Schemes
To implement solar PV installation, the government of Malaysia and utility companies such as Tenaga Nasional Berhad offer programs and incentives to encourage more individuals and/or business owners switch to solar power. These programme and incentives are designed to reward producers and users who adopted the technology.
Net Energy Metering (NEM)
To continue to encourage the uptake of the Malaysia’s Renewable Energy (RE), the Ministry of Energy and Natural Resources (KeTSA) has announced the new NEM3.0 scheme in December 2020 to replace the previous NEM 2.0. The NEM3.0 comprises of three initiatives as below:
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Program NEM Rakyat (Domestic)
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Program NEM GoMEn (Government Ministries and Entities)
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Program NOVA (Commercial & Industrial)
Self-Consumption (SELCO)
When you install a solar PV system onto your own rooftop and fully utilise all the solar energy generated from it, it will be considered as SELCO in which any excess will not be exported to the grid, according to the guidelines of the Electricity Supply Act 1990.
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The Ministry of Energy, Science, Technology, Environment, and Climate Change (MESTECC) encourages consumers in the residential, commercial and industrial sector to install solar PV for their self-consumption in order to reduce the overall energy consumption.
Supply Agreement of Renewable Energy (SARE)
SARE is a programme that covers the related agreements and policies for supplying and consuming Renewable Energy (RE) in Malaysia. This Supply Agreement of Renewable Energy is a tripartite agreement between a third-party investor/owner, customer and TNB (TNBX as its billing agent).
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This agreement will outline the contract years, the solar sen/kWh price , the covenants and obligations of all parties under the tripartite agreement.The SARE agreement is endorsed by the Energy Commission (ST) of Malaysia and Sustainable Energy Development Authority (SEDA).
Corporate Green Power Programme (CGPP)
The Corporate Green Power Programme (CGPP) is a progressive renewable energy initiative spearheaded by the Malaysian government. Its primary objective is to drive the widespread adoption of sustainable practices across the corporate sector. CGPP offers an innovative solution to corporate consumers by providing them with a unique opportunity to virtually purchase solar energy directly from solar developers.
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Traditionally, businesses that are interested in utilising solar energy would have to invest in the physical ownership and management of solar panel installations. However, CGPP revolutionises this approach by introducing Virtual Power Purchase Agreements (VPPAs). Through VPPAs, corporate consumers can participate in the renewable energy movement without the burdensome responsibility of maintaining and operating solar panels.
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By embracing VPPAs, corporate consumers can actively support clean power generation and reduce their environmental impact. They can also effectively offset their carbon footprint by directly contributing to the generation of renewable energy. This not only demonstrates their commitment to sustainable practices but also helps them align with global efforts to combat climate change.
Tax Incentives
Under Budget 2020, the government had announced that the Green Investment Tax Allowance (GITA) and the Green Income Tax Exemption (GITE) incentives are both extended to 2023. Combined with the capital allowance tax incentive (which is provided to counter the depreciating value of assets purchased), all business owners who decide to go solar will be entitled to double tax incentives as such:
Green Investment Tax Allowance (GITA)
100%
Qualifying Capital Expenditure (QCE)
70%
Offset Against Statutory Income
Capital Allowance
34%
Initial Allowance for 1st Year
14%
Annual Allowance For Subsequent Years
