Boston, MA -- (SBWire) -- 07/22/2013 --We have maintained our 2013 electricity generation growth forecast at 6.1% this quarter as our fundamental assumptions remain relevant. Over the near-term, we believe that deteriorating global economic conditions and Malaysia's dependence on exports to China pose a significant downside risk. Our outlook for the Malaysian power sector over the long-term remains relatively sanguine, as we expect modest economic growth and a growing population to drive growth in electricity consumption. In particular, we believe that our view for significant growth in both coal- and gas-fired electricity generation is coming true, though we see potential scope for delays. We have not revised our hydropower figures as our view appears to be playing out.
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We have maintained our 2013 electricity generation growth forecasts at 6.1% this quarter as our fundamental assumptions remain relevant. We had revised up our forecasts in our previous analysis on new data from the Energy Information Administration, and have not seen any factors to suggest material changes in the sector.
Our long-term outlook for the Malaysian power sector remains relatively sanguine, as we expect modest economic growth and a growing population to drive growth in electricity consumption. The government has also taken pertinent steps to avoid a potential electricity shortage in Peninsular Malaysia by increasing the country's power generation capacity by 4,500MW in the period up to 2017.
Key trends and developments in the Malaysian electricity market:
- The government has said that it would not be changing the electricity tariff until June 2013.
- The government has introduced a number of policies and incentives for renewable energy producers. The country's Sustainable Energy Development Agency (SEDA) is responsible for a number of these programmes, and regularly releases new data on capacity approvals.
- The government has given the go-ahead to begin identifying suitable sites for the country's first nuclear power plant. A budget of US$7bn has reportedly been allocated to the nuclear scheme, which, according to Minister of Energy, Green Technology and Water Peter Chin Fah Kui, is expected to start operations in 2021.
- The country's energy sector is set to become more competitive, following the Electricity Commission's decision to hold a new power generation tender exercise to replace Power Purchase Agreements (PPAs) with first generation Independent Power Producers expiring in 2016/17. The PPAs would be awarded and renewed based on the lowest cost of electricity generation, with only 50% of existing PPAs to be renewed.
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Market Report, "Malaysia Power Report Q3 2013", Published
Recently published research from Business Monitor International, "Malaysia Power Report Q3 2013", is now available at Fast Market Research