Following the Ministry of Energy Transition and Water Transformation’s announcement¹ in February on the introduction of the Community Renewable Energy Aggregation Mechanism (‘CREAM’), the Energy Commission recently issued guidelines setting out the framework and requirements for CREAM (‘CREAM Guidelines’)².
 
Overview of CREAM
 
CREAM is a new renewable energy initiative that enables homeowners to lease their rooftops to local renewable energy developers for purposes of the installation and operation of rooftop solar photovoltaic systems. The renewable energy developer will be able to aggregate its various rooftop solar photovoltaic systems to generate electricity and distribute the same to domestic and commercial consumers within a radius of approximately five kilometres via the distribution system of Tenaga Nasional Berhad (‘TNB’). Such distribution will be carried out by way of the New Energy Dispatch Arrangement (‘NEDA’).
 
Roles and Responsibilities under CREAM
 
The parties involved in CREAM, as well as their respective role and responsibilities, are outlined below:
 

 
Contractual Framework under CREAM
 
It is envisaged that the contractual framework under CREAM will comprise five separate agreements. These are considered below: 

(i)

Bilateral Energy Supply Contract  The Bilateral Energy Supply Contract is entered into between the LEGA and the LGC with respect to the LEGA’s supply of energy to the LGC. The CREAM Guidelines provide that the Bilateral Energy Supply Contract shall include the following terms:  Role and responsibilities of LEGA in supplying energy to the LGC; Rights of the LGC in relation to the quality of the energy supply; Information on the LCSP such as installed capacity, location, commencement date, commercial operation date, interconnection and metering; Information on the sale of energy such as term of the Bilateral Energy Supply Contract, rate and payment; Information in relation to supply interruption, emergency condition, and maintenance; Information on parties’ arrangement in relation to the ownership and transfer of green attributes (if any); and Force majeure events and suspension of sale and purchase of energy.

(ii)

Distribution Renewable Energy System Access Agreement  The Distribution Renewable Energy System Access Agreement (DRESAA) is entered into between the LEGA and the EUC. It is intended to bind the LEGA with respect to the LEGA’s compliance with the technical requirements for network access as well as the relevant technical codes and guidelines.

(iii)

NEDA Agreement  As the NEDA mechanism will be utilised for the implementation of CREAM, the LEGA will need to register as a NEDA participant. In connection with this, the LEGA also has to execute the NEDA Agreement4 which sets out its agreement to comply with the NEDA guidelines.

(iv)	CREAMA  The LGC shall enter into the CREAMA with the EUC, whereby the EUC undertakes the role of a supplier of last resort in the event the LEGA is unable to supply electricity to the LGC.

(v)

Lease Agreement Given that CREAM is structured on the basis of homeowners leasing their rooftops for purposes of generating solar power, a lease agreement would be necessary. This would be entered into between the LEGA and the homeowner and should address matters such as the duration of the lease, the payment, and maintenance responsibilities.   In the event of any change in the homeowner, a new lease agreement is required for continued participation in CREAM.

Requirements for Participating in CREAM
 

 
It is to be noted that the LEGA can also be the LGC. In addition, the LEGA is allowed to supply to more than one LGC.
 
Any changes to or replacement of a LGC shall be notified in writing by the LEGA to the Energy Commission, with a copy to the Single Buyer and the EUC, no later than 120 days before such change takes effect.
 
Community Access Charge
 
The LEGA shall be charged a Community Access Charge (‘CAC’) of 15 sen/kWh for the use of the Peninsular Malaysia electricity supply network and associated services. The Single Buyer is responsible for collecting the CAC from the LEGA based on the amount of energy exported by the LCSP into the distribution system (including excess energy sold to the Single Buyer).
 
The CAC is fixed for a period of three years and any revision to the same will be subject to a maximum variation rate of 15% from the prevailing charge.
 
Renewable Energy Certificates
 
The CREAM Guidelines provide that the green attributes under CREAM belong to the LEGA. However, the LEGA and the LGC may agree to transfer the green attributes to the latter pursuant to the Bilateral Energy Supply Contract.
 
Decommissioning of LCSP
 
A LCSP will be subject to decommissioning if it has not been operating for 12 consecutive months or has ceased operations. In such event, the LEGA is responsible for the removal of the LCSP within 12 consecutive months or within the period specified in the decommissioning plan.
 
Application for Participating in CREAM
 
Applications for participating in CREAM can be made to the Single Buyer commencing from 1 June 2025. The LEGA is responsible for the submission of the application and shall do so on behalf of the LGC.
 
The application for participation must include the following: 

Another Feather to Malaysia’s Renewable Energy Cap
 
CREAM shares similarities with the Corporate Renewable Energy Supply Scheme (CRESS)⁵, in that it is an avenue to procure green electricity directly from renewable energy power producers rather than from TNB. It is also implemented based on the concept of third party access to the national grid.
 
It is pertinent to note that CREAM is an introduction of rooftop solar aggregation in Malaysia. This is a significant development in the country’s renewable energy landscape which is envisaged to create further economic opportunities as well as encourage consumers to contribute to the nation’s energy transition agenda. We anticipate that CREAM will be well-received in the market and expect to see a great deal of activity in this space.
 
 
For enquiries on CREAM, please contact Richard Khoo and Rachel Chiah, Partners of the Energy Practice of Skrine.
 

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