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Cleaner and efficient technology interventions in small and medium industries in India

SMEs sector

The small-scale industries occupy an important place in the country’s economy.

India has more than 3 million small-scale industries in the organized sector and

about 15 million enterprises in the unorganized sector. These units account for

about 40% of the total industrial output in the country and in terms of

employment generation this sector is next only to agriculture contributing an

estimated 14% to t he GDP. The total expenditure per enterprise on energy (fuel

and electricity) increased by about 200% between the two reference years (1990-

1995). The expenditure on fuel and electricity increased more than

proportionately in comparison to the total inputs. As per the estimate, of the

energy consuming enterprises 28% uses firewood as their source of energy while

about 8% of the enterprises use charcoal to meet their energy needs. A large

population of small enterprises uses fossil fuel as the main source of energy. In

recent years, the prices of energy, both thermal and electrical, have been

increasing steadily. For example, diesel oil prices have increased to

Rs 17.05/litre (2001) from Rs 7.95/litre (January 1997). Similarly, other

petroleum fuels have also registered a steep increase in prices due to the soaring

international prices of crude oil. The electricity tariff for industrial customers is

also generally much higher compared to agricultural customers, resulting in a

cross subsidy and with various regulatory mechanisms coming into force,

industrial customers may have to pay even higher rates. Also, concessional

tariffs provided initially to encourage small industry are coming to an end,

resulting in a sudden, heavy burden on such industries. All this, combined with

the current sluggishness in the economy, is affecting the small and tiny sector in

a big way. The main issues related to the SMEs sector are:

?? Technological stagnation/obsolescence both in machinery and processes

used

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?? Inadequate availability of credit

??Managerial, financial and marketing weaknesses

?? Cumbersome rules, regulations and procedural tangles

Biomass energy India as an agricultural economy has a large exploitable potential for power generation from agricultural, agro -industrial residues (excluding bagasse), and

forestry residues which have been estimated conservatively at 16,000 MW. To tap this large potential a National Biomass Gasifier Programme for mechanical, electrical, thermal heating/cooking applications has been launched by the

Ministry of Non-conventional Energy Sources (MNES). Under the scheme a target of 10 MW equivalent biomass gasifiers with an annual outlay of Rs 1 crore has been envisaged. Greater emphasis has been given to village electrification and captive power generation projects. However, the technology has huge

potential for meeting the process heat requirements of small and medium industries. In the 10th Five Year Plan the Ministry of Non-conventional Energy Sources

is giving a thrust to oil replacement initiatives for thermal applications. The major focus of such an initiative is on small and medium industries where a

large number of oil-fired boilers, thermo packs, driers, hot air generators, ovens, and furnaces are in use.

Alternative energy technology Tho ugh prices of fossil fuels such as diesel have increased several folds in the last decade, those of biomass have not increased in the same proportion. In the current situation, the most promising energy option for small and medium

enterprises, reeling under high-energy costs, is biomass and its gasification technology can offer the advantages of commercial fuels such as LPG, diesel and kerosene, but at much lower costs. An additional advantage of replacing fossil

fuel with biomass will be major reductions in GHG emissions. Most biomass-consuming industries currently rely upon unsustainable

sources with environmental implications such as deforestation, land degradation etc. An estimated 20 million tons of biomass is also used in traditional and rural enterprises. A survey of some biomass-using enterprises and available data

show that the end-use efficiencies of devices used in such enterprises is also quite low. A partial list of biomass-using enterprises is shown in Table 1.

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Table 1. Partial list of various small-scale industries surveyed for adoption Name of Industry No of

units State

Silk reeling 60,000 A P, Karnataka Dyeing (cotton and silk)

A P, Karnataka

Puffed rice making 50,000 Karnataka Crumb rubber

60 Kerala

Tapioca making 500

Tamil Nadu

Bakeries All over India Hotels All over India Lead recovery from used batteries

200

Karnataka (Bangalore)

Wire enameling unit Karnataka Tobacco curing 30,000 Karnataka Lime kilns

50 U P, Himachal Pradesh

Mini-cement plants 200

U P, Himachal Pradesh

Gur making 2,000 U P Tea drying Kerala, Tamil

Nadu Brick tile drying Kerala Beedi manufacture Kerala Khoya making Rajasthan

(Bundelkhand) Small cardamom Kerala Coffee curing Karnataka Food processing All over India Carbon dioxide manufacture

Gujarat

Copra drying Kerala, Tamil Nadu

Though the bio-resource base of India is substantial, its contribution to useful energy is low. An indirect consequence of the low-energy use efficiency is that carbon emissions are high. The ratios of carbon content to calorific value of several fuels, including biofuels and bio -derived fuels, but that of hydrogen-rich

fuels such as natural gas is comparable. The carbon emissions per unit of ‘useful

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energy’, which takes into account the device efficiency. In case of traditionally

used biofuels emit nearly ten times more carbon into the atmosphere per unit of useful energy. One might argue that, since biofuels do not contribute to ‘net’ carbon emissions, the issue of end use energy efficiency is not very important.

But considering that biomass is harvested unsustainably in most developing countries and that the forest cover in these countries is substantially lower than

desired levels, more efficient utilization of biomass will definitely enhance the ‘sink’ effect of forests. Seen from this angle, climate change projects aimed at biofuel conservation should get at least as much importance as afforestation

projects. A second issue related to biomass combustion in traditional devices is concerned with products of incomplete combustion (PIC), chiefly carbon monoxide, methane, total non-methane organic compounds (TNMOC) and N2O. These

greenhouse gases have higher global warming potentials (GWPs) and it has been shown that their CO2 equivalent contribution is nearly the same as the actual CO2 emitted. Results of a study conducted for 28 stove-fuel combinations in

India clearly establish that the currently practised biomass cycles are not GHG-neutral. In fact the study highlights the win-win situation achievable by

promoting use of ‘modern’ biofuels such as biogas and producer gas. A gasifier is a potentially viable system for significant (50%) fuel savings as already demonstrated by TERI and others in many small and medium

industries. The adoption of a gasifier technology in many of these processes also leads to improved productivity and quality of the end product, because of better process control, which was not possible with the direct combustion route. This further improves the economic viability of the operation. The intervention in a

biomass-consuming industry would save about 50% of the present consumption, which will result in an increase in the carbon sink.

Barriers to biomass gasification technology Though the gasifier technology has large potential for replacing fossil fuel in

small and medium industries, government programmes have largely centered around decentralized power generation applications. This project aims for the gasifier meeting the thermal energy requirements of many small and medium

scale industries. However, there are three major barriers in the way of greater market penetration of such systems in these industries.

Technical barriers

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The induction of a gasifier system into a specific industry is not a simple add-on

job. Experience shows that the process and equipment used in the SSI may have to be modified to some extent to accommodate the gasifier. This integration requires system engineering inputs from expert groups and some trial runs.

Many small, trivial matters related to operation and maintenance procedures will have to be sorted out during this period. Also, a certain amount of fine-

tuning might be required in the first few months of installation. These will require the presence of both the m anufacturer and technology-provider on the site. The costs of such fine tuning and technology acclimatization will have to be

borne by the project and can not be included in the initial product costing. Once the package is proven by demonstrations in a few clusters, adequate attention can be paid to the financing and marketing aspects.

Financial barriers Both the small industry user and conventional financing institutions hesitate to invest in new technologies such as gasification. The new products/techno logy

are perceived as somewhat risky and there will be an initial period in which the user gets acquainted with the new technology of gasification. Hence a separate

credit line with flexible arrangements at user's doorstep is required to help in mainstreaming gasifier thermal applications.

Institutional barriers The lack of in-house capabilities of small and medium industries in solving operational and maintenance problems poses a significant barrier in promotion of the technology. Hence, the proposed project aims to develop ESCOs for

enhancing this capability. The project will aim to establish the appropriate institution mechanism for achieving sustainability.

Road map

A National Project office will be set up with participation from the Ministry of

Non-conventional Energy Sources (MNES), Ministry of Industries, Indian Renewable Energy Development Agency (IREDA), Small Industries Development Bank of India (SIDBI) etc. In the first phase, the project will

initially solicit proposals from small industry units for demonstration projects in selected industry types, by issuing request for proposals (RFPs) in the print media. The proposals should contain an outline of the industry, energy requirements, supply chain for biomass, potential for replication, economic

viability and scope for CO2 mitigation. Based on the project proposals, a few

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demonstration projects will be formulated, the number and location of projects

so chosen as to give maximum visibility to nearby, similar industry clusters. The demo projects will include costs of energy audits, cluster studies, DPRs, consultancies and equipment.

At least two demo projects for each industry type and a minimum of 10 industries will be selected, making the total number of demos to 20. The

average cost of the demo project is estimated to be Rs 50 lakhs per project and hence the total demonstration phase will cost Rs 10 crores. The first phase would have established at least 10 serious manufacturers of gasifiers and related

equipment, with well-established links with R&D institutes and consultants and with proven reliability, quality and life of the equipment. It should be noted that so far gasifiers, which stood the test of serving the industrial sector are extremely low in number.

