Tariff design and Policy framework- Grid connected Biomass Based Power Plants

G R Narsimha RaoThe Energy and Resources Institute

Bangalore

Workshop on ‘Innovative and Sustainable Energy Technologies for Developing Countries : Opportunities and Challenges 28th May 2014, New Delhi

Content

a) Type of biomass power plants

b) Operational efficiency

c) Fuel linkage

d) Tariff design parameters

e) Major deviations in tariffs

f) Recommendations : Sustainable biomass power plants

Type of Biomass Power Plants

a) Conventional power plant – Steam cycle- Power plants 2 - 30 MW range

b) Co – generation power plants- Sugar Industry

- Paper Industry

- Distilleries

c) Gasification

- Small scale IPPs

- Rice Mills

Limitation of biomass power plant : Dedicated energy forestry Source of biomass

Biomass Power Plants : Conversion Technologies

Conventional power plant conversion efficiency increase with large size to be cost – effective

Biomass based power plants cannot use this route as the size of the power station is determined by the size of the fuel resource availability

Pyrolysis and Gasification offers greater efficiency than combustion based steam cycles

- Pyrolysis : Solid biomass to Liquid

- Gasification : Solid biomass to Gaseous

Converted biomass intermediates can be burned in engines or gas turbines to generate power

Biomass Power Plants : Operational efficiency

Type of Plant Operational Efficiency,%

Conventional Power Plant

upto 15 MW 16 - 25

upto 30 MW > 30

Co-generation Power Plant

Thermal energy base operation ~ 80

Electrical energy base operation ~ 65

Gasification Power Plant

Large scale gasification ( > 25MW) ~ 40

Medium scale gasification 30 - 35

Small scale gasification 20 - 25

Fuel Linkage

Fuel Linkage

• Contract with rice mills & agro process units;• Contact with plantations (tea, coffee etc.,);• Contract with forest department;• Social forestry, privately developed plantations .

State Karnataka Andhra Pradesh Tamil Nadu Maharashtra

Rice Husk 40 - 50 25 - 52 36 - 48

Maize / Corn 43 27 44 - 47

Coffee Husk 55

Wood Chips 27 47 - 49

Jaliflora < 18 < 23 29

Chilli powder 25 30

Pam oil < 10

Agro waste < 22 < 30

Average fuel cost in AP is lower compared to other southern states, but still biomass power plants (IPPs) are not really attracted with prevailing tariff.

( Unit : US $ per MT)

Fuel Linkage : Landed cost of fuel

Tariff : Methodology for biomass based power plants

• Power Generation– Capacity

• Installed Power Generation • Auxiliary Consumption• Plant Load Factor• Useful Life

• Fuel Related Assumptions– Heat Rate– Bagasse / Biomass

• During & After Stablisation period• Base Price (FY 14-15)• Goss Calorific Value (GCV)• Fuel Price Escalation

• Operation & Maintenance– Total O&M Expenses – Escalation

a) Project Cost

b) Plant Load Factor (PLF)

c) Operation and Maintenance Expenses (O & M Expenses)

d) Interest on working capital

e) Auxiliary Consumption

f) Fuel Price

g) Fuel Cost escalation

h) Fuel Consumption

Tariff : Cost components for biomass based power plant

Parameter Co-Gen Bio-mass

Project Cost – million USD/MW 0.6 0.8Debt: equity 70:30 70:30Return on Equity (RoE) 16% 16%Interest on Term Loan 11% 11%Depreciation Rate 7% 7%

Minimum Alternate Tax (MAT) on RoE 7.5% 7.5%Plant load factor (PLF) 60% 75%O& M expense including insurance as % of project cost 3% 4%

O & M escalation per annum 5% 5%Interest on working capital on two months bill 12.5% 12.5%Auxiliary Consumption 8% 9%Fuel price- US $./ Metric Ton 20 25Fuel Cost escalation per annum 5% 5%Specific fuel Consumption-kg/unit 1.6 1.16

