GLOBOMASS ASIA

CONFIDENTIAL PROJECT INFORMATION PRESENTATION

RICE HUSK PROJECT – KEDAH “ RE 9 “

CONFIDENTIAL AND PROPRIETARY INFORMATION

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1 EXECUTIVE SUMMARY

The developer intends to develop own and operate a rice husk fuelled power plant with
15MW gross capacity in Kedah state, northern Peninsular Malaysia. (RE9)

The project will benefit from a 16-year PPA with the main power company – Tenaga Nasional
Berhad (“TNB”). The power plant is designed to fire rice husks, with rice straw and wood chips
as alternative fuels.

Status – the project already holds an REPPA issued 2014 to sell 7.9MW to the grid and has
approval to increase the energy sold to 15MW.

The project site is located in the town of Naka, in Padang Terap district, Kedah state, northern
Peninsular Malaysia. Kedah, which is at the centre of the main rice production region in
Malaysia, borders south-western Thailand.

The site location is considered strategic and falls within the overall plans and purview of
Malaysia’s Northern Corridor Economic Region (“NCER”) (see 3.5).

Table 1: Project Execution Target Dates

Target Date Milestone
MARCH 30, 2020 Initial Operations Date

SEPT 30, 2020 Commercial Operation Date

Key features of the project include:

ü The availability of a secure and stable supply of quality biomass feedstock

ü A long-term contract for offtake of the plant’s electricity and / or heat
ü Large biomass feedstock volumes that justify the technology and scale of plant
operations
ü Biomass is available as process residues which can be purchased at relatively low cost
ü The cost of collecting, transporting, and storing the biomass is relatively inexpensive
ü Access to project financing at affordable rates and acceptable terms

Regulatory environment :

To meet the rapid growth of electricity demand fuelled by the expansion of the Malaysian
economy, securing steady supply sources of electricity is a matter of vital importance.

Currently, the country is relying heavily on fossil fuel combustion, with coal accounting for
almost 70% of the total fuel mix. The Government of Malaysia has placed continuing emphasis
on promoting renewable energy to lower the dependence on conventional power.

The Energy Commission of Malaysia (“EC”) acts as the chief regulator of the electricity sector
in the country and state-owned utility TNB is the sole-buyer and dominant player in the power
generation sector in Peninsular Malaysia. Around 50% of total electricity installed capacity in
Malaysia is owned by the private sector though Independent Power Producers (“IPPs”).

In line with the Eleventh Malaysia Plan, renewable energy (“RE”) has been prioritised as an
alternative energy source to support the country’s continuously increasing energy demand.

Currently, Peninsular Malaysia has a total licensed RE capacity of 392MW, comprising solar PV
(235MW); biomass energy (89MW), mini hydro (34MW) and biogas (34MW).
TNB is committed to support development of Malaysia’s renewable energy by investing in
infrastructure that allows more RE to be connected to the grid. TNB’s efforts lend support to
the Government’s renewable energy target, as stated in the 11th Malaysia Plan, to achieve
2,080MW of RE installed capacity by the year 2020. In response, TNB has set its own target,
under “Reimagining TNB,” to achieve a renewable energy capacity of 1,700MW by 2025.

Together with the Sustainable Energy Development Authority (“SEDA”), TNB administers and
manages the implementation of the Feed-in-Tariff (“FiT”) program that is mandated under
the Renewable Energy Act 2011. This program pays Feed-in Approval Holders (“FiAH”) a fixed
price for their electricity as a pioneering incentive. This has led to the commissioning of 7,367
FiT projects in Peninsular Malaysia with an installed renewable energy capacity of 379.4MW as
of July 2017.

Figure 1 – Malaysia: Renewable Energy Capacity Mix (MW) 2015 vs 2016 y-o-y

Globally, energy production has increased steadily in recent years. Malaysia’s electricity
production has grown apace and is projected to increase at an average rate of 5.3% per
annum from 2005 to 2030. Deployment of RE and advances of RE technology will increase
with FiT implementation in Malaysia. RE will contribute significantly to electricity production in
the near future.

Figure 2 - Forecasted global demand for energy

2. Investment highlights - Impact:

§ An attractive Malaysian investment environment: The project provides a good

opportunity to participate in Malaysia’s renewable energy market, which has
attracted considerable investor interest and investments in recent years. Support for
renewable energy in Malaysia is strong and continues to grow, and the Malaysian
government is viewed as a reliable long-term partner.
 § Balanced ownership structure: The current ownership structure combines a highly
experienced renewable energy developer, who deliver a global power plant
operations team and have relationships in place with highly regarded investors.

§ Proven technology: The suspension-fired Boiler is manufactured by Yoshimine Co Ltd

Japan and a Japanese Steam Turbine Generator. This equipment has a proven track
record, and makes reference to the Roi-Et Rice Husk Power Plant in Northern Thailand.
The power plant will operate on a ‘zero-water’ discharge philosophy. It produces
high-quality rice husk ash as a by-product and is able to co-fire rice straw and wood
chips.

§ Solid fundamentals of Malaysia’s energy market: The growth in demand for electricity
and gas is expected to further increase domestic electricity prices. In addition,
renewable energy capacity is projected to grow strongly, driven by long-term
government policy.

§ Strong financial projections: Awarded and signed a 16-year Power Purchase

Agreement with TNB to sell up to 7.9 MW of electrical power to the grid.

§ Added revenue from the sale of by-products: The power plant produces silica-rich rice
husk ash (“RHA”), used for specialty cement production and other applications.

§ Reduction in carbon footprint: The MEE plant is expected to reduce greenhouse gas
emissions by an estimated 43,500 tCO2/yr, for which carbon credits will be sought.

§ Near-term RE capacity expansion plan: The Project Sponsor plans to construct a new
5MW rice husk to energy power plant on nearby land that it has already acquired or
other suitable location.

