MIDF Research expects YTL Power to benefit in the immediate term with the lifting of RE export ban.
PETALING JAYA: Recent updates to Malaysia’s renewable energy (RE) policy are expected to benefit several power producing companies through the creation of new opportunities.
Potentially attracting investments of up to RM637bil up till 2050, involving power generation sources, grid infrastructure and energy storage capacity, the latest policy decisions could position Malaysia as a leader in regional RE trade.
According to MIDF Research, the latest policy decisions is a signal to potential third-party access to the grid to allow transmission of power from RE generators to end customers.
It is also a step towards market liberalisation, it said.
The brokerage expected YTL Power International Bhd
, and indirectly, the latter’s holding company YTL Corp Bhd, to benefit in the immediate term with the lifting of RE export ban and the development of an electricity exchange system to enable cross-border RE trading under the new policy decisions.
This could be attributed to YTL Power’s advantage in having existing power generation and power retail operations in Singapore.
MIDF Research pointed out that YTL group’s 2000-acre land in Johor can accommodate up to 500-megawatt solar capacity, though the brokerage expected part of the electricity generated would be utilised to power the group’s own planned data centres in the state.
“We believe Tenaga Nasional Bhd (TNB) stands to benefit from wheeling charges given its monopoly of the national transmission grid,” MIDF Research said.
“We also believe TNB will benefit from higher capital expenditure into grid infrastructure to accommodate the envisioned regional RE trade, which will be positive for its regulated earnings.”
According to MIDF Research, the potentially increased demand for RE exports could drive greater requirements for RE capacity.
It would not rule out other existing RE owners and developers such as Ranhill Utilities Bhd, Jentayu Sustainables Bhd and Cypark Resources to tap on this potential.
Engineering, procurement, construction and commissioning players such as Solarvest Holdings Bhd and Samaiden Group Bhd were also obvious potential beneficiaries, MIDF Research said.
The Economy Ministry and the Natural Resources, Environment and Climate Change Ministry on Tuesday unveiled several key updates to Malaysia’s RE policy as a commitment to a more aggressive step towards sustainability.
Among the changes involved a new RE capacity mix target of 70% by 2050, as compared to the earlier targets of 31% RE capacity mix by 2025 and 40% by 2035 against an RE capacity mix of 25% as of end-2022.
Another key announcement was the lifting of the current RE export ban and the development of an electricity exchange system to enable cross-border RE trading.
This was expected to allow domestic RE capacity to grow at a faster and larger scale, capitalising on rising regional RE demand.
“A low hanging fruit is Singapore, which lacks land size to accommodate RE generation and houses a lot of the region’s RE100 multinational corporations,” MIDF Research said.
RE100 is a global initiative involving companies that are committed to 100% RE across its operations.
It pointed out that Malaysia had an advantage given its proximity to Singapore and an existing interconnection.
“As RE-sourced electricity in Singapore commands much higher tariffs, this could also drive investments into solar+ battery energy storage system projects, which may have not been feasible previously at local tariffs,” MIDF Research said.
In the long run, the new policy on RE trade aimed to position Malaysia at the centre of the regional electricity trade, riding on the Asean grid interconnection initiative.
“The move aims to capitalise on the ample RE resource in the country and its strategic geographical location at the centre of the region,” MIDF Research said.