Most of the Biomass developers have favoured a 2-part tariff

Tariff : Cost components for biomass based power plant

Biomass Power Plant: Conventional

BoilerQ : 27 MT/hH : 65 kg/cm2

T : 480 0CEff : 80 ± 2%

Heat Value : 805 k.Cal/kg

Power Output: 6.5 MW

Exhaust Heat Value : 792 k.Cal/kg

Turbine

Cooling tower

Turbine Efficiency : { (6500 X 860) / (27000 X 805)} X 100 : 25.7 %Boiler Efficiency : 78 – 80 %Plant Efficiency : (0.257 X 0.78) X 100 : 20.0% Plant Heat Rate : ( 860 / 0.2 ) : 4300 k.Cal/kg

Large number of grid connected biomass power plants : 6 - 8 MW

Plant Heat Rate

Biomass Power Plant: Cogeneration

Use of High Pressure boilers results into steam economy

Crushing Capacity TCD

Installed Boiler Design(Pressure, Flow, Temp.)

Kg/cm2, TPH, 0C

Installed Turbine MW

Internal Cons.MW

Export – Grid

MW

3600 42 / 64 / 410 9.2 3.6 5.5

4000 42 / 75 / 424 16.1 3.8 7.2

4500 66 / 85 / 510 15.5 5.1 10.4

3500 110 / 100 / 540 20.0 4.0 15.0

4800 107 / 120 / 540 24.2 5.2 18.0

4800 107 / 120 /525 24.0 5.5 18.2

10000 67 / (100 +120) / 485 / 510) 15 + 33.75 10.0 25.5

• Export of power depends on initial equipment design• Plant operating efficiency depends on fuel availability

Cogeneration: Sugar Sector

Technical Performance

S No Name Power Plant District Installed Capacity, MW

Boiler / Turbine Fuel Consumption per day, MT

Q, TPH / Pr, Bar Air / Water

1 Indra Power Energies Ltd. Koppal 6 30 / 65 Water 225

2 Koganti Power Pvt. Ltd. Raichur 7.5 35 / 65 Water 250

3 Koppal Green Power Ltd. Koppal 6 30 / 65 Water 200

4 Power Onicks Ltd. Bellary 6 (8 MW upgraded) 32 / 65 Water 250

5 Ravikiran Power Project Pvt Ltd Koppal 7.5 33 / 75 Water 200

6 RK Power Gen Private Ltd. Chitradurga 20 100 / 106(Spread Stoker)

Air 325 (for 12 MW)

Major operating plants 6 MW Range

• Operating Heat Rate of Plants : 4300 k Cal / kWh• Plant Efficiency : ~ 20%• Specific fuel consumption : > 1.4 kg / kWh• Auxiliary power consumption : 12 ± 1 %

Sample Survey : Operating plants in Karnataka state

Technical Performance (Major Deviation)

Based on annual basis Specific fuel consumption is 1.8 – 2.2 kg / kWh for 6 MW biomass power plants(It is mainly due to number of starts / lower operating loads)

Parameter Unit 6 MW 15 MW

Boiler (Q, H) TPH / bar 28 / 65 75 / 105

Boiler Efficiency % 80 ± 2 82 ± 2

Turbine Efficiency % 26 ± 1 29 ± 1

Turbine Heat Rate K Cal / kWh 3300 2965

Plant Efficiency % 20 ± 1 23 ± 1

Plant Heat Rate K Cal / kWh 4300 3740

Fuel Gross Calorific Value K Cal /kg 3040 (Rice husk)

Sp. Fuel Consumption Kg / kWh 1.4 1.2

Auxiliary Power Consumption % 12 ± 1 11 ± 1

Tariff Workings(Major Deviation)

Auxiliary power consumption & Fuel consumption (or plant heat rate)

