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Energy Alternatives India – White Paper

Energy Alternatives India (EAI) C/O Clixoo

C3B, Anugraha, 41, Nungambakkam High Road, Chennai 600034

Tamilnadu, India. Ph: +91-44-32561191 info@clixoo.com , www.eai.in

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This white paper provides details on the profile of Energy Alternatives India (EAI) in the context of its consulting and research work for the Indian renewable energy industry. This white paper also provides samples of work done by EAI in renewable energy market research and consulting.

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List of Contents

1. What we can do for businesses exploring renewable energy?

2. Inputs on renewable energy options

3. Insights into unique business opportunities

4. Sample techno-economic feasibility study

5. Our approach and deliverables

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Section 1

What can we do for businesses exploring renewable energy?

EAI can provide strategic and market related guidance on many critical aspects related to renewable energy. These aspects include details on:

• Business opportunities o Analysis of business potential for renewable energy sources

customized to client’s preferences o Current and future business opportunities, both mainstream and

niche/unique opportunities o Geographical potential of specific renewable energy sources o Inputs and insights on prospective market and customer segments

• Supply-demand o Data on availability of feedstocks and raw material resources o Current demand / consumption of the renewable energy o Present installed capacity and production

• Government plans and policies o Subsidies and incentives o Nature of power purchase agreements o Incentives available from central and state governments

• Identification of attractive projects for investment o By geography o By renewable energy source o By scale of investments

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Section 2

Inputs on renewable energy options

In this section, we provide you inputs on the primary renewable energy sources. This will be useful to those who wish to understand the range of renewable energy sources and the key business aspects of each. The complete list of the primary energy sources is provided below.

Traditional

Non Renewable Energy

Alternative

Oil

Gas

Coal

Renewable Energy

Solar

Wind

Hydro

Ocean

Hydrogen

Geothermal

Bio Based

ENERGY SOURCE

Gas Hydrates

Nuclear

Oil Shale

Tar Sands

Waste to Energy

One way of classifying energy sources is based on whether the source is renewable or non-renewable. Within non-renewable energy sources, coal, oil and natural gas are the traditional sources, while some of the emerging, alternative sources are based on nuclear, oil shale, tar sands and gas hydrates.

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The leading sources of renewable energy are:

• Solar energy o Solar photovoltaic o Solar thermal

• Wind energy • Biomass energy / bio-fuels

o Ethanol o Bio-diesel

• Geothermal energy • Ocean energy

o Tidal energy o Wave energy o Ocean thermal energy

• Hydro energy

Hydrogen usually figures in the discussions on renewable energy sources, but it is not a source of energy but a carrier of energy. Each of the renewable energy sources is analyzed on the following aspects:

• Highlights • Categories & Classification • Trends and Potential

Solar Energy

Highlights

• Solar energy technologies can be broadly classified into solar PV and solar thermal

• Solar PV is more prevalent today than solar thermal • Solar energy is primarily used for electricity generation • Solar costs much more than grid electricity currently • Solar (both PV and thermal together), contribute less than 0.3% to the world’s

total electricity production

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Solar Energy Classification The solar energy technology can be broadly classified as follows:

• Solar Photovoltaic o Crystalline

Monocrystalline Polycrystalline

o Thin-film CdTe (Cadmium Telluride) CIGS (Copper Indium Gallium Selenium) / CIS (Copper

Indium Selenium) CIS (Copper Indium Diselenide) Amorphous Silicon (a-Si)

o Concentrating Photovoltaic • Solar Thermal

o Distributed Solar Thermal Flat-plate Collectors Evacuated Heat-pipe Tubes

o Centralized Solar Thermal Concentrating Solar Thermal

• Parabolic Trough Collectors • Dish/Engine Systems • Power Towers • Hybrid Systems / Integrated Solar Combined Cycle • Linear Fresnel

Solar PV Status and Trends Data for Solar Energy (PV) Worldwide

Global Solar PV – Total Installed Capacity by Year

Year MW 2007 8325 2008 9797 2009 11574 2010 13729 2011 16366 2012 19624

The above table shows a significant increase of solar PV capacity worldwide, with the capacity more than doubling for the period 2007-12, with a CAGR of about 19%.

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World Photovoltaic Installations in 2007 – by Installed Capacity (Total installation in 2007 = 2826 MW)

Country % of Total Installed Capacity Germany 47

Spain 23 Japan 8 USA 8

Rest of World 14 Source: SolarBuzz ( www.solarbuzz.com )

From the table above, it is clear that just two countries – Germany and Spain – constitute 70% of the solar PV installed capacity in 2007. The primary reason for these countries to achieve dominating position is their respective incentive programs for solar energy. Both the countries set attractive Feed-in-Tariffs (the price paid by a distributor of power to a producer of power) for solar energy producers, thus encouraging significant investments in solar energy. Solar Thermal Status and Trends While most discussions on solar thermal have focused on centralized electricity generation using concentrating solar thermal technologies, solar thermal - in its distributed form - plays a significant role as well, in domestic and industrial heating and drying applications The Solar Thermal Industry The energy contribution from the solar thermal plants has been a much smaller one so far, when compared to the solar PV plants. However, a note is in order. In some ways, it can be said that the solar thermal industry’s has been vastly underestimated because so far the data that have been considered are only the energy output of the concentrating solar plants (CSP). The contributions from the end-use markets such as solar water heaters, solar house heating systems and the like have not been captured while calculating the total contribution of solar thermal segment to the worldwide energy output. There have been studies that indicate that, with suitable assumptions about the use of distributed solar thermal for heating and drying applications, the solar thermal energy’s total installed capacity worldwide would be far higher than that of solar PV (in the order of 80 GW for thermal vs 12-14 GW for PV). However, because these are not official estimates, for this report we too consider only the energy capacities and output of concentrating solar power (CSP) segment of the solar thermal industry.

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Solar Thermal Trends

Worldwide Installed Concentrated Solar Power Plants Capacity – 2000-2008

Year Added capacity (MW) Cumulative Capacity (MW)

2000 -10 356 2001 0 356 2002 0 356 2003 0 356 2004 0 356 2005 0 356 2006 1 357 2007 100 457

2012 (projected) 6400 Source: Earth Policy Institute, 2008 Notes for the above table:

1. The numbers are only for concentrated solar power plants, and do not include solar thermal energy used for water heaters, solar heating of buildings and solar architectural design.

2. The projection for 2012 has been arrived at using some proposed solar thermal power plants

that are likely to come online in the next few years. Wind Energy

Highlights

• Outside of hydro-energy, wind energy is the largest renewable energy contributor to the world’s electricity.

• While wind turbines can be located onshore as well offshore, current wind farms are predominantly located onshore

• USA, Germany, Spain, China and India are the leading countries in generating electricity from wind

• Electricity from wind is only slightly more costly than grid electricity based on coal or natural gas

• The biggest bottleneck for wind energy is the variability and unpredictability of wind, and the subsequent storage requirements for the electricity generated.

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Wind Energy Classification Wind Turbines A wind turbine is a rotating machine which converts the kinetic energy in wind into mechanical energy. If the mechanical energy is used directly by machinery, such as a pump or grinding stones, the machine is usually called a windmill. If the mechanical energy is then converted to electricity, the machine is called a wind generator. Wind turbines can be separated into two types based by the axis in which the turbine rotates.

• Vertical Axis • Horizontal Axis

Turbines that rotate around a horizontal axis are more common. Vertical-axis turbines are less frequently used. The wind turbines are grouped in a location to farm a wind farm. Wind Farms Based on their locations, the different types of wind farms are:

• Onshore • Nearshore • Offshore • Airborne

Wind Industry Status and Trends Global Installed Capacity of Wind Power (Current)

Global Cumulative Installed Capacity 1996‐2008

0

20000

40000

60000

80000

100000

120000

140000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

MW

                   6,100       7,600       10,200   13,600     17,400    23,900    31,100    39,431     47,620    59,091   74,052    93,835    1,20,798

Source: Global Wind Energy Council Report, 2008 Observations from the above chart: CAGR of cumulative installed capacity between 1996 and 2008: 28.25% CAGR of cumulative installed capacity between 1996 and 2002: 31.2 % CAGR of cumulative installed capacity between 2002 and 2008: 25.37%

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One can see that the growth rate has been high and consistent over the past 12 years, and this trend is expected to continue. Assuming a CAGR of 25 % for the next five years 2008-13, the following are likely to be the global installed capacity.

