Clearing Up the New Solar Self-Consumption (SELCO) Guidelines in Malaysia
On 24 December 2024, Malaysia’s Energy Commission (Suruhanjaya Tenaga) released the updated Guidelines for Solar Photovoltaic (PV) Installation for Self-Consumption (“SELCO Guidelines”) in Peninsular Malaysia, effective from 1 January 2025. While these guidelines introduced several major revisions to the existing SELCO framework, expanding the scope and flexibility of solar PV adoption to accelerate the country’s energy transition, it has also created confusion and some ambiguity among businesses.
So what do the changes in the recent SELCO Guidelines mean for Malaysian businesses? This article aims to clear up what the key updates under the newly updated SELCO Guidelines entail, following further developments from the recent announcements on 27 February 2025.
Key updates under the latest SELCO Guidelines:
Note: These guidelines only apply to installations where construction begins on or after 1 January 2025.
Capacity Limits/Maximum Demand Now Removed for Businesses
Previously, solar PV systems were capped at 85% of a premise’s maximum demand. Under the new guidelines, this limit has been removed for businesses, allowing businesses to further scale up solar utilisation.Install Beyond Premise Rooftop(s)
Solar PV systems can now not only be installed on rooftops but also on the ground or floating (water bodies) surfaces within business premises, allowing businesses to fully maximise solar generation.Agricultural Sector Now Included
Good news— the SELCO scheme is now finally made available to the agricultural sector!Revision of Previously Introduced Standby Charges
A standby charge of RM14/kWp was initially introduced to SELCO systems above 1MWp for post-2025 installations to maintain grid stability. Following the recent announcements, the standby charge will be reduced to RM12/kWp for systems above 1MWp while systems below 1MWp are exempted from the standby charge.Battery Energy Storage System (BESS) Requirements
Grid-connected systems exceeding 72 kWp are mandated to install a BESS of equal or greater capacity to help maintain grid stability. As a temporary relief measure following the recent announcements, the BESS requirement is now exempted until 31 December 2025. This means that businesses that opt for SELCO before 2026 are not required to install any BESS.CAS Replacing PSS for Pre-Installation Studies
The previous Power Systems Study (PSS) has been replaced with a Connection Assessment Study (CAS) for all installations above 72 kWp. This is a standard study conducted by the solar engineer responsible for the system design prior to construction.
What this means for businesses:
The SELCO Guidelines mark a significant leap in Malaysia’s renewable energy push particularly for commercial and industrial (C&I) consumers. With upcoming regulatory changes coming into the picture, the recent guidelines help offer greater flexibility for commercial and industrial (C&I) consumers to transition to solar power.
Long-Term Savings by Hedging Against Tariff Hikes
With electricity tariffs expected to rise by a significant 14.2% in July 2025 (due to subsidy cuts and conventional fuel costs), solar PV investments could lock in stable rates for 15–20 years, offsetting higher upfront expenses.Temporarily Removed Cost Considerations
While capacity limits are lifted, the standby charge and future BESS mandate still affects businesses. By locking in a solar installation by 31 December 2025, businesses can forgo the BESS requirement which will kick in on 1 January 2026.
