Transformative phase driven by national decarbonisation goals, escalating energy demand, and technological disruption. As TNB accelerates its Energy Transition Plan to meet Malaysia’s target of 40% renewable energy (RE) by 2035 and net-zero emissions by 2050, strategic partnerships with technology providers like CelcomDigi will prove critical. This report analyses TNB’s 2025 priorities, industry challenges, and actionable opportunities for CelcomDigi to support TNB’s transition while advancing Malaysia’s digital and sustainability agendas.

TNB’s Strategic Position in Malaysia’s Energy Landscape

Tenaga Nasional Berhad (TNB) stands as Malaysia’s multinational electricity company, holding a near monopoly as the sole electric utility in Peninsular Malaysia and recognised as the largest publicly listed power company in Southeast Asia. The company serves a vast customer base of over 10.16 million throughout Peninsular Malaysia (excluding Sarawak) and the East Malaysian state of Sabah through Sabah Electricity. TNB’s core activities encompass the entire electricity supply chain: generation, transmission, and distribution. This integrated model provides significant operational synergies and market dominance within its service area, underpinning its foundational role in Malaysia’s economy. As a publicly traded state-owned enterprise, with Khazanah Nasional, Malaysia’s sovereign wealth fund, being a key shareholder, TNB’s strategic direction is inherently aligned with national energy policy and long-term objectives, particularly the ambitious National Energy Transition Roadmap (NETR).

Company Overview: TNB’s Central Role in Malaysia’s Energy Ecosystem

TNB operates 15.72 GW of generation capacity, serving 9.2 million customers across Peninsular Malaysia, Sabah, and Labuan. As a government-linked entity (66.44% state-owned), it balances commercial objectives with national imperatives, including the National Energy Transition Roadmap (NETR). Despite deriving 45% of its 2021 generation from coal, TNB aims to reduce coal dependency to 10% by 2035 while scaling RE to 66% of its portfolio. With RM42.8 billion allocated for 2025–2027 capital expenditure (RP4 period)—including grid modernisation and RE projects—TNB’s strategic pivots will reshape Malaysia’s energy and digital infrastructure landscapes.

Organisational Structure and Core Business Segments

• 1. Domestic Operations: Generation, Transmission, and Distribution TNB’s domestic operations form the bedrock of its business, providing essential electricity services across Peninsular Malaysia and parts of Sabah.
  • Generation Assets Breakdown (Thermal vs. Renewable Capacity) As of September 2024, TNB holds a commanding 53% of Malaysia’s domestic generation capacity, amounting to 18,101 MW. The current domestic generation mix remains predominantly thermal, with Coal accounting for 42% of capacity, other Fossil Fuels (primarily natural gas) at 21%, and Renewable Energy (RE) contributing 37%. This composition underscores the significant reliance on fossil fuels, presenting both a formidable challenge and a substantial opportunity for decarbonisation efforts. In 2023, TNB’s installed capacity was 12.1 GW (Thermal) and 4.0 GW (Non-thermal), reinforcing the thermal base.
  • Transmission Network Scope (Peninsular Coverage Metrics) TNB operates an extensive and critical transmission network vital for maintaining grid stability and facilitating energy flow across Peninsular Malaysia. The network boasts a transmission length of 26,093 km and is robustly supported by 485 substations ². System Minutes, a key reliability metric for transmission, stood at an impressive 0.0001 minutes for 9MFY2024, indicating exceptionally high operational efficiency and minimal transmission-related outages.
  • Distribution Infrastructure Statistics (Substations/km of lines) The distribution network is vast and intricate, covering 761,546 km of lines and supported by 98,254 substations ³. This extensive infrastructure is fundamental for delivering electricity reliably to over 10.2 million retail customers. SAIDI (System Average Interruption Duration Index), a crucial measure of distribution reliability, was 35.72 minutes for 9MFY2024, demonstrating a robust and reliable distribution system.

