Malaysia: New Guidelines for Solar PV Installation for Self-Consumption in Peninsular Malaysia

06 Mar 2025    3 minute read
Energy Transition Sustainability

In brief

On 24 December 2024, the Energy Commission issued new Guidelines for Solar Photovoltaic ("PV") Installation for Self-Consumption ("SELCO Scheme") in Peninsular Malaysia ("SELCO Guidelines") which took effect on 1 January 2025. The Guidelines introduce key changes to the existing framework, enhancing the scope and flexibility of solar PV installations. These changes aim to accelerate energy transition in Peninsular Malaysia and support the country's goal of achieving a 70% renewable energy capacity mix by 2050. Since the introduction of the SELCO Guidelines, the Minister of Energy Transition and Water Transformation recently announced several improvements to the SELCO Scheme ("Minister's Announcement").

Contents

Key Changes in the SELCO Guidelines

The SELCO Guidelines are not applicable to installations which construction commenced before 1 January 2025. 

The key changes introduced in the SELCO Guidelines are as follows:

  1. Removal of Capacity Limit: Previously, there was a capacity limit of 85% of the consumer's maximum demand. Under the new SELCO Guidelines, there is no capacity limit for Non-Standalone / Grid-Connected systems for non-domestic consumers. This change is expected to better support corporations and industries in reducing their carbon footprint while fulfilling Environmental, Social, and Governance (ESG) commitments.
  2. Expanded Coverage: The SELCO Guidelines now allow solar system installations for electricity users in the agriculture category, broadening access to green electricity as well as configurations beyond building rooftops, including ground-mounted solar systems and floating solar systems on water bodies within the consumer's premises. This expansion is in response to demands for solar installations on land and water bodies. 
  3. Standby Charge: The new SELCO Guidelines imposes a RM14/kWp standby charge on all installations constructed after 1 January 2025. This charge is intended to cover the costs associated with maintaining the stability and reliability of the grid. Following the Minister's Announcement, the standby charge will be reduced to RM12/kWp for installation capacities over 1 MWp and installations with a capacity below 1 MWp are exempted from the standby charge.
  4. Battery Energy Storage System (BESS) Requirement: Non-Standalone / Grid-Connected systems with a capacity of over 72kWp will be required to install a BESS with the same or greater capacity. This requirement aims to ensure the overall stability of the electricity supply system. All categories are now exempted from the BESS requirement until 31 December 2025 as a result of the Minister's Announcement.
  5. Connection Assessment Study: The Power System Study has been replaced with a connection assessment study for any solar PV installation exceeding 72kW. This new assessment process will be conducted by the consultant who prepared the design of the solar PV installation.

Remark

The new SELCO Guidelines represent a significant step forward in Malaysia's energy transition efforts, offering greater flexibility and expanded opportunities for solar PV installations. By removing the previous capacity limit and allowing installations beyond rooftops, the SELCO Guidelines aim to support corporate and industrial (C&I) sectors in meeting their ESG commitments and reducing their carbon footprint. However, while private companies can now obtain their entire electricity demand from solar PV installations, the new requirements introduce additional costs despite the improvements from the Minister's Announcement. The mandatory installation of BESS for larger systems post 2025 and the imposition of standby charges will increase the overall expense of solar PV projects. These financial burdens may potentially hamper the private development of solar generation in the C&I sector. That said, given the impending electricity tariff increase in July 2025 and potentially significant tariffs increases in the future due to the removal of subsidy and cost of conventional fuel, the C&I customers may want to consider purchasing renewable energy from solar PV installations albeit at a slightly higher rate but with the rate being locked in for 15-20 years. 

* * * * *

Jenny Yong, Legal Assistant, has contributed to this legal update.

LOGO Malaysia_Wong & Partners_KualaLumpur

© 2025 Wong & Partners. All rights reserved. Wong & Partners, member of Baker & McKenzie International. This may qualify as "Attorney Advertising" requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.

Contact Information
Mark Lim
Managing Partner
Kuala Lumpur
Read my Bio
mark.lim@wongpartners.com
Faez Abdul Razak
Partner
Kuala Lumpur
Read my Bio
faez.abdulrazak@wongpartners.com

Copyright © 2025 Baker & McKenzie. All rights reserved. Ownership: This documentation and content (Content) is a proprietary resource owned exclusively by Baker McKenzie (meaning Baker & McKenzie International and its member firms). The Content is protected under international copyright conventions. Use of this Content does not of itself create a contractual relationship, nor any attorney/client relationship, between Baker McKenzie and any person. Non-reliance and exclusion: All Content is for informational purposes only and may not reflect the most current legal and regulatory developments. All summaries of the laws, regulations and practice are subject to change. The Content is not offered as legal or professional advice for any specific matter. It is not intended to be a substitute for reference to (and compliance with) the detailed provisions of applicable laws, rules, regulations or forms. Legal advice should always be sought before taking any action or refraining from taking any action based on any Content. Baker McKenzie and the editors and the contributing authors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The Content may contain links to external websites and external websites may link to the Content. Baker McKenzie is not responsible for the content or operation of any such external sites and disclaims all liability, howsoever occurring, in respect of the content or operation of any such external websites. Attorney Advertising: This Content may qualify as “Attorney Advertising” requiring notice in some jurisdictions. To the extent that this Content may qualify as Attorney Advertising, PRIOR RESULTS DO NOT GUARANTEE A SIMILAR OUTCOME. Reproduction: Reproduction of reasonable portions of the Content is permitted provided that (i) such reproductions are made available free of charge and for non-commercial purposes, (ii) such reproductions are properly attributed to Baker McKenzie, (iii) the portion of the Content being reproduced is not altered or made available in a manner that modifies the Content or presents the Content being reproduced in a false light and (iv) notice is made to the disclaimers included on the Content. The permission to re-copy does not allow for incorporation of any substantial portion of the Content in any work or publication, whether in hard copy, electronic or any other form or for commercial purposes.