Is Solar Still Worth It in Malaysia in 2026? TNB Tariff, AFA and ToU Explained

Yes—solar is still worth considering in Malaysia in 2026, particularly for homes and businesses that use substantial electricity during daylight hours. Higher AFA charges increase the value of avoiding grid imports, but Solar ATAP export credits are worth less than self-consumed electricity. Accurate system sizing and load-profile analysis are therefore essential.

By: Progressture Solar | Last verified: 28 July 2026

Malaysia’s electricity market changed significantly between 2025 and 2026. TNB customers now face a redesigned tariff structure, a monthly Automatic Fuel Adjustment (AFA), expanded Time-of-Use pricing and a new rooftop solar programme called Solar ATAP.

These changes have not made solar unattractive. They have made the calculation more dependent on when electricity is consumed, how much solar energy is used on-site and how much is exported.

Key facts at a glance

• TNB tariff framework: RP4 structure, effective in Peninsular Malaysia from 1 July 2025 to 31 December 2027 (Energy Commission).

• Domestic General energy charge: 27.03 sen/kWh up to 1,500 kWh; 37.03 sen/kWh above 1,500 kWh.

• Domestic Time-of-Use (optional, smart meter): 28.52 sen/kWh peak and 24.43 sen/kWh off-peak, up to 1,500 kWh.

• ToU periods: Peak 2pm–10pm Monday–Friday; off-peak 10pm–2pm weekdays and all day on weekends.

• July 2026 AFA: +3.59 sen/kWh surcharge; changes monthly; waived for domestic consumption of 600 kWh and below.

• Solar ATAP: commenced 1 January 2026 for TNB consumers in Peninsular Malaysia; existing NEM/SELCO participants generally must terminate their current arrangement before joining.

• Domestic Solar ATAP capacity: 5 kW single-phase and 15 kW three-phase standard limits; larger systems subject to technical assessment. Ten-year ATAP contract.

• Non-domestic Solar ATAP capacity: up to 100% of maximum demand, capped at 1,000 kW, subject to technical assessment.

• Export credit: Domestic — applicable Energy Charge; Non-domestic — Average SMP. Same billing period only; unused credit is forfeited; credits cannot offset AFA.

• SuRIA Home rebate: RM600 per kWac, capped at RM3,000, for eligible domestic Solar ATAP installations, until 31 December 2026 or the 250 MW allocation is reached (PETRA).

What changed in the TNB tariff structure?

The current RP4 tariff framework separates electricity charges more clearly into energy, capacity, network, retail and AFA components.

The Automatic Fuel Adjustment replaces the previous ICPT mechanism. Unlike ICPT, which was normally adjusted over a longer period, AFA is recalculated monthly to reflect changes in fuel costs, generation expenses and foreign-exchange movements.

This means a customer’s effective electricity rate can change from one month to the next even when consumption remains unchanged. AFA moved from a 6.42 sen/kWh rebate in December 2025 to a 3.59 sen/kWh surcharge in July 2026.

Figure 1: Malaysia monthly AFA rates, July 2025–July 2026. Source: Energy Commission / Single Buyer.

The direction is important for solar owners: when the applicable AFA is positive, every kilowatt-hour avoided through direct solar self-consumption becomes more valuable.

What is AFA, and how does it affect solar savings?

AFA is a monthly adjustment to account for differences between allowed and actual electricity-generation costs. Fuel prices and foreign-exchange movements are among its main drivers.

As of July 2026, the published AFA is a surcharge of 3.59 sen/kWh. Domestic customers consuming no more than 600 kWh per month are currently exempt, subject to the applicable billing rules. The Energy Commission’s outlook for July–September 2026 projects AFA in the range of +4.89 to +7.08 sen/kWh, which would further increase the value of solar self-consumption.

Solar affects AFA in two different ways:

• Solar energy used immediately on-site reduces the electricity imported from TNB. This can reduce exposure to the applicable AFA.

• Solar ATAP export credits cannot be used to offset the AFA portion of the bill.

