This article first appeared in The Edge Malaysia Weekly on July 13, 2026 - July 19, 2026
PENINSULAR Malaysia’s latest competitive bidding exercise for combined cycle gas turbine (CCGT) power plants — the second in two years — saw five submissions at its close on July 1, sources tell The Edge.
The Energy Commission requested for proposals with the aim of seeing new plants start operations between 2029 and 2031 as part of a repowering exercise as old plants are retired and electricity demand continues to grow strongly, driven by rising electrification and the influx of data centre projects (see sidebar).
Notable players in the picture include a consortium involving YTL Power International Bhd (KL:YTLPOWR) with 750mw planned in Pulau Indah, Klang and a joint venture (JV) between Petroliam Nasional Bhd (PETRONAS) and Edra Power Holdings Sdn Bhd (700mw), two sources say.
It is understood that utility giant Tenaga Nasional Bhd (KL:TENAGA) has also submitted a bid for a 700mw gas plant project in Connaught Bridge, Klang. The location was home to one of the oldest power plants in the country with an 800mw-capacity plant, which has since been decommissioned. The location currently houses a smaller, 375mw power plant that will operate until 2037.
According to a source, Genting Bhd (KL:GENTING), through its power unit, has also submitted a 1,400mw proposal in Gebeng, Pahang.
This latest bidding round, dubbed NEWGEN26, comes on the heels of an earlier bidding exercise in 2025 (NEWGEN25) that saw a Tenaga JV with Aurora Power Generation Sdn Bhd being the sole winner of new project awards with 1,400mw capacity in Terengganu under a 15-year power purchase agreement (PPA).
Under the 2025 exercise, the Energy Commission also awarded a PPA extension to three companies for their existing plants, namely Tenaga (1,262mw), Malakoff Corp Bhd (KL:MALAKOF) (2,082mw) and Edra Power (1,375mw) to end-2029 and early 2030. PETRONAS, meanwhile, secured a 150mw additional capacity for its power plant in Pengerang, Johor.
The bidding exercise doubles as the new direction for Malaysia’s gas power plant industry. Bidders have to show their ability to secure gas turbines — currently at a bottleneck — and natural gas supplies and ideally suitable land with easy connectivity to the national power grid and gas pipeline.
According to a consultation paper published by the Energy Commission, Peninsular Malaysia could see as much as 7,848mw of new gas power plant capacity between 2029 and 2031.
In the same period, as much as 6,930mw worth of coal and gas-fired power plant capacity could retire, according to data on the website of the Grid System Operator, an entity responsible for the operation of the national grid, including the scheduling and dispatch of generating units.
The bulk of the plant retirement would come from coal, comprising the nearly 1,475mw Sultan Aziz Power Station in Kapar, which is 60:40-owned by Tenaga and Malakoff (retiring in July 2029); the 2,070mw Janamanjung plant in Perak, owned by Tenaga (August 2030); and the 2,100mw Tanjung Bin power plant that is 90%-owned by Malakoff (September 2031).
The idea is to phase out coal and replace it with gas-fired plants as baseload and reduce emissions in line with the government’s commitment to international practices.
However, the influx of gas-fired power plant developments globally — to meet rising electrification demand while managing emissions — has resulted in a market squeeze for gas turbines, in some cases, requiring down payment of up to one-third of the turbine’s price.
It is understood that YTL Power is among the few players that have secured turbines for new bids. Malakoff, which is said to be close to securing two 1,400mw power plants, previously announced it had secured four turbines from Mitsubishi Power Ltd. Tenaga, which has the NEWGEN25 1,400mw tender win in Terengganu and another 1,400mw project in the state, said a month ago that it had signed an agreement for six gas turbines, also from Mitsubishi Power, with up to 4,200mw capacity.
However, the lead time remains tight for new projects. According to Wood Mackenzie, gas turbine manufacturing backlogs have stretched power plant lead times to as long as five years, compared to 3½ years previously.
It said in a report, “Hot-section component manufacturing — particularly single-crystal blade production — remains the industry’s critical bottleneck, as these precision processes can only be performed at scale by a handful of global suppliers”, even when key manufacturers like GE Vernova Inc, Mitsubishi Power’s parent Mitsubishi Heavy Industries Ltd and Siemens Energy AG had confirmed manufacturing capacity expansion plans.
