About Setu Goyal

Setu Goyal is currently involved with a social impact investment firm in delivering basic infrastructure services like energy, water and sanitation to the rural communities in India. He has worked as a product manager with a clean-tech startup where he was focused on marketing and development of solid biofuel products for the industrial and retail segments as well as in developing solutions to transform process waste streams into revenue-generating opportunities. He has a remarkable entrepreneurial zeal to improve waste management and renewable energy scenario in developing countries and has an extensive knowledge on biomass supply chain economics, planning and forecasting. Setu possesses Masters in Renewable Energy Engineering from TERI University (New Delhi) and can be reached at setu.goyal@gmail.com

Major Issues in Biomass Energy Projects

This article makes an attempt at collating some of the most prominent issues associated with biomass technologies and provides plausible solutions in order to seek further promotion of these technologies. The solutions provided below are based on author’s understanding and experience in this field.

Large Project Costs

The project costs are to a great extent comparable to these technologies which actually justify the cause. Also, people tend to ignore the fact, that most of these plants, if run at maximum capacity could generate a Plant Load Factor (PLF) of 80% and above. This figure is about 2-3 times higher than what its counterparts wind and solar energy based plants could provide. This however, comes at a cost – higher operational costs.

Lower Efficiency of Technologies

The solution to this problem, calls for innovativeness in the employment of these technologies. To give an example, one of the paper mill owners in India, had a brilliant idea to utilize his industrial waste to generate power and recover the waste heat to produce steam for his boilers. The power generated was way more than he required for captive utilization. With the rest, he melts scrap metal in an arc and generates additional revenue by selling it. Although such solutions are not possible in each case, one needs to possess the acumen to look around and innovate – the best means to improve the productivity with regards to these technologies.

Immature Technologies

One needs to look beyond what is directly visible. There is a humongous scope of employment of these technologies for decentralized power generation. With regards to scale, few companies have already begun conceptualizing ultra-mega scale power plants based on biomass resources. Power developers and critics need to take a leaf out of these experiences.

Lack of Funding Options

The most essential aspect of any biomass energy project is the resource assessment. Investors if approached with a reliable resource assessment report could help regain their interest in such projects. Moreover, the project developers also need to look into community based ownership models, which have proven to be a great success, especially in rural areas. The project developer needs to not only assess the resource availability but also its alternative utilization means. It has been observed that if a project is designed by considering only 10-12% of the actual biomass to be available for power generation, it sustains without any hurdles.

Non-Transparent Trade Markets

Most countries still lack a common platform to the buyers and sellers of biomass resources. As a result of this, their price varies from vendor to vendor even when considering the same feedstock. Entrepreneurs need to come forward and look forward to exploiting this opportunity, which could not only bridge the big missing link in the resource supply chain but also could transform into a multi-billion dollar opportunity.

High Risks / Low Paybacks

Biomass energy plants are plagued by numerous uncertainties including fuel price escalation and unreliable resource supply to name just a few. Project owners should consider other opportunities to increase their profit margins. One of these could very well include tying up with the power exchanges as is the case in India, which could offer better prices for the power that is sold at peak hour slots. The developer may also consider the option of merchant sale to agencies which are either in need of a consistent power supply and are presently relying on expensive back-up means (oil/coal) or are looking forward to purchase “green power” to cater to their Corporate Social Responsibility (CSR) initiatives.

Resource Price Escalation

A study of some of the successful biomass energy plants globally would result in the conclusion of the inevitability of having own resource base to cater to the plant requirements. This could be through captive forestry or energy plantations at waste lands or fallow lands surrounding the plant site. Although, this could escalate the initial project costs, it would prove to be a great cushion to the plants operational costs in the longer run. In cases where it is not possible to go for such an alternative, one must seek case-specific procurement models, consider help from local NGOs, civic bodies etc. and go for long-term contracts with the resource providers.