Year Cumulative Global Capacity (MW)

2009 150997 2010 188746 2011 235933 2012 294916 2013 368646

Even under the above scenario, it should be noted that the total electricity generation capacity from wind energy will be less than 8% of the total installed capacity worldwide in 2013. In 2009, global installed capacity for electricity is estimated to be about 5000 GW. Region-wise Installed Capacity for Wind Energy

Region Total installed capacity

end 2008 (GW) % Contribution Africa & Middle East 0.67 0.55

Asia 24.37 20.17 Europe 65.95 54.59

Latin America & Caribbean 0.63 0.52 North America 27.54 22.80 Pacific Region 1.64 1.36

World 120.8 Highlights from the above tables:

1. It can be observed that Europe contributes over 50% of the total installed wind capacity. Within Europe, Germany and Spain alone contribute over 60% of the total European installed capacity

2. The wind power capacity of USA is almost on par with the installed capacity in the whole of Asia

3. South America and Latin America / Caribbean contribute almost nothing. These regions being vast and highly populated, the potential for growth in wind energy capacity in these regions is hence tremendous.

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Bio-fuels

Highlights • Bio-fuels are primarily used as a substitute for gasoline or diesel in

transportation • Bio-fuels can be classified into ethanol (as a substitute for gasoline), and bio-

diesel (as a substitute for diesel) • Brazil is the most prominent producer of fuel ethanol, along with USA • Europe is the prominent producer of bio-diesel • Bio-fuel feedstocks can be classified into first, second and third generation

feedstocks, based on the feedstock characteristics and the benefits they provide.

• Bio-fuels currently contribute about 1.5% of the total transportation fuel use Bio-fuel Industry Classification While the term bio-fuels denotes any fuel made from biological sources, for most practical uses the term refers to either bio-diesel or ethanol.

First, Second and Third Generation Bio-fuels

Present and Future Potential for Biofuels

• Currently, ethanol has a much higher share of biofuels than biodiesel, though the share of biodiesel has been growing rapidly since 2006.

• USA and Brazil are the dominant producers of ethanol, while the European Union is the leading producer of biodiesel.

• The biofuel industry is expected grow at double digit rates for the next 6 years, resulting in over 40 billion gallons of biofuel production by 2015.

• Newer technologies such as cellulosic ethanol and thermochemical methods could result in large-scale production of biofuels from less costly and more easily available feedstocks.

1st generation 1st generation 2nd generation 2nd generation 3rd generation

• Corn • Cane • Maize

• Switchgrass • Cellulosic • Gasification

• Palm • Soybeans • Rapeseed

• Jatropha • Gasification

• Algae

Ethanol Biodiesel

Bio-fuels

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• The biggest increases in biofuels consumption are expected in the United States and in Europe, outside of Brazil.

• In spite of a number of setbacks that the industry has suffered over the past years, owing to ecological, cost-related and food-chain related problems, the biofuels industry is expected to perform robustly over the next decade.

• Interest and investments in biofuels will continue to be robust in North America and Europe for the foreseeable future.

• Investments in research and commercialization are quickly moving into second and third generation feedstocks and technologies.

• In the not-so-distant future, one can expect integrated biorefineries that can produce a range of biofuels – ethanol, biodiesel, biogasoline, biokerosene and more – using technologies such as thermochemical routes.

• There are some who are skeptical about the medium and long term demand for biofuels, because they consider biofuels to be a transitional source of energy while the world graduates to electric vehicles. While it is difficult to comment about biofuels prospects in the long term, the potential for biofuels is high in the medium term. It will take a long time for electric vehicles to make any significant impact on the overall numbers of vehicles; the window that is hence open for the biofuels industry will consequently be for over 30 years.

Biofuel Industry Status and Trends Global biofuels production has tripled from 4.8 billion gallons in 2004 to about 16.0 billion gallons in 2007, but still accounts for less than 2 percent of the global transportation fuel supply. About 90 percent of total biofuels production is concentrated in the United States, Brazil, and the European Union (EU). Production could become more dispersed if development programs in other countries, such as India, Malaysia and China, are successful. Production of biofuels is expected to increase multifold between 2007 and 2030. Some country snapshots are listed below:

• Global ethanol production more than doubled between 2000 and 2005, to more than 34 billion liters (9 billion gallons). From 2007 to 2008, production dramatically rose again, increasing from 49 to 65 billion liters (13 to 17.2 billion gallons), a growth rate of 33%. Global production of biodiesel, starting from a much smaller base, expanded significantly during the period 2004-08.

• The US has been a prime driver of growth in ethanol as biofuel. • In Brazil, already the world's largest ethanol producer, a study conducted by

the University of Campinas for the Ministry of Science and Technology showed that the country could lift annual exports of ethanol derived from sugarcane to 200 billion litres (53 billion gallons) by 2025.

• Several other developing countries (e.g. Thailand, India, China) are strengthening their production and use of biofuels, and Malaysia has

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announced its intention of producing biodiesel from palm oil for export to Europe.

• In Australia, the government has set an annual target of 350 million litres (93 million gallons) of biofuel production by 2010.

Geothermal Energy

Highlights

• Geothermal energy can be used to obtain both heat and electricity • Homes and commercial establishments can use geothermal energy for heating

and cooling purposes, through the use of geothermal pumps • Some regions in the world are more suited to benefit from geothermal than

others • Geothermal energy currently generates less than 0.3% of the world’s

electricity • USA is the leading country in this field, with Philippines being the next • New technologies such as Enhanced Geothermal Systems (EGS) could

significantly expand the potential for geothermal energy as a renewable energy source

Geothermal Energy Classification There are three main types of geothermal energy in use currently:

1. Direct Use Heating Systems – these use hot water from springs or reservoirs near the earth’s surface.

2. Electricity from Geothermal Energy – Electricity generation in power plants require water or steam at very high temperature. Geothermal power plants are generally built where geothermal reservoirs are located within a mile or two of the surface. Thus, these plants use the geothermal heat for generating steam that run a turbine to produce electricity.

3. Geothermal Heat Pumps – These heat pumps use stable temperatures under the ground to heat and cool buildings.

Geothermal Industry – Status and Trends The total installed capacity for electricity worldwide is about 5000 GW (2009. AltProfits estimate). It is considered possible to produce up to 8.3% of the total world electricity with geothermal resources, serving 17% of the world population. Thirty nine countries (located mostly in Africa, Central/South America, and the Pacific) can potentially obtain 100% of their electricity from geothermal resources (Dauncey, 2001).

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Geothermal energy currently provides approximately 0.4% of the world global power generation, with a stable long term growth rate of 5%.1 The world geothermal electricity production increased by 16% from 1999 to 2004, with an annual growth rate of 3% (In the same period, application of direct use geothermal increased by 43%, with an annual growth rate of 7.5%)2. The rate of growth of geothermal energy for electricity production has however increased since then; geothermal capacity for electricity is estimated to increase by an annual rate of about 7% for the period 2007-2013. The United States is the world’s largest producer of geothermal power. Next to the United States, the Philippines is the second largest producer of geothermal power in the world. Historically, among the country's indigenous resources, it is the largest supplier of electricity and will continue to be a significant source of energy for the country. Based on 2001 data, geothermal generation accounted for 22.2 percent of the power mix for the Philippines, and this share has increased further since then. Geothermal Energy – Summary of Potential

• Unlike solar, wind and biofuels, investments in geothermal energy will not equally spread worldwide, but will be concentrated in a few countries such as the USA, Philippines, Indonesia and Japan that have been shown to have high geothermal potential.

• There could be excellent business opportunities for businesses in some of the smaller countries located mostly in Africa, Central/South America, and the Pacific which have a high potential for geothermal but have not exploited it so far.

• If R&D efforts into domains such as enhanced geothermal system are successful, they could result in many more regions around the world starting to invest in geothermal energy.

Wave Energy

Highlights

• Wave energy is indirectly a form of wind energy, because waves are created as a result of winds

• Wave energy currently contributes very little to the world’s electricity generation

1Geothermal Electricity and Combined Heat & Power, European Geothermal Energy Council, 2008 2 Survey of Energy Resources 2007, World Energy Council

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• Significant potential is thought to exist for wave energy along certain coastlines in Australia, the United States, the United Kingdom, the Pacific Islands, Japan, China, Western Europe, South America and Africa.

