Tenaga Nasional Bhd’s (TNB) growing renewable energy (RE) portfolio in the United Kingdom is strengthening the utility’s long-term transition towards cleaner energy generation, with RHB Research maintaining its “Buy” call and RM16.50 target price on the stock.
The research house said TNB’s UK-based renewable energy platform, Vantage RE, currently owns and operates 908MW of renewable generation assets across the United Kingdom and Ireland, providing a strategic platform to expand the group’s international green energy footprint.
RHB retained its target price of RM16.50, representing around 13% upside from current levels, while forecasting a dividend yield of approximately 4%.
Although Vantage RE contributes only about 2% of TNB’s group EBITDA, RHB believes the business plays an important role in helping the national utility achieve its target of increasing renewable energy’s share of total generation capacity to 49% by 2030, up from around 23% currently.
908MW Renewable Portfolio Across UK And Ireland
Established in 2021, Vantage RE manages 94 renewable energy projects comprising onshore wind and solar assets throughout the UK and Ireland.
Around 60% of its revenue is secured through long-term contracts, providing stable cash flows while offsetting approximately 477,000 tonnes of carbon dioxide equivalent (CO₂e) annually.
The company also has 360MW of renewable energy projects in the pipeline, including 115MW of onshore wind capacity and 245MW of battery energy storage systems (BESS).
According to RHB, management remains confident of delivering these projects after securing key land approvals and grid connection rights.
The research house expects Vantage RE’s operating capacity to expand by around 40% to 1.2GW by 2030, accounting for approximately 12% of TNB’s renewable generation portfolio and around 6% of its overall generation capacity.
High-Performing Renewable Assets
RHB recently visited two of Vantage RE’s renewable energy facilities in the UK.
One of the assets, the 28.5MW Whiteside Hill onshore wind farm near Glasgow, produces around 9.4GWh of electricity annually, supplying enough power for approximately 25,000 homes.
The wind farm achieves a 42% capacity factor, significantly outperforming the global average of between 25% and 35%, highlighting the favourable wind conditions at the site.
The research team also visited the 35MWp Eastfields solar farm, which uses single-axis tracking technology that allows solar panels to follow the sun throughout the day.
The technology improves electricity generation by approximately 10% to 20% compared with conventional fixed-tilt solar installations.
Renewable Capacity To More Than Double By 2030
RHB forecasts TNB’s total renewable energy capacity will increase by 139% to approximately 11GW by 2030.
While domestic projects under Malaysia’s energy transition agenda are expected to remain the primary growth driver, the research house believes TNB’s overseas renewable assets provide valuable operational expertise and enhance project economics that can be replicated locally.
It estimates the group’s international renewable business is worth around RM1.6 billion, based on an enterprise value-to-EBITDA multiple of 12 times, in line with comparable renewable energy assets in the UK.
Stable Regulated Earnings Support Valuation
TNB is scheduled to announce its second-quarter 2026 financial results on Aug 27.
RHB expects earnings to improve sequentially, supported by a lower effective tax rate.
The target price is based on 19 times FY2026 forecast earnings, equivalent to one standard deviation above the stock’s three-year historical average, reflecting TNB’s position as the key beneficiary of Malaysia’s National Energy Transition Roadmap (NETR).
The research house added that TNB’s regulated utility framework continues to provide a stable earnings base, while long-term renewable energy expansion offers additional growth potential.
Key risks include delays in regulatory approval for capital expenditure programmes and a higher-than-expected effective tax rate.
