As large Scale Solar 4 (LSS4) projects are expected to start commercial operation by end-2023, most Renewable Energy (RE) players’ Engineering, Procurement, Construction, and Commissioning (EPCC) orderbook are expected to exhaust, pending tender award from the 800 megawatt Corporate Green Power Programme (CGPP).
Earnings growth is expected to peak in second half 2023, mainly supported by the remaining LSS4 projects, rooftop for Residential, Commerical & Industrial (C&I), and other RE projects, such as biomass, biogas, small hydro.
“Valuation for RE players under our coverage seems fair at current level. We now have a Hold call for both Solarvest and Cypark. Downgrade the sector to Neutral,” said Maybank Investment Bank (Maybank IB)
CGPP is a virtual power purchase agreement (VPPA) between a Corporate Consumer and a Solar Power Producer for the virtual supply of energy.
This enables corporate companies to participate in the promotion and use of RE in their business operation. A quota of 800 megawatt was release this year with application date having started from 9 May and it will continue until end-2023 or until all quotas have been fully taken up. This programme provides opportunities for solar power producers to own new solar assets or replenish their solar EPCC orderbooks.
The International Energy Agency (IEA) expects global solar PV manufacturing capacity to double in 2023 and 2024, with China accounting for over 95% of new facilities throughout the supply chain.
“From early-2023, polysilicon prices continue to slide to USD12 per kg, back to its 2020 level. Moving forward, we expect this to ease related cost pressures and contribute positively to new solar project IRR,” said Maybank IB.
The government has recently announced the lifting of ban on export of RE, as part of a policy review to accelerate the growth of Malaysia’s green economy industry. Nevertheless, the details are yet to be announced.
“We expect this to be finalised by second half 2023, as the Government expects to introduce two new roadmaps, for example, National Energy Transition Roadmap (NETR) and the Hydrogen Economy and Technology Roadmap (HETR), potentially in end-Aug 2023,” said Maybank IB.
