Why is it important
Reducing greenhouse gas emissions is imperative for the global economy to mitigate the impacts of climate change. To limit the consequences of climate change, there is a necessity to reduce global carbon dioxide (CO2) emissions by 80 percent within 2050. This has led to the implementation of global economic measures, such as the Carbon Border Adjustment Mechanism, which was introduced in the European Union in 2023 and is anticipated to expand its coverage to various businesses and regions globally by 2030. As a result, businesses need to adapt to align with these measures to minimise the impact of climate change.
B.Grimm Power recognises the importance of assessing the risks and opportunities associated with climate change, evaluating the impact on business, and consistently develop and strengthen our strategies with targets and metrics to integrate these activities into our routine businesses. We have disclosed information on its operations and financial impact assessments resulting from climate change, aligning with the Task Force on Climate-Related Financial Disclosure (TCFD) recommendation. This disclosure illustrates the interconnection between the organisation's strategy, risk management, and action plans under various scenarios that may arise.
Target and Performance
| 2023 Performance |
2030 Target |
|
|---|---|---|
| Renewable energy installed1 (% of total installed capacity) | 27% | › 50% |
| Scope 1&2 net emission intensity (tCO2e/MWh) | 0.37 | ‹ 0.28 2 |
1 Calculated from total capacity as of end of 2023
2 Or reduce by no less than 21 percent from a 2021 baseline
B.Grimm Power is committed to increasing the proportion of electricity generation from renewable energy sources to limit the global temperature rise to 2 degrees Celsius (2.0°C pathway) in accordance with the framework of the United Nations Convention on Climate Change at the COP21 meeting in Paris (Paris Agreement). We have outlined plans to achieve the goals set by the International Energy Agency (IEA) for countries outside the Organisation for Economic Co-operation and Development (OECD), aiming to become a Net Zero Carbon Emission organisation by the year 2050.
GHG Intensity projection (tCO2e/MWh)
Management and Strategy
Commitment
B.Grimm Power has a clear governance structure on climate change, as well as the management framework to handle risks and opportunities from climate change. All management approaches relate to this topic are included in the strategic decisions for projects already in operations and business expansion. We are determined to deliver values over the long run by considering the benefits and impacts to all stakeholders. We believe that firm governance with internal audit and proper checks and balance are critical foundation to lead the organisation towards sustainability, and Net Zero Carbon Emissions within 2050.
With a vision to Empowering the World Compassionately, addressing the impact and caring for the climate is considered a top priority within the organisation. We have “No Coal” policy and focus on continuously improving the efficiency of power plants to reduce greenhouse gas emissions per unit of production. Furthermore, we dedicate to developing and investing in producing low environmental impact electricity and steam from reliable energy sources with affordable price, to support communities, societies, and countries worldwide.
Governance Structure
- The Board of Directors (BOD) plays an important role in providing oversight of climate-related risks and opportunities which may impact B.Grimm Power’s business activity. In regards to climate-related risks and opportunities the BOD’s function is to ensure that the climate strategy aligns with the company’s business policies.
- The Board of Directors have appointed the Corporate Governance and Sustainability Committee as a sub-committee to perform duties in making decisions on matters related to the economy, environment, society and corporate governance of businesses associated with sustainability and climate change as follows:
- Assessing the potential impact of climate-related risks on the company's operations, finances, and reputation, including the risks associated with extreme weather events, changing regulatory requirements, and shifting consumer preferences.
- Developing strategies and policies for addressing assessed climate-related risks and opportunities such as investing in renewable energy sources, implementing energy efficiency measures, or developing new products and services to meet changing customer needs.
- Ensuring that the developed strategies are effectively implemented though detailed action plans and monitored over time by setting targets and corporate KPIs to track progress, reviewing performance regularly, and making adjustments as necessary
- Ensuring that the company is transparent about its climate-related risk and opportunity management, which involves regular reporting on environmental performance, as well as disclosing information on climate-related risks and opportunities in financial filings and other public communications.
- Conducting comprehensive risk analyses to be provided to the BoD. The analyses identify and evaluate the potential impact of climate-related risks on the company's operations, finances, and reputation, including evaluating the risks associated with extreme weather events, changing regulatory requirements, and shifting consumer preferences.
