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Malaysia’s Net Energy Metering Scheme

Must electricity generated by a solar panel system be stored in a battery? No, it doesn’t! Net Energy Metering lets you sell unused solar electricity back to the grid, so you don’t have to worry about excess solar energy being lost. Read here to understand how it works and how you can benefit from NEM!
malaysia nem scheme 3.0

What Are Net Metering Schemes?

Net metering allows residential and commercial solar system owners to sell their unused electricity back to the grid. A residential customer’s roof PV system may generate more electricity than the home uses during the daylight hours. 

With net metering, the electricity meter runs backwards to provide a credit against what electricity is consumed at night or other periods when the property’s electricity use exceeds the system’s output. Customers are only billed for their “net” energy use. On average, about 20-40% of a solar energy system’s output goes into the grid, and this exported solar electricity serves other utility customers.

History Of the Net Energy Metering Scheme

The Net Energy Metering Scheme (NEM) was first introduced in November 2016 with a 500 MW quota allocated up to 2020, to encourage Malaysia’s Renewable Energy (RE) uptake. It was executed by the Ministry of Energy and Natural Resources (KeTSA), regulated by the Energy Commission (EC), with Sustainable Energy Development Authority (SEDA) Malaysia as the Implementing Agency (IA). 

Its concept was that energy produced from the solar PV installation will be consumed first, and any excess will be exported to TNB at prevailing displaced cost (Market rate based on your system size). 

Prevailing displaced cost was not very popular as it resulted in smaller gains for the applicants. This resulted in a low uptake. NEM 2.0 was then introduced on 1st January 2019 with a true net energy metering concept. It allowed excess solar PV generated energy to be exported back to the grid on a “one-on-one” offset basis. Attracting far better interest, this 500MW quota was fully subscribed by the end of 2020.

Net Energy Metering 3.0 By SEDA

Due to overwhelming response from the solar industry, the new NEM 3.0 was introduced on 29th December 2020. The NEM 3.0 will be in effect from 2021 to 2023 and the total quota allocation is up to 500 MW.

The NEM 3.0 will be divided into the following three new initiatives/categories:

Initiative/CategoriesQuota Allocation (MW)Quota Opening Date
NEM Rakyat Programme100MW1st February 2021 – 31st December 2023
NEM GoMEn Programme (Government Ministries and Entities)100MW1st February 2021 – 31st December 2023
NOVA Programme (Net Offset Virtual Aggregation)300MW1st April 2021 – 31st December 2023

How Does NEM 3.0 Work?

NEM Rakyat Programme (Residential)

This programme aims to lower electricity bills for residential premises by using solar PV systems. Under this programme, any excess energy generated will be exported to the utility grid and will be paid on a 1:1 offset basis and the credit shall be allowed to roll over for a maximum of 12 months. The maximum solar PV system size that can be installed by homeowners is 4KW and 10KW for single-phase and three-phase homes.

A 100MW quota has been allocated for the NEM Rakyat Programme starting from 1 February 2021 with a 10-year contract for successful applicants. The programme is open until the quota is full or until 31 December 2023 (whichever comes first).

To date (23/12/21), approximately 25% of the quota has been applied for.

The following are the eligibility requirements for the NEM Rakyat Programme application:

  • Users who are registered or are applying to register with TNB in Peninsular Malaysia
  • Users/ applicants who have not installed any solar PV system under any previous photovoltaic solar programme; and
  • Applicants must be domestic users occupying their private-owned premises, not for hotels, hostels, any form of businesses, trades, professional activities, or services

NEM GoMEn (Government Buildings)

This programme aims to lower the electricity bills of government-owned buildings by using solar PV systems. Under this programme, any excess energy generated will be exported to the utility grid and will be paid on a 1:1 offset basis. The credit shall be allowed to roll over for a maximum of 12 months. The maximum size of a solar PV system allowed is 1MW per customer. A 100MW quota has been allocated for the NEM GoMEn Programme with a 10-year contract for successful applicants. The programme is open until the quota is full or until 31 December 2023 (whichever comes first).

To date (23/12/21), approximately 20% of the quota has been applied for.

NOVA (Commercial & Industrial)

This programme aims to lower business’ operating costs (utilities) by using the solar PV system in commercial and industrial sectors. Under this programme, successful applicants:

  • Use electricity generated by a solar PV system
  • Surplus electricity (harnessed from a solar PV system) may be exported via the Supply System to the Distribution Licensee. The unit price (RM/kWh) of the Energy exported during the Billing Period to the Supply System shall be based on the Average System Marginal Price (SMP). The value of the exported energy shall be credited to the account of the NOVA Consumer to be used to offset the bill payment for the next Billing Period.
  • Any excess energy produced in a month that is not consumed by the NOVA Consumer may be exported via the Supply System up to three (3) Designated Premises.

A 300MW quota has been allocated for the NOVA Programme starting  1 April 2021 with a 10-year contract for successful applicants. The programme is open until the quota is full or until 31 December 2023 (whichever comes first).

To date (23/12/21), approximately 50% of the quota has been applied for.

How To Apply For NEM 3.0

In Malaysia, there are two ways to obtain solar

  1. Outright purchase from a PV Service Provider (Solar Companies)
  2. Leasing from a PV Investor (Solar Developer)

All you have to do is follow the steps below and you’ll have a hassle free process of applying for NEM 3.0.

How to apply for NEM with TNB

Follow this step by step guide to generate electricity from your own solar PV system Find your registered contractor/ service provider (RC/ SP), and they will help you settle the rest of the application process.

  1. Step 1: (RC/ SP) you will apply for a Technical Assessment with TNB (if applicable)
  2. Step 2: (RC / SP) you will get approval/quota from SEDA
  3. Step 3 :(RC/ SP) you will install a solar PV System
  4. Step 4: (RC/ SP) you will submit a meter application to TNB
  5. Step 5: Sign your NEM contract with TNB

NEM helps property owners reduce their electricity bills or even make a profit with excess electricity from their solar system. It makes solar more affordable for property owners who would otherwise be shelling out extra sums for solar energy storage. 

With Malaysia’s 2025 target of 31% total power capacity from renewable energy sources, solar adoption is expected to increase substantially. Already, 25-50% of the 500 MW quota by 2023 has been filled. If you want to enjoy the financial benefits of NEM, you really can’t afford to wait. 
Check out our article on the Top 10 Solar Companies in Malaysia to find the best installer for your roof to get started now. If you’re looking at rooftop solar for your home, why not read here for the price of installing and maintaining a solar panel system in Malaysia?

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Ji Kai Ong
Ji Kai Ong
A Marketing Intern currently studying at Ngee Ann Polytechnic. He hopes he can make a difference in the fight towards climate change by working in this industry.
Ji Kai Ong
Ji Kai Ong
A Marketing Intern currently studying at Ngee Ann Polytechnic. He hopes he can make a difference in the fight towards climate change by working in this industry.
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