The second phase will concentrate on issues like credit mobilization, delivery mechanisms, quality control, working capital requirements etc. Extensive and continued discussions will be held with all stakeholders to formulate schemes

for diffusion of products developed and demo nstrated in the earlier phase in a near-commercial and sustainable manner. The diffusion process will not be

completely on a commercial track because of the following reasons: 1. The products will be new and hence will be perceived as somewhat risky. 2. There w ill be an uncertain period in which the user gets acquainted with the

new technology of gasification. Many small, trivial matters related to operation and maintenance procedures will have to be sorted out during this period. Also, certain amount of fine-tuning of the system might be required in the first few months of installation. These will require the presence of

both the manufacturer and technology provider on the site. The costs of such fine-tuning and technology “acclimatization” will have to be borne by the project and can not be included in the initial product costing.

3. Direct cash subsidy can not be provided in the diffusion phase, because attention will invariably be directed towards the subsidy rather than towards

the product. However, certain incentives such as interest subsidy, easy terms of financing etc., will have to be worked out. The nature and magnitude of the incentives should be proportional to the perceived risk of

the new product package, and can be different for different products and sector types.

4. In some ‘tiny sectors’ (e.g. tobacco curing barns, sericulture, khoya making etc.), the credit-worthiness of users might be either unknown or very poor.

In such cases NGOs, private financial intermediaries or user associations will

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have to be involved in diffusion. The diffusion process will then be

necessarily slow, tedious and uncertain. However, the magnitude of potential markets could be large enough to justify special schemes and measures.

The second phase will end when clear and unambiguous trends could be perceived in the diffusion uptake curves in the majority of sectors taken up. It

will be difficult to estimate the project cost in the second phase at this time. A grant component of Rs 10 crore and a loan component of Rs 20 crore would be a very rough estimate. The total project cost would thus be about 9 million USD,

50% of which would be grant and 50% loan. The business model proposed will be centered around developing enterprises (businesses) in small and medium for: ? Manufacturing of modern biomass devices such as gasifiers, improved stoves

and briquetting machines ? Technology providers to supply end-use package to the user. ? Biomass fuel suppliers for processing and supply of biomass fuel for gasifier

applications

TERI has developed a concept-testing prototype, which was exhibited at the

workshop venue, which demonstrated the use of the gasifier technology for puffed rice making industry. This system can be used to meet both operations namely, puffing operation using the flame from the burner and paddy boiling

using the waste heat through flue gases. However, it needs some more design improvements and followed by field -testing to finalize the product to match the

capacity of an average puffed rice unit and users feedback to arrive at an acceptable and affordable product. This system can save fuel and reduce pollution considerably and thus giving a healthier environment to the people

working in this industry.

TERI’s experience

TERI has been working on two projects – one on sericulture and the other on cardamom curing – related to the application of the biomass gasifier technology. In both the projects, the entire sequence of steps was completed successfully,

from a preliminary energy audit and a survey of the sector to the demonstration of the final commercial device. Two separate ‘products’, with the biomass gasifier as the primary component of the complete system, are now ready for

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widespread dissemination and/or marketing. Some common lessons learnt

during execution of these projects are as follows. ?? The biomass gasifier technology goes beyond fuel saving to achieve

productivity improvement, improvement in product quality, substantial

reduction of pollution, saving of time and money, water conservation, ultimately leading to better profit margins for the end-user. Thus the

projects were not confined to prototype development or one or two demos, but laid the foundation for a several fold increase in the chances of the product being acceptable on a large scale.

?? User acceptance comes only through continual and painstaking interaction with several users, both during field-testing and later at specially convened sessions to elicit reactions. Also, user feedback comes in spurts and over an extended period. One-time interaction or demonstration rarely brings out

the ‘real’ assessment of technology by the user. ?? Energy issues alone are insufficient to enthuse user groups. It is vitally

important to search, mobilize and bring together several experts and

consultants to tackle the complex problems of a given sector. Thus competence pooling should be an integral part of the complete project. Also,

interaction with user groups, opinion builders, industry associations, etc., on such issues as technology assessment, quality improvement, government control, and financing is crucial both for product development and

subsequent market promotion. During the course of these projects and a few other projects of TERI, the enormous potential of introducing biomass gasifier technology to many other sectors/applications became quite obvious. The case study for few of these

applications is given in Annexure 1.

Joint OPET meeting between TERI and SINTEF A joint meeting was organized between SINTEF Energy Research of Trondheim, Norway, and TERI at SINTEF, Norway on 11 March 2002 on gasification of

biomass under the work package. TERI and SINTEF Energy Research have a joint contract with the European Commission on this topic. The work carried out by both the partners is shared to evaluate the e fforts and status and to

consider future work. The minutes of the meeting and future action plan as discussed is given in Annexure 2.

Current situation in field of biomass energy in Caucasus Region.

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In the framework of the OPET Network Program the evaluation of the biomass

energy potential has been carried out (see Annex 3) .The reported studies cover evaluation of the biopotential and the review of local technologies and prospects of their applications in the South Caucasus countries (Georgia, Armenia,

Azerbaijan), Beside that in the course of project implementation the local population and

interested specialists where provided with the information of the modern energy technologies in the field of biomass technologies. In particular, the information received from Partners: OPET TERI- India, Merinova - Finland, ICAEN-Spain

has been disseminated in the Region.

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Annexure 1 Case study of gasifier applications

Gasifier system for silk industry

Case 1: Cottage basin silk reeling ovens

Background India is the second largest raw silk producer after China, with annual production of 13,000 tons. Most of the silk is being produced by large number of small units in a few clusters. There are about 26,000 cottage basins and 35,000 charkha ovens (registered units) in the country employing over 2 million of work force. It is estimated that annual fuel consumption in this sector alone is about 1,45,000 tons of fuel wood and 1,70,000 tons of loose biomass. The major concerns of the industry are marginal and low profitability due to low productivity and inefficient cooking system.

Technology intervention strategy A two way intervention strategy of (i) retrofitting of existing ovens for improving efficiency and (ii) use of gasification technology, were considered. After field trials, it was found that gasification is superior both in terms of technology and marketability potential. In this project, important steps such as preliminary energy audit, survey of the sector, detailed energy audit, development of laboratory prototype, field testing, evolution of commercial prototype and demonstration have been accomplished. In all four levels of lab to field iterations were carried out to evolve a marketable product. It was found during field testing that the gasifier based system offers benefits beyond fuel saving, such as improvement in productivity i.e. high silk yield and better silk quality (due to controlled process parameters like water temperature and level), substantial reduction of pollution, time saving, labour saving and water conservation, ultimate leading to better profit margins for the user. The “SERI-2000 cocoon cooking oven”, (see photograph), with the gasifier as the primary component of the system is now being disseminated and marketed through a marketing network. The main lesson learnt from the project is that an acceptable product in a traditional sector like can only evolve through inputs from various stakeholders like users, silk experts, engineering consultants, and manufacturers with sustained support from funding agencies.

Commercial model of gasifier based cottage basin oven

Highlights of field performance and potential impact

Financial benefits (estimated) Savings due to Rs/day ?? Reduction in wood

consumption 9 0

?? Increase in silk yield 455 ?? Improvement in silk quality 200 ?? Total financial benefits 7 4 5 Simple payback period : 88 days N o t e : The financial benefits mentioned above are for processing 100 kg cocoons. The b enefits due to labour saving, water saving and improvement in working conditions are extra.

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Gasifier system for silk reeling oven Case 2: Italian basin ovens

Introduction Siddlaghatta is the most popular silk reeling center of Karnataka state. The reeling process adopted in Siddlaghatta cluster is quite different from that in other areas of southern India. The cocoon cooking oven design adopted in Siddlaghatta cluster is also quite different from other silk reeling clusters of southern India and is called as Italian cottage basin oven. The traders preferred the silk produced using Italian cottage basin oven of Siddlaghatta cluster on account of certain special characteristics such as stiffness, lower sericin content etc. and Siddlaghatta silk fetches higher premium price in the market. Italian cottage basin silk reeling oven A typical Italian cooking basin oven unit, called table, consists of one cooking basin and associated two reeling basins. Each cook thus serves cocoons to two reelers sitting on opposite side of the oven. The reeler reels the silk yarn on the standard sized big reel located behind him by taking the thread over his head to backside. There is no re-reeling step in silk yarn processing in the Siddlaghatta cluster. The cocoon cooking vessel used here is quite different, with almost double the volume (larger in diameter and depth) of water. Cooking process here is slightly slower by about 15 seconds per cooking cycle as compared to Ramanagaram cluster. Thus, the power levels, cooking time, and processing method are quite different from other silk reeling

clusters.

Gasifier system for Italian basin oven During the survey carried out, it was observed that majority of the units in Siddlaghatta clusters are having two tables (2 cooking basins, 4 reeling basins). An updraft wood gasifier system is developed to suit such ovens. Since, there is already a practice of using cut wood pieces of about 12-15 inch length, there should not be much difficulty in making the cutwood supply chain for gasifier system. Another feature of the gasifier system is that, it is made in a modular fashion and could be retrofitted to the existing layout of the Italian cottage basin with minimal modification. Since most of the Italian basin structures are quite similar in dimensions, this

approach could lead to quicker adoption of the gasifier system by reelers.

