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Choose the financing model that best fits your organization's financial strategy.From full CAPEX ownership to third-party performance contracts.
Energy Efficiency Financing Models for Malaysian Commercial Buildings
Capital constraints shouldn't prevent Malaysian facilities from capturing substantial energy savings. Three financing models are worth comparing—from traditional outright purchase for cash-rich organizations to Energy Performance Contracts (EPC) that a third-party ESCO funds from contracted savings. Trexon's own routes are outright purchase and hire purchase; EPC and pay-per-use models are offered by third-party ESCOs. 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 5.0) offering a 60–80% government guarantee on the green-technology portion of a bank loan (no interest rebate; open until 31 December 2026 or until the RM1 billion allocation is used), and development bank programs such as SME Bank 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
COMPARE FINANCINGMODELS
Outright Purchase
Full CAPEX Model
- Companies with strong cash position
- Seeking full asset ownership
- Can utilize tax incentives (GITA)
Energy Performance Contract
Third-Party ESCO Funded — Not Offered by Trexon
- No upfront capital available
- Contracted savings needed
- Risk-averse organizations
Cooling-as-a-Service
Pay-Per-Use Model (Third-Party Provider)
- Variable cooling demand
- Short-term facilities
- Want to avoid ownership
Outright Purchase
Full CAPEX Model
Advantages
- •Full ownership from day one
- •Maximum tax benefits (GITA 60%)
- •All savings retained by client
- •Asset appears on balance sheet
- •No recurring payments
- •Complete control over system
Considerations
- •High initial capital required
- •Client bears maintenance costs
- •Technology obsolescence risk
- •Performance risk on client
- •Cash flow impact
FIND THE RIGHTFINANCING MODEL
Our financing specialists will help you evaluate options and structure the right financing solution for your energy efficiency project.
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 (Trexon does not offer EPC or ESCO financing directly; it is provided by third-party ESCOs). The ESCO finances, designs, installs, and maintains the systems, then recovers investment plus profit from a share of the contracted 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 contracted 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), GTFS 5.0 gives companies a 60–80% government guarantee on the green-technology portion of a bank loan. There is no interest rebate. It is open until 31 December 2026 or until the RM1 billion allocation is used. To qualify, your project must use MyHIJAU-listed products or services and the loan must come from a participating bank. Check current terms with MGTC and the bank.
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.
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