Articles

The acquisition of solar assets has become an increasingly prominent feature of Malaysia’s renewable energy market. As more projects progress beyond the development phase into operational or near-operational stages, they present attractive opportunities for investors seeking stable, long-term returns while contributing meaningfully to renewable energy and ESG objectives. Such acquisitions may involve operating solar plants, late-stage development projects, or portfolios of assets held by dedicated project companies.

However, acquiring a solar asset is not merely a commercial or technical exercise, nor is it sufficient to rely solely on technical consultants to assess system performance and output. Unlike conventional real estate or infrastructure assets, a solar project is underpinned by a complex legal and regulatory framework. Buyers are effectively acquiring not only physical infrastructure, but also a web of licences, land and site rights, contractual commitments, regulatory conditions, and ongoing compliance obligations, including potential restrictions or limitations arising from regulatory approvals. Legal support therefore plays a critical role in ensuring that these risks are properly identified, assessed, and managed throughout the acquisition process.

This article examines how legal considerations fit within the broader technical and financial assessment of solar asset acquisitions in Malaysia. It highlights why legal review remains a critical component of the acquisition process, particularly in identifying risks that may not be apparent from technical or financial analysis alone, and in ensuring that transaction structure and risk allocation are aligned with the long-term nature of solar projects.

Forms of Solar Asset Acquisition

Solar asset acquisitions are generally structured either as a share acquisition or an asset acquisition, and the choice between the two has important legal and commercial implications.

Under a share acquisition, the buyer acquires equity interests in the project company that owns and operates the solar asset. This approach is often favoured because most regulatory approvals, licences, and project agreements are held by the project company itself and are not easily transferable. By acquiring the shares, the project continues to operate within the same legal entity, although the transaction may trigger change-of-control provisions or notification requirements under existing contracts or regulatory approvals.

An asset acquisition, by contrast, involves the direct transfer of specific project assets and, where applicable, associated contractual rights. While this structure may appear more straightforward conceptually, it can be legally challenging in practice. Regulatory approvals may need to be reissued, third-party consents obtained, and key contracts novated or re-executed, all of which can introduce additional complexity, cost, and timing considerations.

Selecting the appropriate acquisition structure at an early stage is therefore critical, as it influences amongst others regulatory compliance, tax treatment and the overall feasibility and timeline of the transaction.

Where Legal Risk Commonly Arises in Solar Asset Acquisitions

In the context of solar asset acquisitions, legal risk rarely presents itself as a single, obvious issue. More often, it arises at the intersection of long-term project arrangements, regulatory oversight, and changes in ownership or control. These risks tend to surface where assumptions made at an early stage of the transaction are not fully tested against the legal and regulatory framework governing the project.

A common source of risk arises from the assumption that existing approvals, contractual rights, and site arrangements will continue unchanged following an acquisition. In practice, a change in ownership or control may trigger consent requirements, notification obligations, or other restrictions that are not apparent from a high-level review of the project documents. Such issues typically only come to light when the legal position of the project is examined in detail through a comprehensive review of the relevant approvals, agreements, and site arrangements.

Separate from this is the issue of long-term contractual exposure. Solar projects are supported by agreements that are intended to operate over extended periods. Provisions relating to termination rights, liability allocation, or changes in control may have been commercially acceptable at the time they were negotiated, but their impact can shift significantly once the project changes hands. If these provisions are not carefully assessed at the acquisition stage, they may constrain the buyer’s position long after completion, when renegotiation is no longer feasible.

Legal risk may also arise from the way project documentation has accumulated over the life of the project. Solar developments typically progress through multiple phases, and agreements entered into at different stages may not always align fully with one another. While such misalignments may not disrupt daily operations, they can introduce uncertainty during an acquisition process or limit the buyer’s flexibility in future refinancing, restructuring, or exit scenarios.

Ultimately, solar asset acquisitions involve a combination of legal, technical, and financial considerations, all of which must be assessed together. Where legal review is overlooked or treated as ancillary, even well-structured technical and financial assessments may be undermined by constraints arising from approvals, contracts, or site arrangements. A balanced approach, in which legal review is integrated alongside technical and financial evaluation, is therefore essential to achieving a clear and reliable understanding of the asset being acquired.

Conclusion

The acquisition of solar assets in Malaysia presents attractive opportunities, particularly for investors seeking long-term, stable returns. However, the value of a solar asset is shaped not only by its technical performance or financial projections, but also by the legal framework within which it operates.

Solar projects are characterised by long-term contractual commitments, regulatory oversight, and site-specific arrangements that continue well beyond the point of acquisition. Understanding how these elements interact, and how they are affected by changes in ownership or control, is essential to preserving asset value and operational stability.

In this context, legal due diligence and transaction structuring are not procedural exercises, but integral components of the investment decision-making process. A considered legal approach enables buyers to understand the risks they are assuming, allocate responsibility appropriately, and position the asset for long-term sustainability. For solar asset acquisitions, this perspective is often what distinguishes a successful investment from one that encounters avoidable challenges over time.

This Article is written by Yeo Shu Pin (Partner) of Messrs. Shu Pin & Associates.

Disclaimer: Every attempt to ensure the accuracy and reliability of the information provided in this publication has been made. This publication does not constitute legal advice and is not intended to be used as a substitute for specific legal advice or opinions. Please contact the author(s) for a specific technical or legal advice on the information provided and related topics.