Evaluation Cost of Energy in Malaysia After Solar Installation

What Is the Levelized Cost of Electricity (LCOE)?

LCOE is a standard way to evaluate the average cost of electricity produced by a solar PV (photovoltaic) system over its lifetime. It takes into account:

Upfront system cost
Operation & maintenance (O&M) costs
Energy output over 20–25 years
Inflation and interest rates

In simple terms, LCOE tells you how much you really pay per kilowatt-hour (kWh) from your solar system.

Key Findings from Malaysia-Based Research:

A study conducted by Universiti Teknikal Malaysia Melaka analyzed a 4 kWp residential solar PV system and found the following:

Initial solar LCOE (2014): RM 0.9170/kWh
Conventional electricity tariff (TNB): RM 0.3853/kWh (2014)
Forecasted electricity price growth: 7% per year
Solar cost trend: Declining by ~1% per year (if optimized)

When Will Solar Become Cheaper than Grid Electricity?

This point is known as grid parity. Based on the study's projections:

Grid parity expected by: 2029 (under normal assumptions)
Could be achieved as early as: 2026 (if solar technology cost continues to drop)

Once this happens, your solar energy cost will be equal to or cheaper than electricity from TNB, meaning:

✅ Lower electricity bills
✅ Long-term savings
✅ Independence from rising utility costs

What Does This Mean for You?

Installing solar now lets you lock in your energy costs at today’s rates, avoiding rising tariffs.
Early adopters benefit more—you may break even before grid parity hits.
With Malaysia’s Feed-in Tariff (FiT) schemes and financial incentives, solar is now more affordable than ever.