KUALA LUMPUR: The role played by national power utility companies is more critical than ever in an era where energy demands continue to rise and the push for sustainable practices grows stronger.
Hence, the financial health of these firms including Tenaga Nasional Bhd (TNB), is pertinent to ensure that electricity continues to be generated, distributed and maintained efficiently.
A financially sound power utility not only benefits its operational capacity but also contributes significantly to the economic stability of a nation, industry observers said.
One of the primary reasons for a power utility to be financially robust is the need for continuous investment in infrastructure.
Aging power plants, obsolete transmission lines and insufficient grid capacity can hinder service delivery and lead to power outages, they said.
TNB may be in a good financial position at the moment. But as Malaysia pursues more efficient, lower emission gas power plants as a transitional fuel in its energy transition, the company must invest heavily in upgrading and expanding its infrastructure.
This includes incorporating renewable energy (RE) sources into its system.
The financial health of national power utility companies is not just a matter of balancing budgets, industry observers said. It has far-reaching implications for infrastructure, operational efficiency, consumer trust and economic stability.
Profitability is a fundamental incentive of investment, they added. Without the potential to realise returns, capital is less likely to be committed and necessary investment falls short.
RHB Research estimated that, under the impending Regulatory Period 4 (RP4) from 2025-2027, TNB's proposed average regulated capital expenditure is RM35 billion-RM45 billion, about twice the RP3 level.
According to Affin Hwang Capital, TNB is forging ahead with its investment plans to grow its RE portfolio particularly.
The development of the company's 300MW Nenggiri hydro project is ongoing, and is on track for completion in the second quarter of 2027.
Elsewhere, TNB is moving forward with the RM4 billion-RM5 billion Sungai Perak hydro life extension programme (651MW), hybrid hydro-floating solar PV at Chenderoh(45MWp) and
Temenggor (300MWp), Corporate Green Power Programme (135MWp) and solar greenfield development in the United Kingdom (102MWp).
The company also plans to develop five centralised solar parks (CSP) with 150MWp of capacity each.
For now, TNB plans to deliver the green energy from these five centralised CSPs to the customers under the Corporate Renewable Energy Supply Scheme (CRESS).
At TNB's analyst briefing held early this month, it was revealed that its annual electricity demand growth guidance increases to 3.0-4.0 per cent from 2.5-3.0 per cent, primarily on stronger commercialisation of data centres (DCs).
Electricity demand in Peninsular Malaysia and Sabah rose 6.3 per cent year-on-year in the second quarter of 2024, largely driven by the stronger commercial (up 1.0 per cent) and domestic (up 11.9 per cent) segments. Demand hit a new peak of 20,066MW in July.
Overall, RHB Research reiterated that the peninsula and Sabah's electricity consumption growth over the next decade should surpass the 10-year average of 2.4 per cent, led largely by the continued expansion of DCs.
TNB's energy system investments, observers said, are critical to ensure a secure and dependable power supply and unlock significant benefits for the national green economy and deliver fair returns to its shareholders.
In 2023, TNB paid out RM2.66 billion dividend to its shareholders, majority are government-linked investment companies and hence benefitting millions of account holders among the rakyat, thanks to a 4.3 per cent revenue growth to RM53.07 billion.
Hence, fair returns on investments in the energy system will help TNB to continue ensuring secure and dependable power supply for all Malaysians and powering the nation's economic growth and energy transition plan.