§ Contracted capacity with Tenaga is 7.9 MW. The Plants added / reserve capacity,
may be sold to Tenaga or other off takers in due course and or added battery storage

§ LLH and Bumiberas are major Malaysian rice millers and distributors.-
http://www.bernas.com.my/

1.3 Project Financial Projections Snapshot

Parameters Projection
Project Internal Rate of Return (IRR) 14%
Levered IRR >20%

Payback period 7 years

Debt Service Coverage Ratio (DSCR) 1.35x

2020 2022 2024 2026 2028 2030 2032 2034 2035

USD USD USD USD USD USD USD USD USD
TOTAL REVENUE 7,029,049 7,029,049 7,029,049 7,029,049 7,029,049 7,029,049 7,029,049 7,029,049 7,029,049
EBITDA 4,756,854 4,527,049 4,273,999 3,995,351 3,688,517 3,350,644 2,978,592 2,568,904 2,225,266
EBITDA % 68% 64% 61% 57% 52% 48% 42% 37% 32%
EBT 2,317,725 2,468,723 2,584,186 2,662,962 2,703,542 2,576,667 2,280,078 1,938,494 1,626,377
EBT% 33% 35% 37% 38% 38% 37% 32% 28% 23%
NPAT 1,970,066 2,098,414 2,196,558 2,263,518 2,298,011 1,932,500 1,710,058 1,453,871 1,219,783
NPAT % 28% 30% 31% 32% 33% 27% 24% 21% 17%

INTEREST
REPAYMENT 1,146,446 891,680 636,915 382,149 127,383 0 0 0 0
 1.4 Project Incentives

In July 2016, the development Company received approval from the Malaysian Investment
Development Agency (“MIDA”) for a 70% income tax exemption from statutory income,
for a 5-year period. In addition, the project has been given a 2% rebate on interest expense
from the GreenTech Financing Scheme (“GTFS”).

2. Project Objectives

The objective of the Company is to deliver an operational Rice Husk Power Plant that will
commence its Feed- in Tariff Commercial Operation Date (“FiT COD”) by September 30th,
2020 within an overall budget of MYR106 million (USD26 million).

The Power Plant’s design will meet the following performance criteria:

ü Maximum net power generated of 9.95 MW

ü Minimum electrical efficiency (@100% load) of 20%
ü Minimum boiler efficiency (@100% load) of 85%
ü Maximum steam turbo (@100% load) of 15,000 kJ/kWh
ü Generator heat rate (@100% load) of 15,300 kJ/kWh

Figure 3 – Approved Plant Layout

The power plant will improve the power supply situation in the area and in Kedah in general,
especially since, aside from the dedicated power plant in the Kulim Hi-Tech distribution loop, this
will be the first major power plant in mainland Kedah. The plant design is based on proven
technology, using the Yoshimine Boiler system and Japanese Turbine, both of which are in
successful operation at various energy plants.
 Table 2 – Development Costs (CAPEX)

Items Cost (MYR) Cost (USD)

Boiler & Steam Turbine 48,524,500 11,835,244
Air pollution control system 4,159,000 1,014,390
Civil, structural & building (includes rooftop 8,517,000 2,077,317
solar)
Distributed control system 2,773,000 676,341
Cooling water system 2,079,000 507,073
Fuel handling & ash delivery system 5,545,000 1,352,439
Electrical plant system 5,007,000 1,221,220
Water treatment plant system 2,773,000 676,341
Feed water system 2,079,000 507,073
Grid electrical interconnection system 7,097,000 1,730,976
Engineering 5,574,000 1,359,512
Start-up cost (operations & fuel) 6,000,000 1,463,415
Critical spares 5,872,500 1,432,317
TOTAL 106,000,000 25,853,659

Table 3 – Key Terms of the Renewable Energy Power Purchase Agreement (“RePPA”)

Key Terms of Agreement Summary

Date of RePPA (executed) Aug 27, 2014
Effective Period 16 years
Approved license number M2014050002
Installed Capacity 9.9500 MW
Net Export Capacity 7.900 MW
Scheduled FiT Commencement Date March 31, 2020
Feed-in Tarif Rate MYR 0.3685 per kWh
Test Renewable Energy Between the IOD and COD; TNB will buy at 30%
of
prevailing displaced cost

** An LC facility negotiated with both MDV and AmBank is in place for the purchase of the boiler and turbine
2.2 The Roi-Et Green Rice Husk Power Plant in Thailand ( reference project )

Roi-Et Green Power Plant Project was established in 2003 as a corporation comprising three
shareholders: Electricity Generating Public Co. Ltd. (“EGCO”), J-Power, and Som Mai Roi-Et
Rice Mill. With 9.8 megawatts (MW) of designed capacity, the company’s power purchase
agreement, signed with EGAT under its SPP Project, mandates the sale of approximately 8.8
MW for a period of 21 years.

The contract commenced 29 May 2003 when transmission through the power line started. Roi-
Et Green Power Plant consumes up to 300 tons of rice husk per day, or approximately 80,000
tons per annum, in generating the power of its 9.95 MW capacity. The plant’s 8.8 megawatts
of electric power transmitted to the grid is approximately one-third of the electricity demand
of Roi-Et province.

The power produced by the plant also helps reduce power losses from long
transmission lines. The benefits derived from Roi-Et Green have helped strengthen
the province’s economic development.

We intend to mirror this project on our MALAYSIAN project site

Figure 3 - Boiler & Combustion Technology installed at Roi-Et Green

Figure 5 – Ground-level view of Roi-Et Green Biomass Plant

3 BUSINESS OVERVIEW ( structure )

The special purpose vehicle (“SPV”) will be established for development, execution and
administration of the 9.95 MW Biomass Fired Power Plant in Naka, Kedah. The Company will
establish an administrative office at, Shah Alam, Selangor.

The project business model will be based on three sources of revenue: Sales of Electricity +
Sales of Rice Husk Ash + Fuel Trading.

Rice Husk Ash (“RHA”) is a by-product of rice husk combustion. Fuel Trading will target the
purchase and sale of rice husk that exceeds the MEE plant’s own feedstock requirement of
90,000 mt per annum. Surplus rice husk will be sourced primarily from rice mills in Northern
Malaysia (e.g., in and around the area of the plant).

I NV ES TOR S TI N S H AR E H O L DE R S

S SPV 2 *

E quity for Proj ect BANKS

7.9 M W s old to T N B
u n d e r 6-year P P A
Supplier
s

s
3.3 Site Location and summary of the Northern economic corridor

The biomass plant is being constructed on a 6-acre site in Naka, Kedah. The location was
selected based on the availability of rice husk in the region as well as the close proximity to
the electricity distribution network. The power plant will be located 35 kilometers north of Alor
Setar, the capital of Kedah. The reference coordinates for the power plant are 6° 8' 0" North,
100° 40' 0" East.