• Wave energy suffers from the same significant problem that wind energy suffers – variability and unpredictability

• Generating electricity from waves is currently not cost-competitive enough to be scaled to commercial levels

Wave Energy - Technology For wave energy conversion, there are three basic systems

• Channel systems that funnel the waves into reservoirs • Float systems that drive hydraulic pumps • Oscillating water column systems that use the waves to compress air

within a container. The mechanical power created from these systems either directly activates a generator or transfers to a working fluid, water, or air, which then drives a turbine/generator. Among the above, float systems are the most popular. The majority of companies developing wave energy technologies are working on devices called point absorbers. Point absorbers resemble offshore floats / buoys used for marking channels and collecting environmental and meteorological data. These devices are preferred over other types of wave energy devices because of their ability to absorb energy from oncoming waves in all directions. These devices bob in reaction to multi-directional ripples. Other wave energy devices are designed to absorb oncoming energy from only one direction or dimension in space. Such multidirectional absorption, however, poses some problems. For instance, unless the wave energy is tuned to the wave climate in which it is submerged, energy will not flow smoothly through the power-take off system. Companies in the wave energy field are developing advanced tuning systems to tackle this issue. It should be noted that different companies are experimenting with a variety of float systems, each having different designs and shapes. Here’s a description of how the Pelamis Wave Energy Converter (WEC) works (The WEC is a snake-like float): WEC is a concept for extracting energy from ocean waves and converting it into electricity, direct hydraulic pressure or potable water. The system is a semi-submerged, articulated structure composed of cylindrical sections linked by hinged joints. The wave-induced motion of these joints is resisted by hydraulic rams that pump high-pressure oil through hydraulic motors via smoothing accumulators. The hydraulic motors drive electrical generators to produce electricity.

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Wave Energy – Status and Trends Current contribution of wave energy Currently, wave energy contributes insignificant amount to the world’s electricity generation. An independent market assessment estimated the potential world-wide wave energy economic contribution in the electricity market to be on the order of 2,000 TWh/year. That is about 12% of world electricity consumption (based on 2009 data) and is comparable to the amount of electricity currently produced world-wide by large scale hydroelectric projects. The potential world-wide wave energy contribution to the production of electricity is estimated by IEA (International Energy Agency) to be between 10 and 50% of the world’s yearly electricity demand of about 16,000 TWh. The future of wave energy will depend on the efficiencies of the technologies under development. Capital cost will be a primary determinant in the success of wave energy. Other cost variables also play a significant role. Unplanned O&M costs, especially in the event of system failure related to ocean storms can increase the cost of energy significantly. Thus, investing the development of robust devices able to withstand heavy seas and high winds will likely continue to be a primary investment driver in this industry. There have been estimates that investments of over ₤500 billion would be necessary for wave energy to contribute 2000 TWh per year worldwide.

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Wave Energy – Summary of Potential

• Owing to its nascency and lack of mature technologies, the wave energy industry is expected to be in research and pilot phases until about 2012.

• Interest and investments in wave energy can be expected to be strong in the short term in specific countries and regions with high potential - Australia, the United States, the United Kingdom, the Pacific Islands, Japan, China, Western Europe, South America and Africa

Tidal Energy

Highlights • Tides are the result of gravitational forces that the sun and moon exert on

earth. • Tidal energy source is more reliable than wave energy owing to the

predictability of the tides. • A minuscule portion of today’s electricity is generated from tidal sources • There are a few tidal plants currently in existence. • The United Kingdom is a leading country both in terms of research activity

and in terms of support to the sector. 25% of Europe's tidal resources are estimated to be found in Scotland.

Tidal Energy – Classification and Technology A tidal energy generator uses this phenomenon to generate energy. The stronger the tide, either in water level height or tidal current velocities, the greater the potential for tidal energy generation. Tidal Barrages – The concept of tidal barrage is quite old, and there are a few tidal barrages that have been in existence for decades. Tidal barrages make use of the potential energy in the difference in height between high and low tides. Tidal barrages are essentially dams built across a tidal estuary, and the technology used is similar to that used in hydroelectric plants. Owing to the large amount of construction required, tidal barrages suffer from very high infrastructure costs. Another bottleneck for tidal barrages is the shortage of viable sites worldwide; tidal barrages also pose serious environmental issues. Tidal Stream Systems - Tidal stream systems make use of the kinetic energy of moving water to operate turbines. Unlike tidal barrages that require water to be stored, this method relies only on the moving water, and hence method is gaining in popularity because of the lower cost and lower ecological impact compared to barrages. Tidal Lagoons - Offshore tidal lagoon power generation resolves the environmental and economic problems of the barrage system and puts tidal power generation back amongst the choices for commercial-scale renewable power generation. Rather than

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blocking an estuary with a barrage, offshore tidal power generators use an impoundment structure, making it completely self-contained and independent of the shoreline. It is similar to having a circular dam, built on the seabed. Tidal lagoons eliminate the environmental problems associated with blocking off and changing the shoreline. Likewise, the concept of a tidal lagoon is not a recent proposition. As of 2009, No tidal lagoon has ever been built anywhere in the world, and although the technologies used would themselves be classed as mature, the concept itself is currently unproven due to a number of remaining uncertainties over design, construction methods and physical impacts. Types of Tidal Energy Technology Tidal Turbines In many ways tidal turbines used for energy from tidal streams are analogous to wind turbines, in terms of the general shape, mounting and fixing technology, and power take-off system designs. The one critical difference between wind turbines and wave energy turbines is the size. For instance, tidal turbines generating 1 MW of power have sizes that are only about a third the size of a wind turbine with a similar generating capacity. Tidal turbines are arrayed underwater in rows, as in some wind farms. Ideal locations for tidal turbine farms are close to shore in water depths of 20–30 meters (65.5–98.5 feet). The turbines function best where coastal currents run at between 3.6 and 4.9 knots (4 and 5.5 mph). In currents of that speed, a 15-meter (49.2-feet) diameter tidal turbine can generate as much energy as a 60-meter (197-feet) diameter wind turbine. The majority of tidal energy companies are developing horizontal axis turbines that are similar to wind turbines. Other types of tidal turbines being experimented are:

• Reciprocating Tidal Stream Devices - These have hydrofoils which move back and forth in a plane normal to the tidal stream, instead of rotating blades. One design uses hydraulic pistons to feed a hydraulic circuit, which turns a hydraulic motor and generator to produce power.

• Venturi Effect Tidal Stream Devices - In these, the tidal flow is directed through a duct, which concentrates the flow and produces a pressure difference. This causes a secondary fluid to flow through a turbine and generate electricity.

Tidal Barrages Tidal barrages are essentially dams. In this method, a barrage or dam is typically used to convert tidal energy into electricity by forcing the water through turbines, activating a generator. Gates and turbines are installed along the dam. When the tides produce an adequate difference in the level of the water on opposite sides of the dam, the gates are opened. The water then flows through the turbines. The turbines turn an electric generator to produce electricity.

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Tidal Energy Status and Trends Current Contribution of Tidal Energy As of 2009, of the total electricity production from renewables, less than 0.03% is obtained from tidal sources. Electricity generation from tidal energy could be much higher in future, with some estimates suggesting a potential generation in the range 1000 TWh to 3500 TWh. (For comparison, the total electricity generation worldwide was about 17000 TWh in 2008) The United Kingdom is a leading country both in terms of activity and in terms of support to the sector. According to estimates, 20% of UK's total electricity requirement can be harnessed from ocean energy, comprising primarily tidal and wave energy sources. The Carbon Trust has also predicted that marine energy could contribute up to one sixth of the UK's '20% renewable energy by 2020' target. Scotland with its rich ocean energy resources plays an important role. In fact, 25% of Europe's tidal resources and 10% of Europe's wave energy resources are found in Scotland. It has been estimated that if ocean energy technologies continue to be supported and achieve their predicted potential, approximately 3 gigawatts (GW) of installed capacity could be available in the EU by 2020.

Tidal Energy – Summary of Potential

• As in the case of wave energy, tidal energy exploration is expected to be in the research and pilot stages until about 2012.

• While most new explorations into tidal energy are currently being done in Europe (with the UK being a leader in this regard), more countries such as China, Australia and Russia can be expected to invest significantly into tidal energy explorations in the next future

Hydro-energy

Highlights

• Hydro-energy is by far the largest renewable energy source in terms of contribution to the world’s electricity generation, providing about 15% of the total world’s electricity.

• Small hydro sources – which use run of river methods rather than large and expensive dams – are gaining popularity worldwide

• Hydro-electricity is even today cost competitive to electricity generated by coal and natural gas

• Large hydro-electricity generation faces opposition from environmental groups owing to some of the negative effects they have on the surrounding

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environment and owing to the large numbers of people who get displaced. • China, Brazil, Canada and USA are the countries that are the leading users of

hydro-electricity

Hydro-energy Classification and Technology Large-scale hydro-electricity generation works as follows. A dam is built on a large river that has a large drop in elevation. The dam stores large quantities of water behind it in the reservoir. Near the bottom of the dam wall there is the water intake. Gravity causes water to fall through a gate which controls water flow. At the end of the gate there is a turbine propeller, which is turned by the moving water. The shaft from the turbine goes up into the generator, which produces the power. Power lines are connected to the generator that carries electricity to consumers Types of Hydropower Plants Some hydropower plants use dams and some do not. Many dams were built for other purposes and hydropower was added later. In the United States, there are about 80,000 dams of which only 2,400 produce power. The other dams are for recreation, stock/farm ponds, flood control, water supply, and irrigation.

