YOG INFRA Q4 2023 insight series
MALAYSIA saw good activity in terms of infrastructure and PPPs in Q42023. New projects are under development in energy transition, WASH and transport sector. Besides solar projets, we also see international investments into sectors such as green hydrogen, green ammonia, hydro electric plants etc. Recent annoucement by the Transport Ministry to use PPP modality to upgrade & develop airports is also encouraging.
Read the key developments in Infrastructure and PPPs in Malaysia in our latest insight series.
MALAYSIAN BUSINESS GROUP MALAKOFF TO DEVELOP 500 MW SOLAR
Malaysia-based Malakoff will invest MYR 2.5 Bn (USD 529.4 Mn) to develop 500 MW of solar projects over the next 5 years. The company signed a memorandum of understanding with the MMC Group of Companies to jointly explore multiple green energy initiatives - including solar power, shore-to-ship power supply and installation of electric vehicle infrastructure. These will require a total investment of MYR 350 Mn (USD 75.3 Mn).
Under this partnership, Malakoff will become a solar power producer, and MMC Ports will serve as a corporate consumer within the Corporate Green Power Programme (CGPP). This collaboration also facilitates MMC Ports’ entry into Renewable Energy (RE) through a virtual acquisition of solar power, with the goal of developing 500 MW of solar projects within the Albukhary Group of Companies.
MASDAR TO DEVELOP 10 GW OF RENEWABLE ENERGY IN MALAYSIA
Abu Dhabi Future Energy Company PJSC – Masdar, the UAE’s clean energy powerhouse, has signed a Memorandum of Understanding (MoU) with the Malaysian Investment Development Authority (MIDA) to invest USD 8 Bn for up to 10 GW of renewable energy projects in a strategic partnership that will significantly contribute to Malaysia's sustainable energy transformation.
The collaboration marks an important milestone in the pursuit of a sustainable and greener future for Malaysia. MIDA will facilitate Masdar to develop up to 10 GW of renewable energy projects by 2035, to include ground mounted, rooftop and floating solar power plants, onshore wind farms and battery energy storage systems.
SHANGHAI ELECTRIC TO DEVELOP A WTE PLANT IN MALAYSIA
China-based Shanghai Electric Group Company Limited will develop a waste-to-energy (WtE) plant in Selangor state, Malaysia. The plant can dispose of about 2,900 tons of solid waste per day and generate about 52 MW of electricity and is scheduled to start operations in 2026, enabling waste disposal while ensuring that new land will not have to be used for additional landfills.
The project is owned by Worldwide Holdings. The project would have a positive impact on the local economy, creating 900 jobs during the construction phase and 250 jobs in operation. The project will help the state dispose of waste in a safe manner using the latest technology.
TRANSPORT MINISTRY TO ADOPT PUBLIC-PRIVATE PARTNERSHIP TO UPGRADE LESS BUSY AIRPORTS
The Transport Ministry will adopt the public-private partnership (PPP) model to upgrade airports in the country that are considered less competitive, as per latest stakeholder consultations with Malaysia Airports Holdings Berhad (MAHB), the largest airport operator in the country. It will potentially work to explore the joint venture method, considering the country's financial constraints.
IWK TO GENERATE SOLAR ENERGY AT SEWAGE TREATMENT PLANTS IN MALAYSIA
Indah Water Konsortium (IWK) has adopted solar initiatives for renewable energy (RE) generation at its sewage treatment sites in Malaysia under the Self-Consumption (SelCo) model. This is in line with the National Energy Transition Roadmap (NETR) to reduce carbon emissions by 2040. Under Phase 1, 396 of the IWK’s sewerage treatment plants (STP) have been identified as feasible and commercially viable for the installation of solar photovoltaics (PVs). Further, the company signed RM 84 Mn (USD 18.07 Mn) worth of RE Power Purchase Agreements (PPAs) with four proponents. Upon implementation, IWK will be able to generate 22,781 MWh of solar energy annually, leading to total savings on electricity of RM 1.9 Mn (USD 0.4 Mn) by 2026.
Meanwhile, for Phase 2 another 583 sites are undergoing a detailed evaluation, which will generate 21,500 MWh of solar energy annually, leading to total savings on electricity of RM 1.8 Mn (USD 0.4 Mn) by 2027. IWK aims to reduce 34.4 ktCO2e of carbon emissions by 2027 with this initiative.
