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The Community Renewable Energy Aggregation Mechanism (“CREAM”) is Malaysia’s latest initiative to empower local communities to participate in the renewable energy transition. CREAM enables individuals to lease their premise’s roof for installation of solar photovoltaic (PV) systems and allows nearby consumers to procure green electricity from solar operators through open access to the distribution network.

This article offers a practical overview of the CREAM framework, highlighting its key features and potential risks for homeowners, solar operators, and end consumers.

Objective of CREAM 

CREAM allows nearby consumers to purchase green electricity from solar operators through open access to the local distribution network. At the same time, it enables homeowners and communities to participate in clean energy generation by leasing out their rooftops for solar PV installation, creating an opportunity to earn additional income while supporting local sustainability.

Key Definitions for Understanding CREAM

To ease understanding of the CREAM framework, here are some of the key terms used:

• Local Energy Generator and Aggregator (“LEGA”) means the rooftop solar PV plant owner whose plant is connected to the system under CREAM;
• Local Green Consumer (“LGC”) means an owner or occupier of a premise who is required to be supplied with electricity by EUC and LEGA. 
• Local Community Solar Plant (“LCSP”) means the rooftop solar PV power generation system owned by LEGA that is connected to the system under CREAM;
• Electricity Utility Company (“EUC”) means the holder of a license granted by the Commission under section 9 of the Act to distribute and supply electricity in the Peninsular Malaysia with the electricity supplied from the single buyer market. 

CREAM Framework

Under the CREAM framework, LEGA is responsible for the development, ownership, operation, and maintenance of the LCSP, which is typically a rooftop solar PV system installed on a landed residential property. The LCSP must have a direct connection to the electricity supply network to serve its designated consumers, known as LGCs. In addition to operating the system, the LEGA is also tasked with managing contractual arrangements with LGCs and ensuring that electricity is delivered in accordance with all relevant technical standards and regulatory requirements.

Electricity generated by the LCSP is exported to the distribution grid and supplied to LGCs located within a 5-kilometre radius. Each LGC may source electricity from multiple LEGAs, and similarly, a LEGA may supply energy to multiple LGCs within the same radius.

To access the distribution network, the LEGA is required to pay a Community Access Charge (“CAC”), currently set at RM0.15 per kWh.

Contractual Agreements Involved 

To enable the flow of electricity and ensure proper commercial settlement under the CREAM framework, there are 5 key agreements to be executed among the relevant parties:

• Bilateral Energy Supply Contract
  This is a direct agreement between LEGA and LGC that governs the terms of electricity supply from LCSP. It outlines the roles and responsibilities of LEGA, including the obligation to supply energy in accordance with agreed standards. The contract typically includes key provisions on the quality of supply, commencement date, commercial operation date, tariff structure, billing arrangements, contract duration, and the ownership of green attributes associated with the energy generated.
• Community Renewable Energy Aggregation Mechanism Agreement) (“CREMA”)
  This agreement is entered into between LGC and EUC to facilitate the transfer of electricity from LCSP to LGC via the distribution network. In addition to enabling the delivery of electricity, EUC also acts as the supplier of last resort under this agreement whereby in the event LEGA is unable to generate or supply electricity whether due to technical issues, underperformance, or temporary outages, LGC is able to use the electricity from EUC.
• Distribution Renewable Energy System Access Agreement (“DRESSA”)
  This agreement is entered into between LEGA and the EUC allowing electricity generated from LCSP to be transferred into the grid. The agreement also binds LEGA to comply with the necessary technical requirements and standards for network access, ensuring the safe and reliable integration of solar energy into the existing electricity supply system.
• NEDA Agreement
  This agreement is entered into between LEGA and Single Buyer for the invoicing and collecting of the relevant CAC and compliance with the NEDA Guidelines.
• Roof Leasing Agreement
  This agreement is entered into between LEGA and homeowner(s) for leasing of their premise’s roof for installation of solar PV system. 