The integrated nature of TNB’s operations means that strategic investments and operational performance in one segment directly influence the capabilities and efficiency of others. For instance, planned grid modernisation initiatives, such as smart meter rollouts and distribution automation , are not merely about enhancing customer service; they are crucial for improving overall grid intelligence and capacity. This enhanced grid capability is vital for seamlessly integrating a greater proportion of intermittent renewable energy sources from the generation side. The Incentive Based Regulation (IBR) framework, with its Weighted Average Cost of Capital (WACC) and Return on Regulated Asset Base (RoRAB) maintained at a stable 7.3% since RP2 ⁷, provides a predictable and transparent return on regulated assets. This regulatory stability is a critical factor for attracting and sustaining the long-term, capital-intensive investments required for the energy transition. The consistently low System Minutes and SAIDI figures underscore the effectiveness of TNB’s historical investments and operational excellence, which in turn builds investor confidence in the company’s ability to manage complex infrastructure upgrades necessary for a successful energy transition.

• 2. International Operations Footprint TNB’s strategic vision extends beyond Malaysia’s borders, with an established operational presence in the United Kingdom, Ireland, Turkey, Kuwait, Saudi Arabia, Pakistan, India, Cambodia, and Australia. As of September 2024, TNB’s international generation capacity contributed 3,269 MW to its overall portfolio.
  • Geographic Presence and Asset Types In Jordan, TNB holds a 30% equity stake in assets totalling 1,151.5 MW, comprising gas, hydro, and wind facilities. Additionally, TNB has a 100% equity stake in water conveyance operations in Jordan. A significant and growing focus on renewable energy is evident in the United Kingdom and Ireland, with 123.9 MW in onshore wind (100% equity), 365.0 MW in solar (55% equity), and 41.5 MW in offshore wind (49% equity). TNB’s global portfolio includes 927 MW of solar and wind assets across the UK, Ireland, and Australia. The company has also commenced construction on two additional UK solar farms totalling 102 MWp. In Australia, TNB has a presence with 276.0 MW in solar assets. Notably, TNB acquired Spark Renewables (100% equity) in 2023, further solidifying its renewable energy commitment in the region.

This strategic international expansion, particularly into mature and supportive renewable energy markets, serves multiple critical purposes for TNB. Firstly, it effectively diversifies TNB’s revenue streams beyond the regulated Malaysian market, potentially unlocking higher growth opportunities in less constrained regulatory and market environments. Secondly, it provides invaluable opportunities for TNB to acquire and refine expertise in large-scale renewable energy development, project financing, and grid integration. This acquired knowledge and experience are directly transferable and highly beneficial for accelerating its domestic energy transition efforts. Thirdly, this international diversification acts as a crucial de-risking strategy, mitigating potential adverse impacts from unforeseen regulatory or policy shifts within Malaysia, as well as buffering against the inherent volatility of global fossil fuel prices. The consistent focus on renewable energy assets internationally also strongly aligns with TNB’s overarching long-term Net Zero aspirations , demonstrating a coherent and consistent strategic direction across its global portfolio.

• 3. Regulatory Framework and Key Subsidiaries TNB’s operations in Peninsular Malaysia are primarily governed by the Incentive Based Regulation (IBR) framework. This framework is designed to provide a clear and transparent regulatory environment, ensuring consistent and stable returns for TNB’s regulated activities. The Weighted Average Cost of Capital (WACC) and Return on Regulated Asset Base (RoRAB) have been maintained at 7.3% since Regulatory Period 2 (RP2), contributing to predictable earnings ⁷. The current RP3 concludes in 2024, with the proposal assessment for RP4 (2025-2027) already in advanced stages , indicating ongoing regulatory stability.

TNB operates various key subsidiaries, including Sabah Electricity, which serves the East Malaysian state of Sabah, and Tenaga Switchgear. Its robust sustainability governance structure includes the Board Sustainability and Risk Committee (BSRC), established in 2023, which is responsible for overseeing the group’s sustainability and risk management frameworks and commitments. Notably, ESG-related Key Performance Indicators (KPIs) have been integrated into the performance evaluation scorecards of the Board and senior management since 2023, driving group-wide accountability for achieving sustainability objectives.