- Develop the execution and action plan to ensure sustainability in operating the business under the strategy and policy from the Board of Directors, by identifying the targets and execution plan that cohere with business goals and the organisation’s climate change goals, with quarterly reviews of the progress and operating results, and reporting to the Corporate Governance and Sustainability once every six months.
- The Sustainability Climate Change Taskforce (TF). The TF includes senior members of each departments to align and mainstream climate action plan across B.Grimm Power business activities and provide feedback to management committees of refinement opportunities to existing climate action plan.
- The Climate Change Operational Support (OS) is responsible for supporting TF to bring policy and plan into actions and implementation.
- In addition, B.Grimm Power has established targets and incentives for the senior management not only for C-level executives but also for business unit managers. These are linked to climate action performance such as reduction of GHG emission intensity, development of clean energy power plants, and improvement of existing power plant efficiency.
Data Transfer under the Governance Structure
Strategy and Risk Management
Our vision of “Empowering the World Compassionately” is at the core of our strategy “GreenLeap – Global and Green”. With this in mind, we aim to promote social responsibility by becoming a leading provider of sustainable energy solutions. Our goal is to provide top-notch energy and integrated services that cater to the evolving needs of our customers. We are committed to building strong, global business relationships with our partners in Thailand and overseas and establishing short-term and long-term competitive advantages for the benefit of all our stakeholders.
- We closely monitors situations and vigilance moves arising from climate change that could affect our businesses. We command a risk management plan and a business continuity plan to reduce GHG emissions, as well as find ways to make our operations most efficient and effective. B.Grimm Power’s policy is to develop and improve efficiency by leveraging clean technology for cost-effective resource usage. We define specific policies to grow our renewables investments in a sustainable way, to improve process efficiency aiming to cut down on GHG emissions, and to drive energy conservation projects
- The climate-related risks have been identified by our risk management, corporate strategy, and corporate sustainability professionals in close consultation with a team of external climate consultants. We conduct comprehensive risk assessments aiming to identify and quantify the impact of climate-related physical and transition risks. The risk reports are managed by the Sustainability Climate Change Taskforce (TF) before being presented to the Board level.
- How B.Grimm Power identifies, assesses, and manages climate-related risks and how these processes are integrated with our existing risk management processes is shown below. The risk analysis covers the following dimensions: Strategic, Financial, Leadership and Values (including Stakeholder, Reputation and Governance), Business Activity and Compliance.
B.Grimm’s Climate-related risks & opportunities management process
Physical Risks
To complete climate change-related risk information, we have considered the physical risks that are significant to our business and performed scenario analysis to define the resilience of our strategy to climate-related risks.
We identified physical risks by asset location and applied a 4-step physical risks assessment approach based on a desk review, historical data, and likelihood of our climate-related risk outlook, in identifying, assessing, and planning its adaptive responses to the identified physical risks are delineated below:
Step 1: Climate change scenarios selection.
Step 2: Identify business impacts.
Step 3: Evaluate business impacts & Financial impacts assessment.
Step 4: Identify potential responses.
The evaluation of risks for every power plant is based on the assumption that the climate change is extremely intense, leading to the state of ‘water stress’, which impacts electricity generation. Our power plants are equipped with the water management measures to alleviate such risk, with the target to reduce water consumption and enhance the effectiveness of utilising water in production.
Transition Risks
Transitional risks are financial risks caused by transitioning to the low-carbon electricity generation system in the future, which may entail an impact on B.Grimm Power’s financial position.
The Climate Change and Sustainability Working Committee has identified all transitional risks, scope of impact and period of the transition, by selecting potential risks as well as business opportunities that can have positive impact on B.Grimm Power’s business operations, consisting of:
- Introduction of carbon pricing i.e., carbon tax, emissions trading system (ETS).
- Enhanced emissions-reporting obligations.
- Costs to transition to lower emissions technology.
- Changing customer behaviour.
- Changes in the reputation among investors and stakeholders.
The data is analysed under different tendencies or scenarios in 3 dimensions; period of the transition, objective of decreasing global temperature and the objective of the regulations that form the national and industrial frameworks.
