Since 1 July 2025, businesses in Peninsular Malaysia have been billed under a restructured TNB tariff framework introduced for Regulatory Period 4 (RP4), which runs until 31 December 2027.
Under this structure, monthly electricity bills are separated into energy, capacity, network and retail charges, with the Automatic Fuel Adjustment (AFA) applied as a separate monthly adjustment. Electricity costs therefore depend on several factors, including supply voltage, tariff option, electricity consumption, maximum demand and the timing of usage.
Understanding these components is important when evaluating operational improvements, solar PV, Battery Energy Storage Systems (BESS) or an integrated solar-and-storage solution. This guide explains the current TNB commercial tariff structure and where each solution may help reduce electricity costs, together with the key limitations to consider.
What Changed on 1 July 2025?
The tariff restructuring was implemented under Malaysia’s Incentive-Based Regulation framework. Under the revised structure, tariff categories are primarily determined by the voltage level of the electricity supply, while charges are presented in a more transparent and cost-reflective manner.
From Bundled Tariffs to Itemised Charges
The base tariff is separated into four (4) main components: energy, capacity, network and retail charges. The AFA is applied separately as a monthly surcharge or rebate. For customers on a Time-of-Use (ToU) tariff, energy charges also vary between peak and off-peak periods.
Why This Matters for Businesses
The revised bill structure provides greater visibility over the factors driving electricity costs. Businesses can more clearly distinguish between charges linked to energy consumption, maximum demand and fixed services.
This transparency supports more informed energy-management decisions. However, an effective cost-reduction strategy must target the relevant billing component, as solar PV, BESS and operational improvements do not affect every charge in the same way.
The New TNB Tariff Components, Line by Line
1. Energy Charge (sen/kWh)
The energy charge is based on electricity imported from the grid, measured in kWh. A general tariff applies one energy rate, while a ToU tariff applies different peak and off-peak rates. Behind-the-meter solar primarily reduces this component by supplying electricity directly to the facility.
2. Capacity Charge (RM/kW)
The capacity charge recovers generation-capacity costs. For non-domestic Low Voltage customers, it is charged per imported kWh. For Medium Voltage and High Voltage customers, it is charged per kW of billed maximum demand. It is therefore important not to assume that reducing total kWh will automatically reduce this charge.
3. Network Charge (RM/kW)
The network charge recovers the cost of transmitting and distributing electricity through the grid. It is also charged per imported kWh for Low Voltage customers and generally per kW of billed maximum demand for Medium Voltage and High Voltage customers.
4. Retail Charge (RM/month)
The retail charge is a fixed monthly amount for customer-service functions such as metering, billing and account administration. Because it is fixed, it generally remains payable even when solar reduces grid imports.
5. Automatic Fuel Adjustment (AFA)
AFA is a monthly surcharge or rebate that reflects changes in generation-related costs, including fuel prices and approved generation-cost items. It replaced the six-monthly Imbalance Cost Pass-Through (ICPT) mechanism from 1 July 2025. AFA is not a permanent increase to the base energy rate, it moves monthly and is applied separately.
| July 2026 AFA snapshot The AFA rate applied for July 2026 was a surcharge of 3.59 sen/kWh. As the AFA is reviewed monthly, businesses should refer to the applicable rate shown on their electricity bills for actual costs and use a range of possible AFA rates when preparing budgets or evaluating energy investments. |
Understanding Your TNB Tariff Category
Under the RP4 tariff structure, non-domestic tariff categories are principally organised according to supply voltage. The main categories are Low Voltage (above 50 V and up to 1 kV), Medium Voltage (above 1 kV and up to 50 kV), and High Voltage (above 50 kV). Specific tariffs also exist for certain customer types and supply arrangements, so the tariff description on the latest TNB bill should be treated as the starting point.
How the old tariff codes map to the current structure
Legacy codes such as C1, C2, E1, E2 and E3 are still commonly used in internal discussions, but the current tariff names are voltage-based. The main mapping is:
- Tariffs B, D and F → Non-Domestic Low Voltage General or ToU
- Tariffs C1, E1 and F1 → Non-Domestic Medium Voltage General
- Tariffs C2, E2 and F2 → Non-Domestic Medium Voltage ToU
- Tariff C3 → Non-Domestic High Voltage General
- Tariffs C4 and E3 → Non-Domestic High Voltage ToU
This distinction avoids the misleading shorthand “C3/E3 High Voltage”, because the legacy codes did not represent the same tariff option.
