Sarawak Energy was also recently named a corporate winner at the UNGCMYB 2021 Sustainability Performance Awards for its efforts in line with the UN’s Sustainable Development Goal (SDG) Ambition Benchmark 7: science-based emission reduction in line with a 1.5 degrees Celsius pathway. In addition, its group CEO, Sharbini Suhaili, received the Sustainability Icon Award.

The big picture

Globally, the push for renewable energy is being driven by the 2015 Paris Agreement, which calls on nations to limit global warming to 1.5 degrees and achieve net-zero emissions. All UN member states have also adopted the 2030 Agenda for Sustainable Development, which includes 17 SDGs targeting issues such as poverty and climate change.

“Between 2010 and 2018, we can see that the share of renewable energy in global energy consumption had increased, but just slightly from 16.4 per cent to 17.1 per cent,” Dr Chen Shiun, vice-president for rural electrification at Sarawak Energy, remarked at SAREF, citing UN data.

The motivation for shifting towards renewable energy is clear, but challenges remain, particularly when it comes to financing. “In 2018, US$16 billion worth of funds were channeled into developing countries to support clean and renewable energy projects. But that was 35 per cent lower than in 2017, and only 32 per cent higher than in 2010,” Chen said. “We need to encourage and develop more international cooperation, especially for investments in clean-energy research and technologies.”

Providing power to all

In a SAREF panel session titled “Energy Poverty Eradication”, several speakers discussed how renewable energy plays an important role in helping to end poverty, which is the first goal on the list of the UN’s SDGs. For developing countries in Asean, collaboration is key to providing populations with affordable, reliable, sustainable and modern energy, in line with SDG No 7.

Countries with ready access to energy are able to build stronger, more productive and resilient economies. But as the financing ecosystem for renewable energy options is still developing, the upfront costs of making the switch can be prohibitive for poorer communities, despite the long-term savings and benefits it can offer.

Sooksiri Chamsuk, deputy representative and programme officer for the UN Industrial Development Organisation (UNIDO), shared an example from Cambodia, where it has proven difficult to persuade banks to support biogas production at rural pig farms. “It is actually not that financially attractive yet, because installing diesel generation sets for the communities is cheaper,” she explained. “This is where UNIDO comes in to talk to the banks, provide technical advice and help these farms invest in biogas production technology.”

In Sarawak – which shares the island of Borneo with Indonesia, Brunei and the neighbouring Malaysian state of Sabah – about 3 per cent of the rural population, comprising 14,300 households in remote villages, have yet to be connected to a utility-provided power grid, even though the state’s urban areas and rural townships are fully electrified. Existing grid lines are being extended to reach these distant areas, but for villages that lack road access – a prerequisite for grid connectivity – a hybrid solution is being implemented that uses 80 per cent renewable energy, mainly solar power, supplemented by 20 per cent diesel power.

For smaller, more remote settlements, the Sarawak Alternative Rural Electrification Scheme (SARES) provides stand-alone solar or micro-hydro systems that allow for a daily provision of three kilowatt-hours per household. Maintaining these systems is challenging due to Sarawak’s rugged terrain, which can call for the use of small planes, off-road vehicles, boats and even buffaloes to transport materials. But SARES operates under a government-community partnership model that sees villagers trained to handle basic maintenance like cleaning solar panels and replacing fuses, which has helped to resolve many logistical issues.

“For the more complicated or routine maintenance, the licensees – or, in this case, the utility service provider – still have to provide the services,” noted Syed Mohamad Fauzi Shahab, director of electricity supply for Sarawak’s Ministry of Utilities.

Ayu Abdullah, co-founder and co-executive director of the non-profit organisation Energy Action Partners, added: “At the very minimum, community engagement is required to ensure that the systems are fulfilling local needs and priorities, but you also require community involvement to ensure the sustainability of the system. You want local management and capacity to run the system independently.”

Making a business case for renewables

While the government-funded and Sarawak Energy-implemented SARES systems have been operating since 2016, moving into the funding phase for similar systems elsewhere may face obstacles because they are being set up in places that have limited scope for income generation.

Divyam Nagpal, programme officer for energy access at the International Renewable Energy Agency, emphasised to the discussion panel the importance of linking energy investments in developing countries to their local value chains. “The broader ecosystem needs access to financing, not just for energy technology, but also for agri-processing equipment and for appliances,” he said. “You need access to markets, and you need skills, not just to maintain the energy system, but also to upskill in terms of the enterprises that are going to be created.”

In another SAREF session, titled “Expanding Sarawak’s Renewable Energy Footprint”, Ting Ching Zung, executive vice-president of strategy and corporate development for Sarawak Energy, talked about how the company is focusing on cross-border electricity interconnection on Borneo with an aim to support the renewable energy transition across Asean.

As an example of what Sarawak Energy is looking to achieve, Ting pointed to Norway, which is nearly 100 per cent dependent on hydropower thanks to the interconnection across Europe that allows energy to be stored in other countries.

