Broker: UOB Kay Hian
Date of Report: Tuesday, 22 July 2025

Malaysia’s Renewable Energy Sector Surges with RM1.87 Billion in New FIT Projects: Top Stocks, Winners, and Market Outlook

Overview: Malaysia’s Renewable Energy Ambitions Accelerate

Malaysia’s renewable energy (RE) landscape is witnessing a significant boost as the Ministry of Energy Transition and Water Transformation (PETRA) approves 48 new projects under the Feed-in-Tariff (FIT 2.0) program, valued at RM1.87 billion and totaling 180.8MW in capacity. This marks a pivotal move in Malaysia’s aggressive drive to meet its net zero targets and positions the nation as a regional leader in renewable investments.

Key Developments: Major Approvals and Sector Impacts

• New FIT 2.0 Project Approvals: PETRA has greenlit 48 projects, including 20 biogas (31MW), 8 biomass (54MW), and 20 small hydropower (96MW) plants. These projects will supply electricity to the national grid over a 21-year period, with tariffs ranging from RM0.25-0.34/kWh.
• EPCC Market Opportunity: The engineering, procurement, construction, and commissioning (EPCC) contracts for these projects are valued at approximately RM1.87 billion. Biomass EPCC contracts generally command between RM11.5m-RM13.0m per MW, while small hydro projects are valued at RM6m-RM13m per MW.
• Top Beneficiaries: Companies poised to benefit from the FIT 2.0 rollout include TNB Genco, Samaiden Group, Cenergi SEA (under UEM Lestra), Salcon Engineering, Cypark, and Worldwide Holdings.

Sector Growth Drivers and Policy Updates

• End of NEM 3.0 and New Rooftop Policy: The Net Energy Metering (NEM) 3.0 program ended on 30 June 2025, achieving a 94% take-up rate for residential, 80% for government, and 71% for commercial/industrial segments. The SolaRIS RM4,000 rebate was a significant driver, reducing the payback period for residential installations by half a year.
• Upcoming Announcements: Investors should watch for further LSS5+ winners, LSS6 bidding in 2H25, the maiden BESS program bidding in 3Q25, and stable solar module prices (US\$0.08-0.10/watt) in 2H25.

Top Sector Picks and Financial Performance

Peer Comparison: Financials at a Glance

Malaysia’s Renewable Energy Project Pipeline: Robust Growth Forecast

• Solar Upsurge: Total solar PV capacity is expected to surpass 6.5GW over 2025–26, fueled by government tenders for LSS5+ and LSS6. EPCC replenishment opportunities could reach RM13b–16b over the next five years, with improved project margins due to declining PV panel prices.
• Risks: Key risks include competitive tariffs for LSS5+ and LSS6, potential for elevated solar module prices in 2H25, and possible changes in the National Energy Transition Roadmap (NETR).

Pekat Group: Standout Renewable Energy Performer

• Orderbook Strength: Pekat Group boasts a robust orderbook of RM600m and will benefit from the full-year consolidation of its 60%-owned EPE Switchgear subsidiary.
• Earnings Outlook: The company is positioned for a three-year earnings CAGR of 40% (2024–27), underpinned by rising contributions from solar, earthing, lighting and protection (ELP) segments, and positive operating leverage.
• Corporate Moves: Pekat’s mainboard listing transfer is on track for 1Q26, offering further upside potential.

Corporate Renewable Energy Supply Scheme (CRESS): The Next Growth Driver

• CRESS Pipeline: There is an anticipated ramp-up in CRESS project announcements in 2H25. Tariffs are expected at 52-55 sen/kWh (with a 25 sen/kWh service access charge), or a lower 27-30 sen/kWh if bundled with BESS, over 20-year contracts.
• Major Signing: Tenaga has secured Malaysia’s first CRESS contract with DayOne Data Centers, supplying up to 500MW of RE for data center operations over 21 years.
• Residential Rooftop Slowdown: New tariff structures may extend payback periods for homeowners from three to five years, reducing near-term residential installations but offset by CRESS growth.

Solar Module Pricing and Market Dynamics

• Price Stability: Solar module prices are projected to remain steady at US\$0.08-0.10/watt through 2H25, supported by Chinese government intervention to regulate competition and phase out obsolete production.
• Supply-Demand Balance: As demand moderates post-China’s installation rush and US tax credit phase-out, production cuts are expected to help maintain balanced pricing.

Upcoming Bidding Rounds: LSS6 and BESS

• LSS6 Launch: PETRA will open bidding for Large Scale Solar Phase 6 (LSS6) in 2H25, with a potential 2GW capacity and BESS integration for select packages.
• BESS Opportunities: A new bidding round for installing Battery Energy Storage Systems (BESS) will commence in 3Q25, offering a total capacity of 400MW/1,600MWj (100MW/400MWj per project).

Detailed Project Winners: FIT 2.0 Biogas, Biomass, and Small Hydro

Biogas Project Winners

Total Biogas Capacity: 30.932 MW

Biomass Project Winners

Total Biomass Capacity: 53.500 MW

Small Hydropower Project Winners

Total Small Hydropower Capacity: 96.391 MW

Conclusion: A Bullish Outlook for Malaysia’s Renewable Energy Sector

The latest government approvals and incentives signal an unprecedented opportunity for Malaysia’s renewable energy sector. With robust project pipelines, strong financials, and supportive policies, leading players like Tenaga, Malakoff, and Pekat Group are set to benefit significantly. Investors should monitor forthcoming LSS and BESS tenders, corporate RE deals, and evolving tariff structures, all of which promise to shape the nation’s sustainable energy future.