May 24, (RECHARGE) -- Malaysia is considering adjusting the feed-in tariffs (FITs) it set in December because an oversubscription to PV risks causing an imbalance in the country’s renewable energy market.

The Sustainable Energy Development Authority (SEDA) told newspaper The Malaysian Reserve it will look at amending the FITs before it launches the next round of quotas in July or August. Other sources such as bioenergy and small-hydro look set to be the beneficiaries.

According to the report – published on SEDA’s own website – chief executive Badriyah Abdul Malek says “it is quite likely” that SEDA will adjust the tariffs after studying the uptake of the first quota of FIT support.

She says that since the launch of the subsidy programme in December, almost half of the nation's installed renewables capacity consists of solar, which is sending a "wrong signal" to the market. Malaysia's solar capacity at the end of February was 140MW out of a total of 311.6MW of renewables.

The number of applications for solar was 348 out of the 377 received under the FIT.

The solar quota for businesses was fully taken up less than three hours after the opening of the process, Badriyah adds. The FIT rates are not overpriced, she claims, but Malaysia needs to stimulate the growth of more than just solar capacity.

“The concept of the FIT in Malaysia is that we should exhaust renewable resources that demand less per kilowatt hour (kWh) to fund, meaning we should exhaust the technical potential for small hydro, biomass and biogas before moving big time into solar PV, where the tariff is highest among other RE sources,” she adds.

Malaysia announced new FITs in December for PV, biomass, biogas and small hydropower, ranging from 1.23 ringgit ($0.39) per kWh for the smallest installations – up to and including 4kW – to 0.85 ringgit for plants above 10MW.

Industry said then that the capacity cap in place was set too low to create a significant market.