Hydrogen: Sarawak must balance ambition with commercial reality

Borneo Post

3 days ago

Sarawak is on a promising hydrogen path but requires a cautious and commercially grounded approach to development.
KUCHING: Sarawak's push to become a green hydrogen exporter depends not just on infrastructure and technical ability, but also on the commercial viability of its project especially in securing committed buyers and meeting global standards for safety, efficiency and bankability.
This was the key message from Jerin Raj, managing director for Asia Pacific at global engineering and infrastructure firm Black & Veatch, on Sarawak's readiness and long-term prospects in the green hydrogen space.
Raj, who has worked in Sarawak's since 2011 and lived in Kuching for several years, said the state is on a promising path but urged a cautious and commercially grounded approach to development.
To note, Sarawak is aiming to export green hydrogen by 2030. Currently, it is spearheading two flagship projects currently in the Front-End Engineering Design (FEED) phase expected to complete by end of this year, namely the H2ornbill and H2biscus Project.
Combined, Sarawak will be producing up to 240,000 metric tonnes of green hydrogen per year.
Jerin Raj.
'On one hand, having timelines creates focus and discipline, while on the other, it is important to remember that Sarawak is on a journey and is heading in the right direction,' he said in an exclusive interview with The Borneo Post.
'What gives me confidence is the leadership and collaboration at the heart of the development. The right organisations are being brought in to develop the sector in the right way,' he said.
He stressed that long-term success will only come if Sarawak's hydrogen industry develops with sound technical and commercial pathways.
'If the development is done right and goes through the right technical and commercial pathways to make the investments sustainable, ultimately this will provide the most benefit to the region and its people over the long term,' he said.
Bankability, according to Raj, hinges on having viable and committed hydrogen buyers which requires not just technological readiness, but committed offtakers.
He said investors want confidence that facilities will be completed on schedule, operate reliably and provide stable returns.
At the of the day, he said investors want to reduce and manage their risk as much as possible, and receive steady and sustained returns from their investments over time.
'Hydrogen is still a new industry, so the most critical questions remain customer-focused: who will buy the hydrogen, at what price, in what volumes, and how will it be delivered?' he said, adding that globally, first wave of viable hydrogen projects only moved forward because they had committed offtakers and strong commercial propositions.
This highlights a central challenge in scaling up hydrogen. While its versatility across sectors is an advantage, it also means demand must be cultivated across a fragmented group of end-users.
Raj noted that governments play a key role in aligning investment timelines with actual demand to avoid mismatches in supply and uptake.
'As a new industry, the state has to continue focus on safety and setting the best practice standards. This can't simply be relying on existing oil and gas standards,' he said.
Don't rush into construction
From a technical perspective, Raj cautioned against rushing into construction or appointing engineering, procurement and construction (EPC) contractors too early especially in the development process.
He noted that hydrogen related infrastructure are first-of-a-kind projects, unlike traditional power plants, and they lack a wide pool of reference examples.
'Globally, only a few such ventures have reached full financing.
'This is why we advocate developers to go through the Front-End Loading process, and working through stage gates, and ask the hard questions both technically and financially.
Raj drew from Black & Veatch's experience in delivering or constructing over 245MW of green hydrogen capacity worldwide to drive home the point that doing the groundwork properly is essential.
That includes site evaluation, technical studies, and commercial analysis before moving to execution.
According to Raj, another often-overlooked element in hydrogen development is water. Green hydrogen is produced by using renewable energy to split water through electrolysis — a process that requires ultra-pure water.
Raj explained that it takes roughly nine litres of ultra-pure water to produce one kilogram of hydrogen, and poor water quality can lead to lower efficiency, higher costs and even equipment damage.
'If the quality of water supply is poor, then the water will need further treatment before being used in hydrogen production.
'Treating water to an appropriate quality level can be time-consuming and costly. Furthermore, the disposal of wastewater generated from the treatment process can be challenging and may result in environmental impacts if not properly handled.'
For Sarawak to compete globally, he said, water treatment and supply must be treated as a core part of project planning, not an afterthought.
When asked whether Sarawak could scale up hydrogen production without destabilising domestic electricity supply, Raj was optimistic.
With over 60 per cent of its current power generation already coming from renewable sources and abundant natural gas reserves, Raj said Sarawak has a strong foundation.
'Sarawak has great potential as a clean energy hub. It has abundant natural resources, including natural gas, and therefore has a strategic advantage that can be harnessed to develop a balanced energy mix both for domestic use and export.
He noted that curtailment of renewable energy, where surplus generation is wasted due to lack of demand, is challenging in many power grids. However, Raj said using that excess power to produce hydrogen is a practical solution.
'Using excess energy that is developed to produce hydrogen in these cases is certainly a feasible consideration.
'More than sixty percent of power generation in Sarawak is already from renewable energy and it has the potential to produce more.
'Natural gas will also play an important role given its availability. Such facilities complement renewables on grids today and, in the future, they can be also used to co-fire hydrogen,' he noted.
While Black & Veatch conducted a feasibility study on hydrogen commercialisation as part of the TNB–Petronas Joint Feasibility Study towards Malaysia's Net Zero 2050 goal, Raj declined to draw comparisons between Peninsular Malaysia and Sarawak.
'It's not particularly productive to compare. We still need to think of hydrogen development on a project-by-project basis, proving the commercial readiness of each proposed project,' he said.
He stressed that the global energy transition doesn't hinge on a single solution, but rather a full ecosystem of clean energy technologies.
'If we take a step back, our world's energy future relies on scaling renewables, enhancing storage and increasing grid stability.
'There's not one thing that will drive these objectives, but more so the entire ecosystem of our power industry, and hydrogen can play an important role in providing sustainable and long-term energy storage.
'This means, in terms of drivers, whether it is Peninsular or East Malaysia, hydrogen can help improve a nation's or region's energy security and may also emerge as a key fuel for other applications,' he said.
This, he said, is the test Sarawak must meet to ensure its projects are not only technically sound, but also commercially viable, bankable and built with long-term competitiveness in mind. hydrogen hydrogen production renewable energy