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Shedding some light on Net Energy Metering

By March 30, 2017 No Comments

Net Energy Metering is the newest program by the Malaysian Government to encourage take-up of solar generated electricity. But how does it work, how much can you save, and what’s in it for you?  BSL Eco Energy Chief Engineer Randy Chuah has the answers.

What’s a solar PV system?

A solar PV system converts light energy directly into electricity. There are four main components:

  • Solar panels – changes sunlight into direct current (DC) electricity
  • Support structure – attaches the solar panels to the roof or building
  • Meter – tracks the AC electricity coming from and being sent back to the grid
  • Inverter – changes DC electricity from the solar panels into AC electricity

Background of renewable energy in Malaysia

In Malaysia, there are two phases of renewable energy so far.

The first phase took place from 2011 to 2016, and is called the ‘feed-in-tariff’ phase. In this program, solar-generated electricity is sold back to TNB at a premium price, guaranteed for 21 years. Solar projects were awarded through a ballot system.

The second phase took place in 2016, and will continue until 2020. This is called the Net Energy Metering (NEM) phase. In NEM, solar-generated electricity is used for self consumption, whilst extra energy is channeled to the grid for credit against future electricity bills. It’s allocated on a first-com-first-serve basis.

How Net Energy Metering works

BSL Eco Energy - How does net metering work?
  1. When there is sunlight, electrical devices are powered by solar
  2. Excess solar energy channelled to the grid through a two-way meter
  3. The meter records the amount as credit against your next bill (currently RM0.32 per kWh)
  4. When there’s not enough solar power, electrical devices are then powered by grid

Is solar energy only about going green? Or is it also a GREAT INVESTMENT?

To illustrate this point, let’s consider some findings from a case study I recently did a for a personal care factory located in Petaling Jaya, Selangor.

I analysed their electricity usage patterns, and found:

  • Average monthly electricity bill = RM180,000.
  • The bulk of their energy usage fell within the peak period rates of 8am to 10pm. This means they pay RM0.355 per kW (peak period rates) vs RM0.219 (off peak rates)
  • Available roof space = 10,000 sq ft
  • Roof structure design = flat
  • Shading analysis = minimal
  • Electrical system = suitable.

Thus, I designed and proposed a solar system size of 150kWp. A system this size would carry the follow returns:

  • Daily energy production = 608 kWh
  • Monthly energy production = 18,848 kWh
  • Reduction in electricity bill per year = RM80,293

Please note that the figures above assume the factory operates 7 days per week, 100% of solar energy generated is self consumed and peak period rates of 35.5 sen applies.

Therefore this translates to the following ROI figures:

  • ROI = 5-8 years
  • Annual returns = 12.5%
  • Savings over 20 years = RM1.5M

While the figures may be different for you depending on your own circumstances, it’s certainly worth getting a solar engineer over to your place for an assessment. Many companies do it for free (although you may need to pay a certain amount to TNB depending on the proposed system size).

Other benefits

Besides positive returns on investment, powering your home or business with solar also has some other great benefits!

  • 100% of qualifying capital expenditure can receive the Green Technology tax incentive
  • Malaysia is in a prime location for solar energy generation, with very good direct normal irradiation (DNI)
  • It’s true CSR, with no Co2 emissions, rooftops as responsible land use, a better public image and a positive workplace environment
  • It’s a low risk investment, with defined safety standards, steady income/savings, low operation and maintenance requirements
  • It minimises the impact of energy costs, so even when energy prices go up, you’ll be shielded from it
  • It’s a scaleable technology
  • It increases the value of your building
  • Silent operations
  • You’re already paying for it through your monthly TNB bill anyway!

This article is derived from a presentation Randy did at ‘Is investing in energy efficiency REALLY worthwhile’? This was an educational event for Malaysian businesses that are serious about saving energy, held on 29 March 2017 at the Grand Dorsett Hotel, Subang Jaya.