Home Solar PV System: A No Brainer?

 

Few years ago, I heard that to install home solar panels, the minimum cost was well above RM20-30k, and the payback period was around 10 years.

I'm not sure how true was it as I didn't do further research.

Last year, I heard that the cost has dropped significantly to less than RM20k and it took less than 5 years to recoup the initial investment.

Now, it is almost "zero cost upfront" with instant return on investment. 

It's just like in property investment when the developer gives 10% discount, free stamp duties/legal fees & DIBS so you don't need to pay anything before the VP, and then you rent out the property immediately with positive cashflow for 10 years.

Can you believe it?

To encourage Malaysians to install home solar photovoltaic panels, the government has introduced Net Energy Metering Scheme (NEM) since Nov 2016. 

Subsequently, NEM 2.0 was introduced in Jan 2019 and due to the overwhelming response, NEM 3.0 was introduced since Dec 2020.

NEM 3.0 was supposed to end on 31 Dec 2024 but was extended until 30 Jun 2025.

Since NEM 2.0, solar energy generated from the panels will be consumed first, and the excess will be exported to TNB grid on a "one-on-one" offset basis.

For example, if the solar panels generate 100 units electricity on a certain day, and you only consume 40 units directly from the solar panels in the daytime, the excess 60 units will be exported to the grid.

If you consume 50 units from TNB grid on that night, TNB will offset it with the excess 60 units and in the end, you have net 10 units exported to the grid on that day.

For this particular day, your energy bill will be zero. The extra 10 units exported to the grid are "credits" that can be used to offset electricity used in other days.

TNB will not pay you cash if there is excess electricity exported to the grid. These credits can only last for 12 months though.

On 1 April 2024, the government rolled out the SolaRIS (Solar For Rakyat Incentive Scheme) which accelerated the adoption of home solar PV system.

Through SolaRIS, there will be one-time cash rebate of RM1,000/kWac (maximum RM4,000 or 4kWac) for those solar PV system successfully commissioned by TNB before 30 April 2025. It will be on first come first served basis until the quotas are fully distributed.

For a basic home rooftop PV system, it can easily surpass 4kWac (~5 to 6kWp) so we can expect full RM4k rebate.

Even though there is a capacity limit of 5kWac (single phase) & 12.5kWac (3-phase) under the NEM, I was told that many houses install over the limit.

Initially I did not bother too much about installing rooftop solar panels until early this year, after hearing it from a friend, suddenly I thought "Why Not"?

I started to do some research and got a few quotations. In the end I chose to install 6.40kWp solar system with 10 panels and 3 microinverters that costs me RM16,000. 

The potential electricity that can be saved is projected at approximately RM300 per month, or RM3,600 per year. 

After the RM4,000 SolaRIS rebate, the actual cost is RM12,000. So the payback period is just 3.3 years.

 

The ROI is 3.3 years, why did I mention earlier that is it like an instant return on investment? 

It's because of the SolaRIS and the fact that most solar companies offer 0% credit card instalment for up to 60 months!

In my case, I paid a down payment of 10% (RM1,600) once I signed the quotation. After the system is commissioned in about 2-3 months time, I will receive RM4,000 cash rebate from the government.

In other words, I actually "earn" RM2,400 in the first 3 months.

After that, I can pay the remaining RM14,400 by 48-month 0% instalment, which comes to RM300 every month for 4 years.

If the solar PV system can really save RM300 of electricity per month, it will be like I got the solar PV system for "free", as I use the money supposed to pay for the electricity bill to pay for the solar system.

I don't need to fork out extra money at all to get the solar system. When the instalment is fully paid after 4 years, I'll get to save RM3,600 of electricity per year.

Isn't this an instant ROI?

For comparison:

Without solar panels: Total RM36,000 electricity bills in 10 years (assume that average RM300 per month with no hike in electricity tariff).

With solar panels: Total RM12,000 electricity bills in 10 years (assume no significant decline in solar panel performance).

Of course, as my PV solar system is not commissioned yet, I'm not sure how much it can really save. The solar energy generated depends on the weather and its efficiency will drop by 0.5-0.8% each year.

The NEM contract is for 10 years only. After 10 years, TNB won't offset the excess electricity we export to the grid, which means we give it to TNB for free.

During night time when the solar system stop working, we still have to pay for the electricity originated from the TNB grid.

At that time, the electricity saving will be lesser especially for those who consume more electricity at night time.

Basically the solar panels and inverters have warranty period of more than 20 years, so we can expect to pay less electricity bills during this period of time.

Nevertheless, in 10 years time, I think the battery system to store solar power might become more mature, more affordable and approved by the government to be added at homes.

If this is the case, then I might be able to save more electricity even after the NEM contract expires after 10 years.

In the last decade, the efficiency of solar panel has increased due to adoption of latest technology. Its price has also fallen significantly, due to intense competition among the Chinese solar panel manufacturers.

To me, it's really a no brainer to install roof top solar panels now especially with the SolaRIS rebate and 0% instalment.

That's why there are so many solar panel installing companies around. I didn't aware of this until I did the research early this year.

So far the public listed rooftop solar PV service providers include Solarvest, Cypark, MFCB, Samaiden, Pekat, Vsolar, BM Greentech, Sunview, Northern Solar etc. 

There are many many others private companies that we do not know.

After the recently listed Northern Solar early this year, Verdant Solar might be the next to be listed on ACE market soon.

Even now Maxis also joins the party by offering home solar PV system to its customers, as below:

From Maxis, a single storey small house needs 7.3-9.3kWp and it can only save RM110-140 monthly? Or the RM110-140 is the amount of bill that need to be paid per month (down from RM500-650)? 

It's a bit confusing...

If it can only save RM110-140 per month, then my 6.4kWp will only save less than RM100 of TNB bill per month, and definitely I will not consider to install it.

Anyway, all solar companies I got the quotations from claim that 6.4kWp of solar PV system can save around RM300 of TNB bill per month.

I already got the system installed and just waiting for it to be commissioned. 

If 6.40kWp can only save less than RM100 electricity bill per month, then installing home solar PV system is not a no brainer, but a cash drainer.