KEPPEL’S Infrastructure Division has signed a multi-year power purchase agreement with semiconductor manufacturer GlobalFoundries to provide electricity at the latter’s Singapore site.

Under the agreement, Keppel will provide 150 to 180 megawatts of electricity each year to power GlobalFoundries’ Singapore operations. This comes as the manufacturer’s Singapore site ramps up production, following the opening of its US$4 billion expanded fabrication plant here in September 2023.

GlobalFoundries is expected to be a “significant long-term off-taker of electricity” from the upcoming Keppel Sakra Cogeneration Plant (KSC), both companies said in a joint statement on Tuesday (Jan 9).

The semiconductor manufacturer is expected to contract about 25 per cent of KSC’s total generation capacity for more than 15 years, when the plant is operational in 2026.

By purchasing electricity from KSC, it is believed that GlobalFoundries will be able to reduce emissions from its Singapore site by more than 10 per cent – or up to 70,000 tonnes – of carbon dioxide emissions per annum, as compared to the status quo.

Furthermore, KSC’s use of hydrogen as part of its feedstock will provide GlobalFoundries with a “resilient source of even lower carbon power”, both companies said.

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GlobalFoundries has also retained the option to switch a portion of the electricity supplied by Keppel to renewable energy – such as solar and wind – when these sources become more readily available in Singapore.

Tan Yew Kong, senior vice-president and general manager of the GlobalFoundries Singapore site, said that the company is “committed” to adopting more solutions to further decarbonise electricity generation and investing in infrastructure to reach its zero-carbon goal, as more renewable energy options open up in the future.

In August 2021, GlobalFoundries announced its aim to reduce the company’s total greenhouse gas emissions by 25 per cent by 2030, despite plans to significantly grow its global manufacturing capacity.

Janice Bong, managing director, power and renewables of Keppel’s Infrastructure Division, noted: “The signing of a long-term power purchase with an established customer, such as GlobalFoundries, provides an added source of recurring income to Keppel’s electricity business, bolstering our growth on an even keel.”

The contract is not expected to have any material impact on its earnings per share and net tangible asset per share of Keppel for the current financial year.

The power purchase agreement is expected to commence on May 1.

Keppel shares closed at S$6.95, up S$0.010 or 0.1 per cent on Tuesday, before the announcement.