Sarawak — our new solar frontier

SARAWAK is emerging as Malaysia’s new solar frontier, drawing major renewable energy (RE) players from the peninsula – where most solar rollout activity has taken place – and unlocking a fresh wave of green investment.

Early this month, three 100MW solar projects were awarded to peninsula-based RE developers marking their entry into Sarawak’s growing RE sector.

Among the successful bidders is Malakoff Corp Bhd, one of Malaysia’s pioneer independent power producers (IPPs), which will develop and operate a 100MW solar photovoltaic plant in Bintulu.

The project represents Malakoff’s maiden venture into the Sarawak market, with it holding a 70% stake in the venture, while the remaining 30% is held by EE Solar Sdn Bhd.

Meanwhile, Solarvest Holdings Bhd, through a 60:40 joint-venture with Sarawak-based Press Metal Aluminium Holdings Bhd, is set to develop a 100MW solar plant in Mukah.

The project carries an estimated investment of RM380mil.

It is Solarvest’s first foray into Sarawak’s RE market, and also marks Press Metal’s entry into large-scale solar (LSS) development – securing dedicated green energy and supporting the environmental, social and governance objectives of the aluminium smelter group.

The third 100MW project will be carried out by Leader Energy Group Bhd to develop a solar farm in Tanjung Manis.

Unlike the federal government’s LSS programmes overseen by the Energy Commission (EC), these projects fall under Sarawak’s state-driven RE initiative.

State-owned Sarawak Energy Bhd, which functions similarly to Tenaga Nasional Bhd, plays a central role, acting as the sole offtaker for power generated and a key enabler in project implementation.

It is understood that multiple companies submitted proposals, from which the final selections were made.

They have since signed 30-year power purchase agreements with Sarawak Energy’s unit, Syarikat Sesco Bhd.

More projects in the pipeline

In response to Starbiz 7 queries, Sarawak Energy says the recent solar project awards align with the state’s broader strategy to diversify its RE mix under the 10-20-30 Vision and Post Covid-19 Development Strategy 2030.

The state aims to develop 10 gigawatts (GW) of RE by 2030, increasing to 15GW by 2035. Within that, it is targeting 1,500MW of solar capacity by 2030.

“The goal is to maintain at least 60% RE in Sarawak’s overall generation capacity, supporting the transition towards a low-carbon economy,” the utility company adds.

Following the successful commissioning of the 50MW floating solar facility at Batang Ai in December last year, Sarawak Energy says similar projects are being planned at Bakun and Murum.

“This demonstrated the viability of LSS projects in Sarawak’s system.

“More floating and ground-mounted LSS projects will continue to be awarded in the near future to help meet the 1,500MW solar target by 2030.”

Based on data from Sarawak Energy website, its available capacity across Sarawak is about 5.8GW, the bulk of it from large hydroelectric plants.

While hydropower remains the backbone of Sarawak’s generation mix, solar energy is emerging as a complementary resource.

“Sarawak Energy is progressively integrating solar into its generation portfolio as part of the state’s target to reach 10GW of generation capacity by 2030, by meeting the region’s need for reliable, renewable energy,” the utility says.

Going forward, utility-scale battery storage could be a feature of Sarawak solar projects too, offering fresh opportunities for players in the ecosystem, providing reliable and sustainable electricity to off-grid communities.

According to the utility company, a number of solar and smaller-scale battery hybrid schemes have already been implemented in remote parts of Sarawak, such as Bario and Long Bedian.

It then commissioned its first utility-scale battery energy storage system or BESS at the Sejingkat Power Station in December last year.

It is also working with international experts, including from Australia, to assess future grid-scale energy storage needs and pumped storage hydropower.

To overcome logistical and technical challenges posed by Sarawak’s vast and often rugged terrain, Sarawak Energy says utility-scale solar projects are planned at grid-connected locations for efficient integration with the power system.

Notably, floating solar developments benefit from existing hydropower reservoirs such as Batang Ai, Bakun and Murum, where infrastructure and grid access are already available.

As solar capacity expands, it points out that new substations and transmission lines may be required because solar resources are more widely distributed across the state.

Coming to project viability, the internal rate of return for the three awarded solar projects is said to be comparable to those under the EC’s LSS programme in Peninsular Malaysia, which have averaged in the high single digits.

“This indicates that Sarawak is beginning to show potential as a market for solar investments, though outcomes will depend on project costs and returns,” an analyst says.

According to him, there’s also growing interest from bankers, who are coming there to explore and evaluate potential avenues for participation.

The Tanjung Manis and Mukah plants are scheduled to begin commercial operations by end 2027, while Malakoff’s Bintulu plant by May 2028.

For Malakoff, the Sarawak venture will contribute to its RE growth trajectory, aligning with its ambition to become a leading RE player in Malaysia and South-East Asia.

Its group chief executive officer Syahrunizam Samsudin envisages growing RE development in East Malaysia.

“Both Sarawak Energy and Sabah Electricity Sdn Bhd are beginning to scale up solar initiatives to diversify their generation mix in line with Malaysia’s broader decarbonisation goals,

“For us, this creates opportunities to collaborate with state utilities and explore potential participation in future RE projects.

“We were recently shortlisted for the 470MW LSS PETRA 5+ project in Perak, demonstrating delivery scale and balance-sheet readiness that we can replicate as East Malaysian opportunities mature,” says Syahrunizam, who was appointed to Malakoff’s helm last month.

With East Malaysia prioritising solar-hydro hybrid projects, he believes Malakoff is well positioned in a “sweet spot” given its strong track record as an IPP and in operations and maintenance.

Syahrunizam adds that the group is developing capabilities to pair utility-scale solar with storage.

“We can expect BESS to be part of future solar projects in East Malaysia, especially in Sarawak.

This is because the state’s grid covers wide and remote areas where solar power can cause fluctuations in supply,” he adds.

Meanwhile, Solarvest’s executive director and group chief strategy officer Leon Liew Chee Ing says that the group had established its Borneo arm back in 2021 and the Mukah solar project adds to its growing track record in the region.

“At present, our combined order book across Borneo, which includes Brunei, Sabah, and Sarawak, stands at around RM500mil, with the majority from our utility-scale solar programmes.

“These projects will translate into revenue over the next two to three years as they move into execution and completion stages. We anticipate stronger momentum ahead as both Sabah and Sarawak accelerate their energy transition agendas,” Liew adds.

The EPCC company expects its total order book to reach a new high of about RM3bil by the end of the financial year.

Solarvest is also part of an 80:20 consortium with Malakoff for the development of a 470MW solar plant in Perak under the LSS 5+ programme.

In addition to its growing EPCC portfolio, Solarvest aims to achieve 30% recurring income from operations.