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PETALING JAYA: In three years, more than 20,000 homes in the country will be powered by clean electricity, thanks to Cypark Resources Bhd's renewable energy parks to be built on former landfill sites throughout the country.
Cypark's aim is to generate between 30MW and 50MW of renewable energy, which will eventually make up a portion of the country's energy mix that is currently dominated by fossil fuel.
Based on a simple calculation, 30MW is enough to power over 20,000 homes with average monthly usage of 160kW, according to Cypark group CEO Daud Ahmad.
To achieve its three-year target, Cypark will kick off its first solar farm measuring 30 acres (12.14ha) at its renewable energy park in Pajam by New Year's Day next year, said Daud in an interview with The Edge Financial Daily.
The park, which will generate 10MW of clean power by mid-2012, will also harness energy from two other sources — biogas and biomass.
"Using renewable power to generate electricity helps reduce stress on our environment and our dependency on limited fossil resources. We are proud to be a part of this solution.
"Tenaga Nasional Bhd (TNB) will be the offtaker for all the renewal energy produced," Daud said.
He said Cypark is due to sign a 21-year power purchase agreement (PPA) with TNB for the Pajam solar farm, touted as the largest in the country. It will have separate PPAs for the biomass and biogas plants, both of which are slated to come onstream in March.
He said the tariff rate for its solar-powered energy is fixed at 95 sen per kW, which is higher than that of a gas or coal-power plant.
Daud said the high tariff is due to the costly investment in a solar farm. It is estimated that RM10 million to RM15 million is needed for every MW produced by a solar plant.
"But don't forget that currently your electricity (powered by fossil fuel) is subsidised by the government. You won't see the same cheap tariff if you strip off the subsidies. Not to mention the other social costs that we have not taken into account.
"Soon there will be a cost and price parity between renewable energy and fossil fuel.
"The cost of solar energy will continue to fall as we achieve better economies of scale while the cost of finding and developing oil continues to rise," he added.
While it is not known how much revenue Cypark can derive from its solar farm, Daud said the internal rate of return is "attractive" given the proximity of the solar farm to TNB's grid connection.
Furthermore, he said with the 8MW solar farm, Cypark has already achieved a few milestones, including roping in big names like LG Electronics and HSBC Bank.
Cypark's investment in the solar park works out to RM94 million or about RM11.75 million per MW.
Daud said since solar project financing is hard to come by, especially in this part of the region where solar industry has yet to mature compared to the West, it is quite a feat for Cypark to secure financing from HSBC Bank.
"The first milestone is the collaboration with LG in solar technology and the second is that we secured the first solar project financing (in the country) with the RM75 million loan from HSBC," he added.
"Our business proposals have all the prerequisites to be successful. This is one MoU that will work; not one that will only sit on your desk," he said.
LG and Cypark's relationship started when the latter roped in the South Korean firm as its engineering, procurement and construction contractor in the installation of its solar farm project in Pajam.
With the latest tie-up, Daud said Cypark and LG will take on solar projects in the country and across Southeast Asia, and co-develop Malaysia as a regional solar business hub.
The scope of the partnership includes conducting joint research and development in solar technology particularly tailored for Southeast Asia's tropical weather conditions.
However, the bigger plan is to look into the possibility of setting up a solar photovoltaics manufacturing plant in Malaysia.
"We are still doing a feasibility study on the plant," added Daud.
In total, Cypark has access to 17 landfill sites in Negri Sembilan, Johor, Pahang, Terengganu and Perlis that will eventually be converted into renewable energy parks.
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