Power sector
Maintain neutral on respective sectors: It has been reported that the Energy Commission is requesting proposals for the development of its third round of large-scale solar (LSS) projects. Capacity to be tendered will be between 1mw and 100mw, with a target aggregate capacity of 500mw in Peninsular Malaysia. Commissioning is expected in 2021. Undoubtedly a positive development considering the government’s plan to significantly increase the country’s electricity from renewable sources from the current 2% of the total generation mix, this will open up many more opportunities to incumbents and/or new entrants, with financial impact likely to be more noticeable on the smaller players. We maintain our “neutral” call on the sector.

 
The government has set a target of 20% of the country’s electricity to be generated from renewable sources by 2025, an increase from the 2% mix currently. In order to achieve the 20% target, about 3,991mw of new energy capacity will be required for addition to the grid. Other than LSS projects, the government also plans to increase electricity generation through the various other feed-in-tariff sources, namely biogas, biomass, geothermal mini-hydro as well as solar and net-energy-metering mechanisms (that is energy consumer to sell surplus solar energy to the grid).

The capacity for this new tender of LSS development will be between 1mw and 100mw with a target aggregate capacity of 500mw in Peninsular Malaysia. The various projects are expected to be commissioned by 2021. We believe this could benefit Cypark Resources given its technical expertise and experience as the developer and operator of solar parks. Mega First Corp has also voiced intentions of venturing into the renewable energy space after the successful operation of its Don Sahong hydropower plant in Vietnam. Other beneficiaries may be Malakoff Corp Bhd, YTL Power International Bhd, Tenaga Nasional Bhd and Ranhill Holdings Bhd.

The first two cycles of LSS projects have a total installed capacity of 958mw. To date, we believe five projects with capacities of 131mw have reached their commercial operation status, with the remaining having a commission operation date in 2019-2020. — PublicInvest Research, Feb 15