TNB’s 2025 Strategic Priorities and Initiatives

1. Decarbonising Generation Assets

TNB is committed to accelerating the transition towards a low-carbon energy mix by phasing out coal-based generation and significantly expanding renewable energy capacity. The company aims to achieve 8.3 GW of RE capacity by 2025, aligning with Malaysia’s national RE target of 31%, and further scaling up to 70% by 2050. To accomplish this, TNB is integrating sustainable energy sources, modernising infrastructure, and improving energy efficiency across its operations. Additionally, strategic investments in energy storage solutions and alternative fuels will enhance grid reliability and sustainability.

Initiatives:

• Expansion of Solar Energy: TNB is developing 2,500 MW of floating solar plants and establishing five 100 MW RE zones under the NETR flagship projects to accelerate large-scale solar adoption. This effort is designed to diversify Malaysia’s energy mix and mitigate reliance on fossil fuels.
• Alternative Fuel Integration: The company is piloting the co-firing of hydrogen and ammonia at existing gas power plants to lower carbon emissions while ensuring grid stability. These initiatives position TNB as a regional leader in alternative fuel adoption.
• Coal Asset Retirement: TNB is actively progressing towards the early retirement of coal plants. Jimah East Power (1,000 MW), commissioned in 2019, is set to be TNB’s final coal-based facility, reinforcing its long-term commitment to cleaner energy sources.
• Energy Storage Solutions: Investing in large-scale battery energy storage systems (BESS) to manage the intermittency of RE sources and enhance grid stability as more renewables are integrated.
• Hydropower Expansion: Strengthening hydropower capacity through strategic partnerships and infrastructure investments to complement intermittent RE sources such as solar and wind.

2. Building a Cross-Border, Digitally Enabled Grid

TNB aims to strengthen grid resilience and regional interconnectivity through the ASEAN Power Grid (APG) to support increased RE integration and achieve 70% RE penetration by 2050. This involves cross-border energy trading, transmission infrastructure enhancements, and the deployment of smart grid technologies.

Initiatives:

• Regional Grid Expansion: Extending transmission links with Thailand, Singapore, Vietnam, and Indonesia to balance RE intermittency and optimise energy flow.
• Grid Modernisation Investments: Deploying RM26.5 billion in base capex (2025–2027) for automation, smart meters, and demand-response systems to enhance grid efficiency.
• Advanced Grid Technologies: Implementing artificial intelligence (AI) and machine learning for predictive maintenance and dynamic load balancing to reduce downtime and improve operational efficiency.

3. Driving Customer-Centric Digitalisation

TNB will leverage digital tools and analytics to improve grid flexibility, customer engagement, and energy efficiency through modernised IT infrastructure and interactive digital platforms.

Initiatives:

• Smart Grid Technologies: Partnering with Microsoft to implement real-time grid analytics and distributed energy resource management, enhancing operational transparency.
• Consumer Engagement Platforms: Launching mobile applications that offer dynamic pricing, real-time consumption tracking, and interactive energy management solutions, aiming for 30% digital customer interactions by 2025.
• Demand Response Programs: Developing AI-driven demand response solutions that enable customers to optimise electricity consumption based on peak and off-peak hours.
• Smart Home and IoT Integration: Encouraging the adoption of smart home energy management systems connected to TNB’s grid for enhanced efficiency and cost savings.

4. Capitalising on the Data Centre Boom to Fuel Growth

As Malaysia solidifies its position as a regional data centre powerhouse, Tenaga Nasional Berhad (TNB) is proactively aligning itself to meet the sector’s escalating energy needs. This strategic positioning involves enhancing grid infrastructure, integrating renewable energy sources, and leveraging digital technologies to optimise power distribution. By doing so, TNB not only remains competitive but also supports Malaysia’s expanding digital economy. Enhancing grid capacity and investing in future-ready energy infrastructure secures a high-value, long-term revenue stream while ensuring power reliability for the digital sector.

