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  • 1. REPORT ON THE ECONOMICS OF RENEWABLE ENERGY SOURCE BIOMASS.Prepared By: SUDEPPANICKER Submitted to : Dr.Rasananda panda Roll No-20104008.EXE-MBA Course Faculty for EnergyEconomicsPandit Deendayal Petroleum UniversityGandhinagarS_geologist@indiatimes.com 1
  • 2. Table of contents.•Introduction & Chemical Composition.•Categories of Bio mass materials.•Key Challenge and priorities in a Bio based Economy•Competitiveness and Potential benefits of Modern Biomass energy•Indian Power production Scenario.•Projected biomass demand• Indian Power production Scenario.•Barriers to accelerated Biomass power Development.•Policy and Regulatory Frame work .•Government Incentives for Biomass Power Projects.• Managerial concerns observations and Suggestions• Conclusion 2
  • 3. IntroductionBiomass is biological material derived from living, or recently livingorganisms .In the context of biomass for energy this is often used tomean plant based material, but biomass can equally apply to bothanimal and vegetable derived material.Chemical compositionBiomass is carbon based and is composed of a mixture of organicmodules containing Hydrogen, usually including atoms ofOxygen, often Nitrogen and also small quantities of other atomsincluding alkali, alkaline earth and heavy metals. The combustiblegas comprises mainly of carbon monoxide (18-22%), hydrogen (15-20%), methane (1-5%), carbon dioxide (10-12%) and nitrogen (45-55%). 3
  • 4. Categories of Bio mass materials-There are five basic categories of Bio mass material:•Virgin wood- From Forestry arboricultural activities or from wood processing.•Energy crops-High yield crops grown specifically for energy applications.•Agricultural residues-Residues from agriculture harvesting or processing.•Food waste-From food and drink manufacture, preparation andprocessing, and post-consumer waste.•Industrial waste and co-products-From manufacturing and industrialprocesses 4
  • 5. . Need for biomass power in India• More than 70% of India’s population depends on biomass and about32% of the total primary energy use in the country mainly in rural areasis still derived from biomass. Biomass gasification based powerproduction, is relevant today especially in the Indian context.• In India more than 2000 gasifiers are estimated to have beenestablished with a capacity in excess of 22 MW and a number ofvillages have been electrified with biomass gasifier based generators. 5
  • 6. Potential benefits of Modern Biomass energyBiomass-based power shows many potential benefits, some of which are listed below:•Distributed generation•Base load power•Suited for rural areas•Ability to have small, kW scale power production•Rural economic upliftment•Carbon neutral•Efficient utilization of renewable biological sources•Reduces methane, a major GHG gas•Low Cost Resource 6
  • 7. CALORIFIC VALUE OF FUELS Fuel Approx heating value Kcal/Kg Natural State Dry state BIOMASS1 Wood 1500 35002 Cattle dung 1000 37003 Bagasse 2200 44004 Wheat and rice straw 2400 25005 Cane trash, rice husk, leaves and 3000 3000 vegetable wastes6 Coconut husks, dry grass and crop 3500 3500 residues7 Groundnut shells 4000 40008 Coffee and oil palm husks 4200 42009 Cotton husks 4400 440010 Peat 6500 6500
  • 8. Indian Power production Scenario•The average electricity consumption in India is still among the lowest in the worldat just 630 kWh per person per year, but this is expected to grow to 1000 kWhin the near future. Some of the highlights of the current power production status in india:-•India’s current installed capacity (end of 2010): 1,70,229 MW, from all sources•Power generation capacity is mainly based on thermal and hydro, with about11% from renewable energy.•Electricity demand is expected to rise by 7.4% a year during the next quarter of acentury.Total Installed Capacity of Renewable Power Sources•As of Feb 2011, India has over 18.3 GW of installed renewable energy capacity.Wind represents about 13 GW, small hydro represents 2.8 GW, and the majorityof the remainder is from biomass installationsTotal Electricity Installed Capacity: 171.9 GW (Feb 2011)Source: CEA 8
