KUALA LUMPUR (July 7): Renewable energy construction flows in Malaysia will likely pick up in the coming months with battery systems being the next phase of growth, said Hong Leong Investment Bank.
Ongoing construction and upcoming deliveries will increase project activity, the research house said. Visibility has improved after a slowdown in contract awards in the first half of the year as developers wait out the geopolitical uncertainties and fluctuations in material prices, the house noted.
“Looking ahead, we view the rapid expansion of Malaysia's data centre pipeline as a key structural demand driver,” Hong Leong Investment said and maintained its ‘overweight’ rating on the sector.
Malaysia aims to have roughly one-third of its total power capacity coming from renewable energy by the end of this year. The target under the National Energy Transition Roadmap is to raise it to 35% by the end of the decade and 70% by 2050.
The push also comes at a time of mushrooming energy-guzzling data centres. Malaysia has rolled out the Corporate Renewable Energy Supply Scheme but adoption has been slow mainly due to elevated and uncertain system access charges that constrain the framework's commercial attractiveness.
While stable module prices should provide greater cost visibility for solar developers and contractors, “we believe the next phase of growth will increasingly be driven by battery energy storage systems”, Hong Leong Investment said.