Malaysia’s renewable energy sector is set for a historic expansion as the latest wave of large-scale solar (LSS) projects—LSS5, LSS5+, and LSS6—are projected to generate contracts worth between RM15 billion and RM18 billion over the next two years. This unprecedented rollout is expected to keep solar industry players actively engaged in engineering, procurement, construction, and commissioning (EPCC) activities well into 2027.
Strengthening Grid Infrastructure for Renewable Energy Growth
According to analysts, the expansion aligns with Malaysia’s broader energy transition strategy. Hong Leong Investment Bank (HLIB) analyst Tan Kai Shuen highlighted the critical role of ongoing transmission and distribution upgrades under the Fourth Regulatory Period (RP4) from 2025 to 2027. With an approved record capital expenditure (capex) of RM42.8 billion, these improvements will enhance grid capacity, allowing for a greater integration of renewable energy (RE).
“The demand for electricity is rising due to rapid developments in data centers, the increasing adoption of electric vehicles (EVs), and Malaysia’s aspirations of becoming a high-income nation,” noted Tan.
He further emphasized that Malaysia’s next round of nationally determined contributions (NDCs) is expected to include more ambitious RE targets, ensuring the sector’s long-term growth. Landowners such as SD Guthrie Bhd could strategically leverage their extensive land banks for solar farm developments, particularly in rural regions.
“As Malaysia assumes the ASEAN Chairmanship and prepares to host the ASEAN Summit this year, its leadership in the regional energy transition will be closely observed,” he added.
Opportunities for EPCC Players Amidst Falling Solar Panel Costs
Kenanga Investment Bank Bhd analyst Nigel Ng highlighted the favorable conditions for EPCC players, given the decline in solar panel prices. He estimated that the gross profit margin for LSS5+ projects would likely fall within the low-to-mid teens.
“With current pricing dynamics, we anticipate winning bid rates to range between 14 sen/kWh and 18 sen/kWh, delivering an internal rate of return of approximately 8%,” Ng explained.
He identified Solarvest Holdings Bhd as a key market player, citing its strong execution track record, extensive client base, and photovoltaic system financing program. Solarvest’s earnings visibility remains robust, supported by a significant order book and an active pipeline of tender opportunities.
For Samaiden Group Bhd, Ng pointed out that its focus on residential and commercial solar projects typically results in higher profit margins. Additionally, its ability to provide comprehensive solutions—including financing—enhances its competitive positioning in the market.
Solarvest’s Strategic Approach to Market Expansion
Davis Chong, Executive Director and Group CEO of Solarvest Holdings Bhd, reaffirmed the company’s ability to manage large-scale solar projects, backed by its 30% market share and a proven track record of completing 1.3GW of renewable energy projects.
“Our strong technical expertise, financial resilience, and execution capabilities position us to handle complex projects effectively,” said Chong.
Despite the promising outlook, he acknowledged several challenges, including intensifying market competition, a shortage of experienced contractors, and workforce constraints. To address these issues, he emphasized the importance of workforce upskilling and increased government support for grid infrastructure upgrades to accommodate the growing RE capacity.
Chong also cautioned that declining tariffs for LSS projects could impact financial viability, making project bankability a crucial consideration. However, he remained optimistic, citing the LSS expansion as a significant opportunity for EPCC players. Solarvest plans to prioritize high-value projects to mitigate competition from smaller firms.
“The future of renewable energy will be shaped by innovations such as battery storage and smart grid technology. Solarvest is well-positioned to leverage these advancements for sustainable, long-term growth,” he added.
Pekat Group Prepares for LSS6 Expansion
As Malaysia’s solar industry gears up for the next phase, ACE Market-bound Pekat Group Bhd’s subsidiary, Pekat Teknologi Sdn Bhd, is actively preparing for the LSS6 bidding round set for Q2 2025 while concurrently participating in LSS5+.
Jia-Sheen Sim, Director of Business Development at Pekat Teknologi, noted that the company is strategically positioning itself to capitalize on Malaysia’s expanding LSS program, which is expected to unlock significant opportunities in the RE market.
“With LSS5+ facilitating bids for 4GW of solar capacity and LSS6 on the horizon, the industry is set for continued infrastructure expansion,” Sim stated.
TNB’s Capex Surge to Bolster Energy Transition
Chong also emphasized the crucial role of Tenaga Nasional Bhd’s (TNB) increased capex in supporting Malaysia’s energy transition and large-scale solar development.
“These investments will enhance grid capacity, reduce intermittency issues, and ensure seamless integration of renewable energy, ultimately sustaining demand for solar projects,” he explained.
He further called for greater grid data transparency from TNB, particularly in areas such as new RE zone substations, EV infrastructure planning, and battery storage integration, to support long-term energy transition planning.
Sim echoed these sentiments, noting that TNB’s expanded capex will significantly improve grid stability and the integration of renewable energy sources.
“With improved grid access, more LSS projects will become viable, benefiting all industry stakeholders,” he said. However, he cautioned that challenges such as grid connectivity constraints and financing hurdles remain key concerns requiring strategic collaboration between industry players and policymakers.
Shaping Malaysia’s Sustainable Energy Landscape
As Malaysia accelerates its transition to a cleaner energy future, the upcoming LSS projects will play a pivotal role in shaping the country’s renewable energy landscape. With strong government backing, technological advancements, and increasing private sector investment, the nation is poised to emerge as a leader in the regional energy transition.
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