Malaysia Aims for 40% Renewable Energy Capacity by 2035

Malaysia has set a new target to increase its renewable energy share to 40% by 2035, signaling a stronger commitment to clean energy. This updated goal builds upon the earlier objective of reaching 31% by 2025, and reflects the country's untapped renewable potential, as outlined in a recent analysis by GlobalData.

According to the study, Malaysia is well-positioned to meet this ambitious target, thanks to an existing policy framework and growing momentum in clean energy deployment.

The Ministry of Energy and Natural Resources (KeTSA) had already outlined aggressive goals in the National Energy Policy 2022–2040, with a plan to develop 18.4 GW of renewable energy capacity by 2040. Technologies prioritized include solar, bioenergy, and hydropower.

To achieve this, Malaysia is expected to double its investment in renewables, with the International Renewable Energy Agency (IRENA) estimating a minimum requirement of USD 375 billion to drive the transition.

Current Progress and Flagship Programs

As of now, renewable sources account for 13.3% of Malaysia’s total installed capacity. Based on current growth trends, GlobalData forecasts that this figure could rise to 18.2% by 2025 and 36.4% by 2035, indicating a steady upward trajectory.

Several government-backed initiatives are propelling this progress. Notably, the Large-Scale Solar (LSS) program, launched in 2016 by the Energy Commission (Suruhanjaya Tenaga), allocated 1.25 GW between 2017 and 2020 to expand grid-connected solar PV capacity. Additionally, the Net Energy Metering (NEM) scheme has played a key role in stimulating the distributed solar market.

Incentives and Policy Support

To drive further private sector participation, the government extended key tax incentives, including the Green Investment Allowance (GIA) and the Green Income Tax Exemption (GITE), through 2023. A solar leasing tax exemption is also in place until December 2026, making solar deployment more financially attractive for companies and investors.

Although wind energy development remains limited—with just one operational 0.2 MW onshore wind farm—GlobalData suggests that smaller-scale wind projects could still yield measurable benefits. While wind speed variability poses a challenge, the resource remains underutilized and presents an area for future growth.

Outlook and Challenges Ahead

Malaysia’s transition to renewables is not only key to meeting climate commitments, but also vital for enhancing energy security and reducing exposure to volatile fossil fuel markets. Diversifying the energy mix will increase resilience while aligning Malaysia with global trends toward sustainable development.

Nonetheless, integrating variable energy sources such as solar and wind into the existing power grid presents operational challenges. Managing intermittency and upgrading infrastructure will require strategic planning and sustained investment.

With strong policy backing and an expanding renewable portfolio, Malaysia appears well-equipped to achieve its 2035 goals and position itself as a regional leader in the clean energy transition.