Biomass – a sustainable renewable energy source for India!
Biomass has been man’s fuel of choice ever since the time he harnessed energy in the form of fire, and continues to have a considerable impact on rural populations especially in India. India being an agricultural economy has always wanted to harness the true potential of bio mass and waste but has fallen short time and again. The cause of the South East Asia brown haze is mainly due to the wasteful burning of agricultural waste and biomass for cooking, light, heating which in turn has a large ecological impact on the subcontinent. More than 70% of the country’s population depends upon biomass for its energy needs, consisting of 32%+ of the total primary energy use in the country.
India generates almost 800 million tons of agriculture / horticulture output from 141 million hectares of arable land and about 70-75% of the waste is used as fodder, fuel for domestic cooking as well as for other economic purposes, leaving behind 120 –150 million tonnes of usable agro industrial and agricultural residues per year, which is available for power generation. This could sustain power projects of approximately 15-20GWe with the capacity to generate between 75-100 Billion KWh units annually.
Currently Biomass power generation in India is an industry that attracts investments of over Rs.600 crores every year, generating more than 5 Billion KWh units of electricity while providing annual employment of more than 10 million man-days in the rural sector.
As of March 2011, 58.43%of the electricity consumed in India was generated by thermal power plants, 19.45% by hydroelectric power plants, 2.47% by nuclear power plants, 10.10% by Captive Power Generation and 9.55% by Renewable Energy Sources primarily wind farms. More than 50% of India’s commercial energy demand is met through the country’s vast coal reserves with another 347 projects waiting in the pipeline. Indian coal which is of poor quality with high ash content and low calorific values, has led to increased particulate pollution and ash disposal problems and constitutes 70% of total fossil fuel emissions.
Table 1: Installed Power Project Capacities for India – March 2011
*Source – Indian Ministry of Power
India’s national Ministry of New and Renewable Energy MNRE is currently targeting 10GWe of biomass based renewable energy sources in the next decade and has constantly encouraged biomass power plant owners to increase capacities with a new thrust focused towards captive plantation management. To avoid misuse and abuse of central support, the 11th plan proposal also expressly states “subsidy for biomass power is sought to be supported only where sustainability of biomass supplies can be demonstrated since there have been apprehensions about over drawl of forest resources with fuel wood so obtained being diverted for some such projects. Further, biomass ceases to be renewable unless a project can demonstrate its sustainability through dedicated plantations specially raised for the purpose.” Recent orders allow for up to a 20% mix of coal to fire biomass plants thus allowing them to run during off cycles for agri-waste and the recent availability of Renewable Energy Certificates (REC) allow for viable business models.
Renewable energy makes up for barely 10% of the energy generated, with wind generating the largest at almost 70% but the power is neither schedulable nor dependable. Amongst Renewable Energy sources, the only reliable sources of power from a base load and scheduling perspective are solar and biomass, while Hydro suffers from seasonal variation.
* including biomass power, bagasse cogeneration, urban and industrial waste to energy.
MNRE covers biomass as part of its remote village electrification with 90% of cost covered under Central Financial Assistance and the remaining 10% from the state. Traditionally biomass has been derived from plant including its waste, however recently a larger focus has been placed on human generated waste from sizable municipalities.
The true potential of renewable energy lies in its offgrid application, which promotes user independence from the grid as well as generates local jobs while availing of the advantages of consistent power especially in remote hamlets which are a significant loss making proposition for state electricity distribution agencies.
MNRE has also pushed for increase in Tail-end Biomass (Gasification and Combustion) and Solar Power projects of 1-2MWe feeding into the grid at 11KV. This is being done to try and reduce transmission losses to below 7% from the current 30% while providing clean and stable power to villages. The Ministry is already working on a plan to setup approx. 200 MWe of biomass gasifier projects at tail-ends by early next decade.
As of Jan 2011, a small grid connected project of 120 kWe based on gasifier system using pine needle was being pursued in Bering Block, Pithoragarh District, Uttarakhand and another two projects with approx 1.2 MWe capacity in Madhya Pradesh. A 500 kWe gasifier based tail end grid connected project has been commissioned at Dist Vellore, Tamil Nadu.
The combined installation of biomass plants connected to the grid has barely grown to a GW excluding bagasse based cogeneration in more than a decade due to the constraints of feedstock management. Biomass based power plants essentially use either of these technologies i.e. Pyrolysis, Combustion and Gasification. Currently 288 biomass power and cogeneration projects aggregating 2665 MW capacity in the country feed power to the grid. These consist of 130 biomass power projects aggregating to 999.0 MW and 158 bagasse cogeneration projects in sugar mills with surplus capacity aggregating to 1666.0 MW. In addition, around 30 biomass power projects aggregating to about 350 MW are under various stages of implementation. Around 70 Cogeneration projects are under implementation with surplus capacity aggregating to 800 MW. The Ministry began implementing biomass power / cogeneration programs in the nineties. States which are keen on implementation of cogeneration projects are Andhra Pradesh, Tamil Nadu, Karnataka and Uttar Pradesh. The major States for biomass power projects are Andhra Pradesh, Karnataka, Chhattisgarh, Maharashtra and Tamil Nadu.