S No

Component Value Remarks

a Project cost USD 0.9 million per MW

b Plant load factor 75%

c O & M Expenses 4% of Project cost with 5%escalation per annum

d Interest on Working Capital 12.5% on two months bills

e Auxiliary consumption 9% 12 ± 1

f Fuel Price USD 20 per MT

g Fuel cost escalation 5% of fuel cost escalation

h Fuel consumption 1.16 kg / kWh as reasonable SEC 1.4 +

Gasifier based grid connected biomass power plants

Name of

Power PlantVillage/District

Installed

Capacity,

KW

Status

BERI Kabbugiri /Tumkur 150 Not in operation

BERI Kabbugiri, Tumkur 225 Not in operation

BERI Bethamangala, Tumkur 5001 x 200 + 1 x 100

operational

Specific fuel consumption : 1.1 – 1.2 kg/kWh (dry wood)Cost of wood purchased : 2.5 – 2.7 US cent per kgUtility buyback price (PPA) : 3.9 US cent per kWhActual operating cost : > 12US cent per kWh ( at lower cost of wood)Auxiliary power consumption : 15%

Two part Tariff :

I. Fixed cost

It is very important to consider intermediate cost (additional) to maintain plant performance & PLF

Value : Rs per kWh

Two part Tariff :

II. Variable cost

Parameters Biomass Power Plant Rating

  Water Cooled Condenser Air Cooled Condenser

  6 MW 15 MW 6 MW 15 MW

Plant Heat rate, K.Cal/kg 4300 3740 4601 4002

Plant Efficiency, % 20 23 18.7 21.5

Rice Husk –Gross Calorific Value, K.Cal/kg : 3040

Specific Fuel Consumption(kg/ Wh) 1.41 1.23 1.51 1.32

Prevailing average price of Rice Husk : USD 43 per MT

Variable Charge, cent per kWh 6.0 5.3 6.5 5.7

Based on the capacity of the plant and technology adopted (like water or air cooled condenser), variable cost has been worked out

Biomass based power plant : Tariff(working)

Two part Tariff : Fixed + Variable cost

Parameters Biomass Power Plant Rating/Type

  Water Cooled Condenser Air Cooled Condenser

  6 MW 15 MW 6 MW 15 MW

Fixed Cost, cent per kWh 3 for New Plants

3.5 for old plants (10 years)

3.3 Average of 20 years period

3.1 for New Plants

3.75 for old plants (10 years)

3.6 Average of 20 years period

Variable Cost, cent per kWh 6.0 5.3 6.5 5.7

Total operational cost,

cent per kWh

9.3 8.6 10.1 9.3

Regulator Issue : Cost of Fuel(Rice Husk Market Price)

Rice Husk price linkage with paddy minimum support price (MSP) fixed by the Government

Financial Year MSP of paddy MSP of paddy Rice husk price (avg)   Rs.per Qnt. Rs.per MT Rs.per MT2008-09 900* & 930** 9000 & 9300 18002009-10 1000 & 1030 10000 & 10300 20502010-11 1000 & 1030 10000 & 10300 20502011-12 1080 & 1100 10800 & 11000 22002012-13 1250 & 1270 12500 & 12700 2500

* Common grade ** A grade

Source: Rice husk price collected from millers & IPPs MSP of paddy from APMC

Sample calculation for the year 2012-13    Cost of 1 MT of paddy (MSP)  Rs.12500/-Quantity of Husk generated  20%

Cost of 1 MT of rice husk  Rs.12500 x 0.2 : Rs.2500/-

Based on local demand fuel price vary significantly

Sustainability of Biomass power plants

Recommendations :

Biomass projects : where fuel cost component is variable therefore its important that biomass tariff should have both separate fixed and variable tariff components;

Fixed cost can be fixed for 20 years basis; Escalation in variable cost is linked with the indexation mechanism (or) actual cost incurred

towards fuel in review year; Variable cost review period should be 2 years;

To ensure availability of biomass and reduce the biomass price volatility among biomass power projects follow the Govt. guidelines;

(a minimum radial distance of 50 kM between plants)

Not to allow plants to go for OPEN ACCESS, it will result in higher volatility in local biomass price;

Govt. policy should support the development of technologies

potential to compete with fossil fuels within reasonable length not only to grow the fuel at low cost to convert it to electricity in a highly efficient manner (like Fluidized bed gasifiers, gas turbines & combined cycles)

THANK YOU