KUALA LUMPUR (Aug 27): Kawan Renergy Bhd (KL:KENERGY) has secured feed-in tariff (FiT) approval to develop a 2.5MW biomass power plant in Tasek, north of Ipoh, Perak.

The FiT approval was awarded to the group’s wholly- owned Magenko Renewables (Ipoh) Sdn Bhd under the 2026 FiT system administered by the Sustainable Energy Development Authority Malaysia (SEDA).

The project will have an expected net export capacity of 2MW once commissioned. The FiT is scheduled to commence on Aug 17, 2029 and be in effect for 21 years, the group said in a Bursa Malaysia filing on Thursday.

The basic FiT rate is 38 sen per kilowatt-hour (kWh) for the first 10 years, before dropping to 28.8 sen per kWh for the remaining period.

The project will be financed through proceeds from the group’s initial public offering (IPO) and bank financing.

Kawan Renergy raised RM33 million from issuing 110 million new shares at 33 sen each during its IPO in May 2024. It planned to use 15.1% of the proceeds for a new biomass power plant and to improve production output at its landfill biogas power plant in Bercham, Perak. Another 45.5% was allocated for working capital requirements for ongoing and future co-generation plant projects, while 30.3% was earmarked for the repayment of bank borrowings and listing expenses.

Kawan Renergy expects the project to contribute positively to the group’s performance throughout the 21-year FiT period.

Kawan Renergy shares closed unchanged at 38 sen on Thursday, giving the group a market capitalisation of RM206.32 million. The counter has fallen over 44% year-to-date.