Tenaga to Invest $1.4 Billion to Repower Paka Power Plant for Clean Energy

By Ying Xian Wong

Malaysian state utility Tenaga Nasional Bhd. is teaming up with oil-and-gas company Petroliam Nasional Bhd. to invest in green hydrogen and carbon capture, a collaboration that could help advance the country’s carbon-neutral aspirations.

As part of the collaboration, the government-owned companies will repower a retired combined-cycle gas-fired power plant in Paka, Terengganu, by using gas with hydrogen-ready technology to equip it for cleaner production.

Tenaga will invest 6.3 billion ringgit ($1.40 billion) in the effort, President and Chief Executive Baharin Din said in a statement Thursday. Petronas didn’t say how much it is investing in the project.

Tenaga will also do joint studies with Petronas in the decarbonization space. It said it hopes to “unlock commercial value of at least MYR10 billion” via its work with Petronas, without providing further details.

The project to repower the gas plant in Paka will start next year, and is scheduled to be ready in 2030, Mr. Baharin said. He expects the plant to generate an average of MYR250 million annually in earnings before interest and taxes, and to avoid the equivalent of carbon dioxide emitted by approximately 700,000 cars each year.

The collaboration with Petronas is part of Tenaga’s push to reach net zero by 2050 and to half its coal capacity by 2035.

Tenaga’s CEO said the group is phasing out its coal and gas plants, some of which will transition to new green technologies, such as co-firing and carbon capture, utilization and storage. It also plans to explore clean-hydrogen production.

Many of Malaysia’s top companies are taking similar steps, as the country aims to be carbon-neutral by 2050. Petronas has been active in the carbon-capture space, recently signing agreements to do feasibility studies with South Korean companies, while Bursa Malaysia is preparing to launch a voluntary carbon market this year.

Write to Ying Xian Wong at yingxian.wong@wsj.com

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