Analysts view the Malaysian government’s move to set up an energy exchange platform to facilitate cross-border trading of renewable energy positively as it will boost the country’s renewable energy industry.

Maybank Investment Bank said in a note on Tuesday that it sees renewable energy export is potentially a new revenue source and capacity growth driver for Malaysia’s renewable energy industry.

It said the establishment of the energy exchange platform represents another milestone achieved for the eventual cross-border trading of renewable energy in Malaysia.

It noted that renewable energy export is potentially a new revenue source (renewable energy sales and wheeling charges) and capacity growth driver for Malaysia’s renewable energy industry (currently reliant on domestic large scale solar ;LSS] and corporate green power program [CGPP] schemes).

To recap, Singapore has announced a target of up to 4 gigawatts (GW) of low-carbon electricity import (about 30 percent of Singapore’s electricity supply by 2035).

Currently, the existing Plentong- Woodlands Interconnector can facilitate bi-directional electricity flow of about 1GW between Malaysia and Singapore.

“Overall, we remain positive on Malaysia’s renewable energy sector, for which engineering, procurement, construction and commissioning (EPCC) order book replenishment is impending from both the 800 megawatt (MW) of CGPP and c.2GW of LSS5 projects,” said the research house.

In line with Malaysia’s energy transition aspiration and commitment to support regional power integration via the ASEAN Power Grid Initiative, the government of Malaysia said Monday it has agreed to establish Energy Exchange Malaysia (ENEGEM) for cross-border green electricity sales to neighboring countries.

The cross-border sales of energy through the ENEGEM platform will be implemented based on the latest “Guide for Cross-Border Electricity Sales (CBES)” issued by the Energy
Commission, The Ministry of Energy Transition and Water Transformation (PETRA) in the country.

The ministry is also inviting interested and eligible party to participate in the inaugural auction for the purchase of green electricity from Malaysia’s Electricity supply system to be supplied to Singapore via the ENEGEM Platform.

The auctioning process for cross border sales of green electricity will commenced with a 100 MW pilot run, utilizing the existing interconnection between Singapore and Peninsular Malaysia.

The ministry believes that the initiation of auctioning via the ENEGEM platform will allow Malaysia to further strengthen its cross-border electricity integration framework, while paving the way for greater renewable energy development and regional cooperation on cross-border energy trading between ASEAN countries.

Meanwhile, CGS International said in a note on Tuesday that it viewed the establishment of ENEGEM positively as it reinforces its view of good follow-through on the implementation of the National Energy Transition Roadmap (NETR) just eight months after its launch.

It opined that the government’s move further adds to the good progress being made on initiatives under the NETR, which should help address investors’ qualms on its implementation.

“It also marks a key step towards realizing the country’s energy exports potential,” said the research house.

CGS International continues to view 2024 as a pivotal year for Malaysia’s utility sector as it expects the establishment of crucial building blocks that will lay the groundwork for the execution of the country’s ambitious energy transition roadmap, underpinning the sector’s longer-term earnings growth outlook through to 2030, and potentially beyond.

MIDF Research also said in a note on Tuesday that it sees the government’s move a positive development for the renewable energy industry.

The research house sees the renewable energy EPCC sub-sector as a key immediate-term beneficiary of Malaysia’s renewable energy initiatives.

While the pilot 100 MW export capacity is small, MIDF noted that in the longer term, Singapore is looking to import up to 3.5 GW of green electricity by 2035.

Malaysia sets up energy exchange for cross-border green electricity sales