Lestari Cooling targets district cooling system upgrades through a capex model in Malaysia

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Lestari Cooling upgrades cooling systems

Highlights

Lestari Cooling Energy Sdn Bhd uses a comprehensive concession model covering EPC, operations, maintenance and asset ownership, targeting energy savings of 20%-30%.
KWAP is expected to invest around RM190 million in Lestari Cooling through the Climate+ Fund, with the potential to save 70,000 tonnes of CO2 emissions annually.
Demand is beginning to rise for energy-efficient cooling solutions in Malaysia, driven by data centre requirements and regulatory support for shared cooling facilities.

This article was translated from the original. Read the original version by our correspondent here.

Concession model and technology upgrade plans

As reported by The Edge Malaysia, Lestari Cooling Energy Sdn Bhd, a joint venture between KJTS Group Bhd and Stonepeak Partners, combines engineering, procurement, construction and commissioning, operations and maintenance, as well as asset ownership under a concession-based model. According to Zach Ennis, managing director of Stonepeak Partners' investment team, the approach is more akin to a master lease contract or subscription-based service, thereby reducing misalignment among different parties.

The company leverages KJTS' expertise in cooling energy management and Stonepeak's capital to finance cooling infrastructure, targeting energy savings of between 20% and 30% at a reasonable cost to customers. At the same time, Lestari Cooling continues to collect data through its cooling system command centre to improve operational efficiency and energy consumption.

KJTS managing director Lee Kok Choon said the company is ready to upgrade existing plants when new technology becomes more affordable and the payback period remains within a financeable range. He cited the example of a shopping mall project under a 15-year concession agreement, where technologies that were previously uneconomical were later installed to improve profitability, energy savings and system reliability.

Lee said the ability to implement such upgrades is supported by the company's in-house plant design and contractor teams. He added that the company's main focus is on improving energy efficiency rather than entering the renewable energy business, although it remains open to using sources such as solar, hydro or wind if costs are lower or if there is a requirement to use green energy.

Focus on the Malaysian market and investment support

Lestari Cooling, established just over a year ago, targets large-scale industrial facilities, commercial facilities and mixed-use developments, but has not disclosed specific customer names due to confidentiality obligations. Ennis said projects in the pipeline will be announced, adding that demand for more energy-efficient cooling solutions is rising as data centres draw more power from the grid and regulators in several markets encourage the co-location of cooling facilities.

He also said environmental benefits and cash flow generation are more pronounced in brownfield developments, as existing infrastructure can be retrofitted and upgraded, whereas greenfield developments require planning and design from scratch and involve higher costs.

The company is also expected to receive an investment commitment of around RM190 million through the Retirement Fund (Incorporated), KWAP's Climate+ Fund initiative. According to KWAP infrastructure investment director Premraj Janardanan, the business is attractive because it has the potential to positively impact its carbon footprint by saving 70,000 tonnes of CO2 emissions annually.

Lestari Cooling is primarily focused on Malaysia while exploring opportunities in other Asean markets, reflecting the region's growth potential for energy-efficient cooling solutions.

In our previous report on the National Climate Change Bill (RUUPIN) and Malaysia's National Adaptation Plan (MyNAP), we examined the government's efforts to accelerate the climate legislative framework, which is a prerequisite for implementing a carbon tax. The article also highlighted the need for private financing and models such as public-private partnerships to cover substantial adaptation costs, as well as the economic risks if climate action is not strengthened.

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