In a statement, the investment bank said its optimism is premised on the mushrooming number of data centre developments; continuous power grid upgrades; experienced independent power producers bridging the supply gap; and domestic renewable energy (RE) capacity expansions anchoring contractors’ job flow.

It said there is solid progress for the key initiatives mentioned under the NETR, such as the recent introduction of the Corporate Renewable Energy Supply Scheme (CRESS) which is crucial for pushing the third-party access mechanism.

“The establishment of Energy Exchange Malaysia (Enegem) is also important to facilitate energy exports to Singapore.

“Multiple solar power programmes continue to be rolled out and executed, while feasibility studies on biomass clustering, co-firing of ammonia and hydrogen are ongoing,” it said.

Meanwhile, RHB IB said government policies and initiatives, together with declining panel prices, should sustain growth in the solar power segment, as demonstrated by the rapid progress of large-scale solar (LSS) projects after a stagnant four quarters.

“With the Corporate Green Power Programme (CGPP) engineering, procurement, construction and commissioning (EPCC) awards coming up, followed by the shortlisting of bidders for LSS 5 and the rollout of CRESS and Enegem, there is significant potential for solar EPCC players’ earnings to continue growing,” it said.

The research firm said downside risks to its call are lower-than-expected new RE capacity rollout, major regulatory changes, and higher-than-expected operating costs.

RHB IB said it expects more details on the NETR initiatives to be announced in the next 12 months.

“We keep an ‘overweight’ call on the sector and our top picks are Tenaga Nasional Bhd, YTL Power International Bhd, and Samaiden Group Bhd with target prices of RM16.70, RM6.68, and RM1.58 per share, respectively,” it said.