With Corporate Renewable Energy Supply Scheme (CRESS) turning more attractive and the new tariff providing upside, Kenanga Research expects stronger renewable energy (RE) contract flows in Malaysia over the medium term.
The research house said in its recent report that at least an estimated MYR 15 billion ($3.55 billion) of engineering, procurement, construction, and commissioning (EPCC) contracts has been set in motion counting large scale solar (LSS), LSS5+, and the latest advent of CRESS.
“Thanks to CRESS being potentially propelled by lower system access charge (SAC), and rising data center tariffs, there could be greater upside to our estimated industry EPCC pie,” it said.
At its time of writing, nearly all LSS5+ awards have been made known publicly, shifting the spotlight for LSS6 bidding to take center stage in 2026, which are yet to be factored into its numbers.
According to Kenanga, solar EPCC players are currently racing against time to execute Corporate Green Power Program (CGPP) projects before the end-2025 deadline while 4GW of LSS5/LSS5+ awards are set to be rolled out in the immediate term, targeting completion by end-2027.
“Order books are already at record highs on the back of strong job flows and poised to climb further. Altogether, LSS5, LSS5+ and CRESS are expected to unlock at least MYR 15 billion ($3.55 billion) worth of EPCC opportunities,” it said.
It is noted that a total of 13 developers have been awarded contracts under LSS5+, but only seven listed firms have made announcement so far.
Kenanga anticipates another 1–2 listed players to emerge once agreements are finalized, with announcements being made progressively.
“That said, about 406MW of capacity is still undisclosed, likely being tied into final details. We believe this tranche may be allocated to similar or mid-sized projects, with potentially beneficiaries counting the likes of recent ACE market debutant WawasanDengkil which have stated their interest in participating in LSS5+, and several unlisted names which we understand to be among the bidders,” it said.
With current solar panel prices, Kenanga expects winning tariffs to range between MYR 0.14–0.17 ($0.033-0.04)/kWh, supporting project internal rate of returns (IRRs) of roughly 8 percent.
It is noted that Malaysian government has recently lowered the system access charge (SAC) by MYR 0.05 ($0.012)/kWh, improving the economics for corporates sourcing green power.
Meanwhile, the introduction of an ultra-high voltage tariff has lifted data center electricity costs to MYR 0.59 ($0.14)/kWh, making CRESS a cost-effective alternative.
According to Kenanga, at current economics, solar developers need about MYR 0.59 ($0.14)/kWh to achieve an 8 percent IRR – on par with conventional grid tariffs – making CRESS adoption by data centers almost inevitable.
Given the likelihood of further hikes from Malaysian utility firm Tenaga Nasional Berhad (TNB) to support grid infrastructure upgrades, the research house opined that CRESS provides a compelling long-term hedge for large energy users such as data centers.
With its 21-year fixed power purchase agreement (PPA), it noted CRESS offers protection against future tariff hikes while supporting environmental, social, and governance (ESG) and RE100 commitments.
On costs, Kenanga highlighted that China’s anti involution policy has pushed polysilicon prices up 21 percent month on month, which could lift module prices by about 14 percent to $0.10/W (from $0.09/W) once existing stocks are drawn down.
“Nevertheless, we view such a scenario as unlikely in 2025 due to persistent industry overcapacity. We project module prices to ease to $0.09/W in 2025 (versus $0.10/W in 2024) before rebounding 19 percent to $0.11/W in 2026,” it said.
It also noted that most EPCC players have pre-procured more than 1GW panels (sufficient for LSS5+), backed by fixed-price contracts and front-loaded procurement.
“While suppliers may attempt to renegotiate if prices spike sharply, we expect EPCC players to still secure panels below prevailing market rates,
“However, we still foresee potential margin pressure for LSS5+ projects as asset owners may be more cost conscious to protect project IRRs,” it said.
For asset owner, Kenanga noted that the effect on LSS5 should be minimal but LSS5+ participants – especially those that submitted bids at lower tariffs – could see some pressure on project IRRs.
“Looking ahead, LSS6 bidding tariffs are likely to increase to MYR 0.16–0.20 ($0.038-0.047)/kWh, with EPCC contract values around MYR 2.2 million ($520,000)/MW,
“Given the low project IRRs of about 8 percent in LSS jobs and rising cost risks, we prefer EPCC contractors over asset owners,” it added.
Meanwhile, with the Net Energy Metering (NEM) quota frozen since end-Jun 2025, the Malaysian government will roll out the Solar Accelerated Transition Action Program (Solar ATAP) this December.
Unlike NEM’s one-for-one offset (about MYR 0.45 ($0.11)/kWh), Solar ATAP compensates consumers at the System Marginal Price (SMP) – the wholesale clearing price that resets every 30 minutes – averaging just about MYR 0.23 ($0.054)/kWh.
“Under our assumptions, residential rooftop solar now carries a payback of eight to nine years versus four to five years under NEM,
“This is unsurprising, as policymakers are deliberately steering the market towards BESS adoption to ease grid strain. As such, we expect Solar ATAP to see a slow take-up, particularly among residential and commercial users,” said Kenanga.
While the EPCC pie continues to expand, the research house also sees rising execution risks – driven by heavier outsourcing and potential panel price swings – could compress margins.