KUALA LUMPUR: Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim tabled Budget 2027 in the Dewan Rakyat on Friday, 9 October 2026, under the theme Reaching for the Sky, Rooted in the Ground. The budget set out a package of incentives and investments intended to accelerate Malaysia's energy transition. Tenaga Nasional Berhad will invest RM15bil to reinforce the National Grid, while UEM Lestra Berhad will invest RM1bil in projects including an energy storage installation at Kuala Lumpur International Airport and a 1 gigawatt hybrid energy project in Johor.
The government also agreed to extend and strengthen tax incentives for green and sustainable technology to 31 December 2030. Companies that carry out green and sustainable technology projects, build electric vehicle charging stations, or buy green technology assets for their own use can receive an Investment Tax Allowance of up to 100 per cent. The allowance is a tax relief tied to qualifying capital spending, and it is one of the main tools the government uses to steer private investment toward lower-carbon operations.
Grid investment and the Johor hybrid project
The RM15bil commitment from Tenaga Nasional Berhad is aimed at reinforcing the National Grid so that power supply remains continuous nationwide. Grid reinforcement covers transmission and distribution capacity, the parts of the system that move electricity from generation to load centres. UEM Lestra Berhad's RM1bil programme includes energy storage at Kuala Lumpur International Airport and a 1 gigawatt hybrid energy project in Johor. Hybrid projects combine more than one generation source, which can smooth output compared with a single intermittent source.
- RM15bil National Grid reinforcement by Tenaga Nasional Berhad
- RM1bil investment by UEM Lestra Berhad
- Energy storage at Kuala Lumpur International Airport
- A 1 gigawatt hybrid energy project in Johor
In addition, Anwar, who is also Finance Minister, said Tenaga Nasional Berhad (TNB) is investing RM15bil to reinforce the National Grid to ensure continuous power supply for the country.
Nur Madani and household electricity
For households, the budget introduced the Nur Madani scheme, which offers rebates of up to RM200 to buyers of energy-efficient air conditioners and refrigerators. The measure responds to rising household electricity consumption caused by hot weather. Air conditioning and refrigeration are among the largest single loads in a Malaysian home, so replacing an older unit with an efficient one cuts consumption where it is highest and trims demand on the same grid that serves commercial customers.
Among the incentives announced is the Nur Madani scheme, offering rebates of up to RM200 for buyers of energy-efficient air conditioners and refrigerators to address rising household electricity consumption due to hot weather.
Green tax incentives extended to 2030
The green technology incentives will now run to the end of 2030 rather than expiring earlier. The extension gives companies a longer planning horizon for projects whose payback periods are measured in years. The Investment Tax Allowance of up to 100 per cent covers three categories: green and sustainable technology projects, electric vehicle charging stations, and green technology assets bought for a company's own use.
- Up to 100 per cent Investment Tax Allowance
- Green and sustainable technology projects
- Electric vehicle charging stations
- Green technology assets for own use
- Incentives valid to 31 December 2030
The RM1bil KWAP climate fund will be used in full for green projects including renewable energy development and decarbonisation. KWAP is the Retirement Fund Incorporated, the pension fund for Malaysia's public servants. A dedicated climate fund gives project developers a domestic source of long-term capital, which is often the hardest part of financing renewable energy in emerging markets.
Anwar said the energy transition agenda must be accelerated to safeguard the country's long-term energy security. The budget frames the transition as a question of supply security and not only of emissions. For data centre operators, that framing matters because new capacity in Malaysia depends on electricity that can be delivered on schedule.
What it means for data centre and cloud operators
For data centre and cloud operators, the budget signals that the state intends to keep adding generation and grid capacity rather than rationing it. Tax incentives for green technology and electric vehicle charging stations lower the cost of meeting sustainability commitments that corporate tenants track in their own reporting. The extension to 2030 also makes it easier to model a project's tax position across its construction period.
The grid remains the binding constraint. Even with RM15bil of reinforcement, connecting a large new load takes time, because transmission, substation and distribution work has to be planned and built in sequence. The budget does not remove that constraint, but it does put money behind it and it signals that the constraint is understood.
The household rebate is a smaller item, but it points in the same direction. Reducing peak household demand eases pressure on the same grid that serves industrial and data centre customers. Taken together, the measures suggest that Malaysia's energy policy and its data centre ambitions are now being planned as one problem rather than two separate ones.
The budget's energy measures will be judged by whether the projects are delivered on schedule. The grid reinforcement, the Johor hybrid project, the airport storage installation and the climate fund all have long construction timelines. For the cloud and data centre market, the practical question is whether power and land are available at the same time in the same place.
Source: The Star
