KPower Gets Four-year Extension for Its Solar Project PPA

Source: 8/11/2022, Location: Asia

KPower Bhd has secured a four-year extension of its power purchase agreement (PPA) with Tenaga Nasional Bhd (TNB) relating to the development of a 50-megawatt (MW) solar photovoltaic plant in Pekan, Pahang.

The extension of the PPA's tenure to 25 year from 21 years was informed by the Energy Commission (EC) in a letter to the renewable energy group's 95%-owned subsidiary, PKNP KPower Suria Sdn Bhd (PKSSB), KPower said in a bourse filing on Thursday (Aug 11).

The EC also agreed to extend the closing date of the project — developed under the Large Scale Solar 4 (LSS4) @ MEnTARI programme — from June 30, 2022 to Sept 30, 2022, and the schedule commercial date from Sept 30, 2023 to Dec 31, 2023.

“PKSSB will execute a supplemental agreement with TNB to effect the aforesaid terms, where relevant, in the PPA," said KPower.

“The extension of time is expected to have a positive impact on future earnings of KPower,” the company added.

On Wednesday, Ranhill Utilities Bhd — another LSS4 bid winner — received a four-year extension of its PPA with TNB to develop a 50MW plant under LSS4 in Perak.

Ranhill also received a similar extension of the project’s financial closing date and scheduled commercial operation date.

The Edge, citing sources, reported on Aug 2 that LSS4 project owners would have their PPAs extended by four years to 25 years, from 21 years previously.

The extension given to LSS4 winning bidders appears to be a concession the EC is making in consideration of how the viability of certain projects has been affected, following a 30% to 50% jump in solar panel prices from when they submitted their bids in 2020, according to the sources.

At the time of writing on Thursday, shares in KPower were up two sen or 7.41% at 29 sen, valuing the group at RM157.41 million.

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