Soft loan for domestic installation of solar photovoltaic in Malaysia: Is it the best option?

Malaysia has passed the Renewable Energy Act in April 2011, in which the Feed-In Tariff (FiT) mechanism is introduced. The FiT gives much emphasis on the solar photovoltaic (PV). This paper presents, first, an overview of solar PV in Malaysia until the present time. Next, a general concept of the FIT Malaysia is explained and finally the loan financing option for solar PV is presented. It also analyses the impact of the proposed interest rate to household consumers in Malaysia, in terms of the total profit, the net present value and the internal rate of return. It is found that the FiT scheme could potentially help in increasing renewable energy penetration, particularly for solar PV. To provide upfront capital for domestic solar PV installation, the soft loan facility from banking institutions is a feasible source if the interest rate is 5% or less.