Malaysia Renewable Energy Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

Malaysia Renewable Energy Market Trends and Insights

National Energy Transition Roadmap Implementation Accelerates Grid Modernization

NETR sets binding targets of 31% renewable energy by 2025 and 40% by 2035, unlocking clearer revenue visibility for developers. TNB's capital expenditure (capex) commitment of MYR 42.9 billion (USD 10.2 billion) earmarks 64% for grid reinforcement, including new inter-regional circuits and advanced system operator tools.^{[1]The Edge Malaysia, “TNB to Double Capex for Grid Modernisation,” theedgemalaysia.com} The roadmap mandates 2.5 GW of floating-solar deployments atop hydro dams and five centralized 150 MWp solar parks, directly addressing land scarcity constraints. By integrating Enegem into policy design, NETR also enables exporters to tap the ASEAN Power Grid, elevating Malaysia's renewable energy market competitiveness. Collectively, these measures ease the 24% solar-penetration cap on peak demand, ensuring additional headroom for variable generation.

Corporate PPAs Drive Demand from Data-Center Expansion

Data-center investments of MYR 162 billion (USD 729 billion) booked from 2021 to H1 2024 underpin long-term offtake commitments under the Corporate Renewable Energy Supply Scheme (CRESS).^{[2]Asian Power, “Data-Center Investments Spur Malaysian PPAs,” asian-power.com}Early signatories, such as AirTrunk and GDS, locked in 29.9 MW and 22.5 MW of virtual PPAs, respectively, with tenor profiles of up to 25 years. TNB itself secured 150 MWp in green electricity supply to Bridge Data Centres under the same framework, adding annuity-style income streams. Corporate buyers prioritize delivery certainty and traceable renewable certificates, driving developers to bundle battery-storage options. The momentum suggests that corporate PPAs could represent 15-20% of Malaysia's annual renewable energy market additions this decade.

Green Hydrogen Projects Transform Sarawak into Regional Export Hub

Sarawak's H2ornbill partnership aims to achieve 150,000 tonnes per year of green hydrogen and 850,000 tonnes per year of green ammonia by 2028, requiring approximately 3 GW of dedicated renewable energy. Complementary projects, including Eneos-Sumitomo's Bintulu plant, illustrate robust Japanese import demand. Sarawak already generated 62% of electricity from renewables in 2024, surpassing its 2030 goal, providing reserve headroom for industrial offtake. State ambitions for 15,000 MW of green energy by 2035 imply a 161% capacity increase versus 2023, reshaping Malaysia's renewable energy market dynamics from a domestic supply to an export-oriented value chain.

Floating Solar Maximizes Land-Constrained Renewable Deployment

A joint Masdar-Sarawak Energy-Gentari study on the Murum reservoir assesses multi-hundred-MW floating arrays, capitalizing on existing transmission assets. Field data from TNB’s 154 kWp Kenyir pilot confirms 10-15% energy-yield uplift owing to water-based cooling and evaporation reduction of up to 70%. With 2.5 GW of floating-solar capacity under TNB’s roadmap, Malaysia could offset land-use conflicts while optimizing hydro-solar hybrid operations. The Batang Ai project alone is expected to cut 52 kt CO₂ annually upon commissioning in 2024, reinforcing its ESG credentials.

Grid Congestion Creates Renewable Energy Curtailment Risks

Solar output already surpasses the 24% peak-demand threshold, leading to periodic curtailment in southern Peninsular Malaysia, where irradiation levels are highest. TNB has allocated 64% of its MYR 16.3 billion (USD 73.4 billion) contingent capex to alleviate bottlenecks, including a 400 MWh BESS in Sabah. Curtailment exposure erodes project returns, prompting regulators at SEDA Malaysia and the Energy Commission to expedite grid code revisions for improved renewable dispatch priority. Smart-grid pilots employing demand response now accompany every new LSS tender to mitigate intermittence.

