What is CRESS
Corporate Renewable Energy Supply Scheme (“CRESS”) is a program designed to ease any businesses or corporate organizations to directly source green electricity through an Open Access to the specified network; Peninsular Malaysia Electricity Supply Network.
On September 20, 2024 the Energy Commission has issued its first edition of guidelines, supplementing the available written laws and regulations, under the name; Guidelines for Corporate Renewable Energy Supply Scheme (“CRESS Guidelines”). These guidelines will come into operation on the date of its registration.
In exchange for CRESS make ease of the obtainment of green electricity, such ease also demands businesses or corporate organizations (“participants”) to exercise due care when gathering and presenting information in due course of partaking CRESS.
Therefore, interested participants are advised to refer to relevant laws, procedures and documents produced by the authorities before diving into the guidelines.
Legal and Regulatory Requirements
CRESS implementation will not disturb the existing legal and regulatory framework of the industry, as this is to ensure the current tariffs are not affected and no unfair financial impacts on other consumers.
Currently there are eight main legal and regulatory requirements that has to be observed by CRESS. It is important to note that they will be amended, modified or supplemented from time to time, hence participants are required to be alert to their latest updates.
The requirements are as follows:
- The Electricity Supply Act 1990;
- The Electricity Supply Regulations 1994;
- The Licensee Supply Regulations 1990;
- The Guidelines for Single Buyer Market (Peninsular Malaysia);
- The Guidelines for New Enhanced Dispatch Arrangement;
- The Guidelines on Electricity Tariff Determination Under Incentive Based Regulation (IBR) For Peninsular Malaysia;
- The Grid Code for Peninsular Malaysia; and
- The Distribution Code for Peninsular Malaysia, Sabah and F.T. Labuan (Amendment) 2017.
Contractual Framework
CRESS enables businesses and corporate organizations to source their own green electricity, and this is by way of physical power purchase agreement and Open Access to the Grid System.
Thus, on the physical power purchase agreement, there are at least five separate contracts the participants should be aware of, namely:
- Bilateral Energy Supply Contract between RED and Green Consumer for the sales and purchase of green electricity;
- Renewable Energy Supply Access Agreement between the Grid Owner and the RED;
- NEDA Agreement between RED and the Single Buyer for the invoicing and collecting of the relevant SAC and compliance to the NEDA Guidelines and these Guidelines;
- Corporate Renewable Energy Supply Agreement between the Green Consumer and the EUC for the sales and purchase of electricity from the EUC; and
- Backfeed Agreement between RED and the EUC for the sales and purchase of electricity from the EUC.
The importance of these five contracts is that they are interlinked with one another.
For example, when a participant wishes to be in a bilateral contract with any Renewable Energy Developer, the developer must also be a registered participant to New Enhanced Dispatch Arrangement (NEDA) and execute NEDA Agreement.
Therefore, participants should carefully observe the fulfilment of these five contracts as the approval of CRESS application is subject to:
- Successful registration under NEDA;
- Completeness of all related agreement or contract as stipulated in Clause 7.2;
- Compliance to the prerequisites and requirements as stated in these Guidelines; and
- Full compliance to GSO technical documents.
Conclusion
In the 44th and 45th ASEAN Summits held in Ventiane on October 9, 2024, the Association of Southeast Asian Nations (“ASEAN”) stresses prioritization on the development and implementation of national and regional adaptations of strategies as they encourage economic system that promotes the betterment of climate together with sustainable economic growth.
Malaysia Minister of Natural Resources & Environmental Sustainability, YB Nik Nazmi bin Nik Ahmad, in his profile on the Climate Finance Summit, stated that Malaysia aspires to achieve net-zero carbon emission by 2050.
