Malaysia’s renewable energy (RE) sector is expected to enter a busy and catalyst-rich period in the first quarter of 2026, driven by new solar tenders, policy developments and rising power demand from data centres, according to Kenanga Research.
The research house expects the potential rollout of Large Scale Solar 6 (LSS6) bids in 1Q2026, which would add to the strong visibility of construction awards as LSS5+ projects progressively move into the execution phase. Together, these developments are likely to sustain momentum for engineering, procurement, construction and commissioning (EPCC) players in the sector.
At the retail level, Kenanga said the unveiling of the Solar for All at Premises (SOLAR ATAP) programme at end-2025 — which replaces the expired Net Energy Metering 3.0 (NEM 3.0) scheme — should reinvigorate rooftop solar adoption. Applications under SOLAR ATAP commenced on Jan 1, 2026, marking an important trigger for renewed demand from households and commercial users.
Beyond solar, bidding activity for an additional 300MW quota under the Feed-in Tariff (FiT) mechanism is expected to begin from February 2026, reinforcing a broader acceleration in renewable energy deployment as Malaysia works towards its national green transition targets.
Kenanga also highlighted Tenaga Nasional Berhad’s (TNB) strong energy sales performance, supported by demand from data centres with a combined capacity requirement of about 7.1GW. The Corporate Renewable Energy Supply Scheme (CRESS), which enables long-term power offtake at competitive rates, is seen as an attractive option for data centre operators, particularly ultra-high voltage customers. As of June 2025, committed capacity under CRESS had reached 1.3GW.
Spillover benefits from the data centre boom are also expected across the electrical infrastructure value chain. Kenanga pointed to opportunities for players involved in switchgear and extra-low voltage (ELV) systems, citing PEKAT Group Berhad as a beneficiary given rising demand from data centre projects.
Execution capability remains a key differentiator in the sector, with Kenanga noting that companies able to scale quickly through partnerships and backed by proven delivery track records are likely to pull ahead. The research house added that corporates are increasingly locking in solar panel prices to protect margins amid cost volatility.
Overall, Kenanga said the renewable energy sector remains firmly in a fast-growth phase, with companies under its coverage expected to collectively deliver earnings growth of about 26% in FY2026. This, it said, supports sector valuations in the range of 20 to 30 times earnings.
Kenanga maintained its OVERWEIGHT call on the sector, naming Solarvest Holdings Bhd (SLVEST) and KJTS Group Bhd as its top picks to capitalise on opportunities arising from the National Energy Transition Roadmap (NETR).
In addition, discussions on a proposed climate change bill — which is expected to provide clarity on carbon tax implementation — are understood to take place during the first parliamentary sitting of 2026. Kenanga believes this could further boost investor interest and policy support for the renewable energy space.
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