Vsolar shifts focus from solar to biogas
PETALING JAYA: Vsolar Group Bhd, which recently aborted plans for a 30MW solar energy plant project, has set its sights on biomass/biogas energy generation instead for shorter paybacks.
Executive director Edward Leung ( pix) said it is not pursuing any solar energy plant projects after mutually terminating its joint venture with Universiti Teknologi Malaysia (UTM) for the development of the 30MW plant.
“We still have the 1MW in Simpang Pulai, that is generating and we are stopping at that and looking at something new, because the financials didn’t make sense; paybacks were too long,” he told reporters at its EGM yesterday.
Leung said the rates given by the Sustainable Energy Development Authority Malaysia (Seda) have been dropping since it first embarked on solar energy generation back in 2013, from RM1.28 per kWh then to about 83 sen per kWh now.
In addition, large scale projects (1MW and above) are now under the purview of the Energy Commission and no longer under Seda. Leung said the rates given by the Energy Commission to successful bidders range from 35 to 43 sen.
“We’ve used those as reference numbers because every year it goes lower. 2017’s rates were anywhere between 33 and 38 sen. At those numbers, the payback was extremely long. The financials did not make sense. The financials made sense when we deployed our first 1MW. Hence we withdrew from solar,” he said.
Leung said the biogas project makes more financial sense although the rates are at 43 sen because energy generation runs for 24 hours compared with solar, which only has effective energy generation of about four hours.
In August last year, Vsolar signed an investment and shareholders’ agreement with KRU Energy Asia Pte Ltd, Rangkaian Iltizam Sdn Bhd and Kenneth Lee Wai Tong for the development of a 10MW biomass/biogas energy generation plant.
Leung said it has submitted its application to Seda and is awaiting approval from the authority. It expects to sign a renewable energy power purchase agreement with Tenaga Nasional Bhd within one month after obtaining Seda’s approval.
He said the project will be implemented in two stages, the first being the physical assets including the equipment to process sorghum. KRU Energy is the intellectual property holder of a planting technology for the sorghum crop.
“Equipment we are getting from overseas and we are getting some special concessions for locally made equipment. The key here is the planting and housing of the sorghum. It is a 90 day crop and we have targeted close to about 1,500 to 2,000 acres to plant,” he said.
He said the project is expected to start contributing to the group’s revenue around end-2019, depending on Seda’s approval.
Yesterday, shareholders approved proposed rights issue, which will raise between RM8.2 million and RM122.1 million, to be used to fund the biomass/ biogas project. Vsolar’s share price closed unchanged at 13.5 sen yesterday with a total of 1.39 million shares traded.