Malaysia’s large-scale solar (LSS) projects, including LSS5, LSS5+, and LSS6, are expected to generate contracts worth between RM15 billion and RM18 billion over the next two years, driving significant activity in the renewable energy sector.
According to analysts, this marks the largest rollout of LSS projects in the country’s history, keeping solar players engaged in engineering, procurement, construction, and commissioning (EPCC) activities through 2027.
Strengthening the National Grid
Hong Leong Investment Bank (HLIB) analyst Tan Kai Shuen noted that ongoing transmission and distribution upgrades under the fourth regulatory period (RP4) (2025–2027) will bolster the national grid. These improvements are supported by a record RM42.8 billion in allowable capital expenditure (capex), enabling the grid to accommodate greater renewable energy (RE) capacity.
“The expansion of renewable energy aligns with growing electricity demand driven by the rise of data centers (DC), electric vehicle (EV) adoption, and Malaysia’s transition toward high-income nation status,” said Tan.
He further stated that with more ambitious RE targets expected in Malaysia’s upcoming nationally determined contributions (NDC), the country’s renewable energy sector is entering a long-term growth phase. Major landowners, such as SD Guthrie Bhd, could leverage their land banks for solar farm developments, particularly in rural areas.
“As Malaysia prepares to take center stage during its ASEAN Chairmanship and host the ASEAN Summit this year, the nation’s leadership in regional energy transition efforts will be closely watched,” he added.
Opportunities for EPCC Players
Kenanga Investment Bank Bhd analyst Nigel Ng highlighted that EPCC players could benefit from declining solar panel prices, with an estimated gross profit margin in the low mid-teens for LSS5+.
“With current pricing, we expect winning rates to range between 14 sen/kWh and 18 sen/kWh, yielding an internal rate of return of approximately 8%,” he said.
Ng identified Solarvest Holdings as a key market player, citing its strong execution track record, client base, and photovoltaic system financing programme. The company’s earnings visibility remains robust, backed by a substantial order and tender book.
For Samaiden Group Bhd, Ng noted that its focus on residential and commercial projects typically yields higher margins. Additionally, its ability to provide complete solutions, including financing, strengthens its position in the industry.
Solarvest’s Market Strategy
Solarvest Holdings Bhd’s executive director and group chief executive officer, Davis Chong, affirmed the company’s capability to manage large-scale solar initiatives, given its 30% market share and completion of 1.3GW of RE projects.
“With strong technical expertise, financial strength, and execution capacity, Solarvest is well-equipped to handle complex projects,” he said.
Chong acknowledged challenges such as rising competition, a shortage of experienced contractors, and labor constraints. He emphasized the need for workforce upskilling and government support in upgrading grid infrastructure to accommodate increased renewable energy capacity.
He also warned that declining tariffs for LSS projects could impact project financials, making bankability a crucial consideration.
Despite these challenges, Chong remained optimistic, stating that the LSS expansion would provide additional EPCC contract opportunities. Solarvest plans to focus on high-value projects to minimize competition with smaller players.
“The integration of battery storage and smart grid technology will be key in shaping the future of the renewable energy sector. Solarvest is well-positioned to leverage these innovations for long-term growth,” he added.
Pekat Group Prepares for LSS6
ACE Market-bound Pekat Group Bhd’s subsidiary, Pekat Teknologi Sdn Bhd, is preparing for the LSS6 bidding round in Q2 2025 while actively participating in LSS5+.
Jia-Sheen Sim, director of business development at Pekat Teknologi, said the company is positioning itself to capitalize on Malaysia’s expanding LSS programme, which is expected to create significant opportunities in the RE market.
“With LSS5+ opening up bids for 4GW of solar energy capacity and LSS6 on the horizon, the industry is poised for further infrastructure development,” he said.
TNB’s Capex Boost to Support Energy Transition
Chong highlighted Tenaga Nasional Bhd’s (TNB) investment in grid infrastructure as a crucial factor supporting Malaysia’s energy transition and large-scale solar sector.
“These upgrades enhance grid capacity, reduce intermittency issues, and facilitate smoother renewable energy integration, ensuring long-term demand for solar projects,” he explained.
He also called for greater grid data transparency from TNB, including insights into new RE zone substations, EV infrastructure planning, and battery storage integration, to support energy transition planning.
Sim echoed these sentiments, stating that TNB’s increased capex would improve stability and renewable energy integration.
“With better access to the grid, more LSS project options will become available, benefiting all industry participants,” he said.
However, he cautioned that grid connectivity constraints and financing challenges remain key hurdles requiring strategic planning and collaboration with stakeholders.
As Malaysia accelerates its renewable energy transition, the upcoming LSS projects are expected to play a critical role in shaping the nation’s sustainable energy landscape.
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