Malaysia's Renewable Energy Push and Goals

Energy Insights speaks with Kian Min Low, the Chief Renewables Officer at Malaysian renewable energy company Gentari about all things renewables, Malaysia and Southeast Asia.

Other topics include who Gentari is and what kind of projects it's working on, the current state of renewables in Southeast Asia, Malaysia's renewable energy push and net zero goals, Malaysia's energy policy, foreign investment support for clean energy expansion in Southeast Asia, energy security in Malaysia, energy subsidies and the role of gas in the energy transition.

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Transcript

Host (01:02): We are here with Kian Min Low. Thank you so much for coming on Energy Insights.

Kian Min Low (01:08): Hi Ashley. Thank you for inviting us. 

Host (01:10): So Kian Min, while I would've introduced you in the pre-recording introduction, I'm just wondering if you can give us a brief background on who you are, where you're working, and what kind of projects you're involved in right now.

Kian Min Low (01:25): I've been in the energy industry for far too long. I think more than 25 years by [the] last count. I've moved, if you like, with the energy transition as you were. I've worked on coal-fired power stations, gas-fired power stations, wind farms, gas pipelines, and so on. Gentari offers a particularly large ambition to achieve something of scale that is not seen sort of elsewhere in the market. So it's an exciting opportunity for us to be part of this journey.

Host (02:09): You mentioned Gentari. I'm just wondering if you can give us a brief overview of what Gentari is, who Gentari is, and what you guys do. 

Kian Min Low (02:21): Gentari is set up by Petronas. We are a hundred percent subsidiary of Petronas. What we do is that we offer low-carbon solutions through, at this point in time, three core pillars. First, renewable energy. Second, hydrogen. Thirdly, green mobility. 

Host (02:41): Just double checking for people who don't know, Gentari is based in Malaysia, correct?

Kian Min Low (02:45): Correct. 

Host (02:46): All right, so I guess a good place to get started would be seeing or getting you to describe what kind of work Gentari does, not only in Malaysia, but also internationally. I'm just wondering how many countries is it working in right now? And can you think of any recent highlights that kind of stood out for you?

Kian Min Low (03:05): Okay. Why don't I go back a bit and say, in terms of what we want to achieve, as our sort of vision and mission, and then into details as to what we are doing in each of the countries that we are present in. I think, firstly, in terms of renewables, we aim to be a very large and leading generation, utility scale, renewable energy provider. We aim to build up more than 30 gigawatts of capacity by 2030 serving commercial, industrial, and retail customers. 

In terms of green mobility, we want to be Asia's preferred green mobility solutions provider and we want to capture more than 10% of the market share across key markets in Asia-Pacific by 2030. In terms of hydrogen, we want to be a scale hydrogen producer and a go-to industry partner. We aim to produce more than 0.7 million tons of clean hydrogen per annum by 2030, serving industrial, power, and transportation customers. Now, I know those are large dreams, but it is backed by significant capital as well as a large number of energy professionals who believe that we can deliver this truly exciting journey that Gentari has embarked upon.

(04:34) In terms of the countries that we are focused [on] today we are now present for the renewable space, across three markets in Malaysia, India, and Australia. In Malaysia, obviously, [a] home base for Gentari. We would obviously like to build out our capacity in this market. We think that we could play a significant role in helping Petronas to decarbonize its existing businesses, but we also like to build out renewable energy within Malaysia. We have signed a strategic collaboration agreement with Sarawak Energy to help diversify and enhance Sarawak’s energy mix. We’ve also signed MOUs with BMW in Malaysia to explore [the] implementation of green mobility solutions as well as renewable energy deployment. 

But during the recent Energy Asia week, that just concluded last month, Gentari signed a few strategic collaboration agreements with Keppel, Sembcorp, and TotalEnergies. With respect to Keppel and Sembcorp, we are looking to try and see if we could help deliver renewable energy into Singapore as well as potentially delivering low-carbon hydrogen to Singapore.

Host (06:03): What does the Keppel partner or Keppel agreement involve? Was that particularly focusing on anything, for example, like EV charging infrastructure or renewable energy rollouts in different areas?

