“The waste to wealth approach, where waste is transformed into a valuable commodity, is a particularly exciting component in building an energy-efficient economy moving forward” – Yap Fook Woh, General Manager, INTEC Energy Systems Sdn Bhd.
What are INTEC’s main business development strategies over the short- to medium-term? What area is particularly exciting for the local industry?
To provide some context, INTEC Energy Systems Sdn Bhd (INTEC) is a subsidiary of the INTEC Group, which is based in Germany, and the company specialises in the development of energy systems. The Malaysian office has been in effect for 11 years and oversees operations in 11 nations across Southeast Asia, delivering distinct energy equipment and services to diverse range of clients.
INTEC’s expertise in the region has traditionally been in the delivery of highly efficient equipment coupled with latest technology, for biomass energy applications, for use in either power plants or for standard heat generation purposes. More recently, operations have expanded towards the downstream with the delivery of equipment that specialises in, for example, the thermal sewage sludge drying and incineration.
Sewage sludge drying technology is important from an energy efficiency and sustainability perspective because it can remove moisture and contaminants, such as heavy metals, chemicals and bacteria from sewage sludge so it can be converted into energy. This energy can be used to generate process heat for the drying process or generate electrical power, which can be fed back into the national grid. The final by-product is ash, which are free of biogenic contaminants and have a high phosphate content and, consequently, are superbly well suited for further industrial processing in the fertilizer industry.
While this waste disposal practice, where sludge is treated, turned into energy and reused, is common in markets such as Europe and other developed nations, it remains only an aspiration in Malaysia. Therefore, there are extensive opportunities for strategic growth in this direction. The waste to wealth approach, where waste is transformed into a valuable commodity, is a particularly exciting component in building an energy-efficient economy moving forward.
To fulfill the potential of this particular market, efforts are required from both the public and private sector. Towards that end, INTEC is well positioned to contribute, due its solid technology development track record in Malaysia and the company’s specific know-how in waste to wealth endeavours from its European operations. Currently, awareness about this practice is gaining traction and its feasibility as a cost-effective and marketable business opportunity is rising.
Beyond waste to wealth, and regarding the regional perspective, INTEC has developed dozens of small-scale biomass power plants in Thailand and Japan and we aim to further consolidate opportunities in this segment in the short term. Significantly, the leaders in green technology design in this area are European nations, such as Germany, and so the challenge for Malaysian players is to apply best practices and adopt similar measures in the local market wherever possible. Given that our parent company is German, INTEC is very excited about its business opportunities in both biomass power plants in the region, and newly emerging segments such as waste to wealth.
What are the main challenges facing the sector in terms of rolling out the latest energy-efficient technology?
First, the major challenge to replicating the latest technology in Malaysia, such as waste to wealth and waste to energy equipment, is price. For instance, similar technology provided by regional competitors from China or India is often a fraction of the price.
Despite the high prices, INTEC has successfully delivered waste-fired energy plants for two of Malaysia’s leading forestry companies and these plants have high rates of efficiency coupled with low operating costs. Moreover, the clients are happy with their installations.
The key to combatting the challenge of price is to improve not only the technology’s efficiency, but also its reliability and simplicity. In particular, a waste to energy power plant must be designed to be robust, simple to operate, reliable, and capable of delivering a guaranteed amount of operational hours over the long term.
In terms of improving technology that has already been deployed, INTEC is prioritising ongoing efforts to upgrade existing equipment, including installed boilers and heaters, thereby increasing efficiency by between 5 and 8 per cent. Typical equipment, such as a boiler with no heat recovery, registers efficiency of approximately 84 to 86 per cent. INTEC heaters for gas-fired equipment can reach up to 96 per cent efficiency if upgrades are made by installing an economiser or heat recovery system. Clearly, this can lead to significant energy savings for clients and reduced emissions across the board.
Second, the key challenge is not necessarily technology per se; it is rather people and their perceptions. In terms of INTEC, the company’s track record is proven and our loyal clients understand this. However, if a competitor is offering a similar service to a new client, that may or may not be energy efficient, but is 50 per cent cheaper, Malaysian entities might be priced out of the market. This is because there is a prevailing mindset that cost is more important than energy efficiency. Consequently, if Malaysia is serious about securing a low-carbon future, this mindset must change.
Platforms such as International Investor are useful in this context because they can disseminate information and promote thought leadership on waste to energy solutions by outlining the importance of maintenance, operational costs, efficiency of time, and degradation of performance, among other factors. This information exchange is a critical part of changing mindsets.
What is the one game changer that could strengthen the Malaysian energy efficiency ecosystem and drive it to the next level?
The biggest game changer is to enable the private sector to continue to drive progress, with assistance and input from the government in the form of a flexible regulatory framework specifically dedicated to the energy efficiency sector. Much prominence, for example, is given to government-linked companies and these entities do a solid job of strengthening energy efficiency efforts. However, due to their structure, they lack the maneuverability required to take advantage of the opportunities energy efficiency affords. Thus, greater progress would be made by boosting privatisation and enabling the market to propel the energy efficiency ecosystem to the next level.
This includes lightening regulations and following through on government plans to liberalise the electricity supply market. These actions would boost competition in the sector and facilitate the access of renewable forms of energy generation, such as solar self-consumption, to the national grid. Such moves have been implemented in European markets including the UK, as well as in Singapore, and they should be replicated in Malaysia.
Another important step, and one that is already being taken, is the government’s commitment to gradually phase out gas subsidies until market price parity is reached. In the past, industry was reluctant to engage in equipment enhancement initiatives because cheap energy prices meant that there was little incentive to save. However, this mentality is changing and private sector actors are increasingly investing in efficiency upgrades and equipment because gas prices are rising. It therefore makes financial sense to mitigate emissions and reduce costs, and this outlook will continue as gas subsidies reduce further.
Are there any untapped segments in Malaysia that INTEC would like to pursue further?
Despite INTEC’s proven track record in distinct markets and different regions around the world, the company has faced certain challenges in gaining access to the national rubber segment, particularly the rubber glove industry. The untapped potential in this area is huge since Malaysia is one of the largest exporters of rubber gloves in the world. That is why INTEC is keen to explore opportunities further in this sector.
The pull factor of this particular industry is that the production of large quantities of rubber gloves requires significant amounts of energy. There are huge opportunities in this segment due to the fact that the efficiency rates of the equipment used to produce the rubber gloves are low and, moreover, energy efficiency as a whole is not currently a priority area for the players. This is largely the result of the revenue-generating power of the major actors operating in this space, in which large profit margins do not translate into incentives to save energy.
The industry is dominated by seven large publicly listed companies, although there are also a number of smaller players. Regardless of their precise efficiency rates at present, every one per cent increment in energy efficiency could have a significant financial impact on industry players because of their large margins and gearing on the profit. Given our experience in the installation and upgrading of energy-efficient equipment, in conjunction with the high rates of energy consumption in the rubber glove market, INTEC will continue to pursue all relevant options in the future.