Malaysia’s Renewable Energy Transformation
Malaysia is undergoing a significant transformation in its power sector, with renewable energy sources playing an increasingly vital role. The country is working to reduce its dependence on fossil fuels and move toward a more sustainable energy mix. The Malaysian government has set ambitious goals, aiming to increase the share of renewable energy to 40% of the total installed capacity by 2035 and achieve net-zero emissions by 2050.
According to GlobalData, a leading data and analytics company, Malaysia’s cumulative renewable capacity is expected to reach 30GW by 2035, growing at a compound annual growth rate (CAGR) of 16.8% between 2024 and 2030. This growth reflects a broader trend in the region, as countries seek to diversify their energy sources and meet global climate commitments.
The report, titled “Malaysia Power Market Outlook to 2035, Update 2025 – Market Trends, Regulations, and Competitive Landscape,” highlights that during the period from 2020 to 2024, Malaysia’s renewable power generation increased from 5TWh to 9.8TWh, with a CAGR of 18.5%. Projections indicate that this will further rise to 51.1TWh by 2035, growing at a CAGR of 16.2%.
Attaurrahman Ojindaram Saibasan, Senior Power Analyst at GlobalData, notes that the introduction of the National Energy Transition Roadmap (NETR) and the Malaysia Renewable Energy Roadmap (MyRER) has created a clear policy framework. These initiatives have opened up investment opportunities and demonstrated the government’s strong commitment to a cleaner and more resilient energy future.
Potential for Renewable Energy Expansion
Malaysia’s countryside is rich in potential renewable energy sources that can serve as local and cost-effective alternatives to fossil fuels. Bioenergy, particularly from palm oil, is one of the most widely used renewable sources in the country and contributes significantly to its energy consumption.
Solar photovoltaic (PV) technology is the largest renewable power source in Malaysia. Net metering plays a crucial role in promoting solar PV installations, especially in the residential sector. The Net Energy Metering (NEM) scheme allows surplus solar-generated energy to be exported back to the grid on a “one-for-one” basis. This means that every kilowatt-hour of electricity exported is offset against one kilowatt-hour consumed from the grid, making solar energy more attractive for households and businesses.
Despite its abundant fuel reserves, Malaysia faces challenges in maintaining energy security. The country is a net exporter of electricity, primarily relying on thermal resources for power generation. However, it lacks the necessary expertise to mine coal effectively, leading to reliance on imports from countries like Indonesia and Australia. Additionally, local oil fields are depleting, with production expected to decline, which could impact the stability of the power supply.
Government Support and Challenges
To address these challenges, the Malaysian government is actively promoting the development of renewable energy sources such as solar and biomass. Solar energy is at the forefront of this shift, supported by initiatives like large-scale solar (LSS) programs, NEM schemes, and incentives for rooftop solar installations in both residential and industrial sectors. Hydropower remains a key contributor, particularly in regions like Sabah and Sarawak.
Bioenergy derived from palm oil waste and municipal solid waste is also gaining momentum as a viable alternative. The government provides grants to support the development of power generation from renewable sources. These grants are essential because emerging technologies often come with uncertainties that can hinder progress, requiring substantial financial investments in research, development, and implementation.
Saibasan points out that renewable energy projects face challenges in securing financing and bank loan approvals due to high risks and a lack of expertise among financial institutions. To overcome these obstacles, the government is implementing robust policies to create a sustainable environment for investors and promote renewable growth.
Future Outlook
As Malaysia continues its journey toward a cleaner energy future, the role of renewable energy will become even more critical. With strong government support, innovative policies, and growing public awareness, the country is well-positioned to meet its renewable energy targets and contribute to a more sustainable global energy landscape.