Key non-domestic tariff rates under RP4
The following rates apply from 1 July 2025 to 31 December 2027, unless amended by the relevant authorities. They exclude AFA and other applicable taxes, levies, rebates, penalties or account-specific charges.
| Tariff category | Energy charge | Capacity charge | Network charge | Retail |
| Low Voltage General | 27.03 sen/kWh | 8.83 sen/kWh | 14.82 sen/kWh | RM20/month |
| Low Voltage ToU | Peak 28.52; off-peak 24.43 sen/kWh | 8.83 sen/kWh | 14.82 sen/kWh | RM20/month |
| Medium Voltage General | 29.83 sen/kWh | RM29.43/kW MD | RM59.84/kW MD | RM200/month |
| Medium Voltage ToU | Peak 31.32; off-peak 27.23 sen/kWh | RM30.19/kW peak MD | RM66.87/kW peak MD | RM200/month |
| High Voltage General | 43.03 sen/kWh | RM16.68/kW MD | RM14.53/kW MD | RM250/month |
| High Voltage ToU | Peak 44.52; off-peak 40.43 sen/kWh | RM21.76/kW peak MD | RM23.06/kW peak MD | RM250/month |
MD = maximum demand. For Medium Voltage and High Voltage ToU customers, maximum demand recorded during off-peak periods is not charged under the current ToU arrangement.
Time-of-Use: Peak Hours are from 2:00 p.m. to 10:00 p.m.
Under the current TNB ToU structure:
- Peak: Monday to Friday, 2:00 p.m. to 10:00 p.m.
- Off-peak: Monday to Friday, 10:00 p.m. to 2:00 p.m. the following day.
- Saturday and Sunday: off-peak throughout the day.
The lower off-peak energy rate can benefit businesses that can move meaningful consumption into mornings, late evenings or weekends. For Medium Voltage and High Voltage ToU customers, the absence of an off-peak maximum-demand charge can also be valuable where major loads can be scheduled outside the peak window.
Is a Time-of-Use Tariff Right for Your Business?
Time-of-Use (ToU) pricing does not automatically result in lower overall electricity costs. For Medium Voltage customers, the combined Capacity and Network Charges under the ToU tariff are higher than those under the General tariff, RM97.06/kW of peak maximum demand compared with RM89.27/kW of maximum demand. Accordingly, a facility with substantial electricity consumption between 2:00 p.m. and 10:00 p.m. and limited flexibility to shift its load may incur higher overall charges, notwithstanding the lower off-peak energy rate.
A robust tariff comparison should therefore model both options using up to 12 months of interval-metering data. The assessment should consider the proportion of electricity consumed during peak and off-peak periods, the timing of maximum demand, weekend operating patterns, anticipated load growth and any technical or operational constraints affecting the facility’s ability to shift consumption.
How to Read a TNB Bill: Worked Medium-Voltage Example
Consider a hypothetical Non-Domestic Medium Voltage General customer with 500,000 kWh of monthly grid imports and a maximum demand of 1,000 kW. Using the official base rates and the July 2026 AFA of 3.59 sen/kWh:
| Bill component | Calculation | Amount |
| Energy charge | 500,000 kWh × RM0.2983 | RM149,150.00 |
| AFA | 500,000 kWh × RM0.0359 | RM17,950.00 |
| Capacity charge | 1,000 kW × RM29.43 | RM29,430.00 |
| Network charge | 1,000 kW × RM59.84 | RM59,840.00 |
| Retail charge | Fixed monthly charge | RM200.00 |
| Simplified subtotal | RM256,570.00 |
How Solar and BESS Could Reduce Your Monthly Electricity Costs
Consider a business that uses solar to reduce its monthly grid electricity purchases by 100,000 kWh, while its maximum demand remains at 1,000 kW. Based on the applicable energy charge and the July 2026 AFA rate, the estimated gross monthly reduction would be RM33,420, comprising:
- Energy charge reduction: 100,000 kWh × RM0.2983 = RM29,830
- AFA reduction: 100,000 kWh × RM0.0359 = RM3,590
If a properly sized and managed BESS also reduces maximum demand by 150 kW, the business could achieve a further indicative reduction of RM13,390.50 in capacity and network charges.
