Malaysia’s Solar PV Capacity Expected To Surpass 6.5 GW By 2029 Amid LSS6 And CRESS Push: UOB Kay Hian

A recent analysis by UOB Kay Hian indicates that Malaysia’s solar power sector is expected to witness strong growth in the coming years. According to the research house, the country’s total solar photovoltaic capacity is projected to exceed 6.5 GW between 2026 and 2029. This anticipated expansion is largely supported by government initiatives, including the upcoming tenders for the Large-scale Solar (LSS) 6 bidding program and the implementation of the Corporate Renewable Energy Supply Scheme (CRESS).

The research note highlights that these programs are likely to generate substantial opportunities for engineering, procurement, construction, and commissioning activities across the solar value chain. Based on current industry estimates, the construction cost of solar projects in Malaysia is expected to range between MYR 2 million and MYR 3.5 million per MW. Using these figures, the total EPCC market opportunity in the country could reach between MYR 13 billion and MYR 23 billion over the next five years. This large pipeline of solar projects is expected to create a strong business environment for companies operating in Malaysia’s renewable energy sector.

Driven by these developments, the renewable energy industry in Malaysia is forecast to record strong financial performance in the near term. The analysis suggests that the sector could achieve a three-year earnings compound annual growth rate of about 28 percent between 2026 and 2028. This growth outlook reflects increasing demand for solar power projects as the country works toward strengthening its clean energy capacity and reducing reliance on conventional power sources.

Despite the positive outlook, the report also highlights certain risks that could impact project costs. One of the key concerns is the potential increase in solar module prices. Prices are expected to rise from around $0.12 per watt currently to about $0.13 per watt by June 2026. The increase is partly linked to policy changes in China, which plans to remove value-added tax export rebates for photovoltaic products starting April 1, 2026.

The removal of the rebate, which will drop from 9 percent to zero, combined with rising raw material prices, may encourage suppliers to revise their contract prices. Several key materials used in solar modules have recorded sharp price increases over the past year. Polysilicon prices have risen by about 39 percent year on year, copper by around 40 percent, and silver by nearly 167 percent. These increases could push manufacturers to raise module prices further.

Silver in particular has become a significant cost factor in solar module production. While it accounted for around 14 percent of total module costs in 2025, its share has recently increased to more than 20 percent due to rising global prices.

However, the research also notes that the appreciation of the Malaysian ringgit has helped offset some of these cost pressures. The currency has strengthened by about 12 percent year on year, which could partially balance the impact of rising solar module prices.

Looking ahead, several factors could further strengthen Malaysia’s renewable energy sector. These include continued appreciation of the ringgit, successful contract awards under CRESS and self-consumption solar programs, and potential monetization of solar assets through listings or strategic sales. Together, these developments could support sustained growth in the country’s solar industry over the coming years.