How to Calculate Commercial Solar Savings in Malaysia

Calculate your electricity costs before solar

Before calculating a reduction, you need a fair picture of electricity costs without solar. Bills covering normal production, quieter months and shutdowns show what the factory is likely to spend over a full operating cycle. Using only a busy month can make the apparent saving larger than the business would experience across the year.

Record electricity quantities, tariff category and relevant demand charges. Separate energy use from expenditure. The average bill divided by total units may include costs that will not fall in direct proportion to solar generation.

Calculate costs for the current operation first. If production will change, prepare a separate forecast using the expected new shift hours and demand. Keep that change separate from the savings attributed to solar.

Calculate expected generation

The savings estimate next needs a forecast of what the proposed system will actually generate. Panel and inverter capacities, local sunlight, orientation, shade and system losses all affect that quantity. A forecast based on the assessed layout gives a better basis for the financial calculation than applying one annual yield to any capacity that fits the site.

Compare expected solar output with factory demand during the same hours. Include weekdays, weekends and shutdowns. Annual generation alone cannot show how much the factory will use directly or how much will become surplus.

Ask whether the forecast allows for inverter losses, downtime, dirt on panels and output limited by inverter capacity, known as clipping. The proposal should identify the allowances used and distinguish measurements from estimates.

Value direct solar use correctly

Electricity used while the panels generate is usually the clearest link between solar output and a lower bill: it reduces the grid electricity the factory needs to buy at that time. This is called direct use. Its value still follows the relevant tariff treatment, rather than automatically removing the same share of every charge on the bill.

Do not assume every component of the electricity bill disappears. Some charges depend on demand, account conditions or other factors rather than only energy quantities.

Ask the provider to estimate the bill after solar using the relevant tariff components. If it uses one simplified RM-per-kWh rate, ask which charges that rate includes. An initial estimate and a calculation used for investment approval may need different levels of detail.

Treat exported energy separately

Output that the factory cannot use directly needs a separate calculation because its value may differ from avoided grid purchases. Under Solar ATAP, eligible non-domestic exports use Average System Marginal Price, subject to programme accounting rules. Treating those units as though they all displaced retail-priced imports can overstate the expected benefit.

Apply the programme’s billing-period limits when calculating export credits. Do not assume all annual surplus can be carried forward indefinitely or paid out in cash. The forecast needs to follow the rules applicable to your project.

For a non-export arrangement, exclude electricity the factory cannot use and the system cannot generate for export. Ask the provider to state the programme used in the calculation and explain how generation is controlled when demand is low.

Use an illustrative calculation

Suppose a project generates 100,000 kWh in a month. Assume, purely for illustration, that 80,000 kWh is used directly and 20,000 kWh receives eligible export treatment.

At assumed values of RM0.40 per directly used kWh and RM0.20 per eligible exported kWh, the gross illustrative benefit is RM32,000 plus RM4,000, or RM36,000. These are teaching assumptions, not current quoted tariff or SMP rates.

If relevant monthly operating costs are RM2,000, the simplified net operating benefit becomes RM34,000 before financing and tax effects. Actual bill recalculation may differ, especially where demand-related charges or programme limits apply.

Include operating and replacement costs

Gross electricity benefit is not the amount the business keeps after ownership costs. Monitoring connectivity, servicing, inspections, access equipment, insurance and planned replacements can affect the net result where they apply. Whether these are included in the price or paid later therefore belongs in the savings calculation, not only in the service discussion.

An early period of complimentary servicing does not mean operating expenditure remains zero for the whole project life. The financial table should show when costs start and whether escalation is assumed.

Ask Verdant Solar to show operating costs separately from its financial projections. Work through the figures using your shifts and electricity records. Confirm who pays each cost and whether it is included in the quoted price or charged after installation.

Show financing costs and tax benefits separately

An owned system funded by a loan has a different cash-flow pattern from a cash purchase. A third-party arrangement introduces energy or lease payments and a different allocation of responsibilities.

Show these payments explicitly. Do not describe gross avoided electricity expenditure as the customer’s net saving if another provider must still be paid for solar energy.

Calculate electricity savings before adding any tax benefit. The value of a capital allowance or green tax incentive depends on eligibility, approval, qualifying expenditure and your company’s tax position. Have the company’s adviser check those figures before relying on them.

Check savings if demand or costs change

A forecast is more informative when it shows which changes would materially affect the result. Lower daytime use, a different export value or higher service costs may each reduce savings for different reasons. Comparing them separately with the expected result helps finance see where the investment is most sensitive, rather than treating every forecast figure as equally certain.

When comparing results, change one main input at a time. For example, keep the system size unchanged while reducing daytime demand. If size and demand both change, show their effects separately so finance can see what caused the difference.

Check how much of the forecast benefit comes from electricity used directly and how much depends on export value or other estimates. This shows which changes could have the largest effect on the return.

What to expect from Verdant Solar

For your team to review the result, the proposed equipment, included work and financial calculations need to describe the same project. Verdant Solar can bring those elements into its commercial proposal, explaining how generation is divided between direct use and surplus before costs are deducted. Missing customer data should remain visible as an estimate requiring confirmation.

Operations should check the working hours and consumption figures; finance should check the rates, costs and payment terms. Ask the provider to identify any estimate that still needs confirmation before investment approval.

Compare actual bills and output after installation

After commissioning, compare actual generation and electricity records with the assumptions used for approval. Note changes in production, working days and tariffs before judging the result. A difference is a reason to investigate the explanation, not automatically evidence that the original equipment has failed.

Finance and facilities should review the bill, generation report, operating changes and service events together each month. Keep a note explaining any difference from the forecast. For a business planning another installation, these records help show whether its original consumption and cost estimates were accurate.