Malaysia's Solar Power Sector Faces Financial Challenges Amid Rising Costs
Malaysia's solar power developers are grappling with mismatched financing tenures, rising capital costs, and inefficient energy project structures, leading to concerns over stranded assets. The country’s installed solar capacity reached nearly 5.8 GW in 2025, but operational efficiency remains hindered by fluctuating market conditions.
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Malaysia's solar power developers are experiencing increased capital costs and mismatched financing tenures, raising concerns about potential stranded assets. Installed solar capacity was approximately 5.8 GW in 2025, yet efficiency varies between 10% and 20% due to inconsistent solar irradiance.
Notably, TNB raised RM1.05 billion (US$261.5 million) in May 2026 for a solar plant, and the Corporate Renewable Energy Supply Scheme (CRESS) has seen 1.3 GW uptake since its introduction in 2024. However, challenges persist as shorter contracts and price volatility complicate project financing.
There is a need for flexible Power Purchase Agreements (PPAs) to accommodate diverse energy demands from data centers. The government may need to enhance transparency in pricing mechanisms to foster greater market efficiency.
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