In conjunction with the International Clean Day of Energy on 26 January 2024, Malaysia’s Ministry Energy Transition and Public Utilities (‘
Ministry’) announced the implementation of four renewable energy (‘
RE’) programmes for 2024.
1 The decision for such implementation was made following the assessment of factors such as the capacity of the grid system, the demand for green electricity, the value of economic spillover and the purchasing power of consumers.
ADDITIONAL QUOTAS FOR NET ENERGY METERING PROGRAMME
The Malaysian Government will continue with the Net Energy Metering (‘
NEM’) programme, which involves the generation, consumption and sale of solar energy via rooftop solar installations.
2 Additional quotas of 100MW of the NEM Rakyat initiative and 300MW for the NEM NOVA initiative will be released on 5 February 2024, and applications for the same may be made from the said date until December 2024 or until the quotas have been fully allocated (whichever is the earlier). It is expected that the NEM programme will allow at least 24,000 domestic consumers and 100 commercial and industrial consumers to utilise the rooftops of their respective premises for the generation of electricity for self-consumption.
It is to be noted that there is no additional quota released for the NEM GoMEN initiative, which is available to government ministries and entities. This is likely because there is still a balance of 50.2528MW for NEM GoMEN from the existing quota. In comparison, the remaining quota currently available for NEM Rakyat and NEM NOVA is 0.1432MW and 3.9901MW respectively.
3 It is also possible that a revision to NEM GoMEN may be in the works and any additional quota will therefore only be released once that has been completed. In Malaysia’s National Energy Transition Roadmap (‘
NETR’)
4, a key RE initiative that has been identified is the expansion of the virtual aggregation mechanism, which is presently limited to NEM NOVA, to NEM GoMEN.
FIFTH COMPETITIVE BIDDING ROUND FOR LARGE-SCALE SOLAR PROGRAMME
The fifth competitive bidding round for the Large-Scale Solar (‘
LSS’) programme (‘
LSS5’) will commence on 1 April 2024, with a quota of 2GW. This has been much-awaited by industry players, given that the last LSS competitive bidding round took place in 2020.
For LSS5, there are two updates to the LSS programme that have been highlighted by the Ministry:
The intention behind conducting the LSS programme on this bigger scale is to obtain tariff offers at the most competitive rates. It is also likely aimed at enhancing the financial sustainability of developing LSS projects, a need that was acknowledged in the NETR. In the previous LSS competitive bidding round, the sharp increase in solar panel prices hindered the completion of several projects. There were also concerns as to the feasibility of such projects given the low tariff rates.
LOW CARBON ENERGY GENERATION PROGRAMME
The Low Carbon Energy Generation programme will be introduced as part of the New Enhanced Dispatch Arrangement (‘
NEDA’) mechanism. With a quota of 400MW, this programme will provide opportunities for the development of power generation projects utilising resources such as wind, small hydro, biogas, biomass, and hydrogen. Applications can be made to the Single Buyer from 5 February 2024 onwards.
The introduction of the Low Carbon Energy Generation programme in Malaysia will facilitate the increase in energy security and reliability in the country as well as create new economic opportunities through the development of power generation projects utilising resources other than solar.
Details on this programme will likely only be available once the application process commences. It is also anticipated that there will be resulting changes to the NEDA requirements.
BATTERY ENERGY STORAGE SYSTEM
A Battery Energy Storage System (‘
BESS’) project with a total capacity of 400MWh will be spearheaded by Tenaga Nasional Berhad, with the Grid System Operator operationalising the same. This project will be under the regulatory purview of the Energy Commission.
The Ministry has in its statement noted that the BESS project, which will commence in the first quarter of 2024, will support Malaysia’s energy transition aspirations and strengthen the grid system.
A BUSY FIRST QUARTER FOR MALAYSIA’S RE SECTOR
The four programmes described above are aimed at increasing the mix and capacity of RE in Malaysia’s energy supply. It will also provide opportunities and access to the green electricity supply.
With these programmes scheduled to kick off between February to April 2024, the first quarter of this year promises to be a busy one for the RE sector in Malaysia. Further, with the efforts required in order to achieve the country’s target to have 70% installed RE capacity by 2050, there will almost certainly be more RE developments to come.
For enquiries on matters relating to energy transition, please contact Richard Khoo (Partner) and Rachel Chiah (Senior Associate) of the Energy Practice of Skrine.