The Malaysian energy storage sector continues its upward trajectory with significant project announcements and policy developments in the first quarter of 2026, signaling robust market confidence and sustained growth momentum.

Market Highlights

Q1 2026 witnessed several major developments that underscore the sector’s vitality:

• Total installed capacity increased by 35% compared to Q4 2025
• Five new utility-scale projects announced, totaling 500 MWh
• Commercial and industrial (C&I) segment grew by 42%
• Government released updated energy storage roadmap

Key Drivers

Several factors are contributing to this accelerated growth:

1. Policy Support

The government’s enhanced renewable energy targets and new incentive schemes have created a favorable investment climate. Recent policy updates include streamlined permitting processes and improved grid connection procedures.

2. Cost Reduction

Battery costs have declined by 18% over the past year, making energy storage projects increasingly economically viable. This trend is expected to continue as manufacturing scales up regionally.

3. Grid Modernization

Ongoing grid infrastructure upgrades are enabling better integration of energy storage systems, particularly in areas with high renewable energy penetration.

Sector Analysis

The growth is distributed across multiple segments:

• Utility-Scale: Largest segment by capacity, driven by renewable energy integration needs
• C&I Applications: Fastest growing segment, with businesses seeking energy cost optimization
• Residential: Emerging segment showing promising early adoption rates

“The market dynamics are extremely positive. We’re seeing sustained interest from both local and international investors, coupled with strong government support.” – MESA Market Analyst

Looking Ahead

Industry forecasts remain optimistic for the remainder of 2026, with several large-scale projects expected to reach financial close in Q2 and Q3. MESA will continue to monitor market developments and provide regular updates to members.