In 2021, the Ministry of Energy and Natural Resources of Malaysia (KeTSA) set a target to achieve 31% renewable capacity by 2025 and 40% by 2035. Later in the National Energy Policy (2022 – 2040) the government set a target to achieve 18.4GW renewable capacity by 2040. Both objectives are highly unrealistic, as only 9.1% of the country’s total capacity is accounted for by renewables. As per the current growth trend, Malaysia is expected to achieve only 12.1% renewable capacity by 2025 and 22.7% by 2035, moreover, by 2040 the renewable capacity is expected to reach only 16GW falling short of its target due to the absence of robust policy support, states GlobalData, a leading data and analytics company.

GlobalData’s latest report, ‘Malaysia Power Market Size, Trends, Regulations, Competitive Landscape and Forecast, 2022-2035’, reveals that solar PV, biopower, and small hydro are the only three renewable sources utilized by the country. In 2015, Malaysia took a step towards exploring geothermal power by launching the 30MW Tawau project, which was later abandoned as there were no obvious signs of activity detected. Also, the country has only one small onshore wind plant with a capacity of 0.2MW. The growth of wind power projects has been hindered by low wind speeds during off seasons, however, several small wind projects could still make a difference.

Attaurrahman Ojindaram Saibasan, Power Analyst at GlobalData, comments: “The government has implemented feed-in tariffs (FiT) (for up to 1MW capacity) and net metering policies in place to encourage the adoption of renewable energy. But there are no major incentives or support for large scale renewable projects. The government has struggled to attract investment in large-scale renewable projects due to sluggish economy. It has failed to implement robust policies that curtail the development of fossil-based power capacity and encourage renewable power capacity.”

In 2021, thermal power accounted for almost 75.8% of the total cumulative capacity in Malaysia and is expected to account for 63.5% in 2035. Gas-based thermal power will continue to be a crucial element of the country’s electricity mix whereas coal-based generation will see a drastic reduction.

Saibasan concludes: “To achieve its climate goals, Malaysia should look to create partnerships to enable technology transfer to improve efficiency of renewable power plants. A detailed policy with a clear roadmap with strict implementation measures is required for renewables growth. The government can look to offer incentives and tax breaks to bring in private and foreign investments, which will help regain confidence after the 1Malaysia Development Berhad (1MDB) scandal.

“The country has well-developed solar module production facilities, but it should seek to exploit this and create a strong value chain. It also needs to explore untapped wind and geothermal potential.”