1. How does the Malaysian government finance for the Feed-in-Tariff System?

A: Our clients should know that the system known as FiT (or Feed-in Tariff) is
not funded by the Malaysian government; rather, it is funded by the
electricity consumers. 1.6% of the total  electricity bill is contributed by these
consumers for the RE fund. Consumers who make use of 300 units of
electricity or lower per month cannot raise their tariffs to pay for the RE fund.
（你去看你家 TNB bill, one of the section shows 1.6% KWTBB）

2. Q: Are there grants given by the Malaysian government for solar panel
installation costs utilized by various companies and other business entities?

A: While some countries give grants for the installation costs of solar PV
technologies, Malaysia does not offer these grants presently; however, there
are many banks who are able to grant loans for purchasing solar systems at
interest rates that are quite low because feed-in tariffs serve as guarantees
for long term profits.

3. Q: Are there feed in tariff incentives available for companies that install RE
technologies?

A: Yes. Fiscal incentives are available for business entities or companies

including third-party exemptions imposed on machineries and equipment
which includes solar PVs. These are usually given to distributors and/or
importers of these products. By using these incentives, the prices of these
systems are expected to be at a low rate as well.

4. Q: Are the other government fiscal incentives still applicable to the

FiAH(Feed-in Approval Holders) ？
A: Investment tax allowance claims, import tax waiver, sales tax and other
government fiscal incentives are still applicable to the FiAH. And as stated by
the Y.B. Prime Minister, the effective date of these fiscal incentives is
extended until the 31st of December 2015 (investment tax allowance) while
the GBI buildings benefits is effective until 31st of December 2014.

5. Q: How does anyone make an application for FiA (Feed-in-Approval)

necessary for selling renewable energy at prevailing FiT rates?

A: There are two ways to become a feed-in approval holder. One, you can
apply for the feed-in approval yourself, or two, you may secure the services
of an authorized company to fill out the application on your behalf. (SEE after
Q9).
 6. Q: What do we need to know about Energy Commission licensing? Is it a
license for selling power back to a grid or license for the generation of solar
power?

A: Power generation licenses obtained from the Energy Commission is

mandatory, particularly for generators with 5kW and above; whereas, fees are
charged at RM1.5/kW. PV power generation license fees are payable for 1 phase
which has a capacity of more than 24kW and 3 phase for 72kW and above.

7. Q: Does the Tenaga Nasional Berhad support the Feed-in-Tariff system?

A: Yes. The Tenaga Nasional Berhad does support for the government initiative in promoting
energy sources with low-carbon utilization. As stated by the Renewable Energy Act 2011,
distribution licensees has the obligation to purchase renewable energy ad prioritize these
purchases using non-renewable energy sources over electricity-generated sources.

8. Q: Will the FiT rate given under the RE power purchase agreement and the FiA be lessened
in the next few years?
A: No. To guarantee the security of investments, a fixed FiT rate is applied for the next 21
years until a grid parity is given. Furthermore, the goal of the degression is to achieve grid
parity at faster rates and increase efficiency while reducing costs.

9. Q: Is the internal utilization of renewable energy allowed?

A: Yes; however, only RE installations connected at low voltages are allowed by the SEDA
Malaysia. To be accurate, utilizing renewable energy is allowed only at 230V, 10kW and
400V, > 10kW and 425kW. More detailed conditions will be made available prior to the
launching of the FiT system.

Source: https://www.solarpanelmalaysia.com/commercial-2/frequently-asked-questions-
corporatecompanies/

***Apply and Become an Authorized Seller of Renewable Energy

To start generating and selling renewable energy, businesses and/or individuals will have
to apply for FIA or Feed-In Approval. This is being managed and granted by Sustainable
Energy Development Authority(SEDA).

If you’re planning on installing and applying for FIA (Feed in approval for Solar PV
Installation), you will initially need to check for Eligibility (refer to Feed-In Tariff Rates
for reference), and secure a copy of the application form where you can either get
manually or online.
What is feed in tariff?
Malaysia’s Feed-in Tariff (FiT) system obliges Distribution Licensees (DLs) to buy from
Feed-in Approval Holders (FIAHs) the electricity produced from renewable resources
(renewable energy) and sets the FiT rate. The DLs will pay for renewable energy supplied
to the electricity grid for a specific duration. By guaranteeing access to the grid and
setting a favourable price per unit of renewable energy, the FiT mechanism would ensure
that renewable energy becomes a viable and sound long-term investment for companies’
industries and also for individuals.

KEY TERMINOLOGIES IN FEED-IN TARIFF(FIT) :

 Distribution Licensees : Companies holding the licence to distribute electricity (e.g.
TNB, SESB, NUR).
 Feed-in Approval Holder : An individual or company who holds a feed-in approval
certificate issued by SEDA Malaysia. The holder is eligible to sell renewable energy at
the FiT rate.
 FiT rate : Fixed premium rate payable for each unit of renewable energy sold to
Distribution Licensees. The FiT rate differs for different renewable resources and
installed capacities. Bonus FiT rate applies when the criteria for bonus conditions
are met.
 Indigenous : Renewable resources must be from within Malaysia and are not
imported from other countries.
 Duration: Period of which the renewable electricity could be sold to distribution
licensees and paid with the FiT rate. The duration is based on the characteristics of
the renewable resources and technologies. Currently, all new approved FiT
applications (regardless of the type of RE resources) will be paid the FiT for 21 years
for renewable energy generation. Only FiAHs that have been awarded the Biogas
quota before 28th January 2019 and Biomass quota before 23rd December 2019
would be paid the FiT for 16 years.

Renewable energy quota

Why is there a quota?
- To ensure that there will be adequate funds to make the FiT payments to RE
generators. This is because in a regulated electricity market such as in Malaysia, the
funding source for FiT is limited to a fixed percentage(1.6%KWTBB) imposed on the
utility’s electricity revenue. Once the electricity market in Malaysia is deregulated, or
when FiT has been operating for a considerable period of time, then removal of the
caps may be possible. Capping is achieved by putting a capacity limit or quota for
new feed-in approvals in respect of each renewable resource for 6-month windows
over the next 3 years. The reason for the 6-month window frame is to limit the
waiting period for the next available set of quotas to a maximum of 6 months.
LEGAL UPDATES ON THE SOLAR ENERGY INDUSTRY
IN MALAYSIA
https://www.legal500.com/developments/thought-leadership/legal-updates-on-the-solar-
energy-industry-in-malaysia-2/