Identification of Climate-related risks and opportunities
B.Grimm Power has considered the risks and business opportunities related to climate change with the tangible impact on operating results and organisation in 3 periods as follows:
1. Short-Term Period: 2023-2025
2. Medium-Term Period: 2026-2030
3. Long-Term Period: 2031-2050
Key climate risk & opportunity items
| Physical risks | |
| Acute | Chronic |
|
Medium-Long term time horizon P1 Flooding P2 Typhoons |
Medium-Long term time horizon P3 Rising Sea Levels P4 Extreme Heat P5 Water Stress |
| Transitional risks | |
| Policy and Legal | Technology |
|
Medium-Long term time horizon T1 Carbon Cost (tax/allowance) T2 Regulations that affect electricity trading from fossil fuels and stricter greenhouse gas reports. |
Medium-Long term time horizon T3 Costs to transition to lower emissions technology |
| Market | Reputation |
|
Medium-Long term time horizon T4 Increased costs of raw materials (Natural gas/LNG) T5 Changing customer behavior towards net-zero |
Medium-Long term time horizon T6 Change in reputation amongst investors and stakeholders |
| Opportunities | |
| Resource Efficiency | Energy Source |
|
All time horizon O1 Increased Energy Efficiency |
Medium-Long term time horizon O2 Shift towards decentralized energy generation O3 Revenue from selling renewable energy |
| Product and Services | Markets |
|
Medium-Long term time horizon O4 Expand Business to low emission products |
Medium-Long term time horizon O5 Access to new markets |
Since B.Grimm Power’s major source of revenue is from distributing electricity under the long-term power purchase agreement, we focus on managing risks in the short and medium term, whereas the long-term focus is on identifying business opportunities.
We have studied the climate change impact on our business, with reference to the data sources both in Thailand and overseas, to prepare the most suitable measures to cope with the global climate change tendency that affects the electricity generation industry. Major sources of data are from the Task Force on Climate-related Financial Disclosures (TCFD), especially from the meeting on “disclosure of information during transitional period for the financial information disclosure and new business opportunities for the electricity industry, production and public utility”. Moreover, we have incorporated suggestions from different experts to analyse and consider in terms of risks and business opportunities directly related to the business and operations that may significantly affect the operating results and operations of different types of power plants in our portfolio.
In conclusion, we have identified physical risks in 5 dimensions, transitional risks in 6 dimensions and business opportunities in 5 dimensions that may occur in the short- and medium-term period, or during 2023-2030 as displayed in the above figure ‘Key climate risk & opportunity items ’
Based on these risk and opportunity items, we conducted workshops to define key items in each category aiming to further assess their impacts regarding business and financial implications for our company under various scenarios. The top risk and opportunities items are summarised in the below figure: Performance Indicators
Performance Indicators
| Item | Rationale | Performance indicators |
|---|---|---|
P5. Water Stress or Water Shortage |
|
|
T1. Carbon Price Risk |
|
|
O3. Opportunities in selling green products and services such as electricity generation credit from renewable energy (I-REC (E)) |
|
|
Assessment of Climate-related risks and opportunities
B.Grimm Power has incorporated key risks and business opportunities, as well as indicators in considering the quantitative impact on business operations to determine the impact on operating results and finance through different scenarios that can potentially happen, with consideration of related factors as follows:
The target to decrease global temperature in accordance with the Inter-governmental Panel on Climate Change (IPCC) that correlates with the potential operational directions as follows:
| Scenario | Description | Impact on Operational Direction |
|---|---|---|
1. SSP1 1-2.6 (1.5 oC) Scenario |
|
|
2. SSP1 2-4.5 (2 oC) Scenario |
|
|
3. SSP1 5-8.5 (4.4 oC) Scenario |
|
|
1Shared Socioeconomic Pathways
With reference to the report of the International Energy Agency, scenarios from the criteria and targets of the global community induce transitional risks that have both positive and negative impact on B.Grimm Power, for instance, the pressure from stakeholders demanding the business to shift to low-carbon and environment-friendly businesses, leading to lower profitability from existing businesses, despite an increase in revenue from renewable energy business and electricity generation credit trading from renewable energy, with 3 relevant scenarios as follows:
