Malaysia’s renewable energy sector is expected to witness robust growth, driven by government initiatives and forthcoming investments, according to financial services company Philip Capital.

In its recent report, the company reaffirmed its positive outlook on Malaysia’s renewable energy sector, citing continued government initiatives and potential new investments.

The research house highlighted the upcoming Large Scale Solar (LSS5) projects, with a 2 GW capacity, generating MYR7 billion ($1.56 billion) in engineering, procurement, construction, and commissioning (EPCC) opportunities, Xinhua reported on Friday.

The recent expansion of rooftop solar capacity is also expected to fuel contract opportunities for solar EPCC companies. Philip Capital projects sector earnings to grow by 63% in 2025, driven by the Corporate Green Power Programme (CGPP) and Net Energy Metering 3.0 (NEM 3.0).

Maybank Investment Bank is also optimistic about Malaysia’s renewable energy sector, citing robust earnings visibility from ongoing and upcoming projects.

It expects earnings recognition from the CGPP projects, slated for completion by the end of 2025, to support sector growth. The anticipated LSS5 projects will further bolster order books and sustain strong growth beyond 2025.

Maybank also highlighted the National Energy Transition Roadmap (NETR) as a key driver for renewable energy development in 2025.

The progress on Malaysia’s first utility-scale Battery Energy Storage System (BESS) with a planned 400 MWh capacity is also expected to reinforce the sector’s growth trajectory.

Hong Leong Investment Bank Research is upbeat about Malaysia’s energy transition which is supported by the burgeoning data centre industry and long-term renewable energy goals.

It highlighted the NETR’s target of 70% enewable energy capacity by 2050, requiring MYR637 billion in investments or MYR 24.5 billion annually starting in 2024.

Hong Leong emphasized the critical need to align renewable energy development with the growing energy demand from data centers. To support the data centre boom, it is estimated that 35 GW to 40 GW of renewable energy capacity, primarily solar, will be needed.