Present energy use pattern Cocoon processing rate : 1.29 kg/h per cooking basin Specific fuel consumption : 2.68 kg per kg cocoon Fuel burning rate : 3.42 kg/h per cooking basin Operating thermal efficiency : 7 -1 6 % Average operating power : 2.3 kW th Specific water consumption : 8 -15 kg per kg cocoon Minimum useful heat required : 8 0 0 -1500 kcal/kg cocoon (for present operating practice)

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Salient features • 4 0-50% fuelwood saving • Can be used as a retrofit option to the existing oven • Low incremental cost; short pay back period • A small blower required for operation • Natural draft operation possible during power cut • Alternatively blower can be operated by coupling to existing reeling shaft • Faster processing rate • Improved quality and yield of silk yarn foreseen • Improved working conditions: less smoke, less emissions

Gasifier system for textile dyeing Background Dyeing is an important activity in the process of making the fabric. Fabric is either bleached/dyed either in yarn stage or in fabric stage. Both bleaching and dyeing is done in hot water bath and primary energy in form of firewood, diesel and kerosene is currently being used to meet the process energy needs. There are several thousand dyeing units operating in clusters. The major concerns are high-energy costs, and deforestation. Technology intervention A gasifier-based dyeing unit has been developed through a process of prototype development and field-testing. Based on the quantification of benefits during field testing, an economic assessment of each of the systems developed was made, which showed that the system pays for itself in less than a year. The gasifier-based dyeing system is currently marketed by two licensed manufacturers. The photographs of the gasifier-based dyeing units are shown below:

Gasifier-based dyeing units in Bangalore

Salient features

?? Reduces firewood c onsumption by 50%. ?? One time fuel feed, for 5-hour continuous operation. ?? Good control of the “liquor temperature”. ?? A technology with easy operation and maintenance. ?? Can use biomass briquettes also as fuel ?? Replaces petroleum fuels (kerosene, diesel), wherever feasible ?? Low cost of CO2 mitigation About 6 gasifier-based systems are currently operational.

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A gasifier system for curing large-cardamom in Sikkim

Large cardamom-drying in India India, the ancient land of spices is the world’s largest producer (54% of world production) of large-cardamom. Out of the 4000 tonnes of large-cardamom produced every year in the country, Sikkim, prime cardamom territory, contributes about 88%. The large-cardamom business in the country is worth Rs 280 million with 25% of the net earnings coming in from exports, which reportedly have trebled since the 1980s. Fresh cardamom capsules generally contain 80-85% (wet basis) moisture. For long duration storage for the market and also for bringing out the aroma of cardamom, the moisture content of fresh cardamom has to be brought down to less than 10% by drying the capsules. Most of the farmers still use the traditional cardamom curing system for drying large-cardamom. Under this system, fresh cardamom capsules are dried in locally made chambers, known as bhattis that are constructed out of rocks, stones, and bamboo. This traditional curing system, however, has several drawbacks. It produces excessive smoke and thus spoils the true flavour of cardamom. The cardamom capsules get covered by soot, are charred, and often unevenly dried. They also lose a high percentage of oil in the drying process. Further, the operating thermal efficiency levels of the traditional system, known as bhattis, are very low – about 5% to 15% resulting in estimated fuelwood wastage of 20000 tonnes per year. However, since majority of the cardamom plantations in Sikkim are small (less than 2 ha) and located in remote hilly areas, the farmers are not able to develop new technology on their own.

Improved cardamom curing system based on gasification Use of a simple low-cost natural draft wood gasifier was found to be the most promising option. The complete system was developed in an interactive manner comprising of scientific methods of investigation and data collection, extensive field testing and continuous production improvement based on farmers feed back. The major benefits of the improved system are: • does not need electricity for its operation • transportable in hilly terrains • can be fabricated locally • more than 60% fuelwood saving • retains 35% more volatile oil • retains natural colour (better

appeal) • pays back itself in one curing • good aroma of volatile oil season

Improved gasifier system in the field

Prototype of improved bhatti design based on gasifier system

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Gasifier system for large-scale cooking in rural areas

Case 1: Residential Tribal School at Kankia in Orissa

Background ?? Residential tribal school for about

300 students run by Gram Vikas at Kankia village.

?? Wood consumption: 300-400 kg per day (For breakfast, lunch & dinner)

?? Smoky working conditions ?? Slow process; takes about 2 hours

for breakfast, 3 hours for lunch ?? Time spent on collection of fuel is

high

Achievements of gasifier system ?? Substantial fuel saving ?? Reducing fuel consumption levels to

less than 100 kg per day ?? Improved working environment: No

smoke ?? Takes same time without blower ?? Time saving with a small 0.1 HP

blower (1 hour for breakfast, 2 hours for lunch)

?? Much less time spent on collection

Salient features ?? Very large-scale cooking application (of over 300 kWth heat output capacity) ?? Simultaneous cooking of dal and sabzi for serving over 6,000 people in one batch ?? Substantial fuel wood saving (more than 50%) achieved ?? Improved working environment; provides clean and smokeless atmosphere while

cooking ?? Large fuel hopper; one-time fuel feeding for the entire day cooking operation ?? Operational flexibility to vary heat delivery rates easily using simple gas control valves

Conventional cooking oven Gasifier-based cooking oven Gas burners for the oven

Case 2: Radha Soami Satsang, Beas

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Gasifier-based furnace for magnesium chloride production

Background Large quantity of firewood is used in many of the industries for process heating. Gasifier technology can be used for reducing the firewood consumption about 50 to 60%, compared to conventional devices. Pioneer Magnesia Works (PMW) is located at Kharagodha in the rann of Kutch in Gujarat State (about 120 km from Ahmedabad). PMW produces about 25 tonnes of magnesium chlo ride per day. For the process heat requirement, PMW consumes about 12 tonnes of firewood per day (about 6 tonnes per furnace per day). Gasifier system A gasifier-based furnace was designed and installed by TERI to reduce firewood consumption in the industry and to provide a clean environment. The gasifier is designed to operate at a 500 kW(th) load. The entire cost was borne by PMW without any subsidy involvement. The payback period of the system is less than one year. The gasifier-based furnace upgraded the 100-year-old technology and reduced firewood consumption by about 60%.

Fuel feeding system

Gasifier

Blowers

A view of the flame at the vessel base Gasifier with fuel charging mechanism

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Gasifier system for green brick drying Introduction Green bricks are required to be air-dried (sometimes sun dried in later stages) to reduce moisture content from about 25% (immediately after moulding) to about 4-5% (just before loading them in brick kiln). After moulding, bricks are stacked closely for 1-2 weeks and then is air dried in a honeycomb structure arrangement for 3 -4 weeks. Totally, it takes about 45 days (3-4 days less if sun-dried in later stage) to dry the brick completely before loading them in the brick kiln. This calls for large inventory of green bricks and large shed areas for drying. In regions like Kerala weather remains cloudy for several months and green brick drying becomes very difficult, which is a major bottleneck in continuing brick production when brick prices are high. Traditional method of artificial drying

Green bricks are stacked in a cylindrical bin structure (8-9 ft dia and 6-7 ft height) and woodlogs are burnt inside. About 1500 bricks are stacked in one bin and it consumes about 700-800 kg wood logs in about 2-3 days time. It is a very inefficient method of drying, as majority of the heat is lost through the large fuel port opening (2 ft ? 3 ft) and due to low residence time of gas as it passes through openings of the honey -comb structure. It also results in non-uniform drying; bricks in lower portion get over-dried while those in upper portion get under dried.

Gasifier system installed in a brick factory at Palghat in Kerala

Benefits of gasifier system ?? Substantial reduction in fuel consumed (from 700-800 to 250-300 kg) ?? Reduction in drying time (from 3 days to 24 hours) ?? No electricity required ?? Low inventory requirement: less shed area required ?? Improved working conditions (no smoke)

Gasifier system for CO2 production

Producer gas multiple burner

Green bricks stacked

in cylindrical bin

Wood logs burning inside the bin

Basket of

cutwood

Updraft

gasifier

Flamearrester/heat

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Background Carbon di-oxide producing industries are located in almost all the cities in India due to high demand for soft drinks, for hospitals and for other industrial applications. Typically, CO2 plants require either furnace oil or diesel for CO2 production through burning. However, these fuels also produce SO2, which is dangerous for human consumption. Therefore in the existing CO2 plants SO2 filtration units are also installed, which require additional capital investment. In several plants, charcoal is also used, but rising prices of charcoal are causing concern. A word gasification system, however, has several advantages.

Schematic view of a 300 kWth gasifier based CO2 production process at M/s Gimar Chemicals Pvt. Ltd, Junagarh (Gujarat) Advantages 1. Fuel costs reduced by more than 50% 2. Direct use of wool, by -passing charring route, results in efficient utilization, thus

reducing deforestation 3. Biomass briquettes can also be used where feasible 4. No need for SO2 removal 5. Payback period for gasifier system less than 1 year

Producergas

Carbon dioxide

Flue gas with outcarbon dioxide

Boiler

Carbon DioxideSeperator

Cum Regenerator

Gasifier Fluegas withCarbon Dioxide

for bottling

MEP (after CO Extraction)

MEP (with CO2 )

2

(100 kg/h)

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Gasifier-based crematorium

Introduction Cremation, the traditional burial practice of Hindus, is one of the major consumers of wood fuel in India. According to national statistics approximately 1 crore people (out of which about 80% are Hindus) die every year in India, thus daily an estimated 20-30,000 dead bodies are cremated in the Hindu tradition. It is estimated that the annual consumption of fuelwood for cremation alone is about 5 million tonnes, with fuel consumption of about 600 kg per cremation in the form of whole logs to completely burn the body. Many times the body is not completely burnt and is thrown into the river causing considerable pollution of water supplies.

