The Energy Commission said that companies in Singapore currently paid premium prices for green energy, relative to prices in Malaysia.
PETALING JAYA: The establishment of a single market aggregator and an energy exchange is to facilitate price discovery and ensure a just and equitable energy transition.
In addition, besides upgrades required to the country’s existing power grid, tariff reforms and subsidy rationalisation are critical measures to spur greater adoption of renewable energy (RE), CGS-CIMB Research said.
These were among the salient takeaways from CGS-CIMB Research’s inaugural environmental, social and governance (ESG) and sustainability conference, which was attended by key personalities from the government and corporate sector.
The key objective of an energy exchange is to ensure a just and equitable energy transition without burdening the public; and exporting RE at the right premium price is one strategy to help finance the grid enhancements, it added.
During the conference, the Energy Commission (EC) explained that companies in Singapore currently paid premium prices for green energy, relative to prices in Malaysia.
Malaysia planned to access the premium price through RE exports and having an energy exchange is critical for this to be achieved. The revenues generated from here have the potential to fund the entire energy system requirements in Malaysia, according to the EC at the conference.
The research house said there was an economic imperative for Malaysia’s National Energy Transition Roadmap (NETR), given the rise in global demand for cleaner energy and green economy initiatives.
“We are ‘overweight’ on Malaysian utilities as we believe the NETR has introduced a structural growth element to a sector that has traditionally been viewed as more defensive,” CGS-CIMB Research added in a report yesterday.
Where stocks are concerned, the research house sees Tenaga Nasional Bhd
(TNB) as the key enabler and beneficiary of the NETR.
However, it noted that there appears to be a huge divergence in the year-to-date share price performance within the sector.
“Thus, we recommend exploring some of the liquid large-cap laggards, particularly TNB and Malakoff Corp Bhd. Genetec Technology Bhd, while not within the utilities sector, offers exposure to the battery energy storage system.”
CGS-CIMB Research said battery storage solutions would be essential to accommodate more than six gigawatt of green electrons, while carbon capture storage solutions would enable large-scale reduction in emissions.
Other takeaways from the conference were the Natural Resources, Environment and Climate Change Ministry (NRECC) reiterating the government’s commitment to shifting towards targeted subsidies.
This has already been implemented for high-volume industrial and commercial users, as well as the top 1% of residential customers.
The NRECC noted that the top 10% of electricity consumers received approximately 50% of the government subsidies.
“This suggests there is room for further tightening and these will be periodically assessed, with evaluations conducted every six months.”
The NRECC planned to learn from the experiences of other nations that expanded their RE capacity rapidly, but struggled with grid limitations
“As such, Malaysia aims to ensure that its grid and related infrastructure are prepared to handle increased RE capacity. This will involve sizeable investments of RM35bil over 2025 to 2030 (or RM180bil) until 2050.”
One challenge in the RE push is the absence of market trading provisions in the country’s existing regulations. This is where the energy exchange aims to address some of these issues, CGS-CIMB Research said.