Hydropower plants range in size from small systems for a home or village to large projects producing electricity for utilities. There are three types of hydropower facilities: impoundment, diversion, and pumped storage.

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Impoundment The most common type of hydroelectric power plant is an impoundment facility. An impoundment facility, typically a large hydropower system, uses a dam to store river water in a reservoir. Water released from the reservoir flows through a turbine, spinning it, which in turn activates a generator to produce electricity. The water may be released either to meet changing electricity needs or to maintain a constant reservoir level. Diversion A diversion, sometimes called run-of-river, facility channels a portion of a river through a canal or penstock. It may not require the use of a dam The Tazimina project in Alaska is an example of a diversion hydropower plant. No dam was required. Pumped Storage When the demand for electricity is low, a pumped storage facility stores energy by pumping water from a lower reservoir to an upper reservoir. During periods of high electrical demand, the water is released back to the lower reservoir to generate electricity. Sizes of Hydro Power Plants Facilities range in size from large power plants that supply many consumers with electricity to small and micro plants that individuals operate for their own energy needs or to sell power to utilities. Large Hydropower Large hydropower facilities have large electricity generating capacities – usually more than 30 megawatts. Small Hydropower Small hydropower facilities have a small-medium electricity generating capacity - usually in the range of 100 kilowatts to 30 megawatts. The total installed capacity of small hydro power projects worldwide is about 50 GW, against potential estimates of over 200 GW (2008 data). Small hydropower projects are normally run-of-the-river schemes with no storage of water. The definition of small hydro varies slightly from country to country; however, a value of up to 10 MW total capacity is becoming generally accepted. Power projects above 25 MW are dubbed as large hydro projects. Many think that small hydropower is one of the most environmentally benign forms of energy generation available to us today. For a small-hydro project to be economically viable, it is essential to know whether there will be sufficient discharge available or not. As a normal practice flow duration

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curves are used to determine the dependable flows. The flow duration curve is a plot that shows the percentage of time that flow in a stream is likely to equal or exceed some specified value - such as the volume of flow. Hydro-energy – Status and Trends

Regional Scenario - Hydro-energy Capacities Country wise

Country

Annual Hydroelectric

Power Generation(Twh)

Installed Capacity

(gw) Capacity

Factor

% of All Electricity Produced

China 563.3 171.52 0.37 17.18 Brazil 371.5 69.08 0.56 90.0 Canada 368.2 88.974 0.59 61.12 USA 250.8 79.511 0.42 5.74 Russia 179 45 0.42 17.64 Norway 135.3 27.528 0.49 98.25 India 122.4 33.6 0.43 15.8 Venezuela 83.9 - - 67.17 Japan 83.6 27.229 0.37 7.21 Sweden 66.2 16.209 0.46 44.34 France 63.6 25.335 0.25 11.23

Most data pertains to 2006 and beyond, collected from multiple sources Highlights of the Above Table

• It is interesting to see that for Norway, almost all the electricity is from hydro. Brazil follows close with 90% from hydro.

• Countries such as Venezuela and Canada also generate large percentages of their electricity from hydro. For these two countries, one of the reasons is possibly their relatively low coal reserves. Venezuela has about 500 Million T of recoverable coal deposits while Canada has about 10 billion T. Contrast this with the coal reserves of USA (over 200 billion T), Russia (about 200 billion T), China (over 100 billion T) and India (over 100 billion T). It is pertinent to note here that Brazil has relatively low recoverable coal deposits as well (about 10 billion T).

Large Hydroelectric Power Plants Worldwide (Based on data collected in Sep 2008) 1) Three Gorges Dam, 17600 MW - Three Gorges Dam is the hydroelectric power plant being developed on river Yangtze River in Sandouping, Yichang, Hubei, located in China. This is the largest hydroelectric power plant with the power generation capacity of 22,500 MW when completed. At present the power plant produces 17600MW of power. As per the plans the Three Gorges Dam hydroelectric power plants is to become fully operational by the year 2011.

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2) Itaipu hydroelectric power plants, 14000 MW - Before Three Gorges Dam, the Itaipu hydroelectric power plant was considered to be the largest hydroelectric power plants of the world. Itaipu power plant is developed on Parana River in the border areas around Brazil and Paraguay and 15 kilometers towards North of Friendship Bridge. There are 20 power generating units at Itaipu each producing 700MW of power totaling 14 GW of power. 3) Guri Dam, 10,200 MW - Guri Dam is the hydroelectric power plant developed on river Caroni River in the Bolivar state of Venezuela. In the first phase the Guri Dam produced 2065 MW of power from 10 power generation units. The second phase of Guri Dam comprises of 10 more power generation units each with capacity of 630MW. Thus the total power production capacity of the hydroelectric power plant of Guri Dam is 10,200 MW. Guri Dam is 1300 meters long and 162 meters high. 4) Tucurui Dam, 8379 MW - Tucurui Dam is the hydroelectric power plant developed in Tocantins River in Tucurui county of Brazil. This is next largest hydroelectric power plant in Brazil after Itaipu. There are total 24 power generation units installed at Tucurui hydroelectric power plants with the total power generation capacity of 8370MW. 5) Grand Coulee Dam, 6809 MW - Grand Coulee Dam is the hydroelectric power plant developed on Columbia River in Washington State of United States. It is the largest hydroelectric power plant in US. The work on Grand Coulee hydroelectric power plants was completed in the year 1980 with the total power generation capacity of 6809 MW. 6) Sayano-Shushenskaya hydroelectric power plant - Sayano-Shushenskaya is the largest hydroelectric power plant in Russia developed on Yenisei River near Sayanogorsk in Khakassia. Sayano-Shushenskaya hydroelectric power plants was completed in the year 1978 and it has total power producing capacity of 6400 MW. Yearly the plant can produce 25,500GWh of power. This is the gravity type of dam with 245 meters height, crest length of 1066 meters, and maximum water head of 220 meters. 7) Krasnoyarsk hydroelectric power plant - Krasnoyarsk is the second largest hydroelectric power plant of Russia, developed on Yenisey River. The work on Krasnoyarsk hydroelectric power plant was completed in the year 1964 and it has power generation capacity of 6000MW. 8) Robert-Bourassa - Robert-Bourassa is the largest hydroelectric power plants of Canada with the power producing capacity of 5616MW. Robert-Bourassa hydroelectric power plant was commissioned in the year 1979-81. The total number of power generation units in the plant are 16 each having power generation capacity of 351MW and Francis Turbine. It is the world’s largest underground plant located 140 meters underground. 9) Churchill Falls hydroelectric power plant - Churchill Falls is the second largest hydroelectric power plant of Canada located on Churchill River in Newfoundland and Labrador. The total power production capacity of Churchill Falls Hydroelectric power plant is 5428MW. There are a total of 11 power generation units, each with the

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capacity of 494MW and having vertical type of Francis turbines. The total head of water is 312 meters. 10) Bratsk hydroelectric power plant - Bratsk hydroelectric power plant is located near Bratsk in Russia and it developed on Angara River. The plant was commissioned in the year 1967 and it annually produces 22.6TWh of power. The total power generation capacity of Bratsk hydroelectric power plant is 4500MW. There are 18 power generation units each with the capacity of 250MW and is equipped with Francis turbine. The Bratsk hydroelectric power plant provides power to hundreds of factories. The major power is consumed by Bratsk Aluminum Plant amounting to 75% of the total power produced by the Bratsk hydroelectric power plant. Prominent Hydro Projects

Prominent Ongoing Projects for Hydro Energy

Name Maximum Capacity Country

Construction Started

Scheduled Completion

Three Gorges Dam 22,500 MW China 14-Dec-94 2011 Xiluodu Dam 12,600 MW China 26-Dec-05 2015 Xiangjiaba Dam 6,400 MW China 26-Nov-06 2015 Longtan Dam 6,300 MW China 1-Jul-01 Dec-09 Nuozhadu Dam 5,850 MW China 2006 2017

