KUCHING (Sept 26): Ranhill Utilities Bhd (Ranhill) stands to gain as Sabah’s electricity supply system has been facing the issue of frequent interruptions for many years.
This is reflected by its relatively high System Average Interruption Duration Index (SAIDI) compared to Peninsular Malaysia.
“One of the issues faced by the supply system is a mismatch in supply capacity; West Sabah is significantly oversupplied with estimated excess of 362MW capacity versus demand in key cities while East Sabah faces significant shortage of an aggregate 139MW, based on findings by the Energy Commission,” commented MIDF Amanah Investment Bank Bhd (MIDF Research).
“Under the 12MP (12th Malaysia Plan), SAIDI for Sabah is targeted to be reduced to 150 minutes by 2025, a significant improvement compared to the 332 minutes recorded in 2021 and 393 minutes in 2022 (annualised).”
As one of the measures to address East Sabah’s under capacity situation, major upgrades of the Sabah power grid, in particular the links within East Sabah, was planned a few years back and is currently underway.
MIDF Research said these revolve around six key projects costing an estimated RM840m involving upgrading works, new transmission lines and PMUs throughout critical phases of the network.
“Upon completion, the upgrade will improve the grid’s capacity to transfer power from West to East Sabah, allowing 400MW of additional capacity to be dispatched (from 216MW previously),” it added.
“Additionally, construction works on the Southern Link transmission network project is expected to commence under the 12MP period, which should unlock further capacity for energy transfers and improve grid stability.”
Via its two CCGT power plants in Kota Kinabalu (West Sabah) with a combined 380MW capacity, MIDF Research believed Ranhill stands as the largest independent power producer (IPP) in Sabah with a 29 per cent share of Sabah’s estimated total capacity of 1,320MW.
A total of 60 per cent owned Ranhill Powertron 1 (RP1) operates under a power purchase agreement (PPA) with Sabah Electricity Sdn Bhd (SESB) until 2029, while 80 per cent-owned RP2’s PPA lasts until 2032.
“We believe the group is well positioned to benefit from higher dispatch by West Sabah IPPs once the West-to-East Sabah grid upgrade work is completed next year,” it commented.
“Besides suffering from a shortage of capacity, East Sabah also relies heavily on expensive diesel generators. We estimate diesel capacity to account for over 80 per cent of East Sabah’s capacity mix.
“We therefore anticipate abundant opportunities for new plant-up projects, in particular cleaner gas-powered types.”
Based on Sabah’s power generation development plan, a total 392MW of new generation capacity is expected to come on-stream comprising 100MW in 2024 and 100MW in 2025. Another 192MW capacity from the Upper Padas hydro plant is expected to come onstream in 2027.
However, MIDF Research acknowledged that gas supply remains a challenge for East Sabah, which as a result could see some of the planned capacity expansion taking place in West Sabah, leveraging on the improved West-to-East transmission instead.
“We understand that Ranhill has submitted a bid for a 100MW gas power plant to be located in the West Coast of Sabah under a tender called by the EC.”