The implementation of the Energy Efficiency and Conservation Act (EECA) marked a watershed moment for Malaysia’s energy transition, establishing the country’s first comprehensive legal framework for energy efficiency and signalling a shift towards a more unified approach.

The Energy Commission (EC) sees energy efficiency as a low-hanging fruit as it offers immediate, cost-effective benefits through behavioural change — which comes at zero cost — or by applying existing technologies without the need for major capital outlays or innovation breakthroughs.

Enforced on Jan 1, 2025, the EECA establishes a wide-ranging legal foundation that brings greater scope and accountability to energy consumption practices.

Prior to the EECA, Malaysia’s energy efficiency regulations focused primarily on electrical usage through the Efficient Management of Electrical Energy Regulations 2008 (EMEER) and selected appliance standards under the Minimum Energy Performance Standards 2013 (MEPS).

With the new act in place, energy efficiency regulations are becoming more structured and wide-reaching, making up for the limitations seen in their predecessors.

One of the most notable changes is the inclusion of thermal energy within EECA’s scope. While earlier regulations focused solely on electricity consumption, the Act recognises the substantial role of thermal systems in energy consumption by industrial and manufacturing operations.

The energy consumers are defined as installations that consume a minimum of 21,600GJ of energy over any twelve consecutive months, ensuring that the law targets high-impact users with the greatest potential for energy savings.

Energy performance requirements have also been expanded to include thermal energy-using products, building on the existing Minimum Energy Performance Standards (MEPS) that previously covered only electrical appliances.

Besides that, EECA introduces the energy intensity label for buildings, which will initially apply to office buildings with a gross floor area (GFA) of 8,000m² and above, to raise awareness, promote transparency and support the development of greener, low-carbon buildings in Malaysia.

The Act also makes energy audits mandatory for designated consumers and buildings, conducted by registered energy auditors. These audits are designed to identify inefficiencies and recommend corrective actions.

This requirement moves energy performance from passive monitoring to active management, promoting ongoing improvements backed by data and analysis.

To support these changes, EECA also mandates the mandatory development and implementation of the Energy Management System (EnMS) based on the guidelines produced by the EC to encourage organisations to establish internal processes, policies and monitoring mechanisms to better manage their energy.

By embedding energy management into daily operations, businesses can achieve sustained energy savings, improve operational efficiency and support long-term decarbonisation goals.

The Act also strengthens enforcement mechanisms by giving the EC greater legal authority to ensure compliance, including the power to conduct inspections, review submissions and impose penalties, backed by clearer timelines and enforcement protocols.

The Government Lead-by-Example (GLBE) programme has been a foundational effort in embedding energy efficiency within the public sector.

Through initiatives such as retrofitting buildings and piloting Building Energy Intensity (BEI) labelling, ministries and agencies have achieved measurable energy savings, ranging from 4% to 19%, while building internal capacity and awareness.

These early efforts helped normalise energy efficiency practices and set benchmarks for improvement.

The introduction of EECA has formalised many of these practices and extended them across sectors.

To complement EECA, the EC has also announced a new electricity tariff under Regulatory Period 4 (RP4), effective July 1.

The revised structure sets an average base tariff of 45.40 sen/kWh and protects 85% of domestic users from bill increases, further supporting Malaysia’s affordability and energy transition agenda.

To further encourage responsible energy consumption, the government has introduced Insentif Cekap Tenaga. The initiative excludes energy-conscious domestic users and low-voltage non-domestic users from tariff hikes while promoting off-peak electricity usage through the enhanced Time of Use (TOU) scheme as an option designed to drive positive behavioural change.

The TOU scheme is an option for consumers that allows them to lower their bills by shifting electricity usage to extended off-peak hours, such as weekends and 10pm to 2pm on weekdays.

This behavioural shift is further supported by the nationwide rollout of smart meters as a digital solution that provides consumers with real-time insights into their energy use, allowing them to monitor their consumption patterns more effectively.

Looking ahead, the EC expects substantial reductions in electricity and thermal energy consumption, particularly in industrial and large-scale buildings — contributing to the national targets under the National Energy Transition Roadmap (NETR).

The commission estimates energy savings of over two billion gigajoules by 2050, which is equivalent to RM97.1 billion in avoided energy costs, while carbon emissions are expected to fall by nearly 198 million tonnes, supporting Malaysia’s commitment to the Paris Agreement.

More broadly, the EECA is also expected to catalyse the shift to energy-efficient business models through increased adoption of efficient technologies, more stringent product standards under Minimum Energy Performance Standards (MEPS) and the growth of energy service sectors.

By embedding energy efficiency across sectors, the country will strengthen its resilience, support economic growth and stay aligned with its long-term carbon neutrality goals.