Malaysia’s renewable energy sector is expected to see a flurry of activity in the first quarter of 2026, driven by surging power demand from the country’s expanding data centre industry, according to Kenanga Investment Bank.
The government is likely to launch bids for the sixth round of the Large Scale Solar (LSS6) programme, which could potentially create RM6 billion in construction jobs and add up to 2GW of solar capacity. Kenanga recommended investors remain “overweight” on the sector, citing promising returns for developers.
“LSS6 is expected to include battery requirements, with internal rates of return projected at 8%-10% for developers,” Kenanga noted, highlighting the sector’s growing integration of energy storage solutions.
Malaysia’s national utility, Tenaga Nasional Bhd, has already signed agreements for 49 data centre projects, which could collectively require up to 7GW of electricity. The Corporate Renewable Energy Supply Scheme (CRESS), launched in 2024, enables high-demand operators to purchase green power directly from renewable energy developers. Kenanga noted that committed CRESS capacity had reached 1.3GW as of June 2025.
In the retail segment, policy clarity around the Solar Accelerated Transition Action Programme (Solar ATAP) is expected to boost solar adoption, with the scheme opening for applications from January 1, 2026.
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