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Every solar and BESS project in Malaysia is held together by a stack of contracts. Get them right and the project has a clear commercial foundation, one that lenders will accept, contractors will perform against, and acquirers will pay for. Get them wrong and the gaps show up later, when renegotiation is no longer straightforward and disputes are expensive.
The contracts behind a solar or BESS project are not generic commercial agreements. For solar projects, each scheme, whether the Large-Scale Solar (LSS) programme, the Corporate Renewable Energy Supply Scheme (CRESS), the Community Renewable Energy Aggregation Mechanism (CREAM), Solar ATAP, or SELCO, has its own regulatory framework, contractual requirements, and risk profile. A Power Purchase Agreement (PPA) under LSS operates differently from a Bilateral Energy Supply Contract (BESC) under CRESS. An Engineering, Procurement, Construction & Commissioning (EPCC) contract for a 50MW LSS plant carries different risks from one for a rooftop C&I installation. For BESS projects, the contract structure must address a different set of issues — equipment supply, site rights, grid connection, safety requirements, battery degradation, availability, warranties, O&M responsibilities and performance risk.
Shu Pin advises on the full suite of project contracts across all Malaysian solar schemes and BESS project models, drafting, structuring, and negotiating the agreements that determine how a project is built, operated, financed, and eventually transferred.
The PPA is the long-term revenue contract of an LSS or private solar project, the agreement under which the developer sells electricity to the offtaker, typically Tenaga Nasional Berhad (TNB) under LSS or a corporate buyer under a private arrangement. A 21-year PPA with TNB under LSS is a long-term commitment with fixed pricing and defined obligations. The terms that govern tariff structures, performance requirements, curtailment provisions, force majeure, and termination rights determine the commercial viability of the project for its entire operational life.
Under the Corporate Renewable Energy Supply Scheme (CRESS) and Community Renewable Energy Aggregation Mechanism (CREAM), the BESC is the core commercial agreement between the Renewable Energy Developer (RED) / Local Energy Generation Aggregator (LEGA) and the Green Consumer / Local Green Consumer. It is a privately negotiated agreement guided by the Energy Commission’s minimum requirements but with significant flexibility for commercial negotiation. The BESC sits within a wider contractual framework. Under CRESS, the related project documents include the Renewable Energy System Access Agreement (RE SAA), Corporate Renewable Energy Supply Agreement (CRESA), NEDA arrangements, and Backfeed Agreement. Under CREAM, the contractual framework includes the Distribution Renewable Energy System Access Agreement (DRESAA), NEDA Agreement, and Community Renewable Energy Aggregation Mechanism Agreement (CREAMA). Getting the BESC right, particularly on pricing and tariff adjustment mechanisms, energy supply and allocation obligations, billing and payment, supply shortfall, changes in consumption, consumer replacement or withdrawal, and termination, is critical to the RED’s or LEGA’s revenue stability.
The EPCC contract governs how the solar system, BESS or solar-plus-storage project is built. It is the most financially significant contract in the development and construction phase, covering design and engineering obligations, procurement of equipment, construction programme and milestones, performance testing, commissioning procedures, defects liability, and handover. For BESS projects, it should also address battery system integration, safety requirements, testing protocols, availability, degradation assumptions and interface with grid or site operations. The EPCC contract must align with the project’s PPA, BESC, BESS Leasing Agreement obligations. A performance guarantee that falls short of the PPA’s output requirements or BESS performance requirements creates a gap the developer carries. Payment structures, liquidated damages, variation procedures, and termination provisions require careful drafting to reflect the risk allocation both parties have actually agreed to.
Where an EPC contractor engages subcontractors for specific scopes such as civil works, electrical installation, and equipment supply, BESS installation, the subcontract must flow down the key obligations, risk allocation, and timelines from the main EPCC contract. Back-to-back provisions, payment security, variation procedures, warranty support and termination rights must be drafted to protect the contractor’s position under the main contract while fairly allocating risk to the subcontractor.
