CRESS Demand Remains Resilient Despite Revised System Access Charge - Analysts
KUALA LUMPUR, Oct 15 (Bernama) -- Demand for renewable energy (RE) under the Corporate Renewable Energy Supply Scheme (CRESS) is expected to remain resilient despite the revised system access charge (SAC).
Corporate decarbonisation commitments and rising electricity demand from data centres support this, according to the investment banks.
RHB Investment Bank Bhd (RHB IB) said the additional charge of four sen per kilowatt-hour (kWh), which is borne by green consumers (GCs), is unlikely to materially affect project economics for RE developers, as the all-in tariff remains about 20 per cent below prevailing grid electricity rates. "Hence, we expect off-takers to proceed with CRESS agreements to secure long-term green tariffs and mitigate exposure to future increases in grid electricity prices," it said in a note today.
The investment bank said the government's introduction of a minimum 30 per cent RE requirement for data centres, alongside rising electricity demand from the sector, would further support CRESS adoption.
It has maintained its "overweight" rating on the RE sector, with Tenaga Nasional Bhd, YTL Power International Bhd, Samaiden Group Bhd and Solarvest Holdings Bhd among its preferred picks.
The investment bank also viewed the recent share price pullback in Samaiden and Solarvest following the SAC revision as a buying opportunity, given that the additional charge would be borne by corporate consumers rather than developers.
Meanwhile, MBSB Investment Bank Bhd (MBSB IB) said the revised SAC was unlikely to materially dampen corporate offtakers' appetite for CRESS, particularly among data centre operators and large companies with firm decarbonisation commitments.
It said the revised structure reflected the need to ensure that corporate consumers using the national grid to access renewable energy bore an appropriate share of the associated infrastructure costs, including transmission, system balancing, network capacity and backup supply.
MBSB IB's illustrative calculation showed that an ultra-high-voltage consumer using 48 million kWh of electricity monthly, including 18 million kWh procured through CRESS, would incur a monthly electricity bill of RM28 million under the acceleration package. This compared with RM28.4 million under the previous CRESS arrangement and RM28.8 million without CRESS. This translated into overall electricity cost savings of 2.6 per cent under the acceleration package, compared with 1.4 per cent under the previous arrangement.
"While the savings may appear modest, we believe the Energy Commission's priority is not simply to make RE cheaper, but to determine who should pay for the additional infrastructure required to accommodate it," it said.
MBSB IB has maintained its positive stance on the RE subsector, citing the strategic need for corporate consumers to secure long-term green electricity supply amid growing data centre power requirements and decarbonisation commitments.
-- BERNAMA