In 2023, Malaysia unveiled its National Energy Transition Roadmap (NETR), which provides a blueprint for achieving a variety of clean energy goals. The plan calls for a big increase in electric vehicle uptake over the coming decades, for renewable energy to rise to 70 percent of installed capacity by 2050, and for ambitious development of frontier technologies like hydrogen and carbon capture.
Like any policy roadmap, the NETR is wide-ranging and aspirational. It lays down a general framework, but the ability to deliver on this vision depends on how the plan is implemented. Malaysia has so far been slow to add renewable energy such as solar and wind at a significant scale, which is not unexpected given that oil and gas are major drivers of economic activity and an important source of government revenue.
When the NETR was first published in August 2023, I noted that the basic structure was a step in the right direction because it provides a mix of incentives for both public and private actors. Of particular importance, the plan tasks state-owned national champions with spearheading big flagship projects. For instance, the national electric utility TNB, which is majority owned by the state, is in charge of developing solar parks and floating solar PV.
Sovereign wealth fund Khazanah Nasional Berhad has been tasked with developing an integrated renewable energy zone, which will span the entire energy supply chain. State-owned oil and gas giant Petronas will focus on biofuel and carbon capture hubs, with potential investment worth billions of dollars. Petronas, along with TNB, will also pursue research and development of hydrogen and its uses in decarbonization.
Why is this important? By including major state-owned energy and investment companies in the NETR, it provides an incentive for these critical stakeholders to get behind and support the plan. A weakness of the Just Energy Transition Partnership in neighboring Indonesia, in my opinion, is that it has insufficiently addressed the interests and incentives of state-owned electric utility PLN.
If you don’t get buy-in from PLN in Indonesia or TNB and Petronas in Malaysia, any clean energy plan is likely to face significant political-economic constraints from the start. The NETR is seemingly mindful of this and envisions these state-owned actors playing important roles from the beginning. Of course, a major criticism of this approach is that the dominance of state-owned companies will crowd out private sector actors.
That’s not necessarily the case in Malaysia, where state and private capital are being blended in interesting ways across the clean energy sector. Solarvest is a private renewable energy developer that went public on the Malaysian stock exchange in 2019, and has grown rapidly. It recorded almost 500 million ringgit ($118 million) in revenue in 2024, and earlier this year, it inked a 401 million ringgit ($95 million) contract with TNB to build a 500 MW solar farm in Bukit Selembau, Kedah.
This solar farm, which will be owned and operated by a subsidiary of TNB, is the largest solar power plant in Malaysia currently under development. The EPF, Malaysia’s national pension fund, also recently became a significant shareholder in Solarvest, acquiring a 5.76 percent stake in the company in 2024.
Sunview is another private solar developer that listed on the local exchange in 2022 and entered a strategic partnership with Cinergi SEA in the same year to develop clean energy projects. Cinergi’s parent company is the Malaysian sovereign wealth fund Khazanah Nasional Berhad. Sunview’s revenue hit 456 million ringgit ($110 million) in 2024, a 369 percent increase compared to 2022.
The scale of Malaysia’s clean energy transition remains modest at this stage, and Solarvest and Sunview are relatively new and have room to grow. But this little snapshot gives us some idea of how clean energy is likely to work in Malaysia. The state acts as the primary catalyst in the sector by directly developing projects, and less directly by channeling capital into clean energy companies through state-managed funds like the EPF.
Private sector actors like Solarvest and Sunview also contribute, but they are doing so, at least initially, within this broader network of state capital and state-directed investment that is typical of Malaysia’s energy sector. Is there a different way to pursue development of renewable energy, one that does more to leverage the efficiency of markets and the private sector? Sure, there are always alternatives. But the approach taken by the NETR is one that is well-suited for the political and economic realities of Malaysia, and by striking a workable balance between state and market, it has a good chance of actually scaling.