Modern methods Modern methods of cremation include use of electricity in electrical crematoria and diesel oil in diesel-based crematoria. These have high capital costs (~ Rs 20 lakhs) and cremation charges are in the range of Rs 300-500 towards fuel and maintenance costs. The operational costs are increasing steadily due to increase in prices of diesel and electricity. Electrical crematoria have the additional disadvantage of long heating-up periods and power breakdowns.

Importance of gasifier-based crematorium The induction of gasifier system for crematorium will improve the energy efficiency thereby saving substantial quantities of fuelwood. Such a system is likely to gain social acceptance also as the body will be burnt in a flame, which is considered as sacred.

Prototype gasifier based crematorium unit

View from front side View from gasifier side Close up of inner flame The gasifier-based crematorium is expected to cost substantially less than an electrical or diesel crematorium. The fuel consumption would be about 150 kg per cremation, resulting in a fuel saving of 350 kg.

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Gasifier system for better utilization of rice husk Background India generates 40.6 million tons of rice husk every year, most of which is used inefficiently. Gasification technology offers scope for cleaner and more efficient utilization of rise husk for thermal application and for decentralized power generation. However, the high ash content and low bulk density of rice husk pose special problem for gasification in fixed beds Features With the above said challenges in mind, a downdraft gasifier design of 20 kWth is being developed at TERI Gual Pahari campus. The main features of the design are: 1. A rotary grate mechanism with reduction gear box and a scrapper, which can remove

the ash continuously. 2. A vibrator placed on the hopper to facilitate fuel movement 3. Water seal arrangement at the top door for easy charging of fuel. 4. Continuous fuel charging pneumatic or mechanical) is possible The photograph of the gasifier installed at Gual Pahari is shown below:

Possible application ?? Meeting both thermal and power energy needs of rice mills ?? Steam generation in boilers ?? Institutional cooking ?? Water pumping and decentralized power generation in rice belts.

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Small scale power generation system for rural areas

Case 1: 6 kWe briquetting-gasification system at Dhanawas

Background Decentralized small-scale power generation systems are ideal to meet the rural electrical energy requirements. Biomass gasifier system can be used effectively to produce electricity using the locally available agro residues. However, agro residues are not easily adaptable for fixed bed gasification technology. Briquetting gasification system TERI has earlier developed a 6 kWe power generation system based on briquetting and gasification, mounted on a trolley. The system consisted of a chopper, pulveriser, screw-type briquetting machine, a throat-less, down draft gasifier, a gas cleaning train and a dual fuel engine coupled to an alternator.

A view of the gasifier based power generation

Briquettes made out of different agro

residues

1. Coir pith briquettes 2. Corn stalk

briquettes 3 . Sawdust briquettes 4. Bajra stalk

21

Small scale power generation system for rural areas

Case 2: 50 kWe gasifier-based power plant at TERI Campus, Gual Pahari Background In continuation to the gasifier based small scale power generation system using dual fuel engine, TERI has up-scaled the design and developed a gasifier system to produce electricity (50 kWe) using a Kirloskar make engine (turbo charged) in dual fuel mode. As was the case for earlier, the system can use both firewood and biomass briquettes. New, improved gasifier and gas cleaning system The gasifier has multiple-level air entries to facilitate production of low tar gas. The gas conditioning system uses a series of components including a hot gas filter and mist remover. A high purity gas suitable for turbo-charged engines is thus produced. The system also has advanced features such as a hot gas heat recovery system, cooling tower for water recycling, and semi-automatic fuel feeding mechanism.

Advantages ?? The gasifier-based power generation system for decentralized power generation. ?? Firewood grown on waste lands/community lands can be used for power generation ?? Briquettes of biomass can also be used ?? Char and other wastes of gasification can be briquetted to produce charcoal-like material

for sale in urban centres. ?? Provides an economical way of mitigation of greenhouse gases.

A view of the (50 kWe) gasifier system

Flare port

Gas cleaning system

Gas air intake manifold Turbo charger

Gasifier

Dual fuel

engine

Alternator

A view of the dual fuel engine along with the manifold and controls

22

Off-grid, decentralized power generation based on biomass gasifier and 100% producer gas engine

Background There are about eighteen thousand unelectrified villages in India, which are largely unelectrifiable in the conventional sense. Even in electrified villages, the access to electricity is very low. Photovoltaic systems have been considered as an option, but these are very expensive. Viable, and sustainable option have not been worked out so far. It is imperative that any proposed system for off-grid power generation should be economically viable and should not depend on conventional fuels like diesel. Biomass gasifer-based system with 100% producer gas engine as the prime mover The proposed system is shown in figure.1 consisting of the gasifier, gas cleaning train, a buffer gas storage and a 100% producer gas engine. Either fuelwood grown on plantation or briquettes produced from agro residues can be used in the gasifier. Addition of a briquetting machine provides an opportunity for income generation through sale of briquettes, and also solves the problem of load factor in remote areas. The buffer storage and the diesel generation modified to run only on producer gas are shown in figure 2 & 3 respectively.

__

Figure 1. 100% biomass gasifier based decentralised power generation system

Figure 2. Gas storage system Figure 3. View of the modified diesel generator

Ash +

Char

Gasifier

Wood/

briquette

Cooling &

cleaning

Gas

storage

Diesel

engine with

spark

Alternator

Air

Gas+air

mixer

Power for

sale Parasitic

load

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Annexure 2

Tour Report to SINTEF Energy Research Institute and NTNU, Norway

TERI : V.V.N. Kishore and Sunil Dhingra SINTEF/NTNU: Jens Hetland, Johan E. Hustad, Maria Barrio, Haavar Risnes,

Morten Gronli, Inge R. Gran, Edvard K. Karlsvik, Odilio Alves-Filho

Date 11-12 March 2002 SINTEF Energy Research is an independent research organisation engaged in contract research in Norway as well as internationally. SINTEF R&D activities are largely focused on power production as well as energy conversion, transmission, distribution and the use of energy, including industrial processes and products. SINTEF has more than 7000 m2 of laboratories and operates in close cooperation with Norwegian University of Science and Technology (NTNU) within power engineering, thermal energy converting, hydropower machinery, refrigeration and air conditioning together with aero- and gas dynamics. SINTEF Energy Research has a staff of about 200 and has consultancy agreements with selected members of staff at NTNU. The institute works in close cooperation between power and mechanical engineering and focuses partic ularly on environmental issues. SINTEF have a range of extensive experimental activities that include field studies and measurements and have test rigs, advanced measuring equipment and instruments as important tools. The organization comprises of following four research divisions 1. Energy Systems 2. Electric Power Technology 3. Thermal Energy 4. Refrigeration and Air-conditioning The energy systems division represents a unique combination of broad knowledge and in-depth understanding of systems analysis in power networks. Their expertise ranges from development planning to the simulation of rapid electric transients, from industrial networks to the Nordic power network, from monopoly control and efficiency to technical details. The electric power technology division works with technology for electro -technical applications and its development and testing. Together with the department of Electrical Power Engineering at NTNU, they operate modern high voltage and high current laboratories and have access to a wide range of analytical instruments for field and laboratory investigations. The thermal energy department has the largest and most advanced industrial heat-engineering laboratory of its kind in Norway. The experimental work is combined with specialized development work on software applications in computational fluid dynamics (CFD). The main research activities of the department are: 1. Industrial heat engineering which focus on energy analysis in Norway 2. Bioenergy research work focuses on waste and new principles in wood combustion areas 3. Combustion technology group works on issues like combustion and environment, laser

diagnostics in combustion The group is also member of OPET (Organisations for Promotion of Energy Technologies). The refrigeration and air-conditioning department works in research areas, such as indoor environment, energy in buildings, refrigeration engineering and food engineering.

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SINTEF thermal energy is one of the EU partners in the work package “Cleaner and efficient technology interventions using biomass gasification technology” under OPET network. Under this work package a seminar on thermo -chemical conversion technology and CHP solutions has been organized at SINTEF energy research department on 11 March 2002. A presentation was made about TERI’s activities and status and potential of renewables in India followed by detailed presentation of biomass technologies being practiced in India along with future challenges and potential. SINTEF researchers made presentations on thermo -chemical conversion projects in Trondheim, gasification facilitating CHP solutions, gas cleaning, pyrolysis and gasification modelling, advanced combustion modelling techniques and overview of novel Norwegian waste-to-energy concepts. After the presentation, several discussions were held with selected researchers to explore possibilities of collaboration between TERI and SINTEF/NTNU. Dr Kishore also visited Trondheim Energivak Fjernvarme AS, a waste-to-energy plant operating near Trondheim. This plant burns MSW to generate steam for district heating. The following areas of co-operation have been identified: 1. Academic collaboration with TERI-SAS Prof John Hustad, Director, Department of Thermal Energy and Hydropower suggested that a collaboration can be set-up with TERI-SAS for academic exchange. He was a member of a team scheduled to visit India to explore possibilities of Indo-Norwegian collaboration in renewable energy. The visit was cancelled after September 11, 2001 and is likely to be re-scheduled. Prof. Hustad indicated that some students working for their Masters degree can come to TERI-SAS to do project work as a start-up of collaboration. Norwegian Government provides financial assistance to students for such purposes. Possibilities of faculty exchange, joint Ph.D programmes etc. will also be explored.

