New policies to boost Msia’s solar demand – TNB lead

The stage is set for Malaysia’s solar demand growth to pick up pace following the introduction of new government policies last year aimed at broadening access to renewable energy, said Khirul Nizam, Strategic Partnerships and Business Development Lead at Malaysian state utility Tenaga Nasional Berhad (TNB)’s New Energy Division, which oversees TNB’s overseas and domestic renewable energy portfolio.

Recent solar headlines on Malaysia have focused on the impact of U.S. tariffs on Malaysia’s export- oriented solar manufacturing sector but domestically, the government is charting its own course towards a solar-dominated net-zero future.

“In any country with a regulated electricity model, the pace of energy transition will always depend on the regulations. And the growth of renewable energy in Malaysia has been driven by positive policies from the government,” said Nizam, who was TNB Renewables’ chief operating officer before a two-year overseas stint in Turkey.

Malaysia’s energy regulator, the Energy Commission, issued guidelines last September for the Corporate Renewable Energy Supply Scheme (CRESS), a new initiative that marks a radical departure from how companies can access green electricity in the country.

Current government solar schemes such as the utility-scale Large-Scale Solar (LSS) designate TNB as the single offtaker. TNB, which owns the National Grid in Peninsular Malaysia, then sells the green electricity produced to consumers.

Under CRESS however, consumers can contract directly with solar developers instead of only buying renewable energy from state utilities. Project developers previously had to wait for government tenders to be issued to bid for solar projects, but they now can negotiate at their own pace with companies looking for renewable energy capacity.

“You can describe LSS as relatively low risk, low return because you are dealing with state utilities. CRESS in comparison is more high risk and high return because it is purely willing buyer and willing seller. The faster you can get customers, the faster you can grow your projects,” said Nizam.

At least two green electricity supply agreements have already been signed under CRESS since its implementation last September. Renewable energy developer UEM Lestra announced in January that it secured CRESS offtakers for its 1GW hybrid solar power plant in Johor with a target to meet commercial operations by end of 2027. TNB announced last November that it was supplying Bridge Data Centres with 400 MW of green electricity under CRESS.

Prices of these CRESS agreements were not disclosed. But bids into earlier LSS tenders have fallen below RM0.15/kwh ($0.034/kWh) amid declining module prices.

Riding on the wave of burgeoning investments in AI around the world, data centers are set to become a key driver for corporate green electricity demand, Nizam said.

As of end-September 2023, TNB completed six data center projects with around 292 MW of electricity supply and signed 2 GW of electricity supply agreements (ESAs) with eight data center projects. By September 2024, the numbers had surged to 1.7 GW of 17 completed data projects, 1.9 GW for eight projects still under construction and another 1.1 GW for six projects for which ESAs have been signed.

TNB now expects the potential electricity demand from data centers to exceed 5 GW by 2035, itself an upgrade from its 2023 projections of 4.3 GW.

“Data centers right now are looking into renewables because they are concerned about ESG (environmental, social and governance) goals,” Nizam said.

Even as it rolls out stimulus policies for green energy, Malaysia’s solar growth can appear modest compared to the breakneck speed at which some of its neighbors are expanding the sector. Solar capacity in Vietnam, for example, skyrocketed by over 400% from 2019 to 2021 after having added 11 GW in 2020 alone.

But by sitting out on the high-speed chase for expansion, Malaysia has also avoided the logjams and project failures that have at least temporarily derailed some of the growth markets.

“Malaysia is very stable in terms of regulatory policies because we are doing things for the long-term,” Nizam said, noting that grid capacity and project sustainability are key considerations.

Whether at stable or breakneck speed, energy transition is capital-intensive. Malaysian Prime Minister Anwar Ibrahim called publicly in January 2024 for government-linked governments to reduce their overseas investments in favor of domestic ones, providing yet another fillip to the country’s renewable energy sector.

TNB itself has a renewable energy project pipeline of up to 10 GW from 2024 to 2030, the bulk of which are solar or hydro-solar hybrid projects. On project count alone, most of these upcoming projects are in Malaysia rather than overseas, where TNB has built up a significant presence over the years.

Even so, there are questions over whether Malaysia’s domestic boom can sustain a domestic supply manufacturing chain on its own, Nizam said. Malaysia has around 10 GW of module manufacturing capacity, the bulk of which is absorbed by overseas markets.

“To build your own supply chain, you have to make sure your market is big enough, and that you can compete with the lowest cost supplier for the long-term,” Nizam said.

With the lowest cost module suppliers in China embroiled in a downward spiral of cut-throat price competition, questions have been raised over the health and direction of the solar industry, both for manufacturers and project developers.

Nizam, with his years of experience in international and domestic solar markets, remains unfazed. “The solar market has always experienced boom and bust cycles. The industry as whole will get through it like before,” he said.

© 2025 Oil Price Information Service, LLC. All rights reserved.