For this reason, one kilowatt-hour consumed directly from the rooftop normally creates more value than one kilowatt-hour exported. Businesses and homeowners should design their systems around daytime demand rather than simply installing the maximum number of panels that will fit.

How does Time-of-Use work with solar?

Under the current domestic Time-of-Use scheme, weekday peak hours are from 2pm to 10pm. Off-peak hours run from 10pm to 2pm on weekdays, with the entire weekend treated as off-peak.

For domestic consumption up to 1,500 kWh per month, the current energy charges are 28.52 sen/kWh during peak hours and 24.43 sen/kWh during off-peak hours. By comparison, the Domestic General energy charge is 27.03 sen/kWh.

Consider a household using 1,000 kWh per month, with 400 kWh during peak periods and 600 kWh off-peak. Under Domestic General, the energy charge is 1,000 × RM0.2703 = RM270.30. Under Domestic ToU, it is (400 × RM0.2852) + (600 × RM0.2443) = RM260.66. The modeled difference is RM9.64 per month before capacity, network, AFA, incentives, taxes and other bill components.

Moving another 150 kWh from peak to off-peak would save approximately RM6.14 more. ToU is therefore most useful when air-conditioning, EV charging, water heating, machinery or other flexible loads can genuinely be shifted.

Solar generation spans both ToU periods. Weekday generation before 2pm falls within the off-peak window, while generation between 2pm and sunset overlaps with the peak window. An assessment should use actual interval data instead of assuming all daytime electricity has the same value.

How does Solar ATAP change the value of exported electricity?

Solar ATAP began on 1 January 2026 as the continuation of Malaysia’s consumer rooftop-solar programme. Under Solar ATAP:

• Solar electricity should first be used within the property.

• Surplus electricity can be exported through a bidirectional meter.

• Domestic exports are credited using the applicable Energy Charge.

• Non-domestic exports are credited using the relevant Average System Marginal Price.

• Credits only apply within the same billing period.

• Unused credits do not roll over and cannot be converted into cash.

• Export credits cannot offset AFA.

This makes self-consumption the central financial driver. A correctly sized system that follows the property’s daytime load will usually have a stronger return than an oversized system that regularly exports surplus electricity.

What might solar save a Malaysian home in 2026?

The following is an illustrative planning model, not a quotation or performance guarantee.

Example: a household consuming 1,000 kWh per month installs a 5 kWp system generating 550 kWh per month, with 65% direct self-consumption (357.5 kWh) and 35% exported (192.5 kWh). Remaining grid import is 642.5 kWh.

The July 2026 avoided-import value is 48.02 sen/kWh, consisting of the energy charge (27.03 sen), capacity charge (4.55 sen), network charge (12.85 sen) and July 2026 AFA (3.59 sen). The domestic export-credit assumption is 27.03 sen/kWh.

Directly consumed solar: 357.5 kWh × RM0.4802 = RM171.67. Exported solar: 192.5 kWh × RM0.2703 = RM52.03. Total modeled value: RM223.70 per month, or approximately RM2,684 per year before considering the Energy Efficiency Incentive, KWTBB, service tax, system degradation, financing, maintenance or changes in future tariffs.

An eligible 5 kWac installation may also qualify for the maximum RM3,000 SuRIA Home rebate, subject to the programme’s rules, allocation and deadline.

Residential rooftop solar in Malaysia. Progressture Solar’s published portfolio includes a 6.06 kWp residential installation in Kuala Lumpur.

What might solar save a Malaysian business in 2026?

Commercial and industrial properties frequently produce better self-consumption ratios because offices, factories, warehouses, retail outlets and refrigeration equipment operate during daylight hours.

Example: a low-voltage business consuming 50,000 kWh per month installs a 100 kWp system generating 10,800 kWh per month, with 95% direct self-consumption (10,260 kWh) and 5% exported (540 kWh).

