Harnessing Renewable Energy in Sabah: Opportunities and Investment Prospects

As the world accelerates toward a low-carbon economy, Sabah is emerging as one of Southeast Asia’s most promising renewable energy (RE) frontiers. Located on the northern tip of Borneo, the state is entering a transformative era driven by abundant natural resources, strong institutional frameworks, and forward-looking energy policies. With an ambitious target to achieve 35% RE in its electricity mix by 2030, Sabah is positioning itself as a compelling destination for clean energy investments in Southeast Asia.¹

Backed by strategic policies such as the Renewable Energy Act 2011 and the Feed-in Tariff (FiT) mechanism, Sabah offers viable pathways for private sector participation in sustainable energy development. Despite existing challenges such as grid connectivity and financing, the state’s vast hydro, solar, biomass, and geothermal resources present unparalleled investment opportunities. Despite existing challenges such as grid connectivity and financing, the state’s vast renewable resources—including hydroelectric potential estimated at up to 1.1 GW across 12 identified sites—position Sabah as a promising hub for sustainable energy development.²

Launched in September 2023, the Sabah Energy Roadmap and Master Plan 2040 (SE-RAMP 2040) outlines Sabah’s ambition to become a regional green energy hub. Key targets include over 50% renewable energy (RE) capacity by 2035 and 80% by 2050³, supporting Malaysia’s National Energy Transition Roadmap (NETR) and ensuring reliable, affordable, and sustainable power for industrial and residential growth.

Further reinforcing Sabah’s energy autonomy, the state assumed full regulatory control over its electricity and RE sectors in January 2024. The establishment of the Energy Commission of Sabah (ECoS) enables direct oversight of licensing, approvals, and policy execution—streamlining processes and boosting investor confidence.

Sabah’s commitment to expanding its RE portfolio is evident in the approval of 15 large-scale solar (LSS) projects totalling 199 MW under the LSS Sabah 2024 bidding exercise⁴. Distributed across the West and East Coasts, these projects are integral to reaching the state’s 35% RE target and underscore the proactive role of ECoS in accelerating clean energy growth, presenting viable opportunities for investors interested in sustainable energy projects.

Sabah’s RE potential spans several high-growth sectors:

• Biomass and Bioenergy: With 129 palm oil mills generating 26.2 million tonnes of biomass annually, of which only 5% is currently utilised – Sabah’s East Coast is primed for scalable bioenergy development.⁵ Public-private partnerships (PPPs) are encouraged in biomass processing, Sabah Green Grid (SGG) integration, and downstream bio-based manufacturing. SE-RAMP estimates the sector’s investment value at 5 billion, with potential to create 25,000 jobs.
• Solar Energy: Boasting Malaysia’s highest solar irradiance and an estimated capacity of 4 GW, Sabah is ripe for solar ventures. Projects in Kudat, Beaufort, Tawau, and Sandakan reflect the state’s ongoing momentum. Opportunities include large-scale solar farms, rooftop solar systems, and Virtual Power Purchase Agreements (VPPAs), enabling off-site corporate participation.
• Hydropower: Sabah has identified more than 1 GW of hydropower potential, including large- and small-scale facilities. Flagship initiatives such as the Ulu Padas Hydroelectric Project are pivotal in the state’s future energy mix, inviting investment via EPC contracts, equity participation, and green finance models.⁶

• Geothermal Energy: Sabah is reviving geothermal development, particularly around the Tawau area, with a 100 MW potential.⁷ A transparent bidding process is underway, offering a new entry point for investors seeking stable baseload RE assets.
• Energy Efficiency and Smart Infrastructure: The Sabah Energy Efficiency Action Plan (SEEAP) is fostering demand for energy-efficient technologies, smart meters, and co-generation systems. Private sector participation is welcomed in digital energy solutions, energy audits, and industrial optimisation tools—paving the way for sustainable growth while meeting Environmental, Social and Governance (ESG) benchmarks.⁸

Sabah’s energy demand is growing at a compound annual growth rate (CAGR) of 4.8%, driven by industrial development, tourism recovery, and population growth (projected to reach 4.7 million by 2030).⁹ This upward trend underscores the urgency for a diversified, resilient, and sustainable energy supply.

Sabah’s integrated approach—combining policy reforms with technical readiness—ensures that investors in the renewable energy space benefit from clear regulations, long-term project pipelines, and a supportive industrial base.

More than just renewable potential, Sabah offers project certainty, institutional clarity, and a coordinated development plan backed by strong political will.

For investors looking to build meaningful, profitable, and climate-resilient energy portfolios, Sabah represents a golden opportunity. The state’s vision is to build a future-ready energy landscape —one that balances economic growth, environmental protection, and social well-being.

Sabah’s energy transition is not just about power—it’s about partnership, innovation, and impact. By engaging in this journey, investors contribute not only to financial success but to reshaping Southeast Asia’s clean energy future.

Whether you’re a clean-tech innovator, a solar farm developer, or a sustainable financier, Sabah invites you to be part of its energy revolution.

Explore investment opportunities at investmentpromotion.sedia.com.my
Or connect directly with the Investment Promotion Unit at +6088 892 000 to learn how you can participate in shaping Sabah’s clean energy future.

¹https://ecos.gov.my/news/sabah-launches-energy-roadmap-and-master-plan

²https://ember-energy.org/latest-insights/solar-and-grid-flexibility-critical-for-malaysia/#:~:text=Sabah%20and%20Sarawak%20developed%20much%20smaller%20fractions,4.9%20GW%20and%20Sabah%20at%201.1%20GW.

³https://ecos.gov.my/news/sabah-launches-energy-roadmap-and-master-plan

⁴https://www.thestar.com.my/business/business-news/2024/12/12/sabah-awards-lss-projects-with-199mw-capacity-to-15-bidders?

⁵https://bepi.mpob.gov.my/index.php/import/1177-number-capacities-of-palm-oil-sectors-2024

⁶https://gamuda.com/2024/10/gamuda-wins-rm3-048bil-contract-for-ulu-padas-hydroelectric-project-in-sabah/news/

⁷https://www.dailyexpress.com.my/news/246083/hopes-for-geothermal-nuclear-power-as-option

⁸https://www.dailyexpress.com.my/read/6029/energy-efficiency-action-plan-for-big-users/

⁹https://www.tnb.com.my/assets/newsclip/17022025g.pdf

Disclaimer: All figures in this article are under the purview of SEDIA and are for informational purposes only. For specific details regarding investments and initiatives, please refer to official SEDIA communications.