Jinping Hydropower Station 4,800 MW China 30-Jan-07 2014 Laxiwa Dam 4,200 MW China 18-Apr-06 2010 Xiaowan Dam 4,200 MW China 1-Jan-02 Dec-12 Jinping Hydropower Station 3,600 MW China 11-Nov-05 2014 Pubugou Dam 3,300 MW China 30-Mar-04 2010 Goupitan Dam 3,000 MW China 8-Nov-03 2011 Guanyinyan Dam 3,000 MW China 2008 2015 Boguchan Dam 3,000 MW Russia 1980 2012 Chapetón 3,000 MW Argentina Dagangshan 2,600 MW China 15-Aug-08 2014 Jinanqiao Dam 2,400 MW China Dec-06 2010

Guandi Dam 2,400 MW China 11-Nov-07 2012 Liyuan Dam 2,400 MW China 2008 Tocoma Dam Bolívar State 2,160 MW Venezuela 2004 2014 Ludila Dam 2,100 MW China 2007 2015 Bureya Dam 2,010 MW Russia 1978 2009

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Shuangjiangkou Dam 2,000 MW China Dec 2007 Ahai Dam 2,000 MW China 27-Jul-06 Lower Subansiri Dam 2,000 MW India 2005 2009 Highlights

1. Total capacity (maximum) of ongoing projects is 107820 MW (108 GW) 2. Close to 95000 MW of capacity in ongoing projects are in China, almost 90%

of the total 3. A review of China’s hydro-projects show that some of their projects are of

very large-scale (Three Gorges Dam (22.5 GW), Xiluodu Dam (12.6 GW)) Upcoming Large Hydro Projects

Name Maximum Capacity Country

Construction Starts

Scheduled Completion

Grand Inga 40,000 MW

Democratic Republic of the Congo 2010 Unknown

Baihetan Dam 12,000 MW China 2009 2015

Siang Upper HE Project 11,000 MW India 2012 Unknown

Wudongde Dam 7,500 MW China 2009 2015

Rampart Dam 4,500 MW United States

Maji Dam 4,200 MW China 2008 2013 Songta Dam 4,200 MW China 2008 2013 Liangjiaren Dam 4,000 MW China 2009 2015 Jirau Dam 3,300 MW Brazil 2007 2012 Pati Dam 3,300 MW Argentina Santo Antônio Dam 3,150 MW Brazil 2007 2012 Lianghekou Dam 3,000 MW China 2009 2015

Lower Churchill 2,800 MW Canada 2009 2014 HidroAysén 2,750 MW Chile 2020

Subansiri Upper HE Project 2,500 MW India 2012 Unknown

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Changheba Dam 2,200 MW China 2009 2015

Banduo 1 Dam 2,000 MW China 2009 Highlights

The total capacity of planned hydro-projects is 112400 MW The hydro project in Congo is of a mega-size, almost double the largest

onoing project size in China. China is a leader in the number of planned projects too – it has 8 out of 17

planned hydro-electric projects

Hydro-energy – Summary of Potential

• Potential investments in large hydro-electric power will continue to be dominated by governments and large businesses / companies

• Owing to its large current installed base and its maturity as an industry, the growth rate in hydro energy will be much lower than those for many other renewable energy sources.

• Small hydro is an area where small and medium businesses can expect excellent business opportunities now and in the near future, as this segment is expected to grow three times as fast as large hydro in installed capacity.

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Section 3

Insights into unique business opportunities This section will provide insights on a specific, unique business opportunity in the renewable energy field. The unique business opportunity chosen for analysis is biomass gasification. The sample provided below is representative of the research done by us for international clients. For biomass gasification, we do the analysis on the following aspects:

o Definition o Market need o Uniqueness o Process o Status o Current and Future Market Potential o Economics o Challenges and Efforts o Trends o Case Studies

Unique Business Opportunity Chosen - Biomass Gasification Definition Biomass gasification refers to the incomplete combustion of biomass, resulting in production of combustible gases consisting of Carbon monoxide (CO), Hydrogen (H2) and traces of Methane (CH4). The resulting mixture, called syngas, can be used to run turbines to produce electricity, to make ethanol, biodiesel and other high-calorie biofuels, and can be used to produce, in an economically viable way, methanol – an extremely attractive chemical which is useful both as fuel for heat engines as well as chemical feedstock for industries. Market Need A process that can convert all types of cheap or zero-cost biomass waste into liquid fuels, electricity and chemicals in a scalable and cost-effective manner Uniqueness

• While biomass gasification in itself is a well-established technology (it has been around for many decades), the use of biomass gasification for electricity generation is only now picking speed.

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• The other aspect of biomass gasification that makes it unique is the range of energy products that it can deliver – electricity, heat, synthetic fuels and key chemicals.

Process Industrial-scale gasification is currently mostly used to produce syngas. In the last few years, gasification technologies have been also developed that use organic waste and biomass as feeds. Gasification of Biomass Although gasification reactions can take many forms, these processes are defined by cranking up the temperature to between 650 and 1,400oCelsius. There are two approaches to achieving these elevated temperatures: direct heating and indirect heating.

• In direct heating, a relatively small amount of oxygen is added to the reactor. If this gas is made up of more than 90 percent oxygen, the resulting syngas will be rich in carbon monoxide and hydrogen. The contrasting approach uses various means of indirect heat transfer to achieve high operating temperatures, including hot sand circulation and exotic alloy heat exchangers

• The least expensive approach to biomass gasification is the direct approach, which adds air—not pure oxygen—to the system with simple blower technology.

A gasification system consists of four main stages

• Feeding of the feedstock • Gasifier reactor where the actual gasification occurs • Cleaning of the resultant gas • Utilisation of combustible gas

Biomass gasification offers an attractive alternative energy system. Biomass gasification technology is also environment-friendly, because of the firewood savings and reduction in CO2 emissions. Other advantages of biomass gasification include

• Easy to operate and maintain • Provides energy security • Generates local employment • Gasifiers can be designed for rural areas

Status The following points explain the current status of biomass gasification: • Technology well-established and mature.

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• Select countries have been using the technology in conjunction with chemical catalysis to derive a range of hydro-carbon fuels.

• The capital costs and operational costs are still high, though they have decreased significantly from their earlier levels.

• Feedstocks that are being used

o Organic waste and organic products from the woodworking industry o Straw and manure from farming o Energy crops from farming o Wastes from the food industry o Wastes from households and industry o Sludge from sewer plants o Aquatic biomass

Current and Future Market Potential • The world syngas market is approximately 6 EJ/Year or about 70 TWh equivalent

of electricity. (For comparison, the world consumes as about 18000 TWh of electricity every year). However, very little of this syngas is used for electricity currently. About 50% is used for ammonia production (for fertilizers), 25% for producing hydrogen to be used in refineries, about 10% for methanol production, 5% in electricity production, and about 8% for gas to liquid fuels production

• Potential to produce a range of biofuels, or electricity, from practically any organic feedstock

• Worldwide, gasification has the potential to produce a significant amount of biofuels in the next 5-7 years.

Economics The overall economics of biomass gasification depends on the following parameters: • Size of the plant • Biomass price and transportation costs • Incentives for fuel generation from renewables • Type of technology: if it used a simple gasification process or a two stage process

(pyrolysis +gasification) Indicative Costs (for producing liquid fuels using gasification)

Capital Cost Levelized Operating Cost* Large gasification + Large FT: varies between 2400 $/T to 1400 $/T annual diesel output, for diesel output capacities of ranging from 0.5-2.5 million T per annum

Small gasification + Small FT: varies between 9000 $/T to 8500 $/T annual diesel output, for diesel output capacities of ranging from 0.5-2.5 million T per annum

About $1.7 per gallon of fuel produced for large gasification systems, and $3.2 for small gasification systems

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*: Represents the total cost of fuel production; takes into account all operational costs, as well as factors in the capital cost component; this includes 80 cents per gallon of pure operating costs. Indicative Costs (for producing electricity using gasification) The cost of electricity production using syngas from gasification is about 5-6 cents per KWh, without the feedstock cost. At a waste biomass cost of $50 per T, and taking into account the amount of biomass required for generating 1 KWh of electricity, the total cost of electricity production from syngas will be in the range of 10-12 c per KWh. Challenges and Efforts • High capital costs - The high capital cost is the biggest bottleneck for biomass

gasification efforts; the operational costs are relatively high as well, when compared to other conversion technologies.

• Reliability - The single train reliability of the biomass gasification process results in added downtime.

• Redundancy - Currently, the gasification process uses a number of redundant components, which increases the overall cost of the process

• Lack of flexibility - Inability of current commercial gasifiers to economically process multiple feedstocks. This again has a bearing on the overall cost of the process.

