CRESS: The key to liberalising Malaysia's power market and boosting renewable energy

WHILE we welcome the government’s focus on renewable energy in the 2025 Budget, particularly the allocation of RM1billion to continue financing green technologies, there is an opportunity to go further and faster to truly achieve Malaysia’s net-zero emissions goal by 2050, by offering greater financial incentives, example tax breaks, grants, or subsidies for companies involved in renewable energy projects, particularly, emerging technologies and/or decarbonisation initiatives.

There are currently many innovative technologies that still only exist at an early stage which will play a critical role in driving a more diverse and resilient green economy for Malaysia. The key is to ensure that they receive adequate funding.

A well-structured grant program will provide innovative start-ups with the financial support needed to de-risk their investments, opportunity to scale up small scale pilot projects, and accelerate the adoption of these technologies.

The planned decarbonisation of industrial areas by UEM Lestra and TNB is encouraging, but it is critical that we apply a holistic approach to the energy transition, and also capitalise on the economic potential of retired coal and gas-fired power plants. Power stations often share a legacy of excellent industrial infrastructure and community ecosystems.

For example, we can look to the Battersea Power Station in London, which was transformed into a vibrant shopping and entertainment centre, almost 40 years since it was decommissioned. Alternatively, there is potential to convert these plants into data centres, making use of the available water and grid infrastructure.

Additionally, for Malaysia to better attract green investments, there are two key opportunities that the Madani government could embrace.

Firstly, streamlining the country’s regulatory environment to reduce administrative bottlenecks that often deter investors. Clearer guidelines and faster approval processes will make Malaysia a more attractive destination.

Secondly, by focusing on re/upskilling its workforce, particularly in high-skill and technical areas, such as industrial, mechanical and production engineering, as well as data analytics and emerging technology, will enable Malaysia to better support the accelerated growth of new, green industries, and provide the human capital needed to establish ourselves as a leader in renewable energy within the region.

And while the Malaysian government’s introduction of the Corporate Renewable Energy Supply Scheme (CRESS) is indeed a positive step in liberalising Malaysia's power offtake market and moving away from the single-buyer model – particularly for large-scale power offtake at the grid level, the high system access charge (SAC) for both firm and intermittent power could restrict broader participation.

To ensure CRESS achieves its goal of strengthening Malaysia’s renewable energy ecosystem, the Energy Commission (EC) should reconsider the current structure of the SAC, with alternative mechanisms put in place to recoup the associated costs of necessary grid upgrades and maintenance.

This can be accomplished by working transparently with industry players and stakeholders and collectively agreeing on the mutually beneficial outcomes for all parties.

The anticipated increased renewable energy integration under this scheme could potentially be leveraged by the EC to improve project economics for participating companies whilst maintaining grid resilience, reliability, and sustainability.

This adjustment would ensure that the business ecosystem benefits not only investors, but also the country and its relevant stakeholders alongside successfully advancing Malaysia's renewable energy ambitions.

By Azril Zainal, Malaysia Energy Leader, Arup. The views expressed in this article are the author's own and do not necessarily reflect those of Sinar Daily.