Table 1.3: Installed Power Projects in India – Biomass and CoGeneration
*Source MNRE Biomass Programme
Municipal solid waste has essentially been a non-starter due to the non-segregation of waste into dry, recyclable and wet waste as well as the supply chain management based on the lethargy of civic run bodies. Also wet waste reduces the amount of power generated exponentially and Indian waste is high in moisture content, thus reducing the viability of projects.
In May 2011, MNRE under the “Programme on Energy Recovery from Municipal Solid Waste” has allowed for financial support for pilot power generation projects. This scheme provides financial assistance for setting up of five Pilot projects for power generation from MSW in accordance with the decision of the Supreme Court on May 15, 2007, and is also based on recommendations of an Expert Committee. Recommended reading would be the DHRP for the IPO of A2Z, which highlight the risks of MSW projects.
Biofuels have also recently been in the news for a source of energy to replace non-renewable fossil fuels especially ethanol have run into a political impasse due to the impact on soaring agricultural food prices and agricultural land use.
Organizations that process feedstock for manufactured products have a head start on the industry, the model of using waste to generate captive power has created a sustainable supply chain.
The Indian biomass industry has suffered from a number of inherent risks
- Non-availability of feedstock within a certain radius
- Cartelization of feedstock, waste and otherwise leading to price instability
- Unorganized market without long term supply contracts being possible
- Greed of farmers and developers alike
- Inadequate awareness of the impact on the environment due to burning
- Poor technology availability with efficiency rates of power plants at just 20-25% – 9000 Metric tons (equivalent to 6000 midsized cars) of biomass is required to annually generate 1MW
- Large scale plantation management, biomass plant technology and supply chain expertise is lacking in general
- Open access is restricted in a large number of states or is an onerous process, preventing third party sales
- Power rates are insufficient to match the increasing costs of feedstock, transportation and storage
- Payment issues with monopolistic State Electricity Boards
- Insurance doesn’t cover feedstock risk
- Seasonality of feedstock availability and crop failures
- Poor supply chain management
- Grid availability, tail end consumptions are limited
- Uncertainty of carbon credits CDMs post 2012
Taking these issues into account, banks have been wary on providing financial support, rarely providing more than 50% of the debt requirement. In some cases which I personally know off, the banks have initially approved a larger section of debt but lowered it when disbursing or have requested for additional guarantees on behalf of the promoter.
While this does seem to be insurmountable hurdles a number of professional organizations believing in green energy have taken the plunge and have grown their portfolio rapidly. The key to the success of biomass power plants lies in the crucial management of the feedstock supply chain. A push towards use of large tracts of wastelands to grow captive feedstock has taken shape with central and state support.
Some options to ensure bankability and viability associated with these would be
- Either setup or tieup with an agricultural produce processing unit which provides a guaranteed supply chain or setup your own captive plantation for feedstock
- Alternatively you could look at dedicated biomass plants with high yields, gestation periods range from 2-4 years however yields are significant and approx. 150-200 acres can comfortably run a 1MW plant with a generation of approx. 6-6.5 million KWh units on an annual basis
- Outsource the supply chain to contract and transport management to professionals
- Locate your plant in an area with large farm tract holdings and agri-waste that has low commercial value and high calorific content
- Locate your plant where the availability of fuel is lower than 10% of the total mass of waste produce within a 20-40 km radius
- Supply power locally to avoid transmission, wheeling and banking losses
- Avail of RECs as well as Central Financial Assistance from the MNRE
- Use local NGO support to create additional employment opportunities
- Ensure the project is registered under the CDMs
- Provide large storage areas of at least 30-60 days of feedstock with moisture management. As moisture in feedstock severely degrades the calorific value
- Tie up with a local NGO to create awareness of the importance of supply to the plant thus resulting in a socio economic upsurge for the local population
- Give back to the community, create a holistic relationship
- Understand local relationships and create a mutually profitable relationship with your feedstock suppliers
- Most important of all, this isn’t an opportunistic business and requires long term commitment for success
These should provide acceptable risk parameters for bankers and financiers while providing biomass power plants with a long term view into fuel availability, which would in turn help fund raising and create a structured industry framework.
In fact, speakers at the Biomass Energy Conclave 2011 held in the latter half of August, echoed a number of these challenges and recommendations as well.
Biomass power generation in the 1-10MW is definitely possible and viable for tail end power generation. The logistics given the fragmented agricultural economy with few families holding large tracts of land in most states, a large biomass plant of 25 MW+ scale is fairly difficult. However professionally managed biomass organizations with long term goals have been successful and continue to grow.
The author leads an Advisory organization focused on Renewable Energy Projects and also runs two of the largest renewable energy forums on linkedin.com dedicated to the Indian subcontinent.
*Table 1 to Table 1.3: Source – Ministry of New and Renewable Energy, India