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Choose the financing model that best fits your organization's financial strategy.From full CAPEX ownership to zero-investment performance contracts.

Energy Efficiency Financing Models for Malaysian Commercial Buildings

Capital constraints shouldn't prevent Malaysian facilities from capturing substantial energy savings. Our three financing models accommodate different financial strategies—from traditional outright purchase for cash-rich organizations to zero-CAPEX Energy Performance Contracts (EPC) that fund projects entirely from guaranteed savings. Each model has distinct advantages regarding ownership, risk allocation, cash flow impact, and tax treatment.

Malaysian energy efficiency projects qualify for multiple financial incentives including GITA (Green Investment Tax Allowance) providing 60% tax allowance on qualified equipment, Green Technology Financing Scheme (GTFS) offering 2% interest rebates and 60% government guarantee on green loans, and various development bank programs (SME Bank, MIDA, SEDA) providing concessionary financing. Understanding which financing model optimizes these incentives for your situation is critical to maximizing project returns.

The calculator below models three financing approaches over 20 years, showing total costs, cumulative savings, and net economic benefit. Input your estimated project cost and annual energy savings to compare outright purchase, ESCO/EPC partnership, and pay-per-use leasing models. Each scenario accounts for Malaysian tax rates, typical financing costs, and operational structures.

PROJECT PARAMETERS

PROJECT COST (RM)

ANNUAL SAVINGS (RM)

PROJECT LIFE (years)

COMPARE FINANCINGMODELS

Outright Purchase

Full CAPEX Model

UPFRONT COST

RM 1000K

20-YEAR NET BENEFIT

RM 4.14M

BEST FOR

Companies with strong cash position
Seeking full asset ownership
Can utilize tax incentives (GITA)

★ RECOMMENDED ★

Energy Performance Contract

Zero CAPEX, Guaranteed Savings

UPFRONT COST

RM 0

MONTHLY PAYMENT

RM 4.2K

20-YEAR NET BENEFIT

RM 4.50M

BEST FOR

Zero CAPEX requirement
Guaranteed savings needed
Risk-averse organizations

Cooling-as-a-Service

Pay-Per-Use Model

UPFRONT COST

RM 0

MONTHLY PAYMENT

RM 45.1K

20-YEAR NET BENEFIT

RM 3.92M

BEST FOR

Variable cooling demand
Short-term facilities
Want to avoid ownership

Energy Performance Contract

Zero CAPEX, Guaranteed Savings

Advantages

•Zero upfront investment
•Guaranteed energy savings
•Professional O&M included
•Performance risk on ESCO
•Immediate cost reduction
•Expert technical support
•Equipment upgrades included
•Predictable monthly payments

Considerations

•Shared savings during contract
•Longer contract period (7-12 years)
•Less flexibility in system changes
•ESCO must verify savings
•Contractual obligations

OWNERSHIP

Transfer after payback

RISK PROFILE

ESCO

CONTRACT

10 years

NET BENEFIT

RM 4.5M

FIND THE RIGHTFINANCING MODEL

Our financing specialists will help you evaluate options and structure the best financing solution for your energy efficiency project.

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Financing FAQ

What is an Energy Performance Contract (EPC) and how does it work?

An Energy Performance Contract (EPC) is a financing mechanism where an Energy Service Company (ESCO) implements energy efficiency improvements with zero upfront cost to the client. The ESCO finances, designs, installs, and maintains the systems, then recovers investment plus profit from a share of the guaranteed energy savings (typically 70-80% of savings for 5-10 years). After the contract period, the client owns all equipment and keeps 100% of savings. EPCs are ideal for organizations with limited capital but strong creditworthiness. Savings are verified through Measurement & Verification (M&V) protocols, and the ESCO bears performance risk—if savings underperform, the ESCO absorbs the shortfall.

Can I combine GITA tax incentives with ESCO/EPC financing?

Yes, but tax benefits flow to the asset owner. In EPC structures where the ESCO owns equipment during the contract period, the ESCO claims GITA benefits. However, this reduces the ESCO's financing costs, which translates to better terms for you—lower savings share percentage or shorter contract duration. If you purchase equipment outright (CAPEX model), you claim the full GITA benefit directly—60% tax allowance providing 14.4% effective discount at 24% corporate tax rate. Some hybrid structures allow client ownership from day one with ESCO providing guaranteed performance, enabling you to capture both GITA benefits and performance guarantees. Consult tax advisors to structure deals optimizing incentive capture for your situation.

What are Green Technology Financing Scheme (GTFS) benefits in Malaysia?

GTFS, administered by Malaysian Green Technology and Climate Change Corporation (MGTC), provides two key benefits for MyHIJAU-certified energy efficiency projects: 2% interest rate rebate (up to RM 4 million over maximum 10 years) and 60% government guarantee covering default risk. This makes green loans more accessible and affordable, particularly for SMEs. To qualify, your project must use MyHIJAU-certified products/services (which all our solutions do), obtain financing from participating banks (CIMB, Maybank, RHB, Public Bank, etc.), and meet minimum project values (typically RM 100,000). Combined with GITA tax allowance, GTFS can improve energy efficiency project economics by 15-20%, significantly shortening payback periods.

What is the typical contract duration for ESCO/EPC projects?

EPC contract durations in Malaysia typically range from 5-10 years depending on project scale and payback period. Shorter contracts (5-7 years) suit projects with fast payback like LED lighting retrofits and power factor correction. Longer contracts (8-10 years) accommodate comprehensive projects involving HVAC overhauls, BMS implementation, and renewable energy integration. Contract length is structured so cumulative savings over the period cover ESCO investment, financing costs, operational expenses, and target profit margin (typically IRR of 8-12%). After contract expiration, you own all equipment and retain 100% of ongoing savings for the remaining equipment life (often 10-15+ additional years). Some contracts include renewal options for continuous optimization and upgraded technology.

How are energy savings measured and verified in EPC projects?

Savings verification follows International Performance Measurement and Verification Protocol (IPMVP) standards. The process involves: establishing an accurate baseline of pre-implementation energy consumption (typically 12 months of utility bills and sub-metering data), installing permanent metering equipment to continuously measure post-implementation consumption, calculating savings as baseline (adjusted for variables like weather, occupancy, production levels) minus actual consumption, and third-party verification of savings calculations (often required by financiers). Monthly/quarterly reconciliations ensure the ESCO delivers promised savings. If actual savings underperform guarantees, the ESCO compensates the shortfall, protecting you from performance risk. This M&V rigor is why EPCs work—both parties have skin in the game ensuring project success.