pManifold PanIIT Conclave 2010 Biomass Presentation

BIOMASS ENERGY SYSTEMS – SCALE-UPFor DIREC, Pan IIT Conclave and MNRE

[email protected]

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enabling sustainable growth…

professional people perspire, partners persevere, prepare

policy process, plan project, price profit potential, pursue

performance, promote progress, preserve plural planet

Dedicated to Leaders like IISC Bangalore, DESI Power, Husk Power Systems, Onergy, RTBI @ IITM and others to set the trail. Special thanks to Mr. Krishnaswamy @ EnerGreen Power, Prof. Ashok Jhunjhunwala @ IITM, Mr. Uday Kamat @ Yash Agro and Ms. Anu Avalli @ RENE, IFMR Trust for inputs.

BIOMASS GASIFIER SAMPLE – SYSTEM PERSPECTIVE11/2/2010

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SFC (kg/kWh)

Load %

1.3 100%

1.35 80%

1.45 60%

1.75 40%

Electricity

Biomass Electric Load

Energy conversion(kcal/kg)

Gasifier Generator

3500 67280% 24%

100 kWe System

2800

19%

Biomass Mgmt Process Control Local Distribution

? ??How to organize biomass supply chain

(Coal model)

How to set up Private Local Distribution

(DGBDF model)

How to • Map technology to right app (demand volatility)• Set right ownership structure & Operational Model

(Rural ESCO Model)

Social Environmental Financial Inclusion

24%

16%

8%

Hot air

Hot water

Cold Water

BIOMASS ENERGY SYSTEM – STAKEHOLDERS VIEWS

End User

• “I also need finance & marketing linkages to be able to use power for income leverage”

Utility

• “We make losses both technical and mostly commercial by selling power to villages. Also not get paid by state govt. for their promised subsidies”

Power Plant Owner

• “We get sandwiched between farmers increase in price of biomass and utilities decrease in feed-in-tariff rate. Also coal enjoys pass through fuel inflation rate to end-user, while biomass not”

Farmer

• “FREE power has been NO power to us for long time now. I need certainty in Water to my farms and willing to pay for it. Regarding biomass, its waste to me, but if useful to you I need money, but cannot contract as my cropping pattern changes w/ market”

Corporates

• “Rural Electrification will never be profitable. Payment collection will remain biggest challenge together with govt. subsidies. Co-creation is far fetched. I do not want to be the first. ”

Technocrat

• “My technology is full proof under std. operating conditions – 15% moisture, specific fuel & size and 80% PLF. Its your problem to map it to right applications dealing with demand volatility and loose operations”

Regulator

• “Under equity of power supply, we cannot allow sale of power at higher rates in rural areas, using state utility grid structure. Aslo grid open access is allowed only above 1MW only”

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KEY GAPS IN RURAL ELECTRICITY DELIVERY11/2/2010

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Elements Dimensions of framework Rationale

1Demand

Uncertainty

• Absence of sustained and steady base loads of power

• Low rural economic development and inadequate support infrastructure like banks, market linkages etc. prevent energy uptake through capacity building

2Improper

Govt. Policies

• Politicization of tariff structure

• Absence of a viable PPP model for rural distribution

• Free power for agriculture etc. results in price distortion and people’s willingness to pay for private power

• High capex, regulated tariff, competition with subsidized grid prices affects both off-grid and crippled on-grid rural areas

3Inadequate

Technology

adaptation

• Lack of robust & effective generation and storage technologies

• No organized consortium

• Existing technologies do not match volatile rural consumption patterns

• Holistic integration of rural electrification into national infrastructure setting is required to drive policies and reforms

4Lack of

Organized

Operators

• Resource intensive delivery model

• Fragmented and technology biased players

• Information asymmetry

• Heavy regulations along with high resource requirement limits the entry of organized private players as operators

• Most private players are focused on being specific technology providers than comprehensive solution / service providers

• Limited means to measure and disseminate critical consumption / demand data of rural areas

4 key gaps for poor electricity delivery in rural areas – inherent demand uncertainty, bad

policy initiatives, inadequate end technology adaptations and absence of organized players.

PROCESS CONTROL

Right Technology Mapping to Applications including HYBRIDs

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RIGHT TECHNOLOGY MAPPING – PLANT SIZE, PLF, COG, TOTAL

COST OF DELIVERY11/2/2010

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BiomassGasification (kWe)

P&M Investment (Rs. Lacs)

BiomassSFC @ 80% (kg/kWh)

COG = RM + O&M + Dep + OH(Paise/kWh)

Viable Other Technologies + Appendages

Impact on utility and returns

% PC change

10 kWe 6 1.6 400 + 100 + 86 + 50 = 636 • Bio Gas RM cost reduces; low O&M

+ 116%

25 kWe 20 1.5 375 + 100 + 86 + 48 = 637 • Bio Gas “ “

100 kWe 60 1.3 325 + 80 + 114 + 41 = 531 • Bio Gas• Refrigeration • 25 TR Cold storage

