PETALING JAYA: Renewable installations in solar, wind and storage facilities are set to rise by 40pc year on year to another record 190GW globally this year, accelerating from a 30pc on-year expansion in 2020 despite project delays caused by the Covid-19 pandemic, predominantly driven by solar photovoltaic (PV) solutions, followed by offshore wind installations, according to Rystad Energy’s “Renewable Energy Trends” presentation.
In a note, AmInvestment Bank Research (AmResearch) said Asia is expected to be the main driver of renewable capacity increase with an addition of 80GW this year, followed by the United States at 55GW and Europe at 25GW. Asia, represented by China, will account for the largest cumulative renewable capacity of 630MW in 2021, twice Europe’s 320MW and 2.3 times North America’s 280MW.
Zooming in on the local scene, the research house pointed out that the shift towards renewable energy (RE) in Malaysia has been in progress over the past three years with Petronas’ investment in AmPlus, which operates over 600MW of solar capacity in India and Southeast Asia.
“Amongst local service providers, only Yinson has an operational RE division from its US$30 million investment for a 95pc equity stake in Rising Son Energy, which has a 140MW solar farm in Bhadla Solar Park Phase II, Rajasthan, India. Yinson also recently signed an agreement with listed NTPC to develop a 190MW plant in nearby nearby Nokh Solar Park.
“As Uzma has just secured a 50MW solar project which will only be operational by end-2023, we expect the momentum to gather steam for renewable projects by local O&G providers as gearing concerns are being alleviated by an improving oil price environment,” it said.
Overall, AmResearch still holds an “overweight” call on the oil & gas sector, recommending Yinson for its strong earnings growth momentum from the full-year contributions of FPSO vessels Helang, off Sarawak, Abigail-Joseph in Nigeria and Anna Nery in Brazil, together with multiple charter opportunities in Brazil and Africa.
“We also like Dialog Group and Serba Dinamik Holdings due to their resilient non-cyclical tank terminal and maintenance-based operations.
“Our other ‘buy’ calls are Sapura Energy, which will complete its RM10 billion debt restructuring package soon and position the formidable EPCIC group to secure fresh global orders; and Petronas Gas, which offers highly compelling dividend yields from its optimal capital structure strategy and resilient earnings base.”
Meanwhile, AmResearch noted that the tariffs of power purchase agreements (PPA) for PV facilities are projected to drop in Asia Pacific (Apac), Middle East North Africa, Americas and Europe due to open bidding competition, falling material prices, increasing project sizes and economies of scale.
Apac’s solar PPA prices, currently above US$50/MWh, are the highest globally, compared with below US$50/MWh and US$30/MWh in Europe and Americas respectively. Over the longer term, Apac’s tariffs may be squeezed due to rising competition amid rising interest in India’s multiple plants. – The Sun
However, the PPA prices for Apac wind utilities, currently below US$50/MWh, are expected to rise to US$75/MWh in 2022, driven by the extension of Vietnam’s feed-in tariff mechanism to 2023. Additionally, utility wind capex has remained steady over the past three years at US$1.5/W in 2020.
Together with the growth in renewable energy, global utility scale battery operations are expected to expand in tandem given the periods of unavailability in solar and wind electricity generation.
For 2021, global utility scale battery installations are projected to double to 12.5GW, then grow by 60pc to 20GW in 2022 and 50pc to 30GW in 2023.
