Market update · Global
Malaysia Advances Solar and Battery Storage to Support Data Center Growth
Malaysia is developing large-scale solar photovoltaic and battery storage projects to supply renewable energy to its expanding data center industry. Key initiatives include a 500 MW solar project with 1 GWh battery storage by IOI Corporation and Tenaga Nasional Berhad under the Corporate Renewable Energy Supply Scheme (CRESS), alongside other planned developments totaling gigawatts of capacity. Regulatory updates aim to enhance project viability amid rising electricity demand and grid challenges.
SolTraCo market update · · 3 min readMajor Solar-Plus-Storage Project for Data Centers
A 500 MWac solar photovoltaic project paired with a 250 MW/1,000 MWh battery energy storage system is planned on approximately 1,300 acres in Bahau, Negeri Sembilan, Malaysia. This project is led by IOI Corporation Berhad in partnership with Tenaga Nasional Berhad and a consortium of SMEs.
The renewable electricity generated will be supplied to DayOne Data Centres Limited under a long-term offtake agreement spanning 21 years, marking IOI’s first large-scale renewable energy investment under Malaysia’s Corporate Renewable Energy Supply Scheme (CRESS).
Expansion of Renewable Capacity and Regulatory Framework
Malaysia is expanding utility-scale solar and energy storage capacity to meet the growing electricity demand from hyperscale data centers. In August 2025, Gentari and Gamuda announced plans to develop 1.5 GW of solar capacity with battery storage under the CRESS framework.
To improve project bankability and stimulate investment, Malaysia revised the CRESS framework in September 2026 by introducing a fixed system access charge of MYR 0.03/kWh for qualifying projects and requiring a minimum 10-year contract term. Projects must commence commercial operations by the end of 2028 to qualify.
Challenges and Industry Implications
The rapid growth of Malaysia’s data center industry has raised concerns regarding electricity supply, grid capacity, and water availability. A March 2026 analysis highlighted the difficulties in meeting rising electricity demand while maintaining grid stability and ensuring sufficient dispatchable generation.
Uncertainty over grid access charges has been identified as a key factor affecting the commercial viability of corporate renewable energy projects, prompting regulatory adjustments to address these issues.
Sources
This update is an original SolTraCo synthesis of the linked industry sources. Reported facts and commercial interpretation are kept separate. It does not contain confidential deal information and is not investment, legal or technical advice.