Initiatives:

• Meeting Rising Demand: The expansion of data centres in Malaysia has driven significant electricity demand growth. In FY2024, projects totalling 635MW in capacity were completed, generating an estimated RM350 million in annual revenue for TNB.
• Future Projections: By 2035, data centres are projected to contribute over 5,000MW to TNB’s grid, establishing a stable and lucrative revenue stream.
• Infrastructure Development: TNB has completed 17 projects supporting 1.7GW of data centre capacity. Additionally, eight more projects (1.9GW) are under construction, and six additional projects (1.1GW) have signed electricity supply agreements.
• Green Lane Pathway: TNB has introduced a specialised initiative to streamline the connection process for data centres. This includes a fast-track application process, dedicated technical advisory services, and infrastructure enhancements to ensure seamless and expedited integration into the power grid.
• Resource Management: TNB addresses the high energy and water consumption of data centres by ensuring sustainable resource allocation while maintaining operational efficiency.
• Environmental Commitment: The company integrates renewable energy sources and improves energy efficiency to mitigate the environmental impact of increasing power demand from data centres.

Key Industry Challenges for TNB and CelcomDigi’s Strategic Opportunities

Challenge 1: Grid Stability Amid Rising Renewable Energy (RE) Penetration and Demand Growth

Tenaga Nasional Berhad (TNB) faces the dual challenge of integrating intermittent renewable energy sources while managing a significant 7.6% year-on-year increase in electricity demand, as reported in the first nine months of 2024. This surge is largely driven by the proliferation of data centres and the electrification of various sectors. The rapid expansion of data centres, in particular, has led to concerns about grid congestion, which could impede the adoption of renewable energy and compromise supply reliability. TNB has completed 17 infrastructure projects to support 1.7 gigawatts (GW) of data centre capacity, with an additional 1.9 GW under construction and 1.1 GW in the pipeline. However, the total load utilisation as of September 2024 was only 248 megawatts (MW), indicating potential challenges in balancing supply and demand.

• Opportunities for CelcomDigi
  • CelcomDigi can play a pivotal role in addressing these challenges by:
  • Providing IoT-Enabled Grid Sensors: Deploying Internet of Things (IoT) sensors across the grid can facilitate real-time monitoring of transmission lines and renewable energy installations, enabling predictive maintenance and efficient load balancing.
  • Deploying Private LTE/5G Networks: Establishing private LTE or 5G networks in areas with high concentrations of renewable energy assets ensures seamless and secure communication between distributed energy resources, enhancing grid responsiveness and stability.
  • By leveraging its advanced communication infrastructure and IoT solutions, CelcomDigi can support TNB in maintaining grid stability amidst increasing renewable energy integration and rising electricity demand.

Challenge 2: Public Resistance to Tariff Reforms and Cost Recovery

In December 2024, Tenaga Nasional Berhad (TNB) announced a 14.2% increase in the base electricity tariff for Peninsular Malaysia, raising it from 39.95 sen to 45.62 sen per kilowatt-hour (kWh), effective July 1, 2025. This adjustment, part of the Regulatory Period 4 (RP4) spanning 2025 to 2027, aims to support a capital expenditure (capex) allocation of RM42.82 billion designated for infrastructure enhancements and the nation’s energy transition agenda. However, such a significant tariff hike may trigger public opposition, especially among consumers concerned about rising living costs. To mitigate immediate impacts, the government has allocated RM2.4 billion in subsidies for the first half of 2025, covering the cost differential through the Kumpulan Wang Industri Elektrik (KWIE) fund.

• Opportunities for CelcomDigi
  • CelcomDigi can assist TNB in addressing potential public resistance by:
  • Developing Targeted Customer Education Campaigns: Utilising its mobile platforms, CelcomDigi can create educational initiatives that inform consumers about the reasons behind the tariff increase and the long-term benefits of infrastructure investments. By employing data analytics, these campaigns can be tailored to different user segments based on consumption patterns and income levels, ensuring relevant and effective communication.
  • Integrating Energy-Saving Tools into the MyCelcomDigi App: Incorporating features such as energy-saving tips and tariff calculators within the MyCelcomDigi app can empower users to manage their electricity usage more efficiently. This transparency fosters trust and helps consumers adapt to the new tariff structure by providing practical solutions to mitigate increased costs.
  • Through these initiatives, CelcomDigi can play a pivotal role in facilitating consumer acceptance of necessary tariff reforms, thereby supporting TNB’s financial sustainability and the broader goal of national energy advancement.