At present, the area is sparsely populated, with the nearest house about 500m away. Two
chicken rearing farms are located about 300 m from the site of the proposed Power Plant.
The nearest population centre is Kuala Nerang, which is approximately 15 km away. The
nearest school, places of worship, medical clinics and police station are located about 1.5, 2
and 2.5 km from the proposed site respectively. There is a small workshop about 800m from
the plant along the main road, while the TNB sub-station is 1 km from site.

The size of the power plant has been limited by the load demand in the vicinity. The plant will
be exporting power to TNB Grid via PPU Naka. The power plant will be designed to export
continuously to Tenaga not less than 7.9 MW of electricity at 33 kV, 50 Hz. This is to match the
system characteristics of TNB Grid at the area, based on the results of the Power System Study
(PSS) conducted by TNB (Reference: Report Number AMD/PSS/2014-32, Applicant
RE/PSS/0455: Power System Study: Proposed Interconnection of 10 MW Biomass Plant at Lot1,
Tapak IKS, Pekan Naka, 06350, Kuala Nerang, Kedah). To achieve this requirement, a suitable
Grid Interconnection System will be installed.

Currently, earthworks and foundation works have commenced and progress of the
development of the project is on schedule.

Figure 4 – Location of the MEE power plant

Naka: Site of the

Biomass Power Plant.
Figure 9– Location of BERNAS Rice Mills in the states of Kedah and Perlis *

* Note: “KBB” is the abbreviation for “rice mill” in Bahasa

As can be seen in the figure, the MEE biomass power plant will be strategically located in the
centre of the rice (husk) production areas of Perlis and Kedah, the two largest rice producing
states in the country.

4. Local Economic Benefits and Costs

Benefits:

§ Increased income for local farmers from sales of biomass (Rice Husk)
§ The MEE plant will provide a local source of renewable energy for commercial and
residential customers
§ The creation of local jobs (either at the MEE plant or in the agricultural sector)
§ Possible infrastructure improvements, such as grid connection or improved roads for
biomass transport

Costs:

§ Potential environmental impact due to emissions from the plant

Note: The plant is designed to fully comply with all applicable environmental
standards. [For details, see Table 9: Risks & Mitigants ]

5. Macro-level Impacts and Costs

The Project is expected to provide a number of Macro-level benefits, including:

§ Additional production capacity, contributing to a stable energy supply

§ Reduce the need for fossil fuel subsidies in the public budget
§ Improved industrial production and employment creation due to the stable energy
supply
§ Increased energy security, making the country less dependent on fossil fuel
§ Reduction of greenhouse-gas emissions, as energy from biomass typically has lower
emissions compared to fossil-based energy sources
§ More environmental benefits from reducing fossil fuel-based electricity generation
§ Improved air quality and reduced health costs
6. Overview of the Northern Corridor Economic Region (“NCER”) – Surrounding the project

The NCER, launched by the 5th Prime Minister of Malaysia on 31 July 2007 encompasses the
northern states of Perlis, Kedah, Penang, and northern Perak. It spans 32,559 square kilometres
(sqm) with 1,031 sqm in Penang, 9,425 sqm in Kedah, 795 sqm in Perlis and the whole of Perak
(21,308 sqm). (EPU 2014). The policy blueprint for the socioeconomic development in the
NCER region for 2007–2025 was prepared by Sime Darby Berhad; the largest government-
linked business conglomerate in Malaysia.

Penang is the most industrialized among the four NCER states with manufacturing directly
contributing over 46% of gross domestic product (GDP) compared to the NCER average of
31.6% and national average of 23.2% during the period 2010–2015. Kedah, Perak, and Perlis
are predominantly agricultural, with abundant land, rich natural resources, and ample
prospects for further development.

The driving idea behind the formation of NCER was to leverage on the growth momentum of
more developed regions in Penang to lift the growth and incomes of poorer regions located
in Perlis, Kedah, and Perak. In particular, the NCER expects to leverage three core strengths to
bridge the development divide between Penang and the other three states: physical
connectivity, a mature business ecosystem, and a pool of skilled and industry-ready
workforce

The NCIA operates under the Economic Planning Unit (“EPU”) of the Prime Minister’s
Department, which is the coordinating/monitoring body of the economic corridor program.
A PPP unit (“UKAS”) was created in the Prime Minister’s Department to encourage private
sector participation as prime movers in the implementation of the program. UKAS is the core
agency that has been given the responsibility to coordinate the Privatization and PPP
projects that are eligible for funding from a facilitation fund operated by UKAS.

The implementation of the NCER blueprint is divided into three phases. The first phase (2007–
2012) was to lay the foundation through constructing “priority infrastructure” and securing
anchor investors. The second phase (2013–2015) was devoted to broadening and deepening
private sector involvement in the region and fostering foreign and domestic business
networks and linkages. The third phase (2016–2025) is focused on efforts to achieve regional
market leadership through sustainable market-led growth.

Among the new projects to be implemented in the NCER are:

§ Kedah Rubber City Project

o Located in the heart of the natural rubber belt that lies in close proximity to the
Malaysia– Thailand border, this project aims to promote natural rubber-based
industries. A sum of RM320 million was allocated in the federal Budget 2016 for
the project. When fully operational in 2025, the 1,500-acre (607 hectares) city
hopes to attract RM10 billion in investments and generate between 15,000
and 20,000 jobs

§ Kedah Science and Technology Park

o The state government of Kedah, with financial support from NCIA, is planning
to develop a second industrial park, the Kedah Science and Technology Park,
on a 1,950-acre site in Bukit Kayu Hitam. It aims to provide “world-class facilities
and support services” such as well- equipped high-end research laboratories,
business incubation centers and technology business incubators, and research
institutions with shared facilities, led by industry. The emphasis will be on
collaboration between academia, government, and industry to lead research
and commercialization projects. It is expected that the park will create 23,244
jobs by 2030
 § Chuping Valley Development Area

o Based in Padang Besar, Perlis, the project aims to promote three clusters (solar
energy generation, green manufacturing, and halal industries) encompassing
an area of 2,482 acres. The green manufacturing initiative aims to attract
activities using or emphasizing green materials (or technologies) in
manufacturing, electrical and electronics and automotive industries, and
property development.

§ Perlis Inland Port (PIP) Project

o The PIP, spanning 200 hectares, is a RM1.5 billion project that will serve as an
additional infrastructure node to the existing Padang Besar Cargo Terminal on
the Malaysia–Thailand border. On completion, the PIP is expected to become
the largest inland (dry) port in the peninsula with its impact being felt not just in
Perlis but also in Kedah, with its Rubber City in Padang Terap.

