Maybank IB Research said significant solar capacity growth is required over the next three decades.
PETALING JAYA: About 2.4 gigawatts (GW) of the country’s large-scale solar (LSS) projects have been awarded to date and out of this, about 1.4GW are operational, says Maybank Investment Bank (IB) Research.
The research firm said the Energy Commission (EC) recently released a progress report on the LSS projects, which were introduced in 2016.
There have been four cycles of the scheme with the LLS4’s competitive bidding in 2020 being the largest, for 1GW of solar plants.
Based on EC’s progress report, Maybank IBG said 57% of the LSS projects have completed construction as at the end of the second quarter 2023.
“The remaining are still under construction, where we expect most of them to complete by end-2023,” added the research firm.
With no new LSS awards, it said the market now awaits the engineering, procurement, construction and commissioning (EPCC) contract awards under the new Corporate Green Power Programme (CGPP).
“As LSS Phase 4 is expected to complete construction by end-2023, most renewable energy (RE) EPCC players’ order book are expected to be exhausted, pending EPCC award under the CGPP. We estimate the CGPP’s 563 megawatts (MW) of awarded capacity to generate circa RM2bil of EPCC work, providing order book-replenishment opportunities,” said the research firm.
In early August, 563MW of solar projects was awarded under the CGPP (out of an 800MW quota) and these are slated to be completed by end-2025.
“Applications for the CGPP will continue until end-2023 or until the quota is exhausted.
“We remain constructive on developments in the RE sector and tactically upgrade Solarvest Holdings Bhd
to a ‘buy’ from ‘hold’ with an unchanged RM1.40 target price,” said Maybank IB Research.
It said based on a study published by the Sustainable Energy Development Authority (Seda), Malaysia has an average solar irradiation of 1,726 kilowatt hours per square metre (kWh/m2) with the north-western part of Peninsular Malaysia receiving the highest solar irradiation.
“In terms of LSS location, we note that Perak has the highest solar capacity awarded, at 542MW (46% completed). This is followed by Kedah (70% completed) and Terengganu (64% completed), at 491MW and 324MW, respectively,” it added.
With the government having raised the installed RE capacity target to 70% by 2050 (from 25% now), Maybank IB Research said significant solar capacity growth is required over the next three decades.
Meanwhile, natural gas will continue to play a pivotal role in Malaysia’s energy landscape as a transition energy, with coal expected to fully phased-out by 2040.
It noted that the recently launched National Energy Transition Roadmap requires an estimated investment of RM1.2 trillion to RM1.3 trillion by 2050.
“In the first decade (2023-2029), 18% of the funding will primarily be for RE power generation and green mobility, of which the investment in RE power generation entails solar PV and hydropower, and strengthening of the grid infrastructure.
Third-party access, a RE exchange system and cross-border trading for RE will be implemented to partly finance the investment,” it added.
