Sabah: Going geothermal

0

The construction of a geothermal power plant in Sabah has massive potential to boost the Malaysian state’s economy, while paving the way for other major developments in renewable energy.

Located at Apas Kiri, Tawau, the plant – to be developed by Tawau Green Energy (TGE) – will be the first geothermal facility in Malaysia. Phase one of the project was launched in May and scheduled for completion by 2014.

At the end of this first stage, the plant will have a generation capacity of 30 megawatt (MW), though it is expected to generate more than 10 MW when fully completed.

Hailed as an example of a successful public-private partnership, the project, worth RM480 million (US$152 million), will benefit from RM35 million (US$11 million) in federal grants to cover the costs of developing infrastructure.

The funds, which will come from the Private-Public Partnership Unit of the Prime Minister’s department, will be used for the access road and water treatment plant.

The remainder of the financing will be obtained through a 75:25 debt equity scheme, and TGE is currently in talks with two Malaysian banks to procure the rest of the funding. Earlier in May Continental Energy Corporation, a Canada-based international energy company operating in South-east Asia, purchased a 10 per cent stake in TGE.

TGE already has a buyer for the plant’s production.

In November last year, the company signed a Renewable Energy Power Purchase Agreement (REPPA) with Sabah Electricity (SESB) to supply 30 MW to SESB’s grid at a fixed rate of RM0.21 (US$0.07) per kWh.

The 21-year agreement should cover the payback of the debt equity financing and the cost of operations through electricity sales, with TGE anticipating more then RM1 billion (US$316 million) in revenues at the REPPA price. Indeed, the project is a boon to Sabah’s energy and utilities sectors, which have struggled to meet the state’s electricity demand.

At present SESB has enough supply for its consumers, but would not be able to cope in the event of a major breakdown.

SESB’s general manager of system operation, Addie Ahmad, told local press that while total generating capacity of 726 MW in the state’s west coast was sufficient to meet current demand of 510 MW, the east coast’s maximum capacity of 292 MW was not adequate to meet demand of 270 MW.

In addition to meeting increasing energy demand, another major draw of geothermal power was that it was less damaging to the environment when compared with other energy sources.

It emitted little carbon dioxide, very low quantities of sulphur dioxide and no nitrogen dioxide. Its carbon footprint was 65 times smaller than that of coal, 49 times smaller than fossil fuels and 40 times smaller than natural gas.

While the initial costs of developing the steamfield were high, geothermal facilities had low operational costs. Additionally, the project would qualify to receive carbon credits under the Clean Development Mechanism of the UN Framework Convention on Climate Change.

However, despite its apparent benefits, geothermal power does present a number of drawbacks.

For instance, the initial stages of development – which include exploration, production and injection wells – are costly and