Malaysia’s renewable energy sector could see a stronger pipeline of corporate power purchase agreements over the coming months after the government cut the system access charge for firm supply under the Corporate Renewable Energy Supply Scheme (CRESS), with research houses expecting developers and data center operators to accelerate negotiations.
MBSB Research said in a note on Monday that the new CRESS Acceleration Package, which lowers the system access charge (SAC) for firm renewable energy supply to 14 sen per kilowatt-hour from 20 sen, could help convert registered projects into actual developments, while Hong Leong Investment Bank Research expects stronger CRESS deal announcements in the fourth quarter of 2026 and the first quarter of 2027.
The Ministry of Energy Transition and Water Transformation (PETRA) announced the package on last Friday, introducing the lower 14 sen/kWh SAC, a minimum 10-year contract period between renewable energy developers (REDs) and green consumers (GCs), and a requirement for qualifying projects to achieve commercial operation date (COD) by December 31, 2028. Projects that miss the deadline will lose eligibility for the special SAC rate, with no extension allowed.
MBSB said the new 14 sen/kWh rate represented a 30% reduction from the existing 20 sen/kWh charge and a 44 percent reduction from the original 25 sen/kWh rate when CRESS was introduced.
There was no corresponding reduction for non-firm CRESS supply, which remains at 40 sen/kWh, it said.
The difference between firm and non-firm supply therefore widens to 26 sen/kWh, which MBSB Research said would encourage developers to consider firm and dispatchable renewable energy configurations, particularly solar projects combined with battery energy storage systems (BESS).
The CRESS mechanism, introduced in September 2024, allows renewable energy developers to supply electricity directly to corporate green consumers through third-party access to the existing electricity grid.
PETRA had previously reduced the CRESS SAC for firm supply to 20 sen/kWh from 25 sen/kWh in August 2025, while the rate for non-firm supply was reduced to 40 sen/kWh from 45 sen/kWh.
The latest package is therefore the third adjustment to the firm CRESS access charge since the scheme was introduced.
MBSB said the latest reduction could represent an important step in improving the commercial viability and bankability of CRESS projects.
Since CRESS was launched, 11 renewable energy developers and eight green consumers representing 3,148 megawatts of project capacity had registered with the Single Buyer, but the projects had not progressed at the same pace, it said.
One of the issues highlighted by industry participants had been uncertainty over the SAC and its future revisions, particularly because the charge is linked to the regulatory period under the incentive-based regulation framework.
The research house said the new package addressed two immediate bankability concerns by lowering the firm SAC and introducing a minimum 10-year contract between developers and offtakers, where previously no minimum contract period had been prescribed.
However, it said it remained unclear whether the 14 sen/kWh SAC would be grandfathered for the entire 10-year contract period or remain subject to revision during subsequent regulatory periods.
PETRA has also said that the enhancement of CRESS will cover procedures and contractual arrangements, technical requirements and the methodology for determining SAC from the fifth regulatory period.
The ministry said the aim was to establish a more transparent and reasonable charging structure that reflects system costs without inappropriately shifting costs to other electricity consumers.
MBSB Research said this left open the possibility of a more formula-based or hybrid SAC structure in the next regulatory period.
It identified four approaches previously considered for SAC, including retaining the existing approach with a ceiling on periodic revisions, fixing the charge for a longer period, determining the charge using an unbundled tariff formula, or adopting a structure combining fixed regulated costs with a variable market-driven component.
The 2028 COD requirement is another key feature of the acceleration package.
MBSB said the strict deadline was likely intended to discourage speculative registrations and prevent projects that were not ready to proceed from occupying limited grid capacity or benefiting indefinitely from the preferential SAC.
The deadline could also push developers and corporate consumers to speed up negotiations, financing and construction decisions.
Meanwhile, Hong Leong Investment Bank Research said it expected CRESS awards to gain momentum in the fourth quarter of 2026 and first quarter of 2027 as renewable energy developers and offtakers seek to meet the deadline.
It said industry checks suggested that CRESS projects had previously taken time to progress because developers and green consumers needed to negotiate commercially viable terms.
With solar projects typically requiring about 18 to 24 months to build and commission, the Dec 31, 2028 deadline leaves a relatively tight window for projects to secure contracts, reach financial close and begin construction.
The research house expects expects CRESS projects to offer potentially higher returns than projects under the Large Scale Solar (LSS) program, where competitive bidding can put pressure on tariffs and project returns.
