Analysts have stayed upbeat on Malaysia’s renewable energy (RE) sector after the government’s projects are gaining momentum.

Maybank Investment bank said in its recent note that it has reiterated its positive call on Malaysia’s RE sector, driven by supportive policy reforms and an accelerating project pipeline.

On August 29, the Energy Commission cut system access charge (SAC) under the Corporate Renewable Energy Supply Scheme (CRESS) and Community Renewable Energy Aggregation Mechanism (CREAM) programs, easing costs for corporate power purchase agreements (PPAs).

This follows the rollout of a new electricity tariff structure from July 1 and the government’s 70 percent RE mix by 2050 (29 percent now).

The SAC cut enhances corporate RE competitiveness, likely spurring uptake among large power consumers, particularly data centers, said Maybank.

According to the research house, momentum on the project front is also firming in Malaysia.

On Sep 2, the Energy Commission announced the shortlist of 13 bidders for the new large-scale solar (LSS5+) (2GW) tender, alongside other large ground-mounted and floating solar projects.

Separately, the inaugural Battery Energy Storage System (BESS) tender (400MW/1,600MWh), with RFPs submitted in July, is expected to see awards by Oct 2025.

Together, these initiatives form a robust pipeline of engineering, procurement, construction, and commissioning (EPCC), operations and maintenance (O&M), and recurring income opportunities for sector players, said Maybank.

“We estimate project internal rate of returns (IRRs) are at 7 percent to 8 percent for solar and could potentially rising to 9 percent to 11 percent when coupled with BESS under structured offtake arrangements (e.g. capacity payments or ancillary services),

“With SAC reductions, new tenders, growing corporate demand, and the long-term 70 percent RE target, we see fundamentals strengthening further for the sector,” it added.

MBSB Research has also maintained its positive stance on the RE subsector, underpinned by the structural policy tailwinds for a deep decarbonization trajectory in line with the targets under National Energy Transition Roadmap (NETR).

“We view that solar remains a multi-year growth engine, on top of the incoming BESS requirements, which will benefit EPCC players，” the research house said in a recent note.

It is noted that the Energy Commission announced the bidding cycle for LSS5+ in Jan-25, with a deadline to submit the request for proposal (RFP) by Feb-25.

The program is divided into Package A with a quota of 1.5GW for land-based solar power plants (capacity range from 30MWac to 500MWac) while Package B is for the remaining
500MW, specifically for floating solar (capacity range of 10MWac to 500MWac).

MBSB estimated that the 1,975MWac of capacity can generate up to MYR 5.9 billion ($1.4 billion) of EPCC opportunities and contract awards can be expected potentially by the first quarter of FY26.

It noted that solar panel prices remain at an all-time low at $0.088/watt, though there are concerns that prices may rise moving forward following China’s anti-involution campaign starting Jul-25 to crack down on low-price disorderly competition.

“Despite some firms slashing capacity by about 30 percent to combat the oversupply situation, the low prices remain unchanged as of now, which should benefit our local solar EPCC players,” it added.

Following the awards of LSS5+ quotas, it expects the Ministry of Energy Transition and Water Transformation (PETRA) or the Energy Commission to announce the bidding for LSS6, which may add another 2GW of solar capacity, coupled with BESS requirements.

“We have previously estimated that solar will be increasingly dominant accounting for 25 percent/39 percent/52 percent/58 percent share of the capacity mix in 2035/2040/2045/2050, growing at compound annual growth rate (CAGR) of 14 percent between 2025-2050，

“This underpins a multi-year growth story for solar EPCC companies and also asset-owners, through power generation over the long-term,” said the research house.

Last month, Malaysia’s Deputy Prime Minister and PETRA Minister Fadillah Haji Yusof hinted that a new version of the Net Energy Metering (NEM) would be announced soon,
dubbed the NEM 4.0 or an entirely new naming convention.

This could be a hybrid mechanism of NEM and self-consumption (SelCo) or an entirely new program.

PETRA is also in the midst of finalizing the new program, 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 June 30 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 percent 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 subsidized the network and capacity charges for solar users, estimated to be about MYR 250 million ($59.23 million) per year,” said MBSB.

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