Net Energy Metering (NEM) 3.0: Lower your electricity bills with solar energy

The Net Energy Metering (NEM) is a solar PV initiative to encourage Renewable Energy (RE) uptake among electricity consumers in Malaysia.

This article was translated from Apa itu Pemeteran Tenaga Bersih (NEM) 3.0 di Malaysia by Rebecca Hani Romeli.

The Net Energy Metering (NEM) Programme is an environmentally friendly energy concept introduced by the government in 2016 with an allocation of 500MW solar incentive to encourage solar energy consumption among consumers in Malaysia. This programme was executed by the Ministry of Energy and Natural Resources (KeTSA), regulated by the Energy Commission (EC), with Sustainable Energy Development Authority (SEDA) Malaysia as the Implementing Agency (IA).

The NEM programme was widely implemented in 2019 and in December 2020, the government announced NEM 3.0. Through NEM, it allows electricity consumers to use solar energy for domestic purposes. NEM harnesses energy from the solar photovoltaic (PV) system that is installed at residential and business premises. According to the Managing Director of Gading Kencana Sdn. Bhd., Datuk Ir. Muhamad Guntor Mansor Tobeng, solar panels in government buildings save up to RM600 mil in electricity bills a year.

What is solar energy

In general, solar energy is energy derived from sunlight. The energy can be used to directly heat and supply electrical energy sources for homes or business premises. Many people are starting to use solar energy to save costs and reduce the use of conventional electricity, which is more costly than solar energy.  The main benefit of solar energy is that it can be used easily by domestic and commercial consumers because it does not require large-scale installation, unlike equipment installation for wind or biomass energy.

Advantages of using solar energy 

• Renewable energy sources (sustainable energy)

Unlike fossil fuels, solar energy is a sustainable energy source because it can continue to generate electricity as long as there is sunlight. This energy source can be harnessed with the installation of solar panels that can scale down our dependence on electricity generated by coal. This makes it prospective energy for countries that focus on environmentally friendly and fully green technology development in the future.

•  Eco -friendly

Solar energy is the best alternative to conventional energy and fuel as it is pollution-free, natural, and renewable. It does not pollute the air by releasing harmful gases such as carbon dioxide, nitrogen dioxide, or sulphur oxide. Thus, the risk of environmental impact can be minimised. Solar energy also does not require fuel to generate electricity and hence issues like fuel transportation costs or radioactive waste storage can be avoided.

• Lower monthly utility bills

One of the many benefits of using solar energy is that it cuts down utility bill costs for residential and business premises. By installing solar panels at residential and business premises, you can do all kinds of activities that use large energy consumptions like water heating without concerning yourself with soaring electricity bills. Solar energy may save up to 20% of your current utility bills.

• Easy to install and manage 

Solar panels are easy to install and require no wires, cables, or power sources. Unlike electric and wind power stations that require them to be fastened to a drilling machine, solar panels do not require them and can be installed on the roofs of residential or business premises. Solar panel installation doesn’t require additional space and every household has the capacity of generating electricity. It is also easy to maintain and maintenance cost is affordable.

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How much is a solar panel in Malaysia 

You can check solar panel installation offers and packages on the GSPRAX website. GSPRAX is a wholly-owned subsidiary of Tenaga Nasional Berhad (TNB) that specialises in rooftop solar solutions.

What is Net Energy Metering (NEM) in Malaysia

Net Energy Metering (NEM) allows electricity consumers to supply their electricity from on-site generation.  The NEM concept will ensure that the energy generated from the installed solar PV system will be consumed first, and if there is a surplus it will be exported to TNB on a “one-on-one” offset basis. A solar PV system can be installed at all domestic, commercial, and industrial premises as long as they are registered TNB customers in Peninsular Malaysia or Sabah Electricity Sdn. Bhd (SESB) for residents in Sabah and the Federal Territory of Labuan. The solar system can only be installed on premises’ roofs or designated space.

What is Net Energy Metering (NEM) 3.0 

Net Energy Metering (NEM) 3.0 is a government initiative to encourage the use of solar energy among consumers in Malaysia starting from 2021 to 2023, with a quota allocation of 500 MW. Under NEM 3.0, three major new initiatives have been introduced to further increase the uptake of solar energy. Along with these three initiatives is the virtual NEW, which allows commercial and industrial sectors to distribute solar energy.

Here are the quota allocations, based on categories:

Source: Sustainable Energy Development Authority (SEDA)

How does NEM 3.0 work in Malaysia

There are three main initiatives introduced by the government.

• NEM Rakyat Programme

This programme aims to lower electricity bills for residential premises by using solar PV systems. Under this programme, any excess energy generated will be exported to the utility grid and will be paid on a 1:1 offset basis and the credit shall be allowed to roll over for a maximum of 12 months. The maximum solar PV system size that can be installed by homeowners is 4kWac and 10kWac for single-phase and three-phase homes.

A 100MW quota has been allocated for the NEM Rakyat Programme starting from 1 February 2021 with a 10-year contract for successful applicants. The programme is open until the quota is full or until 31 December 2023 (whichever comes first).

• NOVA Programme (Net Offset Virtual Aggregation)

This programme aims to lower business’ operating costs (utilities) by using the solar PV system in commercial and industrial sectors. Under this programme, successful applicants:

• Use electricity generated by a solar PV system
• Surplus electricity (harnessed from a solar PV system) may be exported via the Supply System to the Distribution Licensee. The unit price (RM/kWh) of the Energy exported during the Billing Period to the Supply System shall be based on the Average System Marginal Price (SMP). The value of the exported energy shall be credited to the account of the NOVA Consumer to be used to offset the bill payment for the next Billing Period.
• Any excess energy produced in a month that is not consumed by the NOVA Consumer may be exported via the Supply System up to three (3) Designated Premises.

A 300MW quota has been allocated for the NOVA Programme starting  1 April 2021 with a 10-year contract for successful applicants. The programme is open until the quota is full or until 31 December 2023 (whichever comes first).

• NEM GoMEn Programme (Ministries and Government Entities)

This programme aims to lower the electricity bills of government-owned buildings by using solar PV systems. Under this 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 1MWac per account. A 100MW quota has been allocated for the NEM GoMEn Programme with a 10-year contract for successful applicants. The programme is open until the quota is full or until 31 December 2023 (whichever comes first).

Eligibility requirements for the NEM Rakyat Programme

The following are the eligibility requirements for the NEM Rakyat Programme application:

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

Category of TNB users under the following tariff:

• Domestic

How to apply for NEM with TNB

Follow this step by step guide to generate electricity from your own solar PV system

• Step 1

Find your registered contractor/ service provider (RC/ SP)

• Step 2

(RC/ SP) you will apply for a Technical Assessment with TNB (if applicable)

• Step 3

(RC / SP) you will get approval/quota from SEDA

• Step 4

(RC/ SP) you will install a solar PV System

• Step 5

(RC/ SP) you will submit a meter application to TNB

• Step 6

Sign your NEM contract with TNB

READ: What is house orientation and why is it important?

What are the benefits of using Net Energy Metering (NEM)

NEM allows residential and business premises to reduce their utility expenses over years as compared to using conventional electricity. NEM is also an important component that enables the expansion of the solar energy market and creates new job opportunities. NEM is the best alternative to consider for older and new homes to save on utility bills especially during the Movement Control Order (MCO) and Work From Home (WHF) where electricity bills are often soaring compared to normal days.