| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
New Solar Initiative to Drive Market Transformation
The Malaysian renewable energy sector is poised for a significant transformation with the upcoming launch of the Solar Accelerated Transition Action Programme (Solar ATAP) in December 2025. This new initiative by the Ministry of Energy Transition and Water Transformation (PETRA) will succeed the Net Energy Metering (NEM) framework, which is scheduled to officially expire on June 30, 2025. Investment bank TA Securities maintains an “OVERWEIGHT” stance on the sector, anticipating renewed impetus and growth opportunities across the market.
Key Program Features and Market Shift
Solar ATAP represents a strategic shift from the NEM framework’s 1-to-1 retail tariff offsets to a market-based mechanism. Under the new program, offsets for surplus rooftop solar generation will be calculated based on the System Marginal Price (SMP), which historically trades at a lower rate (20-30 sen/kWh) compared to prevailing retail tariffs. While this structure aims for a more cost-aligned approach to generation, it implies reduced savings for residential consumers. Estimates suggest that Solar ATAP will offer 44% lower savings compared to the previous NEM Rakyat scheme for an average household, effectively lengthening the payback period for solar installations.
Rejuvenating Demand and Expanding Access
Despite the adjustments in savings, Solar ATAP is expected to significantly rejuvenate demand for rooftop solar across residential, commercial, and industrial (C&I) segments. The program addresses the challenges faced by the self-consumption (SELCO) model in meeting residential consumption patterns by allowing solar installation sizes up to 100% of maximum demand, an increase from the previous 75% cap. Furthermore, it eliminates the time frame and quota restrictions of the earlier NEM, promoting greater optimization of solar generation and encouraging wider adoption. C&I users will also benefit from enhanced flexibility, including options for direct participation or incorporating battery energy storage systems (BESS).
Investment Outlook
The introduction of Solar ATAP is viewed positively by TA Securities, offering continuity and renewed impetus for the rooftop solar market. Companies with strong exposure to the residential segment are expected to be key beneficiaries. The sector’s strong contract pipeline and government-led green initiatives continue to underpin the “OVERWEIGHT” rating, signaling robust activity and growth prospects within the renewable energy landscape despite the adjustments in consumer savings mechanisms.