The O&M agreement governs how the solar system or BESS asset is maintained and operated after commissioning. Performance targets, scheduled and unscheduled maintenance obligations, response times, liability for underperformance, reporting requirements, and termination provisions must be drafted to reflect the revenue obligations in the PPA, BESC, BESS Leasing Agreement. A system that underperforms because O&M obligations are not properly enforced creates a revenue shortfall the project owner carries, not the O&M contractor.
The land or roof leasing agreement secures the project’s physical foundation for the duration of the project, typically 21 years for LSS projects, aligned to the PPA term. Key provisions include lease duration and renewal, access rights, restrictions on the landowner’s use of the site, decommissioning and reinstatement obligations, what happens on early termination, and how the arrangement interacts with project financing.
BESS projects need a clear commercial structure from the start. A BESS Leasing Agreement usually focuses on the lease or use of the battery asset over a fixed term. A Storage Service Agreement focuses on the storage service being provided — capacity, availability, charge and discharge obligations, performance standards and service fees. Both structures require careful drafting on ownership, access, operation, maintenance, safety, degradation, warranties, downtime, default, termination, removal and liability.
Where a project involves more than one developer, investor, or landowner as equity participant, the joint venture agreement governs the relationship between the parties throughout the project life. Decision-making rights, funding obligations, reserved matters, dilution mechanisms, transfer restrictions, and exit provisions must be structured to reflect the nature of the project and the intentions of the parties, not left to standard terms that do not fit either.
In BESS projects, the equipment contract carries real project risk. A BESS Supply Agreement should cover not only delivery of the battery system, but also specifications, warranties, degradation, defects, replacement, software support, safety compliance, testing support and liability if the system fails to perform.
Not every engagement starts from scratch. If you have received a draft contract from the other side, whether a developer’s proposed EPCC, a RED’s proposed BESC, a landowner’s proposed lease, or a BESS-related agreement such as a BESS Leasing Agreement, Storage Service Agreement or BESS Supply Agreement – the same expertise applies in reverse.
Shu Pin reviews and negotiates existing drafts with the same focus: risk allocation, payment protection, performance obligations, liability exposure, and termination rights. The goal is a clear assessment of what the draft commits you to, what needs to change, and how to ask for it.
The time to fix a contract is before it is signed. Not after.
Shu Pin’s starting point is always the project structure, commercial model and applicable scheme. The contracts behind an LSS project are different from those behind a CRESS or CREAM project, and the risk allocation for a RED is different from that of a Green Consumer, an EPC contractor, or a subcontractor. BESS projects require a different contract lens — the risk is not only how the system is built, but how it performs, operates and is maintained over time. The drafting and negotiation approach is built around what the client needs that set of documents to do and not a standard template applied to every project.
For developers and investors, the goal is a contract suite that is bankable, transferable, and enforceable, documents that a lender will accept, a future acquirer will not need to renegotiate, and a contractor or offtaker will perform against. For EPC contractors and subcontractors, the goal is a fair allocation of risk and a clear set of obligations, covering payment security, protection against uncompensated scope changes, and termination provisions that do not leave the contractor exposed. For BESS owners, technology suppliers and service providers, the focus is on making sure the supply, leasing, storage service and O&M documents reflect the operating model, performance obligations, warranty position and long-term responsibility for the system.
Where Shu Pin is advising on the full contract suite for a project, the documents are drafted to work together. The PPA or BESC must align with EPCC performance requirements. The land or site arrangement must support project development and operation. The shareholders’ agreement must reflect the parties’ commercial positions. For BESS and solar-plus-storage projects, the supply, leasing, storage service and O&M documents must speak to each other — and to the wider project structure.
Structuring a new solar project and needing the full contract suite drafted and negotiated from the outset.
Who need the BESC and the supporting CRESS or CREAM agreements drafted and negotiated with their Green Consumers and counterparties.
Who have been awarded a project and need the EPCC contract reviewed or the subcontract documentation prepared.
