On 30 December 2020, the Ministry of Energy and Natural Resources ('KETSA') announced the introduction of the Net Energy Metering 3.0 programme ('NEM 3.0'). This announcement is pursuant to the 500MW quota under the previous Net Energy Metering programme ('NEM 2.0') being fully taken up as of 27 November 2020. NEM 3.0 introduces three new initiatives which are considered below.
i. NEM Rakyat (Domestic Consumers)
The first initiative is NEM Rakyat, a programme for domestic
consumers, which has a total capacity of up to 100MW. Applications
for quota allocation under NEM Rakyat may be submitted to the
Sustainable Energy Development Authority
('SEDA') from 1 February 2021 to 31
December 2023 and are available on a first-come-first-served basis.
The application fee will be charged at the rate of RM10.00 for each
kW applied for.
It is envisaged that Program NEM Rakyat will result in savings on
electricity bills for 10,000 to 25,000 domestic account holders
with Tenaga Nasional Berhad ('TNB') or an
estimated 40,000 to 100,000 households in Peninsular Malaysia.
KETSA stated that only five percent (5%) of the applications for
NEM 2.0 were from domestic consumers. Given the projected savings
under NEM 3.0, it is possible we will see an increase in the
participation of domestic consumers in these times of the
"work from home" culture which would result in increased
household electricity consumption.
ii. NEM GoMEn (Government Ministries and Entities)
The second initiative under NEM 3.0 is NEM GoMEn, which is a
programme aimed at lowering the electricity bills at government
buildings and offices. Applications for quota allocation under
Program GoMen may be submitted to SEDA from 1 February 2021 to 31
December 2023 and are available on a first-come-first-served basis.
The application fee will be charged at the rate of RM10.00 for each
kW applied for.
KETSA estimates that, under this programme, approximately one
hundred (100) government agencies in Peninsular Malaysia will enjoy
a total savings of RM6 million per month on their electricity
bills.
NEM 3.0 Guidelines for NEM Rakyat and NEM
GoMEn
The Energy Commission Malaysia ('EC') had
on 30 January 2021 published the guidelines for the implementation
and operation of two of the initiatives under NEM 3.0
('NEM 3.0 Guidelines')1. A
summary of the key features and requirements applicable to NEM
Rakyat and NEM GoMEn are set out below.
Available Quota
Both NEM Rakyat and NEM GoMEn have an available quota of 100MW
each.
Eligibility for Participation
In order to be eligible for quota allocation under NEM Rakyat or
NEM GoMEn, the applicant must be an owner or occupier of a premise
that is supplied with, or will be supplied with, electricity by
TNB. This is a requirement that was already imposed under NEM
2.0.
However, a new restriction is introduced under the NEM 3.0
Guidelines which stipulates that a person who has installed a solar
photovoltaic installation under NEM 2.0 will not be eligible to
participate in NEM Rakyat.
Type of Installation Allowed
The NEM 3.0 Guidelines stipulate that a solar photovoltaic
installation under NEM Rakyat or NEM GoMEn must be in the form of
photovoltaic panels mounted on the rooftop of the building within
the premise supplied with electricity by TNB. Unlike NEM 2.0,
installations on car parks and ground-mounted installations will
not be allowed or considered.
Maximum Capacity of Installation
The maximum capacity of installations under NEM Rakyat and NEM
GoMEn is capped as follows:
NEM Rakyat |
i. 4kW for a single phase system; or ii. 10kW for a three-phase system. |
NEM GoMEn |
Maximum capacity of 1,000 kW. This is subject to the following
conditions: i. For medium voltage consumers, it should not exceed 75% of Maximum Demand; and ii. For low voltage consumers, it should not exceed 60% of fuse rating (for direct meters) or 60% of the current transformer rating of the metering current transformers. Note: 'Maximum Demand' is defined in the NEM 3.0 Guidelines as twice the largest number of kilowatt-hours used during any consecutive thirty (30) minutes in a month. |
Credits to Electricity Bills by way of Offset
The '1 to 1 offset' concept
('Offset') offered under NEM 2.0 will be
maintained and applies to both NEM Rakyat and NEM GoMEn. This means
that any excess electricity generated by the consumer's
installation which is not consumed due to operational constraints
or variation in load demands may be exported to the grid. The
consumer will then receive credits for the energy that has been
exported and may use such credits to offset part of the electricity
bill for electricity supplied by TNB during the applicable billing
period. Net credits can be rolled over, but only for a maximum of
twelve months within the calendar year.
