SARE in Malaysia means the Supply Agreement for Renewable Energy. It is a three-party arrangement involving the electricity consumer, a solar investor and Tenaga Nasional Berhad (TNB), allowing agreed solar PPA or leasing payments to be collected through the customer’s electricity bill.

SARE can make rooftop solar easier to adopt when a customer prefers not to purchase the full system upfront. However, SARE is not the same thing as “free solar”, and it is not a guarantee of savings. The commercial terms still depend on the solar power purchase agreement (PPA), lease or hybrid arrangement offered for the specific site.

What does SARE stand for in Malaysia?

Quick answer: SARE stands for Supply Agreement for Renewable Energy. According to SEDA Malaysia’s Solar ATAP guidance, it is a tripartite agreement between the consumer, the solar investor and TNB. The payment collection is made through the electricity bill.

This differs from a direct contract where the consumer pays the investor separately. Under SARE, TNB provides the billing, collection and remittance mechanism, while the underlying solar project is arranged between the customer and the investor.

How does SARE work?

A typical SARE journey can be understood in six steps:

1. Site assessment: the property’s electricity use, roof, electrical system, operating pattern and project objectives are reviewed.
2. Commercial proposal: an investor proposes a solar PPA, lease or hybrid arrangement, subject to eligibility and approval.
3. Contract review: the customer reviews the price, term, ownership, maintenance, performance, termination and other conditions.
4. Applications and installation: the relevant parties arrange the technical submissions, approvals, installation, testing and metering required for the project.
5. Solar operation: the system generates electricity at the customer’s premises.
6. Billing and payment: the agreed SARE charge is collected through the TNB electricity-billing mechanism and remitted to the investor.

SEDA’s current guidance states that TNB charges a service fee of 2 sen per kWh for the SARE service. Ask the proposer to state clearly how this fee is calculated and who bears it in your specific commercial offer.

Is SARE a solar PPA or a solar lease?

SARE is the payment and contractual mechanism; the commercial solar model may be a PPA, a lease or a hybrid. The differences matter because they affect how you pay and who owns the equipment.

Solar power purchase agreement (PPA)

Under a solar PPA, the customer generally pays for the solar electricity generated, usually based on an agreed RM per kWh rate. SEDA describes the system as being owned by the Registered Solar PV Investor (RPVI) under this model, with installation carried out through the investor’s EPC contractor or a Registered Solar PV Service Provider (RPVSP).

Solar leasing

Under a solar lease, the customer generally pays a fixed monthly amount for the use of the PV system. SEDA’s current Solar ATAP page states that the system is owned by the site owner after the lease period ends. The exact transfer conditions, equipment condition and end-of-term responsibilities should still be written clearly in the contract.

Hybrid arrangement

A hybrid may combine features of a PPA and lease. Because offers vary, do not rely on the label alone. Compare the actual payment formula, escalation, duration, ownership, maintenance and termination clauses.

Why do Malaysian businesses consider SARE?

• Lower upfront capital requirement: investor-funded models may reduce or remove the need to purchase the entire system at the beginning.
• One billing channel: SARE integrates the agreed solar payment into the electricity-billing process.
• Maintenance structure: PPA and leasing offers commonly allocate defined operation and maintenance duties to the investor or service provider.
• Potential electricity-cost benefit: a well-designed proposal may offer a solar energy price or payment structure that supports the customer’s financial objectives.
• Sustainability progress: onsite solar can support renewable-energy and emissions-reduction plans when claims are measured and reported carefully.

These are potential advantages, not automatic outcomes. The value depends on the site’s daytime electricity use, roof suitability, system performance, contract price, tariff changes and other project assumptions.

What are the main SARE contract risks to check?

A long-term solar agreement can affect the building, electricity account and future business decisions. Before signing, obtain professional advice where appropriate and review at least the following:

• contract duration and any price-escalation formula;
• minimum payment, minimum purchase or deemed-generation provisions;
• system ownership during and after the agreement;
• performance commitments and how underperformance is measured;
• maintenance response times, downtime and replacement responsibilities;
• roof repairs, building renovation and temporary system removal;
• insurance, damage, safety and access responsibilities;
• early termination, sale of the property and change of tenant or account holder;
• end-of-term removal, renewal, transfer or purchase options;
• taxes, TNB service fees and other charges;
• billing disputes, late payment, default and disconnection consequences; and
• the technical and regulatory approvals required for the site.

SEDA’s guidance warns that non-payment of outstanding amounts under SARE may result in TNB disconnecting the electricity supply under the applicable electricity-supply law. This makes the default and dispute provisions especially important. Do not sign until your legal, financial and operational teams understand the obligations.

Does TNB own the solar panels under SARE?

Not necessarily. TNB’s role under the SARE mechanism includes the electricity-billing and collection arrangement. Equipment ownership depends on the underlying contract. Under the PPA model described by SEDA, the RPVI owns the system; under a lease, ownership may transfer to the site owner after the agreed term.

Does SARE mean zero-cost or free solar?

No. “Zero upfront cost” usually means the investor funds the initial system cost and recovers its investment through payments over the contract period. The customer still has financial and contractual obligations. Compare the total expected payments and risks with an outright purchase, bank financing and other available options.

Is SARE suitable for every solar project?

No. SARE may suit an eligible customer who wants an investor-funded PPA or leasing structure and is comfortable with a longer contractual commitment. Outright purchase may be preferable for a customer who has available capital, wants immediate ownership and accepts the operating responsibilities.

Project size, electricity profile, roof rights, credit assessment, investor requirements and current programme rules can affect availability. Ask for more than one financial scenario before deciding.

What information is needed for a SARE assessment?

• recent electricity bills and, for larger users, available load-profile data;
• business operating hours and major daytime electrical loads;
• property ownership or tenancy information;
• roof drawings, condition, age and available area;
• planned renovations, expansion or changes in electricity demand;
• the organisation’s preferred contract period and financial objectives; and
• the names of the facilities, finance and legal representatives involved.

For a broader preparation checklist, read what to prepare before requesting a solar quotation in Malaysia.

Frequently asked questions about SARE in Malaysia

Who are the three parties in a SARE agreement?

The three parties are the electricity consumer, the solar investor and TNB.

Where does the SARE payment appear?

SEDA describes SARE as collecting the agreed payment through the electricity bill. Review a sample bill and the proposal so your finance team understands every line item.

Does SARE guarantee lower electricity costs?

No. Any savings estimate depends on the contract rate, solar generation, consumption, tariffs, charges and other assumptions. Request transparent calculations and sensitivity scenarios.

Where can I check official information?

Refer to SEDA Malaysia’s PPA and leasing guidance, the SEDA Registered Solar PV Investor directory, TNB’s green-energy information and current requirements from the relevant Malaysian authorities.

Information checked against official SEDA Malaysia and TNB resources on 18 August 2026. Programme requirements and commercial terms can change. This article provides general information and is not legal, financial or regulatory advice.