RE COMPANIES TO BENEFIT FROM CONTRACT CATALYST IN 2H 2024 - HLIB

KUALA LUMPUR, July 3 (Bernama) -- The renewable energy (RE) focused companies are expected to benefit from upcoming contract catalysts such as Malaysia’s fifth Large Scale Solar (LSS5), in the second half of this year.

Hong Leong Investment Bank, in its research note, said, this also includes net energy metering (NEM), low carbon energy generation (LCEG) programme/new enhanced dispatch arrangement (NEDA). 

Retaining its “overweight” sector rating, HLIB said apart from contract catalysts, it also took into account the third-party access (TPA) rollout, export refinement and accommodative costs environment. 

The investment bank said Malaysia’s rise as the preferred data centre (DC) destination had yielded a sizable pipeline of 2.9 gigawatts (GW) (excluding live) with 159 megawatts (MW) currently undergoing construction.

“We believe the government’s bringing forward of the TPA model is timely to cater to the burgeoning data centres (DC) emissions offsetting needs while accelerating decarbonising goals under the NETR. 

“Our back-of-the-envelope calculations suggest that assuming the current DC pipeline fully materialises and complete emissions (electricity) offset requirements, this could translate into demand for environmental attributes roughly equivalent to sizable 30-34GW of solar capacities,” said HLIB.

It is stated that the Corporate Green Power Program (CGPP) is a RE initiative that enables corporate consumers to virtually purchase solar energy from solar developers.

Moreover, the near-term pipeline for companies under coverage looks promising, supported by various quota programmes such as LSS5, NEM (400MW), and LCEG/NEDA.

“These programmes are on top of ongoing Feed-in-Tariff (FiT) programmes and cover wide-ranging RE resources. We believe that long-standing quotas awarded in prior years could be rescinded and re-awarded going forward to accelerate progress, possibly on the bioenergy side to accelerate rollout progress.

“Barring any extension of time granted, the Energy Commission (EC) has stipulated for CGPP projects to meet commercial operating date by the end of 2025, and we anticipate higher urgency on all parties to close the deal,” said HLIB. 

It also expects Solarvest Holdings Bhd to emerge as the biggest winner with its active involvement in 443.4 MW of engineering, procurement, construction and commissioning (EPCC) quotas worth an estimated RM1 billion.

-- BERNAMA