Peak Shaving for Malaysian Industrial Parks: How Factories in BKIP, SAC, and Kulim Reduce MD Charges
Executive Summary
- • Maximum Demand (MD) charge: TNB's kVA/kW charge for industrial and commercial users can be a large part of the monthly bill; the share depends on your load profile and tariff.
- • Peak shaving technique: Discharging the BESS battery (lithium LFP) during peak-load periods to keep the draw from TNB under a set limit.
- • Tax incentive grade: BESS is a Tier 1 GITA Asset: 100% of qualifying capital expenditure, set off against up to 70% of statutory income; commissioned and submitted to MGTC before 31 December 2026.
For commercial and industrial (C&I) companies operating inside Malaysia's premier manufacturing zones like Batu Kawan Industrial Park (BKIP), Senai Airport City (SAC), and Kulim Hi-Tech Park (KHTP), electricity bills are a significant operating cost for many factories.
Under TNB's unbundled tariff structure, businesses are heavily penalized not just for the total kilowatt-hours (kWh) they consume, but for their highest 30-minute peak energy draw in a billing month. This is known as the Maximum Demand (MD) charge. Combined with the monthly Automatic Fuel Adjustment (AFA), high MD penalties act as a severe financial drain on factories.
By combining high-performance solar PV installations with modular Battery Energy Storage Systems (BESS) for peak shaving, factory managers are reclaiming control of their energy load profiles. See our BESS Malaysia page for system options, or our solar for factory page if you are starting with the roof.
Understanding TNB Maximum Demand (MD) Penalties
Since 1 July 2025, TNB non-domestic tariffs (which replaced the old C1, C2, E1, E2 and E3 categories) include a Maximum Demand charge calculated as RM per kW per month. For example, under the Medium Voltage General tariff, the demand charge is RM89.27 per kW (capacity RM29.43 + network RM59.84). On Medium Voltage Time of Use, it rises to RM97.06 per kW of peak-period demand.
If a factory experiences a temporary power draw spike of 1,500 kW for just 30 minutes (due to starting up heavy CNC machinery, chillers, or conveyors simultaneously), the facility is billed for that peak level for the entire month. At RM89.27/kW (MV General), that single peak costs RM133,905 in demand charges alone, even if the factory average load is only 800 kW.
TNB Tariff MD Charges Breakdown (effective 1 July 2025)
| Tariff Category | Voltage Level | MD Rate (RM/kW/mo) | Peak kWh Rate (sen) | Off-Peak kWh Rate (sen) |
|---|---|---|---|---|
| MV General (Flat rate) | Medium Voltage | RM 89.27 | 29.83 (Flat) | 29.83 (Flat) |
| MV Time of Use (Peak/Off-Peak) | Medium Voltage | RM 97.06 | 31.32 | 27.23 |
| HV General (Flat rate) | High Voltage | RM 31.21 | 43.03 (Flat) | 43.03 (Flat) |
| HV Time of Use (Peak/Off-Peak) | High Voltage | RM 44.82 | 44.52 | 40.43 |
How Battery Storage (BESS) Solves Peak Demand
A Battery Energy Storage System (BESS) acts as a high-capacity electrical buffer. The peak shaving process operates on a daily automated cycle managed by an Energy Management System (EMS):
- Off-Peak Charging: The BESS charges overnight (between midnight and 7:00 AM) when electricity rates are at their lowest (e.g., 27.23 sen/kWh off-peak under Medium Voltage Time of Use), or during mid-day when solar panels generate excess power that exceeds the immediate factory load.
- Real-Time Monitoring: The EMS continuously tracks the facility's load draw. The manager sets a target MD threshold (for example, 1,000 kW).
- Active Peak Shaving (Discharge): When production lines ramp up and the load draw approaches 1,010 kW, the BESS discharges stored battery energy. The battery covers the excess draw, aiming to keep the draw from the TNB grid under the 1,000 kW ceiling (subject to battery capacity and the control design confirmed for your site).
"By keeping the grid draw flat, the recorded monthly Maximum Demand is locked at a lower tier, which can lower the MD charge (site-specific)."
Solar for Factories: Solar ATAP and GITA
For local factory operators, installing factory solar not only reduces energy charges (and, when paired with BESS, the Maximum Demand charge), it is also supported by federal initiatives through the Solar ATAP programme and the GITA tax incentive.
Under Solar ATAP, solar energy generated in the daytime supplies the factory directly. Any surplus exported to the TNB grid is credited at the energy charge within the same month; unused credit is forfeited and not carried forward. With a battery system, surplus solar energy can be stored to support night-time operations, or used during peak periods to avoid a high Maximum Demand charge.
Is Peak Shaving Right for Your Factory?
Peak shaving provides the highest return on investment for facilities that display the following characteristics:
- High Peak-to-Average Load Ratio: Facilities where peak energy spikes are significantly higher than the average constant baseload.
- TNB Time of Use tariffs (MV ToU or HV ToU): Tariffs that enforce peak and off-peak energy rates, which maximize both demand charge shaving and energy arbitrage.
- Strict Carbon (ESG) Targets: Companies looking to phase out carbon-heavy backup diesel generators in favor of clean BESS backups.
Get a Custom Peak Shaving Quote
Trexon Energy engineers custom BESS designs based on your actual 12-month interval data. Contact us to receive a detailed ROI simulation for your facility roof.
