Government Incentive For Solar Power in Malaysia

To implement solar PV installation, the government of Malaysia and utility companies such as Tenaga Nasional Berhad offer programs and incentives to encourage more individuals and/or business owners to switch to solar power. These programme and incentives are designed to reward producers and users who adopted the technology.

Starting December 2011, Feed in Tariff has taken effect in Malaysia, which aims to increase investment in renewable energy sources. The Malaysia’s Feed in Tariff System allows you, as renewable energy producer, to sell your generated energy to the utility grid (TNB) at a premium rate. What makes it more attractive is that it guarantees investment returns as the government offers long-term agreement (21 years) wherein you will be paid an amount for the renewable energy you produced. Anyone may apply in feed in tariff program including private investors, business owners, or even the simplest homeowners or farmers.

Feed in Tariff Rates and Quotas

Under feed in tariff, you will be paid a fixed FiT Rates for a period of 21 years, starting from the feed in tariff commencement date. Sustainable Energy Development Authority (SEDA) Malaysia, which administers and manages the implementation of this programme, places a quota for solar PV installation (RE Quota). This quota is placed every 6 months for the next 3 years.

Note: According to the recent SEDA Malaysia’s recent announcement, feed in tariff rates for commercial or businesses are regarded to be lowered than when it’s previously published for years 2013 and 2014; expected release of new quota is in November 2012 for quotas allocated for years 2013 and 2014.

Tax Exemption and Incentives

In Malaysia, there’s a sales tax exemption of 10% on locally manufactured solar PV modules. This also gives you a 10% savings on tax if you chose to purchase solar PV modules that are manufactured locally.

FiT for companies and business entities have additional benefits though, wherein you may apply for various incentives such as:

  • Investment Tax Allowance
  • Pioneer Status
  • Import Duty or Sales Tax Exemption

Incentives for companies and business entities are extended until December 31st2015. These incentives just double your company’s or business’ tax deduction just by investing in solar PV.

How to Qualify

To qualify, you will need to apply for Feed in Approval and become a Feed in Approval Holder. Homeowners can make two FiT Applications (maximum), where you may apply for 12kW solar PV system (maximum) in each application.

If you’re a company or a business wanting to invest in the technology, your company must be locally incorporated under the Societies Act 1966 or must be specified in Section 6 of the Partnership Act 1961. Your business or company must also have some proofs that you’re financially capable of funding the solar PV system.

FiA applications are evaluated equally by SEDA Malaysia and it’s guaranteed that there are no special treatments of some sort. For more detailed and latest information, visit SEDA Malaysia’s official website at www.seda.gov.my.