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

Malaysia Power Market Trends and Insights

Industrial Electricity-Demand Surge

Infineon’s EUR 2 billion silicon-carbide fab in Kulim exemplifies the structural shift from legacy petrochemicals toward precision manufacturing that now underpins the Malaysian power market.^{(2) Infineon Technologies, “Infineon Expands SiC Production in Kulim,” infineon.com} TNB has confirmed that data-center applications alone total 11 GW, compelling the utility to reserve 30% of its RM 16.3 billion contingent capital expenditure for unanticipated load growth. Industrial demand is expected to maintain half of total consumption through 2030, but the composition tilts toward semiconductor and cloud workloads that require low-carbon electricity. Any lapse in generation or transmission build-out risks divesting these investments to regional competitors with more advanced renewable procurement frameworks. Consequently, local authorities are fast-tracking substation upgrades and incentivizing battery storage to keep reserve margins adequate.

Renewable-Energy Capacity Targets

The National Energy Transition Roadmap sets milestones of 31% renewable capacity by 2025 and 40% by 2035. Achieving these goals requires annual additions near 1.5 GW, notably faster than historical build-out rates.^{(3)Malaysian Investment Development Authority, “National Energy Transition Roadmap,” mida.gov.my} Large-Scale Solar Round 5 allocated 2 GW in 2024 to Malaysian-controlled bidders, favoring domestic content capture but narrowing the developer field. TNB’s 2.5 GW floating-solar program across hydro reservoirs leverages existing transmission corridors and minimizes land-use conflicts, while Sarawak Energy’s 7,300 MW hydro fleet positions East Malaysia as a potential clean-power exporter once cross-border interconnections advance. The 70% renewable aspiration by 2050 implies near-zero coal, with hydrogen-ready combined-cycle gas turbines providing a bridge technology, albeit with fuel-supply uncertainties.

Aging Coal-Fleet Retirements Triggering Replacement Build-Outs

Malaysia plans to retire 9.1 GW of coal capacity between 2024 and 2030, eliminating all coal plants by 2044. Replacement projects favor natural-gas hybrids and floating solar rather than like-for-like builds, yet delays at Pulau Indah and Gurun underline schedule risk. Four combined-cycle units totaling 2.2 GW had already closed by 2023, and the 500 MW Miri gas plant is vital to offset closures once it enters service in 2027. The coal phase-out aligns with decarbonization targets yet heightens reliance on gas and hydrogen supply chains, placing risk on fuel price volatility and LNG import costs. Independent producers that commission gas or renewable capacity ahead of schedule can lock in favorable tariffs, whereas coal-centric operators face growing stranded-asset exposure.

Hyperscale Data-Center Clusters Driving Load Pockets

Bridge Data Centres contracted 150 MWp of renewable power through the Corporate Renewable Energy Supply Scheme, illustrating how hyperscalers bypass traditional utility agreements for direct green procurement. Johor’s Iskandar Malaysia and Selangor’s Cyberjaya have emerged as preferred locations due to proximity to Singapore and competitive land prices. The 24/7 uptime standard demands reliable generation, prompting TNB to bundle battery storage into new substations and upgrade transmission earlier than envisaged. Concentrated data-center demand may reach 20% of national installed capacity by 2035, generating both opportunity and stress for grid operators. Third-party access rules thereby fragment utility revenue streams but improve Malaysia’s standing against regional digital hubs.

Natural-Gas Supply Constraints and Price Volatility

Domestic gas production has plateaued, and Petronas prioritizes LNG exports, resulting in periodic fuel shortages that force generators to switch to costlier diesel back-up.^{(4)Petroliam Nasional Berhad, “LNG Outlook 2025,” petronas.com}When global LNG prices spiked in 2022, Malaysia's tariff-pass-through mechanism lagged fuel costs, compressing IPP margins. Planned hydrogen-ready turbines assume green hydrogen will gradually displace gas, yet industrial-scale hydrogen infrastructure remains nascent. Unless coordinated storage, import, and pricing reforms materialize, gas exposure will weigh on Malaysia's power market expansion speed by suppressing investor appetite for flexible thermal assets.

