Malaysia Expands Rooftop Solar Quotas to Boost Renewable Energy Adoption

As part of its continued commitment to fostering renewable energy adoption and sustainability, the Malaysian government is gearing up to release more Net Energy Metering (NEM) quotas for rooftop solar installations across residential, commercial, and industrial buildings. The move comes in response to the overwhelming demand that led to the exhaustion of existing quotas just last week.

The Ministry of Natural Resources, Environment and Climate Change (NRECC) has been actively exploring the right quantum of quotas to be allocated for these three crucial segments – residential, commercial and industrial (C&I), and government buildings. This strategic expansion of the NEM program aligns with the government’s vision to encourage greater rooftop solar utilization in Malaysia.

“We shall be announcing the new release before year end,” stated Minister Nik Nazmi Nik Ahmad, underscoring the imminent nature of this initiative.

Recent data from the Sustainable Energy Development Authority revealed that the allocated quotas for residential buildings (150MWac) and C&I buildings (800MWac) were fully subscribed by November 28th. Another 100MWac quota designated for government buildings has also seen strong demand, with 37.93MWac applications received.

This extension of NEM follows Prime Minister Datuk Seri Anwar Ibrahim’s announcement in Budget 2024, wherein the application period for the current NEM program has been extended until the end of 2024, compared to the original end date of 2023.

It is worth noting that the earlier uptake of residential and C&I quotas included additional allocations by the government earlier this year. In March, the C&I category, known as NEM Nova, saw an additional 200MWac quota introduced, supplementing the initial 600MWac quota. Similarly, the residential segment, referred to as NEM Rakyat, received a 50MWac increase over the initial 100MWac quota.

The accelerated demand observed in 2023 can be attributed to the government’s decision to phase out the blanket subsidy on electricity tariffs at the beginning of the year. This policy change led to higher tariffs for high-voltage and high-consumption users across residential and non-residential sectors. Notably, households consuming more than 1,500 kWh per month now face an additional surcharge, incentivizing them to turn to rooftop solar for cost savings and sustainability.

In addition to expanding quotas, the government is exploring various rooftop solar mechanisms to further enhance the adoption of solar energy. Among these are rooftop leasing and buy-back schemes, though specific details are yet to be revealed.

Minister Nik Nazmi emphasized that the NEM program’s core approach, which has proven successful in promoting rooftop solar installations in Malaysia, will remain largely unchanged. Furthermore, ongoing efforts to upgrade the national grid and power supply infrastructure will ensure seamless integration of solar energy into the country’s electricity generation.

The NEM model typically requires building owners to cover the upfront costs of solar installations, with the option of cash or financing. They then own the solar assets and can offset the electricity they use against the electricity generated on a one-to-one basis. For the C&I segment, power purchase agreements (PPAs) offer an alternative, where the building owner provides space for solar panels, and the solar contractor owns the assets. The building owner receives discounted electricity tariffs without any upfront infrastructure costs.

As Malaysia advances its renewable energy agenda, discussions are underway within the industry to extend the existing 10-year limit for NEM, enabling the export of excess energy generated to the grid beyond this timeframe. This initiative further demonstrates Malaysia’s dedication to green energy and sustainability, positioning the nation as a leader in renewable energy adoption within the region.

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