Research houses remain positive on power sector
Published on: Monday, January 29, 2024
By: Bernama
Research houses are maintaining a positive outlook on power utilities, citing the government’s strong energy transition policy that drives improved growth. (Bernama pic)
PETALING JAYA: Research houses are positive on the utilities sector after the energy transition and public utilities ministry announced a slew of renewable energy (RE) initiatives and programmes last week.
MIDF Research said the latest announcement by the ministry underpinned a strong visibility of the RE pipeline for the power sector this year.
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As such, it has maintained its positive stance on the power utilities sector, premised on a firm energy transition policy layout which should drive improved growth and environmental, social and corporate governance (ESG) profile for the sector.
“We believe RE engineering, procurement, construction and commissioning (EPCC) players such as Samaiden, Sunview, Pekat and Solarvest are among the immediate term beneficiaries, given a potential rise in demand for RE EPCC services,” it said in a note today.
Recently, the ministry announced the continuation of the Net Energy Metering programme with additional quotas of 400 megawatts (MW) and the fifth bidding cycle of the Large-Scale Solar programme with a quota of up to 2 gigawatts (GW).
At the same time, the Low Carbon Energy Generation programme (with a total quota of 400MW) will be undertaken through the New Enhanced Dispatch Arrangement mechanism for non-solar energy such as wind, mini-hydro, biogas, biomass and hydrogen.
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In addition, Hong Leong Investment Bank Bhd has maintained its “overweight” call on the utilities sector, based on strong structural themes as well as a positive earnings growth cycle.
“Overall, we view the cumulative 2.8GW of new RE quotas through various programmes as a significant boost for the sector, as this sets in motion the government’s 70% RE share by 2050 target as outlined in the National Energy Transition Roadmap (NETR).
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“A key highlight is the comeback of the LSS competitive bidding programme (LSS5) with a significantly larger quota size of 2GW. We are conservatively estimating solar EPCC opportunities of about RM7 billion from the LSS5 programme,” it said.
Meanwhile, RHB Research also maintained its “overweight” stance on the sector and is positive on the Integrated Clean Energy (TBB) programme this year as it will support the country’s desired energy transition and carbon footprint reduction initiatives, in addition to generating economic benefits.
RHB Research said it is positive on the recent announcement as the TBB presents a significant opportunity to accelerate Malaysia’s energy transition by facilitating RE project participation in the domestic electricity market, although it noted that developers will need to address initial capex requirements.
“Having participated in three LSS rounds and emerging as the biggest winner for the Corporate Green Power Programme, we believe Tenaga Nasional Bhd (TNB) will be able to capitalise on the 2GW capacity offered for LSS5.
“Although we are yet to know how the battery energy storage system pilot project will pan out, TNB stands to gain from the project as it will increase grid stability and reliability as well as improve the integration of RE,” it added.
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