MBSB Research has maintained its positive stance on the renewable energy subsector in Malaysia, underpinned by a strong multi-year renewable energy 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 in a report on Thursday.
While no new gas-fired capacity is expected in 2027, it expects the winners of the NewGen26 tender to be announced towards the end of CY26 or early 2027, which will generate further excitement for the sector.
The The next major wave of new generation is concentrated from 2028 to 2031, indicatively at 8.3GW.
MBSB also expects the Corporate Renewable Energy Supply Scheme (CRESS) Acceleration Package to drive a surge of CRESS project announcements over the next two quarters.
This is mainly due to the December 31, 2028 deadline set by the Ministry of Energy Transition and Water Transformation (PETRA) in order for developers to enjoy the preferential system access charge (SAC) at 14 sen/kWh.
The next few months will see developers scrambling to get these projects to financial close as quickly as possible.
The projects that already have the land, the off-taker and a viable grid connection will have a significant head start.
“We should start seeing more CRESS projects and engineering, procurement, construction, and commissioning (EPCC) contracts being announced, at least until in the first half of 2027,” said MBSB.
According to the research house, the bottleneck will shift towards project execution and EPCC players are expected to have their hands full until 2029.
“While CRESS is expected to be huge, it is not the only one in the construction pipeline. Contractors are expected to rush LSS5 for COD in 2027, LSS5+ for 2027 and 2028, CRESS by 2028 and LSS6 by 2029. We view that there are enough jobs to go around for everyone,” MBSB added.
The research house also expects data centers to progressively grow into becoming the main driver of electricity demand.
Actual load from operational facilities reached 1.26GW in Jun-26, (2.1 times year on year) while electricity consumption also grew 2.1 times year on year to 4.0TWh in the first half of FY26.
Malaysian utility firm Tenaga Nasional Berhad (TNB)’s secured pipeline now stands at 61 projects representing 8.35GW of maximum demand, of which 42 projects totaling 5.65GW have already been connected.
Going by news reports, the government has approved another 5GW of data center capacity.
Malaysia’s electricity demand rose 2.3 percent year on year in the first half of 2026 to 133.90TWh, driven largely by the commercial sector as economic activities accelerate.
Despite the rapid growth, data centers still account for only 6 percent of total electricity sales, which will see headroom for further contribution as committed capacity progressively ramps up.
“We believe the sustained build-out of data center capacity should continue to underpin electricity demand growth while supporting a higher level of grid and contingent capital expenditure (capex) over the medium term,” said MBSB.
It expects demand to improve remain robust in for the remainder of 2026, with a 5.4 percent growth to 141.87TWh.
In 2026, it expects electricity demand to grow by a further 4.9 percent to 148.86TWh.
MBSB sees data center demand to drive Malaysia’s power capacity upcycle