Coal occupies a difficult but central position in Malaysia’s energy system. The country has significant oil and natural gas resources, yet imported coal became the main fuel for electricity generation in Peninsular Malaysia during the expansion of large coastal power stations.
This was a deliberate diversification strategy. Malaysia reduced the power sector’s earlier dependence on domestic natural gas by constructing high-capacity coal plants supplied through international maritime trade. Coal offered utilities large volumes of fuel, established generating technology, and predictable baseload production.
The result is a power system in which coal remains essential to current reliability even though national policy is moving toward its retirement. In 2025, coal supplied 58.6% of electricity generated in Peninsular Malaysia, an increase from 56.5% in 2024. The national share is lower because Sarawak has a different electricity mix led by large hydropower assets, while Sabah does not operate the same concentration of coal capacity.
Imported Coal Became the Backbone of Peninsular Power
Malaysia has some domestic coal resources, particularly in Sarawak, but local mining does not supply the large thermal fleet serving Peninsular Malaysia. Utility-scale coal generation is overwhelmingly dependent on imports.
Official energy statistics show how quickly this dependence expanded. Coal and coke imports increased substantially during the 2000s and 2010s as new generating capacity entered service. By 2021, Malaysia recorded more than 20 million tonnes of oil equivalent in imported coal and coke, with almost no corresponding exports.
Imports reached another record in 2025. Indonesia supplied approximately three-quarters of Malaysia’s thermal coal purchases, reflecting its geographic proximity, large production base, and established shipping routes. Malaysian buyers also use coal from other exporters to manage fuel quality, price, and supply risk.
This dependence distinguishes coal from Malaysia’s natural gas industry. Malaysia is a major producer and exporter of liquefied natural gas, while the fuel supporting much of its domestic electricity system arrives from abroad. Coal allows Malaysia to reserve or sell more of its gas, but it also creates exposure to international commodity prices, exchange rates, shipping conditions, and policy changes in supplier countries.
Indonesia’s dominant position makes bilateral trade particularly important. Changes to Indonesian export rules, domestic market obligations, production, or weather can affect Malaysian procurement. Utilities therefore maintain stockpiles and diversified purchasing arrangements to protect generating operations from interruption.
Coastal Power Stations Connect Malaysia to the Seaborne Market
Malaysia’s coal system is built around large power stations on or near the coast. Their locations allow bulk carriers to unload fuel through dedicated terminals before conveyors move coal to storage yards and generating units.
The Manjung complex in Perak is one of the country’s largest power-generation centers. Its coal units include both conventional and higher-efficiency generating technology, supported by marine fuel-handling infrastructure. The plant’s position on the Strait of Malacca provides access to major international shipping routes.
Tanjung Bin in Johor is another major coal center. Its original 2,100-megawatt facility was developed under Malaysia’s independent power producer program, while the separate 1,000-megawatt Tanjung Bin Energy plant added further capacity at the site. The complex uses port, unloading, storage, and conveyor systems designed for continuous fuel deliveries.
Negeri Sembilan hosts the Jimah and Jimah East developments, including some of the newest large coal units in Malaysia. The older Kapar power station in Selangor also contains coal-generating capacity, although its age places it among the earlier facilities expected to leave the system.
These plants are more than individual generating stations. Together with ports, coal yards, shipping contracts, transmission lines, substations, and the national grid, they form an integrated supply chain. Electricity security depends on the performance of every stage, from loading coal in Indonesia to delivering power into Malaysia’s main demand centers.
The coastal model lowers inland transport requirements, but it creates concentrated infrastructure exposure. Port disruption, severe weather, plant outages, or transmission constraints can affect a large amount of capacity at once.
Rising Electricity Demand Has Extended Coal’s Importance
Malaysia’s transition plans have not yet reduced the immediate need for coal. Electricity consumption continues to grow as manufacturing, commercial activity, urban development, and digital infrastructure expand.
Data centers have become a particularly important source of new demand in Peninsular Malaysia. Johor and other regions are attracting large facilities that require continuous electricity, strong grid connections, cooling systems, and backup capacity. This demand is developing more quickly than some replacement generation and transmission projects can be completed.