2. Research collaboration on topics common to both Norway and India Considerable work is being carried out at SINTEF/NTNU on biomass pyrolysis/combustion/ gasification, which could be relevant for Indian conditions. The following areas seem to be particularly relevant. 2.1 Development of efficient, low-emission wood stoves for residential heating Edward Karlsvik has been involved for several years in developing wood stoves with and without catalytic combustion for house heating. There is a demand for such stoves in cold regions in India such as Himachal Pradesh, Ladakh, Sikkim etc. and from neighbouring countries like Bhutan. TERI was also involved earlier in research on Bukharis (stoves for house heating). There is also a recent interest in India for stoves using biomass briquettes for large-scale working in schools, hostels, religious places, etc. The work being carried out at NTNU/SINTEF can be extended to include the large-scale cooking application also. Funding possibilities will be explored with NORAD for initialisation of the work.

2.2 Pyrolysis kinetics of biomass Morten Gronli of SINTEF, in collaboration with Michael Antal of Hawais Natural Energy Institute, has been working in this area for several years. This work can possibly be extended for improved charcoal making and char briquettes from agricultural wastes in India. TERI is involved in development of processes for converting biomass materials such as mustard stalks and lantana (a wild growing wood) into char-briquettes, which can open up income generation activities in rural areas.

25

2.3 Heat pump-based dryers Dr Odilio Alves-Filho of SINTEF has been working on the theory and practice of drying- based on heat pumps. He is working at the center for dewatering R&D at SINTEF, focussing on drying of fish and other marine products. Currently, the center is a world leader in the field of drying R&D with its unique range of heat pump drier using natural fluids such as CO2 and NH3. These driers are designed aiming at high quality production, low use of energy and complying with latest environmental issues.

TERI has also been involved in drying of various materials such as cardamom, mushroom, silkworm pupae, rubber and green bricks using biomass gasifier. Hence, a collaboration on drying would be beneficial for both.

3. CDM projects The Norwegian energy situation is unique in that practically all electricity is generated from renewable hydropower (113 TWh) and about 50% of the national energy supply is covered by electric power. Also, the new energy law in 1991 resulted in the liberalisation of the electricity market, which led to reduced prices making it difficult for new renewable energy to compete in the market. It is thus difficult and expensive for Norway to fulfil its green house gas reduction commitments. Hence, CDM projects, which allow for investments in developing countries become attractive for Norway. However, there is a need to identify various options for development into CDM projects.

It is hence agreed in this meeting that CDM projects would form an important basis for collaboration between TERI and SINTEF.

4. Workshop To lay foundation for an effective collaboration between Norway and India on climate change and renewable energy issues, it is proposed that a workshop be held in late 2002 at Delhi. The agenda, participants, funding etc. will be decided by correspondence between TERI and SINTEF.

26

Annex 3

OPET CAUCASUS

Current situation in the field of Bioenergy in Caucasus region

27

Table of contents Introduction Chapter 1: General Background Georgia, Armenia, Azerbaijan Major Information Population Brief Description of the Energy sector Chapter 2: Institutional Aspects Legal Framework Taxation System Chapter 3: Biomass and Waste Georgia Armenia Azerbaijan Chapter 4: Business Issues Local manufactures Local cost

Attachment: Photos

28

Introduction

For current situation with energy crisis and increased cost of imports, promotion of RES appears particularly accurate at national levels and also in regions allowing in rural areas maintaining the population by creation of wealth and energy supply. This process is also the opportunity to develop international co-operation through Technical Assistance programs, financial aids and attract investment.

29

Chapter 1: General Background Major information Georgia Georgia is a presidential republic. The principles of the rules of law are based on the Constitution of 1995. The Parliament of Georgia represents the legislative power. Georgia is located in the Caucasus, between the Black and Caspian Seas. Georgia has an area of 69 700 km² with a subtropical sea cost line of 315 km. To the east of the Black See Georgia is separated from Russia by the natural border of the Caucasian Mountains. To the south it neighbors Turkey and Armenia, and to the East – Azerbaijan. Population, language, culture Estimated in 1996 as 5373 thousand (incl. Abkhazia and Former South Ossetia, 4818 thousand within the territory under the control of the central government), 55.2% urban, 44.8% rural. The population of Georgia is 5.4 mln. 70$ are Georgians. The state language is Georgian. Capital-Tbilisi (1360000); other urban centres:Kutaisi-239, Rustavi-156, Batumi-138,Gori-69, Poti-50,Zugdidi-51 (plus about the same number of IDP’s from Abkhazia), Tskhinvali-42, Tchiatura-30. Georgia a small country with a long history and strong traditions, adopted Christianity in 337 AD, Moreover, the Georgian alphabet, one of fourteen in the world and the first known written literary Monument belongs to the 5 th century. Brief description of the Energy Sector The economic crisis also affected the energy sector of Georgia. The GDP decreased from 11.97 billion US dollars in 1990 to 3.4 billion US dollars in 2000. Accordingly, the total consumption of primary energy resources fell 8.475million tons oil equivalent (MTOE) in 1990 to 2.33 MTOE in 2000. The first peak after the recession was marked in 1996, when the total consumption of primary energy resources rose up to 3.62 MTOE. In 2000, primary energy consumption was structured as follows: ??Natural gas – 25.8% ?? Oil and oil products – 34.6% ??Wood – 13.3% ??Hydropower – 13.9% Sources: Energy Efficiency Center Georgia Energy sector The hydropower sector in Georgia is particularly important to the country, accounting for over 85% of the electricity generation. The total installed capacity of Power Plants of Georgia amounts 4447.1 MW on 2000 of which 1718 are Thermal Power Plants. Fifty hydro power stations have been built in Georgia, of which five large stations (Enguri, Vardnili, Ladzhanuri, Jinvali, and Khrami) represent approximately 70 percent of hydropower capacity.

30

There are twenty hydro power stations with installed capacity from 10 MW to 100 MW, and thirty small hydroplants with under 10 MW capacity. Only 1,500 MW of the 2 700 MW total installed hydro capacity was operating during the 1997. The small hydropower plants represent, with 150 MW (only 90 MW in 1997), 5 % of the total capacity and 8 % ( 530 GWh) of total hydropower generation and ensure power supply to both remote areas and urban centres. National commission of electric energy regulation in Georgia- an independent state organ, which is given the functions of licensing and tariff defining. Tariffs for production, transmission, dispatch and distribution are fixed. Resolution No12 defines the tariffs 5.7 cents/kWh in Tbilisi and on entire territory of Georgia (excluding Tbilisi) – 3.75 cent/kWh, valid since November 14, 2001. Natural Gas Resources About 26.5 thousand km2 (38% of the whole territory) and 9 thousand km2 of sandbank of Georgia is a potential territory for exploration of oil and gas resources. Based on data from 1998, forecasted oil reserves equal to 580 million tones (380 million tones onshore, 200 million tones in a Black Sea shelf.). Estimated amount of natural gas reserves only in eastern Georgia is about 98 billion m3 (according the latest, not examined data, resources of NG are significantly increasing, generally on the basis of potential of licensing blocks in eastern Georgia). Before 1999 only 27 million tones of oil and 300 million m3 of natural gas was produced in Georgia, which equals to 7% of total amount of oil and 3% of gas resources. Oil potential resource in Georgia is estimated to about 550 mln.t. Its extraction has a long history but the maximum (3.3 mln. t) was reached in 1983. The extraction was sharply reduced due to the exhaustion of the reserves of the revealed deposits and the lack of investment necessary for new expedition works and development and it was equal to 180 thous. t by 1990. By the same period natural gas annual extraction was equal to about 60 mln. m 3. Natural Gas Distribution and Demand Georgia, by gas distribution network, may be called as one of the developed countries. The specific rate of gas in country’s heat balance, before crisis, equaled to 60%. By 1989 Georgia had become one of most intensive users of gas in the former Soviet Union. Gas Supply served 46 cities, 230 villages. over 550000 residential units. 800 industrial and agricultural enterprises, 1500 boiler houses for district heating and 2000 municipal buildings. City gas networks stretched for 6700 kilometers and at its peak in 1990 total gas consumption was 6 billion cubic meters, or 60% of total energy used in the country. Currently, natural gas is delivered to Georgia from Russia. The major users, notably Tbilisi thermal power station, chemical industry and metallurgy, as well as Tbilisi. In Tbilisi in 1989 there were 292000 residential units receiving gas supply as well as 96 district heating boiler houses, 256 industrial enterprises and 585 municipal buildings. Total annual gas consumption was 2.1 billion m3, out of which 50 percent was district heating and 20 percent each for industry and residential units. All residential units used gas for cooking, while about 10 percent used gas for water heating and 15 percent used gas for space heating. Gas network of Tbilisi consists of 1935 kilometers of pipelines, of which 82 percent are underground. 198 kilometers are high pressure (to 1.2 Mpa), 551 kilometers are middle pressure (to 0.3 MPa) and 1186 kilometers are low pressure 9to 0.003 MPa). More than 60 percent of the pipelines were built in the 1960s, so they are already 30 years old are nearing the end of their expected life. Indeed recent investigations found that up to 45 percent of underground pipelines are now unreliable and need rehabilitation or replacement. The number of households that demand natural gas supply could increase sharply if the problem of payment for individual gas meters could be resolved. By experts opinion consumption of natural gas in 30 towns of Georgia would be increased to the 1.25-2.43 billion m3 in the 1.5-2 y ears if in terms of providing with

