No idea on how the implementation of PV system can benefit you? Here we help you understand in details regarding the PV schemes.

Private home owner or large business operator? We definitely have the solution for you.

Feed-In-Tariff For Solar PV In Malaysia

Feed-in Tariff (FiT) concept was first introduced by the government during the early days of solar PV industry in Malaysia, back in 2011. The mechanism is simple; all energy generated by the installation of Photovoltaic (PV) system shall be fed & sold directly to the Distribution Licensee (DL). In return, the energy producer (known as Feed-in Approval Holder) shall be paid under a premium tariff for every kWh unit of energy exported back to the grid.

However, this well-received scheme already closed for registration since 2016, and it had already been replaced with Net Energy Metering (NEM) concept. Despite of its cessation, there is no doubt that this scheme kickstarted the beginning of public acceptance & awareness towards Renewable Energy, specifically the PV system.

Large Scale Solar (LSS)

Under Suruhanjaya Tenaga (ST), the Large-Scale Solar (LSS) scheme was first introduced back in 2016. Unlike the other schemes (FiT & NEM), LSS scheme emphasizes on large capacity utility scale Solar PV projects, with the installation capacity of no less than 1 MWac.

The fundamental intention of its inception is to create a competitive bidding programme to drive down the Levelized Cost of Energy (LCOE). Besides that, LSS scheme provides a platform to support PV system implementation at a larger scale. This is decisive in meeting the government’s target in providing renewable energy (RE) as part of the country’s energy generation mix from the 2% recorded in 2018 to 20% by 2025.

To date, ST had successfully launched the scheme in 3 different phases, with the total awarded capacity of XXX MWac. It is expected that the bidding exercise for LSS 4 shall take place in the upcoming year.

Net Energy Metering (NEM)

In essence, the concept of Net Energy Metering (NEM) is not entirely different from its precedent scheme, Feed in Tariff (FiT).

As the name implies, the energy generated by NEM consumer via installed PV system will be consumed internally first, before exporting the excess unused energy back to the grid. The Distribution Licensee (DL) shall pay for each energy unit exported back to the grid in credit, at a similar rate as the purchased electricity tariff. The credit shall be allowed to accumulate and roll over for a maximum of 24 months.

This scheme shall greatly benefit consumers that fall under the high electricity tariff block, especially in commercial & industrial sector. With the self-generated electricity, the NEM consumers may hugely reduce utilities cost, not only by importing less energy from the DL, and also lower down their maximum demand (MD) charges.

And most crucially, by having less dependency on the DL’s electricity supply, the NEM consumers are able to hedge any future fluctuation of increase in utilities tariff.

Benefits : Residential

Benefits : Commercial/Industrial

Tax Incentives

Malaysia offers a wide range of tax incentives ranging from tax exemptions allowances based on capital expenditure to enhanced tax deductions. Where income is exempted, tax exempt dividends may be paid out of the exempted income. For incentives by way of allowances, any unutilized allowances can generally be carried forward until fully utilized. These incentives are generally available for tax resident companies.

Investment Tax Allowance (ITA)

Investment Tax Allowance (ITA) of 100% of qualifying capital expenditure incurred on a green technology project from the year of assessment 2013 (date on which the first qualifying capital expenditure incurred is not earlier than 25 October 2013) until the year of assessment 2020.

The allowance can be offset against 100% of statutory income in the year of assessment. Unutilized allowances can be carried forward until they are fully absorbed.

PV system installation can qualify for this tax incentive. Please refer to the Guideline for Application for Incentives and/or Expatriate Posts for Green Technology (GT) at www.mida.gov.my for more details.

Capital Allowance (CA)

Capital allowances are deductions claimable for the wear and tear of qualifying fixed assets such as industrial machinery, office equipment and sign boards. Under Capital Allowance, Solar PV system could categorized as Plant & Machinery and is eligible for depreciation over the period of 6 years.

It comprises the following types of provisions:

  • Initial Allowance 20% (IA – for the first year allowance)

  • Annual allowance 14% (AA – for subsequent years until the full amount is availed)

  • Balancing allowance; and

  • Balancing charge