- Stated Policies Scenario – STEPS
is the policy announced by different countries that reflect the global intention in the actual demand for energy consumption in each period in the future. - Sustainable Development Scenario – SDS
is the target that each country has to jointly execute to cohere with the United Nations’ sustainable development endeavours. - Net-Zero Emission Scenario – NZE
is the target to achieve Net Zero greenhouse gas emission
When 3 different scenarios are taken into consideration, we can analyse the impact using different assumptions for each scenario and target in order to identify the indicators in assessing risks and business opportunities. These assumptions are summarised in the following exhibit:
Value of performance indicators under selected scenarios (2030)
| Physical Risk | SSP5-8.5 (4.4°C) Scenario | SSP2-4.5 (2°C) Scenario | SSP1-2.6 (1.5°C) Scenario |
|---|---|---|---|
Water stress for combine cycle
|
Steam turbines stop operating for 30 days at a time 1 | Steam turbines stop operating for 15 days at a time 1 | No impact 2 |
| Transitional Risk | STEPS (2.3°C) Scenario | SDS (1.65°C) Scenario | NZE (1.5°C) Scenario |
|---|---|---|---|
Carbon tax3 |
-4 | 34 USD/tCO2 | 60 USD/tCO2 |
Revenue from selling products and services certified of the electricity generation from renewable energy sources. (I-RECs) |
2 USD/MWh | 3 USD/MWh | 5 USD/MWh |
1 Occur in some locations
2 The frequency of water stress under SSP1-2.6 is assumed to happen once every 10 years and will not affect B.Grimm within 2022-2030
3 With reference to Singapore’s carbon tax rate of 34 USD per tonne of carbon dioxide equivalent in case of compliance with the sustainable development goal, and 60 USD in case of compliance with the Net Zero Carbon Emissions goal.
4 Based on the assumption that if Thailand enforced a carbon tax, the United Nations’ sustainable development goals will be referred to, that the global temperature will increase by 1.65 degrees Celsius before the end of this century, leading to no carbon tax payment in the actual policy scenario. (STEPS).
In this regard, the impact on B.Grimm Power’s revenue and costs from the mentioned indicators in 2030 are as follows:
Business impacts from selected climate related risks & opportunities at the year 2030
| Climate-Related Risks | Physical risks | Transition risks | Opportunities |
|---|---|---|---|
Item |
P1. Water stress |
T1. Carbon cost (tax) |
O3. Selling I-RECs |
Assets affected |
Gas-fired power plants | Gas-fired power plants | Solar power Wind power Hydro power |
Impact of identified risks |
Water stress can result in disruption of steam production and increase the water sourcing cost | Carbon pricing regulation may result in increase OPEX if regulatory costs cannot be passed through | Development of I-REC projects and additional revenue from I-RECs trading |
Estimated Financial Implication (2030) |
THB 98-195 million1 | THB 0-15,300 million2 | THB 125 – 315 million5 |
Mitigation Costs (2030) |
THB 9-39 million3 | THB 29 million4 | - |
1 The impact on operating results from water shortage is referred by WRI-Aqueduct, together with the actual amount of water in each area. There are 4 power plants that have been affected, with the quantifiable impact from each evaluation amounting to 98 million Baht in case of SSP 5-8.5 (the assumption that the global temperature increases not exceeding 4.4 degrees Celsius in this century) or 195 million Baht in case of SSP 2-4.5 (the assumption that the global temperature increases not exceeding 2 degrees Celsius in this century) and that such scenario happens once every 5 years.
2 Since electricity distribution in Thailand operates on a single buyer basis and under the terms and conditions of the power purchase agreement, there is a high possibility that carbon tax will not be collected from producers but from consumers, so the carbon tax impact on B.Grimm Power should be minimal. In case B.Grimm Power has to take the carbon tax burden and cannot pass it on to consumers, the amount of impact will be between 8,670-15,300 million Baht (based on the assumption that the carbon tax rate is 34-60 USD per tonne of carbon dioxide equivalent).
3 B.Grimm Power’s short-term impact alleviation plan is to increase water shipment via trucks, costing at 9 million Baht, while the long-term plan is to develop an additional reservoir costing approximately 39 million Baht.
