Let’s look at all the agencies & policy lingos that you will get involved with if you want to partake in the solar energy system for your home or business:
Involved Government Agencies
- Suruhanjaya Tenaga (ST) – Energy Commission. Government body to regulate the energy sector.
- Tenaga Nasional Berhad (TNB) – the dominant energy company in Malaysia.
- Sustainable Energy Development Authority (SEDA) – the organizations that made the solar scheme (NEM).
- Malaysian Investment Development Authority (MIDA)– the agency dealing with corporate green energy tax deductibles.
- Self Consumption (SELCO)
- Feed-in Tariff (FiT) – discontinued
- Net Energy Metering (NEM)
Self Consumption (SELCO)
As the name suggests, for applicants of this scheme, all the electricity generated from the solar energy system will be 100% used for self-consumption. If there is more energy generated from the solar than consumption, the excess will not be exported back into the grid.
Feed-in Tariff (FiT)
Feed-in Tariff (FiT) is an agreement between the energy company (TNB) to purchase back energy from FiT holders (FIAHs) generated from renewable sources with a contract the governs the sell back rate and also the duration of the agreement.
The sell back rate that the energy company pays you will obviously slightly cheaper than what they are selling to you as a consumer.
This scheme was introduced in 2004 and registration stopped in 2016. Net Energy Metering (NEM) will be the successor of the discontinued FiT scheme.
Renewable sources approved for this scheme:
- Biomass – burning of solid biological waste
- Biogas – burning of methane gas from the decomposition of organic waste
- Small Hydropower – harnessing energy from flowing water
- Solar Photovoltaic – harnessing energy from sunlight
Where does the government get the funds to pay the FiT holders? Well, if you take a closer look at your TNB bills properly, there will be a 1.6% charge named KWTBB (Kumpulan Wang Boleh Baharu, or Renewable Energy Fund):
Net Energy Metering (NEM)
Under this new scheme, the energy produced from the installed Solar Energy System will be consumed by the premise first. Only the excess (if any) will be exported back to the grid.
This excess will not be paid in cash but will be deducted in your electricity bill for the following month(s). The credit could be rolled over to a maximum of 24 months.
Licensing for NEM
A license is necessary for the following scenario:
- PV system above 24kW for single-phase (residential)
- PV system above 72kW for three-phase (commercial lots)
Wrapping it all up
As an end-user, you most likely will not have to deal with these organizations personally as the contractor hired for the project installation will usually take care of the process for you.
But it’s nice to know who is involved if you decide to get solar power for your house or business.
Read up on corporate tax benefits for Solar asset purchases in my article here.