KUALA LUMPUR (July 29): The introduction of the Corporate Renewable Energy Supply Scheme (CRESS) would liberalise the green power market and benefit solar panel installers and contractors in the immediate term, analysts said.
CRESS is a step towards the liberalisation of the energy market in Malaysia with the introduction of grid third-party access, said MIDF Amanah Investment Bank. The move would drive the growth of corporate power purchase agreements and boost penetration of renewable energy (RE), it said.
“We expect more details, especially on the system access charge, to be revealed over the next month by the Energy Transition and Water Transformation Ministry,” the research house flagged.
CRESS allows generators and corporations to sign green electricity supply arrangements under agreed terms through the existing supply system. Corporates can directly buy RE from producers while generators can also sell renewable electricity to corporates through Tenaga Nasional Bhd’s (KL:TENAGA) grid.
The government is set to open up the third-party access to Malaysia's electricity grid with the launch of CRESS from September, focusing on green electricity supply.
MIDF is ‘neutral’ on Malaysia’s power utilities sector due to recent surge in stock prices and stretched valuations though the engineering, procurement, construction, and commissioning (EPCC) subsector would benefit from recent RE initiatives.
For exposure, the research house highlighted Samaiden Group Bhd (KL:SAMAIDEN) with a target price (TP) of RM1.57, flagging the company as a beneficiary of rising demand in RE EPCC. MIDF also picked Sunview Group Bhd (KL:SUNVIEW) with a TP of 88 sen, supported by a RM262.8 million order book.
RHB Research, meanwhile, believes that CRESS will only start next year after the conclusion of the Large-Scale Solar 5 (LSS5) programme, given the need to ensure clear connection points to the grid.
The research house also expects CRESS to benefit solar EPCC companies by boosting their orders from the commercial and industrial segment. CRESS also presents an opportunity for existing power producers to sell their output to new clients after expiry of their power purchase agreements, the research house said.
“We believe this could attract more players to become green energy power producers, with the ability to negotiate direct pricing for green electricity,” RHB Research said. “Additionally, it offers the ability to hedge against future fluctuations in green electricity rates.”
All in all, RHB Research said the development is “highly positive” as it will significantly increase the adoption of green energy, and maintained its ‘overweight’ call on the Malaysian power utilities sector.
For strategy, the research house recommended Tenaga with a TP of RM16.10 and YTL Power International Bhd (KL:YTLPOWR) with a TP of RM6.68. RHB Research also has Samaiden (TP: RM1.57) as one of its top picks.