Solar and grid flexibility critical for Malaysia's future electricity affordability and security

Malaysia possesses significant untapped solar resources that could reduce its reliance on volatile fossil fuel prices and improve energy security. While the National Energy Transition Roadmap (NETR) targets 70% renewable capacity by 2050, the report suggests that more ambitious targets, such as those proposed by IRENA, could further benefit the country. In Peninsular Malaysia, solar generation costs dropped 64% between 2016 and 2021, becoming 53% cheaper than fossil fuel options by 2023. To manage the 'twin peaks' of daily demand (4 pm and 8 pm), the report advocates for a combination of solar for daytime peaks and hydropower and battery energy storage systems (BESS) for evening peaks. Key barriers include the need for grid interconnections between Peninsular Malaysia, Sabah, and Sarawak, as well as the requirement for clearer policies on wheeling charges and BESS bankability.

• Malaysia has vast untapped solar resources, with a total potential of 269 GW, yet the National Energy Transition Roadmap (NETR) only aims to utilize 14 GW (about 5%) by 2035.
• Solar generation costs in Peninsular Malaysia decreased by 64% from 2016 to 2021, falling from $0.082 USD per kWh to $0.029 USD per kWh. By 2023, solar was 53% cheaper than fossil fuel generation costs, which were $0.063 USD per kWh.
• Peninsular Malaysia's electricity demand features 'twin peaks' at 4 pm and 8 pm. Solar can meet the daytime peak, while hydropower and battery energy storage systems (BESS) are needed for the evening peak.
• The grid in Peninsular Malaysia can accommodate a solar penetration rate of up to 20% (approximately 3,195 MW based on 2023 data) before storage systems become essential for stability.
• Integrating the independent electricity grids of Peninsular Malaysia, Sabah, and Sarawak would enhance stability and allow for the sharing of renewable resources, such as using Sarawak's hydropower during evening peaks in Peninsular Malaysia.
• The Imbalance Cost Pass-Through (ICPT) mechanism in Peninsular Malaysia and Sabah exposes consumers to global fuel price volatility, whereas Sarawak's hydropower-led system provides lower, more stable tariffs.
• To accelerate BESS adoption, the report suggests implementing tender designs similar to India's Firm and Dispatchable Renewable Energy (FDRE) model and providing a different tariff scheme for solar-BESS services as Virtual Power Plants (VPP).

APA

Nadhila, S., & Setyawati, D. (2024). Solar and grid flexibility critical for Malaysia's future electricity affordability and security. Ember. https://ember-energy.org/app/uploads/2024/10/Report-Solar-and-grid-flexibility-critical-for-Malaysias-future.pdf

Chicago

Nadhila, Shabrina, and Dinita Setyawati. Solar and grid flexibility critical for Malaysia's future electricity affordability and security. Ember, 2024. https://ember-energy.org/app/uploads/2024/10/Report-Solar-and-grid-flexibility-critical-for-Malaysias-future.pdf.

Wikipedia

{{cite report |last1=Nadhila |first1=Shabrina |last2=Setyawati |first2=Dinita |title=Solar and grid flexibility critical for Malaysia's future electricity affordability and security |publisher=Ember |date=7 August 2024 |url=https://ember-energy.org/app/uploads/2024/10/Report-Solar-and-grid-flexibility-critical-for-Malaysias-future.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{nadhila2024solar, author = {Nadhila, Shabrina and Setyawati, Dinita}, title = {{Solar and grid flexibility critical for Malaysia's future electricity affordability and security}}, institution = {Ember}, year = {2024}, month = aug, url = {https://ember-energy.org/app/uploads/2024/10/Report-Solar-and-grid-flexibility-critical-for-Malaysias-future.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }