Energy & Pulse / Insights
Malaysia Budget 2027 and BESS: what changed in the GITA tiers
Malaysia tabled Budget 2027 in the Dewan Rakyat on 9 October 2026. For battery storage, the decision that matters is not an allocation line. It is a change to the tier tables inside the Green Investment Tax Allowance, which determines who can claim an investment tax allowance on a battery purchase from 1 January 2027 — and the previous window closes on 31 December 2026.
This piece sets out what changed, what the storage and solar industry had asked for three weeks earlier, and the two places where the published tax summaries do not yet agree with each other. Figures verified as at 12 October 2026.
What did Budget 2027 change for battery energy storage?
Four changes, taken from EY’s and PwC’s Budget 2027 summaries:
- The window moves. GITA for assets acquired for own consumption ran from 1 January 2024 to 31 December 2026. Budget 2027 sets the new period as purchases of qualifying assets from 1 January 2027 until 31 December 2030, with GITA project applications received by MIDA over the same dates.
- BESS stays in Tier 1. Battery and energy storage systems remain a Tier 1 qualifying asset, as they have been since Budget 2024.
- Renewable energy integrated systems move up into Tier 1 alongside storage — biomass, biogas, mini hydro, solar, geothermal and wind. Under Budget 2024 a renewable energy system sat in Tier 2.
- Green building and energy efficiency drop out of the asset list entirely. Green building was a Tier 1 asset under Budget 2024; energy efficiency was Tier 2.
On the project side — GITA claimed on a green business activity rather than on an asset bought for own use — the structure is cut to two tiers. Tier 1 is green hydrogen and ocean thermal energy conversion, with ocean thermal added as a new qualifying activity and a 100% allowance. PwC lists Tier 2 business activities as electric vehicle charging stations and renewable energy systems, and notes that Tier 3 is removed.
How do the GITA asset tiers compare, Budget 2024 against Budget 2027?
| Item | Budget 2024 (expiring) | Budget 2027 (proposed) |
|---|---|---|
| Application / capex window | 1 Jan 2024 – 31 Dec 2026 | 1 Jan 2027 – 31 Dec 2030 |
| Tier 1 assets | MoF-approved qualifying asset, battery energy storage system (BESS), green building | MoF-approved qualifying asset, renewable energy integrated systems (biomass, biogas, mini hydro, solar, geothermal, wind), battery / energy storage systems |
| Tier 2 assets | MoF-approved qualifying asset, renewable energy system, energy efficiency | MoF-approved qualifying asset, renewable energy systems |
| Tier 1 rate | 100% ITA, offset against 70% of statutory income | Not stated in the tax summaries reviewed |
| Tier 2 rate | 60% ITA, offset against 70% of statutory income | Not stated in the tax summaries reviewed |
| Submitted to | MGTC | MIDA (projects) |
Why does the asset tier matter more than the headline allocations?
Because it changes the relative price of two different purchases.
Under Budget 2024 a company buying a battery storage system claimed under Tier 1 and a company buying a renewable energy system claimed under Tier 2. Whatever the 2027 rates turn out to be, solar and storage now sit in the same asset tier. The allowance differential between buying generation and buying storage, which existed for the three years to December 2026, is gone at the asset level.
For a developer selling into Malaysian commercial and industrial sites, that removes an argument and supplies a different one. It is no longer possible to point at the tier table and say storage is treated more generously than panels. It is possible to say that an integrated solar-plus-storage purchase is now claimed as one Tier 1 asset category rather than split across two tiers.
What did the industry ask for, and what did it get?
On 17 September 2026, three weeks before the budget, The Star ran the storage and solar industry’s pre-budget requests. Setting those against the 9 October announcements gives a clean scorecard.
| Asked for (17 Sep 2026) | Who asked | Outcome in Budget 2027 |
|---|---|---|
| Extend GITA for solar and battery investments by at least three years | Edmund Loo, former MPIA elected committee member | Granted, four years — window runs to 31 Dec 2030 |
| Broaden eligibility to integrated solar-and-battery projects | Edmund Loo | Partly — renewable energy integrated systems and storage now share Tier 1 on the asset side |
| Broaden eligibility to solar and battery leasing, battery-as-a-service, virtual power plants, intelligent energy management | Edmund Loo | Not named in either tax summary reviewed |
| Time-limited rebate or tax relief for residential BESS installed with rooftop solar | Edmund Loo; Michael Leong, MD, BM TERA | Not announced. The NUR MADANI rebate covers energy-efficient air-conditioners and refrigerators, up to RM200 |
| Raise Solar Atap domestic caps from 5 to 8 kWac single-phase, 15 to 22 kWac three-phase | Edmund Loo | Not announced |
| Review the mandatory storage threshold and standby charges under Selco | Edmund Loo | Not announced |
The pattern is worth naming. Everything granted sits on the capex of an asset the claimant owns and uses. Everything not granted sits either in the residential segment or in third-party-owned business models — leasing, battery-as-a-service, aggregation. Vestech, the Solarvest subsidiary quoted in the same article, had framed the problem as battery prices being a real barrier for families and time-of-use tariffs doing little to cushion rising AFA costs. Budget 2027 does not address that framing.
