GlobalData’s latest report, 'Malaysia Power Market Outlook to 2035: Market Trends, Regulations, and Competitive Landscape', provides a comprehensive assessment of the country’s electricity sector. The report analyses installed capacity in gigawatts (GW), electricity generation in terawatt-hours (TWh), technology mix, and regulatory developments across the historical period from 2020 to 2025 and the forecast period from 2026 to 2035. It also evaluates market drivers, policy frameworks, infrastructure investment, and competitive dynamics using GlobalData’s proprietary databases, primary and secondary research, and in-house analytical expertise.

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, a strong policy framework, accessible financing, and rapidly improving grid integration and storage capacity that reduce lead-time risks. 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.

Cumulative capacity (GW) and generation (TWh), 2020–2030f

Malaysia’s solar PV market is forecast to accelerate strongly through 2025–2035, with cumulative installed capacity growing at a CAGR of 16.4%, while annual generation increases at a CAGR of 16.5% over the same period.

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 such as 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 and mobilise private investment.

Streamlined approval processes, which cut regulatory red tape, are slashing time to market for new plants and reducing development costs. Initiatives such as 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.

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 capitalise 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 utilisation and stability.

Malaysia’s surging demand from data centres, 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 modernisation. 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 minimises risks of brownouts while improving power quality.

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 to approximately $2.1bn 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 $0.2bn–$0.6bn annually. Hydro is expected to stabilise in the $0.1bn–$0.5bn range, while biopower, though still marginal, creeps upward toward approximately $0.bn per year.