How a Solar PV system generates savings after installing it?!

The concept of saving electricity expenses via Solar PV system is that you reduce the quantity of electricity that you buy from TNB or grid, and replace it with the Solar energy generated by your own PV System.

By reducing the quantity of electricity you buy from TNB, you pay a “lesser” electricity base tariff, KWTBB and ICPT.

For instance, you buy 1,000kWh from TNB monthly, and your based tariff is RM0.509 (say Tariff category: B), you shall pay

Base tariff: RM0.509/kWh
KWTBB: 1.6% of  RM0.509 = RM0.008144/kWh
ICPT: RM0.037/kWh

Total: RM0.554144/kWh x 1,000kWh = RM554/mth

Say your PV system generate 700kWh/mth, and your monthly electricity usage “remain” 1,000kWh. Then you only buy 300kWh per month from TNB.

So, you only pay TNB RM166/mth. And you save 700kWh or amounting RM388.

*Some people actually use more electricity than they used to, after installing a PV system; and they wonder why their TNB bill is still high…

The amount of money you spent on the PV system divided by the yearly or monthly “saving” will tell you when you’re going to break even. That’s how the Solar contractors calculate your return on investment!

From the year you breakeven onward, you are getting free energy from the PV system.

But, some people will say this is not true, scam etc that you are actually only “prepaid” your electricity cost instead of saving..

Even worse if you tell them you use a bank loan to finance the PV system (incur loan interest). They even see it as wasting your money instead of prepaid or saving.

In fact, if you run a financial analysis and calculate the Levelized Cost of Energy (LCOE).

You will find that the overall cost of your system includes loan interest, operation & maintenance etc over the lifetime energy generated by  your PV system, the RM/kWh is actually very much lower than the TNB tariff.

It shall be around RM0.20 plus per kWh probably… So, do you still think saving electricity costs with a PV system is not true?

I will share more on financial analysis and LCOE calculation for PV systems. Follow my post and let the facts & figures instead of other people’s opinion guide you.

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