RISING costs are affecting the implementation of solar projects, especially under the fourth cycle of large-scale solar (LSS4) scheme with their very competitive tariff bids.

       Several public-listed companies share their progress and how they are mitigating the unexpected cost increase.

       Solarvest Holdings Bhd, which was awarded three plants in LSS4 with an accumulative capacity of 50 megawatt (MW), says it has obtained financial close for its two plants that are due to achieve commercial operation dates in 2022.

       “The construction progress is good with roughly one-third of the work completed.

       “For the third project that is due in 2023, we have begun engineering and designing work, and are awaiting approval from the authorities for site possession,” its group chief executive officer Davis Chong says.

       The company is primarily in the business of providing engineering, procurement, construction, commissioning (EPCC) services for solar projects.

       It has eight EPCC contracts secured under LSS4. For the four contracts which are due in 2022, good progress is being made and on track to meet the deadlines set, the company adds.

       Uzma Bhd group chief executive officer Kamarul Redzuan Muhamed says while raw material costs have affected project costing, it does not render the oil and gas company’s LSS4 project non-viable.

       Solarvest energy farm Dengkil

       On the other hand, the situation has necessitated it to be more creative in project delivery via utilisation of most recent technology and value engineering exercises.

       Uzma, via Uzma Environergy Sdn Bhd, won the bid for a 50MW solar plant under the fourth LSS cycle.

       He adds that the diversification beyond oil and gas was part of the group’s transformation programme to broaden the source of income.“We have accepted that the return on investment is in direct correlation with risk.

       “The oil and gas business inherently has high risk thus higher returns compared to other segments we are venturing into, including the solar business” Kamarul says.

       For Tan Chong Motor Holdings Bhd, its foray into solar is in line with the group’s sustainability efforts to reduce carbon footprints by harnessing renewable and clean solar energy.

       The automotive group was awarded to develop and operate a 20MW of large scale solar photovoltaic plant on the surface of a lake in Serendah, Selangor – its first large scale solar project.

       Its group CEO Daniel Ho shares that the group is currently in the process of finalising certain details to meet the project target deadlines, which is to be on stream by late 2023.

       Other successful bidders such as Ranhill Utilities Bhd and MK Land Holdings Bhd are also optimistic of getting their plants running by the end 2023.

       MK Land’s LSS 4 project is a 10.95MW plant located in Kerian, Perak. The property developer says it has achieved the financial close for the project and commenced works on site.

       But as a precautionary step, via the Malaysia Photovoltaic Industry Association, and together with a few other LSS 4 winners, it is seeking an extension from the regulator.

       “Due to the current uncertainty especially in the global supply market for solar materials and equipment, we hope that the authorities would agree to allow for some flexibility in the duration to complete the LSS 4 projects accordingly.

       “This will encourage more corporates to support the government’s initiative towards generating more renewable energy going forward,” MK Land adds.

       Moving forward, Samaiden Group Bhd Group managing director Chow Pui Hee expects most of the LSS4 successful project developers to finalise their award of EPCC contracts in the coming months as this is one of the main conditions for them to achieve financial close.

       She says that so far, the company has not seen any cancellation of EPCC contracts.

       However, some projects are facing delay of award or execution of EPCC contracts because the companies have not achieved financial close, she adds.

       According to her, based on panel manufacturers’ expectations, (panel) prices will not soften in the second half of 2022 due to strong demand from countries like China.

       However, she believes that renewable energy projects are “still attractive and will be in high demand” with countries pushing their green agendas.