BIOMASS POWER – BUSINESS OPPORTUNITIESBy S N Srinivas, PhDUNDP

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United Nations Development Programme, IndiaLasting Solutions for Development Challenges

PRESENTATION1. BIOMASS POTENTIAL

2. CHALLENGES

3. ACHIEVEMENTS TILL NOW

4. COST-BENEFITS

5. LEARNINGS

6. SENSITIVITY ANALYSIS AT DIFFERENT TARIFFS (TENTATIVE)

7. PREVAILING TARIFFS FOR BIOMASS POWER IN INDIA

8. OTHER INITIATIVES INVOLVING BIOMASS POWER

9. A CASE STUDY OF SUCCESSFUL BIOMASS BUSINESS FOR THERMAL APPLICATION

10. ISSUES AND WAY FORWARD (INCLUDING NICHE SCOPE)

1. BIOMASS POTENTIAL1. India has installed capacity of 187,550 MW (31 Jan 2012),

however still face peak deficit of power 12.7% in year 2009-10.

2. There are estimates that 25000 to 35000 MW diesel power meets deficit. Part of these existing diesel installations can be retrofitted to biomass gasification

3. Biomass power generation potential ranges from 15,000 MW to 23,700 MW. However, till now only 2,505 MW has been harnessed.

National Biomass Atlas provides district-wise assessment of biomass

Step 1. First go to the link given below;http://cgpl.iisc.ernet.in/site/BiomassAtlas/tabid/91/Default.aspx Step 2: Click on the line                                                     

Click here to visit National Biomass Atlas of India Step 3: Login appears, Register yourself Step 4 Click on  Regional Biomass Tables.

4. Scope exists for energy plantations A. Wastelands (57 million hectares) B. Farm forestryC. Un-used forest lands

2. CHALLENGES1. Proven technologies on the anvil (BERI), bankable technology

packages, and revenue models (Sankheda, MPPL)

2. Lack of credible suppliers and a competitive market for RE products

3. Dependable and stable cost Raw material supply

4. Issues related to evacuation of power to grid (tariff, active power)

5. Issues related to off grid power systems (generation, O&M, supply, price setting, revenue collection), parity in pricing (weighted average of power in rural village is about 0.8 Rs/kWh, best price from RE is about Rs 5/kWh)

6. Competing uses of biomass and sudden escalation of price of biomass once a plant is established

7. Cost of generation

8. Costs and complexities of scale of operation

1. less than 100 kW,

2. 100 kW to 1 MW,

3. 2 MW, and

4. above 2 MWLack of investor interest

Less than 100 kW

100 kW to 1 MW

2 MW Above 2 MW0

2

4

6

8

10

12

14

Rs/kWh

3. Achievements till now - Biomass Energy for Rural India India

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•GRID •(11 KV line)

•Cluster 1

•Cluster 2

•100 kW (dual-fuel) 100 kW 200 kW 100 kW

•250 kW

•250 kW

Operational dataBERI 100 kWe performance of 1000 hours

Gasifier operation 1035 h

Engine Operation 1022 h

Grid Synchronisation 951 h

Total biomass consumption 111 t

Average 107 kg/h

Specific Energy Consumption (calorific value 15 MJ/kg) 1.36 kg/kWh

Best recorded SEC 1.2 kg/kWh

Total energy generated 80,600 kWh

Net energy exported to grid 56,500 kWh

Average load factor 85 kWe

Peaking load factor 100 kWe

Rated Capacity of Engine 120 kWe

Overall efficiency biomass to electricity 18%

Overall efficiency producer gas to electricity 25%

Cold gas efficiency 77%

Estimated efficiency for 500 kWe 25 to 30%

Efficiency of 100 MW e coal plant 34%

4. Cost-benefits: Comparison of SECs and some economics

BERI GasifiersCurrent Capacity (kW) 880Annual generation (kWh) 5300000Plant load factor (%) 68%Estimated CO2 reduction (Tons) 5300Approximate investment (INR in Crore) 7Turnover @ Rs 2.85 per kWh, in Crore INR 1.51Costs per kWhOperation cost 3.375Maintenance, Repair Cost (estimates) 1.500Capital recovery 0.500Other costs 0.500Total cost (Rs/kWh) 5.875

5. Learnings based on Biomass Energy for Rural India

• Business model: Panchayat-BERI PMU/Society–BESCOM agreement to evacuate power

– Established feasibility of Decentralized Rural Biomass Power System with involvement of Panchayat