Issues Confronting Biomass Energy Ventures

Biomass resources can be transformed into clean energy and/or fuels by thermal and biochemical technologies. Besides recovery of substantial energy, these technologies can lead to a substantial reduction in the overall waste quantities requiring final disposal. However, biomass energy projects worldwide are often hampered by a variety of techno-commercial issues. The issues enumerated below are not geography-specific and are usually a matter of concern for project developers, entrepreneurs and technology companies:

  1. Large Project Costs: In India, a 1 MW gasification plant usually costs about USD 1-1.5 million. A combustion-based 1 MW plant would need a little more expenditure, to the tune of USD 1-2 million. An anaerobic digestion-based plant of the same capacity, on the other hand, could range anywhere upwards USD 3 million. Such high capital costs prove to be a big hurdle for any entrepreneur or cleantech enthusiast to come forward and invest into these technologies.
  2. Low Conversion Efficiencies: In general, efficiencies of combustion-based systems are in the range of 20-25% and gasification-based systems are considered even poorer, with their efficiencies being in the range of a measly 10-15%. The biomass resources themselves are low in energy density, and such poor system efficiencies could add a double blow to the entire project.
  3. Dearth of Mature Technologies: Poor efficiencies call for a larger quantum of resources needed to generate a unit amount of energy. Owing to this reason, investors and project developers find it hard to go for such plants on a larger scale. Moreover, the availability of only a few reliable technology and operation & maintenance service providers makes these technologies further undesirable. Gasification technology is still limited to scales lesser than 1 MW in most parts of the world. Combustion-based systems have although gone upwards of 1 MW, a lot many are now facing hurdles because of factors like unreliable resource chain, grid availability, and many others.
  4. Lack of Funding Options: Financing agencies usually give a tough time to biomass project developers as compared to what it takes to invest in other renewable energy technologies.
  5. Non-Transparent Trade Markets: Usually, the biomass energy resources are obtained through forests, farms, industries, animal farms etc. There is no standard pricing mechanism for such resources and these usually vary from vendor to vendor, even with the same resource in consideration.
  6. High Risks / Low Pay-Backs: Biomass energy projects are not much sought-after owing to high project risks which could entail from failed crops, natural disasters, local disturbances, etc.
  7. Resource Price Escalation: Unrealistic fuel price escalation too is a major cause of worry for the plant owners. Usually, an escalation of 3-5% is considered while carrying out the project’s financial modelling. However, it has been observed that in some cases, the rise has been as staggering as 15-20% per annum, forcing the plants to shut down.

Biomass Exchange – Key to Success in Biomass Projects

Biomass exchange is emerging as a key factor in the progress of biomass energy sector in a particular country. The supply chain management in any biomass project is a big management conundrum. The complexity deepens owing to the large number of stages which encompass the entire biomass value chain. It starts right from biomass resource harvesting and goes on to include biomass collection, processing, storage and eventually its transportation to the point of ultimate utilization.

Owing to the voluminous nature of the resource, its handling becomes a major issue since it requires bigger modes of logistics, employment of a larger number of work-force and a better storage infrastructure, as compared to any other fuel or feedstock. Not only this their lower energy density characteristic, makes it inevitable for the resource to be first processed and then utilized for power generation to make for better economics.

All these problems call for a mechanism to strengthen the value chain. This can be done by considering the following:

  • Assuring a readily available market for the resource providers or the producers
  • Assuring the project developers of a reliable chain and consistent feedstock availability
  • Awareness to the project developer of the resources in closest proximity to the plant site
  • Assurance to the project developer of the resource quality
  • Timely pick-up and drop of resource
  • Proper fuel preparation as per technology requirements
  • Removal of intermediaries involved in the process – to increase value for both, the producers as well as the buyers
  • No need for long term contracts (Not an obligation)
  • Competitive fuel prices
  • Assistance to producers in crop management

The figure below gives a general understanding of how such a model could work, especially in the context of developing nations where the size of land holdings is usually small and the location of resources is scattered, making their procurement a highly uneconomic affair. This model is commonly known as Biomass Exchange

In such a model, the seed, fertilizer shops and other local village level commercial enterprises could be utilized as an outreach or marketing platform for such a service.  Once the producer approves off the initial price estimate, as provided by these agencies, he could send a sample of the feedstock to the pre-deputed warehouses for a quality check.

