Malaysia to exceed 18.43-GW RE target by 2031, GlobalData says

Capacity may hit 31.5GW by 2035 as rising demand strains grid expansion plans.

Malaysia is on course to surpass its National Energy Policy (NEP) 2040 renewable energy (RE) capacity target of 18.43 gigawatts (GW) by 2031, according to a GlobalData report.

The firm forecasts installed renewable capacity will rise to about 31.5 GW by 2035 from about 6.9 GW in 2025, whilst renewable generation is expected to increase to 46.4 terawatt-hours (TWh) from 10.1 TWh over the same period.

The NEP, alongside the MyRER, NETR, the National Renewable Energy Policy and Action Plan, and the 13th Malaysia Plan, forms the policy framework supporting the expansion of RE capacity, said Sudeshna Sarmah, Power Analyst at GlobalData.

Sarmah said these policies are supported by regulatory and market measures, including market reforms, investment in solar, hydro, and biopower, and measures to improve grid flexibility and storage integration.

She added that streamlined approval processes reduce project lead times and development costs, whilst the Corporate Renewable Energy Supply Scheme uses competitive bidding and long-term contracts to support investor participation in RE projects.

Sarmah identified large-scale and floating solar projects as key drivers of capacity growth, stating that floating solar reduces land acquisition requirements and uses existing waterbody sites with transmission infrastructure.

She added that battery storage systems store excess daytime solar output for use during evening peak demand, reducing reliance on flexible fossil fuel generation and supporting grid stability.

Rising electricity demand from data centres, electric vehicles, cooling systems, and industrial activity supports additional generation capacity and grid expansion.

The report said stable demand conditions support financing for large-scale energy infrastructure.

GlobalData said solar photovoltaic investment will dominate RE spending between 2026 and 2030.

It expects gas investment to remain in a supporting role, with annual spending of $0.2b to $0.6b.

It also forecasts hydro investment at $0.1b to $0.5b a year and biopower investment at around $0.2b annually, whilst solar investment reached about $2.1b by 2025.