Insights into Malaysia’s Energy Efficiency and Conservation Framework

Introduction

In a significant regulatory milestone, Malaysia has recently introduced a new suite of legislations aimed at institutionalising energy efficiency and conservation within the broader national energy transition agenda. With this, the Energy Efficiency and Conservation Act 2024 (“EECA“) came into force on 1 January 2025, supported by the Electricity Supply (Amendment) Act 2024 (“ESAA“) and the Energy Efficiency and Conservation Regulations 2024 (“EECR“). Together, they establish a comprehensive legal framework to promote efficient energy use, reduce wastage and align with global climate commitments.

The ESAA was implemented to remove the brief provisions related to the efficient use of electricity from the Electricity Supply Act 1990 in view of the enactment of the EECA and the EECR, which now cover and consolidate all requirements related to electricity efficiency.

Following the coming into force of the EECA and the EECR, the Energy Commission (“EC“) developed and issued the following seven guidelines and three guides to support the implementation of the abovementioned legislations:

1. Guidelines on Ascertaining Energy Consumer; 

2. Guidelines on Energy Efficiency and Conservation Report; 

3. Guidelines on Energy Management System (“EnMS“); 

4. Guidelines on Functions and Duties of REM; 

5. Guidelines on Ascertaining Building and the Energy Intensity Performance of the Building; 

6. Guidelines on Energy Audit Report; 

7. Guidelines on Energy Using Product; 

8. Guide 1: Guide On Registration of Energy Manager; 

9. Guide 2: Guide On Registration of Energy Auditor; and 

10. Guide 3: Guide On Registration of Training Institution.

This Update provides an insight into Malaysia’s new energy efficiency and conservation framework, including its applicability and the obligations imposed on the relevant persons. 

Applicability of the EECA

Under the EECA, the following terms are defined:

1. “energy efficiency” means the efficiency in the consumption of energy or energy resources, which results in increase in the net benefit per unit of energy;

2. “energy” means the energy specified in the Second Schedule of the EECA, i.e. electricity, chilled water, steam and hot water;

3. “energy resources” means the energy resources specified in the First Schedule of the EECA, including coal, various forms of coke, peat, liquified natural gas, natural gas, butane, propane, ethane, methane, solar photovoltaic, solar thermal, biogas, biodiesel, charcoal, empty fruit bunch, mesocarp fibre and palm kernel shell;

4. “energy consumer” means a person who, for the purpose of carrying out his activity, business or trade, is supplied with energy or energy resources and consumes the energy or energy resources supplied; and

5. “person in charge of a building” means the owner of a building or any other person having the charge, management or control of a building.

The EECA applies to:

1. any energy consumer whose total energy usage for a period of 12 consecutive months meets or exceeds the prescribed energy consumption threshold. The energy consumption is calculated with respect to an activity, business or trade of the energy consumer carried out in one place. Such energy consumer may be determined in accordance with the Guidelines on Ascertaining Energy Consumer;

2. any building falling within the description set out in the Third Schedule of the EECA, i.e. office building exceeding 8,000 square feet. Such building may be ascertained in accordance with the Guidelines on Ascertaining a Building and the Energy Intensity Performance of a Building; and

3. any energy-using product specified in the Guidelines on Energy Using Product, including domestic appliances and other energy-consuming products (“energy-using product“).

Energy Consumers 

Pursuant to the Guidelines on Ascertaining Energy Consumer, an energy consumer to which the EECA applies is any person whose energy consumption for a period of twelve consecutive months equals or exceeds 21,600 gigajoules (GJ).

The energy consumption of a person is determined by:

1. measuring the consumption of energy or energy resources received from a supplier of energy at one measuring point or more; or

2. measuring energy that is generated from solar photovoltaic or solar thermal energy resources at one measuring point or more.

The following are excluded in determining energy consumption:

1. the energy or energy resources which are acquired for onward sale or distribution to other persons; and

2. the energy resources used as feedstock.

An energy consumer determined by EC to be an energy consumer to whom the EECA applies has the following obligations: 

1. appoint within a specified period a registered energy manager whose duties and responsibilities include:
   • collecting and analysing the data on energy of, and energy consumption by, the energy consumer;
   • ensuring that the energy consumer implements an EnMS;
   • monitoring the implementation of the EnMS by the energy consumer;
   • preparing an energy efficiency and conservation report for the energy consumer;
   • ensuring the accuracy of information provided in the energy efficiency and conservation report;
   • advising the energy consumer on any other energy saving measures which the energy consumer may implement, and monitor the implementation of such measures; and
   • carrying out such other duties as EC may determine.

2. develop and implement within the stipulated timeline an EnMS in accordance with the guidelines for maintaining energy-efficient practices in the operation of his activity, business, or trade.

The energy efficiency and conservation report to be prepared by the appointed registerd energy manager and submitted to EC, contains the following information:

• • the description of the EnMS implemented by the energy consumer;
  • the total amount and purpose of consumption of energy and energy resources by the energy consumer;
  • the proposed measures for improving energy efficiency and conservation by the energy consumer;
  • any other energy efficiency and conservation measures which have already been implemented and measures that are yet to be implemented on the date of the energy efficiency and conservation report; and
  • any other information required by EC as may be specified in the guidelines.

An energy consumer shall, from time to time, appoint a registered energy auditor to carry out an energy audit of his activity, business or trade in accordance with the guidelines. The energy consumer must submit an energy audit report to EC within the stipulated timeline.

Upon request from an energy consumer who has submitted his first energy audit report, EC may grant exemption to such energy consumer from submitting subsequent energy audit reports provided the energy consumer is able to prove that significant energy efficiency and conservation measures have been implemented, resulting in improved energy efficiency in the conduct of his activity, business or trade. 

