KUALA LUMPUR: The recent 10 per cent cut in system access charges is expected to accelerate renewable energy agreements with data centre operators, providing a boost to Malaysia's power sector, according to RHB Research.
The firm said rising electricity demand from data centres would continue to drive earnings growth and new project opportunities in the fourth quarter of 2026.
It expects more agreements to be signed under the Corporate Renewable Energy Supply Scheme (Cress) in the coming months.
RHB Research maintained its "Overweight" call on the power sector, with Tenaga Nasional Bhd (TNB), YTL Power International Bhd, Samaiden Group Bhd and Solarvest Holdings Bhd as its top picks.
TNB signed five new energy supply agreements with data centre operators in the first half of 2026, covering a combined capacity of 856 megawatts.
To date, the utility giant has signed agreements totalling 8.4 gigawatts (GW) and completed 5.7GW of capacity, representing a 61 per cent year-on-year increase.
TNB aims to sign 10 energy supply agreements this year, covering up to 1.5GW of capacity.
This is expected to support annual electricity sales growth of five to six per cent.
RHB Research also expects the government to introduce a separate automatic fuel adjustment rate for data centres in January 2027 to reduce the impact of higher fuel costs on residential customers.
On new generation capacity, the firm expects winners of the NEWGEN26 tender to be announced by year-end.
The Energy Commission has reportedly received four bids with a combined capacity of 3.6GW.
RHB Research expects companies with reserved gas turbines, including TNB and YTL Power, to be among the potential winners.
If both companies secure contracts, the firm estimates potential upside of two per cent to its target price for TNB and four per cent for YTL Power.
It also sees opportunities for the companies to deploy their reserved turbines to develop captive power plants supplying electricity directly to data centre operators.
TNB recently signed an agreement with DayOne to potentially supply 1.5GW of electricity.
RHB Research said the generation projects could be developed through Cress or captive power plant arrangements.
Separately, Kinergy Advancement Bhd is collaborating with Mah Sing Group Bhd to explore captive power plant and Cress opportunities for data centres.
Renewable energy projects under the sixth Large Scale Solar (LSS6) programme and Cress are expected to provide further growth opportunities.
The Energy Transition and Water Transformation Ministry estimates that LSS6 projects could be worth RM13 billion to RM15 billion.
RHB Research identified Solarvest and Samaiden as key beneficiaries, citing their track records in previous LSS programmes.
With the LSS6 tender closing in October, the firm expects the earliest project awards in the first quarter of 2027.
It also expects more CRESS agreements to be signed in the coming months, as projects must begin commercial operations by the end of 2028.
The relatively tight construction window of 18 to 24 months could encourage developers and electricity buyers to finalise agreements sooner.
RHB Research said YTL Power was well positioned to benefit from rising data centre demand, while TNB remained a key beneficiary of the National Energy Transition Roadmap, backed by its regulated earnings framework.
The firm also recommended accumulating Samaiden and Solarvest shares on weakness, as the additional system access charge would be borne by electricity buyers, leaving renewable energy developers' project economics largely unaffected.
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