Malaysia is accelerating its journey towards a sustainable future, with a bold target of achieving 70% renewable energy (RE) in its total primary energy supply by 2050. At the heart of this ambitious energy transition lies the nation’s flagship initiative for utility-scale renewable generation: the Large-Scale Solar (LSS) program.

Launched by the Suruhanjaya Tenaga (Energy Commission), the LSS program has been the primary driver for increasing solar power capacity in the national grid. Through a series of competitive auctions, it has systematically lowered the cost of solar energy, attracted significant investment, and positioned Malaysia as a key player in Southeast Asia’s green economy.

This article provides a complete history of the LSS program, tracing its evolution from the foundational LSS1 to the transformative new model of LSS5.

What is the Large-Scale Solar (LSS) Program?

The Large-Scale Solar (LSS) program is a competitive bidding exercise designed to develop utility-scale solar photovoltaic (PV) plants across Malaysia. Under this scheme, prospective developers bid to build, own, and operate solar farms, selling the generated electricity to an offtaker (historically Tenaga Nasional Berhad - TNB) through a long-term Power Purchase Agreement (PPA).

The core objective is to drive down the Levelized Cost of Energy (LCOE) for solar power through competition, ensuring the government secures the most cost-effective and reliable energy generation for the nation.

The Journey Begins: LSS1 (2016)

The first chapter of Malaysia’s utility-scale solar story began in 2016. LSS1 was a landmark initiative to test the waters and establish a framework for future projects.

• Year Launched: 2016
• Target Capacity: 250 Megawatts ($MW_{ac}$) in Peninsular Malaysia and 50 $MW_{ac}$ in Sabah.
• Key Features: This inaugural round was focused on kickstarting the market. It generated significant interest, proving the viability and investor appetite for large-scale solar projects in the country.
• Outcomes: LSS1 was highly successful, with bids coming in at competitive rates. It laid the groundwork for a standardized, transparent, and efficient procurement process that would define subsequent rounds. The reference price was around $RM0.40/kWh$.

Gaining Momentum: LSS2 (2017)

Building on the success of its predecessor, LSS2 was launched just a year later to maintain momentum and further scale up capacity.

• Year Launched: 2017
• Target Capacity: Approximately 563 $MW_{ac}$ across Peninsular Malaysia, Sabah, and Labuan.
• Key Features: LSS2 continued the competitive tender model, attracting both local and international players. The process demonstrated the increasing maturity of the Malaysian solar market.
• Outcomes: This round saw a significant drop in bid prices, with winning tariffs ranging from $RM0.33/kWh$ to $RM0.41/kWh$. The declining costs underscored the effectiveness of the competitive bidding model in delivering affordable clean energy.

Scaling Up and Achieving Grid Parity: LSS3 (2019)

LSS3 marked a major turning point. The scale of the program was larger, and the results were nothing short of spectacular, solidifying solar power’s role as a mainstream energy source.

• Year Launched: 2019
• Target Capacity: 500 $MW_{ac}$
• Key Features: By this stage, the LSS program was a well-oiled machine. Developers had a clearer understanding of costs, risks, and regulatory requirements, leading to highly optimized and aggressive bids.
• Outcomes: The results of LSS3 were groundbreaking. The four lowest bids came in below the gas-fired generation cost at the time, ranging from a remarkable $RM0.1777/kWh$ to $RM0.1970/kWh$. For the first time, large-scale solar had achieved grid parity in Malaysia, proving it could compete head-to-head with conventional fossil fuels on cost.

Navigating New Challenges: LSS4 @ MenTARI (2020)

Announced in the midst of the global COVID-19 pandemic, LSS4 (officially known as LSS@MenTARI) was positioned as part of Malaysia’s economic recovery plan, aimed at stimulating the economy and creating green jobs.

• Year Launched: 2020
• Target Capacity: A massive 1,000 $MW_{ac}$ ($1 GW_{ac}$)
• Key Features: LSS4 saw unprecedented competition due to its large quota and the high level of market interest.
• Outcomes & Challenges: The bidding was fierce, driving prices down even further. However, the timing proved challenging. Winning developers soon faced a perfect storm of post-pandemic supply chain disruptions, soaring logistics costs, and rising solar panel prices. This led to project delays, prompting the Energy Commission to grant extensions to help developers navigate these unforeseen global headwinds.

A New Era of Liberalization: LSS5 (2024) - LSS-Peralihan Tenaga SuRIS

Announced in 2024, LSS5 represents the most significant evolution in the program’s history. It moves away from the traditional PPA model towards a more liberalized market structure, aligning with the goals of the National Energy Transition Roadmap (NETR).

• Year Launched: 2024
• Program Name: LSS-Peralihan Tenaga SuRIS (Solar for Rakyat Incentive Scheme)
• Target Capacity: A landmark 2,000 $MW_{ac}$ ($2 GW_{ac}$)
• Key Features & Strategic Shifts:
  1. No More Single Offtaker: Instead of selling power to a single utility via a PPA, developers will sell electricity to a “corporate virtual buyer pool” or directly on the electricity exchange operated by the single market operator.
  2. Market-Driven Approach: This new model encourages corporate green power procurement and introduces developers to merchant risk, where revenue depends on market prices.
  3. Incentive Structure: The “SuRIS” incentive mechanism will likely provide a baseline price floor or financial incentive to ensure project bankability while exposing projects to market dynamics.
  4. Broader Scope: The program is expected to include specific quotas for different categories, such as ground-mounted solar, floating solar farms, and agrivoltaics.

Summary Table: LSS Program at a Glance

The Future of Solar in Malaysia

The journey from LSS1 to LSS5 tells a powerful story of ambition, competition, and adaptation. Each phase has built upon the last, systematically driving down costs and scaling up Malaysia’s solar capacity. The latest iteration, LSS5, is a bold step that aligns the program with broader energy market reforms, such as the Corporate Green Power Programme (CGPP), and the overarching National Energy Transition Roadmap (NETR).

By shifting towards a market-based model, Malaysia is not only continuing its commitment to solar energy but is also fostering a more dynamic, competitive, and sophisticated renewable energy ecosystem. The LSS program remains the undeniable cornerstone of Malaysia’s solar revolution, powering the nation’s transition to a brighter, cleaner future.