More renewable energy (RE) projects are expected to come up for bids in the near term as the new Energy, Green Technology, Science, Climate Change and Environment Ministry is committed to push up the nation’s RE capacity.
MIDF Research, which recently attended the Minister Yeo Bee Yin’s maiden townhall, said the latter pointed that the country already attains abundant reserve capacity of 30%, which is much higher than most countries.
“While there is no indication of an ideal or target reserve capacity, the new Minister indicated that the abundant reserve capacity gives the industry decent time to build up its RE capacity within the next three to seven years, without the need for much more major new plant-ups in the near-term.
“This suggests in the near future, sector opportunities could tilt heavily towards RE project awards and a dearth of future fossil fuel plants,” the research firm said in its report last Friday.
MIDF added that the ministry aims to reduce the reliance on imported fuel by aggressively increasing the RE contribution to the mix from just 2% currently to 20% “in the future”.
It said the push for RE is not entirely new and efforts had been taken previously to increase RE contribution to the system such as the Large Scale Solar (LSS) projects.
“Solar accounts for the bulk of Malaysia’s RE. However, there is the issue of getting RE sources to reach grid parity for it to be cost competitive and gain a larger share of generation mix without burdening end-consumers,” it said.
MIDF also noted that given the indication of excessive reserve capacity, the pace of any major plant-ups in the near-term is likely to be impacted.
It added that although the new Minister’s intention is to champion RE, it opined that the shift is for RE to eventually dilute contribution from fossil fuel rather than near-term, outright replacement.
“There is the issue of feasibility to induce RE in a big way into the system too which will have to be sorted out,” it added.
Positively, MIDF said that most of the incumbent players such as Tenaga Nasional Bhd (TNB) and Malakoff Corp Bhd are already paving way into the RE space (in particular, solar), while Cypark has been moving aggressively into RE in recent years.
Meanwhile, the research house also highlighted that the four Independent Power Producer (IPP) projects cancellations are likely to hit selective players, the majority of which are likely to be non-listed.
“Among the major projects in the pipeline, we think Edra’s Track 4B with a massive 2242MW capacity in Malacca could come under scrutiny given that it was a directly awarded project.”
“While Track 4A (TNB-SIPP) was a controversial project awarded on a directly negotiated basis (previously to the TNB-YTL-SIPP consortium) back in 2014, the project is already well underway (28% completion),” it said, noting that Tadmax is another directly negotiated power plant project at Pulau Indah.
MIDF said, others might involve LSS project awards such as Quantum Solar which was the first to be awarded LSS projects under the LSS initiative on a direct award basis.
“Ranhill was recently awarded a 300MW CCGT project in Sandakan Sabah. There has yet to be any development announced on the project so far,” it added.
Nonetheless, MIDF said it remained positive on the power sector while its top pick include TNB and YTL Power.