Requirements for LCSP

To qualify under the CREAM framework, LCSP must meet several technical and location-based requirements. LCSP must be installed on a landed residential property and consist of rooftop solar PV system. Its capacity must fall within the range of 100 kWp to 2 MWp per 11kV feeder, and it must be connected to the low-voltage distribution network. In terms of proximity, LCSP and LGCs must be located within a 5-kilometre radius of each other. This distance is measured based on the location of EUC substation that connects both LCSP and LGC.

Key Potential Risks to Consider

While the mechanism offers clear benefits, such as new income opportunities for homeowners and greater access to renewable energy for local green users, each party involved from homeowners to LEGA to LGC carries a unique set of risks. Below is a breakdown of the most common and foreseeable challenges. 

• For Homeowners (Rooftop Providers)
  1. Transfer of Ownership
     In a typical leasing arrangement, LEGA may require the homeowner(s) to ensure that if the property is sold, the new owner shall enter into a fresh agreement with LEGA to continue leasing the rooftop. While this protects the LEGA’s interest, it may also complicate property sales, especially if potential buyer is unwilling to assume such obligations. This could reduce buyer interest or delay transactions.
  2. Roof Damage or Structural Issues
     If the solar installation causes or is perceived to cause roof leakage, cracks, or other structural issues, disputes may arise over liability. It may be difficult to prove whether damage was pre-existing, due to fair wear and tear or installation-related issues.
  3. Change in Intentions
     A homeowner may later wish to install their own solar PV system for self-consumption or decide to renovate or redevelop the property. These intentions could directly conflict with the leasing arrangement.
• For LEGAs
  1. Sale or Foreclosure of Property
     In the event the property is sold and the new owner declines to enter into a new rooftop lease agreement, LEGA may lose access to its installed solar asset. While LEGA may have contractual recourse against the original owner, such remedies may not fully mitigate the disruption. More critically, in the case of a foreclosure by a chargee bank, the rooftop lease may not survive the enforcement process if prior written consent from the chargee was not obtained. This presents a significant risk of asset loss and interruption of energy generation for LEGA.
  2. Shading
     In the event an adjacent property owner carries out structural modifications, such as the addition of an extra storey, this may result in shading of the solar panels installed on the LCSP. Such shading can significantly impair the performance of the solar PV system, leading to reduced energy output and consequential revenue loss for the LEGA.
  3. Maintenance and Access Limitations
     To ensure the optimal performance and reliability of LCSP, LEGA requires periodic access to the property for maintenance, inspection, and troubleshooting. However, if the homeowner refuses access or is otherwise uncooperative, LEGA may face prolonged system downtime, reduced energy output, and resulting loss of revenue.
• For LGCs
  1. Supply Risk
     The Local Green Consumer relies on LEGA for stable green electricity supply. However, technical issues, such as panel degradation, inverter failure, or poor system design, may cause LEGA to underperform or fail to meet its contractual energy delivery. Though EUC acts as the supplier of last resort under CREAM, fallback supply may come at a different tariff or defeat the consumer’s environmental objectives particularly if the goal was to meet internal sustainability targets.

Conclusion

As with any community-based initiative, the success of CREAM will depend not just on policy design, but on how effectively it is implemented on the ground. Addressing practical concerns such as ownership continuity, access rights, and performance risks is essential. With thoughtful planning and clear contractual structures, CREAM has the potential to empower local communities and support Malaysia’s transition to a cleaner, more inclusive energy future.

For those seeking to understand CREAM regulatory framework in greater detail, the official Guidelines published by the Energy Commission is available here.

This Article is written by Yeo Shu Pin (Partner) of Messrs. Shu Pin & Associates.

Disclaimer: Every attempt to ensure the accuracy and reliability of the information provided in this publication has been made. This publication does not constitute legal advice and is not intended to be used as a substitute for specific legal advice or opinions. Please contact the author(s) for a specific technical or legal advice on the information provided and related topics.