Rooftop solar adoption in Malaysia is currently witnessing a slowdown, but industry experts are encouraging consumers and businesses to focus on long-term benefits rather than short-term challenges. The Malaysian Photovoltaic and Sustainable Energy Association (MPSEA) has highlighted that despite the present decline, rooftop solar systems can still offer significant savings over time, especially as a hedge against rising electricity costs.
The association pointed out that electricity prices are expected to increase in the medium to long term due to global energy security concerns, particularly those linked to geopolitical tensions in the Middle East. In such a scenario, investing in solar energy today could help users manage future cost uncertainties more effectively.
According to MPSEA, the slowdown in adoption is mainly due to recent policy changes. The transition from the Net Energy Metering (NEM) scheme to the Solar Accelerated Transition Action Programme (ATAP) has altered the financial attractiveness of rooftop solar. Changes in offset tariffs and rollover periods have increased the payback period, making investments less appealing for both residential users and commercial and industrial sectors.
The self-consumption (SELCO) scheme has also faced setbacks. Projects under this model are experiencing delays and reduced interest due to new requirements. These include the mandatory installation of a one-to-one battery energy storage system (BESS) and the imposition of standby charges, which have increased overall project costs.
The ATAP framework, introduced to help households reduce electricity bills, calculates savings based on the system’s marginal price. This price fluctuates every 30 minutes depending on the cost of the last power plant used to meet demand. While the system aims to reflect real-time market conditions, it has added complexity and uncertainty for potential solar adopters.
MPSEA is currently working with regulators, including the Energy Commission, to improve the effectiveness of ATAP and address industry concerns. The association also warned that waiting until the next tariff revision in 2028 to invest in solar may not be practical. Many small and medium enterprises may not be able to sustain financial pressures for that long.
On a more positive note, large-scale solar projects in Malaysia continue to show strong potential. The upcoming Large-Scale Solar Phase 6 (LSS6) programme is expected to include battery storage, which will help improve grid stability. However, MPSEA cautioned that rising equipment costs, possibly increasing by around 9% due to the removal of tax incentives on imports from China, could impact project economics.
The association also stressed that project awards should focus on quality rather than simply choosing the lowest-cost bids, as this could affect timely delivery and overall performance.
