THE utilities sector remains attractive amid rising electricity demand from data centres (DCs) and growing renewable energy adoption, according to RHB Research, which maintains its “Overweight” rating on the sector.
RHB expects DC-related demand to drive earnings growth and positive developments in quarter four 2026, with Tenaga Nasional Bhd (TNB), YTL Power International Bhd, Samaiden Group Bhd and Solarvest Holdings Bhd identified as its top picks.
TNB signed five new energy supply agreements (ESAs) with DC operators in the first half of 2026, covering 856MW.
Its cumulative signed agreements reached 8.4GW, with 5.7GW completed, representing 61% year-on-year growth.
The utility aims to secure 10 additional ESAs this year, covering up to 1.5GW, supporting annual electricity sales growth of 5% to 6%.
Also, the government is expected to introduce a separate Automatic Fuel Adjustment rate for DCs in January 2027 to limit the impact of higher fuel costs on residential consumers.
New DC approvals are also expected to require secured customers, a minimum 30% renewable energy mix and 10-year supply agreements.
For the NEWGEN26 tender, RHB expects winners to be announced by year-end.
Four bids covering approximately 3.6GW have been received, with TNB and YTL Power considered likely beneficiaries due to their reserved turbines.
Renewable energy opportunities are also expanding. The Large Scale Solar 6 programme offers 2.5GW of solar capacity and 1.25GW of battery energy storage, alongside 150MW reserved for Bumiputera companies in Peninsular Malaysia.
Its total project value could reach RM13bil to RM15bil, with awards expected from quarter one 2027. Solarvest and Samaiden are positioned to benefit from their experience in previous programmes.
Meanwhile, a 10% reduction in system access charges is expected to accelerate Corporate Renewable Energy Supply Scheme (CRESS) agreements.
Lower charges could improve project returns, while long-term contracts provide revenue visibility.
RHB estimates CRESS electricity tariffs remain approximately 20% below prevailing grid rates, supporting demand from DC operators seeking cost savings and cleaner energy.—Oct 19, 2026
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