Malaysia’s power utility company Tenaga Nasional Berhad (TNB) has decided to switch strategy in developing its showcase 5MW grid-connected solar photovoltaic (PV) solar farm. Instead of implementing the 12-hectare project in one go as originally planned, TNB Energy Services Sdn Bhd (TNB-ES), a wholly-owned subsidiary of TNB, will now do it in three phases over 18 months – 2MW-2MW-1MW in that order.
The solar farm, which will be the biggest in Malaysia when completed, will be located at TNB’s open cycle 625MW power plant in the administrative capital of Putrajaya. The project is expected to cost between RM60 million and RM70 million.
Malaysian company Berjaya Solar Sdn Bhd had last year announced plans for a 10MW solar farm at its Bukit Tagar landfill, as a precursor to a 50MW plant. If this materialises, it will be the leader. However, it is learnt that the company has decided to start instead with a 100kW pilot project. It is still seeking official support for its 10MW plant. Berjaya Solar’s aim is to profit from the feed-in tariff (FiT) which is at 95 sen/kWh for power from solar installations with a capacity of 1MW up to 10MW. To put this in context, Malaysian household consumers pay about 20–30sen/kWh for their electricity.
Keeping options open
TNB-ES managing director Shahrir Abdul Latiff tells Green Purchasing Asia that his company will keep its options open regarding the FiT. It will not be an easy decision. The new Renewable Energy Act states that direct licencees (in this case, TNB) can own no more than 49% of the renewable energy plant to be eligible for the FiT. The law is aimed at preventing the main power producer from becoming the major beneficiary of the scheme.
“For this project, TNB is using internal funds, but later we may decide to sell off part of the stake to interested parties if we decide to tap into the FiT,” he says.
There’s a reason for spacing out the project over 18 months. TNB-ES may benefit from lower costs should PV prices drop with higher demand. This is, however, not a given, as prices may change with shifting demand patterns.
However, TNB’s focus for now is to set up the solar farm properly. “We want to be a pioneer. This will be the first grid-connected solar farm and our contribution towards realising the government’s initiative to develop more green energy plants.”
Because of the change in game plan, TNB-ES has scrapped its first pre-qualification tender that attracted, according to Shahrir, 21 participants, including the big boys like Sharp, Solar World and SunPower. It is expected to call for fresh tenders for Phase 1 around June. The company has appointed, after an open tender, Angkasa Consultancy Services to prepare the development order while it (at press time) draws up the tender specifications. While it initially planned to use only monocrystalline PV, the revamp now includes the use of polycrystalline for the second 2MW phase, and thin-film, for the final 1MW.
Shahrir says he expects those who took part in the first tender to also bid for this coming round. PV type and plant size aside, TNB-ES is now looking for a turnkey contractor for Phase 1 instead of acting as systems integrator as originally intended. The earthworks tender will however be for the full 12 hectares. “The second two tenders will depend on how the first pans out,” he says.
TNB-ES is not new to solar. The company has set up more than 40 solar hybrid systems – combining solar panels with batteries and diesel generators – around Malaysia (including Sabah) with a total capacity of 3MW, providing electricity to houses and schools in rural areas. Solar hybrids are used when access to the grid is costly. This includes a hybrid system combining two wind turbines of 100kW each, a solar installation producing 200kW, batteries and a generator for the villagers at Pulau Perhentian Kecil, a diving and snorkelling spot in the South China Sea.
With knowledge gained from the 5MW project, TNB has ambitions to tap into regional markets like Thailand, Vietnam and Indonesia. So is the 5MW plant the start of bigger things? “We are keeping our options open,” Shahrir says.