New SelCo rules dim solar panel outlook

ONE of the more popular programmes for the installation of solar power panels is through an initiative called Self-Consumption (SelCo), introduced in 2017. Under this programme, a factory owner can get permission from the energy regulator to instal solar panels on their own premises for their own consumption.

This is opposed to other programmes such as the Net Energy Metering, which allows excess solar generation to be sold back to the grid to offset energy bills.

Previously, regulations allowed such a facility to generate up to 85% of its energy usage through its own SelCo installation.

However, a revised regulation, which took effect on Jan 1, now allows facilities to generate 100% of their energy needs through their SelCo installation, which is a good thing.

Furthermore, SelCo has been extended beyond rooftop solar installations to include ground-mounted and floating solar configurations on consumers’ premises.

However, the new rules have introduced a condition that has sent shock waves through the industry: installers of SelCo systems on commercial facilities will now have to pay a monthly “standby charge” of RM14 per kilowatt peak (kWp) of solar energy produced.

The rationale behind this new charge is based on the fact that there will be times when SelCo aren’t able to self-generate enough power and must draw from the national electricity grid. Hence, the standby charge.

Ostensibly, the standby charge is meant to cover any costs that the grid owner will incur in managing these fluctuating demands from SelCo users.

However, there is a lack of clarity on how much additional costs will be borne by the grid operator and how that justifies the sudden imposition of this new standby charge.

The regulations now mandate that SelCo installations include a battery energy storage system of sufficient capacity, raising the cost of the project further.

This could impact the viability of SelCo projects being built, as well as new ones in the pipeline.

Furthermore, the lack of consultation with the industry regarding these new charges has raised concerns.

For a smooth transition towards a low-carbon economy, more is expected from the regulator of such an important sector, including closer engagement with the industry.