What is Net Energy Metering (NEM)?

Introduction to Net Energy Metering Malaysia (NEM Malaysia)

Net Energy Metering (NEM) is a system of electricity generation, use and trading that can give renewable energy projects access to the grid. The idea behind this system is to encourage the use of renewable energy power sources by giving them credit for the electricity they generate through their consumption. This means that if a business installs solar panels and uses some of its power itself, it can sell the rest to consumers or other businesses on the grid at an agreed price. This way, they will earn money in electricity without spending money on equipment that produces it like solar panels and wind turbines.

If you are looking to install a Grid connected Solar Energy System on your rooftop in Malaysia, then the one thing you will need to fully understand is the Net Energy Metering (NEM) scheme and how it works.

With NEM, you will first consume any electricity generated by your Solar Photovoltaic (PV) System on your rooftop. Any excess generated by your Solar PV system will be “sold” to the Grid in credit terms on a 1-to-1 offset basis. Generally, 1-to-1 offset basis means that every 1 kWh exported to the Grid can be offset against 1 kWh consumed from the grid at the gazetted tariff (as illustrated below).

nem malaysia


As an analogy, the Grid has now become your Solar Energy storage and there is no need for your Solar PV System to include a battery. This will not greatly reduce the cost of installing a Solar PV System, but also removes any costs associated to maintain / repair / replace the battery.

Benefits of Net Energy Metering (NEM)

The Government of Malaysia through the Ministry of Energy, Science, Technology, Innovation and Environment (MESTIE), is committed to provide the best service for its consumers.

NEM is a leading energy company in Malaysia with the aim of providing affordable and reliable power to households. To achieve this goal, it has developed a strategy that will enable customers to have access to clean energy.

Malaysia has a renewable energy policy that aims to make Malaysia a carbon-free country. Malaysia is one of the first countries in the world to be using solar technology as a source of power. This has helped to save the environment and reduce carbon emissions.

The grid provides electricity for residential consumers through two methods: centralized and decentralized power grids. The centralized power grid relies on large power plants that are located outside of the city in order to distribute electricity throughout the system. The decentralized power grid relies on smaller, more local sources of electricity, such as solar panels or small hydroelectric generators, that are located close to where people live and work.

Limitations Of Net Energy Metering (NEM) Malaysia

Net Energy Metering (NEM) is a system of energy regulation which guarantees consumers a fair price for the electricity they produce. The NEM system is based on the premise that all consumers should be able to purchase power from suppliers at the same rate as they sell it back to those suppliers. It is an important concept in electricity generation and some countries have already implemented it.

The main drawbacks of this system are:

1) The absence of an appropriate pricing mechanism and

2) The lack of balancing mechanisms which prevent oversupply and shortages of power supply in the grid.

Simply contact us If you would like to know more. Our Solar Engineers will gladly help you understand more on Solar Energy and NEM Malaysia (NEM Scheme).

Interested to learn more about Net Energy Metering (NEM 3.0), how Net Energy Metering 3.0 benefits commercial and industrial sectors, Net Energy Metering NEM Malaysia, Sustainable Energy Development Authority (SEDA Malaysia), solar power, how solar photovoltaic system works, how solar pv system helps to reduce electricity bill and many more? Keep checking our blog section regularly!

Application Process for Net Energy Metering in Malaysia

In Malaysia, the application process for net energy metering (NEM) is as follows:

  1. We will request for all the documents required for NEM application.
  2. Once your documents are received, we will review them to ensure zero errors of your NEM application.
  3. All technical designs, drawings, and specification are prepared to supplement your NEM application.
  4. You will then be required to sign a NEM contract which outlines the terms and conditions of your participation in NEM.
  5. NEM approval will be given after all these submissions, thereafter we will proceed for the installation of your solar PV system.
  6. After installation, a TNB person will install a NEM meter which will track any electricity imported or exported, to be then used to offset any charges on your TNB bill.