If you’re planning a solar and battery storage system in Malaysia over the next 18 months, timing your procurement could save you a meaningful amount of money. A policy change in China is about to push up the cost of battery storage equipment across the region — and that means the next few months are a practical window to plan ahead before costs move.
Key Takeaways
Malaysia’s renewable energy sector has spent the past few years scaling up solar deployment. What’s changing now is the storage layer sitting underneath it — and a tax policy shift 3,000km away in China is about to make that layer more expensive.
China currently offers manufacturers a VAT export rebate on battery products, which effectively lowers the price at which batteries can be sold overseas. From 1 January 2027, that rebate will be removed. For buyers outside China, including Malaysian solar developers, this translates into a higher landed cost for imported battery equipment — even if the manufacturing price itself doesn’t change.
This matters more for Malaysia than for many other markets because our utility-scale battery storage supply chain relies heavily on Chinese original equipment manufacturers (OEMs). There isn’t yet a large domestic battery manufacturing base to fall back on, so cost movements upstream in China tend to flow fairly directly into local project pricing.
Note: policy details are subject to change between now and January 2027. Developers should confirm current terms and timelines with their suppliers closer to the procurement date, rather than treating this as a fixed deadline.
For a solar project without storage, this change has limited direct impact. But for any project that includes a BESS component — which is increasingly the default rather than the exception — it means:
Market watchers, including Hong Leong Investment Bank, expect this policy shift to trigger a round of front-loaded procurement in the second half of 2026 as developers move to secure equipment ahead of the change — a trend that’s worth factoring into your own project timeline regardless of project size.
This price pressure is arriving at an inconvenient time for buyers — because storage is quickly becoming a requirement rather than a nice-to-have.
Malaysia made real progress on grid-scale storage in 2025: the Energy Commission awarded 400MW/1600MWh of storage capacity under the MyBEST programme, and a 100MW/400MWh project was advanced in Lahad Datu, Sabah. But the next wave of change is structural. Major upcoming programmes — including the sixth Large Scale Solar plan (LSS6) and the Corporate Renewable Energy Supply Scheme (CRESS) — are expected to make BESS a baseline requirement for large solar projects, not an optional extra.
In practical terms, this means storage is moving from being a specialist add-on to being a standard line item in project scopes — right at the moment its underlying cost is set to rise.
|
Locking In Procurement in 2026 |
Waiting Until After January 2027 |
|
|---|---|---|
|
Equipment cost |
Current pricing, before VAT rebate removal |
Likely higher, VAT-inclusive landed cost |
|
Project timeline |
More flexibility to plan installation and grid approvals |
Possible delays if suppliers face order backlogs closer to the deadline |
|
Contract certainty |
Costs can be fixed in a procurement agreement now |
Exposed to price movement between now and installation |
|
Compliance readiness |
Ahead of LSS6/CRESS storage requirements |
May need to retrofit storage later at higher cost |
For commercial and industrial (C&I) operators: If you’re planning a solar system with storage — whether for backup power, peak shaving, or compliance with an upcoming programme like CRESS — it’s worth getting a procurement timeline in place well before Q4 2026. Locking in equipment pricing through a signed agreement protects you from cost movement even if physical installation happens later.
For homeowners: Residential battery adoption in Malaysia is still growing, and while the direct impact of this policy change is smaller at residential scale, equipment sourced through the same Chinese supply chains will still be affected. If a battery add-on to your solar ATAP or NEM system has been on your mind, 2026 is a reasonable year to act.
Before signing a procurement agreement, it’s worth getting clear answers on the following:
Asking these questions upfront gives you a much clearer picture of whether “locking in now” actually protects your costs, or whether the agreement leaves room for later adjustment.
With battery storage shifting from optional to mandatory across Malaysia’s major solar programmes — and equipment costs expected to rise from 2027 — the next few months are a practical window to plan ahead. Ray Go Solar’s BESS solutions and commercial & industrial solar team can help you assess whether locking in a system now makes sense for your site, and structure procurement to protect your project cost. Get in touch with our team for an assessment tailored to your energy profile.
Ray Go Solar Holdings Berhad is a SEDA-recognised, ISPQ-certified solar EPCC company with over a decade of experience delivering residential and commercial solar and storage systems across Malaysia.
China is removing the VAT export rebate on battery products from 1 January 2027, which raises the effective cost of batteries sold to overseas buyers.
This specific policy change applies to battery products. Solar panel pricing is a separate market dynamic, though panel and battery costs are often bundled in project quotations.
This specific policy change applies to battery products. Solar panel pricing is a separate market dynamic, though panel and battery costs are often bundled in project quotations.
The most reliable way is to enter into a procurement or project agreement with your solar EPCC provider before the rebate removal takes effect, so equipment costs are fixed regardless of when installation occurs.