– Sold about 1 Million Units of power to BESCOM at a tariff of Rs 2.85/kWh earning about 2.85 million Rs

– Can evolve as business model for entrepreneur run, GP governed biomass power generation providing employment, electricity for income generation to rural areas

• Plantation: – Plantation in about 3000 hectares of land yielding about 4 to 5

000 tonnes (against estimate yield of 12000 tonnes) annually

– Gram Panchyat h – 240,000 tCO2 reduced/sequestered till now (about 26,000

tCO2 annually); – 100 men and 100 women employed in power plant operation

and plantations management• Estimates indicate 20% additional money ploughing back in

project area• All basic data procured from BERI gasifier plant are

uploaded on the website – perhaps one of the unique feature

– www.bioenergyindia.in or    www.berisociety.com

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6. Sensitivity analysis at different tariff (tentative)

Scenerio 1 Scenerio 2 Scenerio 3 Scenerio 4 Scenerio 5

Actual cost

New tariff under discussion

New tariff + carbon benefit at 10 USD/ton of carbon

Tariff at 9 Rs + Carbon benefit at USD 10 per tCO2

Tariff at 9 Rs + Carbon benefit at USD 10 per tCO2 and Investment optimised

5.875 6.5 7 9.5 9.5Investment (Rs) 70000000 70000000 70000000 70000000 50000000Annual generation (kWh) for 880 kW 5300000 5300000 5300000 5300000 5300000Annual Expenditure (Rs/year) 31137500 31137500 31137500 31137500 31137500Annual Earnings (Rs/year) 31137500 34450000 37100000 50350000 50350000Net earnings (Rs/year) 0 3312500 5962500 19212500 19212500Simple payback (in years) #DIV/0! 21.13 11.74 3.64 2.60

7. Prevailing tariffs in India for biomass power

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Annexure - I

TARIFF ANNOUNCED BY REGULATORY COMMISSIONS FOR BIOMASS POWER & COGENERATION PROJECTS IN DIFFERENT STATES.

(AS ON 01.11.2011) State Tariff fixed by Commissions RP0 %

Andhra Pradesh

@Rs.4.28/kWh, (2010-11) (BM) Rs.3.48/kWh (Cogen)

Min. 3.75%

Bihar @Rs. 4.17/unit (2010-11)–BM @Rs.4.25/unit (2010-11) – existing (Cogen) @Rs.4.46/unit (2010-11) – new (Cogen)

1.5%

Chattishgarh @Rs.3.95/Unit (2011-12) (BM) for old projects @Rs.4.15/unit for new projects

5%

Gujarat @ Rs.4.40/unit with accelerated depr (BM) @4.55/unit with accel.depr. for first 10 yrs (Cogen)

10%

Haryana

@ Rs.4.00/unit (BM) @ Rs.3.74/unit (Cogen) 3%escalation (base year 2007-08)

1%

Jharkhand @Rs.5.53/unit with 3% escalation variable cost (air cooled) (2011-12) @Rs.5.31/unit with 3% escalation variable cost (water cooled) (2011-12)

3%

Karnataka @Rs.3.66 per unit (PPA signing date) Rs.4.13 (10th year) (BM) @ Rs.3.59/unit, (PPA signing date) Rs.4.14/unit (10th Year) (Cogen)

Min.10%

Kerala @ Rs.2.80/unit (BM) escalated at 5% for five years (2000-01)

3%

Maharashtra @ Rs. 4.98 (2010-11) (BM) @Rs.4.79/unit (Comm yr.) (Cogen)

6%

Madhya Pradesh @ Rs.3.33 to 5.14 /unit paise for 20 yrs. With escl of 3- 8paise

0.8%

Orissa @Rs.4.87/unit with 3% escalation variable cost (2011-12)

5%

Punjab @Rs.5.12 /unit, (2011-12) (BM) @Rs.4.80/unit (2011-12) (Cogen) escalated at 5% -Cogen, & 5%-BM

Min. 3%

Rajasthan @ Rs.4.72 / unit-water cooled (2010-11)- & Rs.5.17-air cooled(2010-11)-(BM)

1.75%

Tamil Nadu @ Rs.4.50-4.74/unit(2010-11) – (BM) @ Rs.4.37-4.49/unit (2010-11)- (Cogen) Escalation at 2%

Min. 13%

Uttaranchal @ Rs.3.06/unit. (2010-11) - BM @Rs.3.12/unit (2010-11)- (Cogen) (new projects)

9%

U.P. @ Rs.4.29 / unit, for existing and 4.38 for new with escalated at 4 paise/year, base year (2006)

