Q0035
For Malaysian LSS projects, the developer generally pays for the dedicated connection facilities and modifications required to connect its project—even where certain completed assets are subsequently transferred to TNB. Broader network reinforcement may be funded through regulated utility investment, but the exact boundary depends on the programme rules, approved connection scheme and project agreements.
Connection costs can transform an attractive project into an unfinanceable one. Developers and investors need to distinguish dedicated project infrastructure from wider system upgrades and understand who owns, operates and replaces each asset after commissioning.
Connection expenditure can be divided into four broad categories:
1. Project-side infrastructure
This normally includes the project substation, transformers, internal collector system, controls and equipment up to the defined interconnection point. It is ordinarily financed and owned by the developer.
2. Dedicated interconnector
A cable or overhead line that exists primarily to carry the project’s output is generally a developer responsibility, including land and rights of way.
3. Works within the utility’s existing network
These may include a new bay, busbar extension, protection changes, metering, SCADA, telecommunications or modifications at remote substations. Under the LSS guideline, the developer bears these connection costs and may have to transfer specified completed works to TNB after commissioning.
4. Wider or strategic network reinforcement
New bulk transmission lines, major transformer additions or system-wide upgrades serving multiple users may be funded by the network utility through regulated capital expenditure and ultimately recovered through regulated network revenue. Whether a particular upgrade is treated as project-specific or system-wide requires a formal regulatory and contractual decision.
For transmission-connected LSS, the developer is responsible at its own cost for the facility, its interconnection facility, the interconnector and the works required at the TNB connection point. The guideline states that all costs associated with connecting the transmission-connected LSS plant are borne by the developer. Specified works and associated land are transferred to TNB after successful commissioning, while the developer continues to own and maintain its plant and interconnector up to the agreed boundary.
For distribution-connected LSS, the guideline similarly states that the developer bears all costs, including modifications or extensions to the existing substation. The developer is also responsible for acquiring cable-route rights of way and related land. Energy Commission: LSS Connection Guideline
This creates an important distinction:
TNB’s wider grid-modernisation programme is funded through its regulated investment framework. Its 2025 reporting states that Regulatory Period 4 includes increased capital expenditure and a contingent allocation for energy-transition and critical transmission and distribution upgrades. TNB reported more than 15 GW of total network renewable-energy hosting capacity, including up to 8 GW at grid level. TNB Integrated Annual Report 2025
Developers should therefore establish:
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