Buyers' Toolkit

Malaysia's oil revenue accounts for 31% of the total fiscal income, while energy exports make up 13% of total exports. As the world gradually shifts away from fossil fuels, Malaysia published the National Energy Policy 2022-2040 (NEP) in September 2022, which details the government's objectives for the energy sector over the next two decades to ensure its future development and competitiveness. Significant initiatives in Malaysia's energy market in recent years include the introduction of the ten-year Malaysian Electricity Supply Industry 2.0 (MESI 2.0) in 2019, which aims to transition the electricity market from its previous natural monopoly model to a liberalized retail market, allowing other suppliers to enter. In August 2022, the Sustainable Energy Development Authority (SEDA) of Malaysia announced the introduction of Virtual Power Purchase Agreements (VPPAs), providing green energy buyers with an additional procurement option.

In Malaysia, most developers and power producers opt for investing in renewable energy through the feed-in tariff (FIT) or international Renewable Energy Certificates (RECs) that can achieve environmental values. In terms of financing, banks in Malaysia remain conservative in their approach to green financing and are only willing to finance solar projects with proven profitability, while they wait to assess the viability of investments in other types of renewable energy. Overall, green energy buyers in Malaysia can only obtain a substantial amount of green energy through the purchase of international RECs (such as I-REC and TIGR) or by participating in Virtual Power Purchase Agreements (VPPA) projects.

According to the Malaysia Renewable Energy Roadmap (MyRER) published by the Ministry of Energy and Natural Resources (KeTSA), it is expected that 31% of the power generation capacity will come from renewable sources by 2025. This target is intended to support a 45% reduction in carbon emissions by 2030 (compared to 2005 levels). According to official data, Malaysia's installed renewable energy capacity currently accounts for only about 3% of potential sites, suggesting an enormous untapped potential in solar power development. However, there is currently insufficient incentive to attract solar investments into the market, which could result in stagnation in the progress of renewable energy installation. For businesses seeking to obtain renewable energy in Malaysia, the country has well-developed subsidy programs for self-consumption compared to other Southeast Asian countries. It is recommended that businesses consider investing in projects such as SELCO and NEM to obtain green energy while waiting for the Virtual Power Purchase Agreement (VPPA) market to become more clearly defined before participation.