Local plantation companies with credible renewable energy (RE) projects stand to become major beneficiaries of the Government’s Renewable Energy Fund, which will be financed by the feed-in-tariff (FiT) mechanism to be implemented on Sept 1.
Industry consultant MR Chandran said that over the past five years, big plantation companies were actively venturing into RE projects generating “green” electricity that were fast turning into their new sources of income.
Given major planters’ good profit margins following the high CPO prices, he said: “Many have invested into RE projects by tapping into their abundant palm biomass waste like empty fruit bunches (EFB), shell, mesocarp fibre as well as palm oil mill effluent (POME) to generate electricity, industrial steam and biogas.
“The green RE is then supplied to their own mills and ultimately, some will be supplied to the national grid.”
Several plantation companies generating “green” electricity have also started supplying to Sabah Electricity Sdn Bhd (SESB) at about 21 cents per unit tariff.
“I believe there are negotiations going on to increase the tariff to 25-27 sen per unit,” Chandran told StarBiz yesterday.
Plantation group TSH Resources Bhd’s 14MW biomass power plant in Kunak, Sabah is the first biomass power plant in the country to be connected to the grid and has a renewable energy purchase agreement (REPA) with SESB to supply up to 10MW of green electricity for 21 years.
To encourage more participation in RE ventures, the RE Fund would be utilised to formulate attractive FiT rates sufficient to create justification for companies and individuals to invest in RE electricity production.
For smaller independent palm oil millers, Chandran said the electricity generation from RE sources was too costly and not competitive with large-scale plants using conventional fossil fuel sources, thus making it an unattractive venture particularly the high transmission cost to connect to the national grid.
“Only big palm oil mills, with 60 to 90 tonnes per hour capacity, are able to generate over 2MW of electricity per mill,” he added.
However, with FiT being used to subsidise the difference between the premium tariff rate and the current selling price of a unit of electricity from RE developers to Tenaga Nasional Bhd (TNB) under the Small Renewable Energy Programme,
Chandran expects more plantation companies to venture into RE projects soon.
In Malaysia, plantation conglomerate Felda Global Group is undeniable the leader in renewable energy projects with 56 biogas plants, two power plants, six compost plants, two mini gasifier plants and one fuel pellet plant all utilising biomass waste and POME as feedstock.
As the world’s largest plantation group, some 15.3 million tonnes of fresh fruit bunches (FFB) go into its 71 mills annually.
Of the total FFB, about 3.36 million tonnes of EFB, 1.83 million tonnes of mesocarp and 760,000 tonnes of palm shells were accumulated, said Felda Holdings Bhd head of biomass Ahmad Nor Azman Jamin recently.
Under the Government’s Entry Point Project 5 for biogas, Felda was also planning for 49 of its 71 mills to have biogas capturing plants, he added.
When fully implemented, the 49 biogas plants will be able to replace the use of about 432,000 tonnes of coal.
Of the 49 biogas plants, 35 have been designated to supply electricity and to be hooked to the national grid.
“Currently, we are segregating 12 existing biogas plants with one in Serting Hilir in Negri Sembilan already hooked to the grid,” he added.
The latest is Felda Global Group and TNB’s joint-venture company, FTJ Bio Power Sdn Bhd, which will set up a RM120mil bio oil plant in Jengka, Pahang to generate 12.5 MW of electricity using purely EFB.
Medium-sized plantation group Kim Loong Resources Bhd is also an advocate of RE projects with an investment of RM15mil to date for its three biogas plants in Johor and Sabah.
Managing director Gooi Seong Hin said the group had been maximising on its biomass and POME from its plantation and three mills to generate RE biogas.
“Even though its contribution is still small, our RE project has become our new source of revenue,” he added.
Gooi said the group would apply for the RE Fund and FiT as “they will definitely provide an incentive for us to further explore and expand on the RE opportunities available out there.”
