Singapore RE foray a potential positive for TNB

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PETALING JAYA: Tenaga Nasional Bhd’s (TNB) (pic) foray into the renewable energy (RE) market in Singapore is in line with the utility giant’s plans to fast track its RE expansion plan, say analysts.

MIDF Research in its latest report said the development is a positive move for TNB, adding that the company’s entry into Singapore’s RE market will help address any environmental, social and governance (ESG) issues it may have.

“The 100 megawatt (MW) cross-border energy supply into Singapore, if TNB is successful, is a potential positive for the group, contributing towards the 8,300 MW RE capacity target by 2025 and gradually alleviating the ESG concern on its ‘dirty fuel’ exposure.”

The research house said the foray could mean acquisitions of RE assets both internationally and domestically, which will dilute the composition of “dirty fuel” in TNB’s capacity mix.

MIDF Research said the initiative could also lead to easing capital expenditure in the near-to-mid term, suggesting that future dividends could be on the higher end of the group’s payout policy of 30% to 60%.

On Tuesday, TNB announced that its wholly-owned subsidiary TNB Renewables Sdn Bhd had made its first foray into Singapore’s RE market via a collaboration with the Sunseap Group.

The collaboration will allow TNB to tap into the RE and corporate power purchase agreement market in Singapore and marks an important milestone for the expansion of TNB’s international RE footprint into South-East Asia.

At present, TNB’s total RE portfolio consists of 2,732.3 MW in Malaysia (including 2,536.1 MW of large hydro) and 666 MW across the UK, Turkey and India comprising mainly solar, wind and hydro energy generation assets.

TNB said the initiative is expected to drive the growth in clean and green energy demand within the region in the coming years.

MIDF Research said the collaboration will allow for participation in a potential tender to be launched by the Energy Market Authority (EMA), a statutory board under the Ministry of Trade and Industry of Singapore, for cross-border energy supply soon.

“In October 2020, Singapore set a target of installing 2,000 MW of solar photovoltaics by 2030, aimed at meeting the annual needs of around 350,000 households.

“As of the first quarter of 2020, based on EMA statistics, it was reported that Singapore has a solar capacity of 290 MW, which means there is another 1,710 MW required over the next 10 years to meet its 2030 target and is targeted to be led by the private sector.”

Given the requirement for large land areas (other than just rooftops) to generate solar power, MIDF Research said Malaysia could provide a meaningful support for this target.

“The Singapore power sector runs mainly on gas and steam turbines, accounting for a collective 96% of total capacity. Waste-to-energy and solar account for 2% and 2.3% of total registered capacity, respectively, ” it said.