Acromec's subsidiary has signed a letter of intent (LOI) with egg producer Chew's Agriculture to operate a waste-to-energy power plant that will use chicken manure as feed stock.

Acropower - an 80-20 joint venture between Acromec and Malaysian alternative energy company Green Energy Resources - will build, own and operate the plant. Chew's Agriculture will supply the manure.

Under the LOI, Chew's Agriculture will purchase electricity from Acropower to power a new farm for a 15-year period at no more than a 10 per cent discount to the prevailing Energy Market Authority electricity tariff rate.

The plant, which is slated to start operations by March 1, 2020, will be built on the upcoming farm as Chew's Agriculture relocates to Neo Tiew Road, off Lim Chu Kang.

Mr Lim Say Chin, managing director of Acromec, an engineering services provider, said: "This LOI is an important first step in our drive into the renewable energy business. It has expanded the horizon of our value chain for our controlled environments engineering business and will differentiate us from our competitors."

However, since the deal marks a departure from Acromec's core businesses, it will be convening an extraordinary general meeting to seek shareholder approval.

The Catalist-listed group currently designs and constructs facilities requiring controlled environments, such as laboratories and medical facilities.

Correction note: An earlier version of this article stated that Chew's Agriculture is a wholly owned subsidiary of Chew's Group. Acromec has clarified that Chew's Agriculture is no longer a subsidiary of Chew's Group.