The Energy Commission (EC) has announced 22 successful bidders out of 71 applicants for the Corporate Green Power Programme (CGPP). Only 563.44MW was awarded out of the 800MW total quota allocation however. Among all bidders, TNB won the biggest slice as it was successfully awarded in all 3 bids via its fully owned subsidiary TNB Renewables SB. We reckon the award is timely given the EC’s target to be in commercial operations by 2025, and for TNB to lock-in raw materials at lower prices. Over the medium term, TNB will benefit from the overall CGPP framework as a Single Buyer entity with lower generation cost from System Marginal Price (SMP) at an average of 25sen/kwh as compared to approved generation Base Tariff of 26.2sen/kwh under the Regulatory Period 3 (RP3). Despite this, we make no changes to our earnings forecast as the size of 90MW for all 3 bids is only marginal considering the Group’s existing generation capacity of 23,551MW in its portfolio. We retain our Outperform call with an unchanged DCF-derived TP of RM12.42.
Source: PublicInvest Research - 9 Aug 2023
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TENAGACreated by PublicInvest | Jul 02, 2024