Solar and battery energy storage system (BESS) engineering, procurement, construction, and commissioning (EPCC) opportunities in Malaysia will remain robust over the next five years, UOB Kay Hian said on Monday.
The research house said in a note that it remained positive on the solar and BESS EPCC landscape, which is poised for sustained growth over the next few years, supported by an estimated 8GW of upcoming solar project plant ups.
Growth prospects are further supported by the Data Centre Task Force (DCTF) under the Malaysian Investment Development Authority (MIDA), which requires new data center developments to source at least 30 percent of their electricity consumption from renewable energy, thereby creating a strong demand catalyst for Corporate Renewable Energy Supply Scheme (CRESS) projects.
According to the note, solar will be the fastest growing energy mix by 2035, supporting the
government’s net-zero greenhouse emission by 2050.
Solar capacity is projected to grow at a 22 percent of compound annual growth rate (CAGR) over the next decade (2026-35), making it the fastest growing energy mix in Peninsular Malaysia.
In fact, the grid system operator (GSO) expects peak demand to surge by 50 percent in 2035, driven largely by data center plant ups.
To keep pace, GSO expects solar capacity to grow by 5 times over the next decade.
“We remain positive on the RE sector as it is a key enabler in achieving net zero carbon emission by 2050,” said UOB Kay Hian.
Importantly, the research housed opined that regulator remains supportive of the renewable energy sector.
“As the government is supportive, we expect a further drop in SAC for CRESS program (to 15 sen/kwh),” said UOB Kay Hian, adding that this will pave the way for positive CRESS contract win(s) for solar EPCC players.
At present, to maintain competitiveness, solar EPCC players must benchmark their CRESS tariff against Malaysia’s utility firm Tenaga Nasional’s ultra-high-voltage (UHV) charge of 55 sen/kwh for data centers.
A 15-year CRESS – based on current SAC charge of 20 sen/kwh – will yield a project internal rate of return (IRR) of 7 percent.
A 5 sen/kwh reduction in SAC will lift CRESS project IRRs to 9 percent, making it more attractive for solar EPCC players to enter into a long-term CRESS agreement.
It is also noted that MYR 14 billion worth of CRESS jobs are expected in the next decade. The Data Centre Task Force (DCTF) under the MIDA requires new data center developments to source at least 30 percent of their electricity consumption from renewable energy.
Based on Tenaga Nasional’s 13GW data center project pipeline, a total of 4GW of new capacity will have to materialize through the CRESS pathway.
“At MYR 3.5 million/MW project capex, this translates to a potential orderbook of at least MYR 14 billion in the next decade. We believe the main data center clusters that will start implementing CRESS would be in Johor and Klang Valley,” said UOB Kay Hian.
The research house noted that there are jobs aplenty for EPCC players to participate in the
CRESS program.
It understands that the likes of the Elmina Google campus have called for a tender under the CRESS program.
It also expects the DayOne and Airtrunk data center clusters in Johor to tender out their renewable energy needs via a CRESS program.
UOB Kay Hian expects total EPCC opportunities of approximately 8GW over 2027-32, driven by the take-off of CRESS projects in the fourth quarter of 2026/the first quarter of 2027 and the government awarding the tender for Large Scale Solar 6 (LSS6) in the first half of 2027.
“Assuming a construction cost of MYR 3.5 million per MW, total EPCC replenishment opportunities are estimated at a staggering MYR 16 billion to MYR 24 billion over the next five years,” said the research house.
UOB Kay Hian also cited a forecast by the nation’s Grid System Operator (GSO), said Peninsular Malaysia’s electricity system demand is expected to grow to a staggering 32GW in 2032 from current peak demand of 22GW).
The forecast also projects solar generation mix to grow to a record 17.5GW in 2032 from
an existing 5.8GW, driven by: the commissioning of a total 6.4GW capacity from LSS5/5+/6; 4GW of CRESS projects primarily from data center-related demand; and growing distributed solar demand under the Solar ATAP and self-consumption (SELCO) program.
Consequently, the country’s BESS capacity is expected to expand to 6GW from an existing 100MW (Santong) + 400MW (MyBeST) to ensure grid stability as more RE is injected into the grid.
Meanwhile, the research house recently attended the Energy Regulatory Insights 2026, organized by the regulator Energy Commission. Key takeaways are: the government remains committed to ensuring sustainable and affordable power supply in Malaysia; and Malaysia is on track to achieving 70 percent clean energy capacity by 2050.
A National Energy Transition Roadmap (NeTR) report card will be published in 2027, which will accurately reflect current progress and market trends, and battery storage will be a key enabler for the renewable energy sector, it opined.