This will enable the company to unlock a commercial value of RM10b until 2035

by AUFA MARDHIAH / pic by TNB

TENAGA Nasional Bhd (TNB) had recently inked a memorandum of understanding (MoU) with Petronas to conduct a feasibility study on decarbonisation efforts covering hydrogen and carbon capture.

This will enable TNB to unlock a commercial value of RM10 billion until 2035.

Through the collaboration, both companies will repower the retired combined-cycle gas-fired power plant in Paka, Terengganu, namely the Sultan Ismail Power Station (SIPS) by using gas with hydrogen-ready technology.

The collaboration will also witness TNB’s investment of RM6.3 billion to repower Sips using high-efficient Combined Cycle Gas Turbine (CCGT) with hydrogen-ready technology for cleaner energy production. 

TNB president and CEO Datuk Indera Ir Baharin Din (picture) said the repowering of the plant will leverage on both company strengths; and will serve as a unique pioneering project in deploying green technologies that may be utilised in future power plants.

“This brownfield project will start with the demolition of the existing plant next year which will take two years. Construction of the project will commence from 2025 and the entire complex is scheduled to be ready in 2030.

“The repowering of Paka, with a capacity of 1,400MW will avoid 3.2 million tonnes of carbon dioxide equivalent (tCO2e) emission per annum, which is equivalent to the CO2 emitted by approximately 700,000 cars each year,” he said in a statement today.

Once the plant is commercially operated and repowered in 2030, it is projected to generate an average of RM250 million per year in Ebit (earnings before interest and taxes).

Baharin also highlighted that TNB and Petronas have been forging cooperation for decades in the development of the energy sector.

“The MoU signals the recognition that our paths must converge, to realise a successful and inclusive energy transition for Malaysia,” he added.

Both companies will repower the retired combined-cycle gas-fired power plant in Paka, Terengganu, namely SIPS by using gas with hydrogen-ready technology

TNB has identified two technologies that will bring sustainable decarbonisation to its thermal assets, namely the Green Hydrogen and Carbon Capture technologies.

“Paka’s transition to be hydrogen ready is a prime example of TNB’s commitment to a long-term investment to decarbonise its generation ecosystem and in creating ripple economic effects for better lives,” he further said.

The collaboration is also in line with TNB’s accelerated Responsible Energy Transition, driven by the group’s aspiration to be net zero by 2050, as well as a target to reduce its coal capacity by 50% and carbon emission intensity by 35% in 2035.

The Repowering Strategy of TNB’s generation arm, TNB Power Generation Sdn Bhd depends on the type of green technology and the expiration of power purchase agreements (PPAs) which are divided into before 2030 and after 2030.

For PPAs expiring before 2030, TNB is phasing out its coal and gas plants and will repower to CCGT with the optionality of hydrogen co-firing and new green technology. 

These plants are in a better position for transitioning to new green technologies such as co-firing and carbon capture, utilisation and storage technology.

TNB will also explore the potential of the green hydrogen economy. By undertaking R&D on Green Hydrogen, it hoped to reduce the levelised cost of electricity for Green Hydrogen that TNB can use as a fuel for future power generation with zero emissions.

On the Green Hydrogen value chain, TNB seeks to venture into energy supply and hydrogen production.

“We have the potential to increase renewable energy in Peninsular Malaysia which is the key ingredient to produce Green Hydrogen. 

“TNB will continue exploring opportunities to participate in other parts of the Green Hydrogen Value Chain with partners like Petronas and other technology leaders where technical and commercial synergies can give TNB the competitive advantage,” Baharin concluded.