Government Incentives for Solar Power Plant

Government incentives for solar system for solar farms

Government FiT scheme

Malaysia’s Feed-in Tariff (FiT) system obliges TNB to buy from Feed-in Approval Holders (FIAHs) the electricity produced from solar system over a fixed period of 21 years at a FiT rate, which is set by a governmental agency, Sustainable Energy Development Authority of Malaysia (SEDA Malaysia).

Quota

SEDA Malaysia will set a quota on the amount of solar power systems can be installed in every six-month period.
SEDA Malaysia has yet to announce when the new quota will be released.

Feed-in Tariff (FiT) Rate

TNB will pay for the solar energy you generate based on the FiT rates and the FiT rates will prevail for 21 years (from FiT Commencement Date)

Description of Qualifying Solar Power System for Commercials FiT Rates (RM per kWh)
(a) Basic FiT rates having installed capacity of : 2013 2014
(i) above 1MW and up to and including 10MW 0.7600 0.6080
(b) Bonus FiT rates having the following criteria (one or more) : 2013 2014
(i) use as installation in buildings or building structures +0.2392 +0.2201
(ii) use as building materials +0.2300 +0.2116
(iii) use of locally manufactured or assembled solar PV modules +0.0300 +0.0300
(iv) use of locally manufactured or assembled solar inverters +0.0100 +0.0100

 

Eligibility

  • A company incorporated in Malaysia other than a company in which a foreign person holds, directly or indirectly, more than 49% of the voting power or issued share capital (excluding preference shares).
  • A body corporate constituted or established under any written law excluding the Authority.
  • A registered society as defined in the Societies Act 1966 [Act 335].
  • A firm as specified in section 6 of the Partnership Act 1961 [Act 135].
  • Any entity mentioned above who can show financial capability to fund for the solar system.

Rules

Each FiT application must be above 1MW and upto and including of 5MW.

Power Systems Study

Before applying for the FiT application, the interested party is required to contact the Distribution Licensee (DL) for Power Systems Study (PSS).

Power Systems Studies (PSS) Cost and Completion Period:

Net Export Capacity or Rated kWp of RE Installation Cost (RM) Completion Period
More Than 1 MW Up To 5 MW 40,000 30 Days
Additional For Insulation Coordination Studies If Required 20,000 10 Days
Additional for Solar PV – Dynamic Study (Voltage Fluctuations) If Required 10,000

Sales Tax Exemption

Sales tax exemption on solar PV modules manufactured locally. The prevailing sales tax applicable for imported solar PV modules is 10%. That means if you opt for locally manufactured PV modules, you can save 10% tax on solar PV modules.

Double Tax Allowances

Eligible producer can apply for Investment Tax Allowance or Pioneer Status from MIDA. Eligible producer can also claim capital allowance for investment in plant and machinery required for conducting the project.

Disclaimer: The information above is excerpted from SEDA Malaysia and MIDA’s official websites and it serves the purpose as general guides. We do not take any responsibility for any omission or incompleteness of information and if there is any change of FiT rates, rules, and policies set by SEDA Malaysia or MIDA. It is investor’s responsibility to check for the latest information from SEDA Malaysia and MIDA.