Sembcorp secures long-term power purchase agreements with GSK subsidiaries

Jovi Ho

26 June 2024 at 9:47 pm·3-min read

The agreements have tenures of up to 10 years and will commence Jan 1, 2025.

A wholly-owned subsidiary of Sembcorp Industries U96 has secured long-term power purchase agreements (PPAs) with subsidiaries of global biopharma company GSK.

According to a June 27 bourse filing, the subsidiary — Sembcorp Power — will supply up to 10 megawatts (MW) of electricity to all three of GSK’s global manufacturing sites in Singapore.

Sembcorp Industries will also be supplying up to 87,600 megawatt-hours (MWh) of renewable energy certificates annually to GSK from its solar projects. This will enable GSK’s manufacturing operations in Singapore to achieve its 100% purchased renewable electricity target by 2025.

The PPAs have tenures of up to 10 years and will commence Jan 1, 2025.

Sembcorp has grown its gross renewable energy capacity to 14.4 gigawatts globally. This figure assumes 100% ownership of assets, including projects secured and under construction, and an acquisition in Vietnam that is pending completion.

The signing of these PPAs is not expected to have a material impact on the earnings per share and net tangible assets per share of Sembcorp for the financial year ending Dec 31.

In a separate press release, GSK says its on-site solar panels are already generating 3% of its facilities’ power needs in Singapore.

GSK says its manufacturing facilities in Singapore are critical for the production of innovative medicines and vaccines for HIV, oncology and infectious diseases. This deal is part of GSK’s ongoing investment and commitment to Singapore, where GSK has had a presence since 1959 and today employs over 1,500 people.

GSK says it has invested more than $2.5 billion in Singapore to date.

Vickrem Vijayan, head of energy commercial, Singapore at Sembcorp, says: “As a leading renewable energy player in Asia, Sembcorp is well-equipped to support its customers to decarbonise through its global renewable energy portfolio and suite of carbon management solutions. We are delighted to be a part of GSK’s decarbonisation journey, and look forward to helping more corporates progress towards their sustainability goals.”

Regis Simard, president, global supply chain at GSK, says: “I’m proud that we’ve been able to sign this deal to transition our manufacturing sites in Singapore to renewable electricity from 2025. We are working to decarbonise our manufacturing facilities globally through purchasing renewable electricity as well as investing in on-site renewable electricity generation. This is an important part of how we are reducing the carbon impact of our medicines and vaccines.”

At a global level, GSK is committed to an 80% reduction in greenhouse gas emissions across all scopes by 2030 and a 90% reduction by 2045, from a 2020 baseline. This includes a commitment as part of the RE100 initiative to 100% purchased renewable electricity by 2025 and 100% renewable electricity (purchased and generated on-site) by 2030.

At the end of 2023, GSK had reached 83% purchased renewable electricity across its operations.

Shares in Sembcorp closed 4 cents lower, or 0.8% down, at $4.97 on June 27.

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Sembcorp secures long-term power purchase agreements with GSK subsidiaries

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