• Required efforts - In order to overcome the above-mentioned challenges, gasification systems need improvements. These improvements center on technology advances in the gasifier and associated systems. These advances are crucial to enhance feedstock flexibility; improve conversion efficiency, economics, and system reliability

Trends Some of the key trends in biomass gasification are:

• The two-stage gasification process • Plasma gasification • Range of products being produced • Small and large scale projects follow different development processes • Integrated biorefineries that involve both biochemical and thermochemical

processes The Two-stage Gasification Process Rather than having the entire gasification done in one stage, of late, companies have started exploring the two-stage gasification process in which pyrolysis constitutes the first stage and gasification constitutes the second.  

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The Two ‐ Stage Gasification Process  The Two - Stage Gasification Process consists of the following steps

Gas

The Two - Stage Gasification Process

Bio‐oil Syngas Products 

Steam/O2 

Char 

Inert gas 

Biomass  Flash Pyrolysis 

 Gasification 

Chemical Processes 

The first stage in the two-stage gasification process is the pyrolysis stage and the second stage is the gasification stage. Pyrolysis is the decomposition of organic materials by heating without oxygen or other agents. At the end of the first stage, the products that result are bio-oil (an oil similar to that of furnace oil), producer gas and bio-char. The bio-oil is used for the gasification process in the second stage. Benefits of the Two-stage Gasification Process

• The two stages gasification routes gives rise to an easy operable high pressure gasification step by use of a pump ( for the bio-oil) instead of a compressor ( for producer gas from direct gasification or produced syngas) with large economic advantages

• In the flash pyrolysis step a large part of the contaminants are already removed and therefore is avoided excessive gas cleaning

• By using a thermal gasification instead of catalytic, problems concerning deactivation are by- passed

• The use of high gasification temperatures results in a tar free gas • Pryolysis and gasification can be geographically decoupled

• The worldwide gasification industry has grown by 10% per year during 2000-

2006. o The 2007 World Gasification Database shows that current gasification

capacity has grown to 56,238 megawatts thermal (MWth) of syngas output at 144 operating plants with a total of 427 gasifiers (operating plus spares).

o Gasification plants are now operating in 27 countries. The Asia/Australia region, with 34 percent of the total capacity, is now the leading region in

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the world for syngas production. Rapid growth in China is fueling this surge.

Plasma Gasification Plasma arc gasification is a waste treatment and waste-to-energy technology primarily used for municipal solid waste. This process uses electrical energy and the high temperatures created by an electrical arc gasifier to break down waste primarily into elemental gas and solid waste (slag), in a device called a plasma converter. The process has been intended to be a net generator of electricity, depending upon the composition of input wastes, and to reduce the volumes of waste being sent to landfill sites. Currently, there are only a few waste-to-energy facilities that use the plasma gasification technology, and thus analytical data are not fully available in order to compare this technology with competing technologies on cost and efficiency. While plasma gasification has its advantages, it is likely that this technology will be more suited to municipal solid waste than to biomass waste. Range of Products Explored The chart below provides details of the range of energy fuels and chemicals that can be derived using the gasification process:

Biomass

Syngas Process

Syngas

Syngas to Liquids Process

Fischer-Tropsch Upgrading Diesel, Naphtha, gasoline, lube products and other hydrocarbon fuels

Syngas to Chemicals Technologies

• Acetic Acid • Methanol • Hydrogen • Mixed Alcohols (Ethanol, Propanol) • Others (Eg DME)

Syngas to Electricity

Syngas Turbine Electricity

  Small and Large Scale Projects Follow Different Development Processes In addition, small and large scale projects have followed different development processes. In the case of large scale, interest has shifted from electricity generation to biofuel production, primarily due to the failed demonstration projects of the technology coupled with combined cycle for electricity generation. On the other hand,

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in small scale projects, cogeneration applications have gained interest over heat production. Integrated Biorefineries that Comprise both Biochemical and Thermochemical Processes Biorefineries are similar to petroleum refineries in concept; however, biorefineries use biological matter (as opposed to petroleum or other fossil sources) to produce transportation fuels, chemicals, heat and power. Integrated biorefineries employ various combinations of feedstocks and conversion technologies to produce a variety of products, with the main focus on producing biofuels. By-products include chemicals, heat and power. Economic and production advantages increase with the level of integration in the biorefinery. The benefits of an integrated biorefinery are numerous because of the diversification in feedstocks and products. Some biorefinery concepts solely produce ethanol or biodiesel, whereas other concepts fully incorporate livestock farming or heat and power and other biobased products. Most of these refineries are nearly self-sustaining in respect to energy consumption. A number of biorefinery proposals are today keen on involving gasification processes as a key technology in their concept. This is owing to the fact that gasification process can work with a range of biomass feedstock, as well as produce a wide range of fuel and chemical end-products. Biomass Gasification Case Study 2 MWEl Biomass Gasification Plant in GÜSSING (Austria) Overview In Austria, the high efficient production of electricity and heat from organic feedstocks in small, decentralized power stations was first realized in Güssing by implementing of a new fluidized bed combustion process.

The project realization was possible due to the formation of a consortium called Renet Austria” that included a construction company, a regional utility, an academic and Research University, and a district heating company The system consists of the following main components • Biomass feeding system • Gasifier (gasification and

combustion zone) • Product gas cooler • Product gas filter • Product gas scrubber

• Product gas blower • Gas engine • Water boiler • Flue gas cooler • Flue gas filter • Flue gas (gas engine) cooler.

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Schematic flow diagram of the biomass power plant in Guessing (Source: T. Pröll, April 2004)

Characteristics of the Güssing biomass CHP power plant Type of plant Demonstration project Fuel input power 8.000 kW Electrical output 2.000 kW Thermal output 4.500 kW Electrical efficiency 25,0 % Thermal efficiency 56,3 % Electrical/thermal output 0,44 Total efficiency 81,3 % Description of the gasification technique

The gas production reactor was developed together by the Institute of Chemical Engineering (Technical University of Vienna) and by AE Energietechnik and is internationally known under the name of FICFB-gasification system (fast internally circulating fluidized bed gasifier).

The fundamental idea of this gasification system is to physically separate the gasification reaction and the combustion reaction in order to gain a largely nitrogen-free product gas.

The endothermic gasification of the fuel takes place in a stationary fluidized bed. This is connected via a diagonal chute to the combustion section, which is operated as a circulating fluidized bed. Here, transported along with the bed material, any non gasified fuel particles are fully combusted. The heated bed material delivered there is then separated and brought back into the gasification section.

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The heat required for the gasification reaction is produced by burning carbon brought along with the bed material into the combustion section. The gasification section is fluidized with steam, the combustion section with air and the gas flows are separately streamed off. Thus a nearly nitrogen-free product gas with heat values of over 12000 kJ/Nm

3 (dry) is produced. The principal of this gasification process is shown in the

following figure. Principle of FICB Process

Additional fuel 

Circulation

Product gas 

Gasification Combustion

Heat

Flue gas 

Biomass 

Steam  Air  Economics and Cost

In 2004, when they started, the capital cost was about $7.5 million per MW.

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Section 4 Preliminary techno-economic feasibility analysis - Small Hydro In this section, we have provided a brief techno and economic feasibility study for a sample renewable energy source. The RE source we have chosen is small hydro. Introduction and Definitions While large hydro power is an old concept and is today by far the largest renewable source contributor to the world’s electricity (about 16% of total global electricity), small hydro is relatively new and is beginning to make a mark as an important renewable source. Small Hydro - Quick Facts

• Small hydropower systems capture the energy in flowing water and convert it to usable energy

• Small hydropower systems have capacities of up to 25 MW Small hydropower facilities have a small-medium electricity generating capacity - usually in the range of 100 kilowatts to 30 megawatts. The total installed capacity of small hydro power projects worldwide is about 50 GW, against potential estimates of over 200 GW (2008 data). Small hydropower projects are normally run-of-the-river schemes with no storage of water. Many think that small hydropower is one of the most environmentally benign forms of energy generation available to us today. Concept Potential and kinetic energy of a mass of water flowing from a higher level to a lower level can be converted into electrical energy. The hydrological potential of water is determined by two parameters: head (H) and flow (Q). Head is crucial, especially for SHP. It is not really necessary to have the water flowing rapidly. The Gross Head (H) is the maximum difference between the levels of falling water. The turbine's actual head is less than the maximum, due to losses caused by friction with construction elements and the internal friction of the water. Sites are classified according to head size:

• 'low head', for H <10 m, • 'medium head', for H ranging between 10 - 50 m, • 'High head', for H >50 m.