31

appropriate legislation successfully is decided privatization of distributors and rehabilitation program foresighted by tender. Requested amount for rehabilitation of distributing nets approximately 150 Mio USD, among them for the Tbilisi system – 8590 Mio USD. Oil Transportation Systems Existing in Georgia Principally, the main oil- and gas-pipelines are used in Georgia for energy sources transportation (railway is used for coal and also Kazakhstan oil transportation). The main pipelines existing on the territory of Georgia are: ?? Baku-Suphsa Azerbaijan crude oil western route pipeline; ?? Khashuri-Batumi oil-pipeline; ?? Transcaucasian gas-pipeline “Vladikavkaz-Gardabani-Yerevan”; ??Gas-pipeline “Azerbaijan -Georgia” (from Karadag to Tbilisi).

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Chapter 2: Institutional aspects Legal Framework Taxation System The Tax Code of Georgia adopted on June 13,1997 regulates general principles of formation and functioning of taxation system, relations connected with tax collection and payment, legislation for payer and tax administration. The main taxes are: ?? Income Tax; ?? Tax on Profits; ?? Value-Added Tax; ?? Excise; ?? Property Tax; ?? Land Tax; ?? Tax on Transfer of Property ?? Tax Rates Currency In October 1995 the government of Georgia introduced a new national currency – the Georgian Lari (GEL). Initial exchange rate was 1.3 GEL to USD. At present, exchange rate is 2.16 GEL to USD. Economical Structure Important sectors of the Georgian economy are: industry, power engineering, transport, tourism and services. According to the data of 2000 the sectoral structure of GDP was presented as follows: ?? Agriculture 11% ?? Trade 57% ?? Industry 40% ?? Transport 35% ?? Construction 55% ?? Telecommunication 20% ?? Restaurant and hotel 69% Source: State Department for Statistic s Armenia Basic Facts of Armenia Land area - 29743 km2. Population - 3791200 Real growth in GDP - 3.1% GDP by main activity; Agriculture - 30.6% Inductry - 24.1% Services - 37.2% Total GDP - 1647.5USDm

33

Energy sector

Reliable independent international studies have estimated that theoretically available hydro potential of Armenia, is as high as 21.8 TWh/y, of which about 85% is the potential of large and medium rivers and the remaining 15% the one of small rivers. The studies estimate the technically available potential at about 7-8 TWh/y of which the economically exploitable potential is about 3.2 TWh/year. The country total energy consumption shows a steady increase at a rate, which is sensitively greater, the increase of GDP.

The installed capacity of the Thermal Power Plants (TPPs) in Armenia is about 1754 MW. TPPs operate with gas/mazout. Hrazdan TPP with installed capacity 1110 MW has been commissioned during 1966-1974 and Yerevan TPP with capacity 550 MW – during 1963-1968. The Medzamor Nuclear Power Plant (NPP) started operation between 1976 and 1980 with two VVER – 440/230 reactors and totalling 815 MW generating capacity, was the most important generation station up to 1988, when it was brought to a standstill. The severe energy crisis obliged the Armenian government to restart Unit 2 of the NPP in November 1995, after extensive renovation and additional measures for improving the seismic safety of the plant. The restarting of this Unit boosted Armenia’s electricity generation and contributed decisively to the stabilisation of its power system. The total installed capacity of Armenia’s HydroPower Plants (HPPs) amounts a little more than 1000 MW. The Sevan-Hrazdan cascade (7 plants, commissioned during 1949-1959) accounts for 55% of this capacity. The Votoran cascade (3 plants, commissioned during 1970-1984) contributes with about 40%. The remaining 5% is the installed capacity of the small HPPs. The following picture shows the structure of Armenian Power Plants generation. The high -voltage transmission network of Armenia consists of 1323 km of 220 kV lines and 3169 km of 110 kV lines. There are 14 substations of 220 kV and 119 substations of 110 kV. The capacity of the existing high-voltage network is considered sufficient for the current and the forecasted domestic loads. The high-voltage transmission network of Armenia has the following interconnections with the neighbouring countries: Natural gas sector: In Soviet times, natural gas consumption in Armenia was firmly above 5-6 bcm/year. In 1989 the natural gas consumption reached 5.76 bcm. But consumption plummeted to 4.6

0

500

1000

1500

2000

2500

1996 1997 1998 1999

Hydro

Nuclear

Gas

Ptroleum

0

500

1000

1500

1996 1997 1998 1999

kto

e

0

2

4

6

8%

FinalConsumption(ktoe)

GDP increase(%)

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bcm in 1990, 4.5 bcm in 1991, 1.9 bcm in 1992, 0.78 bcm in 1993, 0.85 bcm in 1994, 1.0 bcm in 1995, 1.12 bcm in 1996 and 1.2 bcm in 1997. Three high-pressure gas pipelines, with combined capacity of 45 mcm/day, enter the country along the eastern border with Azerbaijan. These pipelines have been shut down for years. Two other gas lines come from Georgia and have capacity of 15 mcm/day. Those lines are partly operational and su pply sparingly Armenia with Russian natural gas. The high-pressure transportation network of Armenia consists of 2000 km length, 273-1200 mm diameter and 12-55 bar pipelines (comprising 67 distribution points and 139 corrosion protection stations). In Abovian there are underground storage facilities for natural gas with the maximal possible pressure 125 bar, nominal gas storage volume 220 bcm and projected useful gas storage volume 180 bcm. Gas distribution in Armenia is performed through: ?? The high-pressure distribution network, with 558 km length, 50-500 mm diameter and

6-12 bar nominal pressure, ?? The medium-pressure distribution network, with the 2656 km length 50-500 mm

diameter and 0.05-6 bar nominal pressure, Low-pressure distribution network (comprising 1797 distribution points and 854 corrosion protection stations) of a total length of 6041 km. Currency Armenian national currency is Drama with exchange rate 564.51 dram for 1 USD on 21.12.01

Azerbaijan Azerbaijan is less developed industrially than either Armenia or Georgia, the other Transcaucasian states. It resembles the Central Asian states in its majority nominally Muslim population, high structural unemployment, and low standard of living. The economy's most prominent products are oil, cotton, and gas. Culture Following their ambigous geographic location, Azeris have their feet in both Islamic and European cultures, the latter mostly Russian and Turkish, struggling with deep divisions between the old and the new. About 90% of the population is ethnic Azeri, with a smattering of Dagestanis, Russians, Armenians, Jews and other groups Electricity ?? system: 220 V, 50 Hz, double pins, European plug ?? capacity: 5.239 million kW (1995) ?? production: 16.035 billion kWh - fossil fuels: 90.55%; hydroelectric 9.45% (1996) ?? consumption: 15.508 billion kWh (1998) ?? consumption per capita: 2,200 kWh (1996 est.) ?? exports: 1 billion kWh (1998) ?? imports: 1,2 billion kWh (1998) ?? transmission lines: 110.000 km

Power cuts are frequent, even in Baku, where people usually stock a few candles at home. The production facilities consist of eight thermal plants supplying over 80% of generating capacity, and 5 hydroelectric plants. Two -thirds of the country's thermal capacity is powered by Mazut (residual fuel oil), with natural gas as the secondary fuel (2400MWt). The second largest thermal plant is in Ali Bayramly (1050MWt). Azerbaijan imports power from Russia, Turkey, Iran, and Georgia. Azerbaijan also exports electricity to Russia and Georgia. Azerbaijan represents one of the biggest potential producer and consumer of the natural gas in the region. At present in the country the gas production reaches approximately 6

35

bcm3, while the demand is about 8 bcm3 (partly covered from the supply from Russia). On its land territory and in the Caspian Sea part belonging to Azerbaijan it is planned to increase the gas production up to 25-30 bcm. The main portion of it would be meant for export and approximately 8 bcm for domestic consumers. Currency Azerbaijanian national currency is Manat with exchange rate 4770.00 manat for 1 USD on 21.12.01

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Chapter 3: Biomass and wastes Georgia Just 50 years ago, biomass was the primary source of thermal energy in Georgia. Energy was obtained by burning wood (38.7% of Georgian territory is covered by forests today), hay, peat and other materials. Wood fuel is the major renewable use in Georgia and has increased significantly with the energy crisis as stated in following table: Wood Consumption in Georgia, 1990-1997.

