net energy metering (nem)

An overview of Net Energy Metering (NEM) in Malaysia as an investment and how it can help consumers to save electricity bills.

Overview of NEM

Net Energy Metering (NEM) in Malaysia

History of NEM

The Ministry has introduced few solar PV initiatives to encourage Malaysia’s Renewable Energy (RE) uptake. From the RE townhall held on 12^th July 2018, one of the key issues highlighted by the PV industry is the need to change the concept of NEM from the existing net billing to true net energy metering. This is will help improve the return of investment of solar PV under the NEM.

Effective on 1st January 2019, the Net Energy Metering (NEM) will be improved by adopting the true net energy metering concept and this will allow excess solar PV generated energy to be exported back to the grid on a “one-on-one” offset basis. This means that every 1kWh exported to the grid will be offset against 1kWh consumed from the grid, instead of at the Displaced Cost previously.

The quota allocation for NEM is 500 MW up to year 2020. Quota allocation will be divided into domestic and non-domestic category. Agriculture will be a new category to be added to the NEM scheme. The NEM category has been divided into 4 categories which are Residential, Commercial, Industrial and Agriculture. The new NEM scheme is only applicable to Peninsular Malaysia and applicants must be a registered TNB customers. NEM is executed by the Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC), regulated by the Energy Commission (EC), with Sustainable Energy Development Authority (SEDA) Malaysia as the implementing agency.

Net Energy metering (NEM) concept

What is NEM?

Net metering or net energy metering (NEM) allows electricity customers who wish to supply their own electricity from on-site generation to pay only for the net energy they obtain from the utility. NEM is primarily used for solar photovoltaic (PV) systems at homes and businesses (other distributed generation (DG) customers may have access as well). Since the output of a PV system may not perfectly match the on-site demand for electricity, a home or business with a PV system will export excess power to the electric grid at some times and import power from the grid at other times. The utilities bill customers only for the net electricity used during each billing period. Alternately, if a customer has produced more electricity than they have consumed, the credit for that net excess generation will be treated according to the NEM policy of the state or utility.

The concept of NEM is that the energy produced from the solar PV system installed will be consumed first, and any excess to be exported and sold to the distribution licensee (such as TNB /SESB ) at the prevailing Displaced Cost prescribed by the Energy Commission. This scheme is applicable to all domestic, commercial and industrial sectors as long as they are the customers of TNB (Peninsular Malaysia) or SESB (Sabah and FT Labuan). The PV systems are allowed to be installed at available rooftops or car porch only within their own premise. Based on FiT experience, solar PV is a technology that requires minimal construction and with high take up rate compared to other RE technologies. One factor driving such growth is the declining cost of solar PV systems in recent years. As solar PV technology is more applicable to the NEM, it is the only technology whereby the public at large can play their role in addressing climate change by generating the clean energy, hence reduce the energy consumption from electricity generated by fossil fuel powered generators.

NEM scheme is ideally suitable to complement the current FiT and Large Scale Solar programmes. The NEM scheme is widely adopted globally and can further contribute in achieving the national RE target, and reduce dependency on imported fossil fuels.

The energy generation by NEM consumer will be consumed first which implies less energy import from the utility. The more energy generated from the solar PV system is self-consumed; the more NEM consumers can save their electricity bills (by reducing the electricity imported from the utility). This is especially relevant for consumers that fall under the high electricity tariff block. In many countries, NEM is often used to hedge any future fluctuation or increase in electricity tariff.

Under the NEM, any excess energy generated will be exported to the utility grid and will be paid at the prevailing Displaced Cost as prescribed by the Energy Commission. The priority is for self-consumption, however some premises especially industry or manufacturing companies which may not be operating during the weekends may have excess energy exported to the grid. The credit shall be allowed to roll over for a maximum of 24 months and net-off at prevailing Displaced Cost.

By generating their own clean energy, consumer will contribute to the reduction of CO2 emission, hence reducing the carbon foot print and mitigating climate change.

PV solar systems generate the most electricity during the middle of the day, when demand and the cost of electricity are highest. With net metering, individual PV systems can offset expensive peak electricity purchases by the utility, resulting in lower electricity bills for all customers.

Since all net metered PV systems deliver electricity at or near the point of consumption, they reduce the need to expand transmission grid capacity, a long and expensive process.

Why NEM?

Benefits of NEM

Net metering PV systems allow families and businesses to fix a portion of their utility expenses for years at a cost lower than they would have paid otherwise.

NEM provides a critical component to the formula that allows for the development of a solar energy market and the jobs that come with it. Local jobs in the solar industry are those in the hard hit construction industries, especially roofing and electrical trades.

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Drop us a call today for more information regarding NEM installation and how it can help to save electricity cost based on your monthly energy bill.

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