If you have been exploring solar energy options in Malaysia, chances are you have come across the term Feed-In Tariff, or FiT. It was the policy that kickstarted Malaysia’s renewable energy revolution, giving homeowners, businesses, and industries a financial reason to invest in clean energy for the very first time.
But Malaysia’s energy landscape has changed significantly over the years. New schemes have emerged, old ones have evolved, and many people are now confused about what FiT actually is, whether it still applies to them, and what they should be doing instead.
This guide breaks it all down in plain language so you can understand Malaysia’s Feed-In Tariff, how it shaped the solar industry, and what the current options look like for anyone looking to go solar today.
What Is the Feed-In Tariff (FiT) and How Does It Work?
The Feed-In Tariff is a government policy mechanism administered by the Sustainable Energy Development Authority (SEDA) Malaysia. Under this scheme, electricity distribution licensees such as TNB, SESB, and NUR are legally obligated to purchase renewable energy from approved producers at a fixed premium rate. The duration of the FiT agreement depends entirely on the renewable resource type. While Solar PV and Small Hydro get a 21-year contract, Biogas and Biomass are capped at 16 years from the FiT commencement date.
In simple terms: if you generate clean energy and hold a Feed-In Approval, you get paid a fixed rate for every unit of electricity you feed into the grid. Your rate is locked in, and the payment is guaranteed for the full duration of your agreement regardless of what happens to electricity prices in the market.
The core idea behind FiT is straightforward. By guaranteeing grid access and a fair price per unit of clean energy, the policy removes the financial uncertainty that would otherwise deter people from investing in renewable energy.
Which Renewable Resources Qualify for FiT in Malaysia?
Not all forms of renewable energy are eligible under Malaysia’s FiT scheme. The Renewable Energy Act 2011 specifies four qualifying resource types, all of which must be indigenous to Malaysia such as solar photovoltaic (Solar PV), biomass, biogas and small hydropower.
The maximum installed capacity eligible under FiT is 30MW, unless special ministerial approval is obtained. It is worth noting that for new solar applicants today, Solar ATAP has largely replaced FiT as the primary scheme for solar PV.
FiT rates are not fixed across the board. They are calculated based on four key factors:
Type of Renewable Resource: Different resources attract different base rates reflecting the cost and maturity of the technology involved.
Installed Capacity: Larger systems generally attract a lower FiT rate per unit due to economies of scale.
Bonus FiT Criteria: Additional bonus rates are available for installations that meet specific criteria, such as a solar PV system integrated directly into a building structure.
FiT Commencement Date: Rates decrease over time through a process called degression. As renewable technologies mature and become cheaper, the premium rate reduces accordingly. Your rate is locked in on your FiT Commencement Date and will not change for the remainder of your agreement.
In 2024, SEDA Malaysia introduced FiT 2.0, featuring a two-phase tariff system. The first phase offers a fixed FiT rate for the initial 10 years, while the second phase allows eligible companies to bid within a set tariff range for the remaining 11 years. This e-Bidding mechanism applies to Biogas, Biomass, and Small Hydro. For 2026, SEDA has opened quotas of 50MW for Biogas, 150MW for Biomass, and 100MW for Small Hydro.
From FiT to Solar ATAP: What Changed for Solar in Malaysia?
For those interested specifically in solar energy, it is important to understand that the landscape has changed significantly.
Under the original FiT scheme, solar PV owners could sell generated electricity back to the grid at a fixed premium rate for 21 years. Over time, Net Energy Metering (NEM) became the dominant model, allowing users to offset their electricity bill with solar generation and carry over unused credits for up to 24 months.
Then in January 2026, Solar ATAP officially launched as the successor to NEM 3.0. Credits now reset every month, meaning surplus energy not offset within the same billing cycle is forfeited. Export pricing is based on the wholesale System Marginal Price (SMP) rather than the retail tariff.
These changes make smart solar consumption more important than ever. Pairing your solar system with battery storage is now one of the most effective ways to maximise your returns under Solar ATAP.
Is FiT Still Relevant in 2026 and Beyond?
For solar PV, FiT is no longer the active scheme for new applicants. Solar ATAP is now the primary programme for new solar installations in Malaysia.
However, FiT remains active for Biogas, Biomass, and Small Hydro through SEDA’s e-Bidding process, with 300MW of combined quota open for 2026 across these three resource types.
For businesses with larger energy ambitions, the Large Scale Solar (LSS) programme remains a separate active pathway for solar projects above ATAP’s capacity limits. You can explore this in our Large Scale Solar Malaysia guide.
For commercial and industrial businesses looking to go solar today, our commercial and industrial solar solutions page outlines the full range of options available.
Start Your Solar Journey with the Right Guidance
Malaysia’s Feed-In Tariff opened the door to renewable energy for thousands of homeowners, businesses, and industries across the country. While solar PV has since moved to newer schemes like Solar ATAP, FiT continues to play an important role for Biomass, Biogas, and Small Hydro developers.
Navigating Malaysia’s energy policies does not have to be complicated. The right solar partner will walk you through your options clearly, handle the technical and regulatory details, and help you build a system that delivers real returns.
Ready to take the next step? WhatsApp AQ Energy today and our team will help you find the best solar solution for your home or business.
- Want to know more about solar solutions for business, commercial or industrial? Check out our Solar Panel for Businesses page to get started.
- Interested in residential solar? Check out our Solar Panel for Home page
Frequently Asked Questions (FAQs)
A. Can I still apply for FiT for a solar PV system in Malaysia today?
For most new solar PV applicants, FiT is no longer the active scheme. As of 2026, Solar ATAP has replaced NEM 3.0 as the primary programme for solar installations. Existing FiT approval holders with solar PV systems continue to receive payments under their original agreements for the remainder of their 21-year duration.
B. How long does a FiT agreement last and is the rate guaranteed throughout?
For renewable resource types such as Solar PV and small Hydro, a FiT contract agreement runs for 21 years. However, Biogas and Biomass projects historically run for 16 years from the FiT Commencement Date.
As for rate guarantees, it depends on which FiT model applies to your project. Under the original FiT mechanism, your rate is locked in at the level applicable on your FiT Commencement Date for the full duration of your agreement. Under the newer FiT 2.0 model introduced in 2024, the rate is only fixed for the first 10 years. For the remaining 11 years, producers participate in an e-Bidding process where rates are determined competitively within a tariff floor and ceiling set by SEDA Malaysia.
C. What is the difference between FiT, NEM, and Solar ATAP in Malaysia?
FiT pays approved producers a fixed premium rate for all renewable energy fed into the grid for 21 years. NEM allowed solar users to offset their electricity bill with solar generation, with unused credits rolling over for up to 24 months. Solar ATAP, launched in 2026, is the current scheme where surplus solar energy earns bill credits at the wholesale System Marginal Price, but credits reset every month without rollover. Each scheme represents an evolution in how Malaysia manages distributed solar generation.
D. What is FiT 2.0 and how is it different from the original FiT mechanism?
FiT 2.0 was introduced by SEDA Malaysia in October 2024 and applies to Biogas, Biomass, and Small Hydro resources. Unlike the original FiT which offered a single fixed rate for 21 years, FiT 2.0 uses a two-phase structure. The first 10 years carry a fixed rate, while the remaining 11 years involve competitive e-Bidding within a tariff floor and ceiling set by SEDA. This drives market competition while still providing reasonable investment security.
