The Ministry of Energy and Natural Resources (KETSA) announced the introduction of the Net Energy Metering 3.0 programme (NEM 3.0).
This announcement was made pursuant to the 500 megawatt (MW) 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, as set out below.
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 until 31 December 2023 and are available on a ‘first come, first served’ basis. The application fee will be charged at a rate of RM10 for each kilowatt applied for.
The NEM Rakyat programme is expected to result in costs savings 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 5% of the applications for NEM 2.0 were from domestic consumers. Given the projected savings under NEM 3.0, there may be increased participation by domestic consumers given the present work-from-home culture, which will result in increased household electricity consumption.
NEM GoMEn (government ministries and entities)
The second initiative under NEM 3.0 is NEM GoMEn, which aims to lower the electricity bills for government buildings and offices.
Applications for quota allocation under the GoMen programme may be submitted to SEDA from 1 February 2021 until 31 December 2023 and are available on a first come, first served basis. The application fee will be charged at a rate of RM10 for each kilowatt applied for.
KETSA estimates that under this programme, approximately 100 government agencies in Peninsular Malaysia will enjoy total savings of RM6 million per month on their electricity bills.
NEM 3.0 Guidelines for NEM Rakyat and NEM GoMEn
On 30 January 2021 the Energy Commission published guidelines for the implementation and operation of two of the initiatives under NEM 3.0 (ie, NEM Rakyat and NEM GoMEn).(1) A summary of the key features and requirements applicable to these initiatives is set out below.
NEM Rakyat and NEM GoMEn each have an available quota of 100MW.
Eligibility for participation
In order to be eligible for quota allocation under NEM Rakyat or NEM GoMEn, the applicant must own or occupy a premise that is supplied with, or will be supplied with, electricity by TNB. This requirement already applied under NEM 2.0.
However, a new restriction has been 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 under NEM 2.0, installations in carparks and ground-mounted installations will not be considered.
Maximum capacity of installation
The maximum capacity of installations under NEM Rakyat and NEM GoMEn is capped as follows.
4kW for a single-phase system; and
10kW for a three-phase system.
Maximum capacity of 1,000kW. This is subject to the following conditions:
for medium-voltage consumers, it should not exceed 75% of maximum demand; and
for low-voltage consumers, it should not exceed 60% of the fuse rating (for direct meters) or 60% of the current transformer rating of the metering current transformers.
‘Maximum demand’ is defined in the NEM 3.0 guidelines as twice the largest number of kilowatt hours used during any consecutive 30 minutes in one month.
Credits to electricity bills by way of offset
The ‘one-to-one’ offset offered under NEM 2.0 has been 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 these to offset part of its electricity bill for electricity supplied by TNB during the applicable billing period. Net credits can be rolled over, but only for a maximum of 12 months per calendar year.
This offset will be available only for the first 10 years from the date of commencement of the consumer’s contract with TNB, after which the consumer’s electricity consumption will be converted to a self-consumption basis.(2)
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 or supply of electricity. However, for solar photovoltaic installations, obtaining a Section 9 licence is necessary only if the installation is above 24kWp for a single-phase system or above 72kWp for a three-phase system.
The requirements for obtaining the licence are set out in the Energy Commission’s Guidelines on Licensing under Section 9 of the Electricity Supply 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.
However, the Section 9 licence requirement will apply to consumers under NEM GoMEn with installations that are above the stipulated capacities.
Notwithstanding the above, domestic consumers will be required to complete a form for their exemption from the Section 9 licence requirement and submit it to the Energy Commission within 28 days of being 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 of the date on which it is notified by SEDA of the approval of its application.
If the installation is not completed within the stipulated three months, the consumer’s application will be deemed to have been withdrawn and cancelled.
Programme NOVA (commercial and industrial consumers)
The third and perhaps most interesting initiative introduced under NEM 3.0 is Programme NOVA (ie, net offset virtual aggregation), which is targeted at commercial and industrial consumers affected by the COVID-19 pandemic.
Applications for a quota allocation under Programme NOVA may be submitted to SEDA from 1 April 2021 until 31 December 2023 or until the quota has been fully taken up. To date, the Energy Commission has not released guidelines for Programme NOVA.
At present, the available information on the elements of Programme NOVA are as follows:
There is an allocated quota of 300MW.
The offset will be based on the system marginal price(3) (SMP) rate rather than the prevailing tariff. This will be converted to credits that will be reflected in the electricity bill for the following month.
There is an option for virtual aggregation(4) of excess electricity generated by the rooftop solar installation for up to three electricity billing accounts under the same owner.
The capacity limit will depend on whether the consumer opts for offset only (1MWac) or offset and virtual aggregation (5MWac).
From KETSA’s announcement, it seems that Programme NOVA aims 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 be 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 10 years, the offset will be at the SMP rate for the subsequent 10 years.
Electricity consumption will be converted to a self-consumption basis after the 10 years of the SMP rate ends.
The implementation of these new benefits for consumers under NEM 2.0 stems from feedback that KETSA received with respect to consumer business models and the return on investment being limited to the initial 10-year period of the offset.
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 regard 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 to manage their financial concerns during the COVID-19 pandemic.