As the world pivots toward clean energy, Malaysia stands at a crucial crossroads. With its mix of traditional and renewable power sources, the country is actively shaping a greener, more resilient energy landscape. But what’s truly powering Malaysia’s renewable energy future? In this blog, we’ll explore the current energy mix, the rise of renewables, the environmental impact of fossil fuels, and the key technologies and policies driving this transformation in 2025.
Malaysia’s Current Energy Mix (2025)
Malaysia’s energy sector has evolved significantly over the decades. Historically reliant on hydroelectric plants since the late 1800s, the nation diversified its sources over time, adding coal, gas, and eventually solar and biomass to meet growing demands.
As of 2025, Malaysia’s primary energy sources include:
- Solar PV
- Coal
- Natural Gas
- Hydropower
- Biomass / Biogas
- Diesel
According to data from the GreenTech & Sustainability Organisation (GSO), fossil fuels (coal and gas) still dominate, but renewable energy is steadily gaining ground thanks to government policies and technological advancement.
Renewable vs Non-Renewable Energy Usage in Malaysia
Renewable Energy Sources
- Solar PV: Increasing rooftop installations and utility-scale solar farms across Malaysia, driven by programs like Net Energy Metering (NEM) and Large Scale Solar (LSS).
- Hydro: Still a significant contributor, especially in regions with natural water resources.
- Biomass and Biogas: Leveraging agricultural and palm oil waste for power generation.
Non-Renewable Energy Sources
- Coal: Used primarily in large power stations like Tanjung Bin.
- Natural Gas: A major player in electricity generation.
- Diesel: Limited but still used in remote areas or as backup power.
While official statistics vary year to year, estimates indicate:
- Renewables account for approximately 23-25% of the electricity generation mix.
- Non-renewables contribute the remaining 75-77%, dominated by coal and natural gas.
The Benefits of Using Renewable Energy in Malaysia
Transitioning to renewable energy is not just about protecting the environment. Iit’s a smart investment in Malaysia’s long-term economic, social, and energy resilience. Here are the key benefits of adopting clean energy sources like solar, hydro, and biomass:
Environmental Sustainability
- Zero Emissions: Renewable sources like solar PV and hydro emit no greenhouse gases during operation, significantly reducing Malaysia’s carbon footprint.
- Cleaner Air and Water: Less dependence on coal and gas means fewer pollutants entering our atmosphere and water systems, improving public health and preserving ecosystems.
- Climate Action: Supports Malaysia’s commitment to the Paris Agreement and national carbon neutrality targets.
Energy Security and Independence
- Reduced Reliance on Imports: By harnessing locally available sunlight, water, and organic waste, Malaysia can reduce dependency on imported fossil fuels.
- Diversified Energy Mix: A robust mix of renewable sources increases energy stability and reduces the risks associated with global fuel price fluctuations and supply chain disruptions.
Long-Term Cost Efficiency
- Lower Operational Costs: Unlike fossil fuel plants that require ongoing fuel purchases, renewables operate on free natural inputs like sunlight and water.
- Energy Savings for Consumers: With programs like NEM and SELCo, consumers can reduce electricity bills and earn credits from excess power generated.
Source : Malaysia Renewable Energy Roadmap
The Environmental and Economic Impact of Non-Renewable Energy
Despite their reliability, non-renewable sources have considerable downsides:
Environmental Impact
- Carbon Emissions: Coal-fired power plants are among the largest sources of CO₂ emissions.
- Air & Water Pollution: Contributes to smog, acid rain, and contamination of water bodies.
- Climate Change: Fossil fuels are the primary cause of global warming.
Economic Consequences
- Fuel Price Volatility: Global market shifts make fossil fuel pricing unpredictable.
- Health Costs: Air pollution-related illnesses increase public health expenses.
- Energy Security Risks: Over-dependence on imported fossil fuels exposes Malaysia to geopolitical and supply chain disruptions.
What’s Powering the Shift?
Malaysia’s journey toward a greener energy future is supported by a range of progressive schemes and evolving market dynamics:
Key Renewable Energy Programs
- Feed-in Tariff (FiT) – Introduced in 2011 to encourage small-scale RE generation.
- Net Energy Metering (NEM) – Allows solar PV owners to offset their electricity bills by exporting excess energy back to the grid.
- Self-Consumption (SELCo) – Encourages on-site use of generated solar power without exporting it.
- Large Scale Solar (LSS) – Utility-scale solar projects across the nation.
- Corporate Renewable Energy Supply Scheme (CRESS) – Enables corporates to purchase green energy directly.
- Community Renewable Energy Aggregation Mechanism (CREAM) – Coming in 2025, will allow small-scale generators to pool and sell their energy collectively.
These programs empower residential, commercial, and industrial consumers to transition to cleaner energy sources while benefitting financially.
What’s on the Horizon for Malaysia’s RE Sector?
- Grid Enhancements
To accommodate more renewable sources, Malaysia is working on:
- Increasing interconnection capacity.
- Upgrading monitoring systems for better load management.
- Improving grid resilience and reliability.
- New Technology Adoption
Emerging solutions set to reshape Malaysia’s energy future:
- Energy Storage Systems (ESS) – Critical for balancing solar intermittency.
- Hydrogen – Early-stage discussions are exploring its potential as a clean fuel.
- Carbon Capture – Technologies to reduce emissions from existing fossil plants.
- Nuclear Energy? – While controversial, it’s under review as a long-term option.
- Efficient Consumers
- Encouraging consumers to adopt energy-saving appliances and practices.
- Introducing battery requirements for large-scale rooftop solar installations (above 72kWp).
- Promoting building designs that reduce energy consumption.
Challenges Ahead: What Malaysia Needs for a Clean Energy Future
- Supportive Policies: Regulatory clarity and incentives must continue to evolve.
- Financing: Lowering capital barriers for RE projects, especially in rural or underserved areas.
- Collaboration: Strong partnerships between government, corporates, and consumers are essential to drive progress.
The Road to a Sustainable Malaysia
Malaysia’s renewable energy journey is gaining momentum. With strategic programs, technological innovation, and growing consumer participation, the country is well-positioned to lead the ASEAN region in clean energy transformation.
But there’s still work to be done. Whether you’re a business, policymaker, or homeowner, now is the time to invest in sustainable solutions and be part of a future that’s not just low-carbon — but resilient, inclusive, and prosperous.
Source : W2: Growing Malaysia’s Renewable Energy Sector: What’s on the Horizon?