The Flow (Q) - expressed in m3/s - is the volume of water flowing through a given Cross-section of the stream per second

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Electrical power and energy is the amount of work done in a fixed time interval. A turbine converts water pressure energy into the mechanical energy of the turbine shaft, which drives a generator to produce electrical energy. The energy unit is Joule (J); and the electrical energy unit is the kilowatt-hour (kWh): 1 kWh = 3600 J. Power is the amount of energy per time interval unit. Therefore, the electrical power of the generator is defined by the following formula: P = A*B*g*Q*H, where: P - electrical power [W], A - hydraulic efficiency of the turbine, B - water density = 1000 kg/m3, g - acceleration of gravity = 9.81m/s2, Q - Flow volume of water flowing through the turbine in time unit, [m3/s], H - head - effective pressure of water flowing into the turbine [m]. Advantages of Small Hydro

• It is a renewable source of energy. It is one of the least CO2 emitting responsible power sources, even considering the full business value chain.

• It is a proven technology indigenously available in India. • Setting up small hydro projects does not require any special geological

contribution/ ground conditions. • SHPs are environmentally friendlier than conventional hydro plants. This is

owing to the fact that SHPs do not involve setting up of large dams and thus not associated with problems of deforestation, submergence or rehabilitation. They also have significantly less impact on flora and fauna (aquatic and terrestrial) and bio-diversity when compared to large hydro projects

• It serves to enhance economic development and living standards especially in remote areas with limited or no electricity at all. With the development of small hydro, rural communities will be able to attract new industries.

• It can be tapped wherever water flows along small streams, medium to small rivers, irrigation dam-toe/ canal drop sites etc.

• Low scales of investment make small hydro affordable to many small, private entrepreneurs.

• These projects are of relatively short gestation periods. • Small hydro is significant for off-grid, rural, remote area applications in far

flung isolated communities having no chances of grid extension for years to come.

• Capital investment is less in small hydro compared to others scheme such as thermal as well as large hydro.

• Under Kyoto Protocol, small hydro projects can earn extra revenue through Clean Development Mechanism (CDM).

Small Hydro Barriers and Bottlenecks Despite the fact that various incentives are available from IREDA and MNRE for development of the small hydro power schemes, the momentum for small hydro development is less, owing to the following reasons:

• Low load factor and revenues - Majority of small hydro projects are located in remote places and are not connected with the grid and in general stand alone

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power stations. Therefore, transmission of the surplus power to other places is not possible. Accordingly, they can fulfill the need of local area only. In case the demand is less, then the power station will continue to run at the reduced load i.e., at low load factor, thereby loss in power generation which in turn result in poor revenue collection.

• Operation and maintenance cost - Inaccessibility of small hydro plants due to poor transport and communication could result in inadequate support for operations and maintenance. Another factor due to which operation & maintenance cost could be relatively high is owing to many unscheduled maintenance requirements. Such unscheduled maintenance requirements could be high in frequency because small hydro is a relatively new concept and the design is currently based on inadequate hydrological and geological data.

• Insufficient management for operations - Due to remoteness, the technical and management skill of local is not sufficient for operation of the power plants. Therefore, lot of training is to be provided to the managerial and operational staff.

• Inadequate quality and performance - The quality and performance of small power stations are not as good as that of bigger power stations, as these power plants are generally designed on the basis of short term raw data. Thus the ground conditions of operation are much different from the conditions taken for design. Due to such differences the quality and performance of equipment becomes a constraint.

• Statutory clearances – Getting the various clearances required - forest clearances, defense clearances, environmental clearances; land acquisition etc. – take considerable amount of time in some cases.

• Transmission lines - The major impediment to majority of SHP stations is non-availability of high voltage transmission lines, resulting in heavy line losses wherever the load centers are spaced far apart.

Techno Feasibility Details - Data and Specifications The capacity specifications of small hydro vary slightly from country to country; however, a value of up to 10 MW total capacity is becoming generally accepted. Power projects above 25 MW are dubbed as large hydro projects. Classification of Micro, Mini & Small Hydro Schemes in India Type Station Capacity Unit Rating Micro Upto 100 KW Upto 100 KW Mini 101 KW to 2000 KW 101 KW to 1000 KW Small 2001 KW to 25000 KW 1001 KW to 5000 KW Capacity factor for small hydro is about 50% (For large hydro, it is about 45%) Step by Step Approach for Setting Up a Small Hydro Plant Step 1: Project identification: Depending upon the availability of a suitable site, a project is identified either by the government or the entrepreneur.

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Step 2: Project allotment: The government puts a group of projects up for bidding, which sees participation from interested parties. Based on the lowest quotation, the government allots projects Step 3: Pre-feasibility report: Once the project has been allotted, the entrepreneur is expected to carry out a study of the site and submit a pre-feasibility report to the government. If the project is not found to be viable, the government returns the earnest money it received at the time of the allotment. Step 4: Detailed project report: If both parties are satisfied about the viability of the project, the entrepreneur works on a detailed project report that closely looks at aspects related to finance, technology, man power, etc. Step 5: Techno-economic clearance: The detailed project reports are submitted to the government based on which and other aspects, the entrepreneur will have to get a techno-economic clearance from a committee of experts set up by the government. Step 6: Environmental and other clearances: Only after the techno-economic clearance has been granted by the government, can the private firm approach various departments for clearances. These include the departments such as forest, wildlife, pollution control board and fisheries. Step 7: Financial closure: This involves arranging project finance, paying the relevant levies and taxes, and finalizing contracts for civil and mechanical work. Step 8: Commencement of construction: With everything now in place, the work on the project is started. Primary Machineries and Equipments Civil Works

• Diversion weir • Desilting arrangement • Water conductor system

Electro-mechanical works

• Turbine • Generator • Switchgear and protection • Control equipment

Switchyard and Interconnection Bay

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Key Control Equipments Present in a Small Hydro Plant Mechanical equipment Governing systems • Electrohydraulic

converters, moving coil valves

• Control valves • Emergency shut-down

valves • Shut-off valves • Relay valves Pressure oil supply system Mechanical and hydraulic control equipment for butterfly and spherical valves Instrumentation

Electrical equipment • Digital protection

systems • Digital excitation

system • Voltage regulator • Reactive power control• LV Switchgears • LV distributors Power supply • Batteries • UPS units Synchronizers Security system

Unit automation and plant control • HMI • Digital turbine

governor • Joint control • River control • Continuous monitoring

Economic Feasibility Details Cost break-up for Small Hydro Capital costs

• Setting up a 1 MW plant costs approximately Rs. 5.5-7 crores • The capital cost is broadly divided under three heads

o Land o Machinery

o Construction (including labour)

Capital Cost Break-up Element of Investment Contribution to Cost % Hydrotechnical constructions 60 Turbines 25 Buildings 5 Electrical equipments 10 Operational costs Operational cost for small hydro is about Rs. 1.25 per kWh

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Total Cost of Electricity Generation from Small Hydro Operational cost for small hydro: Rs. 1.25 per KWh Amortized capital cost (taking 15 years amortization period): Rs. 1 per KWh Total levelized cost for electricity generation: Rs. 2.25 per KWh Return on Investments Price at Which Electricity Sold Rs / KWh

Annual RoI (%)

3 10.9 3.5 13.1 4 19.7 4.5 24.1 Note: The return on investment has included the effect of carbon credits on revenues @ 50 paise per kWh of carbon credit revenues Timeline and Milestones Total period from concept to commissioning – 15-20 months Pre-construction period – 8-10 months

• Surveys and investigations • Feasibility studies • Detailed project report • Clearances • Detailed designs and drawings • Financial closure • Finalization of contracts

Construction period (including commissioning): 7-10 months Financing Small Hydro Indian agencies and financial institutions involved in the financing of small hydro projects:

• IREDA (Indian renewable Energy Development Agency), World Bank, Asian Development Bank and Japan Bank for international cooperation etc. finance small hydro projects.

• Govt. encourages private sectors for their participation in development of small hydro power.

Return on investment and payback period The payback period for small hydro systems (including the financial costs of the investment) is in the range of 4-6 years with existing technologies, depending on local

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factors and the price at which the electricity can be sold. It is expected that the payback periods could be shortened considerably in the next five years. Owing to its ease of installation and operation, the payback period for small hydro systems is much better than large hydro sources. Cost components in which significant cost reductions possible in future Significant cost reductions in the near and medium term can be expected primarily in turbines, owing to improved turbine designs. The following activities and efforts are expected to result in lower costs in future:

• Control systems and maintenance of hydropower plants • Improved turbine designs • Utilization of better pump turbines • Sand erosion control in hydraulic machines • Enhance efficiency measurement techniques • Development of new lubricating systems that have no risk of leakage.

