The Ministry of Energy Transition and Water Transformation has set up the eagerly-awaited ‘Energy Exchange Malaysia’ (Enegem) platform to facilitate cross-border trading of renewable energy (RE). A pilot 100MW RE export to Singapore was announced (although details on timeline and source of RE supply were not disclosed). Maybank IB says it views this development positively given RE export is potentially a new revenue source and capacity growth driver for the RE industry.
100MW pilot project for Singapore
To kick off the cross-border trade, the Ministry has announced a 100MW pilot run via existing interconnection facilities between Malaysia and Singapore. Interested RE bidders (who hold generation licenses and/or retail electricity supply licenses in Singapore) are invited to register their interest (pre-qualify) on Malaysia’s Single Buyer website. Meanwhile, details on auction timeline and source of RE supply for this pilot run have not yet been announced.
RE export – a new growth driver
The establishment of the energy exchange platform represents another milestone achieved for the eventual cross-border trading of RE. We note that RE export is potentially a new revenue source (RE sales and wheeling charges) and capacity growth driver for Malaysia’s RE industry (currently reliant on domestic LSS and CGPP schemes). To recap, Singapore has
announced a target of up to 4GW of low-carbon electricity import (c.30% of Singapore’s electricity supply by 2035). Currently, the existing PlentongWoodlands Interconnector can facilitate bi-directional electricity flow of c.1GW between Malaysia and Singapore.
Potential beneficiaries
Local solar EPCC players like Solarvest (SOLAR MK, BUY, CP: MYR1.60, TP: MYR1.76), Cypark (CYP MK, HOLD, CP: MYR0.99, TP: MYR0.86), Sunview (SUNVIEW, CP: MYR0.64, N.R.), Pekat (PEKAT MK, CP: MYR0.49, N.R.), and Samaiden (SAMAIDEN MK, CP: MYR1.37, N.R.) would benefit from job flows from RE capacity growth. Meanwhile, utility majors such as Tenaga Nasional (TNB MK, HOLD, CP: MYR11.60, TP: MYR11.00) and YTL Power (YTLP MK, HOLD, CP: MYR3.91, TP: MYR4.00) could also benefit from RE export via RE sales and wheeling charges.
Overall, the house remains POSITIVE on the RE sector, for which EPCC order book replenishment is impending from both the 800MW of Corporate Green Power Programme (CGPP) and c.2GW of LSS5 projects.
