Malaysia SolarPV Schemes

Malaysia SolarPV Schemes

ABOUT NET ENERGY METERING (NEM)

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The Government has introduced the Net Energy Metering Scheme in November 2016 with quota allocation of 500 MW up to year 2020 to encourage Malaysia’s Renewable Energy (RE) uptake. The concept of NEM is that the energy produced from the solar PV installation will be consumed first, and any excess will be exported to TNB at prevailing displaced cost.

As an effort to encourage the NEM uptake, the NEM 2.0 was introduced on 1st January 2019, and the true net energy metering concept was adopted, where it allows excess solar PV generated energy to be exported back to the grid on a “one-on-one” offset basis. The NEM scheme were executed by the Ministry of Energy and Natural Resources (KeTSA), regulated by the Energy Commission (EC), with Sustainable Energy Development Authority (SEDA) Malaysia as the Implementing Agency (IA). The 500MW quota under the NEM 2.0 has been fully subscribed by 31st December 2020.

Due to overwhelming response from the PV industry and in an effort to boost the usage of Solar energy, the Energy and Natural Resources Minister via a press statement by KeTSA on 29th December 2020 has introduced the new Net Energy Metering 3.0 programme (NEM 3.0) to provide more opportunities to electricity consumers to install solar PV systems on the roofs of their premises to save on their electricity bill. The NEM 3.0 will be in effect from 2021 to 2023 and the total quota allocation is up to 500 MW. The NEM 3.0 will be divided into the following three (3) new initiatives/categories :-

Initiative/Categories Quota Allocation (MW) Quota Opening Date
NEM Rakyat Programme 100MW 1st February 2021 – 31st December 2023
NEM GoMEn Programme (Government Ministries and Entities) 100MW 1st February 2021 – 31st December 2023
NOVA Programme (Net Offset Virtual Aggregation) 300MW 1st April 2021 – 31st December 2023

Concept for NEM Rakyat

Quota Eligibility Criteria Tariff Category Capacity Limits
100MWac
  • Registered consumers of TNB in Peninsular Malaysia or a person applying to be a consumer of TNB
  • Domestic Consumer(s) who have not participated in any of the prior solar programmes;
  • *Domestic Consumer means a consumer occupying a private dwelling premise which is not used as a hotel, boarding house or used for the purpose of carrying out any form of business, trade, professional activities or services
Domestic
  • Single phase – 4 kWac
  • Three phase – 10 kWac

Under the NEM Rakyat Programme, Domestic Consumer(s) who has a solar PV installation on the roof-top of their premises will consume the energy produced first, and any excess will be exported to the TNB grid. The credit to be received for such excess energy will be used to offset part of the electricity bill on a “one-on-one” offset basis for a period of ten (10) years of operation.

Benefits of NEM Rakyat

The energy generated by NEM consumers will be consumed first which implies that less energy will be imported from the Distribution Licensee (DL). In many countries, the NEM scheme is effective to hedge against fluctuation or increase in electricity tariff in the future. This is especially relevant for consumers that fall under the high electricity tariff block.

Under this program, any excess energy generated will be exported to the utility grid and will be paid on a “one-on-one” offset basis. The priority is for self-consumption, however most of the domestic consumers may not be at home during the weekdays and may have excess energy exported to the grid. The credit shall be allowed to roll over for a maximum of 12 months.

Concept for NEM GoMEn

The concept of NEM GoMEn is that the energy produced from the solar PV installation on Government premises will be consumed first, and any excess will be exported to the TNB grid. The credit to be received for such excess energy will be used to offset part of the electricity bill on a “one-on-one” offset basis for a period of ten (10) years of operation.

Quota Eligibility Criteria Tariff Category Capacity Limits
100MWac
  • Registered consumers or applying to be a consumer of TNB in Peninsular Malaysia
  • Government Agency(ies) who have not participated in any of the prior solar programmes;
  • * Government Agency means a ministry, department or statutory body established by the government at all levels of administration whether at the federal, state or district levels including local authorities
Commercial

The maximum capacity of the PV installation shall not exceed 1,000 kW and subject to the following conditions:

a. for Medium Voltage Consumers, not exceeding 75% of Maximum Demand based on:

  • the average of recorded Maximum Demand of the past 1 year; or
  • the declared Maximum Demand for Consumers with less than 1 year record; and

b. for Low Voltage Consumers, not exceeding 60% of fuse rating (for direct meter) or 60% of the current transformer (CT) rating of the metering current transformers.

