Budget 2026 Energy Sector: Driving Malaysia’s Energy Transition Agenda Towards a Sustainable Future

Budget 2026 Energy Sector: Driving Malaysia’s Energy Transition Agenda Towards a Sustainable Future

The Malaysian Government continues to strengthen its commitment to clean energy and sustainability through key initiatives under Budget 2026. The Energy Transition Agenda highlights comprehensive strategies to accelerate the shift toward renewable energy (RE), positioning Malaysia as a leader in the regional green economy.
 

1. 70% Renewable Energy Capacity Target by 2050

Under the National Energy Transition Roadmap (NETR), Malaysia aims to achieve 70% renewable energy capacity in electricity generation by 2050. To support this transition, the government has allocated RM150 million under the National Energy Transition Fund, driving participation from industries and private investors in clean energy projects.

 2. Large-Scale Solar (LSS) Projects Worth RM6 Billion

The government will continue implementing large-scale solar power projects (LSS) with a combined capacity of nearly 2 gigawatts, attracting RM6 billion in private investments. This initiative will significantly boost Malaysia’s solar power generation capacity.

3. GLC-Led Investments in Renewable Energy

Government-Linked Companies (GLCs) are taking a more active role in advancing renewable energy. For instance, UEM Lestra will develop solar farms in Segamat, Melaka, and Selangor, and collaborate with PLUS Malaysia to expand electric vehicle (EV) charging infrastructure. Overall, GLC investment in the green sector is projected to reach RM16.5 billion by 2026.

4. Expanding Renewable Sources – Biomass, Biogas & Mini Hydro

Malaysia is diversifying its renewable energy mix by increasing the Feed-in Tariff (FiT) quota for biomass, biogas, and small hydro sources, adding up to 300 megawatts of new capacity as early as 2028.

5. Corporate Renewable Energy Scheme (CRESS)

The Corporate Renewable Energy Scheme (CRESS) aims to attract private investments worth RM3.5 billion, with corporate participants generating up to 500 megawatts of clean energy through renewable power purchase agreements.

 Empowering Businesses and Consumers Through Solar Initiatives

6. Solar Accelerated Transition Action Programme (Solar ATAP)

The Solar ATAP initiative enables consumers to generate their own electricity and sell excess energy back to the grid, offsetting their utility bills. This programme encourages wider solar adoption, with a national installation capacity target of up to 500 megawatts.

7. Green Technology Financing Scheme (GTFS 5.0)

The GTFS 5.0 programme has been extended until 31 December 2026, offering government guarantees of up to 80% for green technology projects and 60% for non-green sectors such as energy, water, and transportation. A total financing allocation of RM1 billion will support businesses and innovators investing in renewable technologies.

Towards a Greener and Resilient MADANI Malaysia

Through a combination of strong policy direction, financial incentives, and industrial collaboration, Budget 2026 sets the stage for Malaysia’s transformation into a low-carbon, resilient economy. With active participation from industries, GLCs, and the public, Malaysia is firmly on track to becoming a regional clean energy hub by 2050.