The Biomass Power Plant is situated in the centre of future developments under the NCER and
will be a natural provider of energy to support these projects.

Figure 5 – Growth Nodes of the Northern Corridor Economic Region

7. Potential Risks and Mitigants

In the case of biomass energy projects, the supply of raw materials (“feedstock”) is a risk area
that requires careful attention, particularly with respect to feedstock:

• Availability
• Pricing
• Security

In Malaysia, as in many areas of the world, changing weather conditions have directly
affected the availability and price of rice husk.

Table 9 – Potential Risks and Mitigants

RISKS
Revenue risk
Fuel price and volume risk
Power plant availability risk
Power plant operating risk
Environmental risk
Financing risk
Political risk
Construction risk
Commissioning risk
Fire and Explosion risk
MITIGANTS
- MEE is taking steps to expand biomass energy
production,
which will add to electricity sales revenue.
- Additional revenue from the sale of Rice Husk Ash
- Potential revenue from the sale of Carbon Credits
- Continuous sourcing of rice husk from several major
suppliers
- Expansion of rice husk storage capacity (enabling
the stockpiling of additional feedstock)
- Ability to co-fire or substitute rice husk with other
types of biomass (e.g., rice straw and wood chips)
- Long-term maintenance planning
- Experienced O&M team
- Experienced O&M team and organization
- Installation of advanced emissions control equipment
- Continuous monitoring of stack emissions
- Elevation of power plant above monsoon flood levels
- Pay-back of short-term financing by expected expiry
dates
- Pay-back of long-term financing by expected expiry
dates
- Note: The Project’s Debt-Service Coverage Ratio is
1.35x
- New Malaysian Government is strongly committed
to Green
Technology and Renewable Energy development
- Government committed to long-term PPAs and
extensions
- Good project management team
- Reputable and experienced technology suppliers
- Performance bond in place and specifically
mentioned in EPCC Award Agreement
- Owners are engaged in every part of project
development
- Agreement with Technology Partners (i.e., Shin
Nippon and
Yoshimine) obligates them to commission electrical,
mechanical, instrumentation & controls in
accordance with a pre-agreed schedule and
procedures
- Careful design of the fuel handling and transportation
system
and by specifying maintenance and safety
procedures in the plant operation instructions
To mitigate feedstock supply risks. The developer has established a long-term business
arrangement with BERNAS (the largest rice milling and distribution company in Malaysia) to
off-take rice husk from their mills, as well as from privately-owned rice mills in Kedah and Perlis.

300,000 mt of rice husk per annum can be sourced from rice mills located in the northern rice
region of Peninsular Malaysia. Note: This compares with the plant’s feedstock requirement of
90,000 mt of rice husk per annum.

Any excess rice husk can be stored or sold to third parties, at the developers option.

Project Incentives:

In July 2016, the development Company received approval from the Malaysian Investment
Development Agency (“MIDA”) for a 70% income tax exemption from statutory income, for a
5-year period. In addition, the project has been given a 2% rebate on interest expense by the
GreenTech Financing Scheme (“GTFS”).

8. Feedstock Characteristics and Combustion Process

Rice Husk compared with other solid fuels, has the following characteristics:

• Its high silica content causes the wearing of the components in processing machines,
such as the chopper or grinder. Content of volatile matter in Rice Husk is higher than
in wood and much higher than in coal, whereas fixed carbon is much lower than in
coal. The ash content of Rice Husk is much higher than wood and coal, which causes
barriers for energy conversion

• Its high content of ash, alkali, and potassium causes agglomeration, fouling, and
melting in the components of combustors or boilers (Baker 2000).

Rice Husk has a very low bulk density, allowing roughly 8 tonnes to be transported in a 40 ft
trailer. Currently, MEE is collecting and transporting Rice Husk from 12 Bernas milling
complexes to several storage sites. In addition, MEE is developing agreements with private
rice mills to secure long-term feedstock supplies. MEE is actively managing relationships with
local rice mills, which gives it a very good understanding of the Rice Husk market in the
region.

Figure 6 - Bio-mass Combustion Process

4 MARKET OVERVIEW

4.1 Business environment in Malaysia

Malaysia’s historic May 2018 General Election saw a change in government and the
inauguration of Tun Dr Mahathir as the country’s 7th Prime Minister. The new government has
instituted a corruption-free and business-friendly administration. Malaysia remains resilient and
growth is forecasted to be bullish.

Figure 7 – The impact of key issues on Malaysian Businesses

2. Foreign ownership and control

The policy of foreign ownership in Malaysia is set out in the Foreign Investment Committee
Guidelines. Generally, foreign firms are limited to a 49 per cent equity share. Should majority
control be required, preference shares instead are issued to the foreign party delivering
overriding control.

The Energy Commission was established on 1 May 2001, under the Energy Commission Act
2001. The Energy Commission is primarily responsible for regulating the electricity and piped
gas supply industries in Peninsular Malaysia and Sabah, delicately balancing the priorities of
energy providers and the needs of consumers. The Energy Commission is committed to
ensuring reliable, safe and cost-effective supply of electricity and piped gas to all its
consumers.

3. Energy policies and objectives

There are many challenges and issues with regard to energy supply and demand in Malaysia,
including energy security, fuel supply and pricing, especially gas pricing, renewable energy,
energy efficiency and conservation, sensitivities of nuclear energy options and the
restructuring of the electricity supply industry. Energy security has been always been an
important issue highlighted by various agencies in supporting Malaysia’s socio- economic
growth trajectory towards becoming a high-income nation by 2020. A key focus of Malaysia
with respect to energy security is to ensure a continuous supply of energy at affordable
prices, including a growing share of renewable energy, to offset the gradual depletion of
indigenous oil and gas resources.
Malaysia’s energy development is currently guided by the National Energy Policy, which was
introduced in 1979 with three key objectives, namely: Supply, Utilization and Environmental
Protection.

• Supply objective: Ensure adequate, secure and cost-effective supply of energy.

• Utilization objective: Promote efficient utilization of energy and discourage wasteful
and non- productive patterns of energy consumption.
• Environmental Protection objective: Ensure factors pertaining to the environment are
not neglected in the production and utilization of energy.

