TNB to buy power from 1MDB plant in Kedah


  • Business
  • Tuesday, 15 Apr 2014

KUALA LUMPUR: 1Malaysia Development Bhd (1MDB) has won yet another power project following the signing of a 25-year power-purchase agreement (PPA) with Tenaga Nasional Bhd (TNB).

TNB announced yesterday it had signed a PPA to buy power to be generated by 1MDB Solar Sdn Bhd’s solar photovoltaic (solar PV) plant in Kedah.

Just last month, 1MDB had won an estimated RM11bil deal for the 2,000 megawatt (MW) coal-fired power plant Project 3B.

StarBiz had earlier reported that 1MDB‘s proposed 50MW solar farm was the result of a “direct negotiation” with the Government. It will also become by far the largest in the country.

It is also understood that 1MDB’s power plant agreement with the Government has come about as a result of direct negotiations between 1MDB and the Energy, Green Technology and Water Ministry, with both the Energy Commission and the Sustainable Energy Development Authority Malaysia (Seda) playing a smaller role.

TNB said the PPA provided that 1MDB would design, construct, own, operate and maintain a solar PV plant generating facility with a capacity of 50MW alternate current (MWac).

“The PPA is in relation to the pilot project for 50MWac solar PV, which forms part of the initiative to support the national agenda for the development of renewable energy in Malaysia,” TNB said in a statement.

It said the PPA governed the obligations of the parties to sell and purchase the net electrical output generated by the facility for a period of not more than 25 years, in accordance with the agreed terms and conditions.

While the tariff rates were not disclosed by TNB, StarBiz had reported that 1MDB had secured a rate of somewhere between 40 sen and 46 sen per kilowatt-hour (kWh).

It is much lower than what the first generation of applicants had secured back in January 2012, when Seda had awarded a tariff of 95 sen per kWh for farms with a size of 1MW to 10MW. For allocations under the 10MW to 30MW category, the rates then were 85 sen per kWh.

1MDB currently owns Tanjong Energy (now known as Powertek Energy Sdn Bhd), a 75% stake in Genting Sanyen Power (now known as Kuala Langat Power Plant or KLPP), and a 75% stake in the coal-powered Jimah Energy.

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