PETALING JAYA: The renewable energy (RE) sector is set to experience a positive trajectory going into 2025, as the rising electricity costs and various energy saving initiatives by corporates will accelerate solar adoption and drive solar engineering, procurement, construction and commissioning (EPCC) companies’ order books to an all-time high.
Kenanga Research said there has been a strong surge in contract wins and order book growth contracts under the Corporate Green Power Programme (CGPP) which will wrap up by the end of 2025.
“Thereafter, the Energy Commission (EC) will embark on the two gigawatts (GW) fifth large-scale solar bidding round (LSS5), the largest programme thus far, in four packages.
“We estimate that there will be at least RM5bil worth of solar photovoltaic system EPCC jobs coming from the LSS5,” Kenanga Research said in a report.
It added that while the EC has not revealed winners for the bid, they have been shortlisted as 510 megawatts (MW) have not yet been identified, though this portion may consist of smaller capacity.
“In our view, Solarvest Holdings Bhd
will be among the winners, securing up to 20% of the 510MW. This projection is based on its prior success in LSS4, where it secured 67MW and its extensive experience in executing similar projects, positioning it as a strong contender,” it noted.
According to the research house, the increase in electricity tariffs, both businesses and residential places will likely invest more into solar installations.
It further noted that the Net Energy Metering has a new additional quota of 450MW to further support business investments in solar energy assets, with the deadline extended to June 30, 2025, while the Solar For Rakyat Incentive Scheme will continue with its rebates.
“The residential segment is still significantly untapped. Based on our estimates, Tenaga Nasional Bhd (TNB) has approximately 10.2 million domestic customers but only 54,000 have installed solar rooftops so far.”
The research house added that the severe oversupply in the solar industry has begun to ease while panel prices have reached an all-time low of US$0.09 per watt, falling below production costs.
“Chinese solar manufacturers are struggling to maintain market share.
“We anticipate that most solar manufacturers will report losses this year, with some unable to withstand the financial strain and ultimately exiting the market.
“RE players are still in a season of being able to enjoy a good runway on margins” it said.
Furthermore, Kenanga Research pointed out that there is a growing market for renewable energy certificates from demand by corporations as they commit themselves to the RE100 initiative.
TNB has received more than 70 applications for electricity supply to data centre projects, with a combined maximum demand of 11GW and could potentially generate RM1.1bil annually with this capacity.
Meanwhile, Kenanga Research said its top picks include Solarvest and Samaiden Group Bhd for its near-term prospects, centred on the upcoming EPCC contracts from the CGPP which are expected to see a more active flow of contract awards in the coming months, followed by the 2GW LSS5 project.
“Solarvest has a strong market position, execution track record, strong earnings visibility backed by sizable outstanding order and tender books, and recurring incomes from a growing portfolio of solar assets, while Samaiden typically fetches higher margins given its focus on residential and commercial projects,” it said.
In line with that, Kenanga Research said it will maintain an “overweight” call on the sector.
