Malaysia''s National Energy Transition Roadmap (NETR) sets an ambitious commitment for the country to reach 70% renewable capacity in the energy mix by 2050, with solar power as the dominant source and gas utilised as the transitional fuel away from baseload coal.
From data provided in the NETR, Ember estimates that the generation share of renewables will contribute to about 52%, and gas will account for the remaining 48% of the mix in 2050. This could leave Malaysia’s power sector vulnerable to global fuel price volatility and domestic reserve depletion. Hence, the government could look to raise renewable energy ambitions for the power mix to be better diversified.
By utilising more of its abundant solar power resources, Malaysia can unlock affordability and security benefits in the power sector. Technically, solar power can reliably meet Malaysia’s daytime demand, while the non-solar hours demand could be addressed by utilising hydropower and building more storage facilities over time. Despite the high cost, investing in energy storage solutions such as battery energy storage systems (BESS) is critical. Efficiently managing the increasing solar loads requires upgrading the current grid infrastructure.
A gradual increase in solar power could also strengthen affordability in Malaysia’s power sector, insulating the country from the risk of rising electricity tariffs, which may be caused by fossil fuel price volatility. Therefore, policies to further support solar growth and BESS adoption across Peninsular Malaysia, Sabah and Sarawak regions can allow each region to excel in its solar power adoption and contribute to the national power transition target.
Malaysia’s deployment plans for battery energy storage systems (BESS) could benefit from policies integrating solar and BESS technologies. Conducting feasibility studies to analyse the economic and technical viability of BESS could be a stepping stone. Existing programmes, such as Large Scale Solar and Corporate Green Power Programme, could be further enhanced by integrating BESS technologies and offering a different tariff scheme for BESS services, broadening flexible grid development responsibilities beyond utilities to other market participants.
Mlaysia is an upper-middle-income country in Southeast Asia. It ranked third among the Association of Southeast Asian Nations (ASEAN) members in Gross Domestic Product per capita ($11,993 USD) in 2022. As the economy grows, electricity generation in the country has also shown a steep growth during the last two decades, adding 116 TWh of power generation from 2000 to 2023.
Much of the electricity generation is sourced from coal and gas. In 2023, coal and gas accounted for 43% and 37% of total generation, respectively. The renewable share in 2023 was 19.5%, and most of the generation comes from hydropower (17%, 32 TWh). Solar and bioenergy each contributed 1.7% and 0.6%.
As a parliamentary democracy with a constitutional monarchy, the Federation of Malaysia was formed following the merger of the Federation of Malaya, Singapore, North Borneo (Sabah) and Sarawak on 16 September 1963.
Across Peninsular Malaysia, Tenaga National Berhad (TNB) operates as the sole publicly listed electricity provider, with the government owning a 66% stake. The region implements a single buyer market structure whereby independent power producers generate almost half of the electricity. Single Buyer is assigned to manage electricity procurement to fulfil demand in Peninsular Malaysia.
A regulatory transfer of Sabah''s power supply from the federal government to the state government began in early 2024, slated for completion by 2030. Prior to this, Sabah''s power sector was governed by the federal government and, along with Peninsular Malaysia, adhered to the Electricity Supply Act of 1990. Therefore, some of Peninsular Malaysia''s renewable energy programmes were extended to Sabah.
Meanwhile, Sarawak has managed its electricity-related affairs under its own self-governance. The state''s electricity supply is provided by Sarawak Energy Berhad (SEB), fully owned by the State Government of Sarawak. This arrangement allows Sarawak to establish its own power-related targets instead of following the federal targets.
About three-quarters of Malaysia''s electricity demand is driven by Peninsular Malaysia where most of the population inhabits, amounting to 118 TWh in 2020 (the latest year available) and 137 TWh in 2023 (estimated). Even though the highest demand is in Peninsular Malaysia, Sarawak has seen the most significant demand growth compared to Sabah and Peninsular Malaysia in recent years, with 13% annual growth from 2010 to 2020.
Fossil fuels are the primary source of power across Peninsular Malaysia and Sabah, meeting most of their power demand. In 2022, coal power plants account for 56% of Peninsular Malaysia''s power generation, while gas dominates Sabah''s power generation at 83%.
In contrast, their neighbour Sarawak is leading in renewable generation share from hydropower. Sarawak''s electricity demand is mainly met by large hydropower, which accounted for 73% (25 TWh) of total generation in 2022.
Renewable energy progress varies across Malaysia''s regions. In Peninsular Malaysia, solar generation rose to 36% year-on-year from 2019 to 2022, adding a total of 1 TWh over this period, with hydropower remaining the largest renewable source, supplying 6.8 TWh out of 8.4 TWh of the total renewables in 2022. In Sabah, renewable generation from hydro, solar and bioenergy has plateaued over the last four years, averaging 0.7 TWh annually from 2019 to 2022.
The Malaysian government has announced energy transition plans in Malaysia''s net-zero commitment in 2050. The Malaysia Renewable Energy Roadmap (MyRER), published in 2021, outlines the strategies and detailed plans for clean power transition until 2035. A year later, the National Energy Policy 2022-2040 (NEP) laid the groundwork and the overarching strategy for how the energy transition will shape up to achieve a net zero.
As an updated and extended strategy of MyRER, the country introduced the National Energy Transition Roadmap(NETR) in 2023 to pave the way for the decarbonisation of its energy sector. The roadmap outlines reforms aimed at achieving renewable energy comprising 70% of total capacity by 2050, with solar power making up the majority share at 58% and gas serving as a transition fuel.
In the roadmap, Malaysia also aims to reduce its dependency on coal, with plans for a near-complete phase-out by 2045. As a start, Malaysia is committed to seizing the construction of new plants and setting out a phase-out plan for existing plants. The government recently revealed that half of the coal power plants will be retired by 2035, with a full phase-out scheduled by 2044.
Despite ambitious targets for renewable capacity additions, the estimated generation of gas will remain significant. Ember calculates renewables will constitute 52% (160 TWh) of the total generation in 2050, slightly more than gas, which is projected to account for 48% (149 TWh).
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