By Azril Zainal
While the Malaysian Government’s 2025 Budget prioritizes renewable energy, including the allocation of RM1 billion to finance green technologies, there remains an opportunity to accelerate progress toward achieving Malaysia’s net-zero emissions goal by 2050. A stronger push could be made through enhanced financial incentives such as tax breaks, grants, or subsidies for companies engaged in renewable energy projects, particularly those focused on emerging technologies and decarbonization initiatives.
Many promising technologies that will shape the future of Malaysia’s green economy are still in their infancy. These innovations require substantial funding to transition from pilot projects to scalable solutions. A well-structured grant program could help de-risk investments in these technologies, providing start-ups with the financial support needed to scale up and drive broader adoption. This would ensure that the green economy becomes more diverse and resilient, fostering sustainable growth for the country.
A particularly encouraging development in Malaysia’s decarbonization efforts is the planned collaboration between UEM Lestra and TNB to decarbonize industrial areas. However, a more holistic approach to energy transition is essential, one that considers the potential of repurposing retired coal and gas-fired power plants.
These facilities, with their robust industrial infrastructure, offer untapped potential. An example to follow is the transformation of the Battersea Power Station in London, which was converted into a thriving shopping and entertainment hub decades after its decommissioning. Alternatively, these plants could be repurposed as data centers, capitalizing on existing water and grid infrastructure.
To enhance Malaysia’s appeal as a destination for green investments, the government could embrace two key opportunities. Firstly, streamlining the regulatory environment by reducing administrative bottlenecks that deter investors. By providing clearer guidelines and faster approval processes, Malaysia would be seen as a more attractive investment destination.
Secondly, upskilling and reskilling the workforce, especially in high-demand areas like industrial and mechanical engineering, data analytics, and emerging technologies, would support the rapid expansion of the renewable energy sector. Developing the local talent pool is critical to positioning Malaysia as a leader in renewable energy across Southeast Asia.
While the government’s Corporate Renewable Energy Supply Scheme (CRESS) is a positive step toward liberalizing Malaysia’s power offtake market, particularly for large-scale power projects, the high system access charge (SAC) presents a potential barrier to wider participation. Both firm and intermittent power providers face significant costs, which could deter further engagement.
To ensure CRESS achieves its goal of strengthening Malaysia’s renewable energy ecosystem, the Energy Commission (EC) should reconsider the current SAC structure. By collaborating with industry players to devise alternative mechanisms for recouping the costs of necessary grid upgrades and maintenance, the EC could facilitate broader participation.
This approach would allow renewable energy companies to improve project economics, while maintaining grid reliability and sustainability. Such adjustments would benefit not only investors but also the wider business ecosystem, advancing Malaysia’s renewable energy aspirations.
Malaysia’s renewable energy transition is at a critical juncture. With the right incentives, regulatory improvements, and investment in talent, the nation can solidify its position as a regional leader in sustainable energy, driving progress toward a greener, more resilient future.
Azril Zainal is energy leader, Arup Malaysia
