KUALA LUMPUR (Dec 4): The government is looking at releasing more net energy metering (NEM) quotas for rooftop solar installations for residential, commercial and industrial buildings before the year ends, as the existing quota that was expanded earlier this year was fully taken up last week.
Under the NEM mechanism, a consumer can install a solar PV system for his or her own use and export the excess electricity generated to the national grid, which is owned and operated by Tenaga Nasional Bhd. In return, the consumer gets credit that can be used to offset his or her next electricity bill.
The quota expansion is in line with the government’s ongoing efforts to promote greater adoption of rooftop solar, the Ministry of Natural Resources, Environment and Climate Change (NRECC) said in reply to a query from The Edge following the exhaustion of the current quota.
The NRECC is currently looking into “the right quantum of quota to be released” for all three segments of residential, commercial and industrial (C&I), and government buildings, said Minister Nik Nazmi Nik Ahmad.
“We shall be announcing the new release before year end,” Nik Nazmi said.
The quota expansion will be watched closely by engineering, procurement, construction and commissioning (EPCC) players in the renewable energy space, especially smaller ones that focus on rooftop solar projects.
Other EPCC projects in this space include the corporate green power programme (CGPP) rolled out last year, under which an eligible corporate customer can enter into an agreement with a solar power producer for the sale and purchase of the energy produced by the solar power plant under mutually agreed terms and price structure. With a total quota of 800MW divided into up to 30MW per project, the CGPP is to be completed by 2025.
Data from the Sustainable Energy Development Authority showed that allocations for 150MWac of NEM rooftop solar quota for residential buildings, and 800MWac for C&I buildings were taken up on Nov 28.
There is another 100MWac for government buildings, of which 37.93MWac has been applied for.
The expansion of NEM also follows the recent announcement by Prime Minister Datuk Seri Anwar Ibrahim in Budget 2024 to extend the application period for the current NEM programme to end-2024, from end-2023 currently.
It is noted that the full take-up of the residential and C&I segments' quotas included additional quotas provided by the government for both segments back in March.
At the time, the C&I category — dubbed NEM Nova — saw an additional 200MWac quota allocated, from 600MWac. The segment saw 485.92MWac taken up when the announcement was made.
For the residential segment known as NEM Rakyat, its current quota is 50MWac more than the initial 100MWac, of which 68.07MWac had been taken up at the time.
The faster take-up rates seen this year came on the back of the government's decision to remove the blanket subsidy on electricity tariffs since the start of this year, with higher tariffs seen for high-voltage and high consumption users across both residential and non-residential groups implemented in the second half of the year.
In this period, household users who consume more than 1,500 kWh per month — equivalent to a monthly electricity bill of RM708 — face an additional surcharge of 10 sen kWh for that month, which will raise their bills by a minimum of RM187 or 25%. Such high-consumption domestic users involve 83,000 households or 1% of total domestic users, Nik Nazmi said in June.
Households consuming less than 1,500 kWh per month continue to enjoy a two sen/kWh rebate in the period.
For medium- and high-voltage power users in the non-domestic sector, the electricity tariff surcharge amounted to 17 sen/kWh, while non-domestic consumers in the low-voltage category, such as small and medium enterprises, are imposed a surcharge of 3.7 sen/kWh.
Other rooftop solar mechanisms being explored
The government is also looking at enhancing the roll-out of rooftop solar installations, which has a 42GW potential based on Malaysia’s 2022 Renewable Energy Roadmap.
The enhancements include rooftop leasing and buy-back schemes, although not much details have been shared.
Aside from the two models to improve the ongoing rooftop solar programme, the approach will largely remain unchanged, as “it has demonstrated success in promoting the expansion of rooftop solar installations” in the country, Nik Nazmi said in his reply.
“Additionally, to facilitate more extensive integration of solar energy into the current power supply system, continuous upgrades to our grid and power supply infrastructure will persist as a priority,” he added.
Under the current programme, building owners typically pay the upfront cost, either through cash or financing, in exchange for owning the solar asset and netting of the electricity used and electricity generated on a one-to-one basis.
For the C&I segment, another option is rooftop solar power purchase agreements (PPAs), where the building owner provides the rooftop area for solar contractors to install the solar panels, while the contractor will own the assets.
Instead of completely netting off the electricity consumed with electricity generated from the solar panels on a one-to-one basis under the NEM model, the PPA model provides the building owner with a discounted electricity tariff, and there is no need to fork out any upfront cost for the infrastructure.
Other models recently introduced include the subscription-based model, which is available for the residential segment, and is similar to the rooftop solar PPA model from a payment perspective.
While the NEM model provides a one-to-one offset, excess power generated from the solar panels is not exchanged into cash, and instead kept as credit in the electricity bill account, which is non-transferable and cannot be carried forward to the following year.
There are also calls in the industry to extend the existing 10-year limit for NEM, after which the excess energy generated cannot be exported to the grid.