Bright outlook for Malaysian RE players

NST Tue, Jul 12, 2022 10:35am - 1 year View Original


KUALA LUMPUR: The prospects for renewable energy (RE) engineering, procurement, construction and commissioning (EPCC) contractors are good as the government strives to achieve the target of RE generation capacity to comprise 31 per cent of total electricity generation capacity by 2025. 

Affin Hwang Capital analyst Loong Chee Wei noted that the government planned to roll out large scale solar phase 5 (LSS5) and was studying the possibility of allowing virtual power purchase agreements (PPAs). 

However, the launch of LSS5 could be delayed to 2023 to allow most of the LSS4 projects to kick off first. 

"Indications are the LSS5 tariff rate is likely to be higher to reflect that higher cost of solar photovoltaic (PV) panels. 

"The virtual PPAs will allow solar energy purchase (SEP) by Tenaga Nasional Bhd's non-residential customers from a solar PV plant at an offsite location with the electricity supply transmitted through the national grid," he said. 

Loong noted that the RE EPCC beneficiaries were likely to be Samaiden Group, Solarvest Holdings, Sunway Construction and Pekat Group.

Affin Hwang visited the LSS1 plants in Kedah and Penang, and the Andaman Island reclamation project in Penang island recently. 

It believes long-term prospects of more LSS solar PV plants and sustainable reclamation projects in the Northern Corridor Economic Region (NCER) are good and reiterates its "Overweight" call on the construction industry.

Key downside risks for the construction sector are delays in the implementation of mega infrastructure projects especially the Klang Valley MRT Line 3 project, high building material prices and political uncertainties.

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