Coal output increased during much of 2025 as utilities responded to higher consumption, competitive coal prices, and reduced gas-fired generation. Gas use recovered strongly in December after domestic production improved, but coal still recorded a larger annual share of Peninsular generation than it had in 2024.
The relationship between coal and gas is partly economic. Malaysia can burn domestic gas in power stations, export it as LNG, or supplement domestic supply with imported LNG. When international gas prices are high, coal may remain cheaper for electricity generation, especially within a regulated tariff system.
Coal prices can also fall independently of gas prices. This creates periods when imported coal remains financially attractive even though it produces more carbon emissions. Electricity planners must therefore balance immediate generation costs with fuel security, emissions targets, plant age, and the long-term expense of replacing the fleet.
Coal Diversification Created a Different Energy-Security Risk
Coal originally helped Malaysia reduce overdependence on natural gas. It expanded the number of fuels available to the power system and supported steady electricity production during industrial growth.
The strategy also exchanged one form of concentration for another. Peninsular Malaysia now relies on imported coal for much of its electricity, with Indonesia supplying most of the fuel. This exposure has been manageable because seaborne coal markets are large and Malaysia is close to major exporters, but it remains a structural vulnerability.
International disruptions can raise delivered fuel costs even when Malaysian generating capacity is fully available. Currency depreciation can increase import expenses because coal contracts and freight are generally priced internationally. Fuel-cost changes may then affect electricity subsidies, utility finances, industrial tariffs, or government spending.
The coal fleet also consists of several very large stations. A prolonged outage at one modern unit can remove a significant block of power and require additional gas generation or reserve capacity. Maintaining boilers, turbines, emissions controls, unloading systems, and coal stockpiles is therefore important to national grid reliability.
Malaysia’s energy-security debate is no longer simply about choosing between domestic gas and imported coal. It now includes the speed at which solar, hydropower, storage, flexible gas generation, and regional electricity trade can provide reliable alternatives.
Retirement Schedules Will Shape the Transition
Malaysia’s National Energy Transition Roadmap calls for coal to be almost completely removed from the power-generation mix as renewable energy expands. The government has also committed to cutting coal capacity substantially by 2035 and phasing out unabated coal generation during the following decade.
The transition is expected to occur mainly through scheduled plant retirements rather than a sudden nationwide shutdown. Older capacity, including coal units at Kapar, is positioned to leave the system earlier. Other plants have power purchase agreements and expected operating lives extending through the 2030s or into the 2040s.
This staggered approach reduces the risk of removing dependable generation before replacement capacity is ready. It also means coal will remain part of Malaysia’s electricity system for many years even if no additional conventional plants are approved.
The newer Manjung and Jimah East units create a particular challenge. They represent major investments with remaining technical life, yet national climate and renewable-energy targets require coal output to decline. Possible responses include lower utilization, earlier retirement, emissions-control investment, carbon capture studies, or limited use of alternative fuels. The commercial and technical viability of these options has not been established across the fleet.
Retirement decisions must also account for workers, local contractors, port facilities, coal procurement operations, and communities connected to the plants. The transition affects an industrial supply chain rather than only the generating units.
Replacing Coal Is an Infrastructure Challenge
Malaysia cannot reduce coal generation solely by installing the same amount of solar capacity. Coal plants can operate at night and during periods of weak sunlight, while solar output changes with weather and time of day.
A reliable replacement system will require a combination of renewable generation, flexible gas plants, energy storage, stronger transmission, demand management, and regional electricity connections. Hydropower can support the system, but much of Malaysia’s largest hydro capacity is located in Sarawak and is not directly connected to Peninsular Malaysia.
Natural gas is expected to provide transitional firm power, although greater gas use may increase the need for imported LNG as domestic production changes. This could replace coal import exposure with a different fuel-cost risk unless renewable generation and storage expand quickly.
Coal will therefore remain important during the first stage of Malaysia’s transition, particularly when demand is growing faster than cleaner firm capacity. Its long-term decline is set by policy, but the timing will depend on whether replacement projects, grids, storage systems, and gas infrastructure are completed before major plants retire.
Malaysia’s coal future is not centered on building a new generation of conventional stations. It is centered on operating the existing fleet reliably while constructing the system that will replace it. The success of that process will determine whether coal capacity can fall without raising electricity costs sharply or weakening security of supply.
