KUALA LUMPUR (Sept 8): Malaysia’s solar photovoltaic (PV) plant projects under the large scale solar (LSS) scheme returned to recording progress in the second quarter of 2023 (2Q2023), after a stagnant period due to contract revisions amid panel price shocks last year.

According to an update on the Energy Commission’s (EC) website, LSS progress rose to 57.7% at end-June 2023, from 56% reported in end-Sept 2022, with progress upticks in Penang, Perak and Kelantan totalling 50.99MW.

Prior to that, no new project was operational in the preceding six months in 4Q2022 and 1Q2023.

As at end-June 2023, 1,411.41MW of capacity awarded under the scheme is operational, up from 1,360.42MW at end-Sept 2022.  There remains 1,033.96MW of capacity in progress, the data showed.

In Kelantan, operational capacity rose from nil to 30MW, representing one-third of the total awarded capacity of 90MW in the state.

Idiwan Solar Sdn Bhd achieved commercial operations of its 30MW LSS plant in Machang, Kelantan, on April 5 this year.

Idiwan is an acquisition target of Practice Note 17 outfit Pimpinan Ehsan Bhd, which is en route for a reverse takeover by reNIKOLA Holdings Sdn Bhd — a renewable energy company that is 45%-owned by Thailand’s B Grimm Power.

Penang saw operational capacity increase by 10MW, with overall completion in the state at 31MW or 32.3% of the 96MW in total awarded capacity, from 21.9% previously.

In Perak, the operational capacity rose by 10.99MW. That represented just 2% of total awarded capacity of 542.18MW, where 249.87MW is operational.  

Previously, between 3Q2022 and 2Q2022, there was a 2MW drop in awarded capacity in Sabah to 111.9MW from 113.9MW.

Last year, a number of winners in the fourth round of LSS (LSS4) faced project viability issues after a 30% to 50% jump in solar panel prices compared with prices when they first submitted their bids in 2020.

LSS4, which was awarded in March 2021 based on a reverse bidding exercise, saw winning tariff bids as low as 17.68 sen/kWh to 24.81 sen/kWh.

In turn, the EC provided the companies a lifeline by extending their power purchase agreements (PPAs) by four years to 25 years. Commercial operation deadline was also extended to Dec 31 this year.

However, a number of these companies continued to face difficulty in achieving financial close, due to the longer time period required to recoup returns and rising interest rates environment.  

Prices of solar panels and its raw material polysilicon has since come off its peak to return to pre-pandemic levels, but saw a slight rebound in recent months — although industry analysts maintained that oversupply of solar panels will continue to be the prevailing theme in the market.

With no new LSS awards in 2022 and 2023, the EC this year opted for the corporate green power programme, which allows solar power producers to negotiate tariffs directly with offtaker with a maximum capacity of 30MW per project.

The article has been updated to include 50MW of awarded capacity in Perlis, previously omitted in the official data for 2Q2023.