Scatec Solar has entered the Malaysian solar energy market by joining forces with a local ItraMAS-led consortium that has signed three 21-year Power Purchase Agreements (PPAs) with Tenaga Nasional Berhad (TNB).
The partnership covers three solar projects totaling nearly 200MW and involves a total investment of close to USD 300 million. Located in Merchang in the north, Jasin in the south and Gurun in the west of Peninsular Malaysia, the three photovoltaic solar parks cover more than 200 acres each.
Scatec Solar expects to invest about USD 60 million through preference shares partly convertible to a 49% equity ownership in the projects. The investment expects to provide long term stable cash flows and to meet Scatec Solar's investment hurdle rates. The agreement with the Malaysian consortium includes Scatec Solar acting in undertaking the turnkey EPC for the projects.
"This is a landmark opportunity to bring our wide-ranging expertise to realize the largest solar energy portfolio in South East Asia. For Scatec Solar and our partners, this is a stepping stone to enter one of the most dynamic and fast growing regions of the world.'' said Raymond Carlsen, CEO of Scatec Solar.
ItraMAS is the lead sponsor of the three solar projects and signed the PPA on behalf of the local consortium that includes two other Malaysian companies, Maltech and Cam Lite. CIMB has been appointed to arrange the non-recourse project debt financing for the three projects. All development, financing and project implementation preparatory activities are currently underway to reach timely financial close with the construction expected to begin immediately thereafter.
Welcoming the co-development of the projects by Scatec Solar, Choo Boo Lee, CEO of ItraMAS said, "This is a significant achievement for Malaysia and the solar industry in the region as these projects will help develop local supply chains and uplift local communities.''
The three solar projects are expected to generate 285,000MWh of electricity per year. The clean solar electricity will avoid 210,000 tons of carbon emissions per year, taking Malaysia closer to achieving its promised emission cuts under the Paris Climate Agreement.