Malaysia, traditionally known for its exports of fossil fuels and raw materials, is now stepping onto the path of energy transition.
Malaysia Embarks on Energy Transformation with Ambitious Green Hydrogen Project
Previously known primarily for its exports of fossil fuels and raw materials, Malaysia is now decisively stepping onto the path of energy transition. The eastern state of Terengganu will soon host one of the most ambitious initiatives in the ASEAN region—a hybrid green hydrogen production hub combining hydropower and floating solar farms. The project is being developed by national utility Tenaga Nasional Berhad (TNB), in partnership with oil and gas giant Petronas and local partner Terengganu Inc.
Green Hydrogen Powered by Water and Sun
The green hydrogen, produced via electrolysis powered exclusively by renewable energy, is set to become a cornerstone of Malaysia’s national energy strategy. In Terengganu, it will be generated using energy from the Kenyir Dam hydropower plant and newly planned floating photovoltaic installations. The hydrogen will be used to produce derivatives such as green methanol and ammonia—commodities increasingly sought after in the global net-zero economy.
Petronas President Tan Sri Tengku Muhammad Taufik emphasized the national significance of the project:
“This groundbreaking partnership not only enhances Malaysia’s energy security and diversification, but also taps into the growing potential of green hydrogen as a complement to our conventional energy mix.”
Malaysia Accelerates Energy Transition
The initiative aligns with Malaysia’s broader energy sector reform agenda. Under the updated National Energy Transition Roadmap (NETR), the Kuala Lumpur government has set new climate goals, including increasing the share of renewables in the energy mix to 40% by 2035—up from the previous target of 31% by 2025. According to analysts at GlobalData, the revised targets are fully achievable, given the rising number of projects and well-structured support mechanisms.
Currently, renewable energy accounts for 13.3% of Malaysia’s total installed capacity. This share is expected to grow to 18.2% by the end of next year and reach nearly 37% by the mid-2030s. The country is heavily investing in new energy sources, particularly solar power, bioenergy, and hydropower. By 2040, Malaysia plans to develop 18.4 GW of new renewable capacity. According to the International Renewable Energy Agency (IRENA), the country will need to invest at least USD 375 billion to meet its transition goals.
Flagship Programs and Investment Incentives
In addition to large-scale infrastructure projects, the government is supporting the private sector through various incentives and tax breaks. Programs such as Large-Scale Solar, the Net Energy Metering initiative, and fiscal and leasing incentives for companies adopting solar PV have driven rapid growth in distributed solar energy. While wind energy remains marginal, pilot investments are emerging that could jump-start this segment of the market.
In this equation, hydrogen could play a strategic linking role between the renewable sector, industry, and exports. Malaysia has already signaled its ambition to become not only a producer but also a supplier of green hydrogen and its derivatives to Asian markets—especially Japan, South Korea, and Singapore, which are seeking reliable sources of clean fuels. The production of green methanol and ammonia could also be used in international shipping and the chemical industry, which is in need of low-emission alternatives to traditional feedstocks.
The TNB–Petronas initiative is therefore more than just another energy project—it is a signal that Malaysia intends to play an active role in shaping the new decarbonized energy order in Southeast Asia. Moreover, it does so in a technologically intelligent way, combining stable energy sources with more variable renewables. The hybrid nature of the project enhances production reliability and offers efficient management of energy surpluses, which can be used for hydrogen generation.
Source: energy-box.com