Commercial solar in Malaysia has crossed a critical threshold: with TNB commercial tariffs now at 45.62 sen/kWh for Tariff C1 and above, a 100 kW rooftop solar system pays itself back in 3.5–4 years — then generates RM 100,000–140,000 in annual savings for the next 20+ years. Add the GITA 60% tax allowance (available until December 31, 2026) and the effective payback drops to 2.5–3 years. This guide gives you the complete financial picture.
Why Commercial Solar ROI Outperforms Residential
Commercial solar systems consistently deliver faster payback than residential for three structural reasons:
- Higher TNB tariffs: Commercial Tariff C1/C2 rates (45.62 sen/kWh) are 20–30% higher than domestic Tariff D. Every kWh of solar self-consumed is worth more to a business than to a household.
- Daytime load alignment: Factories, offices, and retail premises run 8–12 hours per day — exactly when solar generates. Self-consumption rates of 85–95% are achievable, far above the 60–70% typical for residential systems.
- Maximum Demand (MD) charge reduction: Commercial TNB bills include a Maximum Demand charge (RM 29.60–37.72 per kVA per month). Solar can shave peak demand, reducing this fixed charge significantly.
ROI Calculation Methodology
A robust commercial solar ROI calculation has four components:
1. Annual Energy Savings
Annual generation (kWh) × TNB tariff avoided (RM/kWh) × self-consumption rate (%)
Example: 100 kW system × 1,350 kWh/kW/year × RM 0.4562/kWh × 90% self-consumption = RM 55,400/year in energy savings
2. Maximum Demand (MD) Charge Reduction
Solar reduces peak demand by shifting energy consumption from grid to self-generated. For a factory with a 200 kVA MD and a 100 kW solar system, peak shaving can reduce MD by 40–70 kVA in solar hours, saving:
60 kVA reduction × RM 37.72/kVA/month × 12 months = RM 27,158/year in MD charge savings
3. Total Annual Savings
Energy savings + MD charge reduction = total annual savings. For the 100 kW example above: RM 55,400 + RM 27,158 = RM 82,558/year
4. Payback Period
System cost ÷ Annual savings = Simple payback period. A 100 kW system costs approximately RM 280,000–320,000 installed (RM 2,800–3,200/kW). At RM 82,558/year savings: 300,000 ÷ 82,558 = 3.6 years simple payback
Payback Period by Commercial System Size
| System Size | Approx. System Cost | Annual Energy Savings | Annual MD Savings (est.) | Total Annual Savings | Simple Payback | With GITA (60% allowance) |
|---|---|---|---|---|---|---|
| 50 kW | RM 155,000–175,000 | RM 28,000 | RM 12,000–15,000 | RM 40,000–43,000 | 3.8–4.3 years | 2.3–2.6 years |
| 100 kW | RM 280,000–320,000 | RM 55,400 | RM 24,000–30,000 | RM 79,000–85,000 | 3.5–4.0 years | 2.1–2.4 years |
| 200 kW | RM 520,000–600,000 | RM 110,000 | RM 45,000–60,000 | RM 155,000–170,000 | 3.2–3.7 years | 1.9–2.2 years |
| 500 kW | RM 1,150,000–1,350,000 | RM 275,000 | RM 90,000–120,000 | RM 365,000–395,000 | 3.0–3.5 years | 1.8–2.1 years |
Assumptions: Tariff C1 at RM 0.4562/kWh, MD charge RM 37.72/kVA, 90% self-consumption, annual generation 1,350 kWh/kW, Peninsular Malaysia. GITA column assumes 24% corporate tax rate and 60% allowance on capex.
GITA: The 60% Tax Allowance You Cannot Afford to Miss
The Green Investment Tax Allowance (GITA) is administered by MIDA (Malaysian Investment Development Authority) and provides a 60% Investment Tax Allowance on qualifying capital expenditure for renewable energy projects, including commercial solar. The allowance can be offset against 70% of statutory income in any given year of assessment, with unused allowance carried forward.
How GITA Works in Practice
- A company invests RM 600,000 in a 200 kW solar system
- GITA allowance: 60% × RM 600,000 = RM 360,000 tax allowance
- At 24% corporate tax rate: RM 360,000 × 24% = RM 86,400 tax saving
- Effective net cost of system after GITA: RM 600,000 − RM 86,400 = RM 513,600
- Revised payback period: RM 513,600 ÷ RM 162,500/yr savings ≈ 3.2 years vs 3.7 without GITA
GITA Eligibility Requirements
- Company incorporated in Malaysia (Sdn Bhd or Bhd)
- MIDA application submitted before commencement of project
- Solar system must be new (not used or relocated)
- Must use for own consumption (not primarily for sale to grid)
- Current GITA deadline for solar: December 31, 2026 — apply now to lock in eligibility
GITA applications are submitted through MIDA's InvestMalaysia portal. Your installer typically provides technical documentation; your company's tax consultant or MIDA-registered consultant handles the application. Trexon's commercial team works with partner consultants who can facilitate GITA applications alongside installation projects.
