Solutions: UaaS to help Malaysia’s industrial sector reduce costs and combat climate crisis

This article first appeared in Digital Edge, The Edge Malaysia Weekly, on February 28, 2022 - March 06, 2022.
Solutions: UaaS to help Malaysia’s industrial sector reduce costs and combat climate crisis
-A +A

Utilities -as-a-Service (UaaS) outsources the design, development and management of plant utilities, saving money and reducing emissions.

Malaysia’s industrial sector contributes close to 40% of the country’s gross domestic product (GDP), but it is facing challenges, even as it emerges from pandemic-driven restrictions.

The country’s response to the global climate crisis is clear from the 12th Malaysia Plan (12MP), which aims to make Malaysia a carbon-neutral country by 2050.

This means that, while the industrial sector is growing rapidly, the country must simultaneously reduce emissions drastically.

Malaysia’s geographical location and its educated and low-cost workforce have attracted global players such as Facebook, Cargill Inc, Nestlé SA, Intel Corp and GlaxoSmithKline plc to set up manufacturing facilities across the country. Foreign direct investment (FDI) in Malaysia continues to grow — the country saw a surge of 223.1% year-on-year in the first half of 2021, mainly in the manufacturing, services and primary sectors.

Despite the advantages international investors see in choosing Malaysia as a manufacturing base, however, they must address the issues of reducing both their production costs and the associated carbon emissions.

To continue to prosper, the industrial sector must come up with new ideas to manage growth, costs and carbon emissions.

Quality risks being compromised by maintenance and reliability issues

For operational performance to consistently meet international standards, including an urgent spotlight on low carbon emissions, global companies’ local operations must have a reliable supply of utilities such as electricity, natural gas, steam, chilled water and compressed air, and the ability to monitor and control the performance of the facilities at all times.

However, existing plants have often grown organically with new facilities being added only when they are needed, each with its own supply of utilities. The addition of smaller expansion projects to the original plant can lead to random and inefficient duplication of the various elements of the infrastructure, with decentralised utility production that is less efficient and less reliable than centralised production.

Such centralised production of utilities drives operational costs down because of lower staffing and higher energy efficiency. This frees up the budget, which the industrial facility can then allocate to their core business.

Manufacturers are increasingly choosing to focus their manpower and capital on their core business instead of having to manage all the “housekeeping” that is also required to run an industrial facility. Providing them with a single point of contact for all on-site utility supply gives industrial players this focus, while reducing costs and improving their energy efficiency.

A new approach to the problem

Recent advances in the approach to industrial plant design and operation show that a solution is available, promising an end to operators’ utility supply headaches.

Outsourcing utilities management to a specialised third party is known as UaaS. This approach has already gained significant traction in Europe, where companies maintain a laser-sharp focus on their core business. Still a relatively new practice in Southeast Asia, UaaS gives a single expert contractor full responsibility — from the initial design to the construction, operation and maintenance of the facility’s utility infrastructure.

Legacy realities versus the vision for the future

In fairness to the legacy industrial facilities seen in Malaysia and elsewhere today, few were developed as turnkey projects and the results are obviously varied.

Catering for future expansion is often overlooked at the greenfield design stage and the focus is placed instead on meeting immediate needs — further magnifying the long-term issues.

The recovery from Covid-19 is a priceless opportunity for manufacturers to focus on sustainability and ensure their operations are adaptable and resilient, given the volatility of the economy and the environment.

The UaaS advantage

Under the UaaS model, the contractor provides all the engineering expertise and equipment necessary to guarantee that utilities are produced efficiently, in the right quantity and of the required quality.

It means plant owners are no longer responsible for the recurring costs of maintenance, allowing them to focus on their core business. In addition, they can expect to see all the long-term efficiencies and cost savings derived from the latest available technologies and best practices from design and build to operations and maintenance.

In the context of an escalating awareness of carbon neutrality, emissions control and climate change, all of the company’s regulatory and compliance requirements within its utilities needs and usage are managed by its UaaS provider, again enabling it to focus on its core business.

Sustainability wins from UaaS

The recent Intergovernmental Panel on Climate Change report on climate change has put even greater emphasis on the urgency of reducing emissions. The time for debate is over — we must adapt the global economic model to produce resilient and sustainable human environments.

The moral obligation is clear, and legislation increasingly mandates the shift to cleaner, more efficient and cost-effective systems.

The environmental and economic benefits of adopting the UaaS model for industrial infrastructure are straightforward to achieve and deliver both immediate and ongoing benefits to the facility owner and operator.

The UaaS contractor focuses its engineering expertise on designing for the lowest lifecycle costs instead of the lowest capital cost — the key to this, as well as to reducing greenhouse gas emissions, is improving energy efficiency. This may also include the replacement of old, inefficient equipment with state-of-the-art technology.

For example, a greenfield production site in the region adopted the UaaS model for a major project. The contractor guarantees the efficient and reliable supply of seven different utilities over a period of 15 years (cooling tower water, chilled water, hot water, compressed air, steam, and cold and hot glycol).

By optimising the design and leveraging synergies between different utilities, the project avoided the release of 550 tonnes of carbon dioxide per year. This was one of the first such projects in the region.

Guillaume Darmayan is head of industry solutions at ENGIE South East Asia Pte Ltd, an MNC that provides integrated and sustainable energy solutions, and operates district heating and cooling networks globally