-efficiency, low-cost silicon cell module. The company has announced its intention to build a 1-GW solar manufacturing facility at the Senai Hi-Tech Park. The company is currently evaluating the most technologically advantageous direction for the plant, a decision about which will be made by the end of 2012.

Germany-based Bosch has also reaffirmed its intention to proceed with construction of a $710m solar panel plant in Batu Kawan, despite earlier delays in the venture which have pushed back the construction start date to late 2012.

CLOUDS ON THE HORIZON: Despite all this interest, as numerous companies prepare to ramp up production in Malaysia, at least one solar outfit is scaling back its output. The thin-film panel maker First Solar announced in April 2012 that it would be cutting 2000 jobs worldwide – or some 30% of its workforce – and scaling back production due to slowing demand in Europe. The US-based firm has said that it has closed down four of its production lines at the Kulim factory as it shifts its sales focus towards more rapidly growing emerging markets.