The ongoing surge in oil and gas prices may have made renewable energy seem more affordable, but Malaysia’s solar power project developers say they are struggling to match financing to supply and demand.
“One of the key problems I have is matching tenure [of renewable energy assets and concessions] with capital deployment,” said Syahrunizam Samsudin, group chief executive officer of Malakoff Corporation Berhad, Malaysia’s largest independent power producer (IPP).
Clean energy projects require longer tenures to maximise long-term benefits for stakeholders, he explained during a panel discussion on Wednesday at the Energy Transition Conference 2026, hosted by national utilities firm Tenaga Nasional Berhad (TNB).
But current tenures for renewable energy projects are too short, Syahrunizam told Eco-Business on the sidelines. Margins are being squeezed by factors such as low renewable energy efficiency — although Malaysia’s total installed solar capacity stood at nearly 5.8 gigawatts (GW) in 2025, uneven solar irradiance across the country means that their efficiency ranges between 10 to 20 per cent of total installed capacity, he said.
At the same time, volatility in the market prices of gas, insurance and more have resulted in higher risk premiums, bumping up the cost of capital.
“[Malakoff] has got a big balance sheet — what about all the small guys?” said Syahrunizam. “So you have [the] potential of a lot of stranded assets in the future if this number cannot be matched.”
In a separate session, Nor Masliza Sulaiman, chief executive officer of CIMB Investment Bank Berhad said that Malaysian investors have become more learned on financing solar power projects, with CIMB having been among the first to raise funding via the capital markets for solar projects.
“In capital markets, tenures [for solar projects] are not a concern because you can get 20 to 25 years of financing,” Masliza told Eco-Business.
On a panel discussion about financing the energy transition, she added that CIMB is continuing efforts to fund solar projects via capital markets.
“As a financier and intermediary, to us it is all about whether there is visibility of cashflows, contractual obligations, and terms that are facilitative to match cash flow financing via debt or sukuk,” said Masliza.
The risks should also be identified, as well as mitigants to those risks, she added.
Fighting for financial close
Still, Syahrunizam’s concerns about rising capital costs and mismatched tenures were echoed by other renewables players throughout the conference.
“A few years ago, solar projects [were]…much easier to bring to financial close,” said Zarihi Hashim, chief new energy officer at TNB. Comparatively, today’s project developers must maneuver a more dynamic landscape, he added.
“Yes, solar cost [has] reduced, but the volatility of the price is increasing. The costing that we do today is not relevant in a few months’ time,” he said on the same panel as Masliza.
“We have seen the price of photovoltaic modules increase up to 30 per cent in a matter of a few months, so projects become more uncertain.”
On top of that, transformers and other key equipment needed to transmit clean energy are also taking longer to be delivered, with lead times increasing as the whole world embarks on the energy transition, Zarihi said.
“
Yes, solar cost [has] reduced, but the volatility of the price is increasing. The costing that we do today is not relevant in a few months’ time.
Zarihi Hashim, chief new energy officer, Tenaga Nasional Berhad
TNB has seen strong investor interest in its recent fundraising rounds for renewable energy projects in Malaysia. In May, it raised RM1.05 billion (US$261.5 million) worth of Asean Green Sustainable and Responsible Investment (SRI) sukuk wakalah to partially finance a 500 megawatt AC (MWac) solar plant in Kedah, Malaysia.
In March, it had issued a RM1.5 billion (US$373.5 million) sustainability sukuk wakalah, which Zarihi said would fund the company’s hydropower projects. The issuance was oversubscribed by more than five times.
“Just by looking at that — the quality of the books, the quality of the accounts that were involved — we can see that there is strong appetite from financiers for bankable projects,” Zarihi said. “But…there is still a gap whereby we can still deploy capital more efficiently and faster, especially in order to meet our ambitions.”
Data centres want flexible tenures…
In recent years, Malaysia has been revising its solar-related policies and tariff mechanisms in response to growing investor and consumer interest in renewable energy. But as is typical of new market mechanisms, these still have to be refined in order to achieve bankability, said Zarihi.
Among these policies is the Corporate Renewable Energy Supply Scheme (CRESS), introduced in 2024 to facilitate direct access between corporate offtakers and renewable energy providers. According to TNB, the scheme had achieved a 1.3GW uptake as of June 2025, including an agreement to deliver 50MW to data centre operator DayOne over a 21-year term.
However, more recent renewable energy contracts for data centres in Malaysia, such as the 21-year deal between Google, French energy giant TotalEnergies and Malaysian company MK Land for the upcoming 29.99MW Citra Energies solar farm, have been structured using the older Corporate Green Power Programme.
“With CRESS, I think there is indeed a lot of demand from the data centre sector, especially recently with fuel price volatility,” said Thavaneethan Manaim, general manager for renewable energy at K2 Strategic, a Singapore-headquartered data centre developer and operator.
He said that among the scheme’s benefits in helping data centres decarbonise is its monthly settlement period.
However, there is a wide range of business models among data centre operators themselves, leading to different profiles of energy demand for hyperscalers, co-location models, self-build centres and third party operators, Maniam added.
To address that, CRESS needs to acknowledge the demand for “flexible PPA structures”, with tenures ranging from seven to 15 years, he said.
“We need to look at different types of risk sharing structures,” said Maniam, suggesting that such a model be considered for system access charges (SAC) as well. “Acknowledging that data centres as a sector need flexible types of PPA structures will really enhance the take up of CRESS.”
…developers and bankers don’t
Guntor Tobeng, managing director of Malaysian solar project developer Gading Kencana also pointed to the mismatch in expectations between bankers and the demands of data centres, which want short term contracts with fixed prices.
“The biggest friction in scaling CRESS…in the market is the mismatch between offtaker and energy developer,” he said, speaking on the same panel as Maniam.
Guntor listed several changes that could improve CRESS, including reviewing the SAC, which currently makes buying solar from project developers more costly than buying it from the grid, he said. Other market players have also criticised the current SAC structure, suggesting that renewable energy developers who integrate battery energy storage systems (BESS) into their projects should not have to pay the charges.
Hamzah Hussin, chief executive officer of Malaysia’s renewable energy regulator Sustainable Energy Development Authority (SEDA) said that while the government is unlikely to remove the SAC as suggested by Guntor, it might have to work on making the mechanism more transparent so that the numbers are understood by industry players and consumers.
Another solution suggested by Guntor and echoed by Dr. Wan Syakirah Wan Abdullah, TNB Renewable’s head of business development, is the establishment of an aggregating platform or exchange to address the mismatch in pricing expectations. Such a mechanism could address the low tariffs often cited in discussions on the costs of solar power, which are based on Malaysia’s government-led large scale solar (LSS) programme.
“ST [Malaysia’s Energy Commission] always awards LSS to the lowest price, so they use LSS price as a reference whenever they negotiate with us,” said Guntor. A centralised platform could help improve price discovery and establish floor or ceiling prices for renewable energy, he said.
Malakoff’s Syahrunizam also cited the race to the bottom for tariff rates as a concern for future solar projects.
While the risk of stranded solar assets is something the government could manage, he cautioned, “If people are fighting for lower tariffs all the time, it’s going to get difficult.”