This would result in a combined illustrative gross reduction of RM46,810.50 per month.
The example is intended as a simple illustration. Actual savings will depend on the site’s electricity usage, tariff category, system performance and prevailing AFA rate, as well as project costs, battery losses, maintenance and other billing components.
How Solar PV Reduces Exposure to the New Tariff
Behind-the-meter solar supplies electricity directly to the facility. Every solar kWh consumed on-site is a kWh that does not need to be imported from the grid, subject to the applicable metering and programme arrangement.
For Low Voltage customers
Energy, capacity and network charges are all calculated per imported kWh. Solar self-consumption may therefore reduce all three variable base-tariff components, as well as the AFA applied to the avoided grid imports. The fixed retail charge and other non-consumption-based items remain payable.
For Medium Voltage and High Voltage customers
Solar can reduce imported kWh, the corresponding energy charge and AFA exposure. It reduces maximum-demand-based capacity and network charges only when sufficient solar output is available during the specific 30-minute interval that would otherwise establish the month’s maximum demand.
Solar alone may not reduce maximum demand if the highest demand occurs after sunset, during poor weather, during an early-morning restart, or because of a short operational spike that exceeds available solar generation. Exported solar electricity may also be settled under a separate programme and should not be assumed to offset every tariff on a one-for-one basis.
How BESS Can Manage Capacity, Network and ToU Charges
A BESS stores electricity and discharges it when required. For tariff management, the control system can be programmed to discharge when grid demand approaches a defined threshold. This is known as peak shaving.
For Medium Voltage and High Voltage customers, successful peak shaving may reduce the maximum demand used to calculate capacity and network charges. Under ToU, BESS may also charge during off-peak periods or from surplus solar and discharge during the 2:00 p.m. to 10:00 p.m. peak window.
The result depends on four (4) practical factors:
- Power rating: whether the battery can provide enough kW to suppress the demand spike.
- Usable energy capacity: whether it can sustain the discharge for long enough.
- State of charge and availability: whether stored energy is available when the peak occurs.
- Control strategy: whether the system responds to the right operational and tariff signals.
A high-energy battery with insufficient power may not reduce a sharp peak. A high-power battery with insufficient usable energy may not sustain discharge through a longer peak period. BESS sizing should therefore be based on interval data and the shape of the load, not only total monthly kWh.
Solar + BESS as a Partial OPEX Hedge
Solar and BESS perform different but complementary roles. Solar principally reduces daytime grid purchases. BESS makes the energy strategy more controllable by shifting energy and limiting demand spikes. Together, they may help a business:
- reduce daytime imported kWh and the related energy charge;
- reduce AFA exposure on electricity no longer imported;
- move solar energy into the evening ToU peak;
- reduce peak-rate grid purchases;
- manage maximum demand more consistently; and
- improve electricity-budget predictability.
The correct description is a partial operational hedge, not protection from every tariff increase. Solar and BESS do not automatically remove fixed retail charges, all maximum-demand charges, the AFA on remaining imports, or charges arising when equipment is unavailable or depleted.
Frequently Asked Questions (FAQs)
What is the AFA charge?
AFA is a separate monthly adjustment applied to electricity bills in Peninsular Malaysia. It reflects changes between the generation costs built into the base tariff and the actual costs incurred, including variations in fuel prices, power-purchase costs, renewable-energy displaced costs and other approved generation-related expenses.
The AFA may appear as either a surcharge, which increases the electricity bill, or a rebate, which reduces it. It is generally calculated in sen per kilowatt-hour and applied to the relevant electricity consumption, subject to any applicable exemptions or programme terms.
For July 2026, the AFA surcharge applied was 3.59 sen/kWh.
What is the difference between AFA and ICPT?