TNB Tariff Impact: Understanding Your Commercial Bill
Malaysian commercial TNB bills have two main components that solar affects differently:
Energy Charge (sen/kWh)
The per-unit charge for electricity consumed. Solar directly displaces this at full tariff value:
- Tariff C1 (low voltage, medium demand): 45.62 sen/kWh
- Tariff C2 (low voltage, high demand): 45.62 sen/kWh energy + higher MD charge
- Tariff D (medium voltage, bulk supply): 38.53 sen/kWh (lower per-unit but higher MD)
Maximum Demand (MD) Charge
Charged on the highest 30-minute power demand recorded in the billing month, in kVA:
- Tariff C1: RM 29.60/kVA/month
- Tariff C2: RM 37.72/kVA/month
- Tariff D: RM 34.97/kVA/month
A 200 kW solar array that is generating during morning peak hours (9am–12pm, typically when factories ramp up production) can shift 150–180 kW of demand from grid to solar during that window, directly reducing the peak demand recorded. Even if MD is set at another time of day, morning solar generation often reduces the probability of hitting the worst peaks.
Case Study: 200kW Factory Solar System
Trexon installed a 200 kW rooftop system for a medium-sized manufacturing facility in Shah Alam, Selangor operating on Tariff C2. Here are the actual first-year results:
System Profile
- System size: 200 kW (LONGi Hi-MO 6 panels, 550W each, 363 panels)
- Inverter: Huawei SUN2000 series string inverters
- Roof area used: 1,200 m² (factory roof, metal deck, east-west ballasted)
- System cost: RM 560,000 (turnkey, including all TNB, SEDA and JKE work)
- Annual generation: 269,000 kWh (Year 1 actual)
Financial Results (Year 1)
- Energy savings (self-consumed at RM 0.4562/kWh): RM 118,000
- MD charge reduction (average 55 kVA reduction): RM 24,900
- Export credits (22,000 kWh × RM 0.218/kWh): RM 4,800
- Total Year 1 savings: RM 147,700
- GITA tax allowance applied (60% × RM 560,000 × 24%): RM 80,640
- Effective first-year benefit: RM 228,340
At RM 147,700/year ongoing savings (growing as TNB tariffs increase over time), the simple payback on the RM 560,000 investment is 3.8 years. Including the GITA benefit: effective payback of 2.6 years. Over 25 years, cumulative savings at current tariffs: approximately RM 3.2 million.
ESG Reporting Benefits
Beyond the direct financial return, commercial solar installations generate Renewable Energy (RE) certificates — specifically, Renewable Energy Certificates (RECs) under the Malaysian Energy Commission's framework. These certificates document your self-consumed solar generation and can be used for:
- Scope 2 emission reduction reporting under GHG Protocol accounting standards
- Science Based Targets initiative (SBTi) compliance for companies with net-zero commitments
- Supply chain decarbonisation requirements from MNC customers (particularly in automotive, electronics, and F&B sectors where Scope 3 pressure from global brands is increasing)
- Bursa Malaysia Sustainability Reporting requirements for listed companies
- Bank Negara taxonomy classification benefits for green financing eligibility
For export-oriented manufacturers supplying to EU or US buyers, the ability to demonstrate renewable energy use is increasingly a commercial requirement — not just an ESG checkbox. Solar with REC documentation is the most credible way to demonstrate this.
Next Steps for Commercial Solar in Malaysia
The window for GITA applications is open only until December 31, 2026. Given the 6–12 week application and installation timeline, companies should begin the process by Q2 2026 at the latest to secure eligibility before year-end.
Explore our complete commercial solar solutions and factory solar packages, or review our full pricing guide to understand cost structures by system size. Our commercial team provides detailed financial modelling — including TNB tariff impact analysis, GITA application support, and 25-year cash flow projections — at no cost as part of the proposal process.
Frequently Asked Questions
What is the typical solar payback period for commercial properties in Malaysia?
For systems between 50 kW and 500 kW installed in Peninsular Malaysia: 3.0–4.5 years simple payback without incentives. With GITA 60% tax allowance applied, effective payback drops to 1.8–2.6 years for companies paying corporate tax at 24%. Larger systems (200 kW+) achieve the fastest paybacks due to lower per-kW installation cost and higher MD charge reduction potential.
What is GITA and when is the deadline for solar applications?
GITA (Green Investment Tax Allowance) is a 60% investment tax allowance on qualifying renewable energy capital expenditure, administered by MIDA. For solar, the current deadline for applications is December 31, 2026. Companies must apply to MIDA before project commencement — you cannot apply retrospectively after installation is complete. Applications are submitted via MIDA's InvestMalaysia portal and typically take 8–16 weeks for approval.
How does solar reduce Maximum Demand charges on TNB commercial bills?
Maximum Demand (MD) is charged based on the highest 30-minute average power demand recorded in the billing month, in kVA. Solar generation during business hours directly reduces the amount of power drawn from the grid during those periods. If your factory's peak demand typically occurs at 10am–12pm (morning production ramp-up), and your solar system generates 150 kW during those hours, your grid demand is reduced by 150 kW for that window. If this prevents your peak MD from being recorded at the usual high point, your MD charge — which can be RM 8,000–20,000/month for large commercial users — is reduced accordingly.