To achieve these three objectives, various related polices were formulated; the National
Depletion Policy was introduced in 1980 to safeguard the exploitation of natural oil reserves,
and the Four-Fuel Diversification Strategy policy was introduced in 1981 (i.e., oil, natural gas,
coal and hydro). These polices accelerated the transition from a dependence on oil as the
main energy source to natural gas as a cleaner and cheaper source of energy.

This policy was then succeeded by the Five-Fuel Diversification Policy in 2001, with the addition
of Renewable Energy (“RE9”) as a fifth fuel source to complement oil, natural gas, coal and
hydro.

As part of its initiative to ensure adequate, reliable and cost-effective supply of energy, the
adoption of clean- coal power generation technology was also encouraged. All these policy
initiatives were conscious efforts by the Government to diversify fuel sources for power
generation to ensure sufficient and reliable power at affordable prices.

Figure 8 – Evolution of Energy Policies

Biomass-to-energy is recognised as a sustainable solution that can reduce greenhouse-gas
emissions, assuming the use of secondary and tertiary biomass to substitute for the use of fossil
fuels. The country’s agricultural and forest-based generate a substantial amount of biomass
residue and waste that can, in principle, be used for energy production.

Biomass energy projects can provide many advantages, such as:

ü Offering a cheaper and more stable supply of energy (including electricity,

steam and heat) for domestic consumption
ü Additional income from the sale of surplus biomass energy (whether electricity, steam
and/or heat)
ü Providing environment-friendly energy solutions (e.g., district heating or cooling)
ü Reducing greenhouse-gas emissions by using biomass feedstock instead of fossil
fuels such as oil, gas, or coal
ü Reducing the solid waste and waste water disposal problems associated with fossil
fuels

With regard to pursuing green technology growth, Malaysia has set a goal to reduce CO2
emissions per unit of GDP to 40 percent of 2005 levels by 2020 and has laid out the following
four policy measures (IEEJ, 2015):

1. Formulate a demand side management master plan and expand demand side
management in buildings and the industrial and residential sectors.
2. Set the green procurement rate for government agencies at 20 percent
3. Boost renewable energy generation from 243 MW in 2014 to 2,080 MW in 2020.
4. Set the household recycling rate at 22 percent.

Figure 9 – TNB Green Policy

4. Electricity generation, transmission and distribution

Electricity generation, transmission and distribution in Malaysia is dominated by three utilities:

• Tenaga Nasional Berhad (“TNB”) in Peninsula Malaysia;

• Sabah Electricity Sdn Bhd (“SESB”) in the State of Sabah; and
• Sarawak Electricity Supply Corporation (“SESCO”) in the State of Sarawak

TNB, a publicly listed company, has a monopoly over the transmission and distribution of
electricity in Peninsular Malaysia. TNB is responsible for electricity generation, transmission and
distribution and retail supply in Peninsula Malaysia. TNB was formed in 1990, following the
corporatization of the National Electricity Board in line with the implementation of the
Government’s privatization policy. Since 1996, TNB has been undergoing substantial internal
restructuring with the formation of many subsidiary companies. Presently, TNB Generation
Sdn. Bhd. (a wholly owned subsidiary TNB) is entrusted with the function of the generation
business and the transmission and distribution section taken over by TNB Transmission Sdn. Bhd.
and TNB Distribution Sdn. Bhd. respectively.

The other main electric utilities, SESB and SESCO, are involved in the generation, transmission
and distribution activities in the East of Malaysia. To keep pace with the goal of making
Malaysia a developed nation by the year 2020 and meet the expected national demand for
electricity, the Government has turned to the private sector to supplement the supply of the
required generating capacity with the introduction of IPPs. As a result of pressure for extra
capacity in the early 90’s, IPPs were introduced into Malaysia in 1994. IPPs were to
complement the national utility (TNB) in meeting the increased demand for electricity.

Under current regulations, IPPs are allowed to sell electricity to two of Malaysia’s three utilities,
namely TNB or SESB.

5. Utilities interconnection policies

There is no domestic interconnection among Malaysia’s 3 utilities, as historically and

geographically, each utility is responsible for supplying electricity within its own geographic
region, namely:

• TNB - Peninsular Malaysia;

• SESB - Sabah and Labuan;
• SESCO - Sarawak.

Malaysia currently has two cross-border interconnections, namely between Peninsular

Malaysia and Singapore and Peninsular Malaysia and Thailand.

The Peninsular Malaysia interconnection to Singapore is between TNB and Singapore Power
(“SP”). The interconnection is from Plentong in Southern Malaysia to the Senoko Power Station
in Singapore via an overhead line and submarine cable.

The Peninsular Malaysia interconnection to Thailand is between TNB and the Electricity
Generating Authority of Thailand (“EGAT”). The interconnection is between Chuping in
Northern Peninsular Malaysia and Sadao in Southern Thailand via an overhead line.
6 POWER PLANT OPERATIONS

The power plant uses Rice Husk as the main fuel and diesel as a supporting and start-up fuel.
The plant can also utilise rice straw and wood chips to fire its boiler.

Figure 10 - Process Flow Diagram

The table below shows the minimum and maximum values of the main components of the
rice husk and ash used for the design of the power plant (all components, except moisture
content, are based on over dried rice husk). An alternative fuel scenario is a 50:50 mixture of
rice husks and wood chips. No pre-treatment is required in both primary and secondary fuel
scenarios. A maximum of 20% fuel input of Rice Straw can also be added to the fuel mix.

Table 5– Rice husk physical properties

Heating value a/
Heating value dry (HHV) 12 600 kJ/kg
Heating value dry (LHV) 11 400 kJ/kg
Rice husk physical property by weight
Moisture content 10.0 %
Ash 19.6 %
For normal operations of the plant, a stockpile of 7 days rice husk biomass feedstock is
maintained. However, the 6-acre site includes a rice husk storage area which allows MEE to
store up to 6,300 tonnes of rice husk representing 21 days worth of feedstock for continuous
use in the power plant. In order to better protect itself from the risks associated with the
quality of rice husk, MEE will consider expansion of storage capacity after 12 months of
operations. The plant is designed to store up to 90,000 tonnes of rice husk annually,
representing 300 days-worth of feedstock for continuous use. MEE is also investigating the
cost-effectiveness of briquetting or compacting rice husk to increase its storage capacity.
Preliminary analysis shows a capacity increase by approximately a factor of 8.