Who have received a draft contract from the other side and need a focused legal assessment of the risk they are taking on before pricing or signing.
Entering CRESS or CREAM arrangements who need the BESC negotiated from their perspective, covering energy quality, supply reliability, pricing transparency, and exit protections.
Who are entering a long-term land or roof lease and want the documentation to properly reflect their position and protections.
Who need BESS Supply Agreements, BESS Leasing Agreements, Storage Service Agreements, O&M agreements or related project documents reviewed, drafted or negotiated.
A Corporate Renewable Energy Supply Scheme (CRESS) project requires five key agreements to be executed: the Bilateral Energy Supply Contract (BESC) between the Renewable Energy Developer (RED) and the Green Consumer, the Renewable Energy System Access Agreement (RE SAA) between the RED and the Grid Owner, the Corporate Renewable Energy Supply Agreement (CRESA) between the Green Consumer and the Electricity Utility Company (EUC), the New Enhanced Dispatch Arrangement (NEDA) Agreement between the RED and the Single Buyer, and the Backfeed Agreement between the RED and the EUC. Of these, the BESC carries the most commercial risk and requires the most careful negotiation.
A Community Renewable Energy Aggregation Mechanism (CREAM) project involves at least four key agreements: the Bilateral Energy Supply Contract (BESC) between the Local Energy Generator and Aggregator (LEGA) and the Local Green Consumer, the Distribution Renewable Energy System Access Agreement (DRESAA) between the LEGA and the Electricity Utility Company (EUC), the New Enhanced Dispatch Arrangement (NEDA) Agreement between the LEGA and the Single Buyer, and the Community Renewable Energy Aggregation Mechanism Agreement (CREAMA) between the Local Green Consumer and the EUC. Where the solar system is installed on a homeowner’s roof, a separate Roof Leasing Agreement between the homeowner and the LEGA is also required. Of these documents, the BESC and rooftop arrangement carry the main commercial risks, including pricing, payment, maintenance responsibilities, and termination.
A Power Purchase Agreement (PPA) is used in conventional solar schemes, including the Large-Scale Solar (LSS) programme, where the developer sells electricity directly to an offtaker, typically Tenaga Nasional Berhad (TNB). A Bilateral Energy Supply Contract (BESC) is the equivalent agreement under the Corporate Renewable Energy Supply Scheme (CRESS) or Community Renewable Energy Aggregation Mechanism (CREAM), where the Renewable Energy Developer (RED) or Local Energy Generator and Aggregator (LEGA) supplies electricity to a Green Consumer through the existing grid. The BESC operates under a different regulatory framework from a PPA, guided by the Energy Commission’s CRESS or CREAM Guidelines but allowing significant flexibility for commercial negotiation between the parties.
An Engineering, Procurement, Construction & Commissioning (EPCC) contract for a Malaysian solar project should cover the scope of works and design obligations, equipment procurement and specifications, construction programme and milestone dates, performance testing and commissioning procedures, performance guarantees and the consequences of failing to meet them, defects liability period and rectification obligations, payment structure and conditions for payment, liquidated damages for delay, variation procedures, termination rights, and governing law. The EPCC contract must also align with the project’s PPA or BESC output requirements. A performance guarantee that falls short of the revenue contract’s obligations creates a gap the developer carries.
Yes, but timing matters. Once the bid is submitted or the Letter of Award is accepted, the contractor’s ability to negotiate may be limited. A project owner may present the EPCC contract on a “take it or leave it” basis, but the contractor should still understand what it is signing. Scope, payment milestones, delay LDs, performance guarantees, variations, EOT, indemnities, liability caps, warranties, termination rights and back-to-back obligations can all affect the contractor’s margin and liability exposure. Legal review helps the EPCC contractor identify the key risks, propose focused amendments where possible, and decide whether the contract is commercially acceptable before signing.
