This article first appeared in The Edge Malaysia Weekly on October 21, 2024 - October 27, 2024

ARTIFICIAL intelligence (AI) and rising data sovereignty — which leads to stronger rules over data collection, storage and processing within a specific country or jurisdiction — are driving investments in power infrastructure worldwide. And the money isn’t just going into renewables, says GE Vernova Inc, General Electric’s unit that focuses on energy technologies.

In Malaysia, data centre energy demand is expected to grow by 11gw, which is equivalent to the power output of about 11 nuclear power plants, as one nuclear power plant typically generates around 1gw of electricity.

This 11gw estimate is based on applications received by national utility company Tenaga Nasional Bhd (KL:TENAGA), and represents more than half of the 20.07gw peak demand that Malaysia recorded in July.

“What you have to do first is electrify. You cannot say you will decarbonise first. You need to make sure you meet that 11gw demand, then you can mix [in decarbonisation efforts such as carbon capture],” says Ramesh Singaram, president and CEO of GE Vernova’s gas power for Asia, in an interview with The Edge.

“The system cannot take” an immediate influx of 11gw from intermittent renewable energy (RE) generation, says Ramesh. 

Power grids need to be in balance between supply and demand, and they are generally capable of handling existing fluctuations like peak hours. But with RE, the fluctuation can be much steeper. In such situations, the grid has to maintain balance — either by cutting demand (when supply is low) or curtailing RE supply (when there is too much electricity).

Due to intermittency in RE, the amount of electricity produced is not consistent. Additional investments must be put into the grid infrastructure to avoid overloading during peak generation. The improvements must be done in stages. Otherwise, one area might need to have its electricity shut down during the grid upgrade.

Thus, the immediate supply “has to be from natural gas” while the national grid and RE sources are continually expanded, says Ramesh.

With over RM114 billion in data centre and cloud-related approved investments from 2021 to 2023, Ma­­laysia is one of the fastest-growing data centre investment markets in Asia, partly thanks to its location at the centre of RE-rich Asean, plus its own potential supply of  green energy.

Even in Japan, the electricity market in the developed country is expected to grow for the first time in two decades to meet demand from data centres and semiconductor manufacturers to support the global pivot towards electrification and digitalisation.

Ireland, which until recently was a hotspot for new data centre projects, saw 21% of its energy generated guzzled up by data centres in 2023, ahead of urban homes (18%) and rural homes (18%).

US-listed GE Vernova, whose key solutions include modular gas turbines and electrical systems used in RE farms, has seen demand for the latter increase and now has a backlog of orders stretching to about two years, says Ramesh.

In the six months ended June 30, GE Vernova recorded a net income of US$1.16 billion (RM5 billion) on revenue of US$15.46 billion. Of its revenue, 54% came from the gas and hydro power segment, followed by wind (24%) and electrification (22%).

The group completed its spin-off from the wider GE Group in April. Since then, the counter had gained 103% to US$266.89 per share at the time of writing on Oct 14.

“We haven’t really seen the impact of AI [on the energy industry], but it’s coming. That’s why we call AI the next investment supercycle that will drive transport, healthcare, energy — everything,” says Ramesh.

“And what data centres need is energy. That’s a big piece [of the puzzle].”

Malaysia has an RE generation mix target of 31% by 2025 and 40% by 2035, compared with 25% currently.

Tenaga, in its latest statements, alluded that RM45 billion worth of investments are needed to enhance the nation’s power grid infrastructure in the three years from 2025 to 2027.

This explains why Malaysia’s Corporate Renewable Energy Supply Scheme or CRESS, which allows third-party energy producers to access the national grid to supply RE directly to their corporate customers, requires participants to pay a hefty premium to access the grid. It is to fund the development of the grid’s infrastructure that can facilitate the influx of RE.

When people started to decarbonise by switching to RE, they realised that their electricity output is curtailed when no infrastructure was built to support the integration of RE into the system, says Ramesh, a Malaysian mechanical engineer by training who started his career as a maintenance engineer with Tenaga’s predecessor, Lembaga Letrik Negara (LLN).

