Have you been seeing the term Net Energy Metering or NEM thrown around in Malaysia? Well if it’s related to getting solar in Malaysia you’ve come to the right place.

In this blog, we’ll cover in detail what this means and how this scheme not only helps you generate power but helps put more money back in your pocket.

What is Net Energy Metering (NEM)?

Net Energy Metering (NEM) is a Malaysian government initiative to encourage the uptake of solar power in Malaysia. It allows solar power system owners to sell excess electricity generated by their solar panels back to the grid.

Essentially, it enables consumers to become “prosumers,” producing and consuming their own electricity while also contributing to the grid when they generate more power than they need. This is done through a bi-directional meter that measures both the electricity consumed from and sent back to the grid.

For example, you install a solar system for your home. But you go away for a holiday with no one using electricity at home. This is where net metering comes in.

How does Net Energy Metering work?

Under NEM, for each 1 kWh of exported electricity to the grid, TNB will offset 1 kWh of electricity nsumed from the grid, irrespective of time of use.

Therefore TNB’s electrical grid acts as your battery storage. If you are totally off-grid, then you may need to explore battery storage. 

1. You Install Solar For Your Home or Business: After installing solar panels to take advantage of the sun’s energy. During the day, your panels generate more electricity than what your home or business uses.
2. Your Electricity Meter Starts Going Down: As part of the net metering program, your electricity meter starts going in reverse because you’re not consuming as much electricity as your solar panels produce. When your solar panels produce excess power, the meter runs backward, which gives you credit for the electricity you’re sending back to the grid.
3. Credit Generated: The credit on your electricity bill can be used later when your solar panels aren’t producing electricity, like when it’s raining or at nighttime. So if your solar system generates RM200 of electricity and you consume RM300. You only pay RM100, the “net” amount of electricity used.

Who Is Eligible For NEM

In Malaysia, various consumer segments are eligible to participate in the NEM program, including:

• Residential homeowners
• Government buildings and facilities
• Commercial establishments
• Industrial facilities

Eligibility criteria may vary slightly depending on the specific guidelines and regulations set by the authorities. Generally, consumers must have a valid electricity supply account and meet technical requirements related to the installation of solar power systems.

The Different Versions of Net Energy Metering (NEM)

Net Energy Metering has evolved over time, with different versions introduced to improve its effectiveness and benefits for consumers. In Malaysia, the NEM program has undergone several iterations, each with its own set of rules and incentives to encourage the adoption of solar power systems.

Let’s dive into the world of Malaysia’s Net Energy Metering Scheme (NEM) and how it’s been evolving to make solar power accessible and rewarding for everyone.

The Start of NEM

NEM get started back in November 2016. NEM started with a 500 MW quota until 2020.

It’s goal was to encourage Renewable Energy (RE) adoption. The concept was simple: solar PV systems would first power your own home or business, and any extra energy would be sold to the grid at market rates.

Unfortunately, this first version didn’t attract much interest in Malaysia due to its limited financial incentives combined with high solar installation costs, resulting in lower adoption rates.

NEM 2.0: A New Dawn

NEM 2.0 was introduced on January 1, 2019, a genuine net energy metering system. This enabled the export of surplus solar energy to the grid on an individually tracked basis. This development received must greater interest. By the end of 2020, the entire 500 MW allocation had been utilized.

Introducing NEM 3.0:

On December 29, 2020, NEM 3.0 was launched, operating between 2021 and 2023. With another allocation of 500MW, its primary goal is to enhance solar accessibility for all. NEM 3.0 introduces three novel initiatives, expanding opportunities to utilise solar energy and reduce electricity expenses.

The Current Version of NEM (NEM 3.0)

As of now, the current version of NEM in Malaysia is NEM 3.0. This latest iteration of the program aims to further promote the deployment of solar energy systems by offering attractive incentives and streamlined processes for consumers.

NEM 3.0 is broken down into three (3) main initiatives each serving different sectors of Malaysia.

