Net Energy Metering (“NEM”) 3.0

ARC News • January 1, 2021

Introduced in 2016, NEM is a program initiated by the Ministry of Energy, Green Technology and Water (“KeTTHA”) to allow solar photovoltaic system owners to generate, use and export the net excess energy to the grid. The NEM scheme was further improved in 2019 by the Ministry of Energy, Science, Technology, Environment and Climate Change (“MESTECC”) whereby solar photovoltaic system owners are able to sell the excess solar photovoltaic energy to the grid on one-to-one basis (“NEM 2.0”). The 500MW quota allocated under NEM 2.0 was fully taken up on 27 November 2020.

In view of the above, on 29 December 2020, the Ministry of Energy and Natural Resources (“KeTSA”) announced the introduction of NEM 3.0 which shall be implemented from 2021 until 2023. In essence, there are three (3) main initiatives introduced by KeTSA, namely:

  • NEM Rakyat Programme;
  • NEM GoMEn (Government Ministries and Entities) Programme; and
  • NOVA (Net Offset Virtual Aggregation) Programme.

Details of NEM 3.0 are as below:

Domestic Government Buildings Commercial & Industrial
Quota (MW) 100 100 300
Mechanism (roll-over) NEM 1:1 (12 months) NEM 1:1 (12 months) SELCO+ (1 month)
Effective Date 1 February 2021 1 February 2021 1 April 2021
Duration 3 years
Offset Rate Current Tariff Current Tariff System Marginal Price
Offset Duration 10 years
Mechanism after 10 Years Self-Consumption (SELCO)
Capacity Limit Single Phase: 4kWac

Three Phase: 10kWac

1 MWac / 1 Account Net Offset: 1MWac

Net Offset + Virtual Aggregation: 5MWac

Eligibility Criteria Domestic Account Holder Government Body/Agency Non-Domestic Account Holder

In addition, KeTSA has also made some improvements to NEM 2.0 whereby upon the expiry of the first 10 years in which the excess solar photovoltaic energy is sold on a “one-on-one” offset basis (“Initial Period”), the excess solar photovoltaic energy can be exported back to the grid at System Marginal Price for a further period of 10 years (“Extended Period”). Self-consumption model will apply upon the expiry of the Extended Period.

We anticipate that the relevant authorities will come out with the detailed guidelines in relation to NEM 3.0 in the near future. We will then provide the necessary updates in due course.

This Article is co-written by Yeo Shu Pin (Partner) and Serene, Tee Jia Qing (Legal Executive) of Messrs. Afif Rahman & Chong

Disclaimer: Every attempt to ensure the accuracy and reliability of the information provided in this publication has been made. This publication does not constitute legal advice and is not intended to be used as a substitute for specific legal advice or opinions. Please contact the authors for a specific technical or legal advice on the information provided and related topics.