Introduction
Following our previous Legal Update on the revised Guidelines for Solar Photovoltaic Installation for Self-Consumption in Peninsular Malaysia which came into effect on 27 March 2025 (“2025 Guidelines“), the Energy Commission (“EC“) has now published further revised Guidelines for Solar Photovoltaic Installation for Self-Consumption in Peninsular Malaysia dated 15 June 2026 (“2026 Guidelines“). The 2026 Guidelines were published by EC on its website on 24 July 2026.
The revisions introduced by EC represent a continuation of the trend towards encouraging the transition into renewable energy in Malaysia by easing compliance burdens for solar photovoltaic (“PV“) self-consumption installations. This Update highlights the key changes introduced by the 2026 Guidelines.
Significant Increase in Battery Energy Storage System (“BESS”) Threshold
The most significant change introduced by the 2026 Guidelines is the substantial increase in the threshold for the installation of BESS as part of the solar PV system. Under the 2025 Guidelines, Non-Domestic Consumers[1] with solar PV installation of more than 72kWp were required to install a BESS with full capacity of at least one hour rating.
The 2026 Guidelines have massively increased this threshold from 72kWp to 1MWac. This means that Non-Domestic Consumers with solar PV installations of up to 1MWac will no longer be required to install a BESS. Only installations with capacity exceeding 1MWac are now subject to the BESS requirement.
The practical impact of this change is substantial. The vast majority of commercial and industrial rooftop solar PV installations in Malaysia fall below the 1MWac threshold. These installations will now be entirely exempt from the costly requirement to procure and install a BESS, significantly reducing the capital expenditure associated with solar PV self-consumption projects.
New Interpretation of “Premise”
The 2025 Guidelines defined “premises” as “any building together with its land, outbuildings and any structures within the boundary of the land where the owner or occupier resides or conducts the business activity in accordance with the land use as permitted by the local authority”.
The 2026 Guidelines have introduced a new interpretation of “premise”. A “premise” now means “any land, building, outbuilding or structure where the owner or occupier of such land, building, outbuilding or structure resides or conducts its business activity which includes the activity of generating the electricity from solar photovoltaic systems”.
The revised definition explicitly includes the activity of generating electricity from solar PV systems as a “business activity”, which makes it consistent with the overall self-consumption framework where energy produced from the solar PV installation can be supplied by the owner to the occupiers of the premises (which include tenants and lessees of the premises) and subject to the owner holding a valid public distribution licence, any other persons in the same premises.
Increased Capacity Limits for Domestic Consumers
Under the 2025 Guidelines, the capacity of solar PV installation for Domestic Consumers was limited to 5kW for single-phase 230V supply or 12.5kW for three-phase 400V supply. Under the 2026 Guidelines, these limits have been revised to 5kWac for single-phase and 15kWac for three-phase supply. The voltage references (230V and 400V) have been removed. The change would allow Domestic Consumers to install larger solar PV systems for self-consumption.
Standardisation of Measurement Units
Throughout the 2026 Guidelines, capacity references have been changed from “kW” and “kWp” to “kWac” (kilowatt in alternating current), and from “MW” and “MWp” to “MWac” (megawatt in alternating current).
The practical significance of this change is that capacity is now measured uniformly by reference to the alternating current (AC) output of the inverter (i.e. the actual usable electricity delivered to the grid or consumed on-site), rather than the direct current (“DC“) peak rating of the solar panels. This provides greater consistency and clarity in determining whether a particular installation exceeds the relevant regulatory thresholds. The DC peak rating (kWp) is retained only where it refers to DC-side specifications.
Exclusion of Solar Accelerated Transition Action Programme
Under the 2025 Guidelines, the self-consumption framework was stated to be “not applicable to any person whose premises is installed with or have applied to install with solar PV installation under the Net Energy Metering programme”.
The 2026 Guidelines have expanded this exclusion by adding the Solar Accelerated Transition Action Programme alongside the Net Energy Metering programme as a programme under which participants are excluded from the scope of the self-consumption guidelines, consistent with the introduction of the Solar Accelerated Transition Action Programme from 1 January 2026.
Removal of Prior Notification Requirement
The 2025 Guidelines introduced a requirement under paragraph 3.1(a) for the owner or occupier of the premises to “submit a form in such manner as determined by the Commission of his intention to install such installation” prior to any solar PV installation. This prior notification requirement has been removed entirely in the 2026 Guidelines.
Extension of BESS Transition Period
Under the 2025 Guidelines, the installation of BESS was only required after 31 December 2025, provided that the solar PV installation was completed (with Form G and Form H requirements fulfilled) and the licensing application was submitted by that date. The 2026 Guidelines have extended this transition deadline by six months to 30 June 2026. Accordingly, the BESS requirement will not apply to installations where the solar PV system is completed (Form G and Form H fulfilled) by 30 June 2026 and the licensing application is submitted to the EC by 30 June 2026.
While the transition period has been extended, the practical effect may not be significant as the 2026 Guidelines were only published by the EC on its website on 24 July 2026.
Concluding Words
The changes introduced by the 2026 Guidelines are welcome and represent a relaxation of the regulatory framework for solar PV self-consumption, particularly for Non-Domestic Consumers with installations below the 1MWac range. The most significant change is the increase of the BESS threshold from 72kWp to 1MWac, which will exempt the vast majority of commercial and industrial rooftop solar installations from the costly BESS requirement. The savings may then translate into better rates for the consumers, making it more attractive to move away from the conventional energy to the use of renewable energy.
Should you require further information or any advice on the above or any other matters pertaining to projects, energy and infrastructure, please feel free to reach out to any member of our team listed below.
For regional Construction, Infrastructure and Projects matters and Sustainability matters, please see Rajah & Tann Asia’s Construction, Infrastructure & Projects Practice and Sustainability Practice for more information.
__________________________________
[1] “Non-Domestic Consumer” means any consumer other than a Domestic Consumer. “Domestic Consumer” refers to any consumer occupying a private dwelling, which is not used as hotel, boarding house or used for the purpose of carrying out any form of business, trade or professional activities or services.
Disclaimer
Rajah & Tann Asia is a network of member firms with local legal practices in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Our Asian network also includes our regional office in China as well as regional desks focused on Brunei, Japan and South Asia. Member firms are independently constituted and regulated in accordance with relevant local requirements.
The contents of this publication are owned by Rajah & Tann Asia together with each of its member firms and are subject to all relevant protection (including but not limited to copyright protection) under the laws of each of the countries where the member firm operates and, through international treaties, other countries. No part of this publication may be reproduced, licensed, sold, published, transmitted, modified, adapted, publicly displayed, broadcast (including storage in any medium by electronic means whether or not transiently for any purpose save as permitted herein) without the prior written permission of Rajah & Tann Asia or its respective member firms.
Please note also that whilst the information in this publication is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as legal advice or a substitute for specific professional advice for any particular course of action as such information may not suit your specific business and operational requirements. You should seek legal advice for your specific situation. In addition, the information in this publication does not create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on the information in this publication.
