Floating solar panels in Selangor, Malaysia. - (AP Photo/Vincent Thian)
PETALING JAYA: Analysts are positive on the power and utilities sector as renewable energy related engineering, procurement, construction and commissioning (EPCC) works are expected to result in record high order books and revenues in 2025.
According to TA Research, this will be underpinned by the rollout of the 800 megawatt (MW) of Corporate Green Power Programme (CGPP) projects and a record 2,000MW in the upcoming fifth large scale solar (LSS5) projects, which is due for commissioning by end of financial year 2025 (FY25) and in FY26 and FY27, respectively.
Elaborating further on LSS5, the research house said the LSS5 tariff bids will be reflective of the sharp fall in global solar module prices, which have fallen over 60% after peaking in late 2021. Solar modules in turn, are estimated to have accounted for up to 50% of EPCC costs during the LSS4 construction.
“As a result, we estimate overall EPCC cost would have fallen about 30% since LSS4, which would translate into lower tariff bids of around 14 to 16 sen per kilowatt-hour for LSS5 compared to a mean tariff bid of 20 sen per kilowatt-hour in LSS4.
“As such, we believe potentially lower tariff bids is by no means a reflection of lower profitability for LSS5 projects,” TA Research stated in a recent sector report.
The evaluation of LSS5 bids have been completed and shortlisted bidders will be notified directly by the Energy Commissions from Dec 23, 2024 onwards.
TA Research said more ‘goodies’ were announced by the Energy Transition and Water Transformation Ministry in regards to the solar for self-consumption (SelCo) programme. This builds on recent enhancements to the Net Energy Metering (NEM) programme.
For context, the NEM programme essentially allows excess solar generation to be exported to the grid in return for credits to offset grid power consumption cost, while in contrast, SelCo is strictly for own usage.
And like NEM, SelCo is primarily targeted towards rooftop solar installations, but the former is limited by quotas issued by the government.
“We view the latest updates to the SelCo programme positively, in particular, the decision to expand SelCo to include ground-mounted and floating solar configurations, which could open up vast opportunities beyond just rooftop solar,” it stated.
Citing a study done by the Sustainable Energy Development Authority which noted rooftop solar accounts for 16% of the country’s total solar source while ground-mounted solar for 78%.
Hence, the SelCo programme which will open up ground-mounting configurations is likely to be received well by the industry as it could unlock new segments of opportunities for the RE industry and lessen the quota and auction cycle limitations in the LSS and CGPP programmes.
Hence, TA Research maintained an “overweight” rating on the power and utilities sector, premised on demand-supply tightness in the generation market, record-high RE rollout, potential step up in grid capital expenditure and commencement of Malaysia’s RE export.
“The sector will continue to be driven by the energy transition backed by the NETRs aggressive 70% RE mix target by 2050, while the influx of data centre capacity is expected to drive strong demand growth, underpinning the requirement for new generation capacity,” the research house added.
It identified key beneficiaries within the RE EPCC sub-sector to include Samaiden Group Bhd, Solarvest Holdings Bhd
, Sunview Group Bhd and Pekat Group Bhd.
The key beneficiaries in the asset owner space – in regards to the LSS5 rollout – includes Tenaga Nasional Bhd, Malakoff Corp Bhd and YTL Power International Bhd, TA Research forecast.
