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Revised Standby Charges And BESS Requirement For Selco Users

Introduction

The Solar for Self-Consumption (“SELCO”) program in Malaysia allows commercial and industrial (“C&I”) consumers to generate electricity using solar photovoltaic (“PV”) systems for their own use without exporting excess energy to the grid. However, regulations governing SELCO systems have been a topic of concern in the recent months, particularly regarding standby charges and the requirement for a Battery Energy Storage System (“BESS”).

On 31 December 2024, Suruhanjaya Tenaga announced the implementation of standby charges of RM14/kWp per month for non-domestic SELCO users with installations exceeding 72 kWp. Additionally, pursuant to the Guidelines for Solar Photovoltaic Installation for Self-Consumption in Peninsular Malaysia dated 1 January 2025, BESS was mandated for non-domestic SELCO users with installations exceeding 72 kWp, a move that raised concerns among industry players.

Industry Concerns and Policy Adjustments

The introduction of standby charges and BESS requirements was met with strong resistance from industry players, who argued that:

  1. higher costs would deter adoption of SELCO solar systems, contradicting Malaysia’s renewable energy goals; and
  2. mandatory BESS installation would significantly increase capital expenditure, making solar investments less attractive.

Acknowledging these concerns, the Ministry of Energy Transition and Water Transformation (PETRA) during the National Energy Awards on 27 February 2025 introduced the following key changes:

  1. the requirement to install BESS has been deferred until 31 December 2025;
  2. installations below 1 MWp are now exempted from standby charges; and
  3. the standby charge for SELCO system above 1MWp is reduced from RM14/kWp to RM12/kWp per month.

Implications for the Industry

The recent announcement has several key implications for the industry:

  1. the exemption for systems below 1 MWp and the reduction in standby charges will make solar adoption more financially viable; and
  2. with reduced financial constraints, more businesses may be encouraged to invest in solar and participate in Malaysia’s clean energy transition.

Conclusion

The latest revision by PETRA is a positive step towards supporting Malaysia’s renewable energy goals while balancing grid reliability and economic feasibility. These changes reflect the government’s willingness to engage with industry players and ensure that regulatory measures do not stifle growth but instead encourage sustainable energy adoption. Moving forward, we encourage the ministry to conduct regular consultations with industry stakeholders before enforcing new guidelines or regulatory changes. This will help create a more transparent, business-friendly, and sustainable energy framework that aligns with industry needs and national energy objectives.

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.

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