Malaysia to grant 4-year PPA extensions to bidders in large-scale solar tender

All of the shortlisted projects from the fourth round of Malaysia’s large-scale PV tender will have their power purchase agreements extended from 21 to 25 years, according to the Malaysian authorities.

“The extension gives confidence in the market regulator,” Moritz Sticher, a senior adviser at Berlin-based consulting firm Apricum, told pv magazine. “Without such extension, we would have probably seen a number of stranded assets. That not only hinders reaching Malaysia’s [renewable energy] targets but is also detrimental in attracting investment.”

The Malaysian Energy Commission made the decision in August. Apricum said the decision was a response to concerns about the bankability of projects, due to rising material prices and fears of rising interest rates.

A number of project owners have also asked the Malaysian Energy Commission to review electricity bid prices, but the regulator rejected this, according to local media reports. Prices submitted by projects between 10 MW and 30 MW in size range from MYR 0.1850 ($0.049) /kWh to MYR 0.2481/kWh. For projects with capacities between 30 MW and 50 MW, the bids range from MYR 0.1768/kWh to MYR0.1970/kWh.

The LSS4 program awarded 823.06 MW of capacity across 30 projects. In total, it has awarded 2,457 MW, but only 1,160 MW of that was operational by the second quarter of 2022, according to the report. The next round, LSS5, is expected to start in 2023, with the government currently studying the inclusion of virtual PPAs.

Malaysia currently has 2,165 MW of total installed solar capacity, according to data from Apricum. It aims to add an additional 1,098 MW by 2025, and another 2,414 MW by 2035. The country has raised its renewable energy targets to 31% by 2025, equaling 8.53 GW of total renewable generation capacity, and to 40% by 2025, or 10.94 GW.