BNM considers greater risk-taking in energy shift

By the Editorial Team · Wednesday, September 30, 2026

Bank Negara Malaysia is considering changes to its regulatory framework to enable financial institutions to take on higher risks in funding the country’s energy transition, particularly supporting green energy projects that face initial commercial viability challenges. This approach aims to balance risk management with increased investment in renewable energy, addressing growing electricity demand driven by expanding data centres and the need for climate resilience.

Bank Negara Malaysia (BNM) is exploring ways to adjust regulatory frameworks to allow financial institutions greater capacity to take on higher risks in support of the country’s energy transition, Governor Datuk Seri Abdul Rasheed Ghaffour said. The central bank aims to strike a balance where increased risk-taking is responsibly managed, with risks properly assessed, priced, and maintained within an acceptable appetite.

Speaking at the JC3 Journey to Zero Conference 2026 in Kuala Lumpur on Tuesday, Abdul Rasheed emphasized BNM’s commitment to facilitating the development of green energy projects through potential regulatory and supervisory enhancements. While capital availability is relatively strong, the governor pointed to financial intermediation challenges, particularly the difficulty of channeling funds into technically feasible but initially commercially unviable projects.

He noted that smaller-scale renewable energy ventures often struggle to secure financing on their own but could become viable when scaled up or aggregated. This, he said, underscores the importance of early stakeholder engagement, improved project structuring, and shared risk mechanisms to unlock investment.

Malaysia has made notable progress in increasing renewable energy capacity, with renewables accounting for 31% of installed power capacity in 2025, up from 25% in 2023. However, the country faces emerging challenges due to rising electricity demand, driven in part by the rapid growth of data centres and artificial intelligence-related technologies. Data centres are projected to consume nearly one-third of Malaysia’s electricity by 2035, heightening the need for reliable, affordable, and cleaner energy sources to sustain digital economy expansion.

The central bank governor also called for a shift in financial approaches from reactive disaster recovery to proactive investments focused on enhancing climate resilience. This would require developing new financing models that prioritize preventative measures to mitigate the impacts of climate change.

Abdul Rasheed’s remarks reflect BNM’s broader strategy to support Malaysia’s transition to a more sustainable energy sector while ensuring the financial system remains robust amid evolving economic and environmental challenges.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.