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Malaysia’s Approach towards Renewable Energy

Malaysia’s Approach towards Renewable Energy

22 Feb 2023

By : Malaysian Investment Development Authority

Malaysia’s energy sector has come a long way since its early years. Over the last 50 years, we have moved from oil to natural gas for cleaner power generation. We have also seen more solar energy use, particularly on rooftops, ground mounts and floating.

With challenges brought about by climate change, we will need to change the way we use and produce energy. This is particularly so if our energy demand continues to rise with our economic development.

Advancing Malaysia’s Energy Transition towards a More Sustainable Manner

Climate change is a global existential threat and Malaysia is doing its part to reduce emissions for a more sustainable future. Malaysia is harnessing natural gas and solar energy, and embracing low carbon emissions – to transform its energy supply, while promoting energy efficiency. At the 26th UN Climate Change Conference of the Parties (COP26), 2021, the world targeted to limit temperature rise to 1.5°C, with over 100 countries making net-zero 2050 commitments, including Malaysia alongside the US, Australia and Europe.

MIDA emphasised, “We need to significantly reduce the power sector’s emissions, while ensuring that the power system remains secure, reliable and sustainable. Malaysia is, therefore, harnessing natural gas and solar energy, and embracing low carbon emissions – to transform its energy supply while strengthening energy security, environmental quality and economic vitality”.

Why is renewable energy in Malaysia so essential?

[1]The Twelfth Malaysia Plan (12MP) recognises the importance of environmental sustainability and the implementation of green initiatives that will be accelerated to ensure sustainable, responsible and resilient socio-economic growth.

Aligning with 12MP and the nation’s pledges made collectively at COP26, Malaysia has demonstrated a strong commitment to the adoption. By outlining the Green Technology Master Plan (GTMP), it will provide strategic direction for achieving goals set for economic growth. [2]The GTMP aims to identify potential economic contributions, outline ways to shift from technology adoption to technology production, and aims to reduce greenhouse gas (GHG) emission intensity by 45 per cent across the economy, based on the Gross Domestic Product (GDP), by 2030.

In 2021, the then Ministry of Energy and Natural Resources of Malaysia (KeTSA) set a target to reach 31 per cent of RE share in the national installed capacity mix by 2025[3]. Renewable energy is currently contributing 23 per cent to Malaysia’s energy mix[4] dominated by hydropower generation.

As such, renewable energy plays one of the most important roles in reducing greenhouse gas emissions. It is one of the few clean, safe, and viable forms of alternative resources to fossil fuels. As more investments emphasised on renewable energy research and development in Malaysia towards a lower carbon pathway, it will evolve into a much more competitive product as technology advances, making it more accessible and affordable for the masses.

The lower environmental impact that comes from using hydropower, solar power, and other viable forms of sustainable energy is pivotal in ensuring a significant reduction in pollution being emitted from commercial production and consumption of and for the population.

Areas of Opportunity in Renewable Energy

The industries listed below are some that MIDA has identified as offering excellent investment opportunities to foreign and local investors in Malaysia (6).

Biomass/Biogas: Malaysia produces at least 168 million tonnes of biomass, including timber and oil palm waste, rice husks, coconut trunk fibres, municipal waste and sugar cane waste annually[5]. As a major agricultural commodity producer in the region and thriving forest sector, Malaysia is well positioned amongst the ASEAN countries to promote biomass as a renewable energy source[6].

With more than 451 mills in Malaysia, processing an average of 95.5 million tonnes of fresh fruit bunch (FFB) annually[7], the waste from palm oil processing can be utilised as feedstock for bioenergy power generation through biomass combustion or biogas capture technologies.

Apart from that, fast-growing cities and the ballooning population in Malaysia contribute to the increase in the production of municipal solid waste. It is estimated that 14 tonnes of garbage are expected to be collected in 2022, nearly 40,000 tonnes a day, and 95 per cent will end up in landfills[8]. This can potentially be used for bioenergy power generation, leveraging Waste-to-Energy (WTE) technologies. To accelerate the transition of solid waste management from a linear economy to a circular economy, the government could leverage available bioenergy feedstock from municipal solid waste to develop WTE facilities as a two-pronged strategy in addressing the waste management issue and supplying energy to the national grid.

Solar Photovoltaic (PV): Malaysia’s proximity to the equator provides strong solar irradiance in the range of 1,575 – 1,812 kWh/m2 throughout the year,[9] making Solar PV to be considered a viable renewable energy option in Malaysia. It is estimated that there is 269 GW potential for solar PV, dominated by ground-mounted configurations (210 GW), including considerable potential from rooftop (42 GW) and floating configurations (17 GW)[10]. Malaysia has successfully promoted the growth of investments in renewable energy (RE), particularly in solar PV. The investment has contributed towards developing the entire value chain industry, from manufacturing of RE equipment to installing RE equipment to generate energy.

Moreover, investment in RE from solar PV has also catalysed the growth of local RE developers and PV service providers capable of implementing project implementation in the design, installation, testing, and commissioning of solar PV projects in Malaysia. More than 200[11] PV service providers have registered with the Sustainable Energy Development Authority (SEDA).

Mini Hydro: Malaysia has numerous river basins with excellent hydrogeological conditions for hydropower generation. It is estimated that a 2.5 GW resource potential for small hydro with 189 rivers can support small hydropower generation[12]. Hydropower could contribute significantly to the reduction of GHG emissions and to the security of energy supply. Its development requires a relatively high initial investment but is offset by a long lifespan with very low operation and maintenance costs[13].

Geothermal: A study commissioned by the Minerals and Geoscience Department of Malaysia in 2009 has identified 67 MW of geothermal resource potential in Tawau, Sabah. A separate study in 2016, by the Minerals and Geoscience Department of Malaysia, found an additional 162 MW of geothermal resource in Ulu Slim, Perak[14]. The availability of geothermal sources could be developed and considered a potential RE in the long run.

Wind: Wind speed in Malaysia is generally low on average, less than 5 m/s. A few locations in Peninsular Malaysia and northern Sabah were found to have sufficient strong wind conditions that may be suitable for wind turbine installation[15]. Low electricity yield, scarce site accessibility and high installation cost make wind power generation in Malaysia uneconomical. However, continued development in low wind speed technology may improve the economics for wind turbine installation in the future.

With all of these opportunities, MIDA believes Malaysia has a great chance to draw more investors and complete its mission by 2025. Additionally, there are a number of incentives and policies available to investors in Malaysia that can be used to their advantage. Having said that, MIDA will keep facilitating and luring top-notch investments in renewable energy that will produce high-paying jobs for the nation.

Source: Bernama

[1] MIDA RENEWABLE ENERGY (Industry Brief as at 31 Dec 2021)

[2] MIDA Malaysia’s renewable energy outlook 2022


[4] Page 106, MyRER 



[7] Page xiii, MyRER 

[8] Can Malaysia achieve 40 per cent recycling rate by 2025?

[9] Page xiii, MyRER 

[10] Page xiii, MyRER 

[11] Latest figure provided by SEDA Malaysia.

[12] Page xiii, MyRER 


[14] Page 42, MyRER 

[15] Page 43, MyRER