HLB funds RM500m for RE over 4 years

The scheme includes SMEs who are venturing into solar, biogas, small hydropower technology


HONG Leong Bank Bhd (HLB) has committed RM500 million for the financing of renewable energy (RE) over the next four years.

In a statement yesterday, HLB said the scheme includes small and medium enterprises (SMEs) who are venturing into solar, biogas and small hydropower technology.

HLB business and corporate banking MD Yow Kuan Tuck said the move is in tandem with the government’s agenda to increase the RE share to 20% of the country’s power mix by 2025.

“We have identified RE as a commercially viable industry with a significant growth potential, taking into consi-deration that the government has also been actively developing the industry,” he said.

Yow said since HLB started its sustainable financing in RE 15 months ago, the bank has seen significant traction in this sector and expects to exceed the target by June 2020.

“As of August 2019, the bank approved close to RM300 million in financing and the firm is confident that the amount will exceed the RM500 million target by the end of this financial year, two years ahead of schedule,” Yow added.

In August, HLB forecast that increased RE activities had led to renewed interests from Malaysian banks, with financing expected to reach between RM15 billion and RM16 billion in the next few years.

However, it is still a far cry from the Energy, Science, Technology, Environment and Climate Change Ministry’s (MESTECC) expectation. The ministry estimated that RM33 billion of investments is needed in order to achieve the 20% target.

Currently, RE generation only stands at 2%, 10-fold behind from the 2025 target. MESTECC Minister Yeo Bee Yin said the investments would come from the government, public- private partnerships and private financing.

HLB said the firm has approved RM300 million in financing across 20 RE projects of both large corporations and SMEs that generate energy from biogas and solar module.

The financier is expected to start financing small hydropower projects soon.

According to Yow, the current financing ranges at an average of RM10 million to RM15 million per project for non-solar programmes.

“We are very receptive to new technology and we attribute this to our ethos of being digital at the core,” he said.

Solar accounts for about 67% of Malaysia’s RE capacity for now, while biogas and biomass account for the second-largest portion at 28%.

The government has issued three large-scale solar photovoltaic (LSSPV) plants under the country’s power purchase agreement, amounting to about 1,458MW to be the key driver of RE generation.

The first and second LSSPV plants are already ongoing, expecting to produce 958MW of electricity from the end of this year until 2020, while the third cycle of 500MW — worth RM2 billion, is expected to be commissioned by 2021.

The government also mulls to open the bid for LSS4 by next year.

Moving forward, Yow said HLB aims to launch a dedicated financing programme for SMEs which are interested in installing rooftop solar panels.

He added that the bank also provides advisory services to the small energy developer on warranty coverages for equipment, besides assisting them to evaluate the feasibility and generation capacity of their RE projects.

“We not only want to continue to support the large energy players and EPCs (energy performance contracting), but also the smaller players who are interested in generating energy from solar PV either for self-consumption, or under netmetering schemes to encourage and give businesses the ability to go green and make themselves more sustainable,” he added.