TNB: Malaysia needs massive power generation investment now

Malaysia’s energy needs are changing quickly. Demand is increasing because data centres are expanding and more activities are becoming electrified. At the same time, renewable energy is taking a larger role in the power mix. TNB says substantial investment is needed so the system can handle these changes without weakening reliability, security or affordability.

The investment has two linked parts. New generation includes more solar, supported by energy storage, and combined-cycle power plants designed to be hydrogen-ready. Grid modernisation strengthens the network and helps it manage electricity from changing sources. TNB has allocated about RM43 billion for grid investment during Regulatory Period 4, covering 2025 to 2027.

This spending is needed now because infrastructure takes time to plan and build. TNB reported that renewable energy represented about 26.5 per cent of its generation capacity in 2025, while installed green capacity reached 4,303 megawatts. The company also highlighted the need for technical talent to support the transition.

Grid modernisation is the process of strengthening and upgrading the network that moves electricity from power plants to users. It can include reinforcing grid capacity, updating equipment and improving how the system manages different sources. TNB described this work as essential for accommodating rising demand and greater renewable-energy integration.

Renewable sources can change with weather and time of day, so the network must manage changing flows of electricity. Solar generation, for example, produces power during suitable daylight conditions. Energy storage can help hold electricity for later use, while a stronger grid can move power to where it is needed. These mechanisms support system stability.

TNB has allocated about RM43 billion to grid investment under Regulatory Period 4, covering 2025 to 2027. The article connects this investment with grid strengthening, modernisation and affordability. As Malaysia’s energy mix changes, upgrading the network becomes as important as building new generation capacity.

Under Regulatory Period 4, TNB has an allocation of about RM43 billion for grid investment. RP4 covers the years 2025 to 2027. This is the company’s stated financial commitment to strengthening and modernising the electricity network as demand rises and renewable energy becomes more important.

The investment is intended to accommodate greater electricity demand and integrate more renewable energy while maintaining system stability and affordability. It supports the network alongside new generation projects. TNB identified solar with energy storage and hydrogen-ready combined-cycle plants as priorities for the changing power mix.

TNB’s generation portfolio is already becoming more diversified. In 2025, renewable energy accounted for approximately 26.5 per cent of its total generation capacity. Its installed green capacity was 4,303 megawatts. These figures show both the scale of the existing renewable base and the need for continued grid preparation.

Electricity systems must be prepared before demand grows beyond available generation and network capacity. Malaysia is facing higher demand from data centres and electrification, while its energy mix is changing. If investment does not keep pace, the system may have less room to manage peaks, outages or changing supply conditions.

The pressure would affect both generation and the grid. Too little new generation could make it harder to supply customers when demand rises. An outdated or undersized grid could limit the movement and integration of renewable electricity. These problems could put reliability and energy security under pressure and make affordability more difficult to protect.

The article does not quantify a specific shortfall or predict a particular failure. It reports TNB’s view that substantial investment is needed to maintain affordable, reliable and secure electricity. TNB’s response includes about RM43 billion for grid investment in RP4, plus solar, storage and hydrogen-ready generation.

Solar power would increase renewable generation in Malaysia’s changing energy mix. Because solar output depends on available sunlight, energy storage can support the system by holding electricity and making it available when needed. This pairing can help the grid manage a source whose output changes over time.

Hydrogen-ready combined-cycle plants add a different capability. They are designed so hydrogen can be used as the power system develops, while combined-cycle generation provides another source alongside solar. The article presents these plants as part of TNB’s priorities, not as a replacement for renewable energy. Grid modernisation connects and manages these sources.

The intended result is a more diversified generation portfolio that can support rising demand from data centres and electrification. TNB reported that renewables already represented approximately 26.5 per cent of its 2025 generation capacity. The article does not specify storage volumes, hydrogen fuel timing or plant capacities.

CRESS is the Corporate Renewable Energy Supply Scheme discussed at the forum. Renewable Energy Developers, or REDs, develop the renewable projects, while Green Consumers, or GCs, buy or use the renewable electricity under the scheme. It gives corporate demand a structured way to support renewable energy.

PETRA reduced the excess charge from 20 sen to 14 sen. The excess charge is a cost referenced in the scheme’s arrangements. PETRA also announced that a 10-year contractual period between REDs and GCs will be enforced. A lower charge can reduce project costs, while a long contract gives participants a clearer period for planning revenue and payments.

PETRA said this approach is intended to provide long-term cost certainty to REDs, GCs and financial institutions. That certainty can improve project bankability, meaning projects may be easier to assess and finance. The article also reports growing uptake of CRESS after the excess-charge reduction.

An electricity system has three basic stages. Generators produce electricity at power plants. Transmission networks move large amounts of power across longer distances, while local distribution networks deliver it to homes, businesses and facilities. Grid investment supports the infrastructure connecting these stages and managing electricity from different sources.

Supply and demand must remain balanced at every moment because users consume electricity continuously and generation must respond to that consumption. If demand rises, the system needs enough available generation and network capacity to serve it. Storage can help support changing renewable output, while other plants can provide additional generation. Grid controls and equipment help maintain stable operation.

The article links this challenge to Malaysia’s rising demand from data centres and electrification, plus greater renewable integration. TNB is investing about RM43 billion in the grid under RP4. It is also planning solar with storage and hydrogen-ready combined-cycle plants to support the changing mix.