FURTHER iteration of the large scale solar (LSS) programme should be underway with the Government targeting to reach 20% of renewable energy (RE) use in Malaysia by 2025 from the current 2% level.
This is given out of the total new energy required to reach the 20% target, most (ie 58%) are expected to come via solar projects, according to Kenanga Research.
“We may also see increased participation in other government-driven renewable energy programmes such as Net Energy Metering (NEM), New Enhanced Dispatch Arrangement (NEDA) and Green Tax Allowance/Incentives,” projected analyst Steven Chan in a thematic report on RE.
“Furthermore, in terms of costs, the awarded prices for LSS4 also confirm the down-trend of solar energy prices over the years.”
Last Friday, the Energy Commission released the list of 30 shortlisted bidders for the Large Scale Solar @ MEnTARI (LSS4) project with prices ranging from 17.68 sen/kWh to 24.81 sen/kWh for a total awarded capacity of 823.06MW out of the 1GW offered.
This was selected and filtered down from a total of 138 bids submitted last year. They include nine shortlisted Bursa Malaysia-listed companies, namely:
- Advancecon Holdings Bhd (26MW)
- Solarvest Holdings Bhd (three bids totalling 50MW)
- MK Land Holdings Bhd (10.95MW)
- Tan Chong Motor Holdings Bhd (20MW) (via a consortium)
- JAKS Resources Bhd (50MW)
- Kpower Bhd (50MW) (95%-stake partnership with Pahang State Government)
- Gopeng Bhd (50MW)
- Tenaga Nasional Bhd (50MW)
- Uzma Bhd (50MW)
The LSS4 programme has a minimum duration of 21 years with commercial operations scheduled to begin in 2022/2023.
Elaborating further on costing matter, Kenanga Research noted that the lowest bid for LSS2 way back in early 2019 was at 33.98 sen/kWh while the lowest bid for LSS3 last year was 17.78 sen/kWh (versus the lowest bid for LSS4 at 13.99 sen/kWh).
“This is somewhat an encouraging sign as the cheaper costs would enhance the commercial attractiveness of solar as an alternative energy source for coal and fossil fuels,” the research house pointed out.
Apart from the LSS4 successful bidders, Kenanga Research reckoned that engineering, procurement, construction and commissioning (EPCC) providers such as Solarvest and Samaiden Group Bhd could be the main beneficiaries of the LSS4 programme.
“From what we gathered, Solarvest is confident that it would secure 200-300MW capacity of EPCC jobs from LSS4 alone which would immensely boost its current order-book of RM197 mil,” shared Kenanga Research.
“As for Samaiden, we reckon that the group would be able to secure at least 100MW of EPCC jobs from LSS4, thus boosting its current order-book of RM185 mil.”
Nevertheless, the research house expects these companies to fetch low-teens EPCC margins from LSS4. “Additionally, we gathered that construction names (eg Sunway Construction Group Bhd) may also be in the running to secure EPCC jobs from LSS4,” added Kenanga Research. – March 15, 2021
