SOLAR ENERGY HOUSE

This guide details everything you need to know when it comes to choosing, purchasing, installing and reaping the benefits from your home’s residential solar system.

What is a solar panel?

Solar panels are usually placed at open and sunny areas (most commonly on a house roof), and it uses photovoltaic PV solar cells to absorb sunlight which is then transformed into electricity. The bright and sunny climate in Malaysia makes it the perfect medium to generate sustainable solar energy all year long.

As a result, you won’t have to buy your electricity from the grid anymore, cutting down your electricity bill substantially. Moreover, if you happen to generate more electricity than you need, you can sell it back to Tenaga Nasional Berhad (TNB) via the Net Energy Metering (NEM) Scheme, as explained further down below.

To give you a clearer vision of how solar panels work, here’s a graphic illustration by TNB:

Why should you install solar panels for your home?

Solar panels are an awesome way to generate electricity on your own that not only can help you financially, but contribute to the environment and bring you some additional income. Here is a list of key benefits that you can look forward to, once you install your very own solar power system:

Savings on electricity bill from 54% up to 87% per month, depending on your electricity bill (according to GSPARX, a wholly-owned subsidiary of TNB and a registered solar PV investor under SEDA Malaysia).
Lucrative incentives from the Malaysian Government.
Investment Tax Allowance (ITA) from MIDA (If you are a Malaysian Incorporated Company that makes a formal application for the Green Technology Tax Incentive – Refer to footnotes)
10% sales tax exemption if you buy locally manufactured solar PV equipment.
Increased value of your property.
Nice addition to your eco-friendly home renovation.
Productive use of your spacious roof.
Making a positive environmental impact by reducing the use of fossil fuel and carbon dioxide emission.
A sustainable source of producing electricity that will last up to 30 years

What are the types of residential solar panels available?

Before you can purchase a solar panel, learn about the two types of solar panel systems that are available in the current market.

Grid-tied Photovoltaic PV System

If you incur a high monthly electricity bill and wish to reduce your utility cost, then this solar power system would be suitable for you. As it will be connected to a local utility grid, the only cost required would be for the purchase of the panels and equipment.

Stand-alone Photovoltaic PV System

The more expensive Stand-alone PV system works separately from the grid and relies on batteries, which are expensive. These are more suitable for areas which do not have proper electricity lines. However, installing this will help you save money on acquiring a power line and at the same time it will generate solar energy to cater to your electricity needs.

What do homeowners need to do to in order to install solar panels in Malaysia?

After choosing the type of solar panel you want for your home, let’s talk about what else you will need in order to proceed with your solar panel installation:

Be a registered TNB customer.
Own a landed property as apartments are usually not feasible to install solar panels.
Have a spacious roof or ground yard to accommodate all your solar equipment.
Have a strong roof without leaks or damage to support the hefty solar power system.
You will need approximately 6.27 sq. metre of roof space to accommodate 1 kilowatt of electricity generation capacity.
A well-ventilated area to place your batteries.
Abide by local laws and meet your electricity provider’s requirements to connect to the local grid.

Are there any solar panel incentives for Malaysian homeowners?

1. Net Energy Metering (NEM)

SEDA Malaysia introduced the Net Energy Metering (NEM) programme to let you generate solar energy and earn from it, as it enables you to store electricity in your grid. The renewable energy that is generated can then be used for your household to save your electricity bill.

As of January 2019, a new concept for NEM was introduced – the previous net billing was switched to true net energy metering, which allows excess solar PV energy to be exported back to the grid on a “one-on-one” offset basis. This would mean that every 1kWh exported to the grid will be offset against 1kWh consumed from the grid.

The more capacity (kwh) your solar panel has, the more electricity it can harness. This electricity is then used as credit. When TNB bills you, this credit can be offset from your electricity bill to reduce your electricity cost significantly.

Applications for NEM are based on a first come first serve basis, up to the allocated quota. Applications may be made by your appointed registered PV service provider or registered electrical contractor and it should be submitted either manually or via SEDA’s online application portal. Click here to learn the latest guideline for NEM application.

NOTE: The quota allocation for NEM was 500 MW in 2020 – so far, the government has not made any announcement for the NEM allocation in 2021.

2. Solar Leasing under Supply Agreement for Renewable Energy (SARE) Programme

This option is for those who are interested to switch to solar energy but who do not have the financial capacity to invest in a solar panel system.

SARE functions in a way where the customer enters into an agreement or contract with an investor/ Solar PV owner and Tenaga Nasional Berhad. This programme is aimed at making it more accessible and affordable for Malaysian customers to adopt solar PV systems. Under SARE, the owner/investor leases the solar PV system to the customer whilst the solar energy purchase by the customer will be billed by TNB. Here TNB will assume the role of a contracting and billing agent. As a customer, you will pay a leasing fee to the owner via TNB and in return, you do not have to pay the upfront cost to install the solar PV system.

Here are some FAQs on the SARE programme:

Who is the investor/owner? For TNB, GSPARX will be one of the investors and there could be other investors such as banks, investment funds, private parties or PV system service providers itself interested to be an investor/owner.

What happens to the solar system after the contract expires? The solar system will be transferred to the customer (you). You will then be responsible for the operation, maintenance and upkeep of the solar system. There are many solar system vendors in the market that you can further engage for a separate maintenance contract.

How do I, as a customer apply for SARE? Generally, SARE is applied by the Investor/Owner as they are the party that require TNB to assist in the billing & Invoicing, revenue management and contracting service. You can get more information on SARE via sending an email to tnbx@tnb.com.my

What are the financing options for your solar panel installation?

Since the solar panels are a little costly, you have 3 options to pay for it to ease your financial capacity.

The first option is to pay in full, upfront, via your credit card, debit card, bank transfer, or cash. Then you can recover the cost by selling your electricity via Net Energy Metering (NEM) over the long run.
You can opt for a low-interest personal loan to break down the cost into several installments. You can check banks like United Overseas Bank (UOB) who have 36-month interest free loans under their U-Solar initiative. Bank Islam also recently announced that it will be offering up to 100% financing for the purchase of a solar PV package from GSPARX with an attractive floating rate that’s as low as 4.67%.
You can lease your solar panel via the solar power purchase agreement (PPA) and solar lease programs offered by solar panel service providers. This would require no upfront payment on your end and you get to enjoy services such as maintenance and repair, system monitoring, insurance, and roof penetration warranty – in exchange for a fixed monthly payment for a designated time period.

What is the Return on Investment (ROI) for installing a solar panel?

The return on investment (ROI) of installing a solar panel comes from your reduced electricity bill – the energy harnessed from the solar panel can offer your substantial reduction in utility cost.