Commercial & Industrial Solar Incentive Ending Soon: Why Businesses Should Act Before 31 December 2026

For factories, warehouses, malls, logistics centres, office buildings, and commercial property owners in Malaysia, 2026 may be one of the most important years to invest in solar PV and Battery Energy Storage Systems (BESS).

Malaysia’s green technology tax incentives for eligible solar and BESS investments are currently available for applications until 31 December 2026. Under the Green Investment Tax Allowance framework, approved green technology assets may qualify for tax allowance treatment, with official guidelines stating that qualifying capital expenditure must be incurred within the period from 1 January 2024 until 31 December 2026. MIDA has also stated that applications for Green Investment Tax Allowance for business purposes and Green Income Tax Exemption for solar leasing incentives have been extended until 31 December 2026. (MIDA)

For many companies, this creates a limited window to reduce electricity costs, improve energy resilience, and potentially enjoy significant tax savings before the incentive period ends.

Why 2026 is the Right Time for C&I Solar and BESS

Commercial and industrial electricity users are facing increasing pressure from higher energy costs, maximum demand charges, operational expansion, and sustainability requirements from customers, shareholders, banks, and multinational supply chains.

Installing commercial solar panels allows a business to generate electricity from its own rooftop and reduce the amount of electricity purchased from the grid during the day. When paired with a Battery Energy Storage System, businesses can go further by storing energy, reducing peak demand, supporting power expansion, and improving energy flexibility.

For companies with large rooftops, high daytime electricity consumption, or heavy machinery loads, solar and BESS can become a long-term cost-saving infrastructure investment.

Solar Tax Incentive: Potential Effective Savings of Up to 38.4%

For eligible commercial and industrial solar investments, businesses may potentially enjoy an effective tax benefit of up to 38.4% through the combination of Green Investment Tax Allowance and capital allowance, subject to approval, tax position, qualifying expenditure, and applicable conditions.

The official green technology tax incentive framework provides for Green Investment Tax Allowance on qualifying green technology assets, and the current qualifying capital expenditure period runs until 31 December 2026. (mgtc.gov.my)

In simple terms, this means a business that invests in eligible solar PV may be able to reduce its effective project cost through tax savings, while also reducing monthly electricity bills through self-generated solar energy.

This is why 2026 is a critical year for business owners. Waiting too long may mean missing the incentive application window, delaying installation, or facing a rush in engineering, approval, procurement, and commissioning timelines.

BESS Tax Incentive: Potential Effective Savings of Up to 48%

For businesses investing in Battery Energy Storage Systems, the potential tax benefit may be even more attractive. BESS is generally treated under a higher green technology asset category, where qualifying assets may be eligible for higher Green Investment Tax Allowance treatment, subject to approval and compliance with the relevant guidelines. (TY TEOH INTERNATIONAL)

When combined with capital allowance, eligible BESS investments may potentially achieve an effective tax benefit of up to 48%, depending on the company’s tax position and qualifying capital expenditure.

This makes BESS especially relevant for factories, industrial facilities, cold storage operators, data centres, logistics centres, and commercial buildings with high peak demand or power capacity constraints.

What is Maximum Demand Peak Shaving?

One of the biggest benefits of BESS for commercial and industrial users is maximum demand peak shaving.

Maximum demand is the highest level of electricity demand recorded during a billing period. For many businesses, short spikes in electricity usage can increase their electricity bill even if the spike only happens for a short period.

A BESS can help manage this by discharging stored electricity during peak demand periods. Instead of drawing all electricity from the grid during a sudden spike, the battery supplies part of the load. This can help reduce maximum demand charges and smooth out electricity consumption.

For example, a factory may experience high demand when multiple machines, chillers, compressors, or motors operate at the same time. A battery system can support the site during those moments, reducing the peak load drawn from the grid.

How BESS Supports Power Expansion

Many businesses want to expand production, add new machinery, install EV chargers, increase refrigeration capacity, or upgrade building operations. However, they may face limitations from their existing electrical infrastructure.

Upgrading the incoming supply, transformer, switchgear, or grid connection can be expensive and time-consuming. In some cases, power availability may become a bottleneck for business growth.

BESS can support power expansion by providing additional power during high-load periods. Instead of relying only on grid upgrades, a business can use battery storage to manage peak demand and support short-duration high-power requirements.

This is especially useful for:

• Factories adding new production lines

• Warehouses installing automation systems

• Cold storage operators with high compressor loads

• Commercial buildings with increasing air-conditioning demand

• EV charging sites requiring high-power charging support

• Industrial users facing transformer or grid capacity constraints

BESS does not replace every grid upgrade, but it can reduce pressure on the existing electrical infrastructure and improve the business case for expansion.

Why Combine Solar and BESS?

Solar and BESS are stronger together.

Solar PV generates clean electricity during the day, while BESS helps manage when and how electricity is used. For commercial and industrial customers, this combination can create multiple benefits:

Solution	Business Benefit
Solar PV	Reduces daytime electricity purchase from the grid
BESS	Reduces peak demand and supports load management
Solar + BESS	Improves energy savings, flexibility, and resilience
EMS	Controls solar, battery, grid, and load intelligently

With an Energy Management System, the business can optimise solar generation, battery charging, battery discharging, peak shaving, and load control. This helps ensure the system is not just installed, but actively managed to deliver financial performance.

Who Should Consider Solar and BESS Before 31 December 2026?

The opportunity is especially relevant for businesses with:

• Monthly electricity bills above RM20,000

• High daytime electricity usage

• Large unused rooftop space

• High maximum demand charges

• Production expansion plans

• EV charging requirements

• ESG or carbon reduction targets

• Need for better energy cost predictability

• Strong taxable profits that can utilise tax incentives

For these companies, the combination of solar savings, BESS peak shaving, power expansion support, and tax incentives can significantly improve the investment case.

Why Businesses Should Not Wait Until the Last Minute

Although the incentive deadline is 31 December 2026, companies should not wait until the final quarter to act. A commercial solar and BESS project may require time for:

• Site assessment

• Load profile analysis

• Rooftop structural review

• System sizing

• Financial modelling

• Tax incentive planning

• Authority application

• Procurement and delivery

• Installation and commissioning

Starting early gives your business more time to design the right system, secure approvals, and maximise the available incentive window.

Why Choose Progressture Solar for C&I Solar and BESS?

At Progressture Solar, we help commercial and industrial customers design and implement solar and BESS solutions that are built around real business outcomes.

Our team supports customers with:

• Commercial and industrial solar consultation

• Rooftop solar PV system design

• BESS sizing for maximum demand peak shaving

• Power expansion and load management planning

• Energy Management System integration

• Financial and tax incentive planning support

• Engineering, procurement, construction, and commissioning

• Long-term system monitoring and maintenance

We understand that businesses do not invest in solar and BESS just for sustainability. They invest to reduce cost, improve operational resilience, and unlock future growth.

Conclusion: The Incentive Window is Closing

The 31 December 2026 deadline creates a clear call to action for Malaysian businesses. Eligible commercial and industrial solar projects may potentially benefit from up to 38.4% effective tax savings, while eligible BESS projects may potentially benefit from up to 48% effective tax savings, subject to approval and tax eligibility.

For businesses with high electricity bills, high maximum demand, or power expansion needs, 2026 is the right time to evaluate solar and BESS.

Speak to Progressture Solar today to assess your rooftop, electricity bill, maximum demand profile, and BESS opportunity before the incentive window closes.