Kian Min Low (06:17): In the MOU with Keppel, we have agreed to explore collaboration in renewable and low-energy projects, as well as electric vehicle charging infrastructure, namely to build the roaming capable, the charging facilities that are of scale and to facilitate mutual support in market access in the development. In addition, we will also explore collaboration in energy as a service opportunity with Keppel. 

Host (06:54): Which countries was that in?

Kian Min Low (06:56): That would be across Singapore and Malaysia.

Host (6:58): Are you looking to expand those into different parts of Southeast Asia, or is that something that hasn't really been discussed yet? 

Kian Min Low (07:05): Not particularly with Keppel, but as a business, we are looking at collaborations across Indonesia, as well as in Thailand, for green mobility and the sort of roaming charging capabilities.

Host (07:17): So, I guess I wanted to move into what I would label as broader questions about Malaysia and Gentari’s role in the clean energy transition. I was just wondering what your thoughts are on the current state of renewables in Southeast Asia. For example, is it on a good trajectory right now? Or do you think that there are challenges, like rising costs and inflation, that are having an impact on renewables expanding in the region in general?

Kian Min Low (07:50): I think the trajectory is definitely upwards. The region is demanding that we go towards the greener side of the energy equation. The energy transition is here and it's real. Southeast Asia, ASEAN, is a significant consumer of energy and, therefore, they will need to decarbonize for the world to reach net zero. Now, what we have, I think, is that the resource, energy, renewable energy resource is here in Southeast Asia, and the challenge is for the exploitation of those resources. What we have seen in the last few years has been a continued decrease in terms of the cost of installation of renewable energies, and that has meant that a lot of countries have managed to install quite a significant number of megawatts in terms of renewable energy. So that, I think, will and should continue for the foreseeable future.

Host (08:53): What are the main challenges you think are facing Southeast Asia right now in terms of renewable energy rollouts?

Kian Min Low (09:00): I think one is in terms of policy, in terms of clear goals by governments to ensure that there are clear policies and targets for renewable energy adoption. Two, is investment in transmission lines. We'll see quite a number of markets where there have been quite large installations of renewable energy projects, but it's been curtailed simply because the transmission lines and the grid systems are not capable of delivery, [of] all of those resources, if you like. Thirdly, I think in terms of financing, clearly, the world has benefited significantly from the low interest rate environment in the last decade or so. And presently, with the rising interest rates, that does present a significant challenge in terms of trying to get renewable energy costs to a lower number.

Host (09:58): Now, when you mentioned policy earlier, it reminds me of something that, if we jump back to Malaysia as an example, it reminds me of the Prime Minister of Malaysia, Anwar Ibrahim. He said recently that Malaysia does plan on becoming a leader of renewables in Southeast Asia. I wanted to just find out what you think, given [that] Gentari is Malaysian and given his goals, for example, what do you think Gentari’s role in that would be? And in your opinion, how fast do you think that this could potentially happen?

Kian Min Low (10:36): I think the sort of direction is quite clear in what we're trying to do. I think the Prime Minister is correct that Malaysia would be a leading player in the renewable energy space in this part of the world. About 30 years ago, when I first joined the industry, there was a talk of the ASEAN grid, and 30 years later, we are still talking about the ASEAN grid. I think the ASEAN grid can't happen without Malaysia being part of that process. At this point in time the renewables, if you like, growth has meant that it has levelized the playing field in terms of energy cost across the region and has now made the ASEAN grid a much clearer possibility. Right. In this space, I think, clearly Malaysia plays an issue like a gatekeeper role as a key connectivity for the ASEAN grid. I think the Prime Minister has been quite clear in his ambitions to increase the renewable generation use in Malaysia, as well as the ambitions for the ASEAN Green Energy Hub. I think those policy directions have made the ASEAN grid a much surer possibility in the near future. 

Host (12:04): By ASEAN grid, you mean basically just one giant electricity grid that would cover the majority of Southeast Asia, right? 

Kian Min Low (12:13): Correct. I think you will see, potentially, connections from the Indo-Chinese countries: Laos, Vietnam, Cambodia, through to Thailand, Malaysia, and down to Indonesia. 

Host (12:25): So I just wanted to go back and linger on some other things that Prime Minister Abraham mentioned about Malaysia wanting to achieve net zero emissions. But he said that this would be impossible without outside support. I wanted to find out from you what does outside support for renewables look like in Malaysia? Do you think that things like government support in maybe, for example, tax credits or subsidies or foreign investment, how would that be beneficial for renewables in Malaysia or even in Southeast Asia in general? 

