THE Government recently announced a new industrial electricity tariff adjustment, resulting in an increase in the imbalance cost past-through (ICPT) surcharge from 3.7 sen per kWh to 20 sen per kWh.
The new tariff adjustment is foreseen to cause a drastic hike in industrial electricity costs faced by medium and high-voltage industry users as they are expected to see 41% higher energy bills starting January this year.
In response to the new ICPT tariff 2023, industry players have voiced their concerns about the significant increase which is currently causing an outcry among business owners who argues that the substantial ICPT hikes will negatively impact their businesses.
How the New ICPT Surcharge Impact Businesses
The increase in industrial electricity prices can make it harder to stay competitive and profitable. If a business is paying more for electricity than its competitors, it may be unable to offer the same prices or services.
When this happens, sales and profits tend to decrease, causing a major impact on the bottom line of the company. It can also make it harder for business owners to invest in new equipment or hire extra staff, which can further reduce their profitability.
Businesses may also be forced to pass on their increased costs to customers, resulting in lower revenue and sales stream. This consequently leads to deliberate measures such as reducing the workforce in order to cut costs, which in turn can have a negative effect on the economy.
In order to combat the effects of high electricity costs, companies must strategise ways to reduce their electricity consumption. This can be done through a variety of methods, such as investing in renewable energy sources, using energy-efficient equipment, and implementing energy-saving practices.
By taking these steps, impacted industries will be able to reduce their electricity costs and ensure their continued success in the long run.
When asked about the cruciality of renewable energy sources in helping industry participants in the current tough situation, Malaysia’s leading solar Company, Progressture Solar in a statement said that investing in renewable energy such as solar could significantly help business owners to safeguard their business from the new ICPT surcharges and any further tariff hikes that the industry is likely to face in the future.
'The recent 440% increase in ICPT tariffs highlights the urgent need for businesses to switch to clean energy. Adopting solar energy is no longer a choice, but a necessity. And there has never been a better time to make the transition,' said Progressture Solar, a solar investor and EPCC solutionist."
Rising Above the Situation
Electricity is a critical resource for businesses, and tariff hikes can affect the bottom line. Fortunately, companies can still protect themselves from high electricity costs by hedging against unfixed tariff hikes.
Deploying a variety of strategies including transitioning to renewable energy sources and practicing energy-efficiency initiatives will substantially provide businesses with multiple cost-reduction opportunities.
The switch to renewable energy sources
As an infinite resource, renewable energy can provide businesses with a stable and reliable source of power, helping them to reduce costs associated with increasing energy prices.
By investing in renewable energy sources, businesses can ensure that their electricity costs remain stable, even as energy prices rise. The use of renewable energy can also help companies to reduce their carbon footprint as they lessen their reliance on traditional sources of energy, allowing them to lower their overall emissions.
In Malaysia, solar energy has been identified as one of the most accessible and cost-effective forms of clean energy, making it a great option for commercial and industrial buildings.
With easy and hassle-free solutions like the Zero CAPEX option, companies can go solar with no upfront capital required, while enjoying the great benefits of solar energy. These benefits include lower energy costs, and fulfilment of ESG and sustainability targets.
Furthermore, with carbon taxes through the Carbon Border Adjustment Mechanism (CBAM) to take effect soon, businesses exporting to the European Union (EU) must be prepared. CBAM is a tax imposed by the EU government on any imported goods or services whose production has caused a significant amount of carbon emissions.
This tax is intended to cover the costs associated with climate change and will be used by the EU to finance environmental projects and support their transition to a low-carbon economy. The implementation of CBAM will ultimately lead to higher costs for local businesses exporting to the EU.
Progressture Solar's Co-founder and Chief Operating Officer, Mr. Ng Yew Weng, stated: 'Adopting solar energy is a sustainable solution for companies looking to mitigate the costs associated with carbon taxes.
