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Resetting the Grid: June Insights on Malaysia’s Energy Policy Evolution
Energy Insights by Densui
June, 2025
INSIGHTS
Malaysia’s energy sector saw significant policy shifts in July 2025 with updates to the Corporate Renewable Energy Supply Scheme (CRESS), the launch of Regulatory Period 4 (RP4), and the announcement of the 13th Malaysia Plan (13MP) by the Prime Minister, signalling strong political will by the MADANI Government to advance the green energy transition over the next five years.
These policies appear to be coordinated across various government ministries. Despite the departure of the Minister of Economy and the Minister of Natural Resources and Environmental Sustainability, there are no signs that the government is slowing down its push toward clean energy. Moreover, it is highly likely that the successors to the Economy and Natural Resources and Environmental Sustainability portfolios will maintain continuity, focusing on implementing existing policies rather than introducing entirely new ones.
These recent changes mark a reset in political direction for green energy by the MADANI Government, building on proven policies while rapidly introducing new frameworks to accelerate progress within the next 5 years.
These policies appear to be coordinated across various government ministries. Despite the departure of the Minister of Economy and the Minister of Natural Resources and Environmental Sustainability, there are no signs that the government is slowing down its push toward clean energy. Moreover, it is highly likely that the successors to the Economy and Natural Resources and Environmental Sustainability portfolios will maintain continuity, focusing on implementing existing policies rather than introducing entirely new ones.
These recent changes mark a reset in political direction for green energy by the MADANI Government, building on proven policies while rapidly introducing new frameworks to accelerate progress within the next 5 years.
On the Corporate Renewable Energy Supply Scheme (CRESS)
CRESS is emerging as the default hedge. With firmed solar output and fixed System Access Charges (SAC) at 25 sen/kWh, solar-backed power purchase agreements (PPAs) offer both economic certainty and clear decarbonisation pathways, particularly for high-load, export-oriented operations.
On Regulatory Period 4 (RP4)
On 1 July 2025, Malaysia entered its fourth regulatory period or Regulatory Period 4 (RP4) under the Incentive Based Regulation (IBR) framework. Essentially, RP4 governs how national utility Tenaga Nasional Berhad (TNB) charges consumers for electricity under the oversight of the Energy Commission (Suruhanjaya Tenaga). This strategic shift has direct implications on how Malaysia grows, decarbonises, and stays globally competitive.
What has changed under RP4?
● Time-of-Use (ToU) Structure Recast
The traditional 14-hour peak window (8 a.m. to 10 p.m.) is now compressed to 2 p.m. to 10 p.m., focusing peak pricing on grid-stress hours and incentivising off-peak shifting.
● New Ultra High Voltage (UHV) Class Introduced
Large industrial users connected at 275 kV now face a distinct tariff band, with base energy charges exceeding 55 sen/kWh, rising further with AFA adjustments.
● Capacity & Network Charges Rebalanced
Tariff stacking now reflects grid losses and load profiles more granularly especially penalising high MD and daytime peaking users.
● Greater Visibility of Automatic Fuel Adjustment (AFA)
Former fuel mechanism was buried in bundled rates, but the newly-announced AFA fluctuates month to month exposing consumers more directly to fossil fuel price risk.
For Malaysia’s industrial sector, RP4 marks the end to the cheap, flat electricity era. Data centres, semiconductor fabs, chemical processors, and large-scale exporters are already seeing total landed costs jump to 30–40% in some cases and many are revisiting their load management and procurement strategies.
For renewable energy developers, RP4 creates a clear pricing floor for grid-delivered fossil power. With solar-backed corporate PPAs now landing at or below grid parity (especially with firming and system access incentives), clean energy is no longer just a sustainability badge, but a financial hedge.
As Malaysia prepares for a domestic carbon tax in 2026 and contends with external regimes like CBAM, the tariff framework is an effort to adjust user behaviour before legislation catches up.
On the Corporate Renewable Energy Supply Scheme (CRESS)
The 13th Malaysia Plan (13MP) reflects tangible actions and achievable targets for the transition to green energy, with strategies that are inclusive of both local and foreign players. Announced by the Prime Minister on 31 July 2025, the energy commitments in the 13MP is a clear signal that the policies are supportive of renewable energy players, providing opportunity for solar and FiT players to scale their operations, attract new investments, and actively support Malaysia’s low-carbon transition over the next 5 years.
Through the National Energy Transition Roadmap (NETR), the government’s strong focus on renewable energy is expected to accelerate demand for new renewable energy solutions, including the development of floating hybrid hydro-solar systems. In particular, the government is looking to capitalize on Sarawak’s expansive hydro capacity by connecting Sarawak’s electricity grid with Peninsula Malaysia’s under the 13MP. The Peninsula-Sarawak interconnected grid will serve as a main catalyst to the set-up of the ASEAN Power Grid, connecting ASEAN member countries for cross-border power trading and the promotion of energy security. Locally, new renewable energy solutions is envisioned to include broader solar + BESS adoption across smart cities, industrial zones, and government facilities. Rooftop solar and other decentralized systems are also a key focus to enhancing grid resilience and expanding energy access.
