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Presentation on Biomass Energy System Scale up strategy for DIREC, Pan IIT Conclave and MNRE. Presented by Rahul Bagdia of pManifold on 29 October 2010.
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BIOMASS ENERGY SYSTEMS – SCALE-UPFor DIREC, Pan IIT Conclave and MNRE
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enabling sustainable growth…
professional people perspire, partners persevere, prepare
policy process, plan project, price profit potential, pursue
performance, promote progress, preserve plural planet
Dedicated to Leaders like IISC Bangalore, DESI Power, Husk Power Systems, Onergy, RTBI @ IITM and others to set the trail. Special thanks to Mr. Krishnaswamy @ EnerGreen Power, Prof. Ashok Jhunjhunwala @ IITM, Mr. Uday Kamat @ Yash Agro and Ms. Anu Avalli @ RENE, IFMR Trust for inputs.
BIOMASS GASIFIER SAMPLE – SYSTEM PERSPECTIVE11/2/2010
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SFC (kg/kWh)
Load %
1.3 100%
1.35 80%
1.45 60%
1.75 40%
Electricity
Biomass Electric Load
Energy conversion(kcal/kg)
Gasifier Generator
3500 67280% 24%
100 kWe System
2800
19%
Biomass Mgmt Process Control Local Distribution
? ??How to organize biomass supply chain
(Coal model)
How to set up Private Local Distribution
(DGBDF model)
How to • Map technology to right app (demand volatility)• Set right ownership structure & Operational Model
(Rural ESCO Model)
Social Environmental Financial Inclusion
24%
16%
8%
Hot air
Hot water
Cold Water
BIOMASS ENERGY SYSTEM – STAKEHOLDERS VIEWS
End User
• “I also need finance & marketing linkages to be able to use power for income leverage”
Utility
• “We make losses both technical and mostly commercial by selling power to villages. Also not get paid by state govt. for their promised subsidies”
Power Plant Owner
• “We get sandwiched between farmers increase in price of biomass and utilities decrease in feed-in-tariff rate. Also coal enjoys pass through fuel inflation rate to end-user, while biomass not”
Farmer
• “FREE power has been NO power to us for long time now. I need certainty in Water to my farms and willing to pay for it. Regarding biomass, its waste to me, but if useful to you I need money, but cannot contract as my cropping pattern changes w/ market”
Corporates
• “Rural Electrification will never be profitable. Payment collection will remain biggest challenge together with govt. subsidies. Co-creation is far fetched. I do not want to be the first. ”
Technocrat
• “My technology is full proof under std. operating conditions – 15% moisture, specific fuel & size and 80% PLF. Its your problem to map it to right applications dealing with demand volatility and loose operations”
Regulator
• “Under equity of power supply, we cannot allow sale of power at higher rates in rural areas, using state utility grid structure. Aslo grid open access is allowed only above 1MW only”
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KEY GAPS IN RURAL ELECTRICITY DELIVERY11/2/2010
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Elements Dimensions of framework Rationale
1Demand
Uncertainty
• Absence of sustained and steady base loads of power
• Low rural economic development and inadequate support infrastructure like banks, market linkages etc. prevent energy uptake through capacity building
2Improper
Govt. Policies
• Politicization of tariff structure
• Absence of a viable PPP model for rural distribution
• Free power for agriculture etc. results in price distortion and people’s willingness to pay for private power
• High capex, regulated tariff, competition with subsidized grid prices affects both off-grid and crippled on-grid rural areas
3Inadequate
Technology
adaptation
• Lack of robust & effective generation and storage technologies
• No organized consortium
• Existing technologies do not match volatile rural consumption patterns
• Holistic integration of rural electrification into national infrastructure setting is required to drive policies and reforms
4Lack of
Organized
Operators
• Resource intensive delivery model
• Fragmented and technology biased players
• Information asymmetry
• Heavy regulations along with high resource requirement limits the entry of organized private players as operators
• Most private players are focused on being specific technology providers than comprehensive solution / service providers
• Limited means to measure and disseminate critical consumption / demand data of rural areas
4 key gaps for poor electricity delivery in rural areas – inherent demand uncertainty, bad
policy initiatives, inadequate end technology adaptations and absence of organized players.
