By Professor Dato Dr Ahmad Ibrahim
More than a decade ago, in Renewable and Sustainable Energy Reviews journal, researchers Nor Afifah Basri etal spoke about Malaysia’s energy future. Their paper was a diagnostic scan of a nation at a crossroads—one foot planted on the stable, subsidized ground of fossil fuels, the other tentatively reaching toward a renewable horizon. Reading their findings today, with the benefit of hindsight, is both reassuring and unsettling. Reassuring because many of their prescriptions have been implemented. Unsettling because the central challenges they identified remain stubbornly unresolved.
The authors gave Malaysia credit where it was due. By 2015, the country had already moved beyond the “cheap oil forever” mentality. The National Renewable Energy Policy (2010) and the introduction of the Feed-in Tariff (FiT) mechanism were genuine leaps. They correctly argued that these policies offered a triple win: energy security, environmental sustainability, and economic resilience.
Their review highlighted a particularly clever feature of Malaysia’s approach: leveraging the palm oil industry. Oil palm biomass—empty fruit bunches, mesocarp fiber, and palm kernel shells—wasn’t waste; it was a distributed energy resource waiting to be tapped. For a nation that is the world’s second-largest palm oil producer, this was low-hanging fruit. The authors pointed out that biomass and biogas could provide baseload power, not the intermittent supply that plagues solar and wind.
Furthermore, they correctly identified solar photovoltaic (PV) as the long-term winner for Peninsular Malaysia, given its equatorial solar radiation of 4.5–5.5 kWh/m² per day. The strategy, as they saw it, was to use FiT to create a market, then transition to net energy metering (NEM) as costs fell. But here is where the 2015 paper reads like a warning we have only half-heeded. The authors were brutally honest about the challenges, and those challenges have proven to be remarkably tenacious.
First, the subsidy hangover. In 2015, Malaysia’s fuel subsidies were still massive, distorting the true cost of coal and gas. The authors argued that until subsidies are rationalized, renewables cannot compete on a level playing field. Fast forward to 2026: while subsidies have been restructured, the political pain of full removal has led to a stop-start approach that confuses investors. You cannot build a 20-year solar farm when the fiscal rules change every budget cycle.
Second, the “cheap coal” trap. The paper noted a troubling trend: the rapid expansion of coal-fired plants to replace declining gas fields. Economically, coal was cheaper. Environmentally, it was a disaster. The authors warned that locking into new coal infrastructure would create a carbon liability for decades. Sadly, Malaysia doubled down on coal for most of the late 2010s. Only recently has the government pledged to retire coal plants by 2044—but that might be too late for the 1.5°C target.
Third, institutional fragmentation. They pointed out that energy policy falls under federal jurisdiction, but land for solar farms and water for hydropower are state matters. Sabah and Sarawak, in particular, operate nearly autonomous energy systems. Their finding was diplomatic: “Coordination is complex.” The translation? Grand national targets often collapse when they hit state-level bureaucracy and local land rights disputes.
The authors also noted that renewable energy tariffs were initially higher than conventional electricity. For urban, middle-class households, paying an extra 1.6% was fine. For rural Sabah or the bottom 40% of earners in Kelantan, it was a regressive tax. This is the unglamorous truth of the energy transition: green energy is only sustainable if it is affordable. Malaysia’s strategy was designed by engineers and economists for an industrial user base, not by sociologists for a diverse population. Consequently, rooftop solar adoption remains highest among commercial buildings and affluent landed properties. The “rakyat” are still mostly watching from the sidelines.
A decade on, the panoramic overview has proven prophetic. Malaysia has made genuine progress: renewable capacity (excluding large hydro) has grown from under 5% in 2015 to nearly 25% today. The National Energy Transition Roadmap (NETR) launched in 2023 echoes almost verbatim the authors’ recommendations—solar parks, floating solar, biomass co-firing, and cross-border green electricity trade.
But the core challenge remains political will. The authors concluded that “consistent and long-term policy commitment” is the single most critical success factor. They correctly identified the benefits and the challenges. The tragedy is not that they were wrong. It is that they were right, and we are still arguing about the same things. Malaysia does not need another study. It needs the courage to retire coal early, the honesty to remove fossil fuel subsidies completely, and the creativity to finance solar for poor households. The panoramic view is clear. The only question is whether our vision is finally sharp enough to act.
The author is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an Adjunct Professor at the Ungku Aziz Centre for Development Studies, Universiti Malaya.
About The Author