The 13MP’s plan to focus on carbon markets and an emissions trading scheme (ETS) is a step in the direction to drive clean energy adoption, especially as industries work to cut their carbon footprint. Green financing initiatives like the Green Technology Financing Scheme 5.0 are also expected to further encourage the transition to low-carbon.
Under the 13MP, Government Green Procurement (GGP) and enhanced green certification measures will be put in place to boost domestic demand and local manufacturing in clean energy technologies. With parallel efforts to embed circular economy practices and ESG compliance across sectors, Malaysia’s green transition is expected to contribute to a projected 5.2% annual growth in the services sector until 2030.
The 13MP shows political will and commitment by the government of the day to advance a green economy over the next five years. The target outcome is to reduce greenhouse gas (GHG) emission intensity relative to GDP by 45% by 2030, based on 2005 levels. Other goals include the complete phase-out of hydrochlorofluorocarbon (HCFC) usage, increasing Government Green Procurement (GGP) to 50% of selected procurement spending, and achieving a CO₂ storage capacity of 10 million metric tons per year.
These policies appear to be coordinated across various government ministries. Despite the departure of the Minister of Economy and the Minister of Natural Resources and Environmental Sustainability, there are no signs that the government is slowing down its push toward clean energy. Moreover, it is highly likely that the successors to the Economy and Natural Resources and Environmental Sustainability portfolios will maintain continuity, focusing on implementing existing policies rather than introducing entirely new ones.
These recent changes mark a reset in political direction for green energy by the MADANI Government, building on proven policies while rapidly introducing new frameworks to accelerate progress within the next 5 years.
These policies appear to be coordinated across various government ministries. Despite the departure of the Minister of Economy and the Minister of Natural Resources and Environmental Sustainability, there are no signs that the government is slowing down its push toward clean energy. Moreover, it is highly likely that the successors to the Economy and Natural Resources and Environmental Sustainability portfolios will maintain continuity, focusing on implementing existing policies rather than introducing entirely new ones.
These recent changes mark a reset in political direction for green energy by the MADANI Government, building on proven policies while rapidly introducing new frameworks to accelerate progress within the next 5 years.
Resetting the Grid: June Insights on Malaysia’s Energy Policy Evolution
Energy Insights by Densui
June, 2025
INSIGHTS
Malaysia’s energy sector saw significant policy shifts in July 2025 with updates to the Corporate Renewable Energy Supply Scheme (CRESS), the launch of Regulatory Period 4 (RP4), and the announcement of the 13th Malaysia Plan (13MP) by the Prime Minister, signalling strong political will by the MADANI Government to advance the green energy transition over the next five years.
These policies appear to be coordinated across various government ministries. Despite the departure of the Minister of Economy and the Minister of Natural Resources and Environmental Sustainability, there are no signs that the government is slowing down its push toward clean energy. Moreover, it is highly likely that the successors to the Economy and Natural Resources and Environmental Sustainability portfolios will maintain continuity, focusing on implementing existing policies rather than introducing entirely new ones.
These recent changes mark a reset in political direction for green energy by the MADANI Government, building on proven policies while rapidly introducing new frameworks to accelerate progress within the next 5 years.
These policies appear to be coordinated across various government ministries. Despite the departure of the Minister of Economy and the Minister of Natural Resources and Environmental Sustainability, there are no signs that the government is slowing down its push toward clean energy. Moreover, it is highly likely that the successors to the Economy and Natural Resources and Environmental Sustainability portfolios will maintain continuity, focusing on implementing existing policies rather than introducing entirely new ones.
These recent changes mark a reset in political direction for green energy by the MADANI Government, building on proven policies while rapidly introducing new frameworks to accelerate progress within the next 5 years.
On the Corporate Renewable Energy Supply Scheme (CRESS)
CRESS is emerging as the default hedge. With firmed solar output and fixed System Access Charges (SAC) at 25 sen/kWh, solar-backed power purchase agreements (PPAs) offer both economic certainty and clear decarbonisation pathways, particularly for high-load, export-oriented operations.
On Regulatory Period 4 (RP4)
On 1 July 2025, Malaysia entered its fourth regulatory period or Regulatory Period 4 (RP4) under the Incentive Based Regulation (IBR) framework. Essentially, RP4 governs how national utility Tenaga Nasional Berhad (TNB) charges consumers for electricity under the oversight of the Energy Commission (Suruhanjaya Tenaga). This strategic shift has direct implications on how Malaysia grows, decarbonises, and stays globally competitive.
What has changed under RP4?
● Time-of-Use (ToU) Structure Recast
The traditional 14-hour peak window (8 a.m. to 10 p.m.) is now compressed to 2 p.m. to 10 p.m., focusing peak pricing on grid-stress hours and incentivising off-peak shifting.
