Against the backdrop of accelerating global energy transformation, the Southeast Asian energy storage market is showing vigorous development vitality. Malaysia has become a hot investment destination with great potential due to its unique advantages. Malaysia's electricity demand continues to rise, and the development plan for renewable energy is ambitious. Energy storage is crucial in ensuring a stable supply of electricity and promoting the optimization of the energy structure. The country has actively introduced a series of policy dividends to fully promote the development of the energy storage industry. This article will analyze the key points of market access in detail for companies that are interested in entering the Malaysian energy storage market, helping companies to accurately plan and seize opportunities.

 

Market Status Analysis

Energy demand and transformation goals

• As the third largest economy in Southeast Asia, Malaysia has an average annual growth rate of electricity demand of about 3.5%, and industrial electricity consumption accounts for as high as 48% (2023 data).
  
  
• The government has proposed the goal of "carbon neutrality by 2050" and plans to increase the proportion of renewable energy power generation to 31% by 2025 (23% in 2023). Energy storage has become a core tool for peak load regulation and grid stability.
  
  

Energy storage market drivers

• Renewable energy expansion: Solar energy has outstanding potential, with a goal of adding 4.5 GW of photovoltaic installed capacity in 2025 (2.8 GW in 2023), and supporting energy storage demand of about 1.2 GWh.
  
  
• Industrial and commercial demand: Data centers, semiconductor factories, etc. require high-reliability electricity, and the backup power supply market grows by 15% annually.
  
  
• Electric vehicle industry chain layout: Electric vehicle sales will increase by 200% in 2023, and it is planned to build 10,000 charging piles by 2030 to promote localized production and cascade utilization of power batteries.

 

Current Market Size

• In 2023, Malaysia's energy storage installed capacity will be about 80 MW/160 MWh, mainly concentrated in industrial and commercial projects in Peninsular Malaysia.
  
  
• The market size is expected to reach 350 MWh in 2025, with a compound annual growth rate (CAGR) of 45%.

Main Challenges and Risks

Grid access and dispatch restrictions

The national grid is monopolized by TNB (Tenaga Nasional Berhad), and energy storage projects must go through a complex grid-connection approval process (taking an average of 12 months).

Due to the lack of an independent electricity market mechanism, the revenue model for energy storage participating in frequency regulation ancillary services (FCAS) is still unclear.

 

Inconsistent policy enforcement

Local state governments (such as Sabah and Sarawak) have energy autonomy, and project approval standards vary greatly.

Foreign companies often face "Bumiputera (indigenous people) equity requirements", and some projects require 30% of the equity to be reserved for local Bumiputera companies.

 

Technology and cost bottlenecks

High temperature and rainy environment: The average annual humidity is above 85%, requiring the energy storage system to have anti-corrosion and efficient heat dissipation design (cost increase of 10-15%).

The supply chain relies on imports: 90% of lithium battery core materials (such as diaphragms and electrolytes) rely on China and South Korea, and logistics costs account for 8-12% of total costs.

 

Major players and competition landscape

International Enterprises

Huawei Digital Energy: Dominating the commercial and industrial energy storage market, signing a 50 MWh Penang data center solar storage project in 2023.

BYD: Cooperating with local consortium Sime Darby to build electric vehicle battery factories and energy storage system assembly lines.

Fluence: Won the bid for TNB's 30 MW/60 MWh grid-side energy storage project, focusing on system integration technology.

 

Local Enterprises

TNB (National Energy Company): Leading the national energy storage tender, plans to deploy 200 MWh of energy storage projects in 2024.

Samaiden Group: A local renewable energy leader, focusing on household solar-storage systems (market share of 22% in 2023).

PESTECH International: Power equipment manufacturer, developing modular containerized energy storage solutions.

 

Emerging players

Virtual power plant (VPP) operators, such as Malaysian startup SOLS Energy, integrate distributed energy storage resources to participate in demand response.

Used battery recycler: ReGen Strategic is working with South Korea’s SK Innovation to develop community energy storage applications for retired electric vehicle batteries.

