The Iran War has provided a silver lining for renewable energy (RE) in Malaysia due to rising grid power cost as a result of higher fuel prices (coal and Tier 2 gas) which has improved the economics for RE and driven stronger demand for RE as a cheaper alternative among consumers, analysts said in recent reports.
This is complemented by the government’s recent launch of Sustainable Rebate & Incentive Assistance (SuRIA) Home initiative, which commenced on June 1, 2026, TA Securities said in its report.
Under the initiative, domestic users who install solar systems under the Solar Accelerated Transition Action Program (Solar ATAP) by December 31, 2026 are eligible, on a first come first serve basis, to receive a rebate of MYR 600 ($147) for every 1kWac of solar installation up to a maximum of MYR 3000, or 5kWac.
The SuRIA initiative is also expected to benefit up to 250MWac of residential solar installations based on the RM600 per kWac rebate and a total allocation of MYR 150 million for the program.
“Similar to the previous Solar for Rakyat Incentive Scheme (SolaRIS), we believe SuRIA could accelerate take up of residential rooftop solar, notwithstanding lower rebates under SuRIA compared to SolaRIS’ RM1000 per kWac incentive and a maximum cap of MYR 4000,” said the research house.
In addition, TA understands there have been on-going discussions between the regulator and industry players on System Access Charge (SAC) structure and rates for the Corporate Renewable Energy Supply Scheme (CRESS).
Among the key pain points currently is the high SAC rates and uncertain long-term cost given that the SAC is subject to change every three years under the Regulatory Period determination, as opposed to typically longer term PPAs entered into between RE suppliers and their offtakers.
Meanwhile, launch of the Large Scale Solar 6 (LSS6) bidding cycle has also provided a strong near-term catalyst.
TA also said RE supply for the pilot phase of Energy Exchange Malaysia (ENEGEM) is currently limited to existing solar and hydro resources, and it believes this will later be expanded to new RE sources, in line with the objective to spur investments into domestic RE capacity and technologies.
“In this regard, we believe RE exports will eventually create capacity growth opportunities for domestic RE players, capitalizing on Malaysia’s geographical proximity to the region’s key demand center in Singapore,” it added.
MBSB Research has also maintained its positive stance on the RE subsector, underpinned by a sustained electricity demand growth, clearer tariff visibility and a strong multi-year RE pipeline.
“Demand fundamentals remain robust, supported by the commercial sector and an accelerating ramp-up in data center load which provides long-term visibility for generation, transmission and distribution investments,” the research house said.
MBSB opined that the sector catalysts will intensify in 2026 with the award of new gas-fired generation capacity, the launch of LSS6 and the upcoming award of the 400MW/1,600MWh Malaysia Battery Energy Storage Technology (MyBEST) program, which will mark the beginning of Malaysia’s grid-scale storage deployment, further improving system flexibility and enabling higher RE penetration.
MBSB also remains positive on solar engineering, procurement, construction, and commissioning (EPCC) activity over the medium term.
According to the research house, most Corporate Green Power Program (CGPP) projects should now be in the final legs of their EPCC progress, and some of which are expected to reach commercial operation date (COD) by the year end.
Following this, it opined that solar EPCC companies will be kept busy until 2027 with sizeable solar farm EPCC projects under LSS5 and LSS PETRA 5+.
MBSB also noted that solar panel prices from China have remained relatively stable at $0.11/watt since the removal of value added tax (VAT) export rebates for solar PV products starting April 1 in a move to moderate excessive price competition and address overcapacity.
Before the removal of the rebates, prices were in the range of $0.09/watt.
“We do not expect any major impact at the moment, especially for utility scale solar projects as larger players typically have procurement arrangements with locked-in pricing while most EPCC companies have the flexibility for cost past through in their contracts,” said the research house.
According to MBSB, the CGPP, LSS5, LSS5+ and Solar ATAP are all aligned with Malaysia’s National Energy Transition Roadmap (NETR), a long-term, firm policy layout that is expected to provide a strong, multiyear catalyst for the power utilities sector.
An overarching goal is raising the RE capacity mix to 70 percent by 2050 from 23 percent in 2020 which necessitates a more than quadrupling in annual RE installations to 2.2GW/annum by 2050.
“We have previously estimated that solar will be increasingly dominant accounting for 25 percent/39 percent/52 percent/58 percent share of the capacity mix in 2035/2040/2045/2050, growing at compound annual growth rate (CAGR) of 14 percent between 2025-2050,
“This underpins a multi-year growth story for solar EPCC companies and also asset-owners, through power generation over the long-term,” it added.
Maybank Investment Bank research also said the 70 percent RE capacity by 2050 target outlined by the NETR alludes to substantial new RE capacity to be developed over time.
It also opined that there are impending opportunities for BESS.
Malaysia to launch 2.5GW LSS6 program with battery storage, targets $3.68B investment