By Oswald Timothy Edward and Muhammad Affeif Mohd Azrain

Malaysia stands at a critical juncture in its energy journey. As the world moves toward greener alternatives, the nation must find ways to transition to renewable energy sources while maintaining economic stability.

While the challenges are undeniable, they also offer an opportunity for Malaysia to transform its energy landscape. With the right strategies, Malaysia can attract global investments, diversify its energy mix, and position itself as a leader in sustainable development.

The Need for Transparency and Policy Clarity

For any nation, clear and consistent policies are the bedrock of investor confidence. Imagine being at an airport with your gate number changing repeatedly—frustrating and anxiety-inducing.

Now, apply that analogy to investors navigating Malaysia’s renewable energy sector. A lack of clarity or sudden policy changes can deter even the most committed investors.

Malaysia must focus on establishing transparent, long-term energy policies and project roadmaps. These documents should not only outline the nation’s goals but also provide regular updates to reflect progress and any changes.

Clear governance ensures that investors feel secure in committing their resources to Malaysian projects. It’s not just about attracting capital; it’s about creating a reputation as a trustworthy partner in the global energy transition.

By fostering transparency, Malaysia can transform its renewable energy sector from a foggy road into a well-lit highway, guiding both local and international stakeholders toward a shared vision of sustainability.

Harnessing Foreign and Direct Investments

Malaysia has already laid the groundwork for attracting environmentally conscious investors. The Sustainable and Responsible Investment (SRI) Sukuk Framework, launched in 2014, is a shining example of this.

This framework has positioned Malaysia as a pioneer in green financing, making it a prime destination for global investors looking to fund projects with a positive environmental impact.

Consider a hypothetical example: a multinational company, “EcoPower Solutions,” is deciding where to establish its next renewable energy project.

Thanks to tax incentives, clear guidelines, and frameworks like the SRI Sukuk, Malaysia emerges as the obvious choice. The benefits of such investments ripple throughout the economy—creating new jobs, introducing cutting-edge technologies, and accelerating the nation’s shift toward renewable energy.

Malaysia must continue to promote and expand initiatives like the SRI Sukuk. By doing so, the country not only attracts foreign investment but also strengthens its commitment to achieving its energy transition goals.

Offering Attractive Incentives

Incentives are a powerful tool for encouraging both local and foreign companies to invest in renewable energy projects. Malaysia has already demonstrated its understanding of this principle through initiatives like the Net Energy Metering (NEM) Scheme.

Under the NEM Scheme, solar energy users can sell their surplus power back to the grid in exchange for credits. This not only reduces their electricity bills but also promotes the adoption of solar energy. The NEM Scheme has evolved over the years:

• NEM 1.0 (2016): Allocated 500 MW for solar users.
• NEM 2.0 (2019): Introduced enhanced benefits to make solar adoption more attractive.
• NEM 3.0 (2021-2024): Expanded with a 1,550 MW quota to encourage further growth in renewable energy.

Such initiatives demonstrate Malaysia’s seriousness about embracing renewable energy and make it easier for companies and individuals to participate in the energy transition.

By expanding similar programs and offering additional tax breaks and subsidies, Malaysia can further incentivize green energy projects and encourage widespread adoption.

Diversifying the Energy Mix

A diversified energy portfolio is essential for ensuring long-term energy security and sustainability. Malaysia is uniquely positioned to harness its natural advantages to create a balanced energy mix.

1. Solar Power in Peninsular Malaysia
The southern regions of Johor, Negeri Sembilan, and Melaka enjoy abundant sunshine, making them ideal locations for large-scale solar farms. By investing in solar energy infrastructure in these areas, Malaysia can significantly increase its renewable energy capacity while creating jobs and stimulating local economies.

2.Wind Power on the East Coast

The east coast, particularly Terengganu and Pahang, has consistent wind patterns that are perfect for wind energy projects. With the right investments, Malaysia could tap into this resource to diversify its energy sources and reduce reliance on fossil fuels.

3. Hydropower and Biomass in Sabah and Sarawak
The hilly terrains and river systems of Sabah and Sarawak make them ideal for hydropower projects. Additionally, Sabah’s agricultural sector offers an opportunity to explore biomass energy, which involves using agricultural waste to generate power. These regions could become powerhouses of renewable energy, contributing significantly to Malaysia’s energy transition goals.

Focusing on Energy Efficiency and Community Engagement

Energy transition isn’t just about generating clean power—it’s also about reducing consumption and involving communities in the process.

1. Promoting Energy Efficiency
By adopting energy-saving habits and technologies, Malaysia can reduce overall energy demand. Programs like the NEM Scheme are excellent examples of how individuals and businesses can contribute to energy efficiency.

2. When consumers are rewarded for being eco-friendly, they are more likely to adopt sustainable practices, creating a ripple effect across society.

3. Engaging Communities with Incentives
Community buy-in is critical for the success of renewable energy projects. One way to achieve this is by offering incentives to communities near renewable energy installations, such as wind farms or solar farms.

4. For instance, residents could receive discounts on their energy bills or other benefits in exchange for their support. This not only fosters goodwill but also minimizes resistance to new projects, ensuring smoother implementation.

By focusing on energy efficiency and community engagement, Malaysia can create a culture of sustainability that supports its energy transition goals.

The Road Ahead

Malaysia’s energy transition is a journey filled with challenges, but it is also an opportunity to redefine the nation’s future.

By enhancing transparency, promoting foreign investments, offering meaningful incentives, diversifying its energy mix, and engaging communities, Malaysia can establish itself as a leader in renewable energy.

The world is watching as nations take bold steps toward sustainability. Malaysia has the resources, the talent, and the potential to lead the way.

But the time to act is now. With decisive policies and targeted investments, Malaysia can build a sustainable energy future that benefits everyone—from local communities to global stakeholders.

The path is clear, and the destination is worth the effort. It’s time for Malaysia to power ahead.

-- BERNAMA

Muhammad Affeif Mohd Azzarain ia a holder of BBA(Hons) (Investment Management), Universiti Teknologi MARA (UiTM) Johor while Oswald Timothy Edward is a Senior Lecturer (Risk Management), Universiti Teknologi MARA (UiTM) Johor.