KUALA LUMPUR (May 31): Sime Darby Plantation Bhd (KL:SIMEPLT), the world's largest palm oil producer by acreage, is sanguine on the outlook of its renewable energy (RE) businesses, especially with the government's liberalisation of electricity supply.

Managing director Mohamad Helmy Othman Basha said that for every megawatt of RE, the group may incur an investment of about RM2.5 million, and this is expected to deliver a return of 8%-13%.

"I give you an example like this, to get one megawatt, the investment is about RM2.5 million. On a project basis, it can give us a return of high single digits of 8% to 9%. It also can be up to 13% return,” he told reporters after the group’s first-quarter results announcement.

Therefore, Mohamad Helmy sees the RE sector providing consistent returns to the group.

“Currently, RE (sector) contributes minimally to our business, but I believe this sector will expand significantly especially after the government announced the liberalisation of electricity supply," he said.

Earlier this month, the group, together with its major shareholder Permodalan Nasional Bhd, revealed plans to collaborate on a 1,000-acre development in the proposed Kerian Integrated Industrial Park (KIGP) to attract green electrical and electronics (E&E) investments.

This site, located within the group’s Tali Ayer Estate in Perak, will feature solar farms owned and operated by Sime Darby Plantation.

Since 2018, Sime Darby Plantation has leased a significant portion of its land for solar farms under the government's large-scale solar (LSS) schemes. Around 40% of the total quota awarded for solar farms under LSS4 was on the group's land, according to Mohamad Helmy.

Meanwhile, 38% of the quota produced under the Corporate Green Power Programme (CGPP) was also on their land, with some for the group’s own use, he added.