Make hay while the sun shines
Solar farm developer eyes projects abroad
WITH the afternoon sun blazing above, Datuk Guntor Tobeng surveys the solar panels ahead with a nod of approval.
“It’s good business today,” he says. A hearty roar follows.
The 30MW solar farm in Bidor is his second pride and joy. The first is Gading Kencana Sdn Bhd’s 8MW solar farm in Melaka — dubbed by some as one of the world’s most efficient solar farms as it produces 1MW per 0.6ha against the worldwide norm of 1MW per 2ha.
Built on 98 acres, the farm in Bidor took about Rm200mil and two years to complete. It houses 110,500 panels, which Guntor estimates can power up about 20,000 homes.
“Now we want to build a bigger one,” he says.
Gading Kencana, founded by Guntor in 1993, was among the first batch of companies that took part in the bid to install solar panels when the Feed-in-tariff (FIT) system was first launched in 2011.
Guntor, who was running a solar light trading business at the time, had participated in a capacity building programme organised by the government and became interested in giving solar farms a shot.
“They were training local contractors to become solar installers and they were giving discounts on solar panels, which were expensive at that time.
“On one of the organised trips, we went to Europe to see how they did it. And I realised it was not that difficult to do a solar farm. If they can do it, so can I. So when the government started FIT in December 2011, we bid for it and I got the licence for 5MW. Then I bid for another 3MW,” he says.
The company purchased a 17ac-plot in melaka and with the licences in hand, figured it would get down to business.
But it faced several setbacks. For one, the land area turned out to be slightly smaller than on paper and the landscape was not exactly suitable for a solar farm. Gading Kencana also had difficulties obtaining the funds needed for the project.
“That farm was about Rm80mil. But at that time, banks didn’t understand the solar business. We spent one year talking to eight banks and they all showed us the door,” he shares.
By then, well-meaning acquaintances were advising him to just sell off his licences and use the money to work on other things.
“‘Why make your life difficult?’, they asked me.”
But he was adamant. He would somehow see it through.
“I believe I could do it. I saw the system in Germany, it was so easy. Don’t tell me they can do and I couldn’t,” he says.
He eventually got a facilitation fund of Rm11.8mil from Teraju and a Rm56mil loan from SME Bank.
Finances secured, they got down to construction. With some creative engineering and redesigning, they managed to maximise the available space, fitting in 8MW on 14 acres of land.
Go it alone
Once its Melaka project was up and running, Gading Kencana was ready for its next project. The company won a bid for 30MW under the first round of largescale solar (LSS) plants development carried out by the government.
Notably, some of the other names that were also awarded licences were larger power players including Tenaga Nasional Bhd and Mudajaya Group Bhd.
But Guntor was certain that Gading Kencana was able to build its Bidor plant on its own.
“We are now a solar farm developer and contractor. We know we can do this one on our own.
“And the reason I want to do this on my own is to tell the world that it is mine. I don’t owe anyone, not the government, or any big companies. The credit is due to us,” he says.
And this time, funding was not so much a problem. In fact, with its track record in Melaka, banks were knocking on its doors.
“We received an offer every month. So we could choose,” says Guntor.
The company completed its Bidor plant at the end of 2018 and recently submitted a bid for 100MW under the third round of the LSS exercise, the results of which will be out in February.
“We are grateful that the new ministry is liberalising the electricity market so there are more opportunities. I recommend other SMES to look into this area. There are about Rm6bil’s worth of projects up for the taking and the returns can be good,” he says.
Guntor estimates that returns for such projects are around 8.5%, and could go up to 11% depending on the cost of construction.
“I am confident of our capability to construct the next farm. And there are new openings in the business in the private sector as well. We have the access and expertise so there is a big opportunity for us,” he says.
Gading Kencana is also looking at projects in the region and has secured some contracting work in Vietnam. But Guntor prefers to own and operate the development projects as he finds that approach to be more satisfactory.
“It’s a lot of work. So I’d rather build our own projects instead of handing it over to someone else after it is constructed.”
The green bandwagon
The Energy, Science, Technology, Environment and Climate Change Ministry has set a target of 20% of the country’s power to be generated from renewable energy by 2030 and this certainly is a big boost for companies such as Gading Kencana.
As Guntor puts it: Everyone wants to be green.
But there are also ample opportunities in the region. For solar, he notes that there is a big demand particularly in Vietnam and Thailand. And should Indonesia sort out its policy on the sector, everyone will jump on that bandwagon, he points out.
Malaysia, he notes, has one of the most matured and structured electricity supply markets.
“Our grid system is very strict and secure. For you to connect to the grid, there are about 18 tests that you must pass. We are the best in the industry. Our structure is more steady compared to Singapore, even. I think we are managing our liberalisation quite well.
“And because of that, our training is internationally recognised. You can work anywhere in the world with the training that you get in Malaysia. And the electricity industry in Malaysia is so structured that you can break up the scope of work into specialised skills for solar. Here, you can have an expert who just focuses on one thing,” he says.
He also points out that 95% of the components used in Gading Kencana’s projects are locally produced, which proves that there is strong local capability to grow the solar industry here. Additionally, all its workers are Malaysians.
“Sometimes, local players lack confidence and they try to outsource the work to China companies. Or maybe local companies want an easy way out by outsourcing the work. But we are capable.
“I want to sweat it out. So we have to take the trouble to do what we can to ensure our projects are done to the best they can be because my money is on the line.
“We need to train our people and trust them to handle the projects,” he says.
Guntor hopes to build Gading Kencana into a company with assets of Rm1bil by 2021. And if revenues can hit Rm120mil in three years, he is looking at listing the company.