 

Key points for regulatory compliance

Foreign investment access rules

Manufacturing sector: The maximum foreign shareholding in energy storage equipment production is 70% (the Bumiputera equity must account for at least 30%).

Energy project operation: Foreign investment is allowed to hold 100% of the shares, but a long-term power purchase agreement (PPA) must be signed with TNB.

 

Localization requirements

Local content rate (DCR): Starting from 2024, government bidding projects must meet 30% local procurement (battery packs, inverters, etc.).

Technology transfer clause: Foreign-invested enterprises must commit to transferring at least 10% of their core technology patents to local partners.

 

Key certifications and approvals

SIRIM certification: Mandatory for energy storage systems (test cycle 4-6 months, cost approximately US$30,000-50,000).

Energy Commission (EC) approval: Energy storage projects exceeding 1 MW are required to submit a technical feasibility report, and the approval period is 6-9 months.

 

Fiscal and tax incentives

Green Investment Tax Exemption (GITA): Energy storage projects can enjoy a 70% income tax exemption for 5 years (valid for applications before 2025).

Import duty optimisation: Setting up a factory in a free trade zone (such as Iskandar Johor) can exempt import duties on lithium battery raw materials.

 

Strategic recommendations and incremental content

Business model innovation

Shared energy storage: Collaborate with industrial parks to provide “on-demand rental” energy storage capacity (e.g., monthly rental fee of $1,500 per MWh).Green electricity + energy storage bundled sales: Provide zero-carbon electricity packages for multinational companies (such as Intel and Tesla's super factory).

 

Localization cooperation path

Priority will be given to collaborating with GLCs (government-linked companies) such as TNB and Sime Darby to obtain policy and resource support.Establish R&D centers with local universities (e.g. University of Malaya, UTM) to meet technology transfer requirements and cultivate talents.

 

Risk Mitigation Strategies

Take out “Political Violence Insurance”: Cover potential geopolitical risks in East Malaysia (Sabah, Sarawak).Financing in local currency (Ringgit): Reduce the impact of exchange rate fluctuations through Islamic bonds (Sukuk).

 

Future market trend forecast

Differentiation of technical routes

Before 2025, lithium iron phosphate batteries will dominate industrial and commercial scenarios (accounting for 75%), and after 2026, the proportion of hydrogen storage in long-term energy storage pilot projects will increase.

Policy breakthrough direction

It is expected that the "Energy Storage Market Operation Framework" will be launched by the end of 2024, allowing third-party independent energy storage operators to participate in electricity trading.

 

Market size forecast

Baseline scenario: Energy storage installed capacity reaches 400 MWh in 2025 (CAGR 50%) and exceeds 2 GWh in 2030.
Radical scenario: If electric vehicle policies are accelerated, energy storage demand may reach 3 GWh in 2030 (with second-hand batteries accounting for 30%).

 

Emerging areas of opportunity

Data center energy storage: Driven by the global expansion of cloud services, the demand for energy storage in data centers around Kuala Lumpur has increased by 60% annually.

Agricultural photovoltaic and energy storage integration: The palm oil plantation "photovoltaic + energy storage" project received government subsidies of 15,000 ringgit per hectare.

 

The energy storage market in Malaysia has both policy dividends and complex challenges. Enterprises need to focus on the three core strategies of "local compliance adaptability, technical scenario innovation, and integration of political and business resources". With the implementation of the revision of the National Energy Policy in 2024, the energy storage track will usher in an explosive period, and those who take the lead are expected to occupy a strategic high ground in the clean energy transformation of Southeast Asia.

 

In general, although the Malaysian energy storage market is full of opportunities, there are also challenges such as technology adaptation and policy changes. When entering this market, companies need to pay close attention to policy trends, conduct in-depth research on local needs, and invest resources in technological innovation and localization. Integrate into the local market by working closely with local companies and participating in the formulation of industry standards. As long as companies seize the opportunities brought by policy dividends and properly respond to challenges, they will surely be able to achieve success in the Malaysian energy storage market, contribute to local energy transformation, and achieve common development.