Tenaga S Nuclear Power No Longer An If But When And How

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TENAGA sees nuclear as a critical component of Malaysia’s energy transition, and views that the inclusion of nuclear into the energy mix is no longer a question of ‘if’ but ‘when’ and ‘how’. 

According to TA Securities (TA), TENAGA’s view is underpinned by the emergence of nuclear power under the 13th Malaysia Plan (13MP) as a strategic pathway to low carbon energy and to meet rising demand, being a viable replacement for coal and gas as baseload generation while complementing renewables and emitting low GHG emissions.
TENAGA views that electrification of transport, industry and population growth and the growth of data centres will sharply increase electricity demand which in turn, adds pressure to the energy trilemma in balancing energy security, affordability and sustainability. 
Compounding the situation, Malaysia’s entire coal capacity of 12GW – which is currently the country’s main source of energy accounting for up to 61% of generation mix, will be retired by 2044.


This will increase the country’s reliance on gas to meet demand and manage RE intermittence, which in turn, will increase Malaysia’s dependence on imported fuels.

Through the 13MP, the government targets 2031 as the commercial operation date (COD) of Malaysia’s first nuclear power plant. MyPOWER was designated as Malaysia’s Nuclear Energy Programme Implementing Organisation (NEPIO), mandated to coordinate all nuclear power-related activities. 
The 2031 COD aligns with the Tariff and Electricity Supply Planning and Implementation Committee (JPPPET) meeting in November 2024, which outlines plans for 300MW capacity by 2031 and 3GW of large nuclear capacity by 2034.
In line with the broad policy targets, TENAGA is preparing its capacities (manpower skilling and technical knowledge) and is positioning itself as a strong candidate to serve as Developer-Owner-Operator (DOO) for Malaysia’s nuclear projects.
The meeting with TNB Nuclear Taskforce largely underscores our views in our earlier sector thematic regarding:

i) TENAGA’s potential involvement in the development of the country’s first nuclear power plant.
ii) SMR being one of the key potential reactor technologies being considered.
iii) Nuclear as a suitable baseload replacement ahead of significant coal capacity expiries from 2029 onwards.

Although still somewhat, early days, the potential transition from coal to nuclear energy opens up capacity replenishment opportunities for TENAGA, while the huge capital outlay for nuclear power plants creates a high barrier to entry for smaller peers to compete.
“Overall, we view nuclear energy development as a potential medium-to-long term catalyst for TENAGA alongside decarbonisation of the group’s generation portfolio,” said TA.
In the immediate-term, TENAGA remains a key beneficiary of the energy transition from a step-up in grid capital expenditure to accommodate higher RE penetration, while Genco is well positioned to benefit from data centre-driven demand growth, underpinned by the on-going gas power generation capacity tender by the Energy Commission. TA maintains buys for TENAGA with a target price of RM15.80. — Focus Malaysia

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