Analysts have remained positive on the outlook of renewable energy (RE) in Malaysia, underpinned by positive initiatives in the country’s recent budget.
Maybank Investment Bank said in a recent report that the introduction of 2GW solar capacity under large scale solar 6 (LSS6), along with the additional 300MW under Feed-in Tariff (FiT) for new biomass, biogas, and mini-hydro projects, is expected to provide a fresh catalyst for solar and bioenergy engineering, procurement, construction, and commissioning (EPCC) players.
It is noted that following the finalization of bidding quotas for LSS5 and LSS5+ (2GW each), the government is set to introduce additional 2GW capacity under LSS6, which is expected to generate additional EPCC opportunities of MYR 6 billion ($1.42 billion).
Nevertheless, industry players have been anticipating the inclusion of battery energy storage system (BESS) systems in LSS6 as part of grid firming initiatives, which could further increase potential EPCC opportunities by about MYR 2 billion ($470 million).
According to Maybank, the additional 300MW quota under FiT is also expected to create new RE asset development opportunities for biomass, biogas, and small hydro projects, which it estimated to create EPCC opportunities of MYR 2 billion ($470 million) to MYR 4 billion ($950 million).
The research house also opined that the introduction of Carbon Tax should incentivize greater adoption of clean energy.
Meanwhile, CGS International, on the other hand, said in its recent report that Budget 2026 reaffirmed the government’s strong commitment to advancing Malaysia’s clean energy transition through the National Energy Transition Roadmap (NETR) – a key driver of growth for the sector.
“The budget outlined a series of plans spanning utility-scale, distributed, and rural RE projects,
“The rollout of the LSS6 program and expansion of FiT quotas reinforce policy continuity and should sustain momentum in new capacity additions, while initiatives such as Solar ATAP and Corporate Renewable Energy Supply Scheme (CRESS) further democratize access to RE participation across corporates and households,” said the research house.
It also viewed the collective funding commitments – including MYR 16.5 billion ($3.9 billion) from government-linked companies (GLCs) and continued catalytic support from the NETF – as clear evidence that public and private capital mobilization remains central to achieving NETR objectives.
The extension of GTFS 5.0 until 2026 also ensures continued financial support for green technology adoption, it added.
“Overall, these measures are positive for Malaysia’s RE space, signaling sustained policy support, stronger investment visibility, and growing diversification of RE sources beyond solar,
“In our view, this continuity and broad based approach should accelerate progress toward Malaysia’s 2050 net-zero goal while reinforcing investor confidence in the energy transition pipeline,” it added.
Phllip Capital, on the other hand, said the announced measures reaffirm the government’s strong commitment to advancing Malaysia’s clean energy transition under the NETR, with a target of achieving 70 percent RE in electricity generation capacity by 2050.
According to the research house, the rollout of LSS6 program, adding nearly 2GW of solar capacity, ensures continuity and supports earnings visibility for solar EPCC players, while initiatives such as Solar ATAP and CRESS encourage broader RE adoption among corporates and households.
Meanwhile, the planned carbon tax in 2026, initially targeting the iron, steel, and energy industries, is expected to accelerate decarbonization efforts and incentivize further investment in the sector, reinforcing Malaysia’s position as a regional clean energy hub, it added.
Kenanga Research also said in its recent report that the NETR is making solid progress towards its net zero target by 2050.
“We expect the unveiling of the MYR 6 billion ($1.42 billion) in LSS6 amounting to continuity of large scale solar programs to the tune of 2GW, similar to LSS5+,
“There is also more clarity in our view with the Solar Accelerated Transition Action Program capacity of 500 MW, which may spur more take-up. This compares to NEM Rakyat program of 700MW, and initially launched at 500MW,” said the research house.
Hong Leong Investment Bank Research also said in a note that the increasing development of RE projects including solar farms (under LSS and CRESS programs), biogas, biomass, and small hydropower (under FiT scheme) will allow utility companies to expand and diversify their power asset capacity.
At the same time, the RE EPCC players will also benefit from the increasing EPCC projects.
The continuation of Solar ATAP program will benefit mainly rooftop solar EPCC players, it added.
MBSB Research also said in its recent report that CRESS which is expected to draw in investments of up to MYR 3.5 billion ($830 million) from the private sector, will generate 500MW of RE and also benefit solar EPCC players.
The research house also sees RE sources such as biogas, biomass and small hydro will be increased through an additional quota of 300MW under the FIT.
These are expected to begin operations in 2028 and the investments will come from the private sector, it added.