Tenaga Nasional Bhd (TNB) expects electricity demand to grow between 5.8% and 6.3% this year, driven by demand from data centres and economic expansion.

Its electricity sales in the first nine months of the year totalled 14,175 gigawatt hours (GWh), up some 7.6% year-on-year (y-o-y).

The demand for power from data centres is set to pick up in the fourth quarter (4Q24) and ahead as more capacity is commissioned.

To-date, the power utility has completed 17 infrastructure projects to support 1.7GW of data centres capacity.

There are another eight projects with 1.9GW of capacity under construction while another six projects with 1.1GW of capacity have signed electricity supply agreements.

“The total load utilisation currently is only 248 megawatts (MW) as at September (from 190MW in June), which management guided will ramp up to 60% to 70% of connected capacities by year end.

Management also guided that there are applications for data centres projects with a combined 5GW to 6GW of capacity,” Hong Leong Investment Bank Research (HLIB Research) said in a report on TNB.

Kenanga Research stated the power utility has found a new sustainable avenue of growth fuelled by electricity demand from over 5,000MW worth of data centre investments by 2035, equivalent to 20% of the total generating capacity in Malaysia.

That said, TNB core profit for 3Q24 plunged 58% quarter-on-quarter to RM633.8mil due to higher non-fuel operating expenditures, but these costs are likely non-recurring, analysts noted following a briefing with the company’s management.

The research house added TNB will also export some 100MW of power to Keppel Electric in Singapore under the Lao PDR-Thailand-Malaysian-Singapore Power Integration Project.

Since September, it has exported 7.5GWh of electricity to the city state.

It also expects to sign an agreement for 50MW with the winning bidder in December under the Cross Border Electricity Sales Renewable Energy Scheme.

TNB expects some RM60mil in revenue from this segment in financial year 2025.

HLIB Research stated TNB is finalising the details for Regulatory Period 4 (RP4, 2025 to 2027) with the Energy Commission and management clarified that the previously guided RM90bil investment for 2025 to 2030 is inclusive of capital expenditure for new power plants.

HLIB Research has upgraded TNB to a “buy” with a target price of RM15 a share following its recent share price softness.