As Malaysia advances along its energy transition journey, developments in the relevant legislative and regulatory framework become necessary to implement and support the initiatives under the National Energy Transition Roadmap, bridge statutory gaps, and ultimately establish a clear foundation for today’s evolving energy market. To that end, amendments to the Electricity Supply Act 1990 (‘ESA 1990’) and the Energy Commission Act 2001 (‘ECA 2001’) were implemented by virtue of the Electricity Supply (Amendment) Act 2025 and the Energy Commission (Amendment) Act 2025. These amendments recently came into force on 1 July 2026 (‘Effective Date’).
 
AMENDMENTS TO ESA 1990
 
The amendments to the ESA 1990 are focused on extending the scope of the said Act to regulate cross-border electricity trade. Such amendments have been long-anticipated - prior to this, cross-border electricity trade was primarily governed by the rules set out in the Guide for Cross-Border Electricity Sales (‘CBES Guide’) issued by the Energy Commission (‘EC’).
 
The key amendments to the ESA 1990 are outlined below:
 
Permitting Export and Import of Electricity
 
Previously, regulation was focused on the export of electricity from Malaysia to the neighbouring countries of Singapore and Thailand. The CBES Guide set out the requirements for such exports, but was silent on the import of electricity into Malaysia. It therefore raised the question as to whether, and under what conditions, the import of electricity was permitted.
 
Under the amended ESA 1990, there are express references to the regulation of both export and import of electricity. Of particular note is the definition of “importation of electricity” as the supply and buying of electricity into any installation¹ in Malaysia from any person or place outside of Malaysia. The effect of this definition is twofold: 

In connection with the above, section 50C of the ESA 1990 has been amended to authorise EC to issue guidelines in relation to the export and import of electricity.
 
These amendments reflect the shift of cross-border electricity trade and regional grid interconnection from being energy policy aspirations to market reality.
 
Requirement for Licence for Import or Export of Electricity
 
Generally, the use or operation of an installation or the supply of electricity from an installation for use by another person are subject to the requirement for a licence under section 9 of the ESA 1990 (‘Section 9 Licence’). The Section 9 Licence applies to both generation and distribution activities.
 
A dedicated licence has now been introduced through the inclusion of a new section 22D to the ESA 1990, whereby any person importing electricity from or exporting electricity to a place outside of Malaysia is required to obtain a licence for the same (‘Section 22D Licence’). A Section 22D Licence is: 

It is to be noted that the provisions of the ESA 1990 which apply with respect to a Section 9 Licence are also applicable with respect to a Section 22D Licence.
 
The demarcation between a Section 9 Licence and a Section 22D Licence suggests that the former is intended for activities carried out in Malaysia, and the latter for cross-border activities. The terms and conditions imposed would also likely differ between the two due to separate policy, regulation and technical requirements.
 
It is pertinent to note that under the CBES Guide, the licence to be obtained previously by power plant developers involved in cross-border electricity sales was a Section 9 Licence. However, pursuant to the latest amendments, any person involved in the export or import of electricity will now need to obtain a Section 22D Licence instead. The Electricity Supply (Amendment) Act 2025 allows for a 6-month transitional period from the Effective Date for existing market participants to apply for a Section 22D Licence. Accordingly, all such applications must be submitted by 31 December 2026.
 
Establishment of Market Operator
 
Pursuant to the new section 22C of the ESA 1990, the Minister may authorise or revoke the authorisation of any person, unit, department or division to be a Market Operator. “Market Operator” is defined to mean any person, unit, department or division who is authorised under section 22C to be responsible for the management of the provision and transaction of electricity and related services, including planning, scheduling, providing and settlement and any other function as may be prescribed.
 
Based on the above definition, a Market Operator could refer to a ring-fenced unit within the electricity utility company (such as is the case for Single Buyer being one such unit within Tenaga Nasional Berhad), or to an independent party that will be empowered to administer the energy market or energy exchange. From a cross-border perspective, this provision formalises the role of Single Buyer as the designated Market Operator for Energy Exchange Malaysia (ENEGEM)².
 
Regulation of Green Attributes
 
In addition to the regulation of cross-border electricity trade, a significant amendment to the ESA 1990 is the regulation of green attributes. The definition of “green attributes” is wide, encompassing the full set of environmental, power sources and emissions characteristics, whether in the form of credits, benefits, emissions reductions, offsets, allowances or by any other designation, attributable to the renewable energy from any installation.
 
The recognition of “green attributes” has the effect of unbundling of green attributes from the power, whereby these are now considered and treated as a separate asset in itself. A renewable energy power producer could therefore sell the electricity generated by its facility to the grid, and separately sell the associated green attributes to another party - such as a corporation seeking to offset its carbon emissions or achieve its decarbonisation targets.
 
Further, under the new section 32A of the ESA 1990, the Minister may determine the standards, specifications, practices and measures to be adopted and any other matters in relation to green attributes. This is supplemented by the amended section 50C, which provides that EC may issue guidelines on any matter relating to green attributes including determination of ownership, verification of amounts and the certification of green attributes. It is envisaged that there will be binding instruments issued in the near future to set out the regulatory framework for green attributes.
 
AMENDMENTS TO ECA 2001
 
Complementing the amendments to ESA 1990, the amendment to ECA 2001 expands the scope of EC’s regulatory functions to expressly include the export and import of electricity.
 
WHAT’S NEXT?
 
The amendments to the electricity supply legislation establish the legal basis for cross-border electricity trade and green attributes, both of which are critical for Malaysia’s energy transition. That being said, it is also just the beginning of operationalisation.
 
We expect the EC to be issuing specific guidelines in the near future to address crucial details such as: 

 
Alert by Rachel Chiah, Partner of the Energy Practice of Skrine.
 
 

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