Malaysia's Feed-in Tariff Mechanism

The Malaysian Ministry of Energy, Green Technology and Water has announced new degression rates for photovoltaic technology under the Malaysian FIT (Malaysia's Feed-in Tariff) mechanism. Further changes to the FIT system have also been announced.

As such, the degression rate for photovoltaic systems up to 24 kW will remain at 8%, while the rate for larger systems will be increased from 8 to 20%. Additionally, the degression rates for bonus criteria of locally manufactured PV modules and inverters has been abolished. It was previously 8%.

The new degression rates will come into effect from March 2013 and they are applicable to Malaysian photovoltaic quotas released in 2013.

The Malaysian Sustainable Energy Development Authority (SEDA), which manages the country’s FIT system, also announced that all companies registered in the e-FIT online system are required to key in information regarding all their Ultimate Beneficiary Shareholders, after the opening of the e-FIT online system on March 5 and before March 20.

Ownership caps have additionally been imposed. Individual shareholders have been capped to a maximum installed capacity of 5 MW of photovoltaics, whereas for companies, the maximum installed capacity of 30 MW has been imposed.

The Malaysian FIT system was introduced in 2011 and obliges Distribution Licensees to buy the electricity produced from photovoltaic systems for 21 years from Feed-in Approval Holders. Investors interested in applying for a FIT rate  need to apply either manually or online via SEDA Malaysia’s official website.

Malaysia, which still has a regulated electricity market, imposes caps on renewable energy production. Capping is achieved by putting a capacity limit or quota for new feed-in approvals in respect of each renewable resource for 6 month windows over the next 3 years. SEDA argues the reason for the 6 month window frame is to limit the waiting period for the next available set of quotas to a maximum of 6 months.