This article first appeared in The Edge Financial Daily, on February 7, 2019.
KUALA LUMPUR: The plan to retrofit 50 government buildings with energy-efficient lighting and appliances by this year is an exciting prospect for Cenergi SEA Sdn Bhd, the renewable energy company wholly owned by Khazanah Nasional Bhd.
“We are waiting for this project to be launched. We are hoping to participate in the tender process,” its chief executive officer Ernest Navaratnam told The Edge Financial Daily.
Energy, Science, Technology, Environment and Climate Change Minister Yeo Bee Yin, who made the announcement in Parliament, said the building sector had been identified internationally as one of the most cost-effective sectors to reduce energy consumption.
Putrajaya announced last November that between RM160 million and RM200 million had been awarded through energy performance contracts (contracts for the implementation of energy-saving and renewable energy measures) to retrofit government buildings.
“Building electricity consumption comprises more than 50% of the electricity consumption in Malaysia,” she said. “This shows that there is a great potential for cost savings if we can improve energy efficiency in buildings.”
Cenergi executive director Ahmad Jauhari Yahya said that if the government is successful with the project, there is the hope that commercial buildings will follow suit.
“The lowest hanging fruit of any carbon reduction exercise is energy efficiency. You use less, you emit less carbon. It’s as simple as that.
“That’s why the minister was keen to promote energy efficiency in government buildings. This would essentially generate savings in carbon footprint and financially,” said Ahmad Jauhari.
Navaratnam said that aside from tendering for this project, Cenergi continues to negotiate with other companies for the same kind of retrofit work.
The company, he said, specialises in renewable energy and energy-efficiency projects. They account for 60% and 40% respectively of its revenue.
In the area of energy efficiency, Cenergi retrofits buildings to save energy consumption and takes a percentage of the savings as payment. This model allows the building owner to pay nothing but still reap the benefits of the savings almost immediately.
Cenergi currently runs a few energy-efficient projects around the country with the largest one being with the International Islamic University Malaysia.
From these projects, Cenergi has saved a total of 42,522 mwh of electricity.
In the renewable energy segment, Cenergi has been involved in biogas projects since 2013, with its first biogas plant located at Havys Oil Mill in Bera, Pahang.
The company’s biogas facilities address two issues simultaneously — it solves the problem of palm oil mill effluent polluting the environment while also using it to produce clean renewable energy. To date, Cenergi owns and operates five zero-waste biogas plants in the peninsula, supplying about 7mw of green energy to the national grid.
Another three plants are currently under construction and expected to be ready by year end. Two of them are in the peninsula while the third is based in Indonesia. In the near term, Navaratnam hopes to expand to other countries as well.
In the longer term, Cenergi plans to own and operate more than 20 biogas plants to meet its target of 100mw of renewable energy operating assets by 2021.
Such efforts are made in a bid to support the government’s target to increase Malaysia’s renewable energy contribution to the total energy mix which is mostly make up by fossil fuel. The government has set a target to increase renewable energy’s contribution to 20% by 2025. Ahmad Jauhari said this is an aggressive target, given that the agenda has long been around with a low achievement rate.
“The various stakeholders such as industry players and policymakers will really have to work together to support this goal. We also need to overcome issues faced by the financiers,” he said.
Navaratnam said Cenergi had been trying hard to introduce debt in its renewable energy and energy-efficiency projects but the efforts had not been very well received by financiers.
“There’s been negative perception by bankers of renewable energy projects because there have previously been a lot of failures — a lot of non-performing loans.
“That was then and things are slightly better now. But we need to continue working with them to change the image to show that these projects are worth investing in,” he said, adding that the group’s first biogas plant was fully financed by equity, and this did help increase banks’ confidence.
Nevertheless, Ahmad Jauhari said the company is focused on its core mission, which is to reduce carbon emissions by developing and investing in clean energy projects. Since 2013, the company has avoided some 100,332 tonnes of carbon dioxide.
“There is a lot more that we can do that we would like to tap into. Besides biogas, biomass is another area we would like to exploit under our renewable energy segment.
“Malaysia should also look at maximising solar rooftops and floaters. It is already being done but on a small scale. We should encourage more growth in this area,” he said.
Since 2013, Cenergi has generated a total of 98,362 mwh of renewable energy. Total energy efficiency savings stood at 42,522 mwh, with total energy cost savings of RM15 million.