Woodfuel 1990 1991 1992 1993 1994 1995 1996 1997 '000 toe 224 336 525 805 455 525 910 744

Source: Ministry of Economy At present, new technology makes it possible to extract energy from the bio -gas of organic waste and manure, as well as from that of vegetable and other matter, by transforming it into generative gas, spirit and vegetable fuel. It should be taken into account that as a result of anaerobic boiling 100 m3 bio-gas can be obtained from 1 t of manure, while the waste can be used as high quality fertilizer, though the quantity will be less than the initial manure mass. In Georgia, where mineral fertilizers are in short supply, it would be more rational to apply manure as an organic fertilizer rather than as a source of energy. Moreover, in winter, when energy shortage is acute, biogas devices require reservoir heating to speed up the boiling process, thus 30-50% of the obtained power is already expended. Biological processing of waste and the technology of the burning the biogas decreases deleterious drain. Space required by waste collectors is decreased, biological filters help remove unpleasant stench, humus obtained from fermentation may be used in forests, parks and in agriculture. According to a rough estimation, waste burning in Georgia may provide fuel for a 100 MW TPP. Georgia has already gained a long experience in development of renewable energy sources. In quantities terms, renewable energy contribution to the national energy balance is of real importance with 85% of the national energy supply. This share is derived from hydropower plants amounting 85% of total national generation and wood fuel by the residential sector. The residential sector mainly in rural areas accounted for more than 90% of the total woodfuel consumption. Overexploitation of the forests (with no volunteer replacement of the resource) is a very worrying element for the future use of this resource for energy purpose and industrial uses, erosion of soils and bio-diversity protection. In this sense, it is highly questionable to classify wood as a totally renewable resource as on a medium term period the majority of the resource will have disappeared. Wood is essentially burnt with low efficiency stoves and chimneys.

37

Estimation of energy utilisation of biomass and waste has been carried out on a large scope of possible energy use (wood and wood waste, agriculture waste, municipal and industrial waste) according to the situation in the country and methodology and technologies developed in the EU. The wood resource (woodcut and waste) is the main fuel as in technical and economic potential. Nevertheless, the over-cutting of the forest resource puts in real danger its future as the ecosystem and agriculture activities (soil erosion, flooding). Assessment of biomass & waste potential

Estimation of Energy potential Technical Hypothesis on

economic potential considered in % of

technical

Economic

GWh % GWh

In % of total economic potential

Woodfuel 1,000 30% 300 44% Wood waste industry 900 10% 90 13% Oth. Wood waste NA 0% Wood cut agric. 630 5% 32 5% Dry Agric. Waste 212 5% 11 2% Food proc. Waste NA 0% Chemicals NA 0% Oth industries NA 0% Municipal Waste 501 50 7%

Biogas 199 25% 50 7% Incineration 302 0% 0 0%

Wet agriculture 1,261 15% 189 28% Sewage, effluents NA 0% Oth. wet waste 0 0% Automobile 80 10% 8 1% Biofuels NA 0% 0 0% TOTAL 4,584 679 100%

The overexploitation of the forestry resources and the lack of regulations or incentives for the use of biomass and waste are also breaks for the mobilization of resources.

Technical potential potential biomass & waste in Georgia/1998

21%

20%

14%5%4%7%

27%2%

Woodfuel

Wood waste industry

Wood cut agric.

Dry Agric. Waste

Munic. Waste/biogas

Munic.Waste/incinerationWet agric

Automobile

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Environmental impact mitigation A great part of the population of Georgia is using wood (and also kerosene and liquid gas) for domestic heating and lighting needs, leading to increased indoor pollution, as well as health hazards. Uncontrolled cutting of forests for fuel-wood has become one of the major environmental problems, leading to a drastic deforestation and diminution of significant source of GHG sinks. This problem is especially serious in the rural areas, where the lack of energy and its environmental and economic consequences are important. Considering that the country’s 400,000 farms are annually cutting an estimated volume of 4,800,000 m3 of wood for heat energy production; taking into account that the Forestry Department of Georgia estimates that a maximum of 500,000 m3 of firewood can be cut per year without damage, it is evident that the uncontrolled use of wood constitutes a huge ecological problem that needs to be addressed rapidly. It should be also considered that already the large amount of non-processed waste is a significant cause of environmental pollution. Natural emissions of GHG’s from deep layers of waste bio-mass are significant – total methane emission from non-processed organic wastes were estimated at 171,000 tons in Georgia in 1997, according to the GHG Inventory. It becomes clear that the correct management and utilization of biomass and notably forest will increase environmentally sound and CO2 neutral energy production. Georgia – Estimate data of biomas s availability for energy production

Bio-mass

Wood fuel 4.800.000 m 3

Energy crops 1.250.000 tons

Agricultural residues 500.000 tons

Other Bio-mass resources

Liquid waster 25.000.000.tons

Urban wastes 400.000 tons

Determination of waste Bio -mass energy potential

Technology

Pilot application

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Prospects for introduction of biogas technology in Georgia

Nowadays two main divergent directions have been studied for biogas reactors. First in warm countries like India or China, small bioreactors, working at ambient temperature, have been developed and are very popular. In most advanced countries biomethanisation of organic wastes is aimed first at preservation of environment including a decrease of Green house effect. To reach high efficiency of using biogas combined heat power centralised plants have been built in European countries. Such Plants are very large representing a very important investment and are not adapted to countries like Georgia, which needs small-scale biogas reactors for isolated farms. Biogas production in low cost, high effective bioreactors is of primary importance for Georgia, where there is a lack of energy and where farms are small. At present around 70 small very rustic biogas reactors are built in Georgia. They operate in discontinuous manner because of various perturbations. During summer biogas daily output does not exceed 0,1-0,2 m3 biogas/m3 digester. During winter biogas production is practically stopped. Because of that population does not have trust in biogas production. To overcome this barrier there is a need to implement and to demonstrate a biogas reactor, which could be operated on a rural environment ensuring:

?? A good continuous biogas production; ?? high yield of biogas; ?? A shorter retention time of organic wastes; ?? A scale-down of the digester able to transform a given bulk of wastes and so a

corresponding investment reduction. These can yield a whole range of benefits for their users, the society and the environment in general:

?? production of energy in autonomous manner ?? transformation of organic wastes into high quality fertilizer; ?? micro economical benefits through energy and fertiliser substitution, ?? additional income sources; ?? improvement of hygienic conditions through reduction of pathogens, ?? warm eggs and flies. ?? environmental advantages through protection of soil, water, air and ?? woody vegetation; ?? macro economic benefits through decentralized energy generation, ?? import substitution and environment protection.

Source; Institute of stable Isotopes, Laboratory of Renewable Sources of Energy The funding of projects The capital intensive of the investment in RES needs a financial set-up based on own investors funds (equities) and/or credit on long term and low interest rates and/or subsidies. In Georgia, investment in energy sector and energy consuming appliances are constrained by scarcity of funds and credits. The weak situation of local financial market and public budget does not give the conditions for long term soft loans or state financial support. The local banks offer short-term credits (up to 6 months) and high interest rates (more than 30%) and guarantees on physical assets. In these conditions, funding of proofed economic projects from the local financial sy stem is extremely difficult and costly. The market economy rules and financial mechanisms require economic and financial analysis skills that few experts in energy sector have the opportunity to learn and develop.

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Institutional aspects Regulations Several initiatives have to be noticed in an on-going process: The Parliament of Georgia has issued successive versions of the Energy Policy –last version in 1999 “Georgian Energy Policy Concept, Ministry of Energy with Strategic Research Center including the promotion of RES as a valuable objective; but implementation measures were not detailed. On the follow-up of one the Solar Forum organised under the supervision of the State Chancellery and Unesco in 1998, a Presidential Order “Development of Non-Traditional Energy Sources Utilisation in Georgia” (dated March 1998, N° 120) describes the main principles in this field. The document includes a wide range of arguments on the development of RES in Georgia, the main priorities per sector and the possible implementation tools. In the second half of 1998, the State Chancellery has proposed an amendment to the “Tax code of Georgia” to include specific measures and tax reductions for the use of renewable energy equipment, notably a decrease of VAT from 20% to 7%. Approval in 1999 by the government of regulation exonerating manufacturers of RES equipment of the payment of the “Enterprise property Tax and Company profit Tax” Workshops organised at the Parliament (Open Parliamentary Meeting-OPM) by the Tacis Environment Raising Awareness program on Wind power (April 1998) and renewable energy policy (June 1998 and May 1999). It appears there is a need in this field for further development and implementation (cf section below on Proposals for a strategy). The necessary regulatory investment framework and implementation, for instance a rather high power tariff would have no impact for independent producers without obligation of purchase or direct sales to consumers and of course guarantee of payment of bills. Renewable energy attracts a significant interest in the country, organisations such as the Ministry of Fuel and Energy (MFE), Sakenergo Generation, Isotopes Institute have settled RES Department. These structures have been allocated limited resources; and the synergy between them appears quite limited. Within the Ministry of Environment, the National Climate Research Centre has developed capacity in greenhouse gases mitigation. Armenia Energy use of biomass and waste potential in Armenia The assessment of the energy potential of boimass and waste includes: The evaluation of the potential availability of the biomass/waste resource; The analysis of the technical possibility of exploiting this potential (technologies for energy conversion); The analysis of the possible constraints that interfere with its exploitation. The investigation has been mainly addressed to explore the potential for energy production of the lignocellulosic biomass like agricultural residues, e.g. pruning residues (combustion), the livestock waste (anaerobic digestion) and, finally, the municipal solid waste (incineration, biogas recovery from landfill). Agricultural residues The wheat straw represents a considerable amount of biomass. The possible exploitation of this resource is strongly limited due to its present high degree of utilisation. In fact, about the 70% of this amount is used in livestock; the rest is already spontaneously used as fuel for heat production. However, the potential is so high that the possibility to exploit even a little amount of the produced straw represents a consistent energy resource.

