Malaysia eyes pandemic recovery with 1GW new solar tender

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Malaysia has been singled out as a 'promising' Asia-Pacific solar market despite high solar LCOEs, which some have linked to strict grid rules. Image credit: Paweł Szymankiewicz / Unsplash

Malaysia has turned to large-scale solar as an engine of the post-COVID comeback, targeting smaller and local ventures with its largest tender to date.

In recent days, the country’s Ministry of Energy and Natural Resources announced the fourth round of its large-scale solar (LSS) programme, designed to offer 1GWac worth of tender contracts and help reactivate Malaysia’s economy in the wake of the global pandemic.

In a statement, the Ministry said the overall capacity pot will be split into two 500MWac baskets, respectively earmarked for projects in the 10-30MWac and 30-50MWac ranges. The downsizing – LSS round three was open to 1-100MWac projects – is hoped to attract more local players.

The Ministry explicitly linked the fourth solar round with the broader COVID-19 recovery efforts. According to its estimates, the 1GWac tender is expected to unlock 4 billion Malaysian ringgit (US$927 million) in investment and create 12,000 new jobs.

To ensure these benefits kick in as early as possible, the Ministry has opted to halve bidding timetables from six to three months. The government’s plan is for project development to begin before the end of 2020, to ensure solar plants can start operating three years later.

The fourth round’s 1GWac size towers over that of LSS round one (250MWac), two (563MWac) and three (500MWac). The Ministry – which shortlisted LSS 3 bids of around US$42/MWh – said it feels “confident” that competitive tariffs will too emerge through the LSS 4 exercise.

Local touch for ‘promising’ market with upstream PV scene

Malaysia’s latest solar push emerges as the country draws praise for its handling of the COVID-19 pandemic. At the time of writing, the Southeast Asian nation was listed as having reported 7,800-plus virus cases and 115 related fatalities.

The country is now hoping its largest solar tender to date will help speed up the return to economic growth, the Ministry said, adding: “[The tender] also aims to accelerate the development of the country’s electricity supply industry, especially the renewable energy industry.”

If LSS 4 is targeting smaller projects, the tender is also setting its sights on local players. According to the Ministry, only “100% locally owned or incorporated” firms – or 75% for those listed on Bursa Malaysia – will be able to bid, to ensure the boost to the country’s economy is “immediate”.

Malaysia, the host of Solar Media’s PV ModuleTech conferences in past years, has recorded steady installed PV capacity raises between 2016 (279MW), 2017 (370MW), 2018 (536MW) and 2019 (882MW), according to the International Renewable Energy Agency (IRENA).

Consultants have singled out the country as a promising solar market, given its mix of high irradiation, government tenders and established manufacturing sector. At US$88.6/MWh, solar LCOEs are thought to be the third highest in Asia-Pacific, surpassed only by Japan’s and Indonesia’s.

Speaking to PV Tech in January, EPC contractor ERS Energy – the builder of some of the country’s top solar projects – heaped praise on the LSS programme. “We have to give credit to the government and [major utility] TNB for designing a very bankable PPA,” said founder Jonathan Kan.

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