Latest solar farm bids lowest at 17.8 sen

Govt is aiming to increase RE generation to 20% in the next 6 years, says Yeo


THE government has received bids of as low as 17.77 sen per kilowatt-hour (kWh) to generate electricity using solar energy, lower than the rates for gas-powered turbines and the previous solar farm schemes.

Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin (picture) revealed that the bids received for the third large-scale solar (LSS3) scheme, which ended in mid-August, showed significant cost drops.

“We have just completed the LSS3 bidding. Technical evaluation is underway, and the Energy Commission has ranked the price of the projects from the lowest to the highest.

“The first four projects amount to 365MW out of 500MW. The bidding price is lower than the cost of gas generation, which is currently at 23.22 sen. In the future, we will see this trend leading to downward costs for renewable energy (RE).

“Today, we can reach as low as 17.77 sen, a 45% reduction in just a few years,” Yeo said at the PowerGen Energy Summit in Kuala Lumpur (KL) yesterday.

For the LSS scheme, the reference price stood at 32 sen.

The government is aiming to increase RE generation to 20% in the next six years and it will be part of Malaysia Energy Supply Industry 2.0 (MESI 2.0) plan, which will be launched this month, Yeo said.

Technological advances in RE and rising demand have made the access to the technology cheaper, allowing for lower costs in electricity generation.

The government had also introduced a stricter bidding process for LSS3, forcing interested parties to put in competitive bids.

Despite the move to RE, Malaysia’s electricity generation has largely been mixed between gas, coal and RE to ensure power security.

Yeo said the electricity prices in Malaysia, however, are influenced by several factors including global coal and natural gas prices.

“As much as two-thirds of electricity bills are affected by these global prices. This over-dependency on the said prices is not a good thing in the long run, especially if it were to go up beyond anyone’s control.

“When you look at solar energy, it is intermittent. It works during the day but it doesn’t in the evening and at night. That is why the government is looking at generation mixture where solar is used in the morning and gas electricity later in the day,” Yeo said.

It was reported that over 700 companies had participated in the LSS3 tender. Malaysia aims to reach 20% of RE generation by 2025 from the current 2%.

Yeo said for the country to reach 20% in the next six years, it will require RM33 billion in investments.

She said some of the investments will come from the government, public-private partnerships and private financing.

“For this, the Securities Commission has already conducted a six-month study on green financing by forming a task force to provide a report on 21 action items for the facilitation of the RM33 billion investments into RE,” she said.

Yeo said the report and the action items will be implemented accordingly by the government.

“In the meantime, we will continue our current incentive for the Green Technology Financing Scheme, Green Investment Tax Allowance and Green Income Tax Exemption, among others,” she said.