  • 9. Projected biomass demandIn India, the biomass demand for fuelwood, industrial woodand sawnwood in 2000 was 226 Mt, of which fuelwoodaccounted for 86.9 percent , industrial wood 7.68 percent andsawnwood, 5.4 percent. It is projected that the biomassdemand will increase to 290 Mt by 2010, fuelwood accountingfor 241 Mt; industrial wood, 26 Mt and sawnwood, 23 Mt. Thesawnwood demand is projected to nearly double in 15 years. Energy source % Share in installed capacity Thermal 64.75% Nuclear 2.78% Hydro (large hydro) 21.73%Other renewable energy sources 10.73% 9
  • 10. Composition of Indian power sector 10
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  • 13. Utilized and Un-utilized potential biomass power in india 13
  • 14. Potential and Current usage of Bio Mass in IndiaThe net energy potential of the biomass has been estimated at over 20,000 MWequivalents. Area Crop Biomass Biomass Power (kha) productio generation surplus(Kt/yr Potential n (Kt/yr) (kt/yr) ) (MWe) Agro- 403,560 444,595 133,756 17,354 129,387 Total Forest & 58,797 NA 62,792 42,121 5,897 Waste land 14
  • 15. However, a large percentage of this biomass utilized is used as fodderfor livestock and for rural energy needs. As shown in the graphbelow, only around 20% of the biomass is potentially utilized by theindustrial and commercial sector. 15
  • 16. The main objectives of the Biomass EnergyTo encourage the deployment of biomass energy systems in industry formeeting thermal and electrical energy requirements.To promote decentralized / distributed power generation through supplyof surplus power to the grid. To conserve the use of fossil fuels for captive requirements in industry. To bring about reduction in greenhouse gas emissions in industry. To create awareness about the potential and benefits of alternativemodes of energy generation in industry. 16
  • 17. Barriers to accelerated Biomass power Development.The following specific barriers to development of biomass power projects havebeen identified-•Absence of Effective Institutional and Financing Mechanism.•Lack of Adequate Policy Framework.•Lack of Effective Regulatory Framework.• Lack of Technical capacity•Absence of Effective Information Dissemination.•Limited Successful Commercial Demonstration model Experience. 17
  • 18. Policy and Regulatory Frame work•In 1981, india created a government commission with overall responsibility fordeveloping renewable energy and a separate department of Non-conventionalEnergy sources.•The Ministry of new and Renewable Energy issued the Renewable Energypower Purchase Guidelines to all states in 1993.•The Electricity Act of 2003 guaranteed interconnection for renewable energysources.•Almost all states have implemented some form of preferential tariffs forrenewable energy generation.•These measures have been strengthened by the National electricity policy2005.the Tariff policy of 2006, the Rural electrification policy 2006 and theintegrated energy policy report of Planning commission of india in 2006•Today India’s power market mostly comprises regulated prices with a few statesintroducing open bidding on electricity through ten to fifteen year power purchaseagreements. 18
  • 19. Government Incentives for Biomass Power Projects Project Type Capital Subsidy Capital subsidy Special Category States (NE Region, For other states Sikkim, J&K, HP & Uttaranchal)Biomass Power projects 25 lakh X (C MW)^0.646 20 lakh X (C MW)^0.646Bagasse Co-generation by private sugar 18 lakh X (C MW)^0.646 15 lakh X (C MW)^0.646mills Bagasse - Co-generation projects by cooperative/ public sector sugar mills40 bar & above 40 lakh * 40 lakh *60 bar & above 50 lakh * 50 lakh *80 bar & above 60 lakh * 60 lakh * Per MW of surplus power ** Per MW of surplus power ** (maximum support `8.0 crore per project) (maximum support `8.0 crore per project)*For new sugar mills, which are yet to start production and existing sugar mills employing backpressure route/seasonal/incidentalcogeneration, which exports surplus power to the grid, subsidies shall be one-half of the level mentioned above.** Power generated in a sugar mill (-) power used for captive purpose i.e. net power fed to the grid during season by a sugar mill. 19
