TA Research expects record-high order books and revenues for RE EPCC players in 2025.
PETALING JAYA: The outlook for Malaysia’s power and utilities sector remains positive, underpinned by significant developments in the renewable-energy (RE) space, including updates to the Net Energy Metering 3.0 (NEM 3.0) programme.
TA Research reiterated its “overweight” rating on the sector, citing strong catalysts for the RE engineering, procurement, construction and commissioning (EPCC) sub-sector following the recent updates from the Energy Transition and Water Transformation Ministry.
These include an expansion of the NEM 3.0 quota and an extension of the Solar for Rakyat Incentive Scheme (SolaRIS), both of which are expected to bolster demand for rooftop solar installations, which typically offer higher margins than utility-scale solar projects.
Under NEM, the energy produced from rooftop solar PV installations will be consumed first, and any excess will be sold to TNB at the prevailing cost.
“We view these updates as a positive catalyst for the RE EPCC sub-sector, given the potential increase in demand for rooftop solar installations,” TA Research said.
The recent updates have increased the NEM Rakyat quota for residential consumers by 150 megawatt (MW) to 600MW, while the NEM Net Offset Virtual Aggregation or Nova quota for commercial and industrial users has been increased by 300MW to 1,700MW.
As at December 2024, 82% of the NEM 3.0 quota allocation had already been taken up, with NEM Rakyat at 95%, NEM Nova at 78% and NEM GoMEn for government ministries and entities at 65%.
TA Research also highlighted that the extension of the SolaRIS programme, which provides cash rebates of up to RM4,000 for residential customers who install solar photovoltaic (PV) systems, until April 30 2025, will further stimulate the residential solar market.
“This will drive increased demand for solar PV systems in the residential sector by reducing installation costs and should attract new installations,” the research house explained.
The expansion of NEM 3.0, alongside the broader rollout of RE projects, is expected to benefit players in the RE EPCC space, including Samaiden Group Bhd, Solarvest Holdings Bhd
, Sunview Group Bhd and Pekat Group Bhd.
Additionally, Northern Solar Holding Bhd, which is set to list in February 2025, is also seen as a key beneficiary, given its focus on rooftop solar EPCC projects.
TA Research expects record-high order books and revenues for RE EPCC players in 2025, driven by the rollout of major projects such as the 800MW Corporate Green Power Programme and 2,000MW of Large Scale Solar 5 projects, set to be commissioned by the end of 2025 and 2026, respectively.
The research house remains confident in the long-term outlook for the power and utilities sector, citing several key drivers, including demand-supply tightness in the generation market, record-high RE rollouts, increased capital expenditure for grid upgrades to accommodate the energy transition, and the commencement of Malaysia’s RE exports.
It noted that the NETR’s target of a 70% RE mix for the country’s energy needs by 2050, combined with strong growth in demand from the increasing number of data centres being built in Malaysia, would further support this positive outlook.
However, TA Research also flagged the possible risk of regulatory and policy changes that could affect the sector’s growth trajectory.
