Malaysia's Feed-in Tariff (FiT) system obliges Distribution Licensees (DLs) to buy from Feed-in Approval Holders (FIAHs) the electricity produced from renewable resources (renewable energy) and sets the FiT rate. The DLs will pay for renewable energy supplied to the electricity grid for a specific duration.

By guaranteeing access to the grid and setting a favourable price per unit of renewable energy, the FiT mechanism would ensure that renewable energy becomes a viable and sound long-term investment for companies industries and also for individuals.Key terminologies in FiT: 

• Distribution Licensees: Companies holding the licence to distribute electricity (e.g. TNB, SESB, NUR).

• Feed-in Approval Holder: An individual or company who holds a feed-in approval certificate issued by SEDA Malaysia.  The holder is eligible to sell renewable energy at the FiT rate.

• FiT rate: Fixed premium rate payable for each unit of renewable energy sold to Distribution Licensees. The FiT rate differs for different renewable resources and installed capacities. Bonus FiT rate applies when the criteria for bonus conditions are met.

• Indigenous: Renewable resources must be from within Malaysia and are not imported from other countries.

• Duration: Period of which the renewable electricity could be sold to distribution licensees and paid with the FiT rate. The duration is based on the characteristics of the renewable resources and technologies. The duration is 16 years for biomass and biogas resources, and 21 years for small hydropower and solar photovoltaic technologies. (source)