KUALA LUMPUR: The introduction of the Corporate Renewable Energy Supply Scheme (CRESS) will significantly increase the adoption of green energy, RHB Research said.

The firm expects the initiative to benefit solar engineering, procurement, construction and commissioning (EPCC) players by boosting their commercial and industrial (C&I) orders.

"Although much is still being discussed with the government, the introduction of CRESS represents a progressive step towards power industry reform, leading to a more liberal and competitive market."

The change also presents an opportunity for existing independent power producers (IPPs) to sell their power output to new clients after their power purchase agreements (PPAs) expire.

"We believe this could attract more players to become green energy power producers, with the ability to negotiate direct pricing for green electricity," it said in a note today.

RHB Research said the initiative provides companies with flexibility in choosing their energy sources, helping them meet environmental, social and governance (ESG) sustainability targets.

It also offers the ability to hedge against future fluctuations in green electricity rates. 

RHB Research expects the impact of CRESS on Tenaga Nasional Bhd's (TNB) transmission and distribution business to be neutral in the near term, as these are likely to be tabulated under regulated earnings.

"That said, should we see a stronger ramp-up in domestic renewable energy (RE) input, a higher capex spending in transmission and distribution (T&D) assets would widen its regulated earnings base too in the longer run.

"We anticipate an overall quota for the entire programme to ensure grid stability, as well as a quota for each project, possibly set at 30 megawatt (MW), which is similar to the Corporate Green Power Programme (CGPP)," it added.

The government has announced the introduction of CRESS, with guidelines to be launched in September.

The programme, under the Greens Madani initiative, aligns with the government's aspiration to increase RE capacity from the current 26 per cent (10.6 gigawatt) to 40 per cent and 70 per cent by 2035 and 2050.

The CRESS scheme allows eligible RE generators and corporate firms to arrange green electricity supply under agreed terms through the existing supply system. 

RHB Research believes CRESS will commence following the conclusion of the large-scale solar 5 (LSS5) programme, given the need to ensure clear connection points to the grid.

"The LSS5 application period closed on July 24, and we anticipate the announcement of winners in 4Q24.

"Hence, we expect CRESS to likely start next year," it noted.

Overall, the firm has maintained an "Overweight" rating on the power industry, with its top picks being TNB, YTL Power International Bhd and Samaiden Group Bhd.

https://www.nst.com.my/business/corporate/2024/07/1083179/cress-markedly-drive-green-energy-adoption-says-rhb-research