PROCESS CONTROL
Right Technology Mapping to Applications including HYBRIDs
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RIGHT TECHNOLOGY MAPPING – PLANT SIZE, PLF, COG, TOTAL
COST OF DELIVERY11/2/2010
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BiomassGasification (kWe)
P&M Investment (Rs. Lacs)
BiomassSFC @ 80% (kg/kWh)
COG = RM + O&M + Dep + OH(Paise/kWh)
Viable Other Technologies + Appendages
Impact on utility and returns
% PC change
10 kWe 6 1.6 400 + 100 + 86 + 50 = 636 • Bio Gas RM cost reduces; low O&M
+ 116%
25 kWe 20 1.5 375 + 100 + 86 + 48 = 637 • Bio Gas “ “
100 kWe 60 1.3 325 + 80 + 114 + 41 = 531 • Bio Gas• Refrigeration • 25 TR Cold storage
(~250 Tonnes of crop)• +4%
250 kWe 160 1.25 313 + 70 + 91 + 38 = 512 • Bio Gas• Refrigeration
“ “
500 kWe 300 1.2 200 + 60 + 86 + 36 = 482 • Bio Gas + Bottling• Refrigeration• Pyrolisis
• 5000m3 into CNG to derisk demand volatility
• 20% charcoal offsetRM cost (pay back: 3-3.5 years)
• +35 to 40%
1000 kWe 560 1.1 275 + 50 + 80 + 33 = 437 • Bio Gas + Bot.•Refrigeration• Pyrolisis
“ “
2000 kWe 1050 1.0 250 + 50 + 75 + 30 = 405 • Bio Gas + Bot.•Refrigeration• Pyrolisis
“ “
COG – Avg. Cost of Generation per unit; RM – Raw material cost per unit; O&M –Operations & Maintenance; Dep – Depreciation; OH - Overheads
!! Pilot Opportunity @ Nagpur !!
BIOMASS MANAGEMENT
Organize biomass supply chain from farms to end-use
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BIOMASS AVAILABILITY – WORLD WIDE11/2/2010
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Availability %
Need for an Aggregator to organize Biomass Supply Chain Organize collection of agri residues – almost 60% going waste
Carry on energy plantation in big existing plantation estates
Source – The Asian Biomass Handbook
BIOMASS MANAGEMENT MODELS
Organize Supply Chain of Agri Residues
•Because of crop diversity and varied distribution channels, the aggregator need to go and collect from farmers
•Provide value addition services through mechanised harvesting to create good bonding for contract enforcement
•Farm processing of biomass (raking, densification, pelletization, torrefecation etc.) to create commodity standards for trading biomass
•Pilot proposal: A good potential aggregator (a leading cotton ginning machine manufacturer in India) with linkages to cotton growers all throughout India has interest in pursuing this role from machine manufacturing side.
Organize Energy Plantation
•Community Model – Parallel cropping
•200-500 farmers aggregated unused for devoted energy plantation OR parallel cropping practices
•Farmer’s Equity in power plant
•Bamboo based organized cultivation
•1MW gasification plant
•250 acres of bamboo plantation @ 40 tons/acre
•2 year initial cultivation period with 40-50 years NO re-plantation
•Rs. 500-600 /ton pricing and availability de-risked
•Higher yield varieties w/ low water consumption
•China has 110-120 tons/acre yield
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!! Pilot Opportunity @ Nagpur & with Partners !!
FOOD CHAIN AND WATER CONFLICT
Productivity enhancement of existing food chain in key
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FOOD AND WATER CONFLICT WITH BIOMASS USE FOR ENERGY11/2/2010
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Highly inter-related systems – Food / Water /
Energy
Use of BioChar (byproduct of gasification/pyrolisis) improves farm yield and
water retention
Too early and other more important dynamics to
worry!
•Current wastage in Fruits and Vegetables supply chain is 30+%
•Our water distribution and consumption has higher order inefficiences
•Current stats of land in India:
•55 mil. Ha – Rain fed
•85 mil. Ha – Irrigated
•80-90 mil. Ha – Waste Land
•With scale-up use of biochar, the productivity from raid fed and irrigated land can be equivalent to ~250 mil. Ha lands with same water consumption
•Scarcity will lead to market forces coming into play optimal utilization of resources (like Water)
Supply – Demand law will dominate and balance the system. But lets not trigger that ‘Black Swan’ and use resources optimally
LOCAL DISTRIBUTION
Realizing true Distributed Generation Based Distributed Franchisee (DGBDF)
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GRID CONNECTED DDGS AND PRIVATE DISTRIBUTION11/2/2010
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Existing regulations and policies do not incentivize private generators to undertake micro
distribution in rural areas at premium tariffs in addition to attractive grid feed-in tariff.
Already assured
buyer base at good
feed-in rates
Uptake and viable feed-in-tariff from
utility. Viable grid feed-in tariff (Rs/kWh):
Biomass – 4.6; Wind – Time of Day; Solar – 13
Good option of power trading on
exchange or bulk 3rd party user
Utilities mandated to keep
10% renewable energy
portfolio
Higher peak-time rates in
the range of Rs.8/kWh;
immediate clearingExisting state distribution
infrastructure is not stable or well
planned e.g. absence of separate
feeder for subsidized customers
Existing state grid is
unavailable for
sharing. And
setting new/parallel
distribution
infrastructure is
expensive
Management of
rural billing,
collection and
power theft is
perceived to be
difficult
Unclear regulation on – Sharing distribution infrastructure
including upgraded meters from private
generation point(s) to selected multiple
LT end users
– Differential tariff setting from multiple
sources for LT users. Allows captive grid
feed-in power for only HT users
Lower revenue collections
from rural feeder
High commercial losses
PILOT PROPOSED STRUCTURING TO SCALE TRUE DGBDF11/2/2010
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Develop a PPP model of state grid and local grid to co-exist, with choice to consumer to shift between the two
supplies with differential (unregulated) pricing
Start first with existing infra and more viable scenario:
• Existing biomass plants (~8-12 MW) already selling to utility, 3rd party sale or IEX (through open access)
• But open access to IEX is still limited to 1MWh unit
• Start with a model of local supply to nearby industries to achieve overall better pricing over IEX
• Once stabilised, then pilot to further lowering resolution of distribution to smaller industries and residential **(rural)
IITM and RENE @ IFMR Trust joint pilot in villages of Thanjavur:
• Establish local grid distribution model (set-up + payment model) with diesel gen-set first
• Learn local issues, setting parallel meters, price point, willingness to pay, demand stabilization etc.
