Renewable Energy Investment in Malaysia: An Integrated Model in Evaluating Public Decision Making Process

Abstract

Rapid depletion of fossil fuel reserves as well as climate change has driven the world including Malaysia towards renewable energy (RE) sources which are untapped and environmentally friendly. Through a feed-in-tariff system, Malaysia has set a target of increasing its RE capacity to 11 % of total capacity mix of electricity generation by year 2020. The system is supported with five strategic thrusts (ST) of National RE policy which include providing a conducive business environment for RE (ST2). Despite the existence of ST2, to the knowledge of this research, there has been no effort being made to better understand the variety of decisions taken by Malaysian RE investors to invest in RE. Through a review of RE literature, this study develops an integrated decision making model, to be tested on Malaysian RE investors, by using Theory of Planned Behavior as the underlying framework. The theory is then modified to incorporate previous drivers introduced in previous RE literature that largely based on behavioral finance and institutional theory. Given that RE in Malaysia is currently reported at only at 1 % of total capacity mix as compared to the 11 % target, the model will help Malaysian regulators to better leverage all drivers that stimulate RE investment and design a more conducive business environment for RE. Index Terms-Renewable energy, investment, decision making, Malaysia.