The power sector in Malaysia is expected to see a proliferation of solar projects in 2024, as households and companies seek to lower electricity bill and reduce carbon footprint.
This will benefit solar engineering, procurement, construction, and commissioning (EPCC) companies like Tenaga Nasional Bhd (TNB), Pekat Group, Solarvest Holdings and Samaiden Group.
According to AmInvestment Bank (AmInvest) Research, the demand for solar systems would likely come from the rooftop segment, solar farms, and data centers.
“Demand for solar rooftop systems will increase as commercial and industrial companies seek to reduce electricity bills and carbon footprint.
“Solar EPCC firms are expected to benefit from the rollout of solar projects in 2024,” it said.
It pointed out that under phase one of the Corporate Green Power Programme (CGPP), 563 MW of solar capacity was awarded to various companies and expected to be commissioned at the end of 2025.
AmInvest Research said it expected profit margins of solar projects to increase as the cost of solar panels had declined.
As such, there was potential for companies to register a decent return under CGPP, it said.
“The cost of solar panels is estimated to be 18 US cents per kWh now compared with the high of 31 US cents per kWh in 2022.
“Off-takers are expected to be sister companies of the winners,” it said, pointing to Sime Darby Plantation, which would be selling green energy under the CGPP to Sime Darby or Sime Darby Property, as an example.
Overall, AmInvest Research maintained its “overweight” stance on the power sector, citing the sunny outlooks for most power companies under its coverage, namely TNB, Malakoff Corp, Mega First Corp and YTL Power International.
The brokerage forecasted electricity demand in Peninsular Malaysia to rise by 2% in 2024.
It said tariff surcharge for electricity users would likely continue through the first half of this year, but at a lower rate, as coal and gas costs were still higher than the reference rates stipulated in the Regulatory Period 3.
Regulatory Period 4, covering 2025 to 2027, would likely be unveiled by the end of this year, it said.
With waste-to-energy (WtE) plants gaining interest, AmInvest Research said the outlook for waste management industry was positive as the volume of waste was forecast to increase to 19 million tons in 2050 from 14 million tons in 2021.
“Kedah, Pahang and Johor will be launching the bidding process for WtE plants in 2024,” it said, adding that Malakoff and YTL Power would likely be bidding for the projects.
Additionally, AmInvest Research said it expected the exports of electricity from Peninsular Malaysia to Singapore to initiate in the first half of 2024, while Sarawak would likely be exporting hydroelectricity to Singapore in 2032.
It also noted that YTL Power Seraya would be the electricity importer for the two-year trial to import 100 MW from Malaysia.
Singapore planned to import up to 4,000 MW of low-carbon electricity by 2035, making up to 30% of its electricity supply.
AmInvest Research said TNB would be receiving a freewheeling charge for the usage of its grid network and inter-connectors. Additionally, it said TNB would also benefit from the growing number of data centers in Malaysia, as electricity demand from these facilities is recurring.
It indicated that electricity demand from data centers is projected to surpass 5,000 MW in 2035, noting that TNB had signed electricity supply agreements with eight data center players, totaling up to 2,000 MW.