Budget 2027: What It Means for Malaysia's Renewable Energy Industry
RM17 billion in new energy investment, tax incentives extended to 2030. Here's what Budget 2027 actually commits to.
Budget 2027, tabled in the Dewan Rakyat on 9 October 2026 under the theme “Reaching for the Sky, Rooted in the Ground,” set out a clear signal for Malaysia's energy sector: continued, concrete investment in grid capacity, storage, and renewables, backed by extended tax relief. Prime Minister Anwar Ibrahim framed the measures as necessary to secure the country's long-term energy supply as demand keeps rising.
From green technology tax incentives to investments in energy storage and grid infrastructure, Budget 2027 highlights several developments shaping Malaysia's energy landscape.
Here's what businesses need to know:
GREEN INCENTIVES EXTENDED TO 2030
Malaysia is extending and enhancing green technology tax incentives until 31 December 2030.
Investment Tax Allowance (ITA) of up to 100% for eligible green technology projects.
Incentives also cover qualifying EV charging stations and green technology assets for own use.
ENERGY STORAGE IS IN THE SPOTLIGHT
RM1 billion — UEM Lestra's planned investment, including:
An energy storage project at KLIA.
A 1GW hybrid energy project in Johor.
Why does this matter?
As Malaysia's data centre industry expands, electricity demand is expected to grow. BESS and hybrid energy solutions can play an important role in supporting energy flexibility, renewable energy integration and power resilience.
RM15 BILLION FOR THE NATIONAL GRID
TNB will invest RM15 billion to strengthen Malaysia's electricity grid and support continuous power supply.
Why it matters:
Reliable electricity infrastructure is increasingly important as businesses expand and energy demand evolves.
Solar, storage and grid infrastructure each play different roles in the wider energy transition.
JOHOR'S INDUSTRIAL GROWTH. RISING DEMAND FOR GREEN ENERGY.
Johor is emerging as a key hub for industrial expansion and data centre investments, increasing the importance of reliable and sustainable energy supply.
Energy solutions to consider:
C&I Solar — Generate renewable electricity on-site.
BESS — Explore energy storage for suitable operational needs.
CRESS — Enable eligible data centres and other ultra-high-voltage electricity consumers to access renewable energy through the grid, subject to the scheme's requirements.
O&M — Maintain solar system performance and reliability.
Why Johor? Growing industrial activity, data centre development and investments in energy infrastructure are creating greater opportunities to explore renewable energy solutions.
Grid and Storage: Where the Money Is Going
Three commitments stand out on the infrastructure side of the Budget:
Tenaga Nasional Berhad (TNB) will invest RM15 billion to reinforce the National Grid and maintain continuous power supply in the face of increasing demand.
UEM Lestra Berhad will invest RM1 billion in energy projects, including an energy storage facility at KLIA and a 1GW hybrid energy project in Johor.
The Retirement Fund Incorporated (KWAP) will set up a RM1 billion Climate Fund, to be used entirely for green projects such as renewable energy development and decarbonisation.
RM15B
TNB investment to reinforce the National Grid
RM1B
UEM Lestra investment in KLIA storage + 1GW Johor hybrid project
RM1B
KWAP Climate Fund for renewable energy & decarbonisation
Separately, TNB and Petronas will join the ASEAN Power Grid initiative, a regional interconnection project aimed at improving energy security and cross-border grid resilience.
Tax Incentives: Green Allowances Extended to 2030
The government agreed to extend and enhance green technology tax incentives through 31 December 2030. The extension carries Investment Tax Allowances (ITA) of up to 100% for:
Companies undertaking qualifying green and sustainable technology projects
Electric vehicle (EV) charging station operators
Companies acquiring green technology assets for their own use
WHAT THIS MEANS IN PRACTICE Businesses that were waiting on the fence for incentive certainty now have a five-year runway. A company installing commercial solar, BESS, or other qualifying green assets for its own operations can claim ITA against that capital expenditure. This is a direct reduction to the net cost of investing in solar and/or BESS, thereby shortening the return on investment (ROI). |
Exact details of this extended ITA will be announced in due course and it is yet to be confirmed if there will be any changes to the rate of tax relief, or the green assets subject to this relief, from the existing framework which we have written about and you can find here. We will provide updates on our website and social media once available. Regardless, this announcement brings certainty and comes as a huge relief for businesses deciding to install a solar PV system and/or BESS in the near future.
Why This Matters for Johor and Data Centres
Johor's position as an industrial and data centre hub makes the grid and storage commitments particularly relevant locally. Rising data centre electricity demand is a key reason reliable transmission capacity and energy storage are being treated as national priorities, not just regional ones. The Corporate Renewable Energy Supply Scheme (CRESS), which lets eligible data centres and other ultra-high-voltage consumers access renewable energy through the grid, sits squarely within this push, and continued grid investment directly supports its delivery.
For commercial and industrial (C&I) electricity users, the combination of a reinforced grid, an extended ITA window, and growing storage capacity points toward a more stable environment for solar, BESS, and hybrid energy investment over the next few years.
Households Weren't Left Out
On the consumer side, the Nur Madani scheme will offer rebates of up to RM200 on energy-efficient air conditioners and refrigerators, a direct response to rising household electricity use during hot weather.
The Bottom Line
Budget 2027 commits roughly RM17 billion in combined grid, storage, and climate-fund investment, alongside a five-year extension of green technology tax allowances. For businesses evaluating solar, BESS, or CRESS participation, the incentive and infrastructure environment just became clearer and more supportive through to 2030.
Ready to Explore Your Energy Options?
Budget 2027's incentives make now the right time to assess solar, BESS, and CRESS opportunities for your business. Solarlink Energy offers integrated Solar PV, BESS, EPCC, and O&M capabilities to help you act on them.
Comments