The power plant is designed to produce a net power output of 9.95 MWe. The boiler capacity
is 50.0 t/h with steam parameters of 52 bar(a) and 425 °C. The steam turbine is a condensing
extraction type and the electrical system is based on a 12.4 MVA generator. The majority of
the power is transformed to a voltage level of 33.0 kV by the step-up transformer and
exported to the distribution network.
 Table 6 – Key features of the MEE plant boiler and steam turbine generator

Boiler Summary
Manufacturer Yoshimine
Capacity 50.0 t/h
Design pressure 52 bar (a)
Design temperature 425 +/- 10 deg C
Steam turbine generator
Manufacturer SIEMENS
Turbine type Horizontal, impulse, multi-stage, multi-valve, axial
flow,
condensing, extraction, geared (down exhaust
type)
Turbine inlet steam pressure & 40 Bar (g) / 420 deg C
temperature
Turbine exhaust steam pressure 0.2 Bar (a)
Turbine maximum inlet steam flow 49.5 t/h
Turbine speed 7,800 RPM
Generator type 4 pole synchronous generator
Generator rated voltage 11 kV
Generated speed 1,500 RPM
Rated output (at generator terminal) 12,437.5 kVA
6.2 Emissions

Waste Water: The MEE plant design reflects a ‘zero-discharge’ philosophy, meaning there will
be no waste water discharge from the plant into the environment under any circumstances.
To achieve this, all plant waste-water (including the boiler blow-down, the cooling tower
blow-down and the demin water plant regeneration water) will need to be directed to an
evaporation pond for the water to be evaporated into the air. The overall process flow
diagram and detailed process flow description can be found in Appendix 2 and 3.

Table 7 – Air and Noise Emissions

Emission Design Criteria
Particulates 50 mg/Nm3
NOx as NO2 300 mg/NM3
Sox as SO2 100 mg/Nm3
Noise level of equipment Not exceeding 85 dB
Noise level at the boundary of the power Not exceeding 65 dB
plant
Unburned carbon in bottom and fly ash 55.0 t/day
Source: MEE Plant Design Data

3. Operation and Maintenance

Post successful commissioning of the plant, the Operations and Maintenance activities of the
plant will be executed by three departments as below:

1. Operations
Operations personnel will consist of a 24-hour operations team and a day
operations team working during normal hours.

The 24-hour operations team will comprise 3 shifts of 8 hours each, consisting of 1
Operator and 1 Patrolman. A roster will be kept to ensure that at any time, 1 shift
will be on duty, 1 shift will be off duty and 1 shift will be on standby. This team will
be responsible for the main power island operations, power evacuation and all
balance of plant systems and chemical monitoring.
6.4 – Overall Power Plant Process Description

Fuel Feeding System

The main fuel for this plant is rice husk, with diesel oil used as supporting and start- up fuel. The
rice husk will be transported to the power plant by truck via weight bridge station, where the
delivered amount of rice husk and the moisture content per truck is registered. Upon delivery,
the rice husk can either be sent to the rice husk storage area or to the one-day storage
building for immediate use. The average rice husk flow at 10MW net output is 12.5 t/h (300
tonnes per day).

Flue gas systems

After the fuel has entered the boiler furnace via the burners it is burned in the furnace area of
the boiler. During this process, as a by-product of the combustion, ash is produced. The
heavy parts of the ash (about 5- 10%) will fall to the furnace floor, where it will be extracted
from the boiler by a water-cooled screw conveyor. From there the ash will be transported to
the ash silo. The hot air and lighter ash particles will be drawn from the furnace area together
with the hot flue gases towards the second pass of the boiler by the under pressure in the flue
gas path, which is created by the induced draft (“ID”) fan. The hot air will give part of its heat
energy to the wall tubes, which work as the evaporator of the boiler.

When reaching the top of the boiler, the hot air and particles will pass the primary and
secondary superheaters, which are located at the top of the boiler between the furnace
area and second pass (the so- called ‘convection pass’). Here energy is transferred to the
super-heated steam, which will drive the steam turbine. in the second pass of the boiler and
in the ducting between boiler outlet and stack, the flue gas and particles will pass a number
of steps.
Economizer

The flue gas is directed to the economizer. In the economizer, the flue gas transfers its energy
(heat) to the boiler feed water coming from the boiler feed water pumps. The feed water
control valve will be placed after the economizer in order to prevent steaming in the
economizer during start up.

Electrostatic Precipitator

After having gone through the Economizer the flue gas reaches the Electrostatic Precipitator
(“ESP”), where the ash particles will be almost all removed from the flue gas flow. Initially, the
flue gas flow enters the mechanical pre-collector which is located at the entrance of the ESP.
The larger particles are heavier and will go straight while the flue gas is re-directed. These
particles fall in the hopper, from where they are evacuated by the ash handling system.

After having gone through the mechanical pre-collector, the flue gases enter the ESP. The ESP
extracts the smaller ash particles from the flue gas. This is done by charging the ash particles.
A large number of electrical wire (electrodes) are located in the ESP. These wires get
energized by applying a high voltage to them. Large steel plates are also located in the ESP.
The high voltage of the wires charges the ash particles which are then drawn on to the
plates. With certain time intervals a hammer falls on to the system and the ash falls off the
plates into the hoppers of the ESP. The hoppers are equipped with electrical heaters, which
are used at start up. During normal operation, the heaters are not required because of the
relatively high temperature of the ash itself. The ESP consist of three independent fields, which
can be switched on or off independently. After coming out of the ESP, the ash content will be
almost completely removed from the flue gas and the emission of dust particles at the outlet
of the stack will be below 50 mg/Nm3.

Induced draft (ID) fan

Before the flue gas reaches the chimney or stack it has to pass the louver damper of the
induced draft (ID) fan and the ID fan itself. The purpose of the ID fan is to create a draft
through the flue gas systems by creating a pressure differential or “under pressure.” The under
pressure in the systems depends on the pressure in the furnace, which is measured and which
is the control parameter for the ID fan. The under pressure in the systems (= air flow through
the systems) is controlled by the louver damper upstream of the ID fan.

A higher airflow (louver damper more open) will create a higher under pressure in the furnace.
The open position of the louver damper depends on the boiler load, which determines the
heat input and thus the amount of fuel burned and the amount of flue gases produced. The
ID fan is always running at the same speed while the louver damper is used to control the
pressure by opening or closing it.

