Sarawak Power Generation (SPG) has signed its first ever Clean Development Mechanism (CDM) agreement and the Emission Reduction Purchase (ERP) agreement for the Bintulu Combined-Cycle CDM project, with Mitsubishi Corporation of Japan yesterday.

Aziz second from left shaking hand with Ichiro after their exchanging documents

The Bintulu project involves the conversion of the existing two open-cycle gas turbine generating sets (GT-7 and GT-8) in Bintulu Power Station to one block of combined-cycle power generation plant with a total capacity of about 330MW of which 110MW is new generation.

This project is eligible for CDM because it generates electricity without polluting the environment with greenhouse gases. The resultant reduction in emission of green house gases will be sold to SPG’s CDM partners, Mitsubishi, in terms of Certified Emission Reduction (CER) credits.

Yesterday’s CDM agreement, replacing the existing Memorandum of Understanding (MoU) between SPG and party with regards to CDM project. The ERP agreement is an international one and governs the sale of CERs by SPG and its purchase by Mitsubishi.

This agreement expands on the CDM agreement and contains the billing and administrative details for the sale and purchase of CERs. SPG is the subsidiary of Sarawak Energy Berhad (SEB).

Yesterday SPG director Tan Sri Datuk Amar Abdul Aziz Husain who is also SEB managing director and chief executive signed the CDM and ERP agreements on behalf of SPG while Mitsubishi’s vice president Ichiro Keida signed on behalf of his corporation.

Keida is also general manager of Mitsubishi’s Emission Reduction Business Unit, New Energy and Environment Business Division of Business Innovation Group. The event was held at the meeting room of Sesco in Petra Jaya Kuching.

In his speech, Aziz said SPG was proud to have Mitsubishi – one of the top three CDM developers in the world – as SPG’s CDM partners.

“The project scores many firsts – it is the first case of combined-cycle gas technology in Sarawak and the first CDM project for SPG and SEB Group It is also presently the largest CDM project ever approved by the Malaysian government.

“It qualifies under the Kyoto Protocol because it will make use of the waste heat from the existing open cycle GTs 7 and 8 to generate electricity,” he said.

Aziz explained: “The two heat recovery steam generators and various equipments will be installed to recover the 550 degree Celsius waste heat from the two GTs and convert it to electricity,”

He pointed out that the Bintulu CDM project is a very important environmental one for SPG as it is able to generate electricity to meet the ever increasing demand in Sarawak with no air pollution.

“As no additional fossil fuels are burnt to generate this additional energy, an annual emission reduction of about 600,000 tonnes of carbon dioxide will be achieved each year.

“Besides the reduction in emission, this combined cycle unit will improve the total system thermal efficiency of our plant to 50 per cent from the current 30 per cent,” he said.

“The cost of this conversion’ project is of course very large. As such the revenue from CDM greatly enhances the financial viability of this project,” he said.

Indeed, the combined cycle conversion project would not have been financially feasible without considering the CDM revenue from the project, he said.

Additionally, the project also contains large elements of technology transfer from Europe, Russia, the USA and China, he said.

SPG will be employing and training over 30 new local staff with various skilled levels to run the plant, hence increasing employment and skill level of SPG’s manpower, he said.

“I am confident that with the Letters of Approval from the government of Japan and Malaysia issued on June 20 and Nov 13 respectively this year, the project was expected to be registered with the United Nations Framework Convention on Climate Change by June next year.

“This project goes a long way in our commitment towards the development of cleaner generation sources in Sarawak and I am confident that in the coming years, the Kyoto Protocol will be further expanded after its expiry in 2012,” he said

In a press conference later on, Aziz said Mitsubishi would be buying the expected emission of around 600,000 tonnes of carbon dioxide per year at RM20 million annually over a period of seven years.

The Borneo Post