Kian Min Low (13:01): I think the region and Malaysia would benefit from [the] acceleration of the rollout of green financing, right? The market has sort of explored the issuance of green bonds, for example, to try and achieve a lower financing cost for renewable energy. I think that effort needs to continue. I think in terms of other countries in the region where political risk remains an issue, where the framework for the revenue models is not as robust as in other regions, we would then want to see the multilateral agencies, the ADB and the IFCs and the big guys of the world stepping up and playing a bigger role in providing political risk covers for financing to occur in support of renewable energy projects in some of these countries in the region.

Host (14:04): What are your thoughts on, bearing in mind all those things you've said, it just reminds me of the just energy transition partnerships, like the one that was made in Indonesia recently. Do you think that something similar like that would be really beneficial for Malaysia, given what we've been talking about?

Kian Min Low (14:23): I think in relation to Malaysia and the rest of the region, I think that is clearly very helpful. I think the world, if you like, or the Western world, has benefited significantly from the use of fossil fuels in building their respective economies. At this time, the global south, if you like, is also now trying to grow its economies. They are essentially being told that they cannot use as much fossil fuels as the Western economies have used before and that, obviously, will present a challenge because energy is a significant component in the building blocks of any growth in any economy. So, as the world moves along this energy transition path, I think a clear and just energy transition program would be very useful for a lot of countries in the region to achieve that transition because we are talking about creating almost a brand new energy infrastructure for each of these countries, which would ill afford, I think, spending more money on infrastructure while they are looking out for other social programs that are essential to move the country forward, both socially and economically. 

Host (15:45): Yeah, there's definitely a big justice angle there as well, I think, and that kind of goes into a few more challenges. It reminded me, in terms of, I guess, in Europe right now they're having a few difficulties with offshore wind projects in terms of financial returns on renewables. Do you see the same challenges affecting Malaysia or Southeast Asia in terms of the returns on the investment? 

Kian Min Low (16:09): I think, in terms of the region, offshore wind is not likely to feature significantly simply because the resources won't be there. But I think the challenges, of course, will continue to affect all of the countries. I think we've talked about financing, as one, with rising financing rates that will clearly present a challenge to the end tariff that needs to be delivered at an increasingly lower level. That, I think, remains the first one. 

The supply chain issues are clearly there. I talked earlier about replacing, sort of, almost [the] entire energy infrastructure for respective countries. I mean, that means a significant amount of infrastructure that needs to be built. So supply chains will be an issue as we embark on this energy transition and as each country increases, if you like, exponentially the installation of renewable energy projects.

Host (17:19): In terms of renewable energy projects, what kind of focus is, you mentioned that wind, offshore wind in Southeast Asia in particular, probably won't feature at a significant scale. I'm just wondering what kind of things, maybe in particular, Gentari is looking at. Are you more solar focused, or are you more EVs and batteries, for example, or hydrogen? 

Kian Min Low (17:42): We look at all of that. I think solar, for the region, will be key. There are some countries more blessed than others in terms of wind resources, so those countries will exploit that. I think you're looking at countries like Vietnam and [the] Philippines, for example, where there are a bit more resources on the wind side. I think batteries will have to feature in each of these countries simply because we are looking at delivering an infrastructure that can deliver renewable energy on a 24-7 basis and, therefore, we will have to look at the batteries. This is especially true in countries where there are little or no hydro resources, where in those countries, the hydro facilities essentially will act as a battery for potentially time shifting of supply during periods where renewable energy is not available. In terms of other sorts of renewable energy sources, some countries, [the] Philippines and Indonesia in particular, have access to geothermal and that can provide a significant amount of baseload with renewable energy. 

Host (19:00): When you mentioned baseload, it reminded me of the conversation that's going around right now in regard to energy security. Now, do you see any issues during this transition in Southeast Asia, for example, where energy security could maybe come up and become an issue where, for example, baseload power is not being able to be provided from, say, renewables? Do you think that anything else can make up for that? You mentioned hydro, for example, but is there anything else that you think might have to play a role in the energy transition to keep the energy security issue at bay?

