Solar share in Malaysia's energy mix set to surge
'We have previously estimated that solar will be increasingly dominant accounting for 25%/39%/52%/58% share of the capacity mix in 2035/2040/2045/2050, growing at compounded annual growth rate of 14% between 2025-2050,' said MBSB Research.
This underpins a multi-year growth story for solar EPCC companies and also asset-owners, through power generation over the long-term.
PETRA is expected to announce a new version of the Net Energy Metering (NEM) this month, dubbed the NEM 4.0 or an entirely new naming convention.
It was hinted that this could be a hybrid mechanism of NEM and self-consumption (SelCo) or an entirely new programme.
PETRA is in the midst of finalising the new programme, which will be aligned with the new tariff structure and designed in a way that gradually shifts away from subsidy dependency.
Recall that NEM 3.0 ended on 30th June following the deadline for the additional 100MW under the NEM Rakyat quota.
Following the rollout of the new tariff structure under Regulatory Period 4 (RP4) starting Jul-25, PETRA had also announced the continuation for rooftop solar users to earn electricity bill credits for excess solar power generated and exported to the grid for the next 10 years.
While domestic and low voltage solar rooftop users continue to be able to offset all three component charges (energy, network and capacity), medium and high voltage users can offset only up to 25% of the network and capacity charges while energy charges can be offset in full.
We view this to be fair, as it ensures heavy users pay their fair share of the fixed network upkeep. In the past, non-solar consumers have indirectly subsidised the network and capacity charges for solar users, estimated to be about RM250m per year.
The decision to include nuclear as part of the energy mix will only be made after 2030, if it receives public acceptance.
Under Strategy A1.5 of the 13th Malaysian Plan, Malaysia will launch a nuclear-power program slated to come online by 2031, integrating nuclear alongside renewables to decarbonise its grid.
MyPOWER Corporation will serve as the Nuclear Energy Programme Implementing Organization, responsible for governing the national nuclear program in accordance with International Atomic Energy Agency (IAEA) standards.
Sarawak's strategic positioning as a hydro-centric renewable hub will be reinforced through a dedicated grid link to Peninsular Malaysia, further unifying the nation's clean-energy infrastructure.
Considering that 70% of Sarawak's energy comes from hydro, there is expected to be an excess of power from the state.
The YAB Deputy Prime Minister said it has been agreed in principle for a maximum of 2GW coming channelled from Sarawak to the Peninsular.
In a report last year, the ASEAN Centre for Energy said the interconnection plan is to connect Peninsular Malaysia and Sarawak through grid-to-grid high-voltage DC (HVDC) subsea cables, with a planned 676km line capacity of 2 x 800 MW, or a total of 1.6GW.
The implementing agencies are expected to be Tenaga Nasional and Sarawak Energy. Undersea cables can also be expected from Vietnam to Kota Bharu, for the supply of RE from Vietnam to Malaysia.
In May-25, a tripartite deal between Malaysia, Singapore and Vietnam was inked to explore the export of RE from Vietnam, particularly offshore green power.
About 30% will be imported by Malaysia while the remaining 70% will be sold to Singapore.
PETRA is working with state governments to develop specific water tariffs for data centres and heavy industrial users, in a move to ensure that domestic users can continue paying reasonable and affordable rates and to prevent them from cross-subsidising large-scale users.
Data centres and industrial users are also encouraged to switch to recycled water and for states to set up zonings in order to have district cooling systems particularly where there will be heavy water usage.
This is to ensure more effective and efficient management of water usage and to prevent any 'competition' for clean water for human consumption.
We maintain our positive stance on the Utilities sector and the Renewable Energy subsector, underpinned by the structural policy tailwinds for a deep decarbonisation trajectory in line with the targets under NETR.
We view that solar remains a multi-year growth engine, on top of the incoming BESS requirements, which will benefit EPCC players such as Solarvest, Samaiden, Pekat, Sunview and Northern Solar.
Tenaga will be the key beneficiary in the asset ownership space from both RE capacity expansion and grid upgrade investments. —Aug 11, 2025
Main image: The Star
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