As a renewable source of energy, solar does not emit greenhouse gases, reducing Scope 2 emissions and subsequently lowering carbon tax liabilities. This offers significant cost savings for businesses, particularly those operating in international markets such as the European Union.'"
"Furthermore, Mr. Ng emphasized the added benefits of solar adoption. He noted, 'Beyond reducing carbon emissions, transitioning to solar energy also reduces a company's reliance on the power grid, thereby reducing the costs incurred under ICPT. Organizations can take advantage of government-offered green tax incentives, resulting in significant savings on energy bills. These incentives allow businesses to reduce operational costs, minimize their environmental impact, and maintain profitability in the market.'"
Aiding Businesses in the Transition Towards Clean Energy
With a mission to combat climate change by powering industrial decarbonisation, Progressture Solar is a leading solar company in Malaysia providing turnkey EPCC solutions for the ownership of renewable energy assets.
Over the years, their proven track records had helped many companies, both local and MNCs in the switch towards clean energy.
Progressture Solar provides Zero CAPEX Solar Solutions for businesses looking to transition to clean energy and decarbonise their operation. With no upfront payment required, the leading solar company in Malaysia is committed to helping more business leaders to go green and reduce their environmental impact by powering their buildings with solar energy.
As a Net Zero partner, Progressture Solar offers comprehensive and diverse clean energy solutions ranging from solar project development, energy storage systems, Renewable Energy Certificates (RECs), VPPA, and carbon advisory, helping their commercial and industrial clients to reduce their carbon footprint, hedge against tariff hikes, and meet their ESG target.
When speaking about the impacts of climate change, Ng Yew Weng said that global carbon emissions are on the rise, and we face a dire situation where global action is urgently needed to reduce carbon emissions and work towards achieving Net Zero emissions.
"Governments, businesses, leaders, and individuals all play a vital role in combatting climate change by consolidating green policies, limiting greenhouse gas emissions, and investing in renewable energy sources. As industry leaders, we need to step forward as a catalyst for positive change and act now to reduce our carbon footprint and save the environment,” he further added.
Harnessing Solar Energy to Hedge Against Tariff Hikes
As a leading solar investor, Progressture Solar is dedicated to helping more companies to go solar and to safeguard their business from any further future tariff hikes. Globally, solar energy is fast becoming a popular choice for businesses, helping them to reduce operational costs and achieve their sustainability goals.
As an abundant and infinite source, solar offers businesses a cost-effective and reliable source of energy that can help them increase profitability.
From an environmental standpoint, solar energy facilitates businesses to reduce their carbon footprint as it produces no emissions, making it a great option for businesses that are looking to become more eco-friendly and meet their sustainability target.
There is no doubt that solar energy is an excellent option for businesses looking to protect their business from tariff hikes and maintain sustainable value chains in the process.
Go Solar with Progressture Solar’s Easy Ownership Options
In order to facilitate the switch, Progressture Solar offers the easy ownership methods of Zero CAPEX and outright purchase. The Zero CAPEX Solar Solution allows companies to switch to clean energy with no investment required for the next 25 years.
Meanwhile, with the outright purchase option, companies are able to own their solar asset with Progressture Solar assisting in green lane financing at low, preferential interest rates from key bank partners.
Bringing together highly qualified and certified in-house expertise, it is Progressture Solar's mission to ensure that its clients enjoy the peace of mind that comes with owning solar PV systems.
Keeping business owners’ tariff woes at bay, businesses will be able to operate sustainably, hedge against electricity hikes, and reduce their carbon emissions while staying competitive in the market.
Ng concluded by saying, "As a Net Zero partner, Progressture Solar is committed to driving industrial decarbonization and encouraging industry players to take on a leadership role in promoting sustainability. Our mission is to combat climate change and shape a greener future for future generations through the promotion and adoption of clean energy. We strive to accelerate the transition to a low-carbon future and make a meaningful impact towards creating a sustainable world for all." - DagangNews.com