Unlike LSS, CRESS allows renewable energy developers to negotiate tariffs directly with corporate offtakers.
Hong Leong cited Tenaga Nasional Bhd’s DayOne CRESS project as an example, saying it could generate a project internal rate of return (IRR) of about 12 percent, compared with its estimated 6 percent to 8 percent IRR for previous LSS projects.
Its estimates suggest CRESS projects could generally generate IRRs of 9 percent to 11 percent, depending on factors such as power purchase agreement tenure, contracted tariffs, land and financing costs.
The research house said this could improve project economics for developers and provide a stronger incentive to prioritize CRESS opportunities.
A potentially larger catalyst for the scheme could come from Malaysia’s expanding data center sector.
Hong Leong also said industry checks indicated that newly approved data center projects could be subject to a minimum renewable energy requirement of 30 percent.
It said this could create a sizeable addressable market for renewable energy and support longer-term demand for CRESS.
The Data Centre Task Force had recently approved an additional 5GW of capacity, which Hong Leong Investment Bank Research estimated was equivalent to about 60% of the existing 8.3GW data center pipeline as of June.
The potential renewable energy requirement could therefore translate into significant demand for solar generation and battery storage, although the research house stressed that the 30 percent requirement was based on its industry checks.
Legacy data center projects with signed electricity supply agreements could potentially be exempted or grandfathered from such a requirement, it said.
Nevertheless, Hong Leong said global data center operators’ commitments to environmental, social and governance targets and renewable energy sourcing could support continued demand for green electricity.
Its estimates illustrate the potentially wide range of renewable energy requirements depending on how the 30 percent target is applied.
Under a capacity-matching scenario, the research house assumed 30 percent of the additional 5GW data center capacity would be matched on a one-to-one basis with solar photovoltaic (PV) capacity.
Taking into account a 1.5 times DC-to-AC ratio, this would imply about 2.25GW of solar capacity.
Assuming a BESS-to-solar capacity ratio of 50 percent and four hours of storage, the corresponding battery requirement would be about 1,125MW, or 4.5 gigawatt-hours.
Based on assumed solar-plus-storage project costs of RM4 million per megawatt, Hong Leong estimated a potential total addressable market of about MYR 9 billion ($2.2 billion) for solar and BESS under this scenario.
The second scenario, based on energy matching, produces a much larger potential market because data centers operate around the clock while solar generation is limited to daylight hours.
The research house estimated that a 100MW data center operating at full load would consume about 876 gigawatt-hours of electricity annually.
To match 30% of that consumption, it estimated that about 180MW of solar capacity and 90MW/360MWh of BESS would be required.
Applied to the additional 5GW data center pipeline, this would imply about 9GW of solar capacity and 4.5GW/18GWh of BESS.
Hong Leong estimated the resulting potential addressable market at about MYR 36 billion.
The large difference between the MYR 9 billion capacity-matching estimate and the RM36 billion energy-matching estimate reflects the intermittent nature of solar generation and the need for additional installed capacity and storage to provide renewable electricity to data centers operating 24 hours a day.
The CRESS acceleration comes as Malaysia seeks to expand renewable energy in its electricity system.
PETRA has previously said CRESS is intended to support the country’s target of increasing renewable energy capacity from 26 percent, or 10.6GW, to 40 percent by 2035 and 70% by 2050.
The government’s broader open-grid approach is designed to provide businesses with greater access to green electricity while encouraging more private-sector participation in renewable energy development.
For renewable energy developers, the latest package could therefore improve project visibility while creating stronger incentives to combine intermittent solar generation with storage.
MBSB said the preferential treatment for firm CRESS supply reflected the lower system burden of dispatchable renewable energy, as solar-plus-storage configurations could help smooth intermittency and reduce balancing and reserve requirements on the electricity grid.
The research house expects the latest measures to widen the pool of commercially viable CRESS projects.
For corporate consumers, particularly data center operators, the combination of rising electricity demand, ESG requirements and greater access to renewable energy could support additional demand for long-term green power contracts.
With the special SAC rate tied to a firm Dec 31, 2028 COD deadline, developers and offtakers now face a clear timeframe to turn CRESS registrations and negotiations into operational projects.
The outcome could make the next several quarters an important period for the development of Malaysia’s corporate renewable energy market, as companies seek to secure long-term renewable power while developers compete to bring projects online before the preferential terms expire.