Challenge 3: Accelerating Low-Carbon R&D and Workforce Upskilling

Tenaga Nasional Berhad (TNB) is intensifying its focus on low-carbon technologies to align with Malaysia’s National Energy Transition Roadmap (NETR). Despite this, TNB’s R&D investments have been modest, with RM60 million allocated in 2022, representing approximately 0.7% of its capital expenditure—below the 5% benchmark typical for utilities. This limited funding may impede advancements in critical areas such as green hydrogen and carbon capture technologies. Additionally, TNB faces a significant human capital challenge: by 2030, an estimated 40% of its workforce will require reskilling to competently manage digital and renewable energy (RE) technologies. This upskilling is essential to meet the evolving demands of the energy sector and to support Malaysia’s commitment to achieving net-zero emissions by 2050.

• Opportunities for CelcomDigi
  • CelcomDigi can play a pivotal role in supporting TNB’s transition through:
  • Collaborative Development of VR-Based Training Modules: By leveraging its high-speed fibre networks, CelcomDigi can partner with TNB to create virtual reality (VR) training programs. These modules would provide immersive, hands-on experiences for engineers, facilitating efficient upskilling in digital competencies and RE technologies.
  • Co-Sponsoring AI-Driven Energy Optimisation Hackathons: Utilising its connections with startups and tech innovators, CelcomDigi can co-organise hackathons focused on artificial intelligence solutions for energy efficiency. This initiative would not only foster innovation but also position both companies at the forefront of the energy sector’s digital transformation.
  • Through these strategic collaborations, CelcomDigi can assist TNB in overcoming its R&D and workforce development challenges, thereby contributing to Malaysia’s broader energy transition objectives.

Strategic Takeaways for CelcomDigi

As Tenaga Nasional Berhad (TNB) addresses the challenges of affordability, sustainability, and reliability in Malaysia’s energy sector, CelcomDigi is well-positioned to support TNB’s initiatives through its expertise in connectivity, data analytics, and customer engagement. This collaboration can accelerate Malaysia’s progress toward net-zero emissions while fostering growth in the energy-tech sector.

1. Position as an Enabler of Grid Digitalisation

• TNB is investing significantly in modernising Malaysia’s power grid, aiming to enhance reliability and integrate renewable energy sources. CelcomDigi can support this transformation by leveraging its advanced fibre and 5G infrastructure to host TNB’s smart grid applications. By deploying IoT-enabled solutions, CelcomDigi can facilitate real-time monitoring and management of the grid, enhancing predictive maintenance and load balancing. This partnership would enable TNB to efficiently manage energy distribution and reduce operational costs.

2. Bridge the Energy-Digital Divide

• To address peak demand challenges and promote energy efficiency, CelcomDigi can collaborate with TNB to offer bundled services that combine broadband connectivity with energy-saving devices, such as smart thermostats. This initiative aligns with CelcomDigi’s convergence strategy and supports TNB’s goal of reducing peak demand. By utilising data analytics, CelcomDigi can segment users based on consumption patterns and tailor solutions that encourage energy-saving behaviours, thereby enhancing customer engagement and satisfaction.

3. Lead in Green Financing Advocacy

• As environmental, social, and governance (ESG) considerations become increasingly important to investors, transparent tracking of renewable energy consumption is essential. CelcomDigi can partner with TNB to develop blockchain-based platforms that accurately track Renewable Energy Certificates (RECs). Such platforms would provide immutable records of energy generation and consumption, attracting ESG-focused investors by ensuring the credibility of green energy claims. This initiative not only supports TNB’s sustainability efforts but also positions CelcomDigi as a leader in green financing solutions.

In summary, by positioning itself as an enabler of grid digitalisation, bridging the energy-digital divide, and leading in green financing advocacy, CelcomDigi can play a pivotal role in supporting TNB’s strategic objectives. This collaboration will drive innovation, enhance operational efficiency, and contribute to Malaysia’s sustainable energy future.