KENANGA anticipate 2026 to be another exciting year for the energy sector, as the Corporate Renewable Energy Supply Scheme (CRESS), Large-Scale Solar 6 (LSS6), Solar Accelerated Transition Action Programme (ATAP) and gas-powered plant extensions should drive news flow on renewable energy (RE).
This report marks the transfer of coverage on the sector to Max Koh. Last September, the Government lowered system access charges (SAC) by 11-20% for CRESS.
Introduced in Jul 2024, CRESS is a third-party access model that allows offtakers to purchase electricity directly from a RE developer.
The lower SAC makes CRESS projects more viable as:
i) Offtakers will be able to pay a fixed energy cost over 21 years with no exposure to rising grid prices.
ii) green energy is 100% guaranteed. Assuming CRESS rates of 62 sen (5% higher than current grid prices), Kenanga estimate CRESS projects with battery storage to generate IRR of 9-12%.
With the SAC rate finalised, Kenanga expects more CRESS project announcements this year.
“In Nov 2025, TNB won the bid to extend 1.3GW in power supply for three gas-fired plants. We expect the three plants to begin commercialisation in mid-2026 until 2030,” said Kenanga.
Given the expected 4-5GW demand shortfall until 2030, Kenanga does not discount the possibility of the Government extending tenures of more gas plants in the first half of 2026 (1H26).
Kenanga estimates 4.3GW of existing gas plants that could be extended – resulting in potential 4% and 8% EPS upsides for TNB and Malakoff if their remaining capacity is renewed.
“We also expect the Government to announce the winners of the 6-8GW new gas-fired plant tender in quarter one of 2026 (1Q26),” said Kenanga.
The recently unveiled Solar ATAP programme is also positive to drive orderbook replenishment for the likes of Solarvest and Samaiden.
Kenanga likes TNB, as its stable regulated earnings support a 4% yield, with upside from a lower tax rate and contingency capex approvals.
Solarvest and Samaiden are beneficiaries of more solar projects being rolled out, and Kenanga expect maiden contributions from YTLP’s 10MW artificial intelligence data centre project to mitigate its weaker PowerSeraya earnings. —Jan 12, 2026
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