The key risks for a Renewable Energy Developer (RED) under CRESS include delayed payments by Green Consumers, which can disrupt cash flow; reduced energy consumption by Green Consumers, which can leave part of the RED’s generation unmatched or subject to excess energy and settlement arrangements under the CRESS framework and the BESC; withdrawal of a Green Consumer, which may require the RED to replace the Green Consumer or reallocate the contracted energy subject to applicable notice and regulatory requirements; and changes in the System Access Charge (SAC), which can affect project profitability. These risks need to be addressed in the BESC through carefully drafted payment, consumption, and termination provisions.
The key risks for a Local Energy Generator and Aggregator (LEGA) under CREAM include delayed payment by Local Green Consumers, lower-than-expected consumption, consumer withdrawal or replacement, changes in energy allocation, and disputes with homeowners over rooftop lease arrangements. Where generation exceeds the Local Green Consumers’ demand because of lower usage, the excess may be treated as free energy to the distribution system. If a Local Green Consumer withdraws, the LEGA may sell qualifying Excess Energy at a significantly reduced rate. The LEGA is also exposed to changes in the Community Access Charge. These risks should be addressed through carefully drafted BESC, rooftop lease, and related project documents covering payment security, minimum consumption, excess energy, termination, property damage, maintenance, and transfer of the homeowner’s property.
Under the revised CRESS Guidelines effective from 2026, a Renewable Energy Developer (RED) may submit term sheets for the land lease agreement and BESC at the application submission stage to proceed with the first pre-screening stage. The executed land lease agreement and BESC must then be submitted within three months of receiving conditional verification from the Single Buyer. This means the land lease documentation needs to be drafted and ready to execute on a compressed timeline. Engaging legal advice early in the process avoids delays at a critical stage of the application.
A land lease agreement for a solar project needs to address lease duration and renewal terms, access rights for construction and maintenance, restrictions on the landowner’s use of the land during the lease period, decommissioning and reinstatement obligations at the end of the project, what happens on default by either party, and how the arrangement interacts with the project financing. Lenders reviewing a project for financing will also look at the land lease — a poorly drafted agreement creates uncertainty that can delay or prevent financing approval.
A focused review of a single contract, whether a PPA, BESC, EPCC, or O&M agreement, can typically be completed in five to seven business days, depending on the length and complexity of the document. Reviews involving multiple interdependent contracts, or where negotiation support is required, take longer. Engaging legal review early, before the deadline to respond to a draft, allows adequate time for a thorough review without commercial pressure.
AI can read the contract. It may even summarise the clauses. But it may not understand the project. Solar contracts need to be reviewed against the scheme, project structure, commercial deal, regulatory requirements and related documents. A clause that looks acceptable in isolation may create problems when read with the PPA, EPCC contract, O&M agreement, BESC, land or roof arrangement, warranty terms or tender documents. AI is useful for a first pass. Legal review is still needed to identify the risks that matter in the actual project.
A BESS Leasing Agreement usually focuses on the use or lease of the battery energy storage asset. The key issues are ownership, tenure, rental or service fees, site access, installation, maintenance, insurance, default, termination, removal and handover. A Storage Service Agreement focuses on the storage service being provided. The key issues are capacity, availability, charge and discharge obligations, performance standards, dispatch rights, downtime, degradation, service fees, liability and termination. The legal structure should match the commercial model. If the customer is paying to use the asset, a leasing structure may be appropriate. If the customer is paying for storage capacity or availability, a service-based structure may be more suitable.
A BESS Supply Agreement should cover more than the delivery of batteries. It should address the full equipment scope, including battery modules, power conversion systems, battery management system, energy management system, containers, transformers, fire suppression systems, software and related components. From a legal perspective, the agreement should clearly deal with technical specifications, delivery timeline, testing support, warranties, degradation, defects, replacement obligations, software support, safety compliance, limitation of liability and what happens if the equipment does not perform as promised.
Ee Wen Le, Senior Manager, Northern Solar Sdn. Bhd.
Tell us about the project and the scheme. Shu Pin will give you a clear picture of what documentation is required and how to structure it.
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