Biomass economy
- 1. REPORT ON THE ECONOMICS OF RENEWABLE ENERGY SOURCE BIOMASS .Prepared By: SUDEPPANICKER Submitted to : Dr.Rasananda panda Roll No-20104008.EXE-MBA Course Faculty for Energy Economics Pandit Deendayal Petroleum University Gandhinagar [email protected] 1
- 2. Table of contents. •Introduction & Chemical Composition. •Categories of Bio mass materials. •Key Challenge and priorities in a Bio based Economy •Competitiveness and Potential benefits of Modern Biomass energy •Indian Power production Scenario. •Projected biomass demand • Indian Power production Scenario. •Barriers to accelerated Biomass power Development. •Policy and Regulatory Frame work . •Government Incentives for Biomass Power Projects. • Managerial concerns observations and Suggestions • Conclusion 2
- 3. Introduction Biomass is biological material derived from living, or recently living organisms .In the context of biomass for energy this is often used to mean plant based material, but biomass can equally apply to both animal and vegetable derived material. Chemical composition Biomass is carbon based and is composed of a mixture of organic modules containing Hydrogen, usually including atoms of Oxygen, often Nitrogen and also small quantities of other atoms including alkali, alkaline earth and heavy metals. The combustible gas comprises mainly of carbon monoxide (18-22%), hydrogen (15- 20%), methane (1-5%), carbon dioxide (10-12%) and nitrogen (45- 55%). 3
- 4. Categories of Bio mass materials- There are five basic categories of Bio mass material: •Virgin wood- From Forestry arboricultural activities or from wood processing. •Energy crops-High yield crops grown specifically for energy applications. •Agricultural residues-Residues from agriculture harvesting or processing. •Food waste-From food and drink manufacture, preparation and processing, and post-consumer waste. •Industrial waste and co-products-From manufacturing and industrial processes 4
- 5. . Need for biomass power in India • More than 70% of India’s population depends on biomass and about 32% of the total primary energy use in the country mainly in rural areas is still derived from biomass. Biomass gasification based power production, is relevant today especially in the Indian context. • In India more than 2000 gasifiers are estimated to have been established with a capacity in excess of 22 MW and a number of villages have been electrified with biomass gasifier based generators. 5
- 6. Potential benefits of Modern Biomass energy Biomass-based power shows many potential benefits, some of which are listed below: •Distributed generation •Base load power •Suited for rural areas •Ability to have small, kW scale power production •Rural economic upliftment •Carbon neutral •Efficient utilization of renewable biological sources •Reduces methane, a major GHG gas •Low Cost Resource 6
- 7. CALORIFIC VALUE OF FUELS Fuel Approx heating value Kcal/Kg Natural State Dry state BIOMASS 1 Wood 1500 3500 2 Cattle dung 1000 3700 3 Bagasse 2200 4400 4 Wheat and rice straw 2400 2500 5 Cane trash, rice husk, leaves and 3000 3000 vegetable wastes 6 Coconut husks, dry grass and crop 3500 3500 residues 7 Groundnut shells 4000 4000 8 Coffee and oil palm husks 4200 4200 9 Cotton husks 4400 4400 10 Peat 6500 6500
- 8. Indian Power production Scenario •The average electricity consumption in India is still among the lowest in the world at just 630 kWh per person per year, but this is expected to grow to 1000 kWh in the near future. Some of the highlights of the current power production status in india:- •India’s current installed capacity (end of 2010): 1,70,229 MW, from all sources •Power generation capacity is mainly based on thermal and hydro, with about 11% from renewable energy. •Electricity demand is expected to rise by 7.4% a year during the next quarter of a century. Total Installed Capacity of Renewable Power Sources •As of Feb 2011, India has over 18.3 GW of installed renewable energy capacity. Wind represents about 13 GW, small hydro represents 2.8 GW, and the majority of the remainder is from biomass installations Total Electricity Installed Capacity: 171.9 GW (Feb 2011) Source: CEA 8
