Malaysia: Tenaga Nasional to build solar panel plant

Malaysia: Tenaga Nasional to build solar panel plant

Tenaga Nasional, Malaysia's largest power utility company, will produce a 50
megawatt large-scale solar photovoltaic plant in the southwest of the
capital Kuala Lumpur as part of its 10-year plan to focus on renewable
energy.

Tenaga Nasional announced Wednesday that it received the greenlight a week
ago from the country's Energy Commission to build the plant in Mukim Tanjung
Duabelas within the district of Kuala Langat, which it won in a competitive
bid. Tenaga Nasional still has to satisfy certain obligations, including
completion of negotiations and execution of project documents before being
getting final approval from the commission.

"The move is part of the mid-term plan to increase the country's renewable
energy capacity to 2,080MW by 2020 from about 300MW--350MW now," MIDF
Research analyst Hafriz Hesry said. He added that coal and gas are still
expected to account for the majority, over 80% of total generation in the
foreseeable future, because it is still cheaper and a reliable source of
electricity.

This announcement followed another similar plant to be built by a consortium
consisting of MMC Corporation-linked Malakoff Corporation and a DRB-Hicom
unit called DRB-Hicom Environmental Services in the northern state of Perak.
The equity stakeholding is 51: 49 between MMC and DHES respectively.

The plant, built across 0.81 square kilometers (or 200 acres), is slated to
be operational on July 1, 2018 for a 21-year term under the stated power
purchase agreement. Both companies are linked to Syed Mokhtar Al-Bukhary,
one of the Malaysia's richest businessmen.

Tenaga's shift to produce renewable energy is part of its 10-year plan
unveiled mid-December during its annual general meeting. It revealed that it
wants to focus on renewable energy solutions like the development of smart
grids. The company detailed that it is awaiting the outcome of its bid due
in January 2017 for the development of a 200MW large-scale solar
photovoltaic plant in Sabah and Labuan, Borneo Malaysia.

Its long-term plan includes global expansion, with the aim of becoming "one
of the world's top 10 utilities by market capitalization by 2025." Tenaga
Nasional is setting its sight on Southeast Asia, South Asia and the Middle
East and wants international investments to account for 20% of its earnings
by 2025 which will amount to 20 billion ringgit ($4.47 billion), according
to Chief Executive Officer Azman Mohd in a statement. The firm already has a
30% stake in GAMA Enerji in Turkey and a 30% stake in GMR Energy in India.

Hafriz said: "From a strategic standpoint, Tenaga may be able to export the
expertise it is developing in renewable energy to the emerging markets that
it intends or has expanded into like India, or vice versa, since Tenaga is
turning to overseas markets for growth."

In his earlier note following the announcement of TNB's expansion plans, he
called Tenaga's move abroad for further growth "timely" given plateauing
growth in Malaysia at just 2%-3% per annum. He also named better returns
from overseas generation projects, its underutilized balance sheet and low
gearing as paving the way for new investments.

Other analysts note that the impact to Tenaga Nasional's earnings will be
minimal, and that it is more a result of the Malaysian government's decision
to develop renewable energy generation.

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Link to Original Article:
http://asia.nikkei.com/Business/Companies/Tenaga-Nasional-to-build-solar-pan
el-plant

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com