AUGUST 18 — As the world pivots towards cleaner, more sustainable energy systems, Malaysia is making strategic strides in the solar energy sector. Solar power is no longer a niche option — it is emerging as a cornerstone of Malaysia’s renewable energy (RE) ambitions, with government policies, market readiness, and technology convergence working in tandem to accelerate adoption.
For a financing institution like Malaysia Debt Ventures Berhad (MDV), this shift offers opportunities to support high-impact ventures across the solar value chain — from rooftop installations to utility-scale photovoltaic (PV) farms and AI-integrated energy management systems.
Malaysia’s solar energy outlook
Malaysia has set targets to increase its renewable energy capacity to 31 per cent by 2025 and 70 per cent by 2050, with solar energy expected to account for a substantial portion of this growth. The country’s geographical location near the equator offers it an advantage, as it receives consistent solar irradiance throughout the year, making it an ideal environment for photovoltaic (PV) investments.
To support these national targets, several government initiatives have been introduced. One such initiative is the Large-Scale Solar (LSS) programme, which is managed by the Energy Commission and the Ministry of Energy Transition and Water Transformation (PETRA). This programme allows private developers to construct solar power plants with capacities ranging from 10 megawatts (MW) to 500 MW. The most recent phase, known as LSS Petra 5+, is scheduled for commissioning by 2027.
Malaysia has set targets to increase its renewable energy capacity to 31 per cent by 2025 and 70 per cent by 2050, with solar energy expected to account for a substantial portion of this growth. — Pexels pic
Another key initiative is the Net Energy Metering (NEM) scheme, which enables residential and commercial users to export excess solar electricity back to the national grid. This not only reduces electricity bills but also encourages wider adoption of rooftop solar PV systems.
Additionally, the Corporate Renewable Energy Supply Scheme (CRESS) was introduced to allow large corporations to source green electricity directly through power purchase agreements (PPAs). This initiative is expected to accelerate corporate decarbonisation efforts and support the broader energy transition agenda.
Rooftops and megawatts: Dual engines of growth
Growth is taking place at both ends of the solar energy spectrum in Malaysia. On one hand, rooftop solar installations are becoming increasingly common across residential properties, small and medium enterprises (SMEs), and commercial buildings. These decentralised systems not only offer significant electricity cost savings but also contribute to the reduction of carbon emissions. As a result, rooftop solar is expected to account for a substantial share of near-term solar energy expansion in the country.
On the other hand, large-scale solar farms continue to play a crucial role in strengthening grid-level renewable energy contributions. Supported by initiatives such as the Large-Scale Solar (LSS) programme and corporate power purchase agreements (PPAs), these utility-scale projects channel solar power directly into the national grid. In doing so, they support Malaysia’s broader energy transition goals while presenting attractive long-term investment opportunities for both public and private sector stakeholders.
The technical backbone: Lifespan, warranty and maintenance
In Malaysia, solar equipment must withstand tropical conditions—high humidity, intense rainfall, and coastal environments—making durability and maintenance central to financing considerations. According to Malaysia’s Energy Commission’s “Guidelines on Large Scale Solar Photovoltaic Plant for Connection to Electricity Networks,” PV modules are designed for 25–30 years of operation, while inverters, transformers, and balance-of-system components are expected to last one to four decades, depending on component type and maintenance schedules.
Warranties on these components—such as 12-year product and 25-year performance guarantees for PV modules—can be voided if standard O&M routines are neglected. The same guidelines highlight the importance of regular maintenance, advising practices like periodic module cleaning, inverter servicing, vegetation management, and grounding checks. Furthermore, module cleaning is crucial in Malaysia’s climate to prevent soiling losses, which global research suggests can range from 4 per cent to 10 per cent annually if left unattended.
Given that solar panels in Malaysia degrade at an estimated rate of around 0.75 per cent per year—and inverters typically require replacement after 10–12 years—project electrical and financial models must account for these lifecycle costs. Anticipating these events aligns with Malaysian PPAs and strengthens both bankability and investor confidence.