Revenue components The primary revenue components are:

• Revenue from selling electricity • Revenue from carbon credits

Industry / Market Analysis India has an estimated small hydro potential of about 15,000 MW. Out of this total potential of small hydro identified so far, is 10,265 MW through 4278 sites. As on 31.03.2005, 523 small hydro projects (up to 25 MW) with an aggregate capacity of 1705 MW have been installed. Besides these, 205 projects with total capacity of nearly 480 MW are under construction. Target capacity addition

• Tenth plan (2002-07) : 600 MW • Eleventh plan (2007-12) : 2000 MW

A Total 4750 MW has been added in the 11th 5 Year Plan so far

• Parvati Stage-II, H.P. NHPC 800MW • Loharinagpala, Uttarakhand NTPC 600MW • Tapovan Vishnugad, Uttarakhand NTPC 520MW • Subansiri Lower, Ar. Pradesh NHPC 2000MW • Kameng, Ar. Pradesh NEEPCO 600MW • Sawara Kudu, H. P. PVC 110MW • Lower Jurala, A. P. APGENCO 120MW

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State wise Identified Small Hydro Projects in India (Up to 25 MW Capacity)  Sl.No  State  Total

No Capacity (MW) 1  Andhra Pradesh  377 250.50 2  Arunachala Pradesh  452 243.47 3  Assam  40 119.54 4  Bihar  74 149.35 5  Chhattisgarh  47 57.90 6  Goa  4 4.60 7  Gujarat  287 186.37 8  Haryana  23 36.55 9  Himachal Pradesh  288 418.68 10  Jammu & Kashmir  208 294.43 11  Jharkhand 89 170.05 12  Karnataka 221 534.76 13  Kerala  207 455.53 14  Madhya Pradesh  85 336.33 15  Maharashtra  221 484.50 16  Manipur  99 91.75 17  Megalaya 90 197.32 18  Mizoram  53 135.93 19  Nagaland 84 149.31 20  Orissa  206 217.99 21  Punjab  122 124.22 22  Rajasthan 55 27.82 23  Sikkim  70 214.33 24  Tamil Nadu  155 373.46 25  Tripura  10 30.85 26  UT (A&N Islands)  5 1.15 27  Uttar Pradesh  211 267.06 28  Uttaranchal  354 1478.24 29  West Bengal  141 213.52   Total  4278 10,265.45  SHP Potential • Potential - 15,000MW. • Identified Potential - 11,356MW (4554 sites). • Installed Capacity - 1975MW (602 projects). • Under Implementation - 649MW (219 projects)

o 10th Plan Target - 600MW o Achievement - 537MW o Target for 2007-08 - 200MW

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State wise Potential for SHP in India Top Ten SHP potential State Sites (Nos) Potential in MW Achievement in MW

Himachal Pradesh 323 1624 141.61 Uttaranchal 354 1478 75.67

J&K 201 1207 111.83 Karnataka 258 652 416.50

Maharashtra 234 1160 209.33 Kerala 252 514 98.12

Tamil Nadu 147 338 89.70 MP 85 336 51.16 U.P 211 267 25.10 A.P 286 254 ---

State-wise Details of the Identified / Future Sites for SHP (as of Mar 2009)

S.No Name of State # of Sites Identified Total Capacity (in MW)

1 Andhra Pradesh 489 552.29 2 Arunachal Pradesh 566 1333.04 3 Assam 60 213.84 4 Bihar 94 213.75 5 Chhattisgarh 164 706.62 6 Goa 9 9.10 7 Gujarat 292 196.97 8 Haryana 33 110.05 9 Himachal Pradesh 547 2268.41

10 Jammu & Kashmir 246 1411.72 11 Jharkhand 103 208.95 12 Karnataka 128 643.16 13 Kerala 247 708.10 14 Madhya Pradesh 99 400.58 15 Maharashtra 253 762.58 16 Manipur 113 109.10 17 Meghalaya 102 229.81 18 Mizoram 75 166.94 19 Nagaland 99 196.98 20 Orissa 222 295.47 21 Punjab 234 390.02 22 Rajasthan 67 63.17 23 Sikkim 91 265.54 24 Tamil Nadu 176 499.31 25 Tripura 13 46.86 26 Uttar Pradesh 220 292.16 27 Uttaranchal 458 1609.25 28 West Bengal 203 393.79 29 A&N Island 12 7.91 TOTAL 5,415 14,305.47

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Status of SHP Projects in India Government of India’s Private Sector Policy for SHP • World’s largest SHP development program launched through private sector

participation • 17 States have so far announced their policies to invite private sector to set up SHP

projects • Over 2600MW capacity SHP sites offered/allotted to private sector by the States to

set up SHP projects State Policies for Private Sector Small Hydro Power Projects

Sl. No.

State CoordinatingAgency

Wheeling Banking TP Sale

Buy-back by SEB

Annual Escalation

Water Royalty

Remarks

1. Andhra Pradesh

NEDCAP 2% of energy generated

2%; 8 -12 Months

Allowed but not< HTT

Rs. 2.69/Unit (2004-05)

- As fixed upto 35% PLF. 25p/unit >35%

2 Arunachal Pradesh

Dept. of Power

Allowed charges to be determined by SERC

With prior permission of State Govt.

Allowed

To be decided by SERC / State Govt.

3 Assam Power Dept. As decided by AERC for TP; no charges for sale to ASEB

6 months Allowed

At mutually agreed rate

- No royalty up to 5 MW if power is sold within state >5 MW Rs. 0.25 per unit

Project allotment for 35 years Water cess on canal projects Rs. 0.05 per unit per year

4 Bihar Dept. of Energy

Allowed, terms to be decided by BSEB

Allowed

As decided by BERC

- -

5 Chhattisgarh

CREDA To be decided by CSEB

Allowed

Rs. 2.25 per unit

- To be decided by WRD

6 Gujarat GPCL 4% of energy generated

6 months As decided by GERC

- - Exempted from electricity duty for 10 years

7 Haryana HAREDA 2% of energy generated

Allowed Allowed

Rs. 2.25/unit (94-95)

5% Rate as announced

Capital Subsidy as extended to other industries

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Sales tax benefit for project owner

8 Himachal Pradesh

HIMURJA 2% of energy generated

Allowed with additional charges

Not Allowed

Rs. 2.64/unit

- Exempted for 15 years up to 3 MW

9 Jammu & Kashmir

J&K PDC 10% now, to be decided by SCRC. No charges for sale to PDD or local grid

Allowed for 2 months

Allowed HT consumers

Negotiable

- 10% first 15 years, 15% after that

� No sales tax on equipment � SHP as industry � No Income tax

Private Sector Initiatives Over 110 SHP projects aggregating 450MW commissioned by the private sector (as of Mar 2009) • Karnataka - 280MW • Andhra Pradesh - 110MW • Himanchal Pradesh - 28.5MW • Maharashtra - 6.00MW • Uttaranchal - 6.00MW • Punjab - 7.75MW • West Bengal - 6.00MW

SHP projects installed in the private sector (as on 31.03.2009)

Sl. No. State Total Number

Total capacity (MW)

1 Andhra Pradesh 41 96.93 2 Assam 1 0.10 3 Himachal Pradesh 33 134.45 4 Karnataka 66 520.80 5 Kerala 2 33.00 6 Madhya Pradesh 1 2.20 7 Maharashtra 4 21.00 8. Orissa 1 12.00 8 Punjab 10 16.65 9 Tamil Nadu 1 0.35 9 Uttaranchal 9 43.30 10 West Bengal 5 6.45 174 887.23

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Section 5

Our approach and deliverables EAI’s typically approaches a consulting assignment with a structured approach. While the specifics might differ, this page provides a generic format of our consulting / market research approach. Needs understanding We spend the first week understanding the client’s needs fully. This will involve interactions over phone, emails as well as a personal meeting. Typical duration – 1 week Primary research Based on the specific needs of the client, the EAI team will meet market participants, decision and policy makers and incumbent companies to gather qualitative and quantitative data. Typical duration: 3 weeks Secondary research Based on our full understanding of the client’s information and intelligence requirements, the EAI team will undertake extensive secondary research. This research will involve using the database that the EAI team already has with it, as well as using other relevant databases online and offline. Typical duration: 4 weeks First presentation / report Upon completion of the primary and secondary research, EAI will make a first presentation to the client on its findings. This presentation, and the report, will provide all the data collected and the intelligence and summaries from those data. Final presentation / report Based on the inputs collected from the client from the first presentation, the EAI team will undertake another round of primary and secondary research to fill in any gaps that the client may have identified. Typical duration: 3 weeks

Total expected duration for a typical market and strategy project: 10-15 weeks