The July 2026 avoided-import value is 54.27 sen/kWh, using the current low-voltage energy, capacity, network and July 2026 AFA components. The export example uses the June 2026 published Average SMP for Solar ATAP/NOVA, rounded to RM0.2200/kWh. The applicable SMP should always be checked for the relevant billing period through Single Buyer’s published market data.

Directly consumed solar: 10,260 kWh × RM0.5427 = RM5,568.10. Exported solar: 540 kWh × RM0.2200 = RM118.80. Total modeled value: RM5,686.90 per month, or approximately RM68,243 per year, excluding taxes, incentives, financing, maintenance, degradation and changes in the customer’s load profile.

The example also shows why self-consumption matters: although only 5% of generation is exported, that exported electricity contributes just RM118.80 of the modeled monthly value.

What does Progressture Solar’s project experience show?

Progressture Solar’s published portfolio includes residential installations such as a 6.06 kWp project in Kuala Lumpur and commercial or industrial systems extending to a 3.25 MWp installation in Masai, Johor.

The company has also announced a collaboration with Shell Malaysia covering up to 20 MWp across more than 600 retail stations, with these installations expected to generate up to 25,550 MWh of clean energy annually.

These projects demonstrate the range of engineering and operating conditions that affect actual output. Nevertheless, a project’s capacity alone does not establish its savings. Savings must be calculated from generation, self-consumption, tariff category, load profile and commercial ownership model.

Should solar owners add a battery?

A battery can improve solar self-consumption by storing surplus daytime generation for use in the evening. It can also provide backup capability where the selected system is designed to operate during an outage. Battery storage may deserve further assessment when:

• The property exports substantial solar energy at a lower value than imported electricity.

• Electricity use is concentrated after sunset.

• A business needs maximum-demand peak shaving.

• Operational resilience has measurable financial value.

• A business qualifies for an applicable investment incentive.

However, a battery is not automatically the best financial choice. Its usable capacity, cycle efficiency, degradation, warranty, replacement risk and control strategy must be included in the return calculation. For many households, correctly sizing the solar system and moving flexible consumption into daylight hours should be evaluated before adding a battery.

What determines the solar payback period?

• Self-consumption ratio: electricity used directly normally provides more value than exported electricity.

• Electricity tariff and AFA: higher applicable import costs increase the value of avoided grid consumption.

• Solar yield: roof orientation, shading, temperature, equipment selection and system losses affect production.

• System price: larger systems may have a lower cost per kWp, but oversizing can increase low-value exports.

• Financing: interest rates and repayment periods affect cash flow and total ownership cost.

• Maintenance and degradation: long-term models should allow for cleaning, inverter replacement and declining output.

• Incentives: SuRIA Home, GITA and other applicable programmes can materially change the result.

• Length of occupancy: owners who expect to use the property for many years capture more of the system’s lifetime value.

A simple indicative calculation is: Payback period = Net installed cost ÷ Annual solar benefit. This should be built from at least 12 months of electricity bills and, where available, half-hourly or interval load data — not from panel capacity alone.

How can I tell whether solar is worth it for my property?

Solar is usually worth investigating when the property has consistent monthly electricity consumption, meaningful daytime demand, an unobstructed and structurally suitable roof, a long expected occupancy period, a system design that avoids unnecessary exports, and a clear ownership or financing plan.

A low-consumption home that is empty throughout the day may obtain a weaker return than a similar home with daytime air-conditioning, water heating, EV charging or home-office use. Likewise, a factory with steady weekday production will generally produce a different result from a warehouse with minimal daytime equipment load.

The most reliable next step is to assess the property’s actual TNB bills, tariff category, maximum demand, operating schedule and usable roof area.

Request a TNB bill assessment from Progressture Solar

Share your latest TNB bill—or preferably 12 months of bills—to receive a tailored solar recommendation based on your consumption, roof and current tariff.

Disclaimer: All calculations in this article are illustrative and are not a quotation, savings guarantee, tax opinion or investment recommendation. Tariffs, AFA, SMP, incentives and programme rules may change. Confirm the latest rates and eligibility before making an investment decision.