Malaysia needs to hustle to maintain power grid buffer as data centres flourish
There is active debate on whether Malaysia’s power sector can keep pace with the fast-growing electricity demand.
Attention has centred on data centres (DCs), which currently account for 7% of electricity demand in Peninsular Malaysia. This is expected to rise to 31% by 2035 on a power grid that also needs to cater to growing demand from other commercial and residential users.
Prime Minister Datuk Seri Anwar Ibrahim has said Malaysia is restricting new DC projects that are not linked to artificial intelligence to manage water and electricity consumption. As a medium-term measure, the government has conducted two tenders for new gas-fired power plants — last year and this year — to add to generation capacity.
However, actual DC consumption today is at a low base: it represents just 54% of approved capacity, with the remaining 948mw expected to largely come online only by 2028. That alone is equivalent to about 3% of grid-connected installed generation capacity, excluding other projects approved but not commissioned yet.
At the same time, a global gas turbine bottleneck suggests new power plants could take longer than the usual three years to commission. A plant awarded today may only come online in 2029 at the earliest — a year after the next major increase in DC power demand.
Furthermore, Energy Minister Datuk Seri Fadillah Yusof said in 2024 that the nation would not build new coal-fired power plants in line with the country’s net-zero emissions target.
Based on the latest peak grid demand of 21,583mw on June 8 and grid-connected installed generation capacity of 28,192mw in 2025, Peninsular Malaysia has a seemingly comfortable reserve margin of 23.4%.
But a closer look shows available generation currently stands at just under 25,000mw, narrowing the margin to around 13%. The reduction is partly due to planned outages for maintenance works, including at the 2,242mw Edra Melaka Power Plant. It is the largest thermal power plant in the country.
Peninsular Malaysia also saw heightened electricity imports of 300mw from Thailand, mainly between September and November 2025 and throughout June this year, Grid System Operator (GSO) data shows.
Renewable energy generation, mainly from solar and hydro, is intermittent in nature and accounts for about 12% of peak demand, according to a snapshot of grid demand. On July 9. large-scale solar (LSS) supplied around 1,500mw during the day, while hydro generation exceeded 1,100mw at night. Hydro also supplied between 300mw and 600mw at other times of the day.
In terms of grid-connected installed generation capacity, LSS and hydro represent nearly 17% of the total. LSS totalled 2,237mw as at July 2025, compared with 2,526mw of hydro generation, according to Energy Commission and GSO data.
Another 2,400mw of solar capacity sits at the distribution network level and is therefore not counted as part of grid demand. Meanwhile, oil- and diesel-fired plants continue to supply between 360mw and 450mw.
Put to the test
Although Malaysia is focusing on AI-linked DCs for now, a substantial pipeline of projects remains. Beyond the 948mw of approved DC capacity yet to come online, another 1,800mw (6% of total generation capacity) is under construction and there are electricity supply agreements for 2,000mw, according to Tenaga Nasional Bhd (KL:TENAGA). More projects remain at the application stage and will be assessed by the Data Centre Task Force.
It is understood that in the second half of 2025, actual DC maximum power demand rose by over 100mw each quarter, followed by another record 200mw in the first quarter of 2026 alone.
Against this backdrop of rising DC demand and tighter generation availability, data centres have also seen more power sag incidents — temporary voltage drops — caused by trips at power lines and power plants, according to channel checks by The Edge.
While some sags last only tens of milliseconds, they can still be detected by top-tier DCs designed for extremely high reliability, where a typical threshold is around 20 milliseconds.
In some incidents, backup power systems kicked in. At other times, there were emerging concerns over whether loads would need to be transferred from the grid to backup generators to eliminate any risk of server shutdown.
In the short term, the government has allowed several gas power plants to operate beyond their original commissioning periods. Will new gas plants be ready to offset the next coal power plant to be decommissioned — totalling 1,474mw — in 2029? The question is no longer whether Malaysia has enough power today, but whether new generation can come online fast enough or it has to play catch-up. Will the phasing-out of coal, which is the base load now for power generation, make it even more challenging? — By Adam Aziz
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