These warehouses need to be organized at different levels according to the village hierarchy and depending on the size, cultivated area and local logistic options available in that region. On assessing the feedstock sample’s quality, these centers would release a plausible quote to the farmer after approving which, he would be asked to supply the feedstock.

On the other hand, an entity in need of the feedstock would approach the biomass exchange, where it would be appraised of the feedstock available in the region near its utilization point and made aware of the quantity and quality of the feedstock. The entity would then quote a price according to its suitability which would be relayed to the primary producer.

An agreement from both the sides would entail the placement of order and the feedstock’s subsequent processing and transportation to the buyer’s gate. The pricing mechanisms could be numerous ranging from, fixed (according to quality), bid-based or even market-driven.

Roadblocks

The hurdles could be in the form of the initial resource assessment which could in itself be a tedious and time consuming exercise. Another roadblock could be in the form of engaging the resource producers with such a mechanism. Since these would usually involve rural landscapes, things could prove to be a little difficult in terms of implementation of initial capacity building measures and concept marketing.

Benefits

The benefits of  a biomass exchange are enumerated below:

  • Support to the ever increasing power needs of the country
  • Promotion of biomass energy technologies
  • Development of rural infrastructure
  • Increased opportunities for social and micro-entrepreneurship
  • Creation of direct and indirect job opportunities
  • Efficient utilization of biomass wastes
  • Potential of averting millions of tonnes of GHGs emissions

Conclusions

In India alone, there has been several cases where biomass power projects of the scale greater than 5 MW are on sale already, even with their power purchase agreements still in place. Such events necessitate the need to have a mechanism in place which would further seek the promotion of such technologies.

Biomass Exchange is an attractive solution to different problems afflicting biomass projects, at the same time providing the investors and entrepreneurs with a multi-million dollar opportunity. Although such a concept has been in existence in the developed world for a long time now, it has not witnessed many entrepreneurial ventures in developing nations where the need to strengthen the biomass supply chain becomes even more necessary.

However, one needs to be really careful while initiating such a model since it cannot be blindly copied from Western countries owing to entirely different land-ownership patterns, regional socio-political conditions and economic framework. With a strong backup and government support, such an idea could go a long way in strengthening the biomass supply chain, promotion of associated clean energy technologies and in making a significant dent in the present power scenario in the developing world.

Biorefinery Prospects in India

India has a tremendous biomass potential which could easily be relied upon to fulfil most of our energy needs. An estimated 50 MMT (million metric tonnes) of liquid fuels are consumed annually in India, but with the actual biomass potential and its full utilization, India is capable of generating almost double that amount per annum. These biomass estimates only constitute the crop residues available in the country and essentially the second-generation fuels since the use of first-generation crop bases fuels in such food-starved nations is a criminal thought.

Existing Technologies

Currently, there are various technologies available to process such crop residues and generate value products from them. However, essentially, they all revolve around two main kinds of processes, either biochemical or thermal.

The biochemical process involves application of aerobic/anaerobic digestion for the production of biogas; or fermentation, which results in the generation of ethanol. Both these products could be subsequently treated chemically and through trans-esterification process, leading to production of biodiesel.

Alternatively, the thermochemical processes involve either the combustion, gasification or pyrolysis techniques, which produces heat, energy-rich gas and liquid fuels respectively. These products can be used as such, or could be further processed to generate high quality biofuels or chemicals.

The Need

The estimated organized energy breakup for India is 40 percent each for domestic and transport sectors and 20 percent for the industrial sectors. The current share of crude oil and gases is nearly 90 percent for the primary and transport sectors and the remaining 10 percent for the generation of industrial chemicals. The escalating prices of crude oil in the international market and the resulting concern over energy security, has lead developing nations to explore alternative and cheap sources of energy to meet the growing energy demand. One of the promising solution for agrarian economies is Biorefinery.