4 Currently, we have made improvements to the gas turbine, with the average annual expense amounting to 29 million Baht, leading to reduced greenhouse gas emission from production of 0.03 million tonne of carbon dioxide equivalent per year, and reduced fuel costs for machine operations as well as long-term expenses.
5 The projected expenses for buying and selling products and services certified of credits for electricity generation from renewable energy are 2 million Baht.
Adaptation Plan to Physical Risks
Water shortage in power plant areas is considered a significant physical risk for B.Grimm Power’s business. Hence, every power plant is required to closely monitor the water quantity data in the area from the Hydro Informatics Institute (Public Organisation) and local organisations, and devise the emergency plan and business continuity plan to accommodate such incidents, for instance:
- Regulate that B.Grimm Power can claim for damages from water supplier based on the water purchase agreement in case of low quality of water
- Develop a list of secondary water suppliers in case of crises
- Improve the cooling water system for cooling tower for enhanced effectiveness
- Reuse the water separated from the sedimentation procedure in production
- Compile a work instruction manual with the execution plan during periods of water shortage
Details for the water consumption effectiveness enhancement and water reuse project are in the Water Management topic in “Environmental and Resource Management ” section.
Performance 2023
Greenhouse Gas Emission Intensity (Tonne of Carbon Dioxide Equivalent per MWh)
B.Grimm Power, as the leading electricity producer and service provider, is determined to reduce greenhouse gas emissions in every production procedure and encourage every organisation in the business value chain to strive for the same goal, through an increase in renewable energy proportion, improvement and enhancement of power plant efficiency, continuous encouragement of energy saving, identification of transitional strategy to clean energy by turning to liquefied natural gas and prescribing carbon prices that cover different business scenarios to help with business decision making while maintaining profitability and reducing greenhouse gas at the same time, as well as reforestation and studying the greenhouse gas reduction technologies through collaboration with different professionals.
Our determination has resulted in a continuous reduction in the intensity of greenhouse gas of 10.4% from 2018 to 2023. Key operating results in 2023 are as follows:
- Continuous investment expansion of renewable energy power plants in Malaysia, The Republic of Korea, Italy and Republic of the Philippines, with an additional 247 megawatts in 2023, resulting in a total capacity of 1,072 megawatts installed capacity.
- Integration of new technologies to reduce greenhouse gas emissions from combined cycle co-generation power plants. This includes expanding the scope of Digital Twins projects, utilising artificial intelligence (AI) to analyse operational data, enhancing production planning accuracy, and facilitating maintenance.
- Upgrading machinery and equipment in combined cycle co-generation power plants to improve production efficiency, reduce fuel consumption per production unit, and enable operation in high-temperature conditions. Upgrades include gas turbine retrofitting for existing power plants, with improvements implemented in 1 project in 2023, accumulating upgrades in a total of 10 projects since 2018.
- Expanding new business opportunities to help reduce greenhouse gas emissions, such as investing in Energy Management Systems (EMS) and Advanced Distribution Monitoring Systems (ADMS) to control electricity distribution according to customer needs. These initiatives aid in grid expansion planning and maintaining stability in electricity supply. Additionally, we offer International Renewable Energy Certificates (I-REC (E)) for solar, wind, and hydropower to more than 20 customers.
Details of the greenhouse gas reduction and electricity generation efficiency enhancement projects can be studied further in the topic “Operational Excellence and Customer Relationship Management”, and details of the new technology adoption for greenhouse gas reduction can be read further in the topic “Innovation and Digitalisation”.
Moreover, we have made operational improvements to cohere with the adaptive measures to accommodate water shortage risks resulting from climate change in 2023 as follows:
- Implementation of projects aimed at reducing water consumption and enhancing efficiency. For instance, upgrade cooling water system efficiency to use reclaim water and reduce evaporation loss, redirecting wastewater from to reuse in the cooling system etc. This has resulted in a substantial reduction in water usage, saving up to 319,413 cubic meters per year.
- Water Tank improvement projects in power plants ABP1-5 to enable shared water usage in adjacent areas during water shortages, ensuring the capability to provide emergency water supply.
In this regard, details of the project to reduce water consumption to adapt to the risk of water shortage can be studied further in the topic “Environmental and Resource Management”.