Legal considerations and bankability
In Malaysia, legal due diligence is a key part of developing and financing solar energy projects. Well-structured agreements help reduce risks, ensure regulatory compliance, and enhance the project’s long-term viability.
Power Purchase Agreements (PPAs), whether under the Feed-in Tariff (FiT) system or bilateral deals like the Corporate Renewable Energy Supply Scheme (CRESS), must clearly state pricing, contract period, and curtailment terms to attract investor confidence. For large-scale solar farms, securing land through lease or tenancy agreements is equally important. These contracts should match the project’s lifespan and consider land use zoning, state approvals, and site restoration at the end of operations.
Engineering, Procurement, Construction and Commissioning (EPCC) contracts outline contractor responsibilities and performance standards, while Operation and Maintenance (O&M) agreements define the upkeep needed to maintain efficiency throughout the plant’s life.
As a technology financier, Malaysia Debt Ventures Berhad (MDV) plays a facilitative role by supporting solar projects that are underpinned by clear, bankable legal structures. MDV works closely with developers to assess the viability of project agreements—including step-in rights, liability caps, performance guarantees, and supply commitments—ensuring they align with industry standards and financing expectations.
By championing robust legal frameworks and risk-sharing mechanisms, MDV enables greater access to capital for solar developers and contributes to the broader growth of Malaysia’s renewable energy ecosystem.
Beyond infrastructure: The rise of solar AI
Artificial intelligence (AI) is also beginning to reshape the solar landscape by transforming how systems are designed, maintained, and managed. Through predictive maintenance, AI enables early detection of equipment issues, minimising downtime and reducing maintenance costs. It also enhances energy forecasting by analysing weather data and historical trends, helping to optimise storage use and manage energy demand more accurately.
However, the use of AI for predictive maintenance in Malaysian solar farms remains limited.
Some local players have begun adopting AI-powered energy management systems, particularly in commercial-scale installations, but large-scale or widespread deployment is still emerging. Nonetheless, the growing interest signals a shift towards more intelligent, data-driven solar operations that can improve system visibility, integration with the grid, and ultimately return on investment.
Conclusion: Financing a sunlit future
For MDV, solar energy is more than a green pivot — it is an investment in resilience and innovation. As an agency under the Ministry of Science, Technology and Innovation (MOSTI), MDV supports Malaysia’s renewable energy transition under the National Energy Transition Roadmap (NETR) and New Industrial Master Plan (NIMP) 2030 framework.
To date, MDV has successfully financed over 110 green technology-related companies, providing a total of RM2.12 billion in green technology financing, with RM619.65 million channelled to solar projects, the largest share of its portfolio. Other allocations include mini-hydro, energy efficiency, biomass, and biogas, reflecting MDV’s commitment to diversifying the clean energy landscape.
Recent reforms to Malaysia’s electricity tariff, effective July 2025, further strengthen the business case for solar adoption. With average grid electricity costs rising to approximately RM0.51/kWh for commercial and industrial users, solar via self-consumption (SelCo) models offer a cost-saving alternative at around RM0.29–0.34/kWh, representing savings of up to 43 per cent. This cost differential makes solar energy particularly compelling for SMEs, (environmental, social and governance) ESG-driven firms, and high-usage sectors seeking to reduce overhead and meet sustainability goals.
MDV is well-positioned to respond to this shift by financing accessible and scalable solar solutions, particularly for commercial and industrial users navigating higher grid costs. The alignment between MDV’s financing mandate and the NETR agenda positions the agency as a key enabler in accelerating Malaysia’s transition to cleaner, more cost-efficient energy.
By providing tailored, risk-mitigated financing solutions, MDV empowers developers — from SMEs to utility-scale operators — to advance solar adoption. Together with Mosti, MDV continues to build a sustainable energy future where solar power strengthens Malaysia’s national grid and economic competitiveness.
*This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