Work to develop the Borneo grid for interconnection began several years ago. “In this effort back in 2016, we managed to achieve our first power export to West Kalimantan in Indonesia,” Ting explained. “We are also currently in discussions with Brunei, and we signed a power exchange and interconnection agreement with the neighbouring state of Sabah earlier this year that extends interconnection to 2023 or 2024.”

The role of sustainable hydropower

Sarawak’s energy mix is predominantly hydropower, which is supplemented by indigenous natural gas and coal to ensure security of supply. But Sarawak Energy is planning to install floating solar panels in the reservoirs of its hydropower stations, with a pilot set to launch soon at the company’s 36-year-old Batang Ai plant. This combination will create more renewable energy storage while eliminating the need to cut down trees to build solar farms – on land, four to five acres of solar panels are required to generate one megawatt of power.

Over the longer term, Sarawak Energy wants to introduce green hydrogen as an alternative source of renewable energy. It is working with the state government and other partners to study how to reduce the cost curve for hydrogen, made possible by the early development of hydropower in Sarawak.

In the final panel session of SAREF 2.0, titled “The Renewable Energy Leaders Forum”, Suhaili, representing Sarawak Energy, was joined by leaders from the International Hydropower Association (IHA), Shell Malaysia, Sembcorp Industries and the Sustainable Energy Development Authority (SEDA) of Malaysia to discuss efforts to shift from brown to green energy operations, and the opportunities and challenges involved.

Earlier this year, the Malaysian government formally recognised hydropower facilities producing over 100MW as contributors to the country’s renewable energy and emission targets. With Sarawak’s hydropower generation counted towards meeting the national renewable energy target of 31 per cent by 2025, Malaysia is also able to commit to reaching a 40 per cent target by 2035.

This announcement coincided with the San José Declaration on Sustainable Hydropower, which was issued in September at the 2021 World Hydropower Congress organised by IHA, of which Sarawak Energy is a board member and strategic partner. The declaration, which provides a framework for enhancing hydropower’s role in the transition to clean energy, has been endorsed by government ministers, industry CEOs and non-profit organisations. It was also presented to world leaders at the UN Climate Conference (COP26) held in November.

During the forum, Roger Gill, president of IHA, highlighted the importance of the declaration. “The hydropower sector has committed to sustainability by adopting the San José Declaration. At its heart, it says that the only acceptable hydropower is sustainable hydropower. This is demonstrated by ensuring projects are certified using the newly launched Hydropower Sustainability Standard,” he said.

“The standard’s certification scheme will give communities, governments and investors greater confidence about hydropower’s net benefits and how impacts on the local environment are mitigated,” Gill added. “This means that hydropower projects can qualify for green financing, which sends an important signal to the wider market that hydropower represents a long-term, secure, sustainable investment. It is a clean, green, modern and affordable solution to climate change.”

Ibrahim Ariffin, director of strategic planning for SEDA, said: “There are a lot more standards in place, especially with the development of the Hydropower Sustainability Standard, which is based on the internationally recognised Hydropower Sustainability Tools, and also the requirement by the local authorities for any project of scale to comply with the environmental impact assessment and social impact assessment.”

On the right track

Things are moving in the right direction for the energy transition, with essential conversations taking place and targets set for adopting low-carbon energy systems.

The panellists conceded that commitments must be made to achieve sustainability goals and strategies, combined with purposeful collaborations supported by policies that encourage players in the energy sector to make the transition at an acceptable pace.

“The fact that green technology is new and does not have a long and proven track record is also an impediment to securing financing from financial institutions,” Sharbini said. “But of course, today they’re also becoming increasingly aware of the importance of sustainability risk and opportunities when making investments, and many of them have started considering ESG, for example, as a crucial aspect of their decision-making process.”

Singapore-based energy and urban solutions provider Sembcorp Industries has a strategic plan to direct the flow of capital towards sustainability. This year, Sembcorp raised S$1.1billion (US$806 million) through green and sustainable financing, including a sustainability-linked bond (SLB) anchored by an investment of S$150million from the World Bank Group’s International Finance Corporation. It is the first such issuance by an energy company in Southeast Asia, and is underpinned by clear sustainability targets.

Wong Kim Yin, group president and CEO of Sembcorp, said: “Sustainability is Sembcorp’s business, and we are fully committed to transforming our portfolio from brown to green. The issuance of our inaugural sustainability-linked bond underscores this commitment.”

Energy company Shell has set a target to become a net-zero-emissions business by 2050. This calls for reducing emissions generated by its operations and those produced from the use of its energy products, as well as offering green solutions to customers.

“Globally, we’re starting to offer and provide lower-carbon solutions like electric charging, hydrogen solutions, renewable power like solar and wind, and biofuels to actually diversify our product mix and lower our emissions,” said Ivan Tan, chairman of Shell Malaysia.

To achieve the ambitious global climate targets set for 2030, continued collaboration between countries and more concerted efforts will be key. The recent COP26 agreement reaffirms this worldwide commitment, with 200 countries agreeing to reduce the use of fossil fuels, among other efforts. For Asean, the discourse at SAREF 2.0 pointed to a promising decade of progress in renewables. While the overarching goal to cap global warming at 1.5 degrees is a daunting task, stakeholders in both government and business are showing that they are up to the challenge.