Malaysian authorities have revealed that the country plans to extend the term of the power purchase agreement for the fourth large-scale photovoltaic project tender (LSS4) from 21 years to 25 years.
Malaysian authorities have said that the term of power purchase agreements for all shortlisted projects in the country's fourth major PV tender round will be extended from 21 to 25 years.
Moritz Sticher, a senior consultant at Berlin-based German consultancy Apricum, told PV magazine: "The extension boosts the confidence of market regulators. Without the extension, we could see a large number of assets stranded. This will not only prevent Malaysia from meeting its (renewable energy) targets, but also from attracting investment."
The decision was taken by the Malaysian Energy Commission in August, and Apricum said the decision was a response to concerns that rising material prices and higher interest rates were affecting the financeability of projects.
According to local media reports, many project owners have also asked the Malaysian Energy Commission to review the price of electricity bids, but have been refused. Bids for projects between 10 MW and 30 MW range from 0.1850 Malaysian Ringgit (US$0.049) per kWh to 0.2481 Ringgit per kWh. For projects with capacities between 30 MW and 50 MW, bids ranged from RM0.1768/kWh to RM0.1970/kWh.
The LSS4 tender programme awarded 823.06 MW of generation capacity to 30 projects. The report said that a total of 2,457 MW of capacity was awarded under the tender exercise, but only 1,160 MW of this had been commissioned by the second quarter of 2022. The next round of tenders, known as LSS5, is expected to be launched in 2023 and the government is currently looking at including virtual power purchase agreements.
According to Apricum, Malaysia currently has a total installed solar capacity of 2,165 MW. Malaysia has increased its renewable energy target to 31% by 2025 (equivalent to 8.53 GW of total renewable energy generation) and plans to adopt 40% of renewable electricity (10.94 GW) by 2035.