Headline The multibillion-ringgit solar power grab MediaTitle The Edge Date 27 Mar 2017 Language English Circulation 23,635 Readership 70,905 Section Corporate Page No 16 ArticleSize 423 cm² Journalist Ben Shane Lim PR Value RM 14,922

The multibillion­ringgit solar power grab

BY BEN SHANE LIM (Note: DC to AC conversion losses range from 5% to 15%. Taking this into account, this revenue Over the past couple of weeks, some WHwam "j||jJu)c*noN ^ Esrawrro calculation is conservative by the same margin.) may have noticed a number of so­ In contrast, the estimated cost of solar panels lar photovoltaic (PV) projects being SBU Power Sdn Bhd 3.996 UniMAP Pauh Campus, Perils 42.65 2.05 is as low as RM4.50 per watt, or RM4.5 million announced by Tenaga Nasional Bhd Tesdec Services Sdn Bhd 3.5 Sura,Dungun,Terengganu 44 1.85 per megawatt. Ignoring financing costs, highly (TNB), awarded under the 2017/2018 & Suria Infintti Sdn Bhd conservative estimates point to a yield of 11% or large­scale solar (li5S) competitive Revenue Vantage Sdn Bhd 3 Jelebu, Negerl SembHan 4495 1.62 an investment payback period of nine years.This bidding programme led by the Energy Com­ Greenviro Solutions Stfri Bhd 20 TapakPelupusanPulauBurung, 40.8 9.79 does not include land costs. mission (EC). &PLBTerangSdnBhd Penang In total, the 2017/2018 LSS programme should Against this backdrop, Minister of Energy, Zeileco Engineering Sdn Bhd, 29 Kulaljohor 40­40.8 13.92 see about 400m Wac of capacity installed. For per­ Pengkalan Bumijaya Sdn Bhd, Green Technology and Water, Datuk Sen Maxi­ & Amled Illumination (M) Sdn Bhd spective,the current total installed solar capac­ ity under the feed­in­tariff programme is only mum Johnity Ongkili, unexpectedly announced EastemPadficGDSolarSdnBhd 185 Muklrn Telok Kalong, Kemaman, 41 9.10 the extension and expansion—by five years and Terengganu 298MWbc,with another 96.7mwdc in the pipeline. RM5 billion respectively—of the Green Technol­ HNG Capital Sdn Bhd 29 Kuala Muda, Kedah 40.00 ­ 40.8 13.92 Also, keep in mind that the 2019/2020 LSS ogy Financing Scheme (GTFS) earlier this month. SelaslhMentariSdnBhd 8 LadangTanahMerah, 41.95 4.03 programme is already underway with a planned The GTFS is a pivotal sweetener for the solar Negerl Sembilan capacity of 460mwac. Bids are due by end July. PV industry. It offers a 2% subsidy on interest costs IL Solar Sdn Bhd 10 Bandar BukitKayuHftam, Kedah 41 4.92 On top of that,the EC has awarded solar capacity for green projects, including renewable energy Tenaga Nasional Bhd 50 Sepang, Seiangor 39.95­43.00 24.00 outside the LSS programme.Quantum Solar Park like solar, which is borne by the government. UITM Property Management Sdn Bhd, 50 Gambang, Pahang 39.95­43.00 24.00 Malaysia Sdn Bhd was awarded 150mw of solar PV Simply, one can think of it as boosting the BJ Power Co Ltd & Perwira Al­Shura capacity on a direct basis.This raised eyebrows as returns on the LSS project by 2%. Consulting Engineers Sdn Bhd one of the indirect shareholders is Umno Supreme This comes on top of the already lucrative Mud^aya Corporation Bhd 49 Sungai Siput, Kuala Kangsar, Perak 39 22.93 Council member, Datuk Sohaimi Shahadan. tariffs of the 21­year LSS concessions. Hence, it Gadlng Kencana Sdn Bhd 30 Bidor, Perak 41 14.76 The tariffs for this project were not revealed is no wonder many companies are clamouring Synergy Generated Sdn Bhd, 30 Bandar Sungai Petani, Kedah 41 14.76 but are said to be substantially higher than the SCOMI Group Berhad & LTAT for a slice of the LSS pie, even if they do not have competitive bidding tariffs. Solar Management (Chembong) Sdn Bhd 50 Pedas,Rembau,Negeri Sembilan 39.95­43.00 24.00 any experience. Including yet­to­be awarded capacity under Quantum Solar Park Malaysia Sdn Bhd 3x50 Melaka, Kedah & Terengannu 50 90.00 TNB only announced six of the winners, and (Itramas Tech + Maltech Pro + Cam­Lite) the 2019/2020 LSS programme, there is about only for projects above 30mwAC. including smaller 1,000mwac of solar PV to be built in the next capacities, the EC has awarded a total of 18 pro­ few years. Ballpark estimates place the total jects under its LSS programme. Many of these eluding project financing and operation of pow­ In turn, these companies become a mini­in­ cost at RM6.3 billion. But more impressive is companies do not appear to have had prior ex­ er plants or electrical installation", this does not dependent power producer (IPP) generating a the revenue it is estimated to generate annu­ perience in solar projects. appear to be a hard requirement. steady income stream over 21 years. ally. Assuming a tariff of 40 sen per kWh, the But that should not be a problem for execution. From a practical viewpoint, potential bidders On average, imwdc of solar capacity in Malay­ budding solar­IPP industry will rake in RM480 In fact, that is half thebeauty of these LSS projects merely need to identify a piece of unproductive sia generates about 1,200mwdc hours per year. million per annum. While the EC's request for proposal clearly land with suitable connection to the grid and Based on a tariff of 40 sen per kWh (the average And the best part is that the government will states bidders should "have previous experience appoint an engineering, procurement and con­ for LSS), Imwac of solar can generate a revenue not have to spend a single sen. The consumers in implementing power or related projects, in­ struction contractor to do the rest of the work. of at least RM480.000 a year. will pay. II