Chimney or Stack

After having passed through the ID fan the flue gas is directed towards the stack. From there
the flue gases will enter the atmosphere from the top of the stack.

CEMS

The Continuous Emission Monitoring System (“CEMS”) is located in the stack and measures the
different emission components from the flue gas. The components measured are NOx, SOx,
CO, CO2 and O2. Besides these components, the opacity is also measured. Opacity is an
indication of the particle emissions of the power plant. The CEMS system is a complete
standalone system, including sampling, flue gas conditioning, analysers and a data
acquisition system, which is able to automatically generate reports for governmental institutes
and monitoring purposes. In addition, the CEMS will send the emissions levels to the Distributed
Control System (“DCS”) via a hardwired connection and the emission levels will be shown on
the DCS.

Bottom ash conveyor

During the combustion process, ash will be produced. The heavier particles will fall down on
the furnace and will get collected in the hopper at the bottom of the boiler. From there the
ash will be removed by a water- cooled screw conveyor. This screw conveyor is located in
the bottom of the boiler hopper. A dense phase pneumatic system transfers the ash from the
outlet of the screw conveyor to the ash silo.
ESP ash removal system

A number of hoppers are located underneath the ESP and the pre-collector. Ash from the flue
gas flow is collected in these hoppers. A dense phase ash removal system is installed at the
bottom of the hoppers. Using compressed air as a medium, the removal system transports the
ash from the hoppers to the ash storage silo. A dense phase system consists of a vessel
underneath the hopper, which is filled up with ash.

When the vessel is full, then the inlet will be closed by an automatic gate valve and the vessel
will be pressurised with compressed air. The expanding air pushes the ash out of the vessel
through a pipeline into the ash silo.

Ash handling system

The ash is collected in the ash bunker. The ash can be disposed of by two separate methods.
One is the bagging of the ash in large plastic bags. After the bag is filled up, it will be carried
away with a fork lift to the ash storage yard. The second possibility to dispose of the ash is via
trucks. The ash handling system also includes a truck loading facility with an ash conditioning
system for dust prevention.

Thermal Deaerator

The thermal deaerator removes the non-condensable gases from the condensate and make-
up water flow and maintains maximum oxygen content. The thermal deaerator consists of
two parts: the deaerator dome (top) section and the feed water storage tank below the
dome. Condensate water coming from the condensate pumps enters the dome at the top
via a spray water valve.

Almost all steam will condensate in the deaerator dome. A small amount of steam will leave
the deaerator through a vent valve at the top of the dome, taking the non-condensable
gases with it. The pressure in the deaerator at base load operation will be 3.0 barg. Before the
condensate reaches the deaerator, the line has a connection with the make-up water line.
This line comes from the demin water pumps and a control valve in the line controls the level
in the feed water tank and adds water to the system, when the level in the feedwater tank
comes below its set point.

Another connection to the deaerator is the connection from the flash tank, which introduces
the flashed out continuous blow down steam back in to the deaerator for re-use. Another
connection which feeds back the drain of the soot blower system and the atomizing steam
system back in to the deaerator. A safety valve is located on the top of the deaerator to
protect the deaerator from over pressurization.

Boiler feed water (BFW) pump

There is one BFW pump to boost the feed water in the feed water tank to the required
pressure for the boiler. The BFW pump takes the water from the demin feed water tank.

Boiler

From the BFW pump, the water enters the economizer (where the water is heated to
approximately 110 degrees Celsius) via the feed water control valve, which regulates the
water level in the steam drum. The feed water is fed into the steam drum. A number of tubes
connect to this drum. They are located in the flue gas path and work as evaporators. From
the drum the water is let in to the wall tubes of the boiler. The wall tubes also work as an
evaporator. The dried steam leaves the drum at the top and enters the superheaters. The
superheater consists of a primary and secondary superheater. After having gone through the
primary and secondary superheaters, the steam leaves the boiler at a maximum temperature
of 425 degrees Celsius.

The boiler will be a Sub Critical Stoker Fired Biomass Boiler due to its simplicity of the boiler, and
“fit for service”. The major concern of utilising Rice Husks is the high amount of silica in ash,
which can cause erosion of tubes. The boiler furnace will be designed such that the flow of
flue gas will be slowed down to reduce the impact of erosion.
Table 8 - Boiler Specifications
UNITS NOTES

Boiler Type Sub Critical, Natural

Circulation, Balanced
Draft, Pneumatic
Spread Stoker Boiler.
Economiser and Gas
Preheater Included.
Main Steam Flow (@ Kg/hr 76 000 10% margin over
BMCR) 100% Load

Main Steam Pressure Bar(a) 42

at
Rated Load
Main Steam Deg C 425 At Boiler Steam
Temperature Outlet

Feedwater Deg C 110 Optimization to be

Temperature carried out
(Economizer Inlet) during
detailed
design

High Pressure (“HP”) steam line

The HP steam line transfers the steam from the boiler to the steam turbine. A couple of devices
are located on this line. First, a safety valve is located on the HP steam line. The set point of
this valve is lower than the setting of the safety valves of the steam drums minus the pressure
loss in the superheaters. This to ensure that in case of over-pressurization there will always be a
steam flow through the superheater of the boiler and in this way protecting the superheater
tubing from overheating.

Second, there is a flow measurement installed in the line, together with pressure and
temperature measurement for the correction of the measured flow value. This value is shown
in the DCS. Finally, just before the steam turbine stop valve, a drain valve is installed for
warming up the line during start-up. The steam drained is fed into the steam turbine blow
down tank. Where required, steam traps will be installed to remove any condensates from
the steam line. In addition, the HP steam line a start-up vent valve and a branch off to the
steam turbine bypass.

Steam Turbine Generator

The steam turbine is a horizontal, impulse, multi-stage, multi-valve, axial flow, condensing,
extraction, geared (down exhaust type) with a rated output of 12 437.5 kVA. The steam
turbine will be running at a speed of 7,800 revs per minute (rpm), while the generator is a 4
pole type and will be running at a speed of 1,500 rpm.