(~250 Tonnes of crop)• +4%

250 kWe 160 1.25 313 + 70 + 91 + 38 = 512 • Bio Gas• Refrigeration

“ “

500 kWe 300 1.2 200 + 60 + 86 + 36 = 482 • Bio Gas + Bottling• Refrigeration• Pyrolisis

• 5000m3 into CNG to derisk demand volatility

• 20% charcoal offsetRM cost (pay back: 3-3.5 years)

• +35 to 40%

1000 kWe 560 1.1 275 + 50 + 80 + 33 = 437 • Bio Gas + Bot.•Refrigeration• Pyrolisis

“ “

2000 kWe 1050 1.0 250 + 50 + 75 + 30 = 405 • Bio Gas + Bot.•Refrigeration• Pyrolisis

“ “

COG – Avg. Cost of Generation per unit; RM – Raw material cost per unit; O&M –Operations & Maintenance; Dep – Depreciation; OH - Overheads

!! Pilot Opportunity @ Nagpur !!

BIOMASS MANAGEMENT

Organize biomass supply chain from farms to end-use

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BIOMASS AVAILABILITY – WORLD WIDE11/2/2010

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Availability %

Need for an Aggregator to organize Biomass Supply Chain Organize collection of agri residues – almost 60% going waste

Carry on energy plantation in big existing plantation estates

Source – The Asian Biomass Handbook

BIOMASS MANAGEMENT MODELS

Organize Supply Chain of Agri Residues

•Because of crop diversity and varied distribution channels, the aggregator need to go and collect from farmers

•Provide value addition services through mechanised harvesting to create good bonding for contract enforcement

•Farm processing of biomass (raking, densification, pelletization, torrefecation etc.) to create commodity standards for trading biomass

•Pilot proposal: A good potential aggregator (a leading cotton ginning machine manufacturer in India) with linkages to cotton growers all throughout India has interest in pursuing this role from machine manufacturing side.

Organize Energy Plantation

•Community Model – Parallel cropping

•200-500 farmers aggregated unused for devoted energy plantation OR parallel cropping practices

•Farmer’s Equity in power plant

•Bamboo based organized cultivation

•1MW gasification plant

•250 acres of bamboo plantation @ 40 tons/acre

•2 year initial cultivation period with 40-50 years NO re-plantation

•Rs. 500-600 /ton pricing and availability de-risked

•Higher yield varieties w/ low water consumption

•China has 110-120 tons/acre yield

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!! Pilot Opportunity @ Nagpur & with Partners !!

FOOD CHAIN AND WATER CONFLICT

Productivity enhancement of existing food chain in key

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FOOD AND WATER CONFLICT WITH BIOMASS USE FOR ENERGY11/2/2010

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Highly inter-related systems – Food / Water /

Energy

Use of BioChar (byproduct of gasification/pyrolisis) improves farm yield and

water retention

Too early and other more important dynamics to

worry!

•Current wastage in Fruits and Vegetables supply chain is 30+%

•Our water distribution and consumption has higher order inefficiences

•Current stats of land in India:

•55 mil. Ha – Rain fed

•85 mil. Ha – Irrigated

•80-90 mil. Ha – Waste Land

•With scale-up use of biochar, the productivity from raid fed and irrigated land can be equivalent to ~250 mil. Ha lands with same water consumption

•Scarcity will lead to market forces coming into play optimal utilization of resources (like Water)

Supply – Demand law will dominate and balance the system. But lets not trigger that ‘Black Swan’ and use resources optimally

LOCAL DISTRIBUTION

Realizing true Distributed Generation Based Distributed Franchisee (DGBDF)

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GRID CONNECTED DDGS AND PRIVATE DISTRIBUTION11/2/2010

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Existing regulations and policies do not incentivize private generators to undertake micro

distribution in rural areas at premium tariffs in addition to attractive grid feed-in tariff.

Already assured

buyer base at good

feed-in rates

Uptake and viable feed-in-tariff from

utility. Viable grid feed-in tariff (Rs/kWh):

Biomass – 4.6; Wind – Time of Day; Solar – 13

Good option of power trading on

exchange or bulk 3rd party user

Utilities mandated to keep

10% renewable energy

portfolio

Higher peak-time rates in

the range of Rs.8/kWh;

immediate clearingExisting state distribution

infrastructure is not stable or well

planned e.g. absence of separate

feeder for subsidized customers

Existing state grid is

unavailable for

sharing. And

setting new/parallel

distribution

infrastructure is

expensive

Management of

rural billing,

collection and

power theft is

perceived to be

difficult

Unclear regulation on – Sharing distribution infrastructure

including upgraded meters from private

generation point(s) to selected multiple

LT end users

– Differential tariff setting from multiple

sources for LT users. Allows captive grid

feed-in power for only HT users

Lower revenue collections

from rural feeder

High commercial losses

PILOT PROPOSED STRUCTURING TO SCALE TRUE DGBDF11/2/2010

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Develop a PPP model of state grid and local grid to co-exist, with choice to consumer to shift between the two

supplies with differential (unregulated) pricing

Start first with existing infra and more viable scenario:

• Existing biomass plants (~8-12 MW) already selling to utility, 3rd party sale or IEX (through open access)

• But open access to IEX is still limited to 1MWh unit

• Start with a model of local supply to nearby industries to achieve overall better pricing over IEX

• Once stabilised, then pilot to further lowering resolution of distribution to smaller industries and residential **(rural)

IITM and RENE @ IFMR Trust joint pilot in villages of Thanjavur:

• Establish local grid distribution model (set-up + payment model) with diesel gen-set first

• Learn local issues, setting parallel meters, price point, willingness to pay, demand stabilization etc.