“You have to electrify — build the infrastructure and allow more RE to come in — and repeat. What happens is you build the reserves [in both RE supply and the capacity of the infrastructure],” he says.

Only by doing so will Malaysia be able to fully make use of its “fortunate” position, with abundant RE resources like solar and hydro, while being supported by its mature position in the natural gas value chain.

While gas has been named as a transition fuel due to the presence of carbon in its emissions, existing gas infrastructure technology actually can adopt even cleaner fuel sources such as hydrogen.

Further, newer turbines — such as aeroderivative gas turbines that can start up and shut down in mere hours — make it suitable as an ancillary or supporting generation source for grid-strengthening or to smooth the intermittencies of RE generation.

“Gas turbine technology is not a transition technology. It’s a [net zero] destination technology,” says Ramesh.

In his view, investments in gas infrastructure to support short-term demand can be future-proofed to be used in a net zero environment.

Admittedly, Malaysia has started to import gas for domestic use due to insufficient production, but it is looking at replenishing its gas reserves. Short-term power purchase agreements (PPAs) have been awarded to gas power plants that have fulfilled their long-term supply contracts to continue to meet the existing electricity baseload.

Committed to not building any new coal-powered plants, the country has been looking at developing gas-powered plants.

As things stand, Malaysia is among the pioneers of energy transition technologies on multiple fronts in Asean, but it will take years for these technologies to mature, costs to come down, adoption to become widespread and supply chains to become more efficient.

These transition technologies include adoption of hydrogen energy sources and offshore carbon capture technologies spearheaded by the likes of Petroliam Nasional Bhd (Petronas) and the Sarawak government. At the same time, Malaysia is looking at nuclear power. The US and Europe are also revisiting nuclear, years after it was out of the picture.

GE Vernova is involved in small modular reactors (SMR) that use nuclear energy, with a unit of 300mw generation capacity expected to achieve commercial operation date (COD) in 2029 in Ontario, Canada, followed by another three of those reactors in stages.

Even if Malaysia, which has never had a nuclear plant, were to think of investing in one now, “it would take more than 10 years” for one to be planted up and ready for commercialisation, Ramesh estimates, due to a stringent planning and approval process and how each facility is “one-of-a-kind” and customised.

On hydrogen, GE Vernova thinks it is practical as it suits current available infrastructure. It also believes it will be used mainly to help balance energy supply and demand (peaking power) and strengthen the grid, and less so for heavy-duty uses like powering large factories or vehicles because hydrogen does not have as much energy as natural gas.

A proponent of carbon capture technologies, GE Vernova is part of a consortium in the UK that is building for BP an 860mw gas power plant with carbon capture in Teesside, the UK, which is targeted to commission by 2027. Work is now being done to make the carbon capture process more “concentrated” to make the facility physically smaller and more efficient.

Another energy transition alternative is the Asean Power Grid, the regional interconnection project that is aimed at connecting the electricity grids of the 10 Asean member states. This means member states can tap the grid to use RE supply from another part of Asean if it needs to, unrestricted by geographical constraints.

Negotiations are still ongoing for the Laos-Thailand-Malaysia-Singapore Power Integration Project or LTMS-PIP, which is part of the Asean Power Grid, though an agreement for the project — which will allow the supply of up to 100mw of electricity from Laos, via Thailand and Malaysia, to Singapore — lapsed in June. Apart from the issue of grid-access pricing, grid standards have to be harmonised to connect more countries, say experts.

This regional grid can become a reality if there really is political will, says Ramesh.

“If it’s technical [issues such as harmonisation of grid standards], we have a lot of smart people in Asean. If there’s a place they can [harmonise the grid], it’s Asean. There are frameworks on broader businesses. They just have to find a common ground. Some countries will never get to meet their [energy growth and carbon-neutral] targets otherwise,” he adds.

Stakeholders in the power industry have now realised that no one will be able to achieve both the required growth and net zero targets, meant to slow down or reverse global warming, without cross-border and cross-sector collaborations, according to Ramesh.

“When [governments] first set their targets, they did not even invite any of the private companies. Over time, they found that they could not meet the targets without the backing of [the private sector]. Now, everyone is asking how we can do more [to help],” he says. 

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