New electricity price policy sets off Malaysia: 20% PV premium, 300% energy storage increase!

With continued pressure from US and EU policy bills and ongoing global geopolitical conflicts, Southeast Asia has reaped the benefits of the shifting global economic landscape in recent years. Many labor-intensive and new energy industries have gradually set their sights on this market, and this is also true for the solar-plus-storage industry, which is currently in its second half.

As a key energy hub in Southeast Asia, Malaysia's Energy Storage market has shown strong growth momentum in recent years, aligning with the country's energy transition strategy. Not only has a flurry of favorable policies been released, but photovoltaic and energy storage mechanisms have also begun to be gradually established and improved, and the market has entered a period of competitive bidding and capacity expansion.

According to Malaysia's National Energy Transformation Roadmap (NETR), Renewable Energy is projected to account for 31% of electricity generation by 2025, with solar power comprising the majority. By 2035, the proportion of renewable energy in the power generation mix will further increase to 40%. By 2050,renewable energywill account for 70% of the electricity mix, with 58% coming from solar, 11% from hydropower, 1% from biomass, and 30% from natural gas. At the same time, the government also released the National Energy Policy (NEP) 2022-2040 in 2022, planning to increase renewable energy capacity to 4GW by 2030 and achieve a 4% share of Solar Energy in the country's energy mix by 2040.

From the current market perspective, Malaysia's energy storage market is experiencing a surge: the new policy will drive a 300% surge in demand for industrial and commercial energy storage in Malaysia between 2025 and 2026, with the market size expected to exceed US$2 billion. Furthermore, local photovoltaic technology urgently needs to be upgraded: the requirement for self-consumption rates is driving demand for high-efficiency modules (24%+ conversion rate) and smart microgrid solutions, with a 15-20% premium. Both the photovoltaic and energy storage markets have considerable potential!

How is Malaysia's energy storage market?

As a key component of the energy storage market, Malaysia's battery market has been experiencing growth in recent years. According to statistics, the Malaysian battery market is projected to grow from US$737.94 million in 2023 to US$954.44 million in 2028, with a compound annual growth rate of 5.28% during the forecast period.
Currently, factors such as falling lithium-ion Battery Prices and increasing demand for batteries in industries such as automotive and data centers are likely to drive further growth in Malaysia's battery market during the forecast period.
On the one hand, according to the National Action Plan 2020, the electric vehicle and power battery industries are key areas of development for the Malaysian government. According to the NETR plan, Malaysia aims to build 10,000 public charging stations nationwide by 2025; achieve a 15% share of electric vehicle sales by 2030; increase this proportion to 38% by 2040; and achieve an 80% electric vehicle adoption rate and a 90% local electric vehicle manufacturing rate by 2050, all of which are positive for the battery market.
On the other hand, Malaysia is consistently considered one of the prime locations for data centers in the Asia-Pacific region, with strong telecommunications infrastructure and supportive government initiatives. As of 2022, 33 colocation data centers will be located in eight regions in Malaysia. With abundant resources and a growing number of internet users, Malaysia's data center sector is likely to see significant growth in the coming years.

In the long term, battery industry chain companies will have enormous room for development.

What are some representative local projects?

Residential Energy Storage Projects (Home User Side)
Elmina Ilham Residence Community Energy Storage Demonstration Project:
Located in Shah Alam, Selangor, this project is a community-scale residential energy storage system deployed by Malaysia's national electricity company, TNB, in collaboration with the developer. As early as the end of 2022, TNB piloted three Community Battery Energy Storage Systems (CESS) in the Ilham residential area. Each cell has a capacity of approximately 76.8 to 170 kWh, with a total energy storage capacity of approximately 0.4 MWh. By storing solar rooftop power during the day and supplying electricity to residents at night, this system successfully increased the residential solar self-use rate in the pilot area and enhanced the stability of the distribution network.
Currently, the project is being jointly implemented by TNBX, a subsidiary of TNB, and Smeda Real Estate. The innovative use of lithium-ion batteries for centralized residential energy storage has effectively saved local residents nearly 50% of their electricity bills and demonstrated the effective deployment of community-level shared energy storage models in the region.

Elmina Ridge Solar Smart Home Project:
This project, developed by Smeda Properties, is the first residential project in Malaysia to be equipped with a scalable battery system in 2024. Each villa is equipped with a standard lithium-ion battery energy storage unit, integrated with rooftop photovoltaic panels and smart meters. This unit stores solar energy during the day and supplies electricity at night, achieving energy self-sufficiency.
The project focuses on sustainable, low-carbon communities, and the developer is also exploring the use of retired electric vehicle batteries for residential energy storage to reduce costs. Currently, Elmina Ridge enables local residents to optimize their electricity consumption through the energy storage system while selling excess electricity back to the grid through net metering. This not only successfully establishes a model for green smart homes but also provides local residents with a new income source.

Commercial and Industrial Energy Storage Project (Factory/Commercial User)

Genetec EPIC Factory Energy Storage Project:
Located in Bangi, Selangor, this project is a joint venture between Citaglobal Malaysia and Genetec Technologies. The 1 MW/approximately 1 MWh lithium-ion battery energy storage system is expected to be completed by the end of 2022 and will be used for energy management within Genetec's manufacturing facility. This project is also Malaysia's first domestically developed and manufactured industrial-grade energy storage system (called "MYBESS"), officially launched by the Ministry of International Trade and Industry in April 2023. The system utilizes lithium iron phosphate batteries to provide peak and valley load regulation and backup power for the factory, capable of providing power to the factory daily and further enhancing its electricity autonomy.

Project partners include Citaglobal Genetec BESS (providing the complete energy storage equipment) and the Malaysian Investment Development Authority (supporting R&D), demonstrating that local Malaysian companies now possess the end-to-end capabilities to design and manufacture energy storage systems.

Ground-mounted grid-side energy storage project (utility-side)

Sabah 100MW/400MWh grid-side energy storage project:
Located in Tuaran, Sabah, this project is currently the largest battery energy storage project in Malaysia and is scheduled to begin commercial operation in mid-2025. The project, awarded to local renewable energy developer MSR-Green Energy through a tender by Sabah Electricity (a subsidiary of Malaysia's national electricity company, TNB), is valued at approximately RM645 million and will have an installed capacity of 100MW/400MWh, with future expansion to 517MWh.

The project utilizes a large-scale lithium-ion battery system (expected to use lithium iron phosphate technology), with China's Sungrow Power Supply Co., Ltd. providing the complete battery energy storage equipment, power conversion system (PCS), and energy management system. Upon completion, it will be connected to the Sabah state grid, releasing power during peak hours, increasing grid backup capacity by approximately 10%, and supporting the integration of new renewable energy sources such as solar. It is also Malaysia's first utility-scale battery energy storage demonstration project and is considered a key milestone in achieving the goals of renewable energy grid integration and carbon neutrality.