On 14 July 2023, the Minister of Natural Resources, Environment and Climate Change, Nik Nazmi Nik Ahmad (‘
Minister’), announced changes to Malaysia’s Green Electricity Tariff (“
GET”) Programme
1. Introduced in late 2021, the GET Programme offers consumers the option to purchase electricity generated from renewable energy sources at a premium tariff rate. In return, consumers subscribing to the GET Programme are able to reduce their carbon footprint through the receipt of renewable energy certificates (‘
RECs’) evidencing their consumption of green electricity.
INCREASE IN GET PROGRAMME TARIFF
The premium tariff rate for the GET Programme will be revised to
21.8 sen/kWh – an increase of almost six times from the current rate of 3.7 sen/kWh. The Minister in his announcement stated that the decision for such increase was based on the benchmark for setting the retail price of green electricity supply.
NO LIMIT ON GET SUBSCRIPTION QUOTA
Presently, a consumer’s subscription to the GET Programme is capped to 30% of their average monthly electricity consumption. This cap will be removed, allowing consumers the option to subscribe up to 100% of their average monthly electricity consumption.
WAIVER OF ICPT CHARGES
Imbalance Cost Pass-Through (‘
ICPT’) charges
2 will be waived for consumers subscribing to the GET Programme, on the basis that their electricity was not generated by fossil fuels. The consumers’ respective monthly electricity bills will reflect such waiver.
It is to be noted that the waiver of the ICPT charges applies to the extent of the number of GET blocks
3 that a consumer has subscribed to
4.
WHEN DO THE CHANGES TAKE EFFECT?
The changes to the GET Programme will take effect from
1 August 2023. Consumers with existing subscriptions have the option to maintain, reduce or terminate their subscription by 31 July 2023. A consumer who does not respond to Tenaga Nasional Berhad’s notification on the foregoing will be deemed as opting out, and their subscription will be terminated automatically on 31 July 2023.
COMMENTS
It remains to be seen whether these changes to the GET Programme will encourage consumers to progress on their energy transition journey, given the high premium tariff rate. It is pertinent to note that a consumer has to pay the GET premium tariff rate
in addition to what they would pay for its electricity consumption at the gazetted tariff rate
5. Consumers who continue to subscribe to the GET Programme will therefore have to be prepared to bear a significant increase in cost for their electricity consumption.
While there is a waiver of ICPT charges, such savings may not be significant enough to detract from the impact of the revised premium tariff rate. Further, given that the RECs issued to the consumer are not tradable and there is no legal requirement for businesses to reduce their carbon emissions at this time, the issuance of the RECs do not seem to have an economic benefit that can be derived and set-off against the increased cost.
Consumers will need to determine whether the benefits of going green in this aspect can be balanced with the additional costs they will incur.
Alert by Richard Khoo (Partner) and Rachel Chiah (Senior Associate) of the Energy Practice of Skrine.