Buildings 

Pursuant to the Guidelines on Ascertaining a Building and the Energy Intensity Performance of a Building, the EECA applies to the following:

1. any office building which has a gross floor area (“GFA“) of 8,000 square meters and above; and

2. a building that is solely built or used for office purposes, subject to further determination by EC, taking into account the specification or conditions of the building, including the measuring point of the energy or energy resources supplied to the building.

GFA refers to the total area of floor space within a building, as measured between the external sides of a wall or, in the case of party walls, between the centres of such walls, but excludes the following areas:

1. parking spaces and circulation areas, including any mechanical or electrical spaces within the parking area of the building;
2. open or covered parking area outside the building;
3. staircases and lift shafts on floors other than the ground floor or lobby;
4. waiting area for commercial vehicles unloading goods;
5. gardens or recreational facilities for residents provided on the rooftop or podium in open or semi-open spaces;
6. pedestrian pathway connected to the building or transit station, including any supporting activities; and
7. pedestrian pathways within the building functioning as public walkways.

The person in charge of a building which has been determined by EC to be an energy consumer has the following obligations under the EECA:

1. Within the stipulated timeline, apply to EC for an energy intensity label for the building. The energy intensity label shall remain valid for such prescribed timeline and be displayed in a visible part of the building at all times.

2. Ensure that the building’s energy intensity performance complies with the prescribed energy efficiency In the event EC determines that the building’s energy intensity performance does not meet the required energy efficiency rating, EC shall issue a written notice of non-compliance to the said person in charge. The responsible party shall then arrange for a registered energy auditor to conduct an energy audit to improve the building’s energy intensity performance to align with the energy efficiency rating.

3. Carry out an energy audit in accordance with the guidelines and submit a report together with an energy efficiency improvement plan within one year from the date of the notice of non-compliance issued to him/her. The energy efficiency improvement plan shall be prepared in the manner set out by EC.

Energy-Using Products 

Pursuant to the Guideline on Energy Using Product, the EECA applies to the following energy-using products:

1. air-conditioner;
2. refrigerator;
3. domestic fan;
4. lamp;
5. television;
6. washing machine;
7. microwave oven;
8. electric rice cooker;
9. freezer; and
10. electric oven.

The following energy-using products are excluded:

1. energy-using products which are used for exhibitions, laboratory work, research, and testing; and
2. energy-using products which have been issued with a release letter under the Electricity Supply Act 1990 by the relevant regulatory authority.

All manufacturers and importers of energy-consuming products are required to obtain and affix an energy efficiency rating label prior to undertaking any sale, offer, display, advertisement or lease. These entities must be duly registered with EC and possess a certificate of energy efficiency confirming that their products comply with the prescribed minimum energy performance standards laid down by EC.

Registration of Energy Managers, Energy Auditors and Training Institutions 

Under the EECA, no person shall perform the duties or assume the responsibilities of a registered energy manager or a registered energy auditor without first registering with EC and obtaining a valid practising certificate issued pursuant to the EECA. The statutory requirement for registration and certification serves as a regulatory safeguard to ensure that only qualified individuals are permitted to undertake energy management functions or conduct energy audits.

Registration of Energy Manager and Energy Auditor

An individual must be duly registered as a registered energy manager and must possess a valid practising certificate issued pursuant to the EECA before performing any duties or responsibilities in that capacity. This applies similarly to individuals intending to act as registered energy auditors, where they must be registered and possess a valid practising certificate prior to carrying out an energy audit.

The statutory framework governing the application and registration of energy managers and energy auditors, the issuance and renewal of their practising certificates, and the grounds and procedure for cancellation of such registrations is provided in sections 25 to 30 of the EECA.

Registration of Training Institutions

A training institution intending to offer training programmes for persons who are keen to be registered energy managers, or conduct continuing professional development programmes for registered energy managers is required to be registered and hold a valid practising certificate under the EECA.

The eligibility criteria, procedural requirements for registration as a registered training institution, the application and renewal processes for practising certificates, as well as the statutory grounds for cancellation of such registration are provided in sections 31 to 36 of the EECA.

Energy Efficiency and Conservation Regulations 2024

To enforce the EECA, the EECR also came into effect. The EECR outlines the requirements relating to the appointment of energy managers, energy management systems, energy audits and energy efficiency reporting. Notably, the EECR imposes an obligation on energy users whose energy consumption exceeds the prescribed threshold to appoint a registered energy manager from among their employees.

In addition, the EECR introduces the requirement for buildings to obtain and display an energy intensity label, which must be renewed on an annual basis. The EECR also mandates that energy-using products must comply with the Minimum Energy Performance Standards (MEPS) and possess an energy efficiency rating label.

Collectively, the provisions set out in the EECR serve to operationalise the EECA and ensure that its consistent and comprehensive implementation across the relevant sectors.

Concluding Words

The EECA signals a decisive shift in Malaysia’s approach to energy governance by transforming energy efficiency and conservation from a policy aspiration into a legal obligation. Previously, under the Electricity Supply Act 1990, the provisions relating to energy efficiency were of limited applicability.

With the implementation of the EECA and the EECR, many industrial and commercial energy users will now be subject to the obligations imposed under these legislations. It, however, can be seen to present strategic opportunities for the affected users to enhance operational sustainability, reduce long-term energy costs and position themselves within a future-proof regulatory environment.

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.

Contribution Note

This Legal Update is contributed by the listed Contact Partners, with the assistance of Vanessa Khoo (Associate, Christopher & Lee Ong).