REPORT ON THE ECONOMICS OF RENEWABLE ENERGY SOURCE BIOMASS

.Prepared By: SUDEPPANICKER Roll No-20104008.EXE-MBA Pandit Deendayal Petroleum University Gandhinagar

Submitted to : Dr.Rasananda panda Course Faculty for Energy Economics

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
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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%).

Categories of Bio mass materialsThere 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

Need for biomass power in India More than 70% of Indias 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.

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
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CALORIFIC VALUE OF FUELS

Fuel Approx heating value Kcal/Kg Natural State Dry state

BIOMASS 1 2 3 4 5 Wood Cattle dung Bagasse Wheat and rice straw Cane trash, rice husk, leaves and vegetable wastes 1500 1000 2200 2400 3000 3500 3700 4400 2500 3000

Coconut husks, dry grass and crop residues

3500

3500

7 8

Groundnut shells Coffee and oil palm husks

4000 4200

4000 4200

9 10

Cotton husks Peat

4400 6500

4400 6500

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:Indias 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

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 Thermal Nuclear Hydro (large hydro) Other renewable energy sources % Share in installed capacity 64.75% 2.78% 21.73% 10.73%

Composition of Indian power sector

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Utilized and Un-utilized potential biomass power in india

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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 (kha)

Crop Biomass production generation (Kt/yr) (kt/yr)

403,560 444,595

Biomass Power surplus(Kt/yr) Potential (MWe)

133,756 17,354

AgroTotal Forest & Waste land

129,387

58,797

NA

62,792

42,121

5,897

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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.

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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.

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Barriers to accelerated Biomass power Development.

The following specific barriers to development of biomass power projects have been identifiedAbsence 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.

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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 Indias power market mostly comprises regulated prices with a few states introducing open bidding on electricity through ten to fifteen year power purchase agreements.
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Government Incentives for Biomass Power Projects

Project Type Capital Subsidy Special Category States (NE Region, Sikkim, J&K, HP & Uttaranchal) Capital subsidy For other states

Biomass Power projects Bagasse Co-generation by private sugar mills

25 lakh X (C MW)^0.646 18 lakh X (C MW)^0.646

20 lakh X (C MW)^0.646 15 lakh X (C MW)^0.646

Bagasse - Co-generation projects by cooperative/ public sector sugar mills 40 bar & above 60 bar & above 80 bar & above 40 lakh * 50 lakh * 60 lakh * Per MW of surplus power ** (maximum support `8.0 crore per project) 40 lakh * 50 lakh * 60 lakh * Per MW of surplus power ** (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.

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Govt Subsidies On Biomass power projects

capacity Unit size upto 100 KWe (300 KWth, 2.5 lakhs kcal/hr) Owned by Co-operative Panchayat, NGOs & Central/State Agencies (Socially Oriented Projects) Owned by Individual(s) / Entrepreneur(s) Unit Size > 100 kWe but < 200 kWe Owned by Co-operative Panchayat, NGOs & Central/State Agencies (Socially Oriented Projects) Owned by Individual(s)/Entrepreneur(s) Unit Size > 200 Kwe Owned by Co-operative Panchayat, NGOs & Central/State Agencies (Socially Oriented Projects) Owned by Individual(s) / Entrepreneur(s) HI-FOCUS AREAS, ISLANDS, NE STATES, LADAKH & SC/ST USERS Additional Financial Assistance(Over and above) % Subsidy

50 30

55 35

60 40

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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

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State-wise growth of biomass power (co-gen) in MW is given below

State Upto 31.03.03 Andhra Pradesh 160.05 37.70 69.50 12.00 22.00 33.00 9 334.25 03-04 04-05 05-06 06-07 07-08 08-09 Total

Chattisgarh Gujarat Haryana Karnataka Madhya Pradesh

11.00 0.50 4.00 109.38 0.00

26.00 1.00

2.00 16.60 -

16.50 72.50 -

85.80 29.80 -

33.50 8.00 -

9.88 12 -

156.1 0.5 6 274.28 1

Maharashtra Punjab Rajasthan Tamilnadu Uttar Pradesh

24.50 22.00 0.00 106 46.5 483.93

7.80 44.5 12.5 129.5

11.50 22.5 14 136.1

6.00 7.50 48.5 163

40 8.00 42.5 228

38.50 75 79 266

41.5 8 18.2 172 271

155.5 28 31.3 308.7 372 1677

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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.
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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 62310 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 Rs168780 billion

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