The Energy Commission (EC) on Aug 7 announced the first set of winners of the Corporate Green Power Programme (CGPP). It said a total of 71 applications have been received, with the EC selecting 22 successful bids (comprising of sole bidders and consortiums) so far totalling ~563MW (or ~70%) of the total 800MW quota.
Individual project capacities range between 7MW and 30MW. According to the guidelines, the plants must be commissioned no later than 2025F. To recap, the CGPP allows corporate consumers to enter into virtual power purchase agreements with solar power producers for the virtual supply of secure renewable energy to meet their green energy consumption with the aim of reducing their carbon footprint.
Tariffs are based on a price structure negotiated on a willing buyer, willing seller basis.
Applications for the first round of CGPP commenced on 9 May 2023 and are expected to remain open till 31 Dec 2023, according to the EC, or until the quota is fully subscribed. There is still a balance quota of ~237MW up for grabs.
TNB Leads
CGS-CIMB, said in a note today (Aug 9), of the 22 winning bids, Tenaga Nasional Bhd emerged as the biggest winner, clinching three projects each with a gross solar export capacity of ~30MW. One was secured on a standalone basis (100%) and the other two on a JV basis. While TNB’s exact stake in the JVs is unknown at this juncture, it is likely capped at 30% each, according to the application guide for the CGPP issued by the EC.
As such, CGS-CIMB estimates the net capacity addition attributable to TNB to be ~48MW from these three new projects. Assuming a construction cost of RM3.5m-4.5m per MW, the firm estimates a capex of RM170m-220m.
This would effectively increase its gross installed renewable energy (RE) capacity by 2% to ~4,000MW. Although small, this takes the group a step closer to achieving its RE target of 7,000MW by 2030F.
Other key winners with exposure to the RE space include Solarvest (NR, CP: RM1.30), Mega First (NR, CP: RM3.30), Sunview (NR, CP: RM0.94) and Pekat Group (NR, CP:RM0.475), cited CGS-CIMB.
Beneficiaries of NETR; TNB is one of our top picks in Malaysia
CGS-CIMB continues to see TNB as a key beneficiary of the country’s National Energy Transition Roadmap (NETR), which aims to position Malaysia as a leader in the energy transition agenda in the region.
“We see upside for the group from the cross-border electricity exports via incremental revenues from wheeling charges for the usage of its transmission grid network while increased RE plant-ups domestically could accelerate TNB’s energy transition ambitions. YTL Power’s entrenched market position in Singapore and strategically located unique green energy data centre in Johor are also well-positioned to benefit, in our view” it said.
Meanwhile, Malakoff stands to benefit from a ramp-up in RE capacity and prospects of co-firing biomass at its Tj Bin coal plant. CGS-CIMB stays on sector Neutral as they are constructive on the power names but remain lukewarm on the gas utilities companies.
