Energy Commission CEO Abdul Razib Dawood said the project was a promising step towards achieving Malaysia’s 2050 net-zero emissions target, describing UEM Lestra’s role as a “first mover” under the CRESS framework.
Razib said the RM2.5 billion project was financially viable thanks to high demand from corporate offtakers, innovative strategies by UEM Lestra, and access to efficient capital.
He also said UEM Lestra’s collaboration with foreign partners would bring advanced technology and financing to the table.
“When we have the first successful project, it will encourage other participants to study and see how this project will be implemented and completed on time,” he told FMT.
On Jan 17, it was announced that UEM Lestra, the wholly-owned green energy arm of UEM Group Bhd, had secured offtakers for its first-phase investment in the one-gigawatt hybrid power plant.
Among the companies that will purchase green energy produced from the plant in Segamat, Johor, is Hong Kong-based ESR Group, a leading real asset management firm in Asia-Pacific and the parent company of Logos Infrastructure Holdco Pte Ltd.
The plant is set to establish a 750-megawatt peak of solar capacity, supported by a battery energy storage system, and will be capable of generating over 1,000 gigawatt-hours of green energy per annum.
The energy transition and water transformation ministry lauded the offtaker agreements, saying it was an early success of the CRESS initiative and demonstrated the potential for Malaysia to attract foreign direct investment while fostering economic growth.
The minister, Fadillah Yusof, witnessed the exchange of documents between UEM Lestra and ESR Group on Jan 16.
UEM Lestra’s project is the first under CRESS, an initiative launched in September aimed at supplying corporations with greater green energy supply options and helping them achieve environmental, social and governance commitments.
A ‘win-win-win’ model
Razib described the CRESS framework as a “win-win-win” model as it enabled developers to negotiate directly with corporate offtakers, such as ESR Group, through business-to-business agreements.
“This allows developers and consumers to strike (mutually beneficial) deals, without government regulation on tariffs,” he added.
He said shifting the responsibility of meeting energy demands to corporations and developers also reduced the government’s burden of planning additional generation capacity, offering flexibility for renewable energy developers like UEM Lestra.
He said the integration of advanced battery storage in UEM Lestra’s solar project meanwhile addressed two key challenges in renewable energy: intermittency and grid stability.
“Hybrid solar projects with battery storage ensure a firmer energy output. This will help the system as a whole. When the output is firm, there will be less intermittence, and a decreased risk of causing instability to the whole national power grid,” he said.
Razib said projects like UEM Lestra’s not only provided reliable renewable energy but also reflected Malaysia’s broader energy transition goals to decarbonise the economy and energy industry.
“We hope CRESS will accelerate more projects, particularly solar farms with battery storage, as we aim to achieve net-zero emissions by 2050,” he said.