Commercial Solar Financing Options in Malaysia

Four Solar Financing Options for Malaysian Businesses

Each financing model has different upfront costs, ownership structures, and payback timelines. Choose based on your business capital availability and long-term plans.

Option 1: Green Technology Financing Scheme (GTFS)

What it is: Government-backed financing specifically designed for renewable energy projects. The scheme provides preferential interest rates with a 2% government-funded rebate on your monthly installments.

• Interest rate: 4-6% per annum minus 2% rebate = effective 2-4% (varies by bank)
• Upfront cost: 10-20% down payment (RM10,000-40,000 for typical 100 kWp system)
• Loan term: 5-10 years, flexible repayment
• Eligibility: Registered Malaysian businesses, documented electricity consumption
• Processing time: 2-4 weeks after application

Best for: Businesses with reasonable capital reserves (10-20% of system cost) who want ownership and long-term savings with government support.

Key advantage: GTFS rates are among the lowest available. A 100 kWp system at 3% effective rate costs roughly RM3,000-3,500/month, often covered by electricity savings.

Option 2: Solar Leasing and Power Purchase Agreements (PPA)

What it is: You pay nothing upfront. A solar company installs, owns, and maintains the system. You pay per kilowatt-hour (kWh) generated—typically RM0.28-0.35/kWh versus SESB tariffs of RM0.25-0.35/kWh depending on your consumption tier.

• Upfront cost: Zero—no capital required
• Monthly payment: Only for electricity generated (pay-per-kWh model)
• Maintenance: Fully handled by the installer
• System ownership: Installer retains ownership
• Contract term: 10-20 years
• Savings: 15-30% reduction in electricity costs if PPA rate is below your tariff

Best for: Businesses with zero available capital or those that want to avoid ownership risks and maintenance responsibilities.

Key advantage: Immediate savings with zero risk. Installer covers all repairs, warranty, and monitoring. Best for cost-conscious businesses prioritizing cash flow over ownership.

Consideration: You do not own the system, so no tax incentives apply (benefits go to the installer). Electricity cost savings are typically lower than ownership models.

Option 3: Bank Green Loans (Standard Commercial Loans)

What it is: Traditional commercial loans offered by Malaysian banks at preferential rates for renewable energy projects. Rates are lower than standard business loans due to government green financing initiatives.

• Interest rate: 5-7% per annum (better rates than standard business loans)
• Upfront cost: 15-30% down payment required
• Loan term: 5-10 years, fixed or variable rates available
• Eligibility: Standard business loan criteria (credit score, financial statements, collateral)
• Banks offering: Maybank, CIMB, RHB, Public Bank, AmBank (rates and terms vary)

Best for: Established businesses with good credit, existing bank relationships, and 15-30% capital to invest upfront.

Key advantage: Competitive rates, flexible terms, and you retain full system ownership from day one. Tax incentives and long-term savings are maximized.

Option 4: Cash Purchase (No Financing)

What it is: Full upfront payment for your solar system. Most cost-effective long-term but requires significant capital.

• Upfront cost: 100% (RM110,000-180,000 for typical 100 kWp commercial system)
• Monthly cost: Zero loan payments—only maintenance (RM500-1,000/year)
• Payback period: 4-5 years (fastest among all options)
• 25-year lifetime savings: RM600,000-800,000 (highest total savings)
• Ownership: Yours from day 1; full tax incentive eligibility

Best for: Businesses with available capital and long-term commitment to solar. Maximum savings over time.

Key advantage: Fastest ROI, zero interest costs, immediate full ownership, complete tax benefit eligibility, highest 25-year lifetime savings.

Malaysian Tax Incentives for Solar

Two government tax allowances can significantly reduce the true cost of solar ownership:

1. Green Investment Tax Allowance (GITA)

What it is: A 100% tax allowance on the cost of qualifying green energy assets (solar panels, inverters, battery storage).

• Benefit: Reduces taxable profit by the full system cost in year 1
• Example: RM140,000 system cost = RM140,000 tax deduction
• Tax savings: At 24% corporate tax rate, that is RM33,600 in year 1
• Eligibility: Businesses with positive taxable income; companies and sole proprietors
• Sunset date: 31 December 2028 (incentive ending soon)

2. Green Income Tax Exemption (GITE)

What it is: Income from exported solar energy (if applicable in your state) is exempt from income tax for 5 years from first generation.

• Application: Primarily for Peninsular Malaysia (NEM export income)
• Sabah: Limited benefit as SELCO systems are zero-export
• Duration: 5-year exemption from commissioning

Combined savings example: A 100 kWp system at RM140,000 with GTFS financing:

• Year 1 GITA tax allowance: RM33,600 immediate value
• Annual electricity savings: RM30,000 (100 MWh × RM0.30/kWh)
• Annual financing cost: RM39,600 (at 3% effective rate)
• Year 1 net: RM24,000 positive (savings + tax deduction exceed financing)

Easy Solar's SELCO Positive Cash Flow Model

Here is how we structure financing for immediate positive cash flow:

100 kWp SELCO System (Kota Kinabalu, Sabah):

• System cost: RM140,000
• GTFS financing: RM112,000 at 3% effective rate
• Down payment: RM28,000
• Monthly financing: RM3,200
• Annual electricity saved: RM50,400 (100 MWh × RM0.50/kWh average SESB tariff)
• Monthly savings: RM4,200
• Monthly positive cash flow: RM1,000 (RM4,200 savings - RM3,200 financing)

From month one, your business generates RM1,000 monthly positive cash flow. Over 5 years of financing, that is RM60,000 in pure cash benefit while building equity in the system. After the loan is paid off in year 5, all RM4,200/month in electricity savings flows directly to your bottom line.

Quick Comparison: Which Option Is Right for You?

Frequently Asked Questions