Tenaga Nasional Bhd has teamed up with IOI Corporation Bhd and a consortium of 12 small and medium enterprises (SMEs) to develop a 500 MW solar project in Bahau, in the state of Negeri Sembilan, Malaysia. According to a filing with Bursa Malaysia on Tuesday, its subsidiary TNB Renewables Sdn Bhd (TRe) signed a joint venture agreement with the other parties. Other solar deals have been announced elsewhere in the world, such as the financing of the Llanos 6 solar farm by EDF power solutions and Colpatria, the commissioning of 450 MW of solar by ENGIE at Khaba and Khavda or the wind and solar memorandum signed by Renexia and Sistem-MNE in Montenegro.

A project with 250 MW of batteries under the CRESS scheme

The project includes a 250 MW/1,000 MWh battery system. It will be developed under the Corporate Renewable Energy Supply Scheme (CRESS), a framework for supplying renewable electricity to businesses.

The project will be carried by Bahau Energy Ventures Sdn Bhd. TRe will hold 70% of the capital, Luminous Aspect Sdn Bhd, a subsidiary of IOI Corp, 25%, and the SME consortium CSP 500MW Sdn Bhd the remaining 5%.

Up to RM606.2 million in equity

Tenaga will invest up to RM424.4 million (Malaysian ringgit). Luminous Aspect and CSP 500MW will contribute up to RM151.5 million and RM30.3 million respectively, bringing the partners' combined maximum equity investment to RM606.2 million.

The financing will combine contributions from the three partners and borrowings. Debt could account for 80% of the total and equity for 20%, but the final arrangement has yet to be determined.

TRe will oversee the project's development and procurement. IOI Corp and the SME consortium may take part in construction and installation works, subject to meeting the necessary requirements.

Limited impact expected on Tenaga's accounts

Tenaga says the partnership supports its plans to expand its renewable energy business and aims to generate long-term returns from supplying green electricity. The group does not expect a significant impact on its earnings, net assets or debt levels for the current financial year.

Its future financial contribution will depend on the project's final cost, the financing arrangements and the start of operations. On Tuesday, Tenaga shares closed 14 sen, or 1.05%, lower at RM13.16, valuing the group at RM76.7 billion. IOI Corp shares slipped one sen to RM4.45, giving the group a market capitalisation of RM28 billion.