TNB harvests as electricity demand peaks

Electricity demand should remain quite resilient in 2024. TNB should also continue to benefit from the continued modernization of transmission and distribution assets, where energy demand can be underwritten by rapidly expanding data center development. RHB said it continues to like the solar landscape in Malaysia as structural growth is solid-driven
a number of government initiatives and favorable market conditions – solar panel prices are expected to remain low throughout 2024.

In the recently ended reporting period, seven companies under the care of the investment bank published their results for the first quarter of this year. Five of the reserved numbers are within estimates and two are below expectations. The two disappointments were Samaiden and Taliworks. For Taliworks, the negative deviation was mainly due to slow progress in construction projects, while lower commercial and industrial (C&I) participation and margin decline resulted in Samaiden reporting weaker-than-expected results.

Electricity demand grew much faster – by 9.6% y/y, compared to GDP growth of 4.2% in Q1 2024 – largely driven by a stronger commercial segment (+11.2%) and domestic (+16.8%). In April, demand reached a new peak of 20,028 MW. TNB highlighted that the strong growth in commercial demand was largely driven by the commercialization of a 150MW data center in Q1 2024. Two projects totaling 535MW have been completed under the Green Lane Pathway, with a further seven expected to be completed this year. TNB also intends to sign electricity supply contracts for 10 projects with an energy demand of 2 GW. Despite strong demand growth of 9.6% y/y in Q1 2024, TNB continues to assume annual demand growth of 2.5-3% y/y for this year and the upcoming regulatory period, which represents significant progress, and contracts with recipients are close to finalization and financial closure is on the horizon.

Recently, one of the solar players, Sunview, won an EPCC contract under the program, tagging
start of awarding orders. The chamber said it expects more jobs to be awarded in the coming months. Looking ahead, RHB said it also expects to announce LargeScale Solar (LSS) 5 winners in the second half of 2024 after the July 24 application deadline. Further boosting profits for solar energy players is the commercial trading of Malaysian Renewable Energy Certificates (mRECs), which aims to increase market demand for renewable energy (RES) by allowing companies to trade certificates representing renewable energy production.