Better margins for RE players from lifting of export ban
11 Jul 2023
Local renewable energy (RE) players is expected to enjoy better gross profit margins, as the government announced the lifting of the ban on the export of RE in May, according to Maybank Investment Bank Bhd (Maybank IB).
Malaysia and regional head of equity research Anand Pathmakanthan said the policy review is aimed at accelerating the growth of Malaysia’s green economy.
He added that while specific details regarding the mechanism are yet to be announced, they are expected to be disclosed in August or September this year.
“Currently, Singapore has a target of four gigawatts (GW) of RE import capacity by 2035.
“(As) Singapore has a higher average regulated household electricity tariff than Malaysia, we believe this could translate to a better gross profit margin for local RE players.
“This in turn will also incentivise RE players to explore battery energy storage system (BESS) projects, which are not viable at local tariffs,” he said in a note.
Maybank IB has kept “Hold” ratings on Solarvest Holdings Bhd and Cypark Resources Bhd, and a “Buy” rating for YTL Power International Bhd which is well-positioned for RE exports.
Additionally, Anand noted that the Energy Commission has set the maximum capacity limit of applicants at between five megawatt (MW) and 30MW each under the Corporate Green Power Programme, with the solar power assets expected to be operational by the end of 2025.
He said the application date started from May 9 and will continue until the end of 2023 or until all quotas have been fully taken up.
“This programme provides opportunities for solar power producers to own new solar assets or replenish their solar EPCC order books.
“We understand that the contracts are expected to be awarded from July or August 2023 onwards,” he added.