Tenders for large-scale solar projects in Malaysia - an overview


Although Malaysia is not one of the „typical” photovoltaic countries, some interesting new developments are visible also here. The government strives to increase the share of renewable energies in the country‘s energy mix. In this context, the Large Scale Solar programme will play a major role in the future. Together with tax incentives designed to promote green technology, the Large Scale Solar programme is an interesting alternative to the „long established” renewable energy markets.


PV in Malaysia

Renewable energy sources are not your first thought when you think of the Malaysian energy mix. The country is still known for offshore oil and gas production. On the one hand, however, the fossil fuel reserves will be exhausted in a few decades, and on the other hand, the country is looking for alternatives to oil and gas in view of its developing economy and growing population. Photovoltaics, which is still rarely used in Malaysia, has increasingly become the focus of attention in this context.

In geographical terms, Malaysia offers favourable framework conditions for the installation of PV systems.


 Quelle: World Bank Group, Solargis, http://globalsolaratlas.info



Malaysia is also one of the most popular industrial locations in Southeast Asia. In solar cell production, the country is even the third largest manufacturer of solar cells after China and Taiwan.


Large Scale Solar (LSS)

In addition to the existing incentive systems – Enhanced Net Energy Metering, Self Consumption and Feed-in-Tariff (the latter no longer available for photovoltaics) – Malaysia has also launched an LSS programme. The aim of this programme is to enable the development of large-scale solar power plants (1 up to 30 MW). The programme is implemented by the Malaysian Energy Commission Suruhanjaya Tenaga (ST) in cooperation with the Western Malaysian electricity utility Tenaga Nasional. In 2019, the third round of the LSS project, also called „LSS 3”, was launched. The Malaysian Energy Minister Yeo Bee Yin stated that the LSS procedures would be instrumental in increasing the share of renewable energies in Malaysia from currently about 2% to 20% by 2025. The current LSS 3 round has a total volume of 500 MW. The energy prices (RM/kWh) offered in the previous rounds (LSS 1 and 2) ranged from RM 0.34 to RM 0.53.


Project Award Procedure

In order to successfully participate in the LSS bidding process, an applicant must first submit a technical qualification application. This must be submitted in response to the Request for Qualification published by ST. The applicant must use this document to describe the technical and financial qualification of his/her company for the implementation of the relevant LSS project.


For foreign applicants, it should be noted that an application must be submitted by a company incorporated in Malaysia in which a Malaysian shareholder holds at least 51% of the shares or by a consortium in which at least one Malaysian company holds [at least] 51% of the shares.


In the second step (reply to the request for Proposal), the project and also the bidder (i.e. the Malaysian company or the consortium) must be described in detail. Furthermore, a so-called Power System Study (PSS) is required. The PSS contains additional technical information about the project itself, but also a technical assessment of the following issues: capacity of the required grid connection point and impact of the project on the electricity grid or the analysis of the voltage behaviour in various scenarios.


The bidder offering the best combination of costs of energy and the technical / financial qualification is then awarded the contract. The actual electricity price is then determined using the principle of a reverse auction. Based on these criteria, a short list of successful bidders is prepared.


The applicant whose bid is selected as the winning bid will then sign a Power Purchase Agreement with the relevant utility. The subsequent project stages can be described as follows:

  • Financial Closing
  • Initial Operation Date; and
  • Commercial Operation Date.

As regards the financing of projects, the project developer may, of course, use its own financial resources or, under certain circumstances, seek financing from local banks in combination with the Green Technology Financing Scheme (GTFS). The disadvantage of this programme is the equity requirement (20%) and the capping of the financed volume at RM 100 million.


In connection with green technology projects (such as PV), it should be also noted that in certain circumstances the project developer can benefit from tax incentives.


Opportunities for Companies

Opportunities for entering the market that arise from the LSS programme are manifold for companies.
In addition to project development itself, a whole range of services should also be considered: project
management, financing or engineering services. LSS offers also good opportunities in the area of production of solar cells locally in Malaysia.


Closing Remarks

In summary, it can be said that the PV industry in Malaysia is still in its infancy. But precisely this is what creates an opportunity for companies that already have the relevant experience in the PV business. Especially the LSS programme offers well-prepared investors or project developers attractive alternatives to markets that are already well-established or saturated.




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