‘Lowest bid for LSS Cycle 3 could drop to sub-30sen per kwh levels’
KUCHING: With the Large Scale Solar (LSS) Cycle 3 now open for bidding, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) opine that the lowest bid could drop to sub-30sen per kilowatt hour (kwh).
According to MIDF Research, Cycle 1 of the LSS (September 2016) saw mean bid of 45.43sen per kwh and lowest bid of 40sen per kwh - this was for the six megawatt (MW) to 29MW range package.
The research arm noted that for the largest, 30MW to 50MW package, the lowest bid was 39sen per kwh (mean bid at 43.77sen per kwh).
“In Cycle 2 (August 2017), largest package scheme was smaller at the 10MW to 30MW range. Lowest bid declined by 15 per cent to 33.98sen per kwh while mean bid dropped 14 per cent to 39.05sen per kwh,” MIDF Research said.
“Taking this as a yardstick to the reduction in cost, we think the lowest bid for Cycle 3 could drop to sub- 30sen per kwh levels while mean bid could drop to 33sen- 34sen per kwh levels.”
It also noted that in the past decade, solar panel prices have dropped by approximately 60 per cent, or an average six per cent per annum.
“However, project cost is also determined by site location and proximity to interconnection points as this will impact infra cost and power loss – renewable energy ( RE) supply agreements are based on electricity output at the interconnection points.”
MIDF Research highlighted that key beneficiaries of the LSS Cycle 3 include Ranhill Holdings Bhd ( Ranhill) which is moving towards greener energy initiatives.
“Though its geothermal plant venture had hit a stumbling block, Ranhill is likely to put in a bid for LSS 3 via joint ventures (JVs) with local land owners.”
The research arm also did not rule out YTL Power International Bhd moving into RE in a bid to revive the group’s domestic power business, which has only seen its Paka plant getting a short-term power purchase agreement ( PPA) extension up till 2021.
“Meanwhile, Tenaga Nasional Bhd (TNB) has abundant balance sheet capacity and having acquired the track record in LSS 1 (Sepang) and LSS 2 ( Bukit Selambau), is likely to make a return in LSS 3, especially given that the maximum capacity bid this time around is much larger at 100MW (versus 30MW and 50MW previously).
“TNB also locks in exposure to smaller scale or residential solar via G- Sparx which is targeting to offer 1500MW of self-generation for solar photovoltaic (PV) investment by 2025.”
“Other potential bidders include Cypark Resources Bhd and Malakoff Corporation Bhd.”