The new National Energy Efficiency Policy and Action Plan 2026-2035 (NEEAP 2.0) is set to create significant opportunities for energy-efficiency, industrial automation and mechanical and electrical engineering companies, according to MBSB Research.
The report follows the launch of NEEAP 2.0 by the Ministry of Energy Transition and Water Transformation (PETRA), which marks the next phase of Malaysia’s energy transition by placing greater emphasis on improving the efficiency of existing energy consumption rather than relying solely on additional energy supply.
Unlike its predecessor, NEEAP 1.0, which focused largely on electricity, NEEAP 2.0 covers both electrical and thermal energy and is supported by the Energy Efficiency and Conservation Act (EECA) 2024, which came into force in January 2025.
The EECA gives the Energy Commission greater statutory powers to obtain energy-related data, monitor compliance and enforce energy-efficiency requirements.
RM85.2 billion in projected energy savings
NEEAP 2.0 targets an 11.6 per cent reduction in energy demand against the business-as-usual (BAU) scenario by 2035.
MBSB noted that the target does not mean Malaysia’s absolute energy consumption will fall by 11.6 per cent. Instead, energy demand in 2035 is projected to be 11.6 per cent below what it would otherwise have reached under the BAU scenario.
BAU energy demand for the industrial, commercial and domestic sectors is projected at 1.466 million terajoules (TJ) in 2035. After the targeted efficiency savings, demand is expected to be around 1.296 million TJ, compared with 1.238 million TJ in 2026.
The plan projects cumulative energy savings of 815,382 TJ between 2026 and 2035, equivalent to approximately RM85.2 billion in energy savings.
The use of TJ as the measurement reflects the broader scope of NEEAP 2.0, covering both electricity and thermal energy, including fuels used for industrial heating, steam and other processes.
Industry to deliver bulk of savings
The industrial sector is expected to account for about 69 per cent of cumulative energy savings, followed by commercial buildings at 21 per cent and households at 10 per cent.
In terms of percentage reduction targets by 2035, however, the commercial sector has the highest target at 13.2 per cent, followed by industry at 11.9 per cent and the domestic sector at 8.7 per cent.
The plan is expected to require total investment of approximately RM36.6 billion over the next decade.
Of this amount, the private sector is expected to contribute about RM36.04 billion, or 98.5 per cent, while only RM560 million is projected to come from public funding.
The domestic sector accounts for the largest portion of projected investment at RM26.9 billion, largely related to the adoption or replacement of energy-efficient household appliances.
Industry is expected to account for RM7.11 billion, while commercial buildings are projected to require RM2.03 billion.
Industrial efficiency measures
MBSB said the industrial sector’s expected contribution to energy savings will be supported by 10 energy-saving measures covering energy management, utilities, production processes, electrical equipment and thermal systems.
These include energy-efficient lighting and insulation, energy management systems, recommissioning and retro-commissioning, energy-source rationalisation, efficient compressed-air, steam and hot-water systems, digitalised production, high-efficiency motors, heat recovery and solar thermal preheating.
The estimated RM7.11 billion of private investment in the industrial sector includes approximately RM1.68 billion for energy-efficient utilities, RM1.62 billion for high-efficiency motors, RM1.22 billion for digitalised production and RM952 million for recommissioning and retro-commissioning.
The house said the opportunities for industrial and commercial players could be concentrated in about RM9.1 billion of private investment, spanning industrial utilities, high-efficiency motors, automation, HVAC and chillers, heat recovery, M&E retrofits and district cooling.
EECA strengthens regulatory push
While many of the measures under NEEAP 2.0 are not blanket mandatory requirements, the EECA provides a regulatory framework that could help translate energy-efficiency recommendations into actual investment.
Large industrial and commercial energy consumers using at least 21,600 GJ over 12 consecutive months are required to appoint a Registered Energy Manager (REM), establish and implement an Energy Management System (EnMS), submit annual reports and conduct periodic energy audits.
Annual energy-efficiency and conservation reports must disclose proposed efficiency measures as well as measures that have been implemented or remain outstanding.
Failure to appoint an REM or establish an EnMS could result in fines of up to RM50,000.
However, MBSB cautioned that much of the RM36.6 billion investment remains indicative rather than committed.
Achievement of the plan’s targets will depend on project economics, companies’ willingness to invest, access to financing and the effectiveness of future incentives and enforcement.
The research house also noted that the largest investment component is linked to households, where appliance replacement is largely voluntary.
Solar, M&E and consumer companies among potential beneficiaries
The house expects companies involved in solar engineering, procurement, construction and commissioning (EPCC) as well as battery energy storage systems to potentially benefit by cross-selling energy-efficiency and energy-management solutions.
Among the potential beneficiaries are Solarvest, Pekat Group and Samaiden Group.
Mechanical, electrical and process utilities contractors could also benefit from retrofit and upgrade projects arising from the plan.
Such projects could include high-efficiency chillers, pumps, cooling towers, building automation systems, lighting, motors, compressed-air systems, steam and hot-water utilities, as well as recommissioning and retro-commissioning works.
Potential beneficiaries identified by MBSB include Critical Holdings, KJTS Group, Solar District Cooling, AWC and BM Greentech.
If the projected RM26.9 billion domestic-sector investment materialises, consumer-related companies could also benefit as households progressively replace less-efficient appliances with higher-efficiency models.
MBSB highlighted Fiamma Holdings, Khind Holdings, Senheng New Retail, Pensonic Holdings, Panasonic Manufacturing Malaysia and Cuckoo International Malaysia as potential beneficiaries.
Despite the focus on energy efficiency, MBSB views NEEAP 2.0 as neutral for Tenaga Nasional Bhd (TNB), maintaining its BUY call with a target price of RM16.40.
The research house stressed that NEEAP 2.0 is not designed to reduce electricity demand outright, but rather to moderate future energy demand growth relative to the BAU trajectory.
It also noted that TNB’s earnings are regulated under the Incentive Based Regulation (IBR) framework.
Overall, the house sees NEEAP 2.0 as a potentially important catalyst for Malaysia’s energy-efficiency ecosystem, particularly for companies supplying industrial and commercial retrofits, automation, efficient equipment and energy-management solutions, although the pace of actual investment will depend heavily on economic incentives and corporate adoption.
