Malaysia Slashes CRESS Grid Fee to 14 sen/kWh
Malaysia cut the Corporate Renewable Energy Supply Scheme access charge to 14 sen/kWh, boosting solar project economics and unlocking a RM16 billion market.
Key points
- Malaysia cut the CRESS system access charge to 14 sen/kWh, improving solar project economics by up to 10%.
- Developers must sign 10-year contracts and achieve commercial operation by December 31, 2028, to secure the lower rate.
- Kenanga Research estimates a RM16 billion addressable market with potential equity internal rates of return between 10% and 13%.
Malaysia’s decision to reduce the system access charge (SAC) for the Corporate Renewable Energy Supply Scheme (CRESS) has immediately strengthened the financial viability of new solar projects. The regulatory adjustment, which lowers the cost of transmitting green electricity via the national grid, is projected to unlock billions of ringgit in investment by improving bankability for developers and buyers.
The market reaction was swift, with shares of solar contractors Solarvest Holdings Bhd, Pekat Group Bhd, and Samaiden Group Bhd reaching record highs. The policy shift specifically targets the economics of corporate power purchase agreements, reducing the barrier for large consumers, particularly data centers, to secure long-term renewable energy contracts.
SAC reduction improves project margins
The CRESS acceleration package reduces the firm supply SAC from 20 sen per kilowatt-hour (kWh) to 14 sen/kWh. According to Siemens Energy Asia Pacific, this six sen/kWh reduction can improve project economics by up to 10%. Based on typical power purchase agreement tariffs of 55 to 60 sen/kWh, the lower access charge makes CRESS cost-competitive with the ultra-high voltage tariff category currently paid by data centers.
This adjustment also resolves previous disputes over SAC escalation risk sharing, providing developers and offtakers with greater headroom to absorb potential future cost increases. The lower charge broadens the addressable market beyond hyperscale data centers, making CRESS attractive to high-voltage and medium-voltage users in sectors such as semiconductor manufacturing.
Contract terms and development timeline
In exchange for the lower SAC, renewable energy developers and green consumers must sign contracts of at least 10 years. Projects seeking the reduced 14 sen/kWh rate face a strict commercial operation deadline of December 31, 2028. This timeline is designed to accelerate negotiations and push stalled projects toward execution.
The Star reported that analysts expect engineering, procurement, construction, and commissioning awards to begin materializing in the fourth quarter of financial year 2026. The mandatory ten-year contract tenure provides the certainty required for long-term financing, addressing a key hurdle in previous CRESS negotiations.
Market size and investor returns
Kenanga Research estimates the potential addressable market at approximately RM16 billion, based on 3.15GW of registered project capacity and an EPCC value of RM5 million per MW. The house projects equity internal rates of return of 10% to 13% for firm-output projects, assuming a developer tariff of 35 sen/kWh.
Hong Leong Investment Bank notes that CRESS offers superior economics compared to the large-scale solar program because developers can negotiate tariffs directly with corporate offtakers. HLIB estimates CRESS projects can generate IRRs of 9% to 11%, depending on specific project parameters, making the scheme a more attractive alternative for institutional investors seeking yield in the renewable energy sector.
