By Sharen Kaur
KUALA LUMPUR: Renewable energy (RE) construction activity in Malaysia is expected to pick up in the coming months, with battery energy storage systems (BESS) emerging as the next phase of growth.
Malaysia is increasingly integrating BESS into major solar projects to support grid stability.
The country aims to raise RE to 70 per cent of installed generation capacity by 2050, increasing the need for energy storage to manage fluctuations in generation.
The government has started procuring BESS.
In November 2024, the Energy Commission opened Malaysia's first competitive bidding process for utility-scale BESS, offering 400 MW/ 1,600 MWh across four projects.
Each project is 100 MW/ 400 MWh and was targeted for commercial operation in 2026.
Market insiders said this was a significant signal because it established BESS as part of Malaysia's electricity infrastructure rather than merely a private-sector add-on.
Malaysia has emerged as a major Southeast Asian data center hub, attracting billions of ringgit in investment as global technology firms expand their digital infrastructure.
This has increased demand for reliable, round-the-clock electricity.
Data centres consume huge amounts of electricity and cannot tolerate prolonged interruptions. Critical facilities have traditionally relied on diesel generators for backup, but BESS provides another option, an insider said.
"Data centres could combine grid power, solar, BESS and conventional backup.
"The battery can respond almost instantaneously when the grid fails or fluctuates, while also being used for other purposes when there is no outage."
A July 2026 Hong Leong Investment Bank (HLIB) report described battery storage as the next phase of growth for Malaysia's RE construction sector and referred to the opportunity as a billion-ringgit opportunity.
HLIB said major RE programmes, including the large-scale solar 6 (LSS6) and corporate renewable energy supply scheme (CRESS), are expected to drive demand for storage, prompting developers to bring forward battery procurement plans in the second half of 2026.
PUC Bets on Multibillion-Ringgit BESS Boom
PUC Bhd is betting on a potential multibillion-ringgit BESS market in Malaysia, as the country ramps up solar deployment and faces rising power demand from data centres and other energy-intensive industries.
The digital services company is seeking to enter the sector through the proposed RM6.75 million acquisition of H BESS Sdn Bhd, giving PUC exposure to a fast-growing segment of the RE value chain.
PUC managing director Cheong Chia Chou said H BESS was a suitable strategic fit because it provides PUC with an existing platform, allowing the company to enter the sector without building capabilities from the ground up.
He said the timing was favourable as energy storage was shifting from a supporting technology to a critical part of the power system.
H BESS is involved in the assembly and trading of BESS solutions and has received a non-binding letter of intent for a 4,626-kilowatt-hour BESS system at a five-star hotel in Kuala Lumpur.
The company has a partnership with China-based battery storage manufacturer Hithium Tech HK to set up a BESS assembly line in Malaysia.
Cheong said the proposed facility could support local manufacturing capabilities, with a targeted production capacity of up to 2.0 gigawatt-hours (GWh) annually if completed.
"For PUC, this creates the potential to grow the business with strong internal and external technology support, as well as local production capabilities."
Yong Tzen Wae, director of H BESS Sdn Bhd, said: "We will start by importing and installing systems, then gradually localise assembly and build up our capabilities in Malaysia.
"We see potential to become a regional player because every country will eventually require some level of localisation for energy storage solutions."
Hithium is among the major global battery storage manufacturers, while lithium iron phosphate, or LFP, technology has gained wider adoption because of its safety, durability and cost competitiveness.
"The technology is proven. It is already widely used globally and is now expanding into Southeast Asia," Yong added.
The proposed H BESS acquisition will be funded through a private placement of as many as 304.8 million new PUC shares, equivalent to 10 per cent of the company's existing issued share capital.
At an indicative issue price of 3.44 sen a share, the placement is expected to raise about RM10.49 million. Of the proceeds, RM6.75 million will fund the acquisition, RM3.02 million will go towards working capital and RM720,000 will cover related expenses.
The acquisition of H BESS is expected to create a new recurring growth avenue for PUC, Cheong said.
He said the deal includes a profit guarantee of RM3.5 million in aggregate audited net profit over financial years 2026 to 2028.
This provides additional earnings support during the expansion phase, he said.
"We believe the timing is right. Things are just beginning. The key is to accelerate and capture market share. We see BESS as a new growth pillar that complements our existing businesses."
RE GROWTH MAKES BESS INEVITABLE
Malaysia's electricity grid has nearly 32 per cent RE penetration, and a higher share would require greater storage capacity to maintain grid stability, said Datuk Chua Sai Men, director of H BESS Sdn Bhd.
Once RE reaches a certain threshold, the requirement for BESS becomes unavoidable, he said.
He said demand for BESS solutions is expected to rise alongside the growth of renewable energy adoption, supported by government-led initiatives such as the LSS6 programme.
The LSS6 programme, which includes 1,250MW of BESS capacity, would provide further support for the development of the sector, Chua said.
"With favourable policies and increasing market demand, we believe PUC is well positioned to capture long-term opportunities in the energy storage sector," he said.
Chua said the opportunity extended beyond utility-scale projects to commercial and industrial (C&I) users, particularly as electricity demand rises from data centres.
Data centres require large amounts of reliable power, while solar can provide an additional source of electricity. Batteries could therefore play a key role in managing the intermittency of solar generation and ensuring a more stable power supply.
The economics of BESS could also improve as electricity tariffs rise, potentially making energy storage more attractive to commercial and industrial customers seeking to optimise power consumption and reduce exposure to peak electricity costs.
"Once you put in solar, you need batteries. Data centres cannot depend on an intermittent power supply," he said.
BESS could also increasingly compete with conventional diesel backup systems used by critical facilities, offering a lower-emission alternative for backup power while supporting grid flexibility.
"Backup power is another major future application of BESS, especially as more data centres look for reliable energy solutions," Chua said.
PUC, meanwhile, plans to use the acquisition as a springboard to build capabilities beyond importing and installing battery systems, with ambitions to develop local assembly and eventually manufacturing capacity
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