KUALA LUMPUR: With the government "doubling down" on its renewable energy (RE) commitment following the unveiling of the National Energy Transition Roadmap (NETR), domestic RE players foresee strong growth for the sector, particularly in tapping new investments.
The NETR, which expects to see an inflow of investment opportunities of between RM435 billion and RM1.85 trillion to the country by 2050, will place Malaysia as the RE powerhouse in Southeast Asia.
One RE player, Federal International Holdings Bhd (FIHB), expects solid growth, driven by the government's renewed efforts to promote RE that will lead Southeast Asia in the transition to a greener economy.
FIHB executive director Datuk Choy Wai Ceong anticipates significant growth for its RE segment, a crucial part of its longer-term expansion strategy.
"Our 50 per cent-owned Warrants RE Assets Sdn Bhd (WREA) is working with China's State Power Investment Corp Ltd (SPIC), China's top five power generators, to acquire operating feed-in tariff, net metering and large-scale solar farm projects.
"This partnership aims to invest in Malaysia's greenfield and brownfield RE projects."
WREA is responsible for funding while SPIC's wholly-owned SPIC Energy Bhd provides technical support.
"Our strategy is to acquire solar farms that are fully operational or under construction and have them repaired and upgraded by SPIC, thereby generating immediate positive cash flow," Choy told the New Straits Times.
FIHB continuously explores the acquisition of brownfield assets that immediately generate operating cash flow and is open to other RE business opportunities such as biomass.
Chow further explained that FIHB's investments and acquisitions in the RE sector signify a strategic step into this burgeoning industry.
While the immediate financial impact on FIHB's earnings might not be substantial due to its position as a minority stakeholder, these investments serve as a strategic foothold in the RE sector.
"This opens up new opportunities and allows us to benefit from the overall growth in the industry.
"Furthermore, these investments hold latent value, which can be unlocked with a listing of these assets in the future."
He added that such a listing could provide a substantial one-off boost to our earnings and further solidify its standing in the RE market.
"This strategic positioning aligns with our long-term vision and diversification strategy, allowing us to explore and benefit from a broader range of growth opportunities," said Choy.
Asked if it plans to expand its RE portfolio beyond solar farms such as wind or hydroelectric projects, Choy said FIHB is actively exploring opportunities to diversify and expand into other types of RE sources.
"While wind power may not be feasible for us at this time due to Malaysia's geographical and climatic conditions, we see potential in mini-hydropower projects.
"Mini-hydro plants can leverage the country's numerous rivers and their capability to generate electricity, providing a more consistent power supply than sun-dependent solar farms.
"Importantly, our construction division has the necessary expertise and experience to undertake the infrastructural works related to such projects, enabling us to execute these ventures efficiently," Choy said.