Kuala lumpur: In the race toward a carbon-free future, Malaysia is ramping up renewable energy generation and reducing its reliance on fossil fuels. The challenge, however, lies in expanding clean energy while still keeping electricity tariffs stable and affordable for consumers.
According to BERNAMA News Agency, Malaysia's National Energy Transition Roadmap (NETR) has set a target of achieving 70 percent of its electricity generation from renewable energy (RE) by 2050. For years, electricity tariff calculations under mechanisms such as the Imbalance Cost Pass-Through and Auto Fuel Adjustment introduced by the Energy Commission (ST) and Tenaga Nasional Bhd (TNB) in Peninsular Malaysia have shaped household bills, often without much public attention. Currently, electricity demand is surging, driven by industrial growth, digitalisation, and the rapid expansion of energy-hungry data centres, a development that is worrying many stakeholders. The big question now is: can Malaysia truly decarbonise without placing a heavier burden on households through higher electricity bills?
According to global energy think-tank Ember, Malaysia relied on fossil fuels for 81 percent of its electricity generation in 2024, with its largest source of clean electricity being hydro (16 percent). Its share of electricity generated from wind and solar sources stood at two percent, which is below the global average (15 percent). Malaysia aims for approximately 24 percent renewable electricity by 2030, which is below the global share of 60 percent as set out in the International Energy Association's net zero emissions scenario.
Energy expert and Rosergy Consulting managing director Rosman Hamzah said Malaysia must strike a careful balance among energy security, environmental sustainability, and energy affordability as it progresses toward its net zero ambitions. He highlighted that Malaysia's long-standing priority remains securing a reliable and uninterrupted energy supply, followed by ensuring that electricity remains affordable for households and businesses. Environmental sustainability has become increasingly important as the country advances its climate commitments.
Rosman noted that Malaysia's future energy mix will undergo significant structural changes, particularly with a fivefold increase in RE production by 2050, largely from solar and hydro. He also pointed out that despite the higher share of RE, electricity generation from natural gas will continue to rise, with more gas-fired power plants needed even as natural gas' share of installed capacity declines from about 40 percent currently to the low 20 percent range.
Meanwhile, a report by international climate analytics firm TransitionZero estimates that Malaysia could save more than US$700 million annually and cut 1.8 million tonnes of carbon emissions by shifting to real-time clean electricity from solar and hydro sources or battery storage. TransitionZero Southeast Asia lead analyst Isabella Suarez described Malaysia as a 'corporate decarbonisation hotspot' for global technology and manufacturing firms seeking reliable clean power.
As Malaysia pushes toward 70 percent RE by 2050, the rapid expansion of data centres driven by global investments has sparked concerns over whether the national grid can sustain both booming industrial demand and the everyday needs of households. A KPMG report for the Asia Pacific Data Centre Association projects Malaysia's data centre capacity to double from 1.26 GW to 2.53 GW between 2025 and 2030.
Since Malaysia's push to become a regional data centre hub is expected to significantly increase electricity consumption, it has sparked debate over whether to include nuclear power in the national energy mix. Deputy Prime Minister Datuk Seri Fadillah Yusof, who is also Energy Transition and Water Transformation Minister, said recently that the government plans to explore nuclear energy for power generation under the 13th Malaysia Plan as part of its clean energy strategy.
Malaysia consistently receives an average of four to six hours of effective or peak sunlight daily, making solar power a highly viable and promising source of RE for the nation. However, due to the intermittent nature of solar power, Malaysia's peak electricity demand has shifted to nighttime, a trend that became a key factor in the electricity tariff reform introduced in July to better reflect market dynamics.
University Kebangsaan Malaysia Solar Energy Research Institute director Prof Dr Norasikin Ahmad Ludin said the initial RM43 million investment to upgrade the power grid acts as a down payment for long-term price stability, potentially shielding households from future global energy shocks. 'However, costs related to solar infrastructure, battery storage and grid upgrades are substantial and if not managed carefully, these could be passed on to consumers through slightly higher tariffs in the short term,' she said.