Kian Min Low (19:39): In the short and medium term, we see gas remaining as a transition fuel. Gas is still, if you like, the most transportable form of energy for energy generation, that is, on the cleaner side of the equation. So we see that for the short and medium term. Going forward, we are exploring hydrogen as a way to deliver power that is potentially deliverable on a 24-7 basis. 

Host (20:09): In regards to gas, I know that you mentioned [that] Gentari is also working in Australia, and I read just before this call that Gentari is cleaning up or trying to clean up gas facilities in Australia. Correct me if I'm wrong, but gas facilities in Australia with renewables. Do you see this happening more in, not only Australia but do you see it happening in Malaysia as well or elsewhere in Southeast Asia? How big do you think this can get and do you think that there's more potential there? 

Kian Min Low (20:41): Definitely more potential. The collaboration that we signed with TotalEnergies to deliver renewable energy to the Gladstone LNG facility in Australia is clearly an example of [the] decarbonization efforts that we are undertaking. The Australian example, I think, has caught more lakes, if you like. It has [the] potential to run further and grow bigger in terms of decarbonization efforts. In Malaysia, there are clearly decarbonization efforts that we will have to undertake at Petronas, and Gentari will play a significant role in helping that decarbonization effort. 

Host (21:26): How do you think that will happen in general? I mean, going back to the project in Australia, what are the finer details about how they're trying to decarbonize that side of the supply in terms of the production facilities?

Kian Min Low (21:41): A lot of these production facilities do use, sort of, gas that's being produced to drive the turbines and to generate electricity for these plants that liquefy LNG, for example. So the energy needs could be supplied from renewable energy resources. In that sense, you know, we will lower the carbon footprint of the entire facility and, therefore, the molecules that are eventually being delivered. So that is one aspect. The second aspect is [the] electrification of other processes. The more that we can electrify, the more we can then use renewable energy to drive the electrification process. 

Host (22:29): Now, some critics, especially, I mean I'm Australian, but then some critics here suggest that decarbonizing gas is kind of an ironic situation in terms of reaching net zero. How do you see that critique? Like, do you see that there's a conflict between cleaning up, say, a gas facility but then using gas itself? 

Kian Min Low (22:50): I think we are, as I said, in an energy transition and gas will continue to play a role in that transition. I think simply because the world is not ready for a hundred per cent renewable world. It will simply be too challenging and too expensive at this point in time to deliver immediately. So what we are doing is obviously helping that transition process. We are, at the end of the day, delivering a lower carbon solution than what it is at present when we are looking at decarbonizing gas generation facilities or gas liquefaction facilities, as you may. 

Host (22:32): Just being mindful of your time, Kian Min, I just had one final question that I wanted to pick your brain up on. It's to do with subsidies. I mean, not just in Malaysia, but also in many countries subsidies are used to make electricity cheaper. Especially subsidies in coal, for example, are used all over the world. Do you see the current energy subsidies causing a challenge for the transition to cleaner energy systems? Do you see it slowing things down a bit? Or do you think that this would be relatively straightforward? Maybe we could just shift the subsidies that are being used for, say, coal into renewables? How do you see this all playing out? 

Kian Min Low (24:14): I think subsidies will have a role to play in the energy transition. I think, like it or not, the energy transition is gonna be a very expensive exercise for the world. And, like it or not, at the end of the day, [it] will either be paid for by the consumers or the taxpayers, right? For us to embark on this net zero journey, there has to be the delivery of subsidy to be able to make some of these new energies work. For example, we are talking today about potentially delivering green hydrogen, that in itself is an expensive fuel today, right? You can compare that, if you like, to how wind and solar energy started almost 20 years ago. They were very expensive to begin with and the scale that it got to was driven initially, significantly, by the availability of subsidies in Europe, right? So. I think we see [a] similar, sort of, situation playing out in the newer greener fields, like hydrogen. Hydrogen today is expensive in terms of green hydrogen, and for it to work, some level of subsidy will need to be delivered, whether by governments, consumers, or taxpayers. So one way or another, some party will have to meet the increased cost of these new fuels.

Host (25:47): Yeah, it’s definitely a big job. That's for sure. And I share your thoughts on hoping this goes well. Kian Min, thank you so much for coming on. I really appreciate your time and your insights. It was great to get you on here. 

Kian Min Low (26:04): Thank you very much, Ashley.