Three key benefits
- Technical guidance and knowledge support from DNV covering market outlook studies, customized due diligence reports and reviews on project and environmental plans
- The customer secured funding and achieved financial close for the project
- The solar plant was completed ahead of the PPA scheduled commercial operations date.
About the customer
TRe is the asset management, operations and investment company arm of the group that spearheads renewable energy projects and assets in Malaysia and other parts of Southeast Asia.
Parent company Tenaga Nasional Berhad is a leading Malaysian utility company in Asia with an international presence in United Kingdom, Kuwait, Turkey, Saudi Arabia, Pakistan, India and Indonesia. It aspires to be a leading provider of sustainable energy solutions in Malaysia and internationally. Under the group’s sustainability commitment, TNB targets its renewable energy generation capacity at 8.3 GW by 2025. The group has pledged to stop investing in greenfield coal plants and aims to cap revenue from coal generation plants at 25%.
Within the renewable energy space, TNB has a total portfolio of 2,732.3 MW in Malaysia (including 2,536.1 MW of large hydro) and 666 MW across the UK, Turkey and India comprising mainly solar, wind and hydro energy generation assets.
MUFG is a market leader in renewable energy with a lending portfolio including solar power, concentrated solar power, hydro power, biomass and offshore and onshore wind. MUFG has been investing in the renewable energy sector for almost 20 years, financing more than 500 clean energy projects equal to approximately 120 GW of renewable energy generation capacity. MUFG has also publicly committed to investing JPY 35 trillion yen into sustainability related financing globally by 2030. It also recently announced its commitment to achieve net-zero emissions in its finance portfolio by 2050 and its own operations by 2030.
The customer challenge
TNB’s Bukit Selambau plant located in Kedah state in northwest Malaysia was one of the projects selected for Phase 2 of Malaysia’s large scale solar (LSS) program. This is TNB’s second project under the program, which was established to diversify the country’s energy mix and increase renewable power generation to 31% by 2025.
All solar projects under the LSS2 program had to achieve commercial operation by December 2020. As a result, the customer required support from an advisor who could help them deliver a lender’s due diligence report, manage the execution of the project and navigate the challenges and restrictions posed by COVID-19 and Malaysia’s movement control order.
TNB also required an independent engineering certification for the project.
DNV worked with TRe and MUFG to provide a full lenders technical due diligence which included reviews on the project’s design, construction, operations, financial model, contracts, permits and environmental impacts to help bring the Bukit Selambau solar power plant to financial close.
DNV also provided independent technical advisory services to support the construction phase of the project, guided by the company’s long international experience in the development of solar power projects.
Despite the project being suspended for two-month as a result of restrictions brought about by the Covid-19 pandemic, the Bukit Selambau solar plant was commissioned on the 8th of September 2020, 114 days ahead of the power purchase agreement (PPA) scheduled commercial operations date.
With two plants now operational, TNB’s Bukit Selambau and earlier Sepang solar plants bring the company’s domestic solar generation capacity to 80 MWac (123 MWp).
Benefits to the customerWith the completion of the lender technical due diligence, which was led by DNV, TRe achieved financial close with MUFG and secured RM 144 million financing for this project. Further deliverables included:
- Power market outlook studies including impact of increased competition in the electricity market in Malaysia on energy prices
- Reviews of the project’s environmental management plan (EMP) and environmental and social management system (ESMS) against the IFC performance standards and the equator principles ensured that the project was developed in a manner that is socially responsible and reflects sound environmental management practices.
- Certifications of the EPC’s draw-down requests under the facility agreement and independent engineering certifications required to be issued under the power purchase agreement.
The customer achieved financial close for the project with lenders providing funding and working capital requirements for the LSS project which was facilitated by the good reputation and experience of the customer as well as satisfactory completion of the lender’s technical due diligence report. As a result of the timely financial close, effective project management by the customer and strong project management support, the solar plant was completed ahead of the PPA scheduled commercial operations date.