  • 20. Govt Subsidies On Biomass power projects capacity % SubsidyUnit size upto 100 KWe (300 KWth, 2.5 lakhskcal/hr)Owned by Co-operative Panchayat, NGOs &Central/State Agencies (Socially Oriented Projects) 50Owned by Individual(s) / Entrepreneur(s) 30Unit Size > 100 kWe but < 200 kWeOwned by Co-operative Panchayat, NGOs &Central/State Agencies (Socially Oriented Projects) 55Owned by Individual(s)/Entrepreneur(s) 35Unit Size > 200 KweOwned by Co-operative Panchayat, NGOs &Central/State Agencies (Socially Oriented Projects) 60Owned by Individual(s) / Entrepreneur(s) 40HI-FOCUS AREAS, ISLANDS, NE STATES,LADAKH & SC/ST USERSAdditional Financial Assistance(Over and above) 10 20
  • 21. Economical and Technological Aspects of Bio EnergyProduction• Biogas gasification works well for small scale power production, upto amaximum capacity of 2 MW. Combustion, on the other hand, works wellat MW scales.• The capital cost per MW for a biomass gasification plant is about Rs5.5 crores, while the operational expenses (excluding the cost ofbiomass) are about 0.75 Rs per kWh. The levelized cost of power frombiomass gasification will be in the range of Rs 2.25-4/kWh, dependingmainly on the cost of the biomass.• Under optimal conditions, biomass gasification based powerproduction presents a good business opportunity with attractive IRRs(over 25%) and payback periods (fewer than 3 years).•It can operate at small scales (10-25 kW) as well as medium scale(upto 2 MW).•India has an estimated potential of over 30,000 MW of power frombiomass, but less than 2500 MW has been exploited. Thus, over 90% ofcapacity from potential still exists. As per The India Biomass Gasification Report-May 2011 21
  • 22. State-wise growth of biomass power (co-gen) in MW is given belowState Upto 03-04 04-05 05-06 06-07 07-08 08-09 Total 31.03.03Andhra Pradesh 160.05 37.70 69.50 12.00 22.00 33.00 9 334.25Chattisgarh 11.00 - - 16.50 85.80 33.50 9.88 156.1Gujarat 0.50 - - - - - - 0.5Haryana 4.00 - 2.00 - - - - 6Karnataka 109.38 26.00 16.60 72.50 29.80 8.00 12 274.28Madhya Pradesh 0.00 1.00 - - - - - 1Maharashtra 24.50 - 11.50 - 40 38.50 41.5 155.5Punjab 22.00 - - 6.00 - - - 28Rajasthan 0.00 7.80 - 7.50 8.00 - 8 31.3Tamilnadu 106 44.5 22.5 - 42.5 75 18.2 308.7Uttar Pradesh 46.5 12.5 14 48.5 - 79 172 372 483.93 129.5 136.1 163 228 266 271 1677 22
  • 23. Managerial concerns observations and Suggestions• Compared to coal, and indeed compared to almost any other combustionfuel, biomass is expensive to handle and move, and cost of transportation loomslarge in assessments of financial viability.• The distributed nature of the wood fuel source and the relatively high cost of woodmovement suggest that in general, wood-chip burning power plants will berelatively small and dispersed.•Yet the other major influence on plant size is economies of scale in plantoperation: larger plants generally use less labor, operate at higher efficiencies, andhave lower costs per kWh generated than smaller plants. The implications for rural development could be far reaching if bioenergy cansupply a significant proportion of this modern energy requirements. Manycommercial possibilities could be created with many social and economic benefits.In addition, there is a considerable potential for improving the environment.Thus replacing fossil-derived energy with biomass can reduce greenhouse gasesand mitigate global climate change. 23
  • 24. CONCLUSION• Bioenergy should not be regarded as the panacea for solving agricultural andenergy problems in the rural areas, but as an activity that can play a significantrole in improving agricultural productivity, energy supply, the environment andsustainability. Its final contribution will depend on a combination of social,economic, environmental, energy and technological factors.•The potential role in bioenergy production should receive greater recognition,together with the need for positive political encouragement, and socio-culturaladaptations.•The scenarios considered for estimating the biomass potential as per theabove study are incremental biomass demand, sustainable biomass demandand the full biomass demand. Under these scenarios, two situations namely noincrease in cropland by 2010 and increase in cropland by 10%..•Annually 62–310 Mt of wood could be generated from the surplus land, aftermeeting all the requirements of biomass, such as domestic fuelwood, industrialwood and sawnwood, with an investment of Rs168–780 billion 24
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