DBS, OCBC and Maybank extend S$500 million loan to YTL PowerSeraya for hydrogen-ready power plant

[SINGAPORE] Some of South-east Asia’s largest banks – DBS, OCBC and Maybank – will be extending a S$500 million transition loan for the construction of Singapore’s first hydrogen-ready combined-cycle gas turbine (CCGT).

This is the first transition-finance transaction aligned with Singapore-Asia Taxonomy for Sustainable Finance, according to a media release by power generation company YTL PowerSeraya on Monday (Oct 27).

It is also structured in line with the Asia Pacific Loan Market Association’s green loan principles.

The financing is part of a broader S$1.2 billion term loan facility provided to YTL Power Seraya, with the three banks also serving as joint sustainability structuring advisers.

“This milestone demonstrates growing confidence in the commercial viability of transition technologies, setting a precedent for sustainable project financing in the region. This project signifies a milestone in Singapore’s ambitions to decarbonise its power sector,” read the press release, which was issued on the sidelines of the Singapore International Energy Week.

YTL PowerSeraya had been awarded the right to build, own and operate the 600-megawatt hydrogen-ready CCGT by the Energy Market Authority in January 2024 in its inaugural request for proposal for new generation capacity under the authority’s centralised process framework.

This framework guides generation companies in making hydrogen-ready and lower-carbon intensity solutions and technologies, as part of Singapore’s national efforts to decarbonise its power sector.

Set to be completed by end-2027, the power plant’s development officially commenced in October last year, with GE Vernova and PowerChina unit SEPCOIII appointed as consortium partners.

To further lower the carbon intensity of this upcoming power plant, YTL PowerSeraya is also embarking on two carbon capture and storage feasibility studies.

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It will work with Air Liquide to evaluate the potential of incorporating the industrial gas supplier’s technology into the pre-combustion phase of the upcoming plant.

The technology involves producing hydrogen by mixing oxygen with natural gas and steam in a burner to reform natural gas with a catalyst, and could potentially abate up to 15 million tonnes of carbon dioxide equivalent over the plant’s lifetime, said YTL PowerSeraya.

The company is also conducting another feasibility study to see how carbon can be captured and stored in the post-combustion phase with GE Vernova.

As one of the two manufacturers of the upcoming power generator, GE Vernova would be looking at how they can retrofit it with technologies capable of capturing 90 per cent of the plant’s carbon emissions.

“These technologies allow a gas power plant with post-combustion carbon capture solutions to operate more efficiently and cost-effectively, which reduces overall plant size, capital expenditure and operating expenditure while also boosting overall integrated plant performance,” said the release.

In a separate announcement relating to another power plant, YTL PowerSeraya would be working through its subsidiary Taser Power with Siemens Energy to deploy advanced turbine efficiency solutions at its Taser power plant.

The upgrade is expected to be completed by the end of this year, and aims to improve the power plant’s energy efficiency and reduce carbon emissions by up to 11,000 tonnes of CO2 equivalent annually.