Key Takeaways
Solar can reduce a business’s electricity costs no matter how it is paid for, but the way you pay for it changes who owns the system, who is responsible for maintaining it, and how much you save over time. This guide compares the three common ways Malaysian businesses acquire commercial solar, in neutral terms, so you can weigh which one suits your situation.
Ray Go Solar works with businesses across these different financing approaches for commercial and industrial solar, and the comparison below reflects the trade-offs businesses generally need to weigh regardless of which provider they use.
Under this model, the business owns the solar system from day one, whether it pays in cash or takes out a loan to spread the cost over several years. Ownership means the system becomes a business asset, and the business is generally responsible for maintenance, though this can be outsourced through a separate operations and maintenance agreement.
What this generally means in practice: the highest upfront cost or loan commitment among the three options, but generally the greatest total savings over the system’s typical 20 to 25 year lifespan, since there is no ongoing payment to a third party once the system (and any loan) is paid off, often within around 4 to 6 years. Owning the system is also generally required to claim tax incentives such as GITA.
With leasing, a provider installs and owns the solar system, and the business pays a fixed monthly rental fee instead of a loan instalment or an electricity bill component. Maintenance responsibility varies by agreement, but is often handled or shared by the provider.
What this generally means in practice: low or no upfront cost, and a predictable monthly expense, which can make budgeting easier. However, total payments over the full lease term can end up higher than simply buying the system outright, and the business does not own the asset or generally qualify for ownership-linked tax incentives.
Under a PPA, a third-party provider funds, installs, owns, and operates the solar system on the business’s property, and the business simply buys the electricity generated at an agreed rate per kWh, typically set below the prevailing grid tariff.
Contracts commonly run for 15 to 25 years, and the provider generally handles the kind of ongoing consultancy, installation, and maintenance work needed to keep the system performing over that period.
What this generally means in practice: little to no upfront capital required, and the provider handles maintenance and performance monitoring, which reduces operational responsibility for the business. In exchange, the business generally gives up ownership, the associated tax incentives, and some flexibility, since PPA contracts are long-term commitments that may involve fees for early termination.
Buy (Cash or Loan) | Leasing | PPA | |
|---|---|---|---|
Upfront cost | Highest (or loan-financed) | Low to none | Low to none |
Ownership | Business | Provider | Provider |
Payment structure | Loan instalment or one-time | Fixed monthly rental | Per-kWh electricity rate |
Maintenance responsibility | Business (can be outsourced) | Varies by agreement | Generally the provider |
Typical term | Loan term, if financed | 5 to 15 years | 15 to 25 years |
Eligible for tax incentives (e.g. GITA) | Generally yes | Generally no | Generally no |
Total lifetime savings | Generally highest | Generally moderate | Generally moderate, but immediate |
Businesses that own their solar system, whether bought in cash or financed through a loan, are generally the ones eligible for incentives such as the Green Investment Tax Allowance (GITA), reported to offer a substantial capital allowance on qualifying solar expenditure, and the Green Technology Financing Scheme (GTFS), which reportedly offers an interest rate subsidy and a government guarantee on green financing.
According to the most recent guidance available, both incentives in their current form are scheduled to expire at the end of 2026, which makes the ownership decision more time-sensitive for businesses considering financing this year. Because incentive terms and deadlines can change, businesses should confirm the current position directly with the relevant government agency before finalising a purchase decision based on these figures.
The right choice generally depends on a few practical questions: How much capital or borrowing capacity does the business have available right now? Does the business plan to stay in its current premises for the long term? How important is claiming tax incentives compared to preserving cash flow? And how much responsibility is the business willing to take on for maintaining the system?
A business with strong cash flow and a long-term site tends to benefit most from buying, while a business prioritising cash preservation or wanting to avoid any operational responsibility may lean toward a PPA or lease instead. Businesses also weighing how to manage electricity usage patterns alongside any of these three options may want to evaluate battery energy storage as part of the same decision.
No, though they are similar. A PPA charges based on the electricity actually generated and consumed, while a lease charges a fixed rental regardless of output. Both generally involve the provider retaining ownership.
Generally no, since incentives like GITA are typically tied to asset ownership, which sits with the leasing company or PPA provider rather than the business using the electricity.
Buying the system, whether in cash or financed through a loan, generally delivers the highest total savings over its lifetime, since there is no ongoing payment to a third party once it is paid off.
This depends entirely on the specific agreement, so businesses should review end-of-term terms carefully before signing, including whether there is an option to purchase the system, extend the contract, or have it removed.
Every financing model has a legitimate place depending on a business’s cash position, site plans, and appetite for responsibility. A qualified solar provider can walk through the numbers for a specific site to help determine which structure delivers the best outcome, regardless of which financing route is ultimately chosen.