- 9. Projected biomass demand In India, the biomass demand for fuelwood, industrial wood and sawnwood in 2000 was 226 Mt, of which fuelwood accounted for 86.9 percent , industrial wood 7.68 percent and sawnwood, 5.4 percent. It is projected that the biomass demand will increase to 290 Mt by 2010, fuelwood accounting for 241 Mt; industrial wood, 26 Mt and sawnwood, 23 Mt. The sawnwood demand is projected to nearly double in 15 years. Energy source % Share in installed capacity Thermal 64.75% Nuclear 2.78% Hydro (large hydro) 21.73% Other renewable energy sources 10.73% 9
- 10. Composition of Indian power sector 10
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- 13. Utilized and Un-utilized potential biomass power in india 13
- 14. Potential and Current usage of Bio Mass in India The net energy potential of the biomass has been estimated at over 20,000 MW equivalents. Area Crop Biomass Biomass Power (kha) productio generation surplus(Kt/yr Potential n (Kt/yr) (kt/yr) ) (MWe) Agro- 403,560 444,595 133,756 17,354 129,387 Total Forest & 58,797 NA 62,792 42,121 5,897 Waste land 14
- 15. However, a large percentage of this biomass utilized is used as fodder for livestock and for rural energy needs. As shown in the graph below, only around 20% of the biomass is potentially utilized by the industrial and commercial sector. 15
- 16. The main objectives of the Biomass Energy To encourage the deployment of biomass energy systems in industry for meeting thermal and electrical energy requirements. To promote decentralized / distributed power generation through supply of surplus power to the grid. To conserve the use of fossil fuels for captive requirements in industry. To bring about reduction in greenhouse gas emissions in industry. To create awareness about the potential and benefits of alternative modes of energy generation in industry. 16
- 17. Barriers to accelerated Biomass power Development. The following specific barriers to development of biomass power projects have been identified- •Absence of Effective Institutional and Financing Mechanism. •Lack of Adequate Policy Framework. •Lack of Effective Regulatory Framework. • Lack of Technical capacity •Absence of Effective Information Dissemination. •Limited Successful Commercial Demonstration model Experience. 17
- 18. Policy and Regulatory Frame work •In 1981, india created a government commission with overall responsibility for developing renewable energy and a separate department of Non-conventional Energy sources. •The Ministry of new and Renewable Energy issued the Renewable Energy power Purchase Guidelines to all states in 1993. •The Electricity Act of 2003 guaranteed interconnection for renewable energy sources. •Almost all states have implemented some form of preferential tariffs for renewable energy generation. •These measures have been strengthened by the National electricity policy 2005.the Tariff policy of 2006, the Rural electrification policy 2006 and the integrated energy policy report of Planning commission of india in 2006 •Today India’s power market mostly comprises regulated prices with a few states introducing open bidding on electricity through ten to fifteen year power purchase agreements. 18
- 19. Government Incentives for Biomass Power Projects Project Type Capital Subsidy Capital subsidy Special Category States (NE Region, For other states Sikkim, J&K, HP & Uttaranchal) Biomass Power projects 25 lakh X (C MW)^0.646 20 lakh X (C MW)^0.646 Bagasse Co-generation by private sugar 18 lakh X (C MW)^0.646 15 lakh X (C MW)^0.646 mills Bagasse - Co-generation projects by cooperative/ public sector sugar mills 40 bar & above 40 lakh * 40 lakh * 60 bar & above 50 lakh * 50 lakh * 80 bar & above 60 lakh * 60 lakh * Per MW of surplus power ** Per MW of surplus power ** (maximum support `8.0 crore per project) (maximum support `8.0 crore per project) *For new sugar mills, which are yet to start production and existing sugar mills employing backpressure route/seasonal/incidental cogeneration, which exports surplus power to the grid, subsidies shall be one-half of the level mentioned above. ** Power generated in a sugar mill (-) power used for captive purpose i.e. net power fed to the grid during season by a sugar mill. 19
