By Laverson Bagah and Suzana Ariff Azizan
A shortage of sunlight in Malaysia is like a durian with no smell – unthinkable.
The country’s equatorial location gives it consistent, year-round solar exposure, making it one of the most solar-rich nations in the region.
On paper, it has everything needed to lead a solar revolution: consistent irradiance, national targets, and generous incentive schemes.
But while the sun shines generously, solar adoption among small and medium-sized enterprises (SMEs) – the heart of Malaysia’s economy – continues to lag.
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Accounting for over 97% of registered businesses and 38% of gross domestic product (GDP), SMEs are often hailed as the “backbone” of the Malaysian economy.
Yet, in the transition to clean energy, they have largely been left in the dark. Residential homes and large companies have taken the lead in rooftop solar adoption. SMEs, meanwhile, face structural and systemic barriers that prevent them from tapping into this opportunity.
High upfront costs, fragmented information, technical uncertainty and regulatory red tape are among the most significant challenges. These issues have created hesitation among business owners, many of whom are eager to reduce long-term energy costs and contribute to sustainability goals.
In other words, while Malaysia’s solar future shines brightly in policy documents, it often dims in practice.
For most SMEs, solar take-up is beyond their budgets. While in the longer term there will be cost savings, the initial cost of RM50,000 to RM200,000 is difficult to justify without affordable finance. Leasing opportunities and third-party offers exist, but they are poorly promoted well and carry high entry barriers. Even if finance is available, SMEs struggle to meet terms or understand technical jargon in contracts.
Then there’s the issue of infrastructure. Many SMEs in Klang Valley operate from rented buildings or old shop lots with limited rooftop access. The result is a “split incentive” – landlords are not motivated to invest in solar panels when the tenants are paying the bills, and tenants have no authority to install systems themselves. These are not new problems, but they remain largely unaddressed.
Beyond economics or structure, there is a gap in confidence. Many SME owners are aware of solar energy, but few feel equipped to make the leap. The view that solar is “not for businesses like mine” is a common refrain, rooted not in apathy, but in a lack of targeted outreach and peer support.
While some community-led initiatives and industrial cluster projects have emerged, they are still too few to shift the tide.
Yet, change is possible.
Some SMEs have successfully pooled resources to develop shared solar facilities, cutting installation costs by up to 30% and enabling collective ownership models.
Others have reported significant savings after switching to solar energy, with annual reductions in electricity costs of up to RM150,000.
These are real instances challenge the perception that solar is solely for large companies or the privileged few.
The potential impact is not insignificant. Large-scale SME adoption of solar power can significantly push Malaysia’s renewable energy agenda, cut carbon emissions, and increase business resilience. It would also contribute directly to the sustainable development goals – notably SDG 7 (affordable and clean Energy), SDG 9 (industry, innovation and infrastructure) and SDG 13 (climate action).
But to achieve this, systemic change is required.
First, policies must move beyond broad incentives. They must recognise the realities of SMEs – their size, shape and limitations. That means simplifying application processes, offering pre-approved solar installations packages and encouraging shared infrastructure in industrial estates.
Second, financing must be tailored to SME capabilities. Microloans, rent-to-own schemes or peer-financing arrangements facilitated by trade associations are all possible avenues. Green technology financing scheme programmes must not only exist in principle but also made more visible and accessible.
Third, awareness must become action. Solar education cannot stop at roadshows. It must enter everyday conversations among business groups, chambers of commerce and supplier networks. Public agencies must work closely with SME associations to bridge the information gap and create trust.
The truth is, many SMEs are not waiting for change. They are waiting for a fair and realistic entry point into a cleaner energy future. And in the face of climate uncertainty and rising energy costs, Malaysia cannot afford to leave them behind.
The nation’s solar future cannot be built by large companies alone. If Malaysia is serious about achieving its renewable energy ambitions, it must bring SMEs into the fold – not as afterthoughts, but as essential partners in the transition. The sun shines on all of us.
The question is: who gets to use it?
Laverson Bagah and Dr Suzana Ariff Azizan are in the Department of Science and Technology Studies, Faculty of Science, University of Malaya.
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