TNB Set To Benefit From Malaysia’s Renewable Energy And Grid Expansion

Tenaga Nasional Bhd (TNB) is emerging as a key beneficiary of Malaysia’s accelerating energy transition, supported by rising renewable energy demand, expanding electricity consumption, and increased investment in the national power grid. Analysts expect the utility company to benefit from government-backed renewable energy programmes and growing demand from large corporate power consumers.

One of the major projects supporting TNB’s renewable energy strategy is the 595 MW Kenyir hybrid hydro floating solar project. The project is currently targeted for commercial operation in the fourth quarter of 2028. Its expected commissioning timeline allows it to qualify for Malaysia’s newly introduced accelerated Corporate Renewable Energy Supply Scheme (CRESS) package.

Under the revised arrangement, the project’s system access charge is expected to fall to 14 sen per kilowatt-hour (kWh) for the first 10 years, compared with the previously agreed rate of 20 sen per kWh. According to CGS International Research, the resulting savings could be transferred to the electricity buyer, depending on the final commercial terms agreed between the parties.

The floating solar facility at Lake Kenyir is expected to use only around 1.4% of the reservoir’s total surface area. This approach reduces the need for additional land while allowing the solar panels to benefit from the cooling effect of the water, which can support generation efficiency.

TNB is also exploring opportunities to expand floating solar development across Malaysia. The company has shortlisted five additional reservoirs that could collectively support more than 1.9 GW of floating solar capacity. In addition, TNB is assessing the possibility of combining floating solar with pumped-storage hydropower at the Nenggiri hydro reservoir. Such an integrated system could provide long-duration energy storage and offer an alternative to relying entirely on battery-based storage.

Analysts also point to improving demand for renewable electricity from corporate customers as a positive development for TNB. Previously, finding suitable corporate off-takers was considered a major challenge for renewable energy projects. However, Malaysia’s rapidly expanding data centre sector is creating stronger demand for reliable and renewable electricity.

The growing number of data centres could therefore help TNB secure additional green-power customers and support the development of its wider renewable energy pipeline.

TNB is also expected to benefit from higher capital expenditure on grid infrastructure. The company’s earnings outlook is supported by the current Regulatory Period 4 framework, which includes an automatic fuel adjustment mechanism. This mechanism allows fuel-related costs to be recovered, reducing the impact of international fuel price fluctuations.

Although TNB’s share price has faced temporary pressure due to measures involving cost absorption for domestic consumers, analysts believe the regulatory framework provides earnings stability. With renewable projects, data centre demand and grid investments expanding simultaneously, TNB remains well positioned to play a central role in Malaysia’s transition toward a cleaner and more resilient power system.