FAQ – Companies

Have questions about the Malaysia’s FiT System? Chances are, you’ll find the answers here!

1.)  How’s the Malaysia’s Feed in Tariff System financed by the Malaysian government?

Feed in Tariff Malaysia is not funded by the government, it is in fact funded by the electricity consumers. These consumers contribute at least 1% of their total electricity bill towards RE Fund. Both those customers who consume 300 units of electricity and below per month will not be able to have their tariffs raised to pay to the RE Fund.

2.)  Is there any solar panel grant from the Malaysian government towards installation costs for companies and other business entities?

Grants toward cost of installation of home Solar PV technology are available in some countries. Unfortunately, though, these grants are not available at this time in Malaysia. But the good thing about installing Solar PV is that most banks are willing to provide loans to purchase the system at a very low interest rate since feed in tariff guarantees long term profit.

3.)  Will there be feed in tariff incentives for companies for installing RE technologies? 

Yes. There are available fiscal incentives for companies or business entities. There are also third-party exemptions on equipment and machinery (i.e. solar PV) that are given to importers and/or distributors of such products. Through these incentives (sales tax and/or import duty exemptions), prices of the technology or the system is expected to be lower as well.

4.)  Will other government fiscal incentives still applicable to FiAH?

Government fiscal incentives (i.e. investment tax allowance claims, sales tax and import tax waiver) are still applicable to FiAH. According to Y.B Prime Minister, these fiscal incentives will still continue until December 31st 2015 (investment tax allowance) and the benefits for GBI buildings will continue until December 31st 2014.

5.)  If a commercial entity applies to MIDA for double tax relief this year but commissions a renewable energy installation utilising Solar PV as a renewable resource in the middle of next year, would this commercial entity be awarded tax exemption?

Double tax reliefs are currently applicable for all applications made before December 31st 2015. Successful applicants are given one year period for the implementation of the project. If your application is submitted before December 31st 2015, you may still implement the project later on, but just within the allowed time period.

6.)  How do I go about applying for feed in approval to become an authorized seller of renewable energy at a FiT rate?

Becoming a feed in approval holder is easy. You can either apply to it yourself or seed a service provider to do it for you.

7.)  How can SEDA Malaysia facilitate my feed in tariff commencement date when it all depends on the distribution licensee’s availability?

Distribution licensee is obliged to interconnect and purchase renewable energy, which is agreed upon the Renewable Energy Act 2011; and failure to do so would involve penalty that’ll be imposed on distribution licensee. As to the commencement date, there’s a set target date or a specific time frame for the feed in tariff commencement date.

8.)  What is Energy Commission licensing? Is it licensing for solar power generation or licensing to sell power back to the grid?

It is required to have power generation licenses from the Energy Commission for all 5kW and above power generators, where fees are chargeable at RM1.5/kW. The power generation license fees for PV are payable for capacities of over 24kW for 1 phase and above 72kW for 3 phase.

9.)  Is Tenaga Nasional Berhad supportive of the Feed in Tariff system?

Yes. Tenaga Nasional Berhad supports the government’s initiative to promote low-carbon energy sources. Under the Renewable Energy Act 2011, it’s mandatory for the distribution licensees (such as Tenaga Nasional Berhad) to not just purchase renewable energy, but to prioritize such purchases over generated electricity using non-renewable energy sources as well.

10.)  What if Tenaga Nasional Berhad, for instance, or other distribution licensees refused to purchase my generated renewable energy?

It’s mandatory for Tenaga Nasional Berhad and other distribution licensees to purchase generated renewable energy from its producers. They are also required to prioritize generated energy using renewable energy sources over generated energy using non-renewable energy sources. There’ll be penalties that’ll be imposed should the distribution licensee fails to comply to this law.

11.)  Is feed in tariff income a taxable income?

Yes, feed in tariff income is also subject to tax and any exemption will require a policy decision from the government.

12.)  Will the FiT rate that was given to me under my RE power purchase agreement and FiA be reduced in later years?

No. For the next 21 years, you will have a fixed FiT rate until grid parity occurs. This is to guarantee security of your investments. The only goal of the degression is to encourage cost reduction while increasing efficiency to achieve grid parity at a faster rate.

13.)  What will hapen when my RE power purchase agreement under the FiT system has already expired?

Once the effectivity period of your RE power purchase agreement or FiA has already expired, you, as the Feed in Tariff Approval Holder may still re-apply for new FiA or feed in approval. However, Feed in Tariff Approval Holders (such as you) will have to directly negotiate with distribution licensees if grid parity has already been achieved.

14.)  Does internal utilisation of renewable energy is allowed?

Yes. However, SEDA Malaysia allows this for RE installations connected at low voltage only, which is known as indirect connection. This means that utilisation of renewable energy is only allowed at 230V; 10kW and 400V, > 10kW; 425kW, and detailed condition will be available before the FiT system is launched.

15.)  Is it possible for retail electricity tariff to go beyond the FiT rates on the contract before expiration of REPPA?

Yes. In an even that’s described as the attainment of grid parity in the RE Act 2011, FiA Holders (you) will be paid the displaced cost.

16.)  Is there a requirement for Power Systems Studies?

Yes. Power Systems Studies is a mandatory requirement for medium-voltage RE installations. This include those with installed capacity of 180kW and above. More questions on Feed in Tariff? Leave us a comment or visit SEDA Malaysia’s official website for more info.