SolarQuarter ASEAN magazine had an exclusive conversation with Mr. Arnfinn Unum – General Manager Malaysia, Scatec and got insights on how the year is faring for the company. He also spoke about the challenges in the Malaysian market along with the company’s future projects and growth plans.
Please tell us how is the year 2021 progressing for Scatec with the pandemic scenario?
Scatec is having a good 2021, with full production, no interruptions and with clients paying as forecasted for the energy production. As a global company working with an international matrix network, we are well positioned to take advantage of the new normal. We will continue to invest in our great staff, so that we can build on the good track-record we have in Malaysia.
Despite the challenges of meeting face to face with partners and local developers of new projects, we have recently (2nd quarter this year) added around 1,5 GW of new projects into our backlog. Quite impressive taking today’s business environment into consideration.
Which have been the major solar projects executed recently by your esteemed company in Malaysia?
We currently have 4 operating solar plants with 247 MW DC production capacity, representing a total investment of around 1,6 bill MYR. The first plant reached commercial operation 2 years ago, the last one 9 months ago, with a 5th project targeted.
As a developer, what key challenges do you face today in the Malaysian market? How do you mitigate them?
There are many challenges, but I can mention some of the most important ones:
- To find attractive and competitive land is quite difficult. You need to work hard over long time and establish relations to get to the best opportunities
- To get the right design and accurate costing of civil works, flooding mitigation works and foundations for the solar panel structures can be quite demanding as it is not always straightforward to get the necessary site investigations and consequently the following quality engineering done before a bidding. To avoid surprises, it is necessary to plan and invest upfront. Some competitors fail to do so, and damage the market place by bidding too low without proper pricing.
- It can be quite challenging to understand the tax incentive offerings, and to some degree we have experienced that the framework can change after our investments. This is unfortunate as clarity and predictability is key for investment decisions everywhere, including Malaysia.
- To find the right partners can also be challenging. Scatec is a long term player in Malaysia, and wants to earn credibility through our work processes and achievements. We do that through partnerships and investing in local know-how, as we believe it adds crucial value to make correct decision making processes and strategies for long term success and understanding of Malaysian way of doing business.
- We would like to see some more transparency in the LSS program, as we are of the impression that rules were changed during the course of the bidding process. Despite polite requests for more information, it has not been forthcoming.
- Finally we would like to see more investment opportunities outside of the LSS programs. Scatec believes there is great potential for larger scale projects across the RE technologies with mutual benefits for Malaysia, the individual states and our consortiums with local partners. And we have the financial and technological muscles to make it happen.
What is your company’s growth plan for the next couple of years? Please tell us about some of your upcoming projects as well.
Scatec has recently become a full-fledged renewable energy company by adding hydro power generation, wind generation, floating solar and battery solutions to our traditional solar generation capability. By adding these technologies, we believe we can become a base load vendor of renewable energy and we look forward to combining such technologies for both the Malaysian and the wider SEA market. We are targeting to find partnerships both with the Malaysian states and other stakeholders to facilitate such projects utilising a wider RE platform, and we are ready to assist both with our competence and our financing strengths together with local partners.
With our concept named Release, we also can offer rented or leased renewable energy (RE) plants, potentially suitable for corporate RE offerings as an alternative to traditional long term offtakes with a plant investment at a fixed location (i .e. we own redeployable assets in a company that rent it out for shorter or longer time periods). So our growth ambitions are big, our impatience to get the next steps going is high and we look forward
to putting Malaysia on the map as a facilitator of good RE projects.
How do you see the Malaysian solar market evolving post pandemic/in near future?
We hope to see a market with a gradual opening for use of the grid for direct supply to corporate consumers. This could be for export as well. Import could also be considered if the ASEAN grid network can be operated smoother across the borders.
In addition hybrid projects can be developed to create base load energy by combining hydro power, solar power and batteries. We also hope and think that a merchant market will develop to support an optimal use of hybrid based RE and combining long term fixed PPA’s with merchant trade and storage (of for instance water and battery capacity).
We also believe that the states should be given the opportunity to develop their own projects, securing local activities and paybacks in all states, not only the ones with the best irradiation and best land areas that would normally win an LSS bid.
We believe the LSS program should continue, but we have some experiences saying that the RE platform and framework should be expanded to the benefit of Malaysia reaching its RE goals and attract investments to help doing so.