A gearbox between the turbine and generator converts the 4,900 rpm of the steam turbine
into 1,500 rpm of the generator. The gearbox is a horizontal single reduction, double helical
gear type. At the inlet of the turbine, one emergency stop valve and one governor valve are
installed. The governor valve controls the actual steam flow to the turbine itself. The governor
controls the power output of the steam turbine. On the steam turbine there are two
extraction ports installed. The extraction at a pressure level of 40 barg is installed, but is not
connected. The extraction at a pressure level of 3.0 barg is actually connected and will be
used for providing steam to the deaerator. The lube oil system of the steam turbine consists of
a main lube oil pump, an auxiliary lube oil pump, a main oil control pump, an auxiliary oil
control pump and an emergency oil pump. The main lube oil pump is shaft driven. The
auxiliary lube oil pump, a main oil control pump and the auxiliary oil control pump are driven
by AC motors. The emergency oil pump is driven by a DC motor.

The gland steam system uses steam extracted from the HP steam line. Two exhaust fans are
installed on the gland steam condenser, one running and one stand by. The steam turbine
generator is a four pole generator,
which operates at a speed of 1500 rpm and a voltage level of 11.0 kV.

The steam turbine has its own independent turbine control panel (simplex type) and
generator control panel. The panels are connected with the DCS, where the most important
data are visual and from where the turbine can be operated. The critical signals are
hardwired with the DCS, while the less important signals are exchanged via a modbus
connection (a serial communications protocol). A vibration monitoring system is installed on
the turbine and generator bearings to sound an alarm when any excessive vibrations occur in
the steam turbine or the generator. The vibration monitoring consists of X-Y probes. These
data will also be available in the DCS. An alarm will be sounded when the value exceeds a
certain level, while an automatic shutdown will be initiated at a second, higher vibration
level.

The steam turbine will also include a Water-Cooled Surface Condenser, utilising closed-loop
cooling water circulation. The water will be cooled by air-cooled heat exchangers.

Condensate system

The condensate system extracts the condensate from the condenser hotwell. From here the
condensate flows through the gland steam condenser and the air ejector steam condenser.
After passing through these two condensers, the condensate either flows back to the main
condenser or is directed to the deaerator. This is controlled by the condensate circulation
valve, which controls the level in the hotwell. The level in the hotwell is kept always constant.
The surplus water which is not required to maintain the hotwell level is transferred to the
deaerator.

Water Pre-Treatment System

Water to be utilised at a steam plant has to achieve a certain level of quality. This ensures the
boiler tubes and piping are protected from corrosion. Water quality is also controlled to
ensure the steam turbine is not damaged by impurities, which at high pressures can damage
the system. Water is circulated in a closed loop cooling water system for the condenser, and
has to be of good quality to prolong the life of the condenser tubes, piping and cooling
tower. Intake water for the steam plant will be treated to meet set specifications.
The demin water plant has a capacity of 6 m3/h. Each train consist of a carbon filter, a cation
exchanger, an anion exchanger and a mixed bed exchanger. The treated water pumps
pump the water through the carbon filter and the cation and anion exchanger and mixed
bed exchanger to the demin water tank. The demin water tank consists of two tanks each
with a capacity of 45 m3.

Electrical systems

The steam turbine generator operates at a voltage level of 11.0 kV. From the generator, the
majority of the power is transformed to a voltage level of 33.0 kV by a step-up transformer
located in the switchyard. From the high voltage terminals of the step-up transformer, the
power is exported to the TNB distribution network via the switchyard.

Synchronization of the power plant to the TNB grid can be done at 11.0 kV generator circuit
breaker. During start up, the power plant will receive power from the grid. Once the steam
turbine is started and the generator is ready to produce power, the steam turbine generator
will be synchronised to the grid via the generator circuit breaker when all conditions are met.
When the power plant is running in island operation, the transformer circuit breaker will be
opened.

The plant is controlled from the control room by the operations staff. An overall distributed
control system (DCS) has been installed to give the operators in the control room all
information required for the operation of the plant. Some of the equipment has its own
control systems (e.g., the steam turbine, electrostatic precipitator and the water treatment
plant). From these individual control systems, the important parameters are visible on the
DCS. Alarms by the individual systems (sometimes common alarms) will be transferred to the
DCS to alert the plant operators.
 7 FINANCIALS

The financial projections have been prepared based on the terms of the Company’s
Policies, RePPA and the Operations and Maintenance planning established by the
operations team.

Table 9 – Key assumptions underlying the financial projections

No. Item Assumptions
1. Electricity generation @ 300 days operations per year
2. Feed-In 7.9MW capacity @USD 0.0899 per kWh
Tariff Pricing Power producers are paid in MYR
Projections assume revenue remains
constant every year (and do not
Include revenue from planned 5MW
expansion of capacity in 2021)
3. Rice Husk pricing and consumption USD 6.00 per mt; annual consumption
108,000 mt, with a 10% increase in cost
every 2 years
starting 2021
4. Ash sale pricing and volume of sales USD 73.00 per mt/volume of 13,140 mt per
per annum
annum
5. Surplus feedstock sales price and USD 7.80 per mt/volume of 70,000 mt per
volume annum [over and above the 90,000
of sales per annum mt per annum consumed by the
MEE plant]
6. Operations and maintenance costs Approximately USD 1 million per annum
with
5% increase every year
7. Other operating costs Approximately USD 60 thousand per
annum with 5% increase every year
8. Taxes Net of Tax Incentive; assumed at 15%
effective
tax rate per annum
9. CAPEX USD 25.8 million
10. Finance cost 6.3% per annum; net of interest rebate of
2%
from GreenTech Financing Scheme
11. Loan Tenure 7 years with 2 years grace period
12. Accounts Receivable Days 45 days
13. Accounts Payable Days 30 days

We seek to secure majority ownership from the current developers.

Delivering our project management team and engineers into a highly scalable project.

Your investment is sought to support this exciting development.

We will be glad to address any relevant questions

Annex A

MILESTONES ACHIEVED BY THE EXISTING DEVELOPMENT GROUP

Conclusion

Investment Offers Significant Upside Opportunities

§ Beginning Investment Opportunity in a New, High
Value Industry

§ Significant Competitive Advantage

- Complementary Technologies
- Operating Technologies
- Superiority to competition in key areas

§ Financially Attractive Business Model

- Diverse Revenue Streams
- Guaranteed pricing to construct plant

§ Highly Scalable, Global Business Model

- Tremendous upside potential with further opportunities
beyond the base business plan
- The company continues to develop additional business
lines and new energy data measurement technologies
in the renewable energy space

§ Committed Experienced Management and Globally Addresses Multiple Economic, Social

Leadership Team with an Exceptional Track Record and Environmental Issues