It is pertinent to note that the Offset will only be available for
the first ten years from the date of commencement of the
consumer's contract with TNB, after which the consumer's
electricity consumption will be converted to self-consumption
basis2.
Licensing for Installation
Pursuant to Section 9 of the Electricity Supply Act 1990, a
licence is required for any person to use, work or operate any
installation designed for the use and/or supply of electricity
('Section 9 Licence'). However, for solar
photovoltaic installations, obtaining a Section 9 Licence is only
necessary if the installation is above 24kWp for a single phase
system or above 72kWp for a three-phase system. The requirements
for obtaining the said licence shall be as set out in the EC's
Guidelines on Licensing under Section 9 of the above-referred
Act.
Given that the maximum capacity of an installation under NEM
Rakyat will be capped at 4kW for a single phase system and 10kW for
a three-phase system, domestic consumers participating in NEM
Rakyat will not have to obtain a Section 9 Licence for their
respective installation. The Section 9 Licence requirement would
however apply to consumers under NEM GoMEn with installations that
are above the stipulated capacities.
Notwithstanding the above, domestic consumers should take note
that they will be required to complete a form for their exemption
from the Section 9 Licence requirement and submit the same to the
EC no later than 28 days after they are notified of the approval of
their application to participate in NEM 3.0.
Timeframe for Completion of Installation
The NEM 3.0 Guidelines expressly provide that a successful
applicant must complete the installation within three months from
date on which they are notified by SEDA of the approval of their
application. In the event the installation is not completed within
the stipulated three-month period, the consumer's application
will be deemed to have been withdrawn and cancelled.
- Program NOVA (Net Offset Virtual Aggregation) (Commercial and Industrial Consumers)
The third and perhaps most interesting initiative introduced
under NEM 3.0 is Program NOVA, which is targeted towards commercial
and industrial consumers affected by the COVID-19 pandemic.
Applications for quota allocation under Program NOVA may be
submitted to SEDA from 1 April 2021 to 31 December 2023 or until
the quota has been fully taken up. At the time of writing, the EC
has not released guidelines for Program NOVA.
At present, the available information on the elements of Program
NOVA are as follows:
- Allocated quota of 300MW.
- Offset will be based on System Marginal Price3 ('SMP') rate rather than the prevailing tariff. This will be converted to credits that are reflected in the electricity bill for the following month.
- Option to have virtual aggregation4 of excess electricity generated by the rooftop solar installation for up to three electricity billing accounts under the same owner.
- Capacity limit will depend on whether the consumer opts for Offset only (1MWac) or whether the consumer opts for Offset and virtual aggregation (5MWac).
From KETSA's announcement, it would seem that Program NOVA is intended to help entrepreneurs, local companies, and places of worship reduce their electricity bills and operational costs. However, with the application process, the obtaining of financing, and the installation works for the rooftop solar installation, it will take some time before commercial and industrial consumers will benefit from savings on their electricity bills.
New Benefits for NEM 2.0 Consumers
Aside from the new initiatives under NEM 3.0, KETSA has also
introduced the following benefits for consumers under NEM 2.0:
- After the first ten years, the Offset will be at the SMP rate for the subsequent ten 10 years; and
- Electricity consumption will be converted to self-consumption basis after the ten years of the SMP rate ends.
The implementation of these new benefits for consumers under NEM
2.0 is pursuant to feedback that KETSA received with respect to
consumers' business models and the return on investment being
limited to the initial ten-year period of the Offset.
Comments
With the introduction of NEM 3.0, it is clear that solar energy
generation will continue to be the focus of Malaysia's
renewable energy initiatives. This is a step in the right direction
with regards to the future of clean energy in the country. However,
what remains to be seen in the short term is whether NEM 3.0 will
help consumers with managing their current financial concerns
during this COVID-19 pandemic.
Footnotes
1 The NEM 3.0 Guidelines can be accessed at http://www.seda.gov.my/reportal/nem/. Note that the NEM 3.0 Guidelines presently only address two of the initiatives under NEM 3.0, namely NEM Rakyat and NEM GoMEn.
2 Self-consumption means that electricity generated will be for the consumer's own usage and any excess will not be allowed to be exported to the grid.
3 System Marginal Price (SMP) refers to the market rate.
4 Under the virtual aggregation option (also referred to as virtual meter aggregation or virtual net metering), credits for excess electricity that is supplied to the grid is not limited to only the billing account at the generation site. Such credits can be distributed to the billing accounts for other locations or sites, provided these accounts are in the name of the consumer. At the time of writing, details of the virtual aggregation mechanism under Program NOVA were not yet available.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.