Solar energy likely the main booster for Malaysia's renewable energy sector: Maybank

MAYBANK Investment Bank is positive on Malaysia's plans to grow its renewable energy sector, and expects that the solar energy pillar will be the main contributor to the growth plans.

In a report on Thursday (Jan 13), the brokerage noted that the recently launched Malaysia Renewable Energy Roadmap will likely boost the portion of renewable energy in the national installed capacity mix to 31 per cent in 2025 and 40 per cent in 2035, up from 20 per cent in 2020.

As movement restrictions are eased and work momentum for solar installations catches up, renewable energy stocks should also see an earnings recovery in 2022, Maybank said.

The brokerage noted that the solar energy pillar is likely built on existing programmes, such as the Net Energy Metering and Large Scale Solar (LSS) projects.

It warned that tariffs for the fifth cycle of LSS projects may be higher than the fourth cycle, due to major procurement and supply chain disruptions. The disruptions may also delay project execution and existing installation plans into the second half of 2022.

Nevertheless, the programmes may possibly be complemented with new business models such as corporate power purchase agreements, Third Party Access, peer-to-peer energy trading and monetisation of renewable energy certificates.

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Maybank expects the strategic pillars for the growth will continue to leverage on existing untapped resources in areas including bioenergy and hydro power, with new technologies and solutions supporting the roadmap post 2025.

The brokerage has a "buy" call on renewable energy solutions companies Cypark Resources and Solarvest. It expects Cypark will see a boost from its growing renewable energy portfolio, while Solarvest should continue riding on its strong order book to support earnings growth.

READ MORE:

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• Malaysia's 2025 renewable target to be backed by strong solar power growth: Fitch Solutions
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