PETALING JAYA: Malaysia’s renewable energy (RE) sector is set to enter another phase of accelerated growth following the launch of the large-scale solar 6 (LSS6) programme.
Analysts expect the record-sized tender to drive billions of ringgit in engineering, procurement, construction and commissioning (EPCC) contracts, strengthen earnings visibility for solar players and reinforce the country’s long-term energy transition ambitions.
Research houses generally view the LSS6 as a major catalyst for RE developers and contractors, highlighting the larger-than-expected capacity allocation and the mandatory inclusion of battery energy storage systems (Bess) as key features that will support industry growth over the next several years.
UOB Kay Hian (UOBKH) Research said: “The launch of the flagship LSS6 programme tender reinforces our investment thesis that solar EPCC players will continue to benefit from strong order book replenishment and healthy earnings visibility over the next three to five years.”
The research house said the 2.5GW allocation, together with 1.25GW of Bess, exceeded expectations and could generate about RM9bil worth of jobs under the programme.
Based on elevated order books driven by more than 6.5GW of planned solar developments between 2026 and 2029, it maintained its “overweight” call on the sector.
UOBKH Research estimates total EPCC replenishment opportunities of RM13bil to RM23bil over the next four years as the government rolls out LSS6 alongside the Corporate RE Supply Scheme.
It named Solarvest Holdings Bhd
, Pekat Group Bhd and Northern Solar Holdings Bhd as its preferred sector picks.
RHB Research also kept an “overweight” stance on the energy sector, with Solarvest and Samaiden Group Bhd set to be the biggest beneficiaries of the new development, citing their strong execution track records across earlier LSS programmes.
It expects Solarvest to secure a 20% to 30% market share, while Samaiden could capture 10% to 15%, supporting further order book growth.
While total project capital expenditure could reach RM13bil to RM15bil, RHB Research noted that declining module costs may partially offset higher project costs associated with Bess integration.
It cautioned that increasingly competitive bidding could compress returns.
“While the power purchase agreement (PPA) terms and project internal rate of return (IRR) remain unclear for now, we do not rule out the possibility of lower project internal rate of returns at mid-single digit, given the increasingly competitive bidding environment,” it said.
CGS International (CGSI) Research believes LSS6 marks another significant milestone in implementing the National Energy Transition Roadmap (NETR).
“Including LSS6, cumulative utility-scale solar quotas announced since the launch of the NETR in mid-2023 now total 6.7GW, about three times the 2.2GW awarded across the entire LSS1-LSS4 programmes (2016-2021), underscoring the significant acceleration in RE deployment,” the brokerage explained.
CGSI Research maintained its “overweight” rating on the utilities sector, arguing that the NETR has transformed the industry from a defensive earnings play into one offering visible long-term structural growth.
It estimates LSS6 alone could generate RM13bil to RM15bil in EPCC opportunities, benefitting established contractors such as Solarvest, Samaiden, Sunview Group Bhd, Cypark Resources Bhd and Pekat.
TA Research similarly expects solar EPCC companies to emerge as the biggest winners, estimating RM11bil to RM12bil worth of opportunities from solar and Bess installations.
“This is expected to drive industry order book once LSS6 EPCC awards start to trickle in, potentially from the third quarter of 2027. In the meantime, order book replenishment is expected to be sustained by the ongoing LSS5+ EPCC awards,” it said.
An analyst told StarBiz that LSS6 represents another important step in Malaysia’s energy transition, not only because of its larger scale but also due to the integration of battery storage, which should improve grid reliability and support higher RE penetration over time.
“The programme provides greater visibility for RE developers and contractors over the next few years. While competitive bidding may keep margins in check, the sheer volume of upcoming projects should continue to underpin sector growth and investment interest,” he explained.