What else in Budget 2027 touches storage demand?
- Grid. TNB will invest RM15 billion to strengthen the national grid. TNB’s own statement of 10 October places that within RM43 billion of grid investment across 2025–2027.
- Named storage project. UEM Lestra will invest RM1 billion in projects including energy storage at KLIA and a 1 GW hybrid energy project in Johor.
- Government solar. RM1.5 billion for a centralised solar park for government buildings, with opportunities for 34 Bumiputera companies.
- LSS6. 150 MW reserved for Bumiputera companies.
- Climate finance. KWAP’s RM1 billion Climate Fund for renewables and decarbonisation projects.
- Sabah. RM600 million from the federal government for supply continuity, RM204 million of Statcom systems at the Dam Road and Segaliud main intake substations, the Southern Link transmission project continuing, and electricity regulatory powers devolved to the state.
- Rural. RM3.3 billion for rural basic infrastructure including electricity.
The Sabah items are the ones to watch for storage. Statcom installations and devolved regulatory powers are both responses to a grid with stability problems, and Sabah already hosts Malaysia’s first large-scale battery installation.
Two caveats before you model any of this
The 2027 tier rates are not published. EY states 100% for Tier 1 projects — green hydrogen and ocean thermal — and does not give rates for the other tiers or for assets. PwC lists the tier contents without rates. Until MIDA or MGTC issues the guideline, the 100% and 60% figures in the table above describe the expiring Budget 2024 regime only. Do not carry them into a 2027 model.
The two summaries disagree about solar on the project side. EY’s reading is that integrated waste management and solar activities no longer qualify under the GITA project incentive. PwC lists Tier 2 business activities as electric vehicle charging stations and renewable energy systems, which on its face would include solar. These are not the same statement. Anyone whose model depends on claiming GITA against a solar project activity rather than against an asset should treat this as open and check the Ministry of Finance appendix and the eventual MIDA guideline.
A third item we could not confirm: EY’s summary states that the Green Income Tax Exemption for solar leasing will not be extended, with applications accepted only until 31 December 2026. PwC’s summary does not cover GITE, and we found no second source. If you operate a solar leasing structure, that deadline is worth verifying directly rather than on the strength of one summary.
How does this sit alongside the CRESS change?
Three weeks before the budget, on 18 September 2026, PETRA cut the CRESS System Access Charge for firm green electricity supply to 14 sen/kWh, against 20 sen previously and 25 sen when the scheme launched — a 44% reduction, conditional on a minimum 10-year contract and commercial operation by 31 December 2028. We covered the arithmetic in the CRESS acceleration package and the case for storage.
Read together, the two instruments point at the same counterparty. CRESS rewards firm, storage-backed supply committed under a long contract. GITA keeps an investment allowance on the battery the buyer owns. Neither does much for a party whose business is renting storage to someone else. If you are sizing the Malaysian market, that is the segmentation the policy is drawing: the end user who owns the asset and signs the long contract.
For current tender capacity and award status across the region, see BESS tenders in Southeast Asia 2026. For cost benchmarks to put against the allowance, see BESS prices in 2026.
Sources
| Fact | Source | Date |
|---|---|---|
| Budget 2027 tabled in the Dewan Rakyat by the Prime Minister and Finance Minister; fuel subsidy, electricity threshold, UEM Lestra, solar park, LSS6 Bumiputera reservation, KWAP, Sabah and rural figures | The Rakyat Post | 2026-10-09 |
| GITA tiers, extension to 31 Dec 2030, assets and activities added and removed, GITE solar leasing not extended | EY Take 5: Budget 2027 | 2026-10 |
| GITA asset and business activity tiers, 1 Jan 2027 – 31 Dec 2030 period, Tier 3 removed | PwC Centre Stage: Budget 2027 | 2026-10 |
| GITA Budget 2024 tier contents, 100% / 60% ITA against 70% of statutory income, 1 Jan 2024 – 31 Dec 2026 window, MGTC as submission body | MIDA, Horizontal of Green Incentives, Budget 2024 | 2023-12 |
| Pre-budget requests on residential BESS relief, Solar Atap caps, Selco thresholds, GITA extension and eligibility | The Star | 2026-09-17 |
| RM15 billion grid investment within RM43 billion for 2025–2027; NETR commitments including BESS and CRESS | Bernama, reporting a TNB statement | 2026-10-10 |
| CRESS System Access Charge cut to 14 sen/kWh for firm supply, 10-year contract and 2028 COD conditions | See our CRESS analysis, sourced to Bernama / PETRA | 2026-09-18 |
Verified as at 12 October 2026. Budget 2027 proposals require the Finance Bill and the relevant MIDA or MGTC guidelines before they take effect; tier rates and eligibility may change between the budget speech and the published guideline.