- 20. Govt Subsidies On Biomass power projects capacity % Subsidy Unit size upto 100 KWe (300 KWth, 2.5 lakhs kcal/hr) Owned by Co-operative Panchayat, NGOs & Central/State Agencies (Socially Oriented Projects) 50 Owned by Individual(s) / Entrepreneur(s) 30 Unit Size > 100 kWe but < 200 kWe Owned by Co-operative Panchayat, NGOs & Central/State Agencies (Socially Oriented Projects) 55 Owned by Individual(s)/Entrepreneur(s) 35 Unit Size > 200 Kwe Owned by Co-operative Panchayat, NGOs & Central/State Agencies (Socially Oriented Projects) 60 Owned by Individual(s) / Entrepreneur(s) 40 HI-FOCUS AREAS, ISLANDS, NE STATES, LADAKH & SC/ST USERS Additional Financial Assistance(Over and above) 10 20
- 21. Economical and Technological Aspects of Bio Energy Production • Biogas gasification works well for small scale power production, upto a maximum capacity of 2 MW. Combustion, on the other hand, works well at MW scales. • The capital cost per MW for a biomass gasification plant is about Rs 5.5 crores, while the operational expenses (excluding the cost of biomass) are about 0.75 Rs per kWh. The levelized cost of power from biomass gasification will be in the range of Rs 2.25-4/kWh, depending mainly on the cost of the biomass. • Under optimal conditions, biomass gasification based power production presents a good business opportunity with attractive IRRs (over 25%) and payback periods (fewer than 3 years). •It can operate at small scales (10-25 kW) as well as medium scale (upto 2 MW). •India has an estimated potential of over 30,000 MW of power from biomass, but less than 2500 MW has been exploited. Thus, over 90% of capacity from potential still exists. As per The India Biomass Gasification Report-May 2011 21
- 22. State-wise growth of biomass power (co-gen) in MW is given below State Upto 03-04 04-05 05-06 06-07 07-08 08-09 Total 31.03.03 Andhra Pradesh 160.05 37.70 69.50 12.00 22.00 33.00 9 334.25 Chattisgarh 11.00 - - 16.50 85.80 33.50 9.88 156.1 Gujarat 0.50 - - - - - - 0.5 Haryana 4.00 - 2.00 - - - - 6 Karnataka 109.38 26.00 16.60 72.50 29.80 8.00 12 274.28 Madhya Pradesh 0.00 1.00 - - - - - 1 Maharashtra 24.50 - 11.50 - 40 38.50 41.5 155.5 Punjab 22.00 - - 6.00 - - - 28 Rajasthan 0.00 7.80 - 7.50 8.00 - 8 31.3 Tamilnadu 106 44.5 22.5 - 42.5 75 18.2 308.7 Uttar Pradesh 46.5 12.5 14 48.5 - 79 172 372 483.93 129.5 136.1 163 228 266 271 1677 22
- 23. Managerial concerns observations and Suggestions • Compared to coal, and indeed compared to almost any other combustion fuel, biomass is expensive to handle and move, and cost of transportation looms large in assessments of financial viability. • The distributed nature of the wood fuel source and the relatively high cost of wood movement suggest that in general, wood-chip burning power plants will be relatively small and dispersed. •Yet the other major influence on plant size is economies of scale in plant operation: larger plants generally use less labor, operate at higher efficiencies, and have lower costs per kWh generated than smaller plants. The implications for rural development could be far reaching if bioenergy can supply a significant proportion of this modern energy requirements. Many commercial possibilities could be created with many social and economic benefits. In addition, there is a considerable potential for improving the environment. Thus replacing fossil-derived energy with biomass can reduce greenhouse gases and mitigate global climate change. 23
- 24. CONCLUSION • Bioenergy should not be regarded as the panacea for solving agricultural and energy problems in the rural areas, but as an activity that can play a significant role in improving agricultural productivity, energy supply, the environment and sustainability. Its final contribution will depend on a combination of social, economic, environmental, energy and technological factors. •The potential role in bioenergy production should receive greater recognition, together with the need for positive political encouragement, and socio-cultural adaptations. •The scenarios considered for estimating the biomass potential as per the above study are incremental biomass demand, sustainable biomass demand and the full biomass demand. Under these scenarios, two situations namely no increase in cropland by 2010 and increase in cropland by 10%.. •Annually 62–310 Mt of wood could be generated from the surplus land, after meeting all the requirements of biomass, such as domestic fuelwood, industrial wood and sawnwood, with an investment of Rs168–780 billion 24
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