Electricity-Tariff Subsidy Reforms

The government has started phasing out cross-subsidies, aligning tariffs with generation costs under the Incentive-Based Regulation framework. Industrial consumers now bear a larger share of fuel-price risk, which tightens manufacturing margins but bolsters the business case for onsite solar and storage. Although residential tariffs remain partially shielded, subsidy rationalization frees fiscal space for grid upgrades and renewable incentives. In the short term, however, higher bills may delay adoption of electric heating and mobility applications, tempering demand growth.

Segment Analysis

By Power Source: Renewables Reconfigure Thermal Dominance

The Malaysian power market size for renewables is projected to rise at a 23.8% CAGR, eating into thermal technology’s 75.6% Malaysia power market share in Malaysia in 2024. Solar leads the renewable surge, propelled by TNB’s 2.5 GW floating-solar roll-out and 2 GW of allocated capacity under Large-Scale Solar Round 5. Hydro remains pivotal in East Malaysia, yet expansion is bound by environmental assessment and community engagement. Coal will decline sharply, with 9.1 GW scheduled to retire by 2030, while hydrogen-ready gas turbines pick up reserve margins and prepare the grid for future fuel transitions. Battery storage adoption becomes a gating factor: adequate storage unlocks higher solar penetration, while shortfalls would keep mid-merit gas plants online longer.

Solar’s levelized cost fell below marginal gas generation in 2024, even before storage, encouraging IPPs to stack corporate PPAs on top of utility tenders. Hydro assets in Sarawak supply near-baseload output at low variable cost, positioning the state as a potential exporter pending interconnection. Wind and geothermal remain exploratory, and biomass expansion slows due to rising feedstock prices. The evolving mix will influence dispatch order, emissions intensity, and investment allocation across the Malaysia power market.

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

By End User: Residential Uptake Narrows Utility Lead

Utilities held 50.2% of capacity in 2024, yet residential installations under Net Energy Metering Rakyat grew at 17.5% CAGR and exhausted the 350 MW quota months ahead of schedule.^{(5)Sustainable Energy Development Authority, “NEM Statistics Update 2025,” seda.gov.my} The Solar for Rakyat Incentive Scheme accelerates this trajectory by reimbursing up to MYR 4,000 per installation, pushing daily applications from 100 to 150. Commercial and industrial buyers increasingly procure energy directly from IPPs, leveraging Third-Party Access to secure cost and sustainability advantages. As more factories and data centers receive green power via private wires or wheeling arrangements, utility energy sales retreat, but network-service revenue rises.

Further residential gains hinge on low-interest financing and battery price declines, while industrial offtake depends on transparent wheeling fees and grid-connection timelines. Utilities respond by investing in advanced metering and distributed-energy management systems, which open data-driven service opportunities such as demand response. Altogether, shifting end-user behavior reallocates capital toward smaller, decentralized assets and hastens the transformation of the Malaysia power market size distribution across customer segments.

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

Geography Analysis

Peninsular Malaysia houses the most installed capacity, backed by an interconnected transmission grid that supports multi-state dispatch. TNB allocates over RM 42.9 billion to modernize lines in Selangor, Johor, and Penang, where semiconductor and cloud clusters generate concentrated load. The peninsula’s aggressive coal retirement schedule requires swift replacement by hydrogen-ready gas turbines and utility-scale solar, while floating solar leverages existing reservoirs to reduce land conflict. Industrial corridors in Iskandar Malaysia and Klang Valley draw foreign direct investment predicated on reliable, low-carbon electricity, prompting battery storage and advanced metering deployments ahead of previous plans.

East Malaysia operates two isolated grids. Sarawak’s hydro-dominant portfolio supplies low-carbon energy but faces export bottlenecks, though proposed interconnections with Brunei and Kalimantan could unlock new revenue once regulatory frameworks align. Sabah’s grid remains weaker, leading to curtailment risk that the 400 MWh battery project only partly addresses. New gas capacity at Kimanis improves resilience, yet solar and wind developers still struggle to obtain bankable PPAs due to uncertain offtake. Microgrids and distributed storage are emerging as cost-effective alternatives for remote communities.

Regional disparity shapes investment priorities. Peninsular Malaysia attracts most corporate procurement and utility-scale projects. East Malaysia’s hydro surplus creates potential export advantages but requires capital-intensive transmission. Policymakers weigh nationwide uniform tariff goals against the practicalities of differentiated regional strategies to maximize the Malaysia power market’s economic potential.