Malaysia: 2026 Updates to Renewable Energy Schemes

In brief

At the turn of the 2026 new year, the Energy Commission of Malaysia (“Energy Commission”) released a series of new updates affecting the principal green electricity schemes available to renewable energy developers and electricity consumers in Peninsular Malaysia.

These changes span the full spectrum of Corporate Renewable Energy Supply Scheme (CRESS), Solar Photovoltaic for Self-Consumption (SELCO), Solar Accelerated Transition Action Program (ATAP), and the New Enhanced Dispatch Arrangement (NEDA) mechanism, and reflect a continued policy shift towards greater flexibility, market participation, and private‑sector‑led decarbonization. Collectively, the updates recalibrate commercial risk allocation, streamline regulatory processes, and introduce new participation pathways for both local and foreign stakeholders across Malaysia’s renewable energy ecosystem.

Key takeaways

The 2026 updates include the new Solar ATAP scheme, updates to the CRESS guidelines and updates regarding the standby charge payable and the Battery Energy Storage System (BESS) requirement under the SELCO scheme.

CRESS Guidelines

On 29 December 2025, the Energy Commission revised the Guidelines for Corporate Renewable Energy Supply Scheme (“CRESS Guidelines”). The key updates in the revised CRESS Guidelines are:

• The definition of “Bilateral Energy Supply Contract” (BESC) has been amended so that the BESC shall be reviewed by the Single Buyer to ensure compliance with Clause 7.3 of the CRESS Guidelines prior to execution. Clause 7.3 of the CRESS Guidelines sets out items to be included within the BESC, which govern commercial, technical, and operational alignment with the CRESS framework.
• Previously, excess energy supplied by the Renewable Energy Developer (RED) would be deemed as free energy to the grid. However, under the revised CRESS Guidelines, the treatment of excess energy will instead be subject to the terms of the BESC. This allows further contractual freedom to the RED and the corporate consumer to contract on possible compensation mechanisms for excess generation or consumption shortfalls, as well as the RED's right to sell excess energy to a different consumer, or to retain rights to the green attributes associated with excess energy.
• The application process for CRESS has now been updated and streamlined in the following ways:
  • The power system study has now been split into two stages:
    • Power system study stage 1 (PSS1) may commence as soon as the CRESS participation application has been submitted. If PSS1 is successful, the Energy Commission will issue a conditional verification letter to the RED.
    • Power system study stage 2 (PSS2) is carried out after the RED receives the conditional verification letter and while it finalizes and executes the land agreement and the Bilateral Energy Supply Contract. If PSS2 is successful, the Energy Commission will issue the final verification letter. However if PSS2 fails, the secured nodal point is released.
• Previously, a RED was required to submit executed versions of the land lease agreement/land acquisition agreement (LLA) and the BESC at the CRESS application submission stage. Under the revised CRESS Guidelines, the RED may now submit term sheets for the LLA and the BESC at the CRESS application submission stage in order to proceed with PSS1. Thereafter, the executed LLA and BESC is to be submitted within three months of receiving conditional verification.

SELCO

The Energy Commission had on 31 December 2025 issued a statement entitled Notis Makluman Mengenai Penyesuaian Serta Penambahbaikan Terhadap Program Solar Untuk Kegunaan Sendiri (Solar for Self-Consumption-SELCO), or Notice of Information Regarding Adjustments and Improvements to the SELCO Program. The notice sets out the following adjustments:

• The SELCO system capacity threshold is revised from >1 MWp to >1 MWac for the purpose of the SELCO systems to which the standby‑charge of RM12/kWp is applicable; and
• The requirement to install a BESS now applies only to systems exceeding 1 MWac, instead of the previous threshold of 72 kWp.

The Energy Commission also stated that these adjustments will be reflected in an updated edition of the SELCO Guidelines.

Solar Accelerated Transition Action Program (“Solar ATAP”)

On 30 December 2025, the Energy Commission also released the new guidelines for Solar ATAP (“Solar ATAP Guidelines”), which came into force on 1 January 2025. Solar ATAP is designed as the successor and replacement for the previous net energy metering (NEM) scheme, which allows consumers to install and operate rooftop PV primarily for self‑consumption, while enabling export of surplus energy to the grid to offset monthly utility bills. Unlike past NEM schemes, there is no specific quota allocation for Solar ATAP.

The key points to consider for Solar ATAP are:

• The capacity limit for consumers under Solar ATAP is:
  • For single-phase domestic consumers, the maximum capacity shall not be more than 5 kW;
  • For three-phase domestic consumers, the maximum capacity shall not be more than 15 kW; and
  • For non-domestic consumers, the maximum capacity may be up to 100% of the premises’ Maximum Demand (MD). MD is calculated as either the 12‑month average recorded MD, or the declared MD for new consumers with less than 12 months of consumption history. Irrespective of MD, the absolute upper capacity limit is 1,000 kWac (1 MWac).
• The bill credits which Solar ATAP participants may receive for exporting excess energy to the grid is:
  • For domestic consumers, bill credits will be based on the energy charge component in the utility tariff; and
  • For non-domestic consumers, bill credits will be based on the average system marginal price issued by the Single Buyer.

Conclusion

The refinements to CRESS enhance contractual flexibility and reduce upfront development friction, while the SELCO and Solar ATAP changes rationalize technical and cost requirements for self-consumption solar, including clearer thresholds for the imposition of standby charges and battery storage requirements. At the same time, the introduction of Solar ATAP expands participation models for investors, corporations, and communities alike. Ultimately the updates underscore Malaysia’s intention to attract further investment, deepen private sector involvement, and accelerate the country’s energy transition through diversified market-based mechanisms.

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Faez Abdul Razak, Partner, and Jenny Yong, Associate, have contributed to this legal update.

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