KUALA LUMPUR (Oct 30): Steel pole manufacturer Mestron Holdings Bhd (KL:MESTRON) has secured a new feed-in approval (FiA) from the Sustainable Energy Development Authority Malaysia to expand the capacity of its biogas power plant in Gua Musang, Kelantan, boosting its approved electricity export capacity by 18%.
The approval, obtained through its indirect wholly owned subsidiary Liziz Biogas Sdn Bhd, raises the plant’s approved net electricity export capacity to 2.36 megawatts (MW) from 2MW, while increasing its approved installed capacity to 3.12MW from 2.76MW.
Under the revised approval, the facility will receive a feed-in tariff (FiT) of 45 sen per kilowatt-hour (kWh) for the first 10 years, up from the existing rate of 39.75 sen, followed by 43 sen per kWh for the subsequent 11 years.
The revised tariff will take effect from the scheduled FiT commencement date of Aug 17, 2029, providing a 21-year framework for renewable electricity sales, subject to the applicable approval conditions.
To support the expansion, Mestron plans to procure and install an additional 1.5MW gas engine generator to increase the plant’s generation capacity and operating efficiency.
"Upon completion and full commissioning, the expanded facility has the potential to generate annual revenue of RM7.5 million," Mestron said in a statement on Friday. Actual revenue will depend on generation performance, plant availability and operating conditions.
Managing director Por Teong Eng said the approval strengthens the commercial prospects of the group’s biogas operations and improves visibility over its long-term revenue potential.
“The new FiA marks an important step forward in Mestron's renewable energy (RE) expansion. With higher approved electricity export capacity and an enhanced tariff structure, we are strengthening the commercial foundation of our biogas operations and creating greater visibility for long-term revenue generation,” he said.
Mestron is seeking to diversify beyond its core steel pole manufacturing business, with RE assets expected to provide an additional source of recurring income.
Por maintained that the group would continue to develop its RE portfolio alongside its steel pole manufacturing operations, with an emphasis on commercially viable projects, disciplined capital allocation and operational execution.
Mestron’s Gua Musang biogas plant began supplying renewable electricity to Tenaga Nasional Bhd (KL:TENAGA) in March 2023. It processes palm oil mill effluent, capturing methane-rich biogas and converting it into electricity for the national grid.
Unlike solar power facilities, which depend on daylight, biogas plants can generate electricity around the clock, subject to feedstock availability and operating schedules. The process also helps reduce greenhouse gas emissions by capturing methane that would otherwise be released through the decomposition of agricultural waste.
At 3.24pm on Friday, Mestron shares were traded down 0.5 sen or 4.35% at 11 sen, giving it a market capitalisation of RM110.08 million. The stock has fallen 42.11% year to date.