Boldly stepping into the new year, Malaysia's renewable energy sector is gearing up for a bustling first quarter, as a surge of solar project tenders emerges to satisfy the escalating power demands from rapidly expanding data centers. According to Kenanga Investment Bank's latest insights, this developmental wave could be a game changer for the industry.
The government is expected to initiate bids for the sixth phase of the Large Scale Solar (LSS6) program, which has the potential to create approximately RM6 billion in construction jobs by generating up to two gigawatts of energy capacity. This projection comes with a strong recommendation from Kenanga for investors to maintain an 'overweight' stance on this promising sector.
"We predict that LSS6 will likely incorporate requirements for battery systems, and when combined with battery installations, it could yield internal rates of return between 8% and 10% for developers," said Kenanga in their report.
On another note, Tenaga Nasional Bhd, Malaysia's leading electricity utility company, has committed to 49 data center projects that will demand nearly seven gigawatts of power. This highlights the growing need for sustainable energy solutions as these facilities continue to expand.
In 2024, the government introduced the Corporate Renewable Energy Supply Scheme (CRESS), which enables high-consumption data centers to purchase green energy directly from renewable developers. Kenanga pointed out that the long-term energy agreements offered through CRESS, at competitive rates, are particularly attractive for data centers, which are often classified as ultra-high voltage customers. As of June 2025, the total commitment to CRESS has already reached 1.3 gigawatts.
Turning to the retail sector, Kenanga anticipates that the clarity surrounding the Solar Accelerated Transition Action Programme, known as Solar ATAP, will reignite interest in solar adoption, given that the scheme opened for applications on January 1.
For strategic investment recommendations, Kenanga identifies Solarvest Holdings Bhd and KJTS Group Bhd as standout options within the sector. Additionally, other companies that hold potential for outperforming in the renewable energy space include Pekat Group Bhd, Samaiden Group Bhd, and Swift Energy Technology Bhd.
As we observe these developments unfold, the question remains: How will these initiatives reshape Malaysia's energy landscape in the coming years? Are you optimistic about the future of renewable energy in Malaysia, or do you believe that challenges still lie ahead? Share your thoughts!