The three main initiatives are:

• NEM Rakyat Program (for Residential Solar)
• NEM GoMEn (Government Ministries and Entities) Program (for Government)
• NOVA (Net Offset Virtual Aggregation) Program (for Commercial & Industrial Solar)

Benefits of NEM 3.0

NEM 3.0 offers several benefits to consumers, including:

• Enhanced tariff rates: NEM 3.0 provides more favorable feed-in tariff rates for exported solar energy, allowing consumers to earn more credits for the electricity they generate.
• Higher system capacity limit: Under NEM 3.0, consumers can install larger solar power systems, enabling them to generate more electricity and potentially offset a greater portion of their energy consumption.
• Simplified application process: NEM 3.0 streamlines the application and approval process, making it easier and faster for consumers to participate in the program

How NEM Works For Different Sectors

NEM Rakyat Programme (Residential Solar)

For residential consumers, NEM allows homeowners to install solar panels on their rooftops to generate electricity for their own use. Any excess energy generated is exported to the grid, and consumers receive credits for this surplus electricity. These credits can then be used to offset future electricity bills, resulting in savings for the homeowner.

Any excess energy can help you offset future electricity bills, and these credits can roll over for up to 12 months!

Homeowners can install solar systems of up to 4KW for single-phase homes and 10KW for three-phase homes.

A generous 100MW quota was set aside for the NEM Rakyat Programme, starting from February 1, 2021, with a 10-year contract for successful applicants. But remember, this program stays open only until the quota is filled or until December 31, 2023 – whichever comes first.

In January 2024, it was announced that the NEM 3.0 would be extended to 31st December 2024 with additional quotes of 100MW for NEM Rakyat (Residential Solar) and 300MW for NEM NOVA (Commercial & Industrial Solar). Applications opened on 5th of February 2024

The eligibility requirements for the NEM Rakyat Programme application are as follows:

1. Users who are registered or are applying to register with TNB in Peninsular Malaysia.
2. Users/applicants who have not installed any solar PV system under any previous photovoltaic solar program.
3. Applicants must be domestic users occupying their privately-owned premises, not for hotels, hostels, any form of businesses, trades, professional activities, or services.

NEM GoMEn (Government)

Government buildings can also benefit from NEM by installing solar power systems on their premises. Similar to residential consumers, government buildings can generate electricity from solar panels and export excess energy to the grid.

Under the programme, any excess energy generated will be exported to the utility grid and will be paid on a 1:1 offset basis. The credit shall be allowed to roll over for a maximum of 12 months. The maximum size of a solar PV system allowed is 1MW per customer.The credits earned through NEM can help reduce the operational costs of government facilities while promoting renewable energy usage.

A 100MW quota has been allocated for the NEM GoMEn Programme with a 10-year contract for successful applicants.

Nova (Commercial & Industrial)

Commercial and industrial establishments can leverage NEM to reduce their electricity expenses and carbon footprint. By installing solar power systems on their rooftops or premises, businesses can generate clean energy for their operations. Any surplus electricity produced can be exported to the grid, earning credits that can offset energy costs and improve the company’s bottom line.

When NEM 3.0 was introduced in April 2021, a 300MW quota was set aside for the NOVA Program.

This quota was further extended by an additional 300MW in February 2024 bringing to the total to 600 MW.

How To Apply For NEM

To apply for NEM in Malaysia, consumers need to follow these steps:

1. Eligibility Check: Ensure that you meet the eligibility criteria set by the authorities, which typically include having a valid electricity supply account and meeting certain technical requirements for installing solar panels.
2. Engage a Certified Installer: Work with a certified solar PV installer or solar company to design and install your solar power system. The installer will handle the necessary paperwork and ensure that the system complies with relevant regulations and standards. The installer will also review your documents to make sure there are no errors
3. Design and Specification Preparation: All technical designs, drawings, and specifications are prepared to supplement your NEM application.
4. Submit Application: Complete the NEM contract and submit it along with supporting documents to the Sustainable Energy Development Authority (SEDA) Malaysia
5. Approval and Installation: Await approval, after which you can proceed with the installation of your solar power system.
6. Bi-Directional Meter Installation: Once the solar panels are installed, a TNB representative will install a bi-directional meter to measure both the electricity consumed and exported to the grid.
7. Start Generating and Saving: With the bi-directional meter in place, you can start generating your own electricity and earning credits through NEM. Monitor your energy usage and savings through the meter readings and adjust your consumption patterns accordingly to maximize benefits.

You can find out in more detail about the process by visiting the TNB website.

Conclusion – Next Steps

That’s it! If you’re thinking about installing rooftop solar for your home or business, you’re in the perfect spot.

We’ve explored the details of solar panel system installation process in Malaysia, equipping you with the insight needed for informed choices.

If you’re ready to install Locating the ideal installer for your roof is easy with TopSolar.

Just hit the button below to find the best solar installed for you so you can your solar cost-cutting journey promptly. Embrace sustainability, savings, and a brighter future powered by solar power!