Land-Use Conflicts Constrain Large-Scale Project Development

Palm oil contributes 2.8% of Malaysia’s GDP, making land reallocation a politically sensitive issue. Agrivoltaics and reservoir-based floating systems are emerging as compromise solutions, yet approval cycles for greenfield sites still span 18-24 months.^{[3]SEDA Malaysia, “Palm Biomass Potential Report,” seda.gov.my} Palm biomass, tallied at 164 million tons per year, remains underutilized due to fragmented collection and costly logistics. The National Biomass Action Plan 2023-2030 aims to secure MYR 17 billion (USD 76.5 billion) in biorefinery investments; however, achieving scale depends on integrating supply-chain upgrades.

Segment Analysis

By Technology: Geothermal Disrupts Hydropower Dominance

Hydropower retained a 65.8% share of the Malaysian renewable energy market in 2024, anchored by legacy assets such as Bakun and Murum. Yet geothermal, starting from a low base, is forecast to post a 118.7% CAGR, spearheaded by the Tawau project and expanded heat-flow mapping in East Malaysia. Solar PV follows as the volume workhorse amid falling LCOE and corporate offtake appetite. In contrast, onshore wind remains a niche option due to suboptimal wind speeds, while palm biomass offers a technical potential of 2.3 GW under the Biomass Action Plan. Small hydro and nascent ocean-energy pilots round out the mix.

The evolving stack supports grid stability: floating-solar hybrids capitalize on hydro reservoirs, geothermal furnishes baseload, and BESS smooths solar output. Malaysia's renewable energy market size for geothermal is projected to increase rapidly once field development funding is secured, while solar's growth relies on a consistent auction cadence and rooftop adoption. Hydropower's large-dam development is tapering, shifting focus to run-of-river and micro-hydro schemes that minimize ecological impact.

Note: Segment shares of all individual segments available upon report purchase

By End-User: Residential Adoption Accelerates Through Enhanced Incentives

Utilities commanded 68.3% of Malaysia's renewable energy market share in 2024, due to TNB’s consolidated procurement through LSS auctions and bilateral PPAs. The residential segment, however, is on track for a 27.5% CAGR to 2030, catalyzed by NEM 3.0 and the SolaRIS incentive extension through 2025. Commercial and industrial uptake, led by semiconductor fabs and hyperscale data centers, leverages 15-25 year corporate PPAs for tariff hedging and ESG compliance.

Declining rooftop solar system costs and streamlined online approvals have cut payback periods to under seven years for households. Meanwhile, commercial rooftops exploit larger surface areas for self-consumption, qualifying for accelerated capital allowance. Utilities continue to tender multi-gigawatt LSS tranches, ensuring bulk additions but facing curtailment risks unless grid upgrades keep pace.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

Peninsular Malaysia dominates installations through an extensive TNB network, which delivers proximity to load centers and shorter development cycles. Sarawak, operating an independent grid, is the fastest-growing province, boasting a 62% renewable energy generation mix in 2024 and an ambitious hydrogen export agenda. The state aims for 15,000 MW of green output by 2035, representing a 161% increase from 2023, supported by H2ornbill and other ammonia projects in Sabah.

Sabah's prospects focus on geothermal, and Tawau's; Tawau's geothermal field and 561 MW theoretical biomass capacity represent significant upside. Transmission isolation increases capital expenditures; however, floating-solar and microgrid solutions help address rural electrification gaps. Cross-border trading through Enegem debuted with a 100 MW auction to Singapore in 2024, validating commercial flows and paving the way for gigawatt-scale sales once additional interconnectors with Indonesia come online.

Malaysia's renewable energy market size in Sarawak could surpass incremental additions in the Peninsular regions by the late decade as hydrogen projects absorb multi-gigawatt (GW) of renewable energy. Peninsular Malaysia remains the core for corporate PPAs, data center clusters, and rooftop deployments, while East Malaysia commands resource-driven megaprojects.