ICPT was the previous mechanism used to adjust electricity tariffs for changes in fuel and electricity-generation costs. Under the earlier RP3 framework, ICPT adjustments were generally reviewed and implemented on a six-month cycle.
The AFA replaced ICPT when the RP4 tariff structure took effect on 1 July 2025. Unlike ICPT, the AFA is updated monthly, allowing changes in actual fuel prices, generation costs and other relevant cost components to be reflected more promptly in electricity bills.
The practical difference is therefore mainly the frequency and speed of adjustment. Under AFA, electricity costs may change from one month to the next even where the customer’s consumption and base tariff remain unchanged. This makes the AFA an important consideration in monthly budgeting, energy procurement and solar or BESS savings assessments.
What is the difference between the capacity and network charges?
The capacity charge relates to the availability of generation capacity. The network charge relates to transmission and distribution. For Low Voltage customers, both are charged per imported kWh; for Medium Voltage and High Voltage customers, both are generally charged per kW of billed maximum demand.
Is ToU better for my factory?
A Time-of-Use tariff is not automatically more economical for every factory. Its suitability depends on when the facility consumes electricity and when its maximum demand occurs.
Under the current ToU schedule, the weekday peak period is generally from 2:00 p.m. to 10:00 p.m. The remaining weekday hours and all hours on Saturdays and Sundays are treated as off-peak. A factory may benefit where it can move a meaningful proportion of its energy consumption and chargeable maximum demand into these off-peak periods.
However, the lower off-peak energy rate must be considered together with the applicable peak energy rate and demand-related charges. For example, under the current Medium Voltage structure, the combined Capacity and Network Charges are RM97.06/kW under ToU, compared with RM89.27/kW under the General tariff. A facility with substantial electricity consumption and maximum demand between 2:00 p.m. and 10:00 p.m. may therefore incur higher overall costs despite benefiting from a lower off-peak energy rate.
The best option should therefore be assessed using your actual interval-metering data, operating hours, maximum-demand pattern and ability to shift production. Solar, BESS and automated load controls may also improve the potential benefits of ToU.
The tariff with the lowest individual rate may not always produce the lowest overall monthly bill.
How much can solar reduce my TNB bill?
There is no reliable percentage without site data. Savings depend on tariff category, solar generation, self-consumption, the timing of maximum demand, export treatment, AFA and operating hours.
Does BESS always reduce maximum demand?
No. The BESS must discharge at the correct time and have sufficient:
- discharge power, measured in kW or MW;
- usable energy capacity, measured in kWh or MWh;
- state of charge;
- response speed;
- discharge duration; and
- control and monitoring capability.
For example, a 300 kW BESS may be capable of reducing grid demand by approximately 300 kW at a particular moment. However, if the battery cannot sustain that output for the full duration of the demand event, the facility may still record a higher maximum demand later in the same interval or billing month.
The BESS may also fail to achieve the targeted reduction if it is discharged too early, insufficiently charged, unavailable during the actual peak or controlled using an unsuitable demand threshold. A properly configured Energy Management System should therefore monitor grid demand continuously and preserve sufficient stored energy for the demand events with the greatest commercial impact.
Any savings assessment should also account for charging costs, conversion losses, auxiliary consumption, battery degradation, maintenance, availability and the applicable RM/kW demand-related charges.
When does the RP4 tariff period end?
The current Peninsular Malaysia tariff schedule is stated to apply until 31 December 2027, subject to any approved regulatory or government changes. AFA continues to change monthly within that period.
Turn Your TNB Tariff into an Energy Strategy
The strongest solar or BESS project is not necessarily the largest system. It is the system designed around your actual tariff category, interval consumption, operational schedule, maximum-demand drivers and growth plans.
Avera Energy supports commercial and industrial businesses with tariff and bill analysis, General-versus-ToU comparisons, solar feasibility and generation modelling, maximum-demand analysis, BESS power and energy sizing, solar-plus-storage dispatch modelling, and sensitivity testing for AFA and load growth.
| Speak to Avera Energy A site-specific assessment can show which tariff components are realistically addressable, the operational changes that may be required, and whether solar, BESS or a combined solution is commercially suitable for your business. |
