Malaysia’s renewable energy sector remains on a solid growth trajectory, driven by sustained government initiatives and potential new measures aimed at spurring further investments, analysts said.

Maybank Investment Bank said in its recent report that the renewable energy sector outlook in the country remains robust as earnings recognition for engineering, procurement, construction, and commissioning (EPCC) works on the 800MW Corporate Green Power Program (CGPP) projects commence. The projects are expected to complete by end-2025.

Additionally, it noted the anticipated awards for the 2GW capacity of large scale solar (LSS5) will provide further opportunities for EPCC orderbook replenishment to renewable energy pure-plays, offering strong earnings visibility beyond 2025.

Assuming an EPCC works value of MYR 3.6 million ($800,000) per MW, Maybank estimated the 2GW capacity to be worth about MYR7.2 billion ($1.6 billion) in EPCC works.

The research house also expects execution from the National Energy Transition Roadmap (NETR) projects to be the renewable energy thematic for 2025.

Apart from CGPP and LSS5, it looks forward to the initial development of 2.5GW of Hybrid Hydro Floating Solar (HHFS) at Tasik Kenyir.

It noted Malaysian utility firm Tenaga Nasional (TNB) expects to commission up to 1GW of Hibrid Solar Terapung Hidro (HHFS) capacity by end-2026.

In addition, it also expects some progress from the first utility-scale Battery Energy Storage System (BESS) development project, to be spearheaded by TNB, with a 400MWh capacity.

Philip Capital also said in its recent report that it is positive on Malaysia’s renewable sector premised on continued government efforts, and potential new initiatives to stimulate further investment in the sector to drive renewable energy sector.

“We project the sector’s aggregate earnings to grow by 63 percent in 2025, driven by robust order books bolstered by ongoing CGPP and Net Energy Metering 3.0 program (NEM3.0) projects,” said the research house.

Concurred with Maybank, Philip Capital remains bullish on Malaysia’s renewable energy sector, as the award of LSS5 projects (2GW capacity) is expected to generate about MYR 7 billion ($1.56 billion) in EPCC contract opportunities, marking the sector’s most extensive program.

Additionally, it noted the recent expansion of rooftop solar capacity is likely to drive further contract opportunities for solar EPCC companies.

“Sector interest is expected to remain strong, driven by upcoming contract announcements and increased focus on environmental, social, and governance (ESG)-focused investments,” it said.

According to the research house, the NETR continues to serve as the cornerstone for Malaysia’s long-term green energy transition, with the goal of renewable energy making up 70 percent of the nation’s installed energy capacity by 2050.

In 2024, several key initiatives aligned with the NETR were introduced, including LSS5 (totalling 2GW capacity), the Corporate Renewable Energy Supply Scheme (CRESS), and the establishment of Energy Exchange Malaysia (Enegem), which facilitated the pilot phase of renewable energy export to Singapore with a 100MW capacity.

“Looking ahead to 2025, the expected momentum from national energy transition initiatives and strong contract news flow will likely boost sentiment within the renewable energy sector,” it said.

It noted the adoption of Corporate Renewable Energy Supply Scheme (CRESS) is also likely to gain momentum with the finalization of the LSS5 project.

It opined that developers with identified land for solar assets, whose bids for LSS5 are unsuccessful, may pivot to CRESS as an alternative for project development, potentially generating another round of EPCC contract opportunities for the sector.

Last year, the Malaysian government also introduced a new Low Carbon Energy Generation program with a capacity of 400MW for non-solar renewable resources – wind, small hydro, biogas, biomass and hydrogen.

Maybank also noted that solar panel prices remain at record lows.

Cited the International Energy Agency (IEA), it said global solar module manufacturing capacity could reach 1,546GW by 2035, compared to 1,115GW in 2023.

China is expected to maintain a lead in solar production, but its market share may drop slightly as projects and policies in other regions drive manufacturing expansion, it said.

Meanwhile, it noted global demand for solar modules will grow from 460GW in 2023 to 674GW in 2035, at an average growth rate of 3 percent per year, with China continuing to drive demand.

“As a result, IEA expects the average price of the solar module to remain low in the next few years,” it added. 

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