● New Ultra High Voltage (UHV) Class Introduced
Large industrial users connected at 275 kV now face a distinct tariff band, with base energy charges exceeding 55 sen/kWh, rising further with AFA adjustments.
● Capacity & Network Charges Rebalanced
Tariff stacking now reflects grid losses and load profiles more granularly especially penalising high MD and daytime peaking users.
● Greater Visibility of Automatic Fuel Adjustment (AFA)
Former fuel mechanism was buried in bundled rates, but the newly-announced AFA fluctuates month to month exposing consumers more directly to fossil fuel price risk.
For Malaysia’s industrial sector, RP4 marks the end to the cheap, flat electricity era. Data centres, semiconductor fabs, chemical processors, and large-scale exporters are already seeing total landed costs jump to 30–40% in some cases and many are revisiting their load management and procurement strategies.
For renewable energy developers, RP4 creates a clear pricing floor for grid-delivered fossil power. With solar-backed corporate PPAs now landing at or below grid parity (especially with firming and system access incentives), clean energy is no longer just a sustainability badge, but a financial hedge.
As Malaysia prepares for a domestic carbon tax in 2026 and contends with external regimes like CBAM, the tariff framework is an effort to adjust user behaviour before legislation catches up.
On the Corporate Renewable Energy Supply Scheme (CRESS)
The 13th Malaysia Plan (13MP) reflects tangible actions and achievable targets for the transition to green energy, with strategies that are inclusive of both local and foreign players. Announced by the Prime Minister on 31 July 2025, the energy commitments in the 13MP is a clear signal that the policies are supportive of renewable energy players, providing opportunity for solar and FiT players to scale their operations, attract new investments, and actively support Malaysia’s low-carbon transition over the next 5 years.
Through the National Energy Transition Roadmap (NETR), the government’s strong focus on renewable energy is expected to accelerate demand for new renewable energy solutions, including the development of floating hybrid hydro-solar systems. In particular, the government is looking to capitalize on Sarawak’s expansive hydro capacity by connecting Sarawak’s electricity grid with Peninsula Malaysia’s under the 13MP. The Peninsula-Sarawak interconnected grid will serve as a main catalyst to the set-up of the ASEAN Power Grid, connecting ASEAN member countries for cross-border power trading and the promotion of energy security. Locally, new renewable energy solutions is envisioned to include broader solar + BESS adoption across smart cities, industrial zones, and government facilities. Rooftop solar and other decentralized systems are also a key focus to enhancing grid resilience and expanding energy access.
The 13MP’s plan to focus on carbon markets and an emissions trading scheme (ETS) is a step in the direction to drive clean energy adoption, especially as industries work to cut their carbon footprint. Green financing initiatives like the Green Technology Financing Scheme 5.0 are also expected to further encourage the transition to low-carbon.
Under the 13MP, Government Green Procurement (GGP) and enhanced green certification measures will be put in place to boost domestic demand and local manufacturing in clean energy technologies. With parallel efforts to embed circular economy practices and ESG compliance across sectors, Malaysia’s green transition is expected to contribute to a projected 5.2% annual growth in the services sector until 2030.
The 13MP shows political will and commitment by the government of the day to advance a green economy over the next five years. The target outcome is to reduce greenhouse gas (GHG) emission intensity relative to GDP by 45% by 2030, based on 2005 levels. Other goals include the complete phase-out of hydrochlorofluorocarbon (HCFC) usage, increasing Government Green Procurement (GGP) to 50% of selected procurement spending, and achieving a CO₂ storage capacity of 10 million metric tons per year.
These policies appear to be coordinated across various government ministries. Despite the departure of the Minister of Economy and the Minister of Natural Resources and Environmental Sustainability, there are no signs that the government is slowing down its push toward clean energy. Moreover, it is highly likely that the successors to the Economy and Natural Resources and Environmental Sustainability portfolios will maintain continuity, focusing on implementing existing policies rather than introducing entirely new ones.
These recent changes mark a reset in political direction for green energy by the MADANI Government, building on proven policies while rapidly introducing new frameworks to accelerate progress within the next 5 years.
These policies appear to be coordinated across various government ministries. Despite the departure of the Minister of Economy and the Minister of Natural Resources and Environmental Sustainability, there are no signs that the government is slowing down its push toward clean energy. Moreover, it is highly likely that the successors to the Economy and Natural Resources and Environmental Sustainability portfolios will maintain continuity, focusing on implementing existing policies rather than introducing entirely new ones.
These recent changes mark a reset in political direction for green energy by the MADANI Government, building on proven policies while rapidly introducing new frameworks to accelerate progress within the next 5 years.
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Secure your summit pass for full access and save 20% with the early bird rate – Book now!
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Secure your summit pass for full access and save 20% with the early bird rate – Book now!
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20% off - Early Bird Rate
Secure your summit pass for full access and save 20% with the early bird rate – Book now!
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Standard Rate
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