Benefits of NEM GoMEn

The energy generated by NEM consumers will be consumed first which implies that less energy will be imported from the utility. In many countries, the NEM scheme is effective to hedge against fluctuation or increase in electricity tariff in the future. This is especially relevant for consumers that fall under the high electricity tariff block.

Under this program, any excess energy generated will be exported to the utility grid and will be paid on a “one-on-one” offset basis. The priority is for self-consumption, however some premises which are not operating during the weekends or public holidays may have excess energy exported to the grid. The credit shall be allowed to roll over for a maximum of 12 months.

Licensing Requirements

License is required under Section 9 of the Electricity Supply Act for any person to use, work or operate or permit to be used, worked or operated any solar PV Installation above 72kWp for three phase system and above 24kWp for single phase system. The NEM Consumer or the owner of the PV system asset shall apply for a license from the Energy Commission after receiving information that the NEM application has been approved.

Concept for Net Offset Virtual Aggregation (NOVA) Programme

The concept of Net Offset Virtual Aggregation (NOVA) Programme is that the energy produced from the solar PV installation on a NOVA consumer premise shall be consumed and designed primarily for self-consumption. Any excess energy which is not consumed at the premise where the PV installation is located due to operational constraints or monthly or seasonal variation in load demands at the said premises may be exported through the supply system under one of the following categories:

Category A Category B
  • Any excess energy produced in a month which is not consumed by the NOVA consumer may be exported via the supply system to the Distribution Licensee.
  • The value of the exported energy shall be credited to the account of the NOVA consumer to be used to offset the bill payment for the next billing period.
  • The unit price (RM/kWh) of the energy exported in the billing period to the supply system shall be based on the Average System Marginal Price (SMP).
  • Any excess energy produced in a month which is not consumed by the NOVA consumer may be exported via the supply system to up to three (3) Designated Premises.
  • The value of the exported energy shall be credited to the account of such Designated Premise to be used to offset the bill payment for the next billing period.
  • The unit price (RM/kWh) of the energy exported in the billing period to the supply system shall be based on the Average SMP.
  • A Designated Premise of the NOVA consumer includes premise used or operated by its wholly owned subsidiary company
category a category b

Notes:

  • The period of operation of NOVA programme is 10 years from commencement date of the Solar PV Installation.
  • System Marginal Price (SMP) is as defined in the Guidelines for Single Buyer Market (Peninsular Malaysia).
  • Average SMP is a monthly average SMP for the daily period between 7:00 hour to 19:00 hour in the preceding calendar month.
  • Designated Premise: premises other than the premise where the solar PV installation is installed and is designated as such by the applicant in their application to participate in the NOVA

ABOUT SELF-CONSUMPTION (SELCO)

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HOW SELCO WORKS:

When you install a solar PV system onto your own rooftop and fully utilize 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.

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.

Under the Electricity Supply Act 1990, you can refer to the application guidelines for self-consumption:

  • Any person who uses, works or operates any solar PV generating facility for self-consumption and indirect connection to the licensee distribution network in Peninsular Malaysia and Sabah.
  • The relevant Distribution Licensee (DL) whose network is to be connected to the self-consumption solar PV generating facility.

Source: Suruhanjaya Tenaga-Energy Commission

ABOUT LARGE SCALE SOLAR (LSS)

Large Scale Solar or known as LSS is a competitive bidding programme to drive down the Levelized Cost of Energy (LCOE) for the development of large scale solar (LSS) photovoltaic plant and Energy Commission is the implementing agency for this scheme.

