Malaysia’s move to reduce the system access charge (SAC) for firm renewable energy supply under the Corporate Renewable Energy Supply Scheme (CRESS) by 30% to 14 sen per kilowatt-hour (kWh) is expected to accelerate solar and battery storage investments, according to MBSB Investment Bank.
The research house said the acceleration package announced by the Ministry of Energy Transition and Water Transformation (PETRA) represents the most significant improvement to CRESS since its introduction in September 2024, potentially converting existing project registrations into actual developments.
Under the package, the SAC for firm renewable energy supply has been reduced from 20 sen/kWh to 14 sen/kWh, representing a 44% reduction from the original rate of 25 sen/kWh.
The preferential rate is available to eligible projects that achieve their commercial operation date (COD) by Dec 31, 2028, while renewable energy developers and green consumers must enter into contracts with a minimum tenure of 10 years.
MBSB said the revised rate is designed to encourage firm, dispatchable renewable energy supply, particularly solar projects integrated with battery energy storage systems (BESS), rather than intermittent solar generation alone.
The general SAC for non-firm renewable energy supply remains unchanged at 40 sen/kWh, widening the difference between firm and non-firm supply charges to 26 sen/kWh.
3.15GW Of Registered Projects Awaiting Execution
Since CRESS was launched in September 2024, 11 renewable energy developers and eight green consumers have registered with the Single Buyer, representing approximately 3,148MW of potential project capacity.
However, MBSB noted that registrations have not translated into project execution at the same pace, partly due to concerns over the cost and predictability of grid access charges.
The new package addresses two key financing challenges by lowering the SAC and introducing a minimum 10-year contractual commitment between renewable energy developers and electricity buyers.
Nevertheless, the research house said it remains unclear whether the preferential 14 sen/kWh rate will be maintained throughout the contract period or remain subject to adjustments under subsequent electricity regulatory periods.
The package also imposes a strict completion deadline. Projects that fail to commence commercial operations by Dec 31, 2028, will lose their eligibility for the preferential rate and become subject to the prevailing SAC.
MBSB said the deadline could encourage developers to accelerate construction while preventing grid capacity from being tied up by projects that are not ready to proceed.
Tenaga, Gamuda Among Potential Beneficiaries
MBSB maintained its POSITIVE outlook on Malaysia’s renewable energy subsector, citing improved project viability and opportunities for developers and engineering contractors.
It identified Tenaga Nasional Berhad and Gamuda Berhad as companies with substantial renewable energy development opportunities.
Tenaga has a CRESS arrangement for up to 500MW with DayOne Data Centre, while Gamuda has a 1.5GW solar-BESS collaboration with Gentari and a separate 1.2GW collaboration with SD Guthrie to support hyperscale data centre demand.
MBSB maintained its BUY calls on Tenaga and Gamuda, with target prices of RM16.31 and RM5.60, respectively.
The research house also expects engineering, procurement, construction and commissioning (EPCC) companies to benefit as more solar developments incorporate battery storage.
It said the inclusion of BESS would increase the potential contract value per megawatt of solar capacity installed, while the end-2028 deadline could accelerate the award of construction contracts over the next two years.
MBSB highlighted Pekat Group Berhad, Samaiden Group Berhad and Solarvest Holdings Berhad as companies exposed to these opportunities.
It maintained BUY calls on Pekat and Samaiden, with target prices of RM2.46 and RM2.45, respectively, while Solarvest remains unrated.
The research house said PETRA is continuing to refine the broader CRESS framework, including simplifying contractual procedures, improving technical requirements for solar and battery storage projects, and establishing a more transparent methodology for determining grid access charges from Regulatory Period 5.
These measures, alongside the acceleration package, are expected to support the commercial viability of renewable energy developments and help bring additional firm renewable electricity capacity into Malaysia’s power system.
