With potentially rising electricity tariffs and growing environmental awareness, homeowners are exploring ways to reduce their energy costs while contributing to a more sustainable future. Naturally, solar photovoltaic (PV) systems are an attractive option for landed homeowners to do just that.
When exploring solar PV installation, one key consideration may crop up: should you purchase the solar PV system outright or opt for a subscription model? Both approaches offer their respective advantages and limitations, which we shall discuss here.
In an outright ownership model, homeowners pay the full cost of the solar PV system upfront, thereby owning the system installed on their property.
This has several benefits, namely:
Owning a system means you benefit directly from the energy it generates. Once the system cost is offset through utility savings, additional savings on electricity bills go straight to your pocket. Breakeven is typically within 3 to 5 years depending on system size and usage.
If you generate excess energy, it can be exported to the grid for credits under Malaysia’s NEM initiative. These credits offset your electricity bill, further reducing overall household expenditure. System ownership allows you to fully capitalise on this initiative.
A solar PV system can add value to your home, especially for homeowners who may want to sell their property in the future. Prospective buyers may view the installed solar PV system as a value add and thus be more willing to pay a higher price for the house.
Homeowners are not bound by any contract terms or provider limitations and have total control over system maintenance, monitoring, and upgrading decisions.
Attractive as outright ownership is, the main concern is the upfront cost. A typical 8 kWp solar PV system for the average terrace/linked house in Malaysia costs in the region of RM25,000. This can be quite a steep outlay, particularly for younger homeowners.
Nevertheless, financing options exist which can significantly reduce the financial strain. These include 0% interest credit card instalments of up to 68 months, and bank loans with minimal or even no interest up to 120 months. Such solutions make solar PV ownership more accessible as homeowners can spread the cost over a period that suits their financial planning.
Correlating to the higher initial outlay, the payback period will also take longer. For those who are just renting temporarily or plan to move to a new house, long-term savings or return on investment under an ownership model may not be fully realised.
Another thing to keep in mind is that as a system owner, you bear responsibility for any upkeep and potential repairs required after the warranty period.
An alternative that’s gaining traction in Malaysia is the subscription or rent-to-own model. In this instance, homeowners pay a monthly fee to a service provider, up to a pre-determined period, before ownership is transferred to the user, like a hire-purchase agreement.
This model makes solar PV adoption more accessible for capital conscious households by reducing the financial barrier to entry. Subscription models do away with initial upfront costs in favour of a longer contractual term.
A subscription model helps homeowners with expense budgeting as they can project the exact fee required throughout the subscription tenure since basic maintenance is factored in into the quoted fee.
While subscriptions offer a low-risk entry for more households to adopt solar energy, they also come with their own drawbacks.
Subscription contracts can lock homeowners in for 10 years, with penalties for early termination, such as the need to settle the remainder of the contract. Modifications or upgrades to the system may also be restricted. In the long-run, the subscription fee eats into the potential savings and can be substantial.
As alluded to earlier, since the solar PV system isn’t owned by you, the long-term financial benefit is lower. Homeowners essentially rent the energy savings during the contracted period, and monthly fees add up over time.
Both models have a part to play in Malaysia’s RE ambitions. Empowering homeowners with choice is a net positive towards creating greener future. Ultimately, the decision comes down to your financial goals and lifestyle.
Outright ownership offers superior returns, independence, and full control while a subscription provides a low-risk entry for those who are more capital conscious.
A table comparing the potential cost and savings between outright ownership and subscription models is included as a general guide below. The calculations are based on a 8 kWp system to provide as close to a one-to-one comparison possible for your benefit.
Before making a decision, or to better understand the difference, speak with us to explore how we can support your switch to RE and begin saving on your electricity bills. With over 4,000 premises installed for, totalling 130,000 kWp, TERA is your trusted partner for solar solutions.
System size
Outright Ownership: 8.61 kWp
Subscription (Generic): 8.68 kWp
Monthly energy generation
Outright Ownership
878.22 kWh
(8.61 kWp x 3.4 hours x 30 days)
Subscription (Generic):
885.36 kWh
(8.68 kWp x 3.4 hours x 30 days)
Monthly savings
(based on highest tariff)
Outright Ownership:
RM501
(878.22 kWh x RM0.571)
Subscription (Generic):
RM505
(885.36 kWh x RM0.571)
Savings over 10 years
Outright Ownership
RM60,120
(RM501 x 120 months)
Subscription (Generic):
RM60,600
(RM505 x 120 months)
Total investment
Outright Ownership:
RM26,600
Subscription (Generic):
RM45,240
(RM377 fee x 12 months x 10 years)
Net savings after 10 years
Outright Ownership:
RM33,520
(RM60,120 – RM26,600)
Subscription (Generic):
RM15,360
(RM60,600 – RM45,240)
Note: outright ownership calculated as per TERA’s provision
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