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Northern firms of Malaysia embrace solar

By David Tan, George Town, July 4, 2009
Source: The Star Online

Companies in the northern region are now making strategic moves to enter into the solar power business, as the Malaysian Industrial Development Authority (MIDA) has identified solar power sector as a new source of growth for the economy.  Three public-listed companies in Penang, P. I.E. Industrial Bhd, Ire-Tex Corp Bhd, and Pentamaster Corp Bhd, have recently invested to tap into the growing market demand for solar products in the country and in the world.  The global revenue from solar panels (known also as photovoltaic panels) is expected to rise to US$17.8bil in 2010, up 38.2% from 2009. Revenue will rise by another 11.1% in 2011 and by 29.1% in 2012, according to US-based market research company, iSuppli Corp.

Solar power, a green and renewable energy source, is the conversion of sunlight into electricity via the use of solar cells installed in a solar panel.  Ire-Tex managing director Datuk Dr Donald Yap Tatt Keat told StarBizWeek that the group had recently invested about RM3.5mil to acquire the know-how and technology to produce packaging materials for solar panels at its premise in Bukit Tengah Industrial Park.

The demand for packaging materials by the solar industry in the country was expected to grow to RM120mil in 2012, Yap added.  “This year the solar industry demand for special packaging materials is estimated to worth around RM50mil, and is expected to grow to RM80mil next year.  “We expect the solar packaging material business to generate some 40% of the group’s revenue this year. There are three to four companies in Malaysia capable of designing and manufacturing packaging materials for the solar industry. “We work closely with our customers to design and manufacture their packaging materials,” Yap added.

Pentamaster Corp Bhd has also recently entered the solar power business by teaming with a US-based solar company to develop solar trackers at its plant in Bayan Lepas.  Pentamaster executive chairman C.B. Chuah said solar trackers traced the positioning of the sun to maximise heat reception for the solar panels, which would increase solar power generation from 20% to 40%.  He added that the group had so far spent RM1mil to acquire the technology to develop solar trackers.

“The global revenue from solar panel installation is expected to grow to US$23.5bil in 2010 from US$18bil in 2009. The revenue is forecast to increase to US$37bil in 2011 and US$59bil in 2012, hitting eventually US$90bil in 2013,” he added.  Chuah said the customers for the solar trackers would come from the local solar power industry and utility companies overseas that use solar energy.

P.I.E. Industrial Bhd has invested in a RM30mil facility in Seberang Jaya to make solar panel cables this year.  Group managing director Alvin Mui said it was now waiting for the relevant TUV certification from Germany to manufacture the solar panel cables.  “This move is to diversify further our manufacturing capability and mitigate the impact of the global recession. We look forward to supplying to the new multinational corporations (MNCs) in the country that are involved in the solar panel business.

“The use of solar energy is becoming increasingly popular as global warming is now a primary concern,” Mui said. The market in the country which Ire-Tex and Pentamaster planned to tap into are five MNCs involved in the solar power generation business that have either started operations or are planning to start operations in Malaysia next year.

To date, Malaysia has attracted five foreign direct investments, worth up to RM13.8bil, to set up solar PV manufacturing facilities in Malaysia. These include US-based companies First Solar Inc at the Kulim Hi Tech Park (KHTP) and US-based SunPower Corp in Malacca, the China-based ReneSola in Johor Baru, the German company Q-Cells in Selangor Science Park 2, and the Japanese firm Tokuyama Corp in Sarawak.

First Solar Inc started operations of its RM2bil at the KHTP last April, while Q-Cells is expected to start operations in the fourth quarter of 2009.  ReneSola, SunPower, and Tokuyama are scheduled to commence operations next year. Collectively, these companies are expected to provide 11,500 jobs by 2010.  It is learnt that another US solar company, Solar Tech, is currently negotiating with the state government to set up a production facility in Bukit Minyak Science Park.

Meanwhile, First Solar Malaysia managing director P’ng Soo Hong told StarBizWeek that the challenge was for small and medium0scale enterprises (SMEs) to tap into their 30 years of semiconductor experience to shorten the learning curve of solar technology. “The SMEs in the country need to acquire the necessary solar panel technology if they want to become a part of the eco-system supplying to the growing solar industry in the country.

“They need to invest to acquire the necessary know-how and understand the needs of the solar panel industry before they can provide support for it,” he said.  P’ng said First Solar currently sourced certain components used in the solar panels from local SMEs.

“These are the few SMEs that First Solar has shared its needs and production requirements with, as they are among the handful in the country that understand and can manufacture the components according to our specifications,” he added.

P’ng said First Solar would like to see more SMEs equipped with solar module technology manufacturing know-how mushroom in the country.  “If we could source the necessary components locally, then we would not need to buy them from overseas. This would then position us to operate more cost effectively,” he said.

The present priority of First Solar is to train its 2,400 workforce based in KHTP on good solar module technology manufacturing.  “The staff, ranging from engineers to operators, are sent to the United States and Germany for training,” he said.  At its RM2bil plant in KHTP, First Solar manufactures solar modules with an advanced thin film semiconductor technology.

The advanced manufacturing process transforms a piece of glass into a complete solar module in less than 2.5 hours. The glass, equipped with semiconductor materials and processes, receives and stores the heat from the sun, before channelling the heat for conversion into electricity.  First Solar also assembles components that are sourced locally and from overseas for use in the solar panels.