In recent news, Goodyear Malaysia was reported to have installed a 2.5MW solar power system for their corporate office and production plant in Shah Alam. If you are wondering: Is it really worth it to install solar power for your own business? The simple answer is: Yes! Every business in Malaysia that has available rooftop space should install solar power because of:
- Government tax incentives
- Ease up monthly cash flow
- Possibility of avoiding maximum demand charge
1. Government Incentives for Solar Systems
The incentives given by the Malaysian Government should be the biggest reason for businesses to install solar power. As solar power systems are categorised as “plant and machinery” by the Inland Revenue Board (IRB Malaysia), the system is eligible for depreciation over a 6-year period. This provision includes Initial Allowance of 20% and Annual Allowance of 14%, Balancing Allowance, and Balancing Charge.
Then, this is where it gets interesting for businesses; with the Malaysian Investment Development Authority offering an additional Investment Tax Allowance. With this, 100% of qualifying capital expenditure incurred on green technology project can be offset against 70% of statutory income in the year of assessment. Unutilised allowances can be carried forward until all is fully claimed.
With these two tax incentives combined, the total cost of a solar power system can be reduced by as much as 48% for businesses. That is almost half of the entire cost, which reduces payback periods to 3-4 years for businesses. As such, there is an enormous opportunity being offered by the Government here, which Goodyear Malaysia has certainly taken full advantage of with a 2.5MW solar power system. If you own a business, you should too!
2. Ease up monthly cash flow
With a solar power system installed, there will be less (or no) usage of electricity supplied by TNB; resulting in lower monthly electricity bills. Commercial or industrial properties can take full advantage of this, as these properties have large unused rooftop space that can accommodate a substantial solar power system size. In the case of Goodyear, a 2.5MW system could be installed just on their rooftop. By our estimation, this can save Goodyear over RM 1.3 million in electricity bills annually, and ease up cash flow that can be better used for other investments or opportunities. Additionally, the increase of cash flow will also come in very handy during tough economic times, and could possibly save a business from closing down.
3. Possibility of avoiding maximum demand charge
A solar power system generates electricity when the sun is out, and typically peaks between 12pm to 2pm everyday. If the electricity consumption of a business were to peak at the same time, the business may be able to draw the required electricity from the solar, effectively avoiding any maximum demand charges that can be very hefty. We will never know if Goodyear Malaysia is able to avoid any maximum demand charges with their 2.5MW solar power system, as we do not have access to such information. But it’s safe to assume that power consumption for most manufacturing businesses will occur during the day time, and solar will play a part in reducing any maximum demand charges.
Millennials are known as a “civic-minded” generation. They have very specific demands, all mainly for the betterment of the community and the world. It is the demands from millenials that are pushing businesses to conform to sustainable and ethical practices. Companies that recognise this will greatly benefit, as millenials are the largest generation on earth today. With Goodyear Malaysia adopting solar power in such a big way, there is no doubt that Goodyear will have an edge when it comes to selling their products to millennials and other coming generations. We expect to see more companies considering solar system for office in the future.
If you would like to consider solar system for office or for your business, simply get in touch with us here. We will be glad to answer any questions you may have, as well as offer you a complimentary power survey of your property.
Stay tune for more updates from us. Other than solar system for office, we shall cover broader topics on solar energy, solar power, solar power system, solar system, solar thermal panels, grid solar system, technical aspects of solar panel system, what factors to consider before install solar panels, what is the best renewable energy source, what is solar cooling, rooftop solar systems, what you need to know about pre heating ventilation air, how to reduce energy consumption and energy consumption needs, fossil fuels & country’s carbon emissions and many more!