DRIVEN by strong demand from data centres, Peninsular Malaysia’s electricity peak demand in 2025 grew at its strongest pace in the past 8 years.
“Coupled with scheduled net outgoing capacity between 2027-2029 as per the 2021-39 Power Generation Development Plan, we estimate reserve margins could tighten significantly going forward,” said TA Securities (TA).
Against this projection, the latest Request for Proposal (RFP) for gas power generation capacity by the Energy Commission is timely in our opinion, potentially bringing online up to 8GW by 2029 via a mix of short-term Power Purchase Agreement (PPA) extensions and greenfield development.
This should provide a strong catalyst for domestic IPPs in the near to medium-term.
Beyond the RFP-driven capacity, gas-based power plants are expected to play a critical role as future baseload to replace the country’s outgoing coal capacity with the National Energy Transition Roadmap (NETR) outlining a potential doubling in the country’s gas power generation capacity by 2050.
This in turn, is expected to drive significant growth in gas consumption by the power sector, necessitating expansion in domestic gas supply infrastructure. Although nuclear is an option, at this point, the government has yet to reach a final policy decision.
In terms of Renewable Energy (RE), we expect the momentum to sustain moving into 2026 underpinned by execution of an aggregate 4GW LSS5 and LSS5+ projects.
“Further out, we estimate up to 10.5GW RE projects to come online by 2030, providing a solid EPCC project pipeline for domestic RE players,” said TA.
The grid is a critical component in accommodating RE intermittence, underpinning a doubling in grid capex under Regulatory Period 4 (RP4).
RE export, accompanied by the ASEAN Power Grid, is an emerging growth catalyst for domestic players, both from an RE asset ownership and EPCC standpoint.
Meanwhile, five key interconnection projects involving the Malaysian power grid have been outlined to remove existing bottlenecks and enhance connectivity, which should provide a multi-year growth catalyst for grid infrastructure players led by TENAGA. TA maintains Overweight on the Utilities sector. —Jan 28, 2025
Main image: Interactive Investor
