RE sector buoyed by 48 new project approvals
PETALING JAYA: UOB Kay Hian (UOBKH) Research has maintained its 'overweight' call on the renewable energy (RE) sector following the Energy Transition and Water Transformation Ministry's recent approval of 48 RE generation projects as part of its aggressive ramp-up to achieve a net-zero target.
It noted that these projects fall under the feed-in tariff (FIT 2.0) programme.
The FIT programme consists of 20 biogas projects totalling 31 megawatts (MW), eight biomass projects totalling 54MW, and 20 small hydropower projects totalling 96 MW.
Under this scheme, the winning RE generators will export electricity to the national grid over a 21-year period at their respective approved tariff rates, ranging between 25 sen and 34 sen per kilowatt-hour (kW/h).
'Based on valuations from existing RE generation projects, the engineering, procurement, construction, and commissioning (EPCC) contracts for biomass power plants are typically valued between RM11.5mil and RM13mil per MW, while EPCC contracts for small hydropower projects range from RM6mil to RM13mil per MW,' UOBKH Research said.
It noted that the net energy metering (NEM) 3.0 programme, which officially ended on June 30, had a take-up rate of 94% for the NEM Rakyat (residential), 80% for NEM government ministries and entities and 71% for NEM net offset virtual aggregation (commercial and industrial).
The high adoption rate for NEM Rakyat was mainly bolstered by the Solar For Rakyat Incentive Scheme RM4,000 rebate, which assisted consumers in reducing their payback period by half a year (normal payback period: four to five years).
'We expect to see healthy revenue growth in the second quarter of 2025, contributed by the acceleration of solar projects, especially among commercial and industrial customers as they seek to mitigate the impact of the revised tariff structure.'
It also expects the total solar photovoltaic (PV) capacity to exceed 6.5 gigawatts over 2025 to 2026 as the government calls for tenders on large-scale solar programmes.
Assuming a construction cost of RM2mil to RM2.5mil per MW, total EPCC replenishment opportunities are estimated at a staggering RM13bil to RM16bil in the next five years, the research house said.
It noted that EPCC margins for these projects are anticipated to be better, given the recent decline in PV panel prices.
'We reiterate 'overweight' on the sector.'
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