Kenanga Research said solar EPCC players are currently racing against time to execute the Corporate Green Power Programme projects before the end-2025 deadline.
PETALING JAYA: At least RM10bil in engineering, procurement, construction and commissioning (EPCC) contracts are up for grabs for solar players, as the government ramps up the renewable energy (RE) initiatives.
According to Kenanga Research, solar EPCC players are currently racing against time to execute the Corporate Green Power Programme projects before the end-2025 deadline.
Meanwhile, the two gigawatt (GW) large-scale solar five (LSS5) contract awards are set to be rolled out in the immediate term, targeting completion by end-2027, suggesting there appears to be some flexibility to the commonly understood 2026 delivery date.
“Order books are hitting record highs driven by a surge in EPCC jobs.
“Solarvest Holdings Bhd
has emerged as the first listed firm to secure an LSS5 contract with total secured contracts so far at about RM504mil, still a fraction of our RM5bil LSS5 target with momentum expected to pick up,” Kenanga Research said in a report.
The LSS5 EPCC contract awards are expected in the second quarter of 2025. Thereafter, the focus will be on the 2GW LSS5+ bidding winners, which will be announced by the fourth quarter of 2025 with project completion slated for end-2027.
“Bidding rates should stay close to LSS5 levels, of RM0.14 to RM0.18 per kilowatt-hour (kWh) but any surprise spike in panel prices could slam internal rate of returns to below 8% or even negative territory in a worst-case scenario.”
The research firm noted that solar panel prices have remained low, enabling concession holders to scale up bids to 500 megawatt (MW).
The price drop stemmed from a massive oversupply of manufacturing capacity which is likely to persist though further sharp declines seem unlikely, as deeper cuts would push most manufacturers into losses, added Kenanga Research.
“With some manufacturers struggling to survive, market exits could pave the way for a future rebound, but a major recovery in 2025 looks doubtful.
“As a result, solar EPCC players can still benefit from lower panel prices, with an estimated gross profit margin of around the low mid-teens for LSS5+. With current prices, we expect winning rates to fall between RM0.14/kWh and RM0.18/kWh, yielding an 8% project IRR.
“The rooftop solar segment is gaining traction too driven by policy support and rising electricity costs. The newly introduced Community Renewable Energy Aggregation Mechanism is also a posive initiative.”