• Once stabilised, find substitute for diesel genset
• Then scale-up
** Parallel with penetration of financial delivery systems in rural
!! Pilot Expansion Opportunity @ Thanjavur with Partners !!
NO ESCAPE FROM DEDICATED OPERATIONS
– ONLY MONEY IS NOT THE ANSWER
Operational Rural ESCO Model
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OPERATIONAL MODEL - RURAL ENERGY SERVICE COMPANY
(RESCO)11/2/2010
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• Needs assessment of
village requirements
• Data mapping on village
resources
• Operates and maintains
electricity or energy
infrastructure (Private
DDG + state utility)
Training
Networking
Financing
Technology
solution
Approvals
Finance
Training
services
• Share village needs and
resources data with
technology partners
• Establish partnerships to
identify and implement
viable technology solutions
• Lias with regulatory agency
for procuring approvals
Independent
Franchisee
Technology
Partners:
Engineering
construction and equipment vendors
Central and State
Regulators
Financial
Institutions
Training
Institutions
Rural Energy
Service
Company
Village Energy Agency
Village
• Lias with financial institutions
to secure project financing.
Provide guarantee on loans
• Identify training requirements
of village franchisee
• Facilitate training through
appropriate partners
VillageVillage
Backend Enterprise-in-Block (EIB)
RESCO is aimed to be an efficient delivery by providing tailored energy and electricity
services to villages in India – retail (solar home lighting), cooking solns, grid electricity,
franchisee with local utility etc.
RESCO Model developed in previous work with RENE @ IFMR Trust by author. Thanks to Ms. Anu Valli @ IFMR Trust.
RESCO – IMPLEMENTATION STEPS11/2/2010
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Energy Mapping
Selection of
technology & decision
matrix
Regulation and utility interfacing
End Package design
Identify and train
local entre-
preneurs
Local RESCO Hub and spoke establish-
ment
Continuous operations
and monitoring
Including EPC vendor selection, raw
material supply chain management
and capacity building
1
2
3
45
6
7
For reliable delivery and investment returns
Demand estimation / aggregation, energy resources, socio-economics and supporting infrastructure
These implementation steps are based on the economic value chain model for an economic
unit.
CONCLUSION - SYSTEM PERSPECTIVE WITH INVOLVEMENT OF
CORPORATES NEEDED TO BRING SCALE-UP
Participatory consortium led by MNRE: Private corporates (Power & Agri), Technocrats (IISC Bangalore, IITM), Biomass and Solar Plant Owners, State utilities, Private Distribution companies, vendors, investors (PE, debt, financial inclusion capacity building), System Thinkers* (pManifold, InvVest, CII)
Design of suitable tender and size to attract corporates participate under different holding structure and operational models – for structured pilot of technologies, scale, fuel supply chain model and distribution
** Very important to first allow right agencies to take detailed Energy Mapping against agreed dimensionalities/template and share the results with the bidders
Detailed study for pilot realization of :
1. Sharing state grid infrastructure with local generator – easy interface, differential tariff, local distribution franchisee
2. Parallel local grid with linkage to state grid with cost absorbed under R-APDRP /RGGVY programs
3. Common meter for multiple power suppliers with selection choice to end-user
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* pManifold could help raise this engagement platform with other partners InvVest & CII (under their Co-creation initiative)
PMANIFOLD HELP ENABLE BUSINESSES TO IMPROVE, SCALE-UP
OR DIVERSIFY SUSTAINABLY – CREATING ENGAGEMENT PLATFORMS TO BRING
STAKE HOLDERS FOR CO-CREATION
pManifold Business Solutions
Our 3M
Framework
Research Consulting Initiatives
Yo
ur
Bu
sin
ess
Modeling
Business
Emerging Models
Investor ideas
Strategic Planning
Revenue Opportunities
Cost Optimizations
Investor Education
Market
Development
Growth strategies/tactics
New Markets
New Opportunities
Partnerships
Relationship Management
Due Dillegence
Marketing Plan / Collateral
Management Support
Proposal/Bid Preparation
Biz Networking
Best Practices
Business Showcase
Monitor
Performance
Monitoring
Benchmarking
Techno-commercial Analysis
Operations Management
Supply Chain Management
Process Management
Skill Development
11/2/2010
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