Kuala Lumpur, 7 August – Malaysia can achieve affordability and security benefits through rapid solar growth, according to a new analysis by global energy think tank Ember. The report finds solar generation in Peninsular Malaysia was 53% cheaper than fossil fuels in 2023.
Solar generation in Peninsular Malaysia was 53% cheaper than fossil fuels in 2023
7 Aug 2024
The report examines Malaysia’s electricity transition roadmap, focusing on maximising solar potential through targeted policies for faster solar growth and battery storage. It evaluates electricity trends in Peninsular Malaysia, Sabah and Sarawak, highlighting opportunities and challenges to meet renewable energy targets.
Approximately half of Malaysia’s solar power potential (138 GW) is in Peninsular Malaysia, while 37% (99 GW) is in Sabah and 12% (32 GW) is in Sarawak. Almost all of this solar resource is currently untapped.
Peninsular Malaysia, which accounts for 74% of the country’s electricity demand, had solar and hydropower supplying 10% of daytime peak generation in 2023, with hydro providing 7% of the evening peak. The report also finds that Peninsular Malaysia’s grid can technically accommodate an additional 2.4 GW of solar before storage systems are needed.
Peninsular Malaysia also saw bid prices from solar auctions drop significantly in 2023. From 2016 to 2021, the lowest auction rates for solar plants fell by 64%, from $0.082 USD per kWh to $0.029 USD per kWh. This aligns with a global decrease in solar generation costs of 55%. As the auctioned plants in 2021 were scheduled to start operating between 2022 and 2023, solar generation costs in the region had dropped to $0.029 USD per kWh by 2023, making them 53% cheaper than fossil fuels at $0.063 USD per kWh.
Promoting rapid solar growth will result in cost savings and improved energy security
The country’s National Energy Transition Roadmap (NETR) targets 70% renewable capacity in the energy mix by 2050, with solar power expected to be the dominant source. However, this report suggests that 95% of Malaysia’s massive solar potential will remain untapped in 2035 after solar is built as per NETR.
Ember estimates that by 2050, renewables will contribute about 52% of Malaysia’s energy, with gas making up the remaining 48%. This reliance on gas could make Malaysia’s power sector vulnerable to global fuel price volatility and domestic reserve depletion.
To mitigate these risks, raising renewable energy ambitions to further diversify Malaysia’s power mix is essential, focusing on abundant solar resources to gain affordability and security benefits. Additionally, policies integrating solar and battery storage will enhance Malaysia’s energy transition.
Supporting rapid solar growth in Peninsular Malaysia, Sabah and Sarawak will also help meet the national power transition targets. In addition, integrating the grids of these regions will improve grid stability and power supply security, reducing reliance on fossil fuels.
The 64% reduction in utility-scale solar generation costs in Malaysia from 2016 to 2021 presents a significant opportunity to expedite the country’s journey towards achieving net zero ambitions in its power sector. By adopting holistic system-wide plan targeting solar and grid flexibility, Malaysia can accelerate its transition to clean energy, thereby reducing its vulnerability to fuel price volatility and mitigating the risk of becoming a net importer of power generation fuels.
About Ember
Ember is an independent energy think tank that aims to accelerate the clean energy transition with data and policy. It creates targeted data insights to advance policies that urgently shift the world to a clean, electrified energy future.
Related Content
Press releases
Rising gas costs drive up GB electricity prices
22 November 2024
Press releases
Australia reaches record solar, generating a QUARTER of its electricity from solar in October 2024
12 November 2024
Press releases
Founder of energy think tank Ember named among TIME’s 100 most influential climate leaders in the world
12 November 2024
Press releases
ASEAN's demand growth continues to outpace renewable growth, but falling clean energy costs offer a way out
21 October 2024