PETALING JAYA: The renewable energy (RE) space remains the focus point for analysts as companies operating in the engineering, procurement, construction and commissioning (EPCC) business look set to benefit from project rollouts under various initiatives to grow power output from the sub-sector.
This comes after the government’s move to relax conditions for the net energy metering (NEM) and self consumption (Selco) for solar photovoltaic (PV) programmes (effective July 15) by increasing allowable capacity to 85% of consumption from 75% previously for both NEM and Selco, as well as allowing participation of high voltage consumers in the Selco programme.
“We believe these will encourage further solar PV adoption by both domestic and non-domestic consumers, while the latter should complement the existing NEM programme without impacting the grid’s solar penetration limit (Selco programmes are non-grid connected, unlike NEM).
“We believe the increase in effective tariffs for high-consumption domestic consumers will encourage the adoption of rooftop solar to reduce electricity cost,” MIDF Research stated in a report following Putrajaya’s move to review power tariff rates last week.
Analysts noted the latest review in power tariff under the second-half 2024 (2H24) imbalance cost pass-through (ICPT) review saw minimal changes and was in line with Putrajaya’s continued targeted subsidy approach.
There were no changes in rebates and surcharges for domestic consumers, but with small reduction in ICPT for commercial and industrial users, which are speculated to assist in efforts to reduce prices of goods.
The ICPT review sees the government bear a subsidy of RM2.19bil or about 15.3% higher than the estimated RM1.9bil spent in 1H24.
That aside, on the table for EPCC companies is the opportunity to undertake works for the fifth stage of large-scale solar (LSS5) plants (commercial operation date in 2026) and generation capacity under the Corporate Green Power Programme (CGPP) plants (commercial operation date in 2025).
A total of 800 megawatt alternating current capacity was awarded under the CGPP, giving rise to potential RM2.4bil to RM3.2bil worth of EPCC jobs this year.
The LSS5 construction in 2025, based on the two-gigawatt capacity allocated, could offer RM6bil to RM8bil in prospective EPCC jobs, MIDF Research noted.
It remained neutral on power utilities due to stretched valuations but had a “buy” call on key plays into the RE EPCC space such as Samaiden Group Bhd (target price or TP: RM1.57 a share), Sunview Group Bhd
(TP: 88 sen), Pekat Group Bhd (TP: 88 sen) and Solarvest Holdings Bhd (non-rated).
