Renewables are the solution to Malaysia’s sustainable future and renewed climate ambition. Transitioning to renewable energy will save Malaysia between US$9 billion and US$13 billion annually by 2050 in avoided energy, climate, and health costs according to a new report by the International Renewable Energy Agency (IRENA) in collaboration with the Ministry of Natural Resources, Environment and Climate Change (NRECC).
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The new joint IRENA and NRECC “Malaysia Energy Transition Outlook” report shows that by aligning its low-emission development strategies with IRENA’s 1.5˚C Scenario, the Southeast Asian country can increase its share of renewables to over half its final energy mix by 2050, up from just 5 percent today.
With its renewed pledge to be carbon neutral by 2050 and the expected increase in energy demand due to almost a tripling size of its economy in the same period, Malaysia needs to decide between continuing with fossil fuels or tapping into its significant potential for renewable energy sources.
The report offers a long-term energy pathway to a cleaner and more sustainable energy system.
Improve grid flexibility
To allow higher integration of renewables in a cost-effective manner, Malaysia needs to improve its system flexibility. Ambitious and long-term planning must emphasize solutions to overcome the current challenges of grid integration and to create grid flexibility.
That is why Malaysia’s energy transition pathway sees the power sector and grid-related investments accounting for over 70 percent of the total investment requirement, which is at least US$375 billion.
The urgent action that Malaysia needs to take is to create a more conducive investment environment for renewables. Through strategy and policies that prioritize clean energy investments and are consistent at all government levels, Malaysia can achieve its renewed ambition of reaching net zero by 2050, while securing a more prosperous, sustainable future for its people, said Francesco La Camera, Director-General of IRENA.
Tackle regulatory and market barriers
However, renewable energy investment remains a major hurdle to accelerating Malaysia’s energy transition.
The report finds there is a need to strengthen the capacity of national financing institutions, overcome the regulatory and market barriers, as well as to reduce government spending on fossil-fuel-related subsidies.
The Malaysia Energy Transition Outlook presents a long-term energy scenario planning framework that can be explored, in line with the country’s 2050 carbon neutrality aspiration. This report also considers aspects of transitioning Malaysia’s energy system into a modern, reliable, affordable, sustainable, and future-proof system. Therefore, the recommendations presented in this report will be studied and adopted accordingly, said Minister of NRECC, YB Tuan Nik Nazmi Nik Ahmad.
Electrification and energy efficiency key measures
Based on the report, electrification, and energy efficiency are key measures in Malaysia’s net-zero pathway.
The share of electricity in the total final energy consumption of all end-use sectors should increase from 26 percent in 2018 to 40 percent in 2050.
Such an increase reflects the additional electricity demand required to electrify end-users in industry and the transport sectors.
Electric vehicle (EV) numbers must grow rapidly, with annual EV sales of more than 0.4 million annually from 2030, reaching up to 80 percent share by 2050.
These sectors could also benefit from enabling technologies like green hydrogen. Hydrogen demand in Malaysia is expected to grow significantly, up to 1.5 million tonnes of clean hydrogen by 2050.
Furthermore, the country can position itself as a reliable partner and supplier of green hydrogen, provided that national targets, needs, and mandates are met first.
Solar PV and sustainable bioenergy
The findings show solar photovoltaic as a key technology that will lead Malaysia’s energy transition regardless of the scenario, with up to 150 GW of installed capacity required up to 2050.
Additionally, the country needs to tap into its diverse mix of bioenergy potential. Scaling up sustainable bioenergy use can assist the transformation of the transport, industry, and non-energy sectors, as bioenergy contributes around 16 percent to Malaysia’s total final energy consumption up to 2050.
The report also touches upon the country’s role in the energy transition of Southeast Asia (SEA).
With diverse renewable power systems, Malaysia has an opportunity to provide supply and flexibility to neighbouring countries, through the deployment of energy storage and expansion of regional interconnection.
Achieving the energy transition in the most cost-effective way will necessitate higher renewables integration within Malaysia’s national power systems and regionally with its neighbours.