MOU SIGNED TO PROMOTE GREEN TECHNOLOGY FINANCING IN MALAYSIA
Kinergy Advancement Bhd (KAB) has signed a memorandum of understanding (MoU) with Alliance Bank Malaysia Bhd (ABMB) to promote green technology financing and clean energy initiatives in Malaysia. The initial term of the MoU is 2 years, with an extension through mutual written consent. Under the agreement, KAB will provide sustainable energy engineering services which will include specialized engineering consultancy for ABMB, participation in green project financing discussions, and support for ABMB’s initiatives in sustainable energy solutions (SES), ESG, and sustainable development. Meanwhile, ABMB will provide preferential financial solutions to KAB’s SES projects, facilitate strategic connections, and serve as a banking institution for green project financing.
The MoU is in line with a collaboration between KAB, ABMB, and Mah Sing Group Bhd, and targets areas, including sustainable, green, and clean energy projects, technology innovation, green financing, and sustainable development through Environmental, Social, and Governance (ESG).
CHINESE DEVELOPER PLANS MALAYSIAN DATA CENTRE
Chinese data centre operator Beijing Sinnet Technology will partner with its controlling shareholder — Zhoushan Baihuida Venture Capital Company — to develop a project in Malaysia's Johor state. The two will initially invest a combined USD 105 Mn in the first phase of the project, which will have 2,500 racks and deliver 15 MW. The entire facility, with a capacity of 45 MW, is planned to be built on a 14.4-acre land parcel.
Sinnet will use CNY 376 Mn (USD 53 Mn) for the first phase from its cash resources, with the remainder to come from domestic and international bank loans and other financing options. Construction is scheduled to start in June 2024 and will take about 2 years. The data centre will serve Chinese and Southeast Asian companies, with an estimated annual revenue from the first phase estimated at USD 34 Mn and net income at USD 9.2 Mn. Sinnet expects an internal rate of return of about 14%.
GAMUDA TO DEVELOP USD 839 MN HYDROELECTRIC PLANT IN SABAH
Malaysian infrastructure company Gamuda will develop a 187.5 MW hydroelectric plant in Tenom, Sabah, through a private finance initiative. The total cost of the Upper Padas Hydroelectric Power Plant is estimated to be MYR 4 Bn (USD 839.31 Mn), including interest during construction. Gamuda has signed a joint venture (JV) agreement with Sabah Energy (SEC) and Kerjaya Kagum Hitech JV (KKHJV), to develop the project.
The group will hold a 45% stake in the JV company, while Sabah Energy will own 40% with KKHJV holding the remainder. As part of the JV deal, a power purchase agreement (PPA) will be finalised between the JV company and the offtaker, Sabah state government-linked SEC. Subject to the PPA being signed, construction of the project will begin in the first half of 2024 and take approximately 5 years to complete.
RESULTS ANNOUNCED FOR CORPORATE GREEN POWER PROGRAMME
Under the Corporate Green Power Programme, Malaysia’s Energy Commission (EC) has allocated solar project to the following companies in November and December 2023, namely:
NEFIN, a Hong Kong-headquartered independent power producer, will build a 45 MW (at peak capacity) solar farm, costing around MYR 130 Mn (USD 27.6 Mn). The 29.99 MW ac capacity project, located in Teluk Intan, Perak, is scheduled to start construction in 2024. It expects to produce 60,750 MWh of clean energy, with potential to offset 47,385 tons of CO2 emissions annually.
German solar developer ib vogt to develop a 29.99 MW ac-capacity solar project under the CGPP, through a PPA with Samsung SDI Energy Malaysia. The is expected to cost USD 35 Mn, for which DIF-backed ib vogt and Malaysian project partner Coara Solar have been seeking over 70 % in debt financing.
Samaiden Group Bhd's wholly owned Samaiden Sdn Bhd has been awarded an individual export capacity of 13.42 megawatts (MWac).
ENEOS AND SUMITOMO TO PRODUCE GREEN HYDROGEN IN MALAYSIA
Japanese oil refiner ENEOS, trading house Sumitomo Corp. and Malaysia’s SEDC Energy have agreed to produce green hydrogen in the Malaysian state of Sarawak for exports to Japan. The companies are planning to create a supply chain in which they aim to produce 90,000 tons of green hydrogen annually by 2030, using the electricity from hydroelectric power plants in Sarawak, for shipments to Japan via marine transport.
The Malaysian state boasts rich hydropower resources capable of generating a combined 3.5 GW capacity. SEDC Energy is a wholly-owned subsidiary of Sarawak Economic Development Corporation.
List of key transactions - Malaysia Q4 2023
Source: Inframation, YOG INFRA analysis
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