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As regards the woody crops pruning residues, the main part of boimass can be available during the autumn and winter months and then rather in phase with the period of higher heating demand. The energy conversion of the biomass obtained from pruning residues is a consolidated technology and doesn’t present any particular technological risk. The energy utilisation of the pruning waste can be carried out by means of little domestic heaters (thermal power of few kWt) or by means of wider boiler (thermal power of one or two MWt) for the space heating of the farm and other uses (canning facilities, schools heating, hospitals heating, etc.). Considering an heating period of 2000 h/y, a 2 0% loss for collection and transport, a boiler average efficiency of the 80%, the potential thermal power that could be generated burning the pruning residues is of 33 MWt. The total potential of residues available in Armenia can produce, considering also an 80% efficiency of collection and transport, about 3 MWe (a steam power plant has been considered with an energy conversion efficiency of 18% and 5000 running hours /year). If a global availability of biomass of 50% is supposed, the electric power decreases to 1.5 Mew. The utilisation of the pruning residues for electric power generation does not appear proposable in Armenia because it presents more difficulties in comparison with the production of only heat, due to the much higher investment cost, the need of organising a wider network of collection of biomass for a single plant. Moreover, the reasonable capacity of plants based on steam Rankine cycle is not less than 3 MWe; smaller capacities, in fact, imply higher unitary costs. The technology of ORC (Organic Rankine Cycle) is of recent application to the biomass and is well suited to low power (hundreds of kW) systems. Livestock waste The possibility of exploiting livestock waste potential is related to build little plants for hundreds of heads, which isn’t generally economic. Only fourteen farms have been identified, based on information received by the Ministry of Agriculture, with a significant number of heads. As regards the cattle, only five farms have been identified, with a number of heads mo re than 300 (from 300 to 600,half of whom are cows). Two of these have also other animals: one pigs and sheep and one only pigs, reaching a total amount of animals of 1400 and 450. With reference to the pigs, only one farm has been identified with 1500 heads, and another one counts 300 heads. Four farms have a number of chickens respectively included among 500,000 and 100,000 chickens (the latter includes also 100 cattle and 300 pigs). Besides, two sheep farms have been identified with 1000 heads. The total energy potential concerning the above listed farms can be assessed in about 35,000 GJ/y as energy content of biogas recoverable, mainly connected to the chicken poultry, which is a difficult substrate. A certain part of this energy potential must be used in the anaerobic process itself for heating the reactor.

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Chapter 4: Business Issues Local manufactories Biomass use can also be mentioned with rural biogas digesters developed by Constructora Ltd; around 30 installations are operated. A market study carried out by the Tacis Technical Assistance at Consumer and Industry levels. Research capacities also exist at Isotopes Institute, Renewable Department. Georgia The first biogas device in Georgia was built in Krtsanisi, near Tbilisi, shortly after World War II. Recently the “Constructor” firm started to produce simple biogas devices, and with the support of the Ministry of Fuel and Energy several such devices have already been used by farmers. ?? Institute of stable Isotopes

Laboratory of Renewable Sources of Energy

The Tbilisi Institute of Stable isotopes (ISI) was established in 1962. In 1994 ISI established the Lab of Renewable Sources of Energy (RSE), devoted to the development and implementation of cost effective technologies for bio -mass energy utilization in Georgia.. Lab personnel are the high qualification engineers, chemists, microbiologists, and power engineer and computer specialist. The main scientific and engineering activities of the lab are devoted to development and implementation of environmentally sound energy effective technologies for heat and electric energy production from organic wastes. Lab is equipped with modern analytical equipment, produced by Perkin Elmer Company. Lab has access to the mechanical workshop existing at the Institute of Stable Isotopes where pilot utilities are produced. Technical personnel are invited on contractual conditions. The Presidential decree N.688 issued on 14 December 1998 approved the ISI programme ISOTOP, consisting of several sub-programmes. One of them is “Energy from Bio-mass”. The realisation of these programmes is envisaged through the following research and development activities: • Development of cost effective biogas reactors for simultaneous production of gas,

electricity and hot water at the individual farms • Development of plan on energy crops cultivation on the semimarshed lands • Development of environmentally sound wasteless technological cycle for Processing

of MSW • Advanced technology transfer for gaseous, liquid and solid fuel production from

various composition of biomass. The RSE Lab has established contacts with several well known International Institutions, such as INRA Lab for bio-technology research in France, Institute of Gas technology in USA, Barcelona university, department of Chemical Engineering in Spain, Technological University of Compiegne in France. Services provided by the lab of Renewable Energies: ?? Development of design papers for different size biogas reactor; ?? Production and supply of farmers with bacteria concentrates for biogas densification

production. ??Monitoring of ecological and chemical characteristics of organic -mineral fertilizers

produced through anaerobic treatment of cattle breeding wastes.

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?? Reconstruction of low power (0,5-1 KW) petrol engine generator to biogas for production of electric energy from biogas.

?? Development of design of the system for utilization of exhaust heat of engine generator. ?? Construction, installation and further service of bioreactors ?? Training of farmers in how to operate biogas devise. Participation in International Projects: In 1997-98 Lab Participated in TACIS ES-97 Project in domain of assessment of possibilities for diffusion of bioreactors in rural Georgia. In 1999 the Lab was awarded NATO SfP Program grant for dev elopment of biogas reactor for production of heat and electricity at small-scale farms. In 2000 Lab was awarded World Bank Grant for the project: Introduction of effective technologies at 8 pilot farms for reduction of environment pollution caused by agricultural wastes. ??Union “Bioenergy” and its manufacturing facility Bioenergy Ltd. Contact Person –Lasha Bitsadze and Avtandil Bitsadze Chairman; Director 8 Stanislavski St. Tbilisi Tel. +995 32 344359; Mobile-877-453578 E-mail:bioenergy@gol.ge; http://bioenergy.gol.geLtd “Bio energy”- Georgia Non-government Union “Bioenergy” “Bioenergy” was registered in November 2000, by the Decree # 2/9-277 of the Didube district Court. Mr. Avtandil Bitsadze “Bioenergy” Deputy Chairman is one of the leading specialist in bioenergy field. He is the author of a number of publications, including books on bioenergy installations-“ Construction & Operation of Biogas Installations”;”Recommendations On the Construction of Biogas Installations at Small Farms”. Implemented Projects: # Project Title Project Cost Time Donor Organization

Contact Person 1 Construction of 4 one family

biogas installations and 4 animal waste storages in Terdjola district villages Akhali Terdjola and Alis Ubani.

$21200 2000 World Bank GEF Fund Project Director G.Maglakelidze

2 Construction of one family biogas installation in Dedoplis Tskaro village Kvemokedi

$ 6990 1996 USAID

3 Boxes for Electric Meters $12000 2000 AES-Telasi Department for Strategic Projects Manager G.Tabidze

4 Biogas Installation with Solar Heater

300 1999 Tacis Energy Project Manager Masle Kouvinen

Tree proposal of the construction the biogas installations have been submitted by Energy Efficiency Centre Georgia to donor organisation. (See the attachment)

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Armenia There are not identified manufacturers of industrial or local farm utilization of biomass energy. The utilization of pruning residues and livestock waste potential for power generation does not appear perspective in Armenia. The livestock waste is used as fuel for heating and fertilization purposes in mountainous regions (e.g. Sisian, Aparan, etc.) where there are not sufficient fuel resources and gas mains. According to the assessment of specialists of French firm “Agat” that had visited Sovetashen landfill not far from Yerevan there is not enough quantity of waste and its structure is not suitable for construction and efficient work of waste processing plants. Azerbaijan Solar Energy Contact person:Mr.L’man bakhaduroff address: Zardabi Avenue 94, Baku-370620 Tel: (+99412) 314208 Fax:(+99412)312036 Local cost Georgia Each project needs the individual calculation, but on average the biogas installation utilizing the manure of 7-10 cows or other domestic animals will costs 2000 USD

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Atachment: Photos

Union “Bioenergy” and its manufacturing facility Bioenergy Ltd.

Existing biogas facility in Alisubany village, Terjola rejion in Kavtaradze’s home

Union “Bioenergy” and its manufacturing facility Bioenergy Ltd.

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Different stages of the construction of biogas installation in one of the villages of Georgia

Union “Bioenergy” and its manufacturing facility Bioenergy Ltd.

Photo materials reflecting project preparation activities Didi Jikhaishi project - Didi Jikhaishi IDP community Farm.

The Farm has been constructed with the assistance of IRC and can give shelter to 90 cows.

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Community kitchens.