The Concept

Biorefinery is analogous to the traditional petroleum refineries employing fractional distillation process for obtaining different fractions or components from the same raw material, i.e. the crude oil. Biorefinery involve the integration of different biomass treatment and processing methods into one system, which results in the production of different components from the same biomass.  This makes the entire chain more viable economically and also reduces the waste generated.

Typical Model of a Biorefinery

The outcome ranges from high-volume, low-energy content liquid fuels, which could serve the transportation industry needs, to the low-volume but high-value chemicals, which could add to the feasibility of such a project. Steam and heat generated in the process could be utilized for meeting process heat requirements. By-products like chemicals, fertilizers, pharmaceuticals, polymers etc are also obtained which provide additional revenue streams.

Benefits

Biorefineries can help in utilizing the optimum energy potential of organic wastes and may also resolve the problems of waste management and GHGs emissions. Wastes can be converted, through appropriate enzymatic/chemical treatment, into either gaseous or liquid fuels. The pre-treatment processes involved in biorefining generate products like paper-pulp, HFCS, solvents, acetate, resins, laminates, adhesives, flavour chemicals, activated carbon, fuel enhancers, undigested sugars etc. which generally remain untapped in the traditional processes. The suitability of this process is further enhanced from the fact that it can utilize a variety of biomass resources, whether plant-derived or animal-derived.

Applicability

The concept of biorefinery is still in early stages at most places in the world. Problems like raw material availability, feasibility in product supply chain, scalability of the model are hampering its development at commercial-scales. The National Renewable Energy Laboratory (NREL) of USA is leading the front in biorefinery research with path-breaking discoveries and inventions. Although the technology is still in nascent stages, but it holds the key to the optimum utilization of wastes and natural resources that humans have always tried to achieve. The onus now lies on governments and corporate to incentivize or finance the research and development in this field.

Rationale for Biomass Supply Chain

Biomass resources have been in use for a variety of purposes since ages. The multiple uses of biomass includes usage as a livestock or for meeting domestic and industrial thermal requirements or for the generation of power to fulfill any electrical or mechanical needs. One of the major issues, however, associated with the use of any biomass resources is its supply chain management. The resource being bulky, voluminous and only seasonally available creates serious hurdles in the reliable supply of the feedstock, regardless of its application. The idea is thus to have something which plugs in this gap between the biomass resource availability and its demand.

The Problem

The supply chain management in any biomass based project is nothing less than a big management conundrum. The complexity deepens owing to the large number of stages which encompass the entire biomass value chain. It starts right from the resource harvesting and goes on to include the resource collection, processing, storage and eventually its transportation to the point of ultimate utilization.

Owing to the voluminous nature of the resource, its handling becomes a major issue since it requires bigger modes of logistics, employment of a larger number of work-force and a better storage infrastructure, as compared to any other fuel or feedstock. Not only this their lower energy density characteristic, makes it inevitable for the resource to be first processed and then utilized for power generation to make for better economics.

All these hassles associated with such resources, magnify the issue of their utilization when it comes to their supply chain. The seasonal availability of most of the biomass resources, alternative application options, weather considerations, geographical conditions and numerous other parameters make it difficult for the resource to be made consistently available throughout the year. This results in poor feedstock inputs at the utilization point which ends up generating energy in a highly erratic and unreliable manner.

The Solution

Although most of the problems discussed above, are issues inherently associated with the usage of biomass resources, they can be curtailed to a larger extent by strengthening the most important loophole in such projects – The Biomass Resource Supply Chain.

World over, major emphasis has been laid in researching upon the means to improve the efficiencies of such technologies. However, no significant due diligence has been carried out in fortifying the entire resource chain to assure such plants for a continuous resource supply.

The usual solution to encounter such a problem is to have long term contracts with the resource providers to not only have an assured supply but also guard the project against unrealistic escalations in the fuel costs. Although, this solution has been found to be viable, it becomes difficult to sustain such contracts for longer duration since these resources are also susceptible to numerous externalities which could be in the form of any natural disaster, infection from pests or any other socio-political or geographical disturbances, which eventually lead to an increased burden on the producers.