KUALA LUMPUR: Peninsular Malaysia will need to add up 17GW-21GW (gigawatt) of generation capacity in the next decade to meet power demand, replace retiring capacity and maintain an adequate reserve margin.
This will mean up to RM52 billion in total investments from 2025-2035 if these capacities are to be largely fulfilled by new hydrogen-ready combined cycle gas turbine (CCGT) plants or higher.
According to the Single Buyer website, Malaysia's current installed capacity stood at 27.4GW as of April 30 this year and the highest demand of 20.0GW was recorded at 4:30pm on May 29. Hence, this translated to an estimated reserve margin of 37 per cent.
In March this year, Deputy Energy Transition and Public Utilities Minister Akmal Nasrullah Mohd Nasir reportedly said the power reserve margin in the peninsula was projected to remain sustainable at about 28-36 per cent from 2024 to 2030.
Affin Hwang Capital analyst Isaac Chow believes additional installed capacity are needed to meet the demand growth and maintain an adequate reserve margins.
This is due to the strong electricity demand growth potential from the mushrooming data centres, rapid recovery in domestic economic activities from the pandemic period and the progress of new power plants under development.
"We estimate Peninsular Malaysia may need to add 17GW-21GW of generation capacity in the next decade, including 10GW-11GW between 2025-2030."
Chow said the government had engaged with industry players on short-term power purchase agreement (PPA) bidding utilising expired or expiring gas plants and expressed plans to add new CCGT plants by 2029-2030.
These new PPAs should revive investor's interein independent power producers (IPPs).
"It has been many years since the Energy Commission last awarded a major PPA and the IPPs were in a long lull. As such, we expect these new PPAs to inject excitement and raise investors' interest in the IPPs and utilities sector."
Chow said the government had engaged with industry players on short-term power purchase agreement (PPA) tenders, utilising expired or expiring gas plants, and expressed plans to add new CCGT plants by 2029-2030.
These new PPAs should revive investor's interest in IPPs, he added.
In the Generation Development Plan 2020 report, the government laid out the national
generation development plan over the 2021-2039 period.
Under the plan and based on the PPAs, four CCGT plants with a combined capacity of 2.2GW were scheduled to, and have been retired over the 2021-23 period.
Another three power plants with total capacity of 1.3GW are scheduled to retire in 2024, followed by 249MW in 2025 and 675MW in 2026.
Overall, 11 power projects with 9.1GW of generation capacity have been expected to be retired over 2024-2030, and to be cushioned by the commissioning of new thermal plants and renewable energy.
Chow noted that the development plan had listed three major power plants (alongside a number of RE projects) that are scheduled to be commissioned over 2024-2027.
This included Tadmax (2x600MW, 2024), THB (2x600MW, 2026) and Nenggiri (300MW, 2027).
Tadmax Resources Bhd has since sold a 75 per cent stake in Pulau Indah Power Plant Sdn Bhd (PIPP) to Worldwide Holdings Bhd (a wholly-owned subsidiary of PKNS) and the balance 25 per cent stake to Korea Electric Power Corp.
In April 2020, PIPP executed an EPCC contract in relation to the power plant with the consortium of Posco E&C, Mitsubishi Corp and PEC Powercon.
In March 2021, Worldwide indicated that the power plant is expected to be operational in January 2024;
THB Power Sdn Bhd, meanwhile, is an IPP which obtained the concession license from the government to build and operate the 1,200MW CCGT plant in Gurun, Kedah.
"There has been limited updates on the project and we believe the construction
may have yet to commence," he said.
TNB, on the other hand, shared that its Nenggiri hydro project had achieved 30 per cent project progress as at end-March 2024 and was on track to achieve commerciasl operations date in the second quarter of 2027.
Chow said six new CCGT projects with combined generation capacity of 6.1GW should be commissioned by 2029-2031.
These include a700MW CCGT unit and a 500MW CCGT unit in 2029. four 700MW CCGT units in 2030 as well as one 700MW CCGT unit and two 700MW coal-fired power plants in 2031.
Affin Hwang believes the government will not proceed with the coal-fired power plant development and may seek to develop more gas plants, in line with the country's commitment to phase its coal-fired power plants.
"While the Energy Commission has yet to call for the new tenders, some utilities companies have shared their plans for new power project developments," Chow said.
Affin Hwang kept its "Overweight" call on the utilities sector with Tenaga Nasional Bhd and Malakoff Bhd still its top sector picks.