Malaysia is poised to exceed its National Energy Policy's (NEP) 2040 renewable energy capacity target of 18.43GW by 2031, driven by aggressive large-scale solar tenders, strong policy framework, accessible financing, and rapidly improving grid integration and storage capacity that reduce lead-time risks, according to GlobalData, a leading intelligence and productivity platform.
GlobalData's latest report, "Malaysia Power Market Trends and Analysis by Capacity, Generation, Transmission, Distribution, Regulations, Key Players and Forecast to 2035", reveals that the country's renewable capacity is expected to increase from around 6.9GW in 2025 to approximately 31.5GW. Renewable power generation is estimated to reach 46.4TWh in 2035 from 10.1TWh in 2025.
Sudeshna Sarmah, Power Analyst at GlobalData, comments: "Malaysia's suite of long-term energy plans such as the National Energy Policy 2022-2040, MyRER, NETR, the National Renewable Energy Policy & Action Plan, and the Thirteenth Malaysia Plan (13MP) lays out an ambitious roadmap to not only hit but to advance its renewable energy targets. These policies are reinforced by enabling measures like market reforms, investments in solar, hydro, and biopower technologies, strategies for grid flexibility and storage, and legislative instruments to improve energy efficiency, all of which are designed to accelerate deployment, mobilize private investment."
Streamlined approval processes, which cut regulatory red tape, are slashing time to market for new plants and reducing development costs. Initiatives like the Corporate Renewable Energy Supply Scheme (CRESS) introduce competitive bidding and longer contract tenures, significantly boosting investor confidence and unlocking private capital for renewable projects.
Sarmah adds: "By deploying both ground-mounted and floating solar farms in tandem with battery storage, Malaysia is significantly boosting generation capacity while driving down wholesale electricity prices. Floating solar projects sidestep land acquisition challenges and often capitalize on waterbody sites that are already equipped with transmission infrastructure, leading to faster construction timelines and reduced grid connection delays. At the same time, battery storage helps smooth out solar power's daily inconsistencies by capturing excess midday power and supplying energy during evening peak hours. This reduces reliance on high-cost, flexible fossil fuel generators, enhancing overall grid utilization and stability."
Malaysia's surging demand from data centers, EVs, cooling systems, and industrial processes is pushing up electricity usage both day and night. This opens the door for fresh generation capacity and drives investment in grid expansion and modernization. Stable, predictable demand underpins financing for large-scale projects, helping utilities leverage scale and recoup infrastructure costs. At the same time, increased demand fosters a more diversified energy mix, boosts reliability, and minimizes risks of brown-outs while improving power quality.
Sarmah concludes: "From 2020 through 2025, Malaysia's energy investment portfolio has increasingly tilted toward renewables. Solar PV has seen robust and steady growth, with capital allocations rising approximately $2.1 billion by 2025. Investments in hydro and biopower remain modest while gradually increasing, they are still small relative to solar. Looking ahead to 2026–30, solar PV is projected to dominate the renewable energy investment landscape. Gas will maintain a supporting role, with investment in balancing and peaking capacity hovering between $0.2–0.6 billion annually. Hydro is expected to stabilize in the $0.1–0.5 billion range, while biopower, though still marginal, creeps upward toward approximately $0.2 billion per year."
