Solar and wind developer Hexa Renewables has signed a memorandum of understanding with UEM Group Berhad and the Itramas Corporation to develop up to 1GW of hybrid solar PV projects in southern Malaysia.
The agreement will see public and private groups work together to deliver the new solar projects. Hexa Renewables is a subsidiary of US infrastructure investment manager I Squared Capital, while UEM is the green investment platform of Khazanah Nasional Berhad, the sovereign wealth fund of the Malaysian government. Itramas, meanwhile, is a Malaysian solar developer with around 100MWp of capacity in its portfolio.
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“I Squared Capital welcomes this agreement between Hexa and UEM-Itramas to develop a large-scale, state-of-the-art solar project to support local demand for clean power,” said Harsh Agrawal, senior partner of I Squared Capital. “We will continue to seek out similar climate focused infrastructure projects to support the global energy transition, including in emerging markets and countries party to the Indo-Pacific Economic Framework, pursuant to our partnership with the US International Development Finance Corporation.”
The project is the first to be launched under the Malaysian National Energy Transition Roadmap, a government programme to radically decarbonise the country’s energy mix by 2050. In 2020, natural gas dominated the Malaysian energy supply, providing 42.4% of power, ahead of crude oil and coal, with renewables providing just 3.9%.
The new roadmap aims to meet 40% of Malaysia’s energy needs with renewables by 2035, and 70% by 2050, and solar power is set to be a core component of this transition. The document highlights four solar projects: the Khazanah Nasional Berhad “integrated renewable energy zone”, a 2.5GW hydro and floating solar project and 100MW solar park, both to be developed by electric utility Tenaga Nasional Berhad, and the construction of 4.5MW of residential solar by Malaysian property firm Sime Darby Property.
Completing these projects will require considerable investment, with the roadmap noting that the Malaysian energy sector will need US$140.9 billion (RM637 million) of investment to meet the 70% renewables target. However, the document did not outline how much of this money would be expected to come from private or public funding, and the government’s approach appears to be the encouragement of investment from a variety of sources.
Indeed, the roadmap itself notes that “historically, the power sector in Malaysia has operated as a vertically integrated monopoly system,” before the privatisation of the power sector to attract foreign investment, and government support for the work of independent power producers to help the country meet its energy needs.
I Squared Capital noted that Hexa and UEM-Itramas will work together on planning, construction, operation and offtake agreements at the project, but did not suggest a timeframe for any of these aspects.
The news follows yesterday’s announcement that UAE renewable developer Masdar plans to build 2GW of new clean energy capacity in Malaysia, as investors from around the world look to develop renewable power in the country.