Electricity supply industry transformation and decarbonization in Peninsular Malaysia

Malaysia has maintained some of the lowest and most stable electricity tariffs globally from 1990 to 2023, supported by a regulated Electricity Supply Industry (ESI) and heavy fossil fuel subsidies. While this system ensured affordability, it also entrenched dependence on coal and gas, creating fiscal and environmental risks. As Malaysia aligns with global decarbonisation targets, the transition towards a renewable-based and competitive market raises challenges of cost escalation, subsidy rationalisation, and equity across consumer groups. This paper reviews the structural evolution of the ESI from a regulated monopoly to a hybrid capacity market, identifying key policy drivers and barriers. The novelty lies in applying the Energy Justice framework to evaluate reforms, showing how distributional, recognition, and procedural justice can guide subsidy and tariff restructuring. The findings propose an operational pathway for a just transition in Peninsular Malaysia, with lessons applicable to ASEAN’s regional energy integration. • Emissions requirements have emphasised ESI decarbonisation globally. • The Malaysian ESI sector is undergoing gradual deregulation towards market competitiveness. • Relationship of ESI market structure and impact towards decarbonisation. • Energy Justice can guide balanced policy-making in the ESI sector. • Energy Justice provides a balanced approach for energy transition efforts.