Thursday 28 Mar 2024
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KUALA LUMPUR (Oct 23): Tenaga Nasional Bhd may benefit from indirect exposure to future solar installations in Malaysia via its unit G-Sparx, according to MIDF Amanah Investment Bank Bhd Research.

G-Sparx, which will be offering financing for solar self-generation packages, targets to offer 1,500 megawatts (MW) of self-generation for solar photovoltaic (PV) investment by 2025, the research house said in a report today.

"The financing scheme essentially offers a zero upfront capex solution for solar PV installation... to encourage premise[s] owners, particularly residential, to install solar panels," MIDF Research analyst Hafriz Hezry said.

G-Sparx will earn a return on investment from the solar panels while customers would enjoy savings on electricity charges, he added.

The offer is part of the updated Net Energy Metering (NEM) programme, which ensures that tariffs received for exporting power back to the grid is the same as the cost of purchasing.

The impact on Tenaga could involve additional electricity sourcing cost as excess capacity is sold back to the company at a higher rate of 50 sen per kilowatt hour (kwh) versus 31 sen per kwh previously, Hafriz said.

On top of that, there could be lower electricity demand as consumers can generate electricity themselves, he added. However, current solar panels can only generate a maximum four hours of electricity per day, Hafriz pointed out.

"Based on current incentive-based regulation (IBR) principles, both these factors are likely to be reflected in tariffs... which limits upside but also protects downside for Tenaga," he said.

"We estimate Tenaga will have to set aside some RM9.5 billion capital for the program, assuming all takers (adopt) the financing scheme. This is 28% of Tenaga's current borrowings, but the build-up, if any, should be spread out over a number of years," Hafriz said.

MIDF Research maintained its positive view of the power sector, with buy calls on Tenaga, YTL Power International Bhd and Ranhill Holdings Bhd.

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