KUALA LUMPUR: Solarvest Holdings Bhd
has partnered with Brookfield CTF Asia Holdings Pte Ltd, a wholly owned unit of Canada’s Brookfield Asset Management, to develop at least 1.5 gigawatts (GW) of utility-scale solar and battery energy storage projects in Malaysia over the next three to five years.
The collaboration focuses on Malaysia’s Corporate Renewable Energy Supply Scheme (CRESS), which allows businesses to purchase renewable energy directly from power producers via the national grid.
“This strategic partnership is designed to target CRESS.
“The market movement and demand for CRESS is starting to grow right now, and we expect it to progressively grow into a stable capacity over the next three to five years,” said Solarvest executive director and chief executive officer Datuk Davis Chong Chun Shiong at a press conference in conjunction with the formalisation of the agreement.
The deal marks Brookfield’s first investment in Malaysia through its Catalytic Transition Fund, a US$5bil vehicle focused on accelerating decarbonisation in emerging markets.
As of September 2024, the fund had raised about half, or US$2.4bil, of its total target.
Chong noted that groundwork for the projects had already started.
“The early development effort and the exploration of off-takers and land acquisition is already ongoing.
“We foresee this 1.5GW of development and deployment being realised within three to five years,” he said.
Brookfield, with more than US$1trillion in assets under management, owns and operates one of the world’s largest renewable portfolios, with over 270 GW in operation and development.
Under the agreement, each project will be undertaken through a special purpose vehicle (SPV), with Solarvest holding 51% and Brookfield 49%.
Solarvest chief financial officer Liew Kong Fatt said the SPVs would be funded mainly through debt markets.
“There are many avenues, but we can imagine we will mostly use bond financing to fund these mega-projects, which are currently competitively priced. The sukuk market is one we should be targeting,” he said.
On project economics, Solarvest chief investment officer Daniel Bernd Ruppert estimated costs at about RM3.5mil per megawatt, including storage.
“When we were looking and discussing partnerships for us, it was important not just to look at access to capital and cost of funding, but to have a lot more beyond that in terms of strategic value.
“Hence, the strategic value for us was either access to other markets where we are not as strong as yet in Malaysia, or access to the global corporate offtake market, especially with regards to the CRESS programme, because right now the programme is ready to go,” he said.
Ruppert said Brookfield’s global corporate relationships were a decisive factor.
“The big tech companies, the big data centres, hyperscalers – these are all global companies that, yes, we can probably make very good value propositions as being the leading solar developer. But in the end, there is more than that in their decision-making.
“It comes down to regional or even global contracts.
“So, we need to have a partner who has that influence or maybe an already existing relationship or even contracts with those players.
“That was, for us, the key decision-maker at the end, to go with Brookfield, because not only are they pretty much the largest renewable energy asset owner and investor, but they also, maybe because of that, have the best network to all these global corporate consumers,” he added.
Chong, meanwhile, said Brookfield’s strengths complemented Solarvest’s local capabilities.
“With capital strength, cheap cost of funds and a global track record, together with Tier-1 off-takers, it gives this joint venture a very strong position. This is the most valuable part of the partnership,” he said.
Looking ahead, Liew said a spin-off could be considered if the venture grows large enough.
“If it’s big enough and we develop this vehicle into a giant, why not? It’s definitely one way we can recover our capital investment,” he said.
Separately, Solarvest is targeting to raise its engineering, procurement, construction and commissioning (EPCC) orderbook to RM3bil by year-end, from RM1.2bil currently, excluding new CRESS-focused projects under this partnership.