• Once stabilised, find substitute for diesel genset

• Then scale-up

** Parallel with penetration of financial delivery systems in rural

!! Pilot Expansion Opportunity @ Thanjavur with Partners !!

NO ESCAPE FROM DEDICATED OPERATIONS

– ONLY MONEY IS NOT THE ANSWER

Operational Rural ESCO Model

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OPERATIONAL MODEL - RURAL ENERGY SERVICE COMPANY

(RESCO)11/2/2010

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• Needs assessment of

village requirements

• Data mapping on village

resources

• Operates and maintains

electricity or energy

infrastructure (Private

DDG + state utility)

Training

Networking

Financing

Technology

solution

Approvals

Finance

Training

services

• Share village needs and

resources data with

technology partners

• Establish partnerships to

identify and implement

viable technology solutions

• Lias with regulatory agency

for procuring approvals

Independent

Franchisee

Technology

Partners:

Engineering

construction and equipment vendors

Central and State

Regulators

Financial

Institutions

Training

Institutions

Rural Energy

Service

Company

Village Energy Agency

Village

• Lias with financial institutions

to secure project financing.

Provide guarantee on loans

• Identify training requirements

of village franchisee

• Facilitate training through

appropriate partners

VillageVillage

Backend Enterprise-in-Block (EIB)

RESCO is aimed to be an efficient delivery by providing tailored energy and electricity

services to villages in India – retail (solar home lighting), cooking solns, grid electricity,

franchisee with local utility etc.

RESCO Model developed in previous work with RENE @ IFMR Trust by author. Thanks to Ms. Anu Valli @ IFMR Trust.

RESCO – IMPLEMENTATION STEPS11/2/2010

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Energy Mapping

Selection of

technology & decision

matrix

Regulation and utility interfacing

End Package design

Identify and train

local entre-

preneurs

Local RESCO Hub and spoke establish-

ment

Continuous operations

and monitoring

Including EPC vendor selection, raw

material supply chain management

and capacity building

1

2

3

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For reliable delivery and investment returns

Demand estimation / aggregation, energy resources, socio-economics and supporting infrastructure

These implementation steps are based on the economic value chain model for an economic

unit.

CONCLUSION - SYSTEM PERSPECTIVE WITH INVOLVEMENT OF

CORPORATES NEEDED TO BRING SCALE-UP

Participatory consortium led by MNRE: Private corporates (Power & Agri), Technocrats (IISC Bangalore, IITM), Biomass and Solar Plant Owners, State utilities, Private Distribution companies, vendors, investors (PE, debt, financial inclusion capacity building), System Thinkers* (pManifold, InvVest, CII)

Design of suitable tender and size to attract corporates participate under different holding structure and operational models – for structured pilot of technologies, scale, fuel supply chain model and distribution

** Very important to first allow right agencies to take detailed Energy Mapping against agreed dimensionalities/template and share the results with the bidders

Detailed study for pilot realization of :

1. Sharing state grid infrastructure with local generator – easy interface, differential tariff, local distribution franchisee

2. Parallel local grid with linkage to state grid with cost absorbed under R-APDRP /RGGVY programs

3. Common meter for multiple power suppliers with selection choice to end-user

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* pManifold could help raise this engagement platform with other partners InvVest & CII (under their Co-creation initiative)

PMANIFOLD HELP ENABLE BUSINESSES TO IMPROVE, SCALE-UP

OR DIVERSIFY SUSTAINABLY – CREATING ENGAGEMENT PLATFORMS TO BRING

STAKE HOLDERS FOR CO-CREATION

pManifold Business Solutions

Our 3M

Framework

Research Consulting Initiatives

Yo

ur

Bu

sin

ess

Modeling

Business

Emerging Models

Investor ideas

Strategic Planning

Revenue Opportunities

Cost Optimizations

Investor Education

Market

Development

Growth strategies/tactics

New Markets

New Opportunities

Partnerships

Relationship Management

Due Dillegence

Marketing Plan / Collateral

Management Support

Proposal/Bid Preparation

Biz Networking

Best Practices

Business Showcase

Monitor

Performance

Monitoring

Benchmarking

Techno-commercial Analysis

Operations Management

Supply Chain Management

Process Management

Skill Development

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[email protected]