Malaysia's solar tenders unfazed by uncertainties

The previous, smaller round attracted over 112 bids.

Despite the uncertain economic and financing environment, Malaysia’s latest solar tenders is expected to do well with the country seeing significant oversubscription in previous auctions, according to a Fitch Solutions’ report.

Malaysia has launched a new round of solar auctions with a targeted capacity of 1GW, its largest to date.

The latest round held in September 2019 had a targeted capacity of 500MW but attracted more than 112 bids for a total of more than 6.7GW of generation capacity. Bid prices went to a record low of 17.77 cents/kWh (USD0.0416), which had fallen lower than the price for gas-fired power.

Further, Malaysia's solar sector is expected to be well poised for more growth. Besides having relatively high irradiation levels in the country, the report noted that Malaysia already has an established solar manufacturing sector, though most solar equipment is exported at present.

“The expanding domestic manufacturing base for renewables components will ensure that there is a reliable and low-cost supply chain for project developers, enabling them to capitalise on falling technology costs. We believe that this will be a key supportive factor to the Malaysian solar industry over the coming years, as greater numbers of manufacturers set up in the country,” Fitch said.

Malaysia is tipped to add a net capacity of about 800MW between end-2019 and 2029. “Whilst we expect some near-term project delays to weigh on growth in 2020 due to the Covid-19 outbreak and ongoing political uncertainties, we have revised our longer term growth forecasts up slightly given the rising traction and investor interests in the sector,” the report stated.