Feed-in Tariff (FiT)

The FiT System is Malaysia’s new mechanism under the Renewable Energy Policy and Action Plan and the Renewable Energy Act 2011 catalysing generation of renewable energy, up to 30 MW in size. This mechanism allows electricity produced from indigenous renewable resources to be sold to power utilities at a fixed premium price for a specific duration.

The fundamental idea underlying feed-in tariffs is that distribution licensees pay renewable energy power generators a premium for clean energy that is generated. These generators sell their clean energy to distribution licensees for a fixed number of years. The exact duration will depend on the type of renewable resource used for power generation. The FiT System provides a fixed payment from distribution licensees for every kilowatt hour (kWh) of renewable energy generated and a guaranteed minimum payment for every kWh exported to the grid.

The FiT System is not financed by the government. Instead it is financed by electricity consumers themselves who contribute one percent (1%) of their total electricity bill towards a Renewable Energy Fund. However, domestic customers who consume 300 units of electricity or less each month will not have their tariffs raised to pay to the Renewable Energy Fund.

Sourced from SEDA Malaysia