This article first appeared in The Edge Malaysia Weekly on June 17, 2024 - June 23, 2024
Malakoff Corporation Bhd (KL: MALAKOF) is the country’s largest independent power producer (5,342mw of thermal power plants and 40mw of renewable energy) and it owns power generation and water desalination assets in the Middle East. It has a subsidiary, Alam Flora Sdn Bhd, which provides waste management solutions. Malakoff also has a green solutions arm that develops and operates solar photovoltaic facilities.
Among its seven local power plant assets, two are powered by coal, four by natural gas and one uses coal, oil and gas. These contribute to the company’s carbon footprint, the majority of which is from its Scope 1 emissions (Scope 3 emissions were not reported).
To reduce emissions, the company has trialled the co-firing of alternative fuels like biomass in its thermal power plants to reduce the coal content in the energy mix. It also intends to study the feasibility of co-firing coal plants with hydrogen or ammonia.
The company’s target is to achieve 1,400mw of renewable energy capacity by 2031, according to its 2022 sustainability report, and to explore opportunities in biogas, battery energy storage systems and other areas. Malakoff wants to achieve net-zero emissions by 2050.
ESG caught up with Malakoff group CEO and managing director Anwar Syahrin Abdul Ajib for an interview, which has been edited for brevity.
ESG: Are you experiencing pressure to transition?
Anwar: Feeling the importance of embracing ESG principles, like so many others, we willingly commit ourselves to this path. To maintain relevance in the power sector, we [are] committed to transitioning towards renewables and sustainability.
Understanding the importance of active engagement, we go beyond merely mentioning our initiatives by actively involving stakeholders through various channels. This fosters interactive dialogue and allows us to promote our efforts across mainstream and social media platforms.
Additionally, our integrated reports provide detailed insights into our renewable energy and carbon-reduction strategies, tracking emissions and reaffirming our commitment to sustainable growth. A recent milestone is our Biomass Co-Firing Project, an initiative aligned with the National Energy Transition Roadmap.
By 2027, we aim to co-fire up to 15% biomass with coal at our 2,100MW Tanjung Bin Power Plant. Starting with a 2% system that went fully operational on April 1, we plan to increase from 3% to 5% next year progressively and ultimately reach 15% by 2027. This initiative is estimated to offset a significant amount of carbon dioxide equivalent emissions, equivalent to planting 141,536,250 mature trees.
What are some of the challenges you face?
In our industry, we are grappling with numerous challenges such as uncertainties stemming from changes in energy policies, fierce competition from major utility companies and international traders and the growing demand for clean energy technologies, which is expected to triple by 2050.
Domestically, we face political and market risks. We are contending with disruptive market forces driven by new technologies and difficulties in entering new energy markets in Southeast Asia, for instance, Vietnam and Indonesia. There is intense competition on tariffs and prices for conventional and solar projects.
Is the lack of financing a problem?
Securing timely financing can be challenging. This is why Malakoff has established the Asean Sustainability SRI Sukuk Murabahah programmes of up to RM1.2 billion. These programmes, rated “Gold” by MARC Ratings, underscore our commitment to sustainability.
In 2022, Alam Flora Sdn Bhd, a Malakoff subsidiary, launched its own RM700 million Sukuk Murabahah to fund capital expenditure and waste management projects.
In 2023, RH Hydro (Kelantan) Sdn Bhd, another Malakoff subsidiary, raised RM 975 million via Asean Green SRI Sukuk Wakalah for a (small run-of-river) hydro project in Kelantan.
What can be done to help companies like yours in this sector to transition?
For organisations like ours, long-term contracts for equipment supplies and installers for rooftop solar residential projects would be beneficial. Stakeholder management and engagement are also crucial.
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