HOW LSS WORKS:

For individuals who are looking to develop a large-scale solar photovoltaic (PV) plant for connection to electricity networks will need to ensure their capacity is approved by the Energy Commission connected to either the Transmission Network or Distribution Network in Peninsular Malaysia, Sabah or Labuan

Under Section 50C-The Electricity Supply Act 1990 (Act) [Act 447], the Energy Commission has issued these guidelines:

  • Any person who has been given the right by the Commission to develop large scale solar power plant and seeking connection to the transmission and distribution electricity network with a capacity as reflected in the Request for Proposal (RFP) issued by the Commission
  • The relevant licensee, whose network is to be connected with the Large Scale Solar (LSS) power plant
  • The single buyer or relevant distribution licensee who manage the contractual arrangement for the sale and purchase of electricity through the network
  • The grid system operator and distribution system operator

These guidelines are not applicable to large scale solar power plants which have been given the right through Sustainable Energy Development Authority (SEDA) Malaysia to develop the plant under FiT scheme

For those who are looking to bid for LSS4, the deadline has passed. However, if you are participating in the LSS program, here are the key principles of the [email protected] framework by the Energy Commission:

  1. Local companies incorporated in Malaysia under the Companies Act 2016 or under any corresponding previous written law, whereby such company:
    1. If not listed on Bursa Malaysia Berhad, shall have 100% Malaysian equity shareholding; and
    2. If listed on Bursa Malaysia Berhad, shall have at least 75% Malaysian equity shareholding
  2. Local companies incorporated in Malaysia under the Companies Act 2016 or under any corresponding previous written law, whereby such company:
    1. Package P1: 10.00MWa.c. to less than 30.00MWa.c
    2. Package P2: 30.00MWa.c. to 50.00MWa.c
  3. The connection to the electricity network (either the Transmission Network or Distribution Network), shall be based on technical criteria and evaluation through a comprehensive power system study
  4. The Power Purchase Agreement (PPA) shall be based on take and pay, energy only under Build, Own and Operate (BOO) concession.
  5. A bidder can submit up to three (3) LSS Plants for consideration, however the aggregated Export Capacity of all the LSS Plants shall not be more than 50MWa.c
  6. The PPA duration is 21 years with fixed energy prices throughout
  7. The offers by the shortlisted bidders shall be based on the optimum output, final yield and specific yield of the proposed LSS power plant in accordance with the design and technology used
  8. The LSS developer shall declare the plant’s energy production for 21 years. In the PPA, the LSS developer is entitled to be paid the energy rate up to the LSS power plant’s Maximum Annual Allowable Quantity (MAAQ).

Source: Suruhanjaya Tenaga-Energy Commission

AMAZING SOLAR PROVIDES CLEAN POWER INVESTMENT WITHOUT ANY UPFRONT COSTS

Companies and private consumers in many regions around the world have to adapt to an unstable or costly energy supply due to the unreliability of the grid or even the total absence of such a power supply. This involves, especially for companies and industries, a heavy disadvantage in terms of competitiveness on the global market. Paused production lines in manufacturing industries, interrupted cold chains in food factories or electrical breakdowns in office buildings are just a few examples how power cuts can cause substantial losses for the commercial sector and constitute a serious threat to their commercial success accordingly. Many companies rely on a diesel-based energy supply, suffering high and unpredictable fuel and maintenance costs. Utilising solar (photovoltaic) technology is much eco-friendlier and more cost-effective. The contractual framework of a power purchase agreement (PPA) offers all the advantages of clean energy at long term predictable low prices with limited or no upfront capital expenditure (CAPEX) costs for the company.

What is a Power Purchase Agreement?

A power purchase agreement (PPA) is a contract between two parties: the seller (provider), who generates and sells electricity, and the buyer, who purchases the energy accordingly. The energy provider covers the majority part or indeed all investment costs for the engineering, procurement and construction and also the operating costs of the solar power plant and sells the generated energy at a fixed price to the purchasing party. This contract is closed for a certain period of time, usually more than ten years, and stipulates several other details for the energy delivery.

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The circle of a Power Purchase Agreement in an easy way.

What are the benefits of a PPA?

PPA includes various advantages: the energy consumer benefits from a reliable energy supply based on renewable and clean power sources (driven by the reliable recurrence of the sun every day passing through our skies) and also increases the availability of the energy supply when including energy storage facilities or additional energy generation appliances such as diesel generators. Prices for the electricity are contractually agreed and mostly independent from the price volatility of the national grid or fossil fuels.

All benefits at a glance:

  • Climate protection can be financially promoted by the government
  • CO2 emissions will be substantially reduced
  • Companies can express corporate environmental responsibility by utilising clean energy
  • Clean energy at a fixed price for years
  • Independence from the national grid and its prices » save cost