4%

West Bengal @Rs. 4.36/unit fixed for 10 years-BM 4% For latest updates kindly contact concerned Regulatory Commissions

8. OTHER INITIATIVES INVOLVING BIOMASS POWER

PROGRAMME HIGHLIGHTS REMARKS/ISSUES

Decentralized Distributed Generation – Ministry of Power. To support supply of electricity and indirectly facilitate power requirement of agriculture, small & medium industries

25,000 villages not covered under MNRE’s RVE programme are eligible. 15 projects have been sanctioned with committed amount of Rs 77 million. NTPC is implementing 14, WBREDA is implementing 1. Expected to achieve 2 to 5 MW.

1. Lack of access to competent, effective and responsive affordable technical back-up

2. Inadequacies in community management, O& M

3. Uncertainties in modalities of funding support

Remote Village Electrification (RVE) – electrification of (not feasible or not cost effective for grid extension) unelectrified villages and hamlets through RE

8,033 villages and hamlets have been covered.

1. Largely meets lighting requirements.

Village Energy Security Programme (VESP)

About 90 projects implemented in different villages (mostly 10 to 20kW biomass gasifiers). 30 projects were functioning as per an evaluation

1. Inadequate commissioning and training.

2. No technical and service back up.

3. Cost of power generation were as high Rs 13 to 20 per kWh.

SUTRA (UNDP supported, IISc implemented)

Demonstrated 50 kW biomass gasifier systems

1. No institutional arrangement

2. Higher costs of power to end user

LIBERA (SDC supported) Demonstrated less than 50 kW biomass gasifier systems

1. Found difficult to source biomass

2. No institutional arrangements

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9. A CASE STUDY OF SUCCESSFUL BIOMASS BUSINESS FOR THERMAL APPLICATION

Vijay Engineering Enterprises is involved in selling gasifiers and supply services of raw materials and technical back up. 1250 tons of biomass supplied per year (50 lakhs per year)

They have sold 60 systems of capacities ranging from 60 to 200 kg/h.

Applications: Bengal gram, chemical processing, tamarind seed roasting, condiments/biscuits making, bakery and powder coasting

Approximate turnover: 3 Crore per year (50% due to gasifier business)

200,000 hours of cumulative operation

10. Issues and way forward• 11 kV connection is a must to be prepared for evacuation to grid and

appropriate amalgamation with local load will help higher PLF

• Dependable, long term raw material supply - Plantations to support such biomass power plant is important sustainability factor in long term, however, approaches for management of plantations and ensuring good yields still needs to be worked out

• There are very few players who can run and manage such plants on turn-key basis

• Government of Karnataka is considering replicating it for 100 MW in the state

• MNRE is considering 2 MW as niche area for tail end grid support which opens up enormous potential to harness biomass for power

• Pricing - MNRE is considering negotiating for tariff restructure to support sub-megawatt scale projects – should be around Rs 9 per kWh

• Off-grid tariff and other support systems needs to be formulated

10 Contd. Some niche scope1. There are about 88,000 Grama panchayat in the country (0.5 MW to 10 MW is

the power required per GP - approximation) with harnessing plantation

– 3,520 no. of 1 MW systems - Investment scope Rs 17,600 Crore (Average 1 MW per 5 GPs in 20% of GPs would mean 3,520 MW (Rs 17,600 Crore @ Rs 5 per MW)

2. Brick kilns are going for mechanisation which requires 100 kW power. 50,000 brick kilns are there in India. Assuming 20% of them go for mechanisation, it holds potential for 10000 nos. of 100 kW scale power generating units (1000 MW)

3. Lift Irrigation (typical load 100 kW) – Government of Karnataka has requested us to explore options including biomass power

4. Agriculture pump sets (typical load 10 kW) – 15 million electrical and 6 million diesel pump sets

5. Flour mills in rural areas (typical load 10 kW) – may be about 88,000 (@ 1 no. per grama panchayat)

6. 13 million unorganized enterprises (30% of them energy consuming of which 40% consume biomass)

7. 3 million SSIs (70% of them consume energy)

Thank You!

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United Nations Development Programme, IndiaLasting Solutions for Development Challenges

  S N Srinivas, PhDProgramme Analyst (Energy and Climate Change)United Nations Development Programme (UNDP)No. 55, Lodi EstateNew Delhi – 110 003Tel: 011- 4653 2251 (Direct)Fax: 011- 2462 7612E-mail: sn.srinivas@undp.orgWebsite: www.undp.org.in