Cress scheme gains traction
THE Corporate Renewable Energy Supply (Cress) scheme launched in September last year offered corporates direct access to clean energy but uptake was slow.
The scheme’s financial viability, driven largely by high system access charges (SAC), kept many developers and corporates in a “wait-and-see” mode.
Recent revisions to the SAC and early notable deals, however, suggest momentum may be building for the scheme.
A case in point is Gamuda Bhd, which in August signed two renewable energy (RE) collaboration agreements under the scheme.
The first is with Petroliam Nasional BHd (PETRONAS)-owned Gentari Sdn Bhd to develop 1.5GW of solar photovoltaic (PV) power plants with battery energy storage systems (Bess).
The second is with SD Guthrie Bhd on a similar 1.2GW solar and storage collaboration, targeting the plantation group’s idle landbank. Analysts say securing “quality offtakers” is key.
Among the first projects under Cress was UEM Lestra Bhd’s 1GW hybrid solar plant in Segamat, Johor, which was announced early this year.
Cress aims to promote the adoption of green energy among corporate users by enabling them to supply or purchase electricity via open access to the national grid.
Under the scheme, RE developers pay a SAC to use the grid – a fee that became a stumbling block in its early rollout.
According to industry watchers, many developers had found it difficult to structure financially viable deals under the original SAC pricing.
“There was strong interest, but most players took a wait-and-see approach,” says Pekat Group Bhd managing director Chin Soo Mau.
“There were concerns regarding financial viability of the programme because it is angled as premium green electricity, and risks associated with long-term contracts with the offtaker.
“The SAC added to the financial complexities of structuring a long-term package between the corporate off taker and green energy producer,” Chin tells StarBiz 7.
Initially, the SAC was set at 25 sen per kilowatt-hour (kWh) for firm supply – which refers to energy that is consistently available with the help of battery storage – and 45 sen/kWh for non-firm supply.
These charges were recently revised to 20 sen/kWh and 40 sen/kWh, respectively, and will be fixed for a period of three years for both types of energy output.
While Pekat, a specialist in solar engineering, procurement, construction, and commissioning (EPCC) and manufacturer of switchgears for PV systems, has yet to close a Cress deal, Chin remains optimistic about the scheme’s prospects given the recent SAC revisions.
“The adjustments improve financial viability and could encourage more players to commit,” he says.
According to him, firm supply is now looking more viable, adding that the three-year SAC lock-in provides some pricing predictability even if grid costs rise in future.
“The main challenge is securing long-dated corporate offtake with bankable power purchase agreements (PPAs) that satisfy all parties.”
Coming to Pekat, Chin expects the scheme to form a substantial part of the company’s project pipeline by 2026-27.
Another notable EPCC player, Sunview Group Bhd, is also actively exploring opportunities under the Cress – as a developer, contractor and through partnerships.
Chief executive officer Ong Hang Ping says the company’s approach is to target anchor offtakers first and then structure projects around their commercial and bankability needs.
“We are in discussions with several clients on potential implementations. Our 2026-2027 pipeline is projected to include up to 500MW of Cress-related projects, spanning both EPCC contracts and role as a project owner, to be rolled out in phases,” Ong tells StarBiz 7.
Sunview aims to own and operate solar farms, while expanding into Bess and bioenergy space.
The company was recently shortlisted – via a 51:49 consortium with Cypark Resources Bhd –to develop a 99.99MW solar PV plant in Port Dickson under the large-scale solar 5+ (LSS5+) programme. Ong says Cress is a departure from the quota-based bidding under the LSS model.
“There is no fixed cap on total capacity or the number of participants in the guidelines. Instead, the scheme operates on an open-access basis, where projects are matched with corporate offtakers through the grid, subject to technical feasibility and demand declaration.”
He says the recent reduction in the SAC is positive, making Cress more competitive versus buying green energy from the utility.
“However, module prices and other balance-of-system costs have shown upward pressure in parts of 2025, which can offset some of the SAC gain.
“While the SAC cut helps, developers still need to actively manage procurement timing, supply-chain risk and financing costs to preserve project internal rate of returns (IRRs),” Ong adds.
Going back to Gamuda’s Cress-related projects, it expects them to achieve higher IRRs than typical LSS schemes, which have historically yielded returns of around 7% to 8%.
Some analysts, however, believe returns for LSS5 and LSS5+ may be slightly lower due to aggressive tariff bids and the increase in solar module prices since the tender submissions.
Ong notes growing corporate demand for “traceable” renewable energy backed by tracking mechanisms such as renewable energy certificates (RECs).
“Large energy users, especially those with environmental, social, and governance reporting requirements, are increasingly seeking direct green energy procurement, and Cress gives us a regulated pathway to serve that demand through the grid.
“The recent reduction in SAC has also made certain firm-supply projects commercially workable, particularly when paired with long-term offtakers or storage solutions.
“On top of that, the programme allows us to unlock sites and partnerships with landowners and corporate portfolios that would not qualify under auction-based LSS programmes,” Ong explains.
Even so, there are barriers to manage. With the SAC reviewed every three years, long-tenure IRR assumptions will be harder to lock in. Financing is another hurdle as lenders are still getting comfortable with Cress-style agreements versus conventional LSS PPAs, he adds.
Industry watchers expect early adoption to come from large corporates, multinational manufacturers and data centres, which are projected to require 12.9GW of electricity by 2030, which will add strain on power supply.
There is also international capital interest. Recently, Solarvest Holdings Bhd announced a partnership with Canadian investment giant Brookfield to jointly develop 1.5GW of renewable energy projects, with Cress as the primary target, alongside LSS and battery storage initiatives.
For each approved project, Solarvest will hold a controlling stake while leveraging Brookfield’s low-cost capital and corporate network – both critical to securing Cress offtake agreements. Funding will be structured through a combination of debt (loans or sukuk) and equity to support project development.
Going forward, plantation companies grappling with rising operating costs, declining yields and limited opportunities to expand their landbank could turn to solar partnerships to diversify income sources.
In a mid-2024 report, RHB Research estimated that solar farms can generate earnings before interest and taxes of up to RM135,000 per hectare, about 26 times more than the RM5,100 per hectare from oil palm. It said besides SD Guthrie, which has announced major plans to participate in solar farming initiatives in the country, other companies which could have suitable landbank in West Malaysia include IOI Corp Bhd, Kuala Lumpur Kepong Bhd and Genting Plantations Bhd.
It noted that SD Guthrie has leased out 24 sites within its estates to solar operators, housing close to 600MW.
In a more recent report, the research firm says based on its estimates, 1.2 GW of solar assets will require about 1,800 ha of land, and cost around RM3bil. Assuming the Gamuda-SD Guthrie project is developed gradually, contributions could start trickling in from 2028-2029.
“Based on our back-of-the-envelope calculation, annual earnings from 1.2 GW of solar projects could range RM200mil-250mil per annum, depending on the tariff,” RHB adds.