The green energy market is promising as it moves towards liberalization of the utility sector

The Malaysian government will launch the “Enterprise Renewable Energy Electricity Supply Plan” (CRESS) in September. Analysts believe this will greatly increase the industry's green energy adoption rate and further benefit solar energy construction, procurement, construction and commissioning engineering (EPCC) operators.

Research analysts at Societe Generale Investment Bank pointed out in the report that although CRESS procedures and guidelines still need to be discussed, the launch of the plan will advance electricity reform one step further, thereby bringing about a freer and more competitive market.

“At the same time, it also provides an opportunity for independent power producers (IPPs) to sell their electricity output to new customers after the PPA expires.”

The analyst continued, “Given that CRESS can negotiate the pricing of green electricity, it is expected that it will attract more operators to switch to green energy power producers.”

According to the report, this is a positive development path for the industry, as it will greatly increase the adoption rate of green energy and increase commercial and industrial orders from solar EPCC operators, thereby benefiting the latter.

The CRESS plan will allow renewable energy producers and companies to arrange green electricity supply according to agreed terms through existing supply systems.

The total quota for the entire project is to ensure grid stability, and the quota is expected to be set at 30 megawatts (MW).

The plan is also an extension of the government's Greens Madani initiative, which aims to increase renewable energy capacity by increasing the current 26% or 1.5 gigawatts (GW) capacity to 40% and 70% in 2035 and 2050, respectively.

Expected to be implemented next year

Analysts also pointed out that CRESS is good for national energy $TENAGA(5347.MY)$In the short term, the impact of the initiative will be neutral, as its business is mainly regulated by the government.

“Having said that, if domestic renewable energy (RE) continues to grow, capital expenses on transmission and distribution (T&D) assets will increase accordingly, which will expand the profit base of China Energy in the long run.”

Analysts believe that due to the need to ensure the stability of grid connections, CRESS is expected to begin implementation after the 5th largest solar project (LSS5) is completed.

“The results of the LSS5 bid will be announced at the end of this year, and it is expected that the CRESS program will be implemented next year.”

Overall, analysts upgraded the field's previous “reduced holdings” rating to “increased holdings”. The preferred stocks were China Energy and Yang Zhongli Electric Power, respectively $YTLPOWR(6742.MY)$, and Samaiden Group $SAMAIDEN(0223.MY)$。