KUALA LUMPUR, July 28 — MIDF Research is positive with the government’s initiatives for an orderly energy transition for the nation through the launching of phase one of the National Energy Transition Roadmap (NETR), from the oil and gas (O&G) sector’s perspective.
“We are confident that Malaysia has the right tools, assets, and skillset to pioneer hydrogen fuel and carbon capture and storage in the region,” it said in a research note today.
MIDF Research pointed out that globally, the O&G sector had suffered divestments in favour of renewable energy (RE) and cleaner fuel.
“However, relative to the speed of adoption of RE, we believe that the pace of divestment from O&G may be faster than required. As of July 2023, approximately US$40.5 trillion (US$1=RM4.54) had been divested from the sector, since 2014,” it added.
Yesterday, Economy Minister Rafizi Ramli launched the NETR comprising 10 flagship catalytic projects worth RM25 billion to be developed in collaboration with the private sector, including carbon capture, utilisation and storage (CCUS), efficient switch and green hydrogen.
This sets in motion the longer-term plans to lift RE capacity share to 70 per cent by 2050 from the current 25 per cent.
The announcement formed the first phase of the NETR whereby phase two will focus on establishing the low-carbon pathway, national energy mix and emissions reduction target as well as identifying key enablers.
MIDF Research believes that hydrogen fuel and CCUS projects could assist in the reinvestment in the O&G sector to ensure a smooth and orderly energy transition, in line with the aspirations for net-zero carbon and carbon neutrality across various markets.
“With the available CCUS technology, along with the depleted gas reservoirs in our local front, we believe that these could help Malaysia to pioneer the utilisation of hydrogen fuel in industrials and power generation, beyond its current usage as a transportation fuel,” it said.
While the utilisation of hydrogen fuel is still in its early stage, MIDF Research opined that given time for the rapid advancement of new technologies and utilisation of artificial intelligence and digital tech in the infrastructure for the processing, storage, transportation and combustion of hydrogen, this energy source will be crucial in realising the energy transition agenda in the near future.
Meanwhile, Hong Leong Investment Bank (HLIB) said, within the 10 projects listed, Tenaga Nasional Bhd (TNB) has already planned for a combined 4.0 gigawatt (GW) of solar projects, including 1.0GW integrated RE zone and 500-megawatt (MW) solar park catering for both domestic and export markets (potentially Singapore) and also 4.5MW solar rooftops.
“We understand that the projects will provide further earnings growth in terms of potentially higher returns (as compared to existing Large-Scale Solar 1-4). Furthermore, TNB will also benefit from the potentially higher wheeling charges for the export market (as it is proposed for differentiated returns for investment into energy export infrastructure),” HLIB said in a sector update report today.
It noted that TNB is expecting to invest an additional RM35 billion for energy transitioning, on top of existing planned RM54 billion for non-energy transitioning projects, for 2025-2030, whereby the cost could be recovered through higher tariffs for RE exports and green programmes for prosumers.
TNB is also supporting the emerging trend of data centres in Malaysia, which requires RE as part of their sustainability policy, HLIB added. — Bernama
