Business is down at the Surya Chambal power plant, but not because of recession. It is the fuel. This power plant runs not on coal, but on mustard husk.
When it was set up four years ago in Kota, in Rajasthan, mustard husk was in surplus.
It cost Jyoti Ranjan, Surya Chambal’s chief executive officer (ceo), just 70 paise to produce a unit of energy from biomass sourced from plants.
While cheap coal could have been cheaper, it would not have fetched the incentives the government offered for producing electricity using mustard crop residue. It bought the power so produced. Then there was money from carbon credits, earned under the UN’s clean development mechanism (cdm) fund.
That was then. Four years ago. Last month, Ranjan wrote to the Rajasthan government that the price of mustard husk had tripled, but the state government continues to buy electricity at the rate fixed four years ago.
Surya Chambal entered a growing sector. Use of biomass as fuel has gained wide acceptance recently.
Four power plants in Rajasthan run entirely on mustard husk. “More than 30 such plants are proposed in the state,” Ranjan said. Rajasthan may be the leading producer of mustard in India—an estimated 2.9 million tonnes annually—but most investors are worried. There is scarcity staring in the face now.
Today it costs Ranjan four times to produce a unit of energy from biomass because the raw material is more expensive: Mustard husk now costs Rs 2,000 per tonne, up from Rs 500 a tonne four years ago.
Ranjan’s raw material comes from Digod, about 25 km from the plant. Mustard husk prices have shot up there.
This has hit hard people who depend on crop residues for income, such as landless farm labourers in villages within 50 km of the power plant, from where Ranjan’s plant procures mustard husk.
Mohini Bai is one such. Her household of 20 (including her four sons and their families) lives on livestock rearing and farm labour. Rajasthan, with a livestock population of 54.35 million, contributes 11 per cent of the India’s milk production. It produces 69,000 tonnes of goat meat, about a third of the country’s total. But subsistence-level dairy farmers like Mohini Bai’s large family can only sigh as they watch truck after truck cart away mustard husk from landed farmers in their village. “Wheat husk is so expensive this season; we thought we would mix mustard and soy husk with some wheat husk to feed the cattle. But even that is so expensive,” said Mahaveer Prasad Rathore, Mohini Bai’s son. With 13 buffaloes, four bulls and three cows to feed Rathore can ill-afford fodder at current prices. “I cannot even imagine what the prices will be if more power plants are built,” he feared.
More power plants
If the Central and state governments have their way, more plants will be built because there is a surplus of biomass waiting to be properly managed, believe their experts. “If exploited fully, surplus biomass could sustain a capacity of 16,000 MW; another 45,000 MW could be produced by growing plants that give a quick yield of woody biomass on degraded land,” said H S Mukunda, scientist at the Indian Institute of Science (iisc), Bengaluru. He has been a key figure in developing the technology that uses biomass as fuel in power plants.
In a study titled Biomass Resource Atlas of India, which mapped biomass surplus across the country estimated by iisc, 500 million metric tonnes of biomass is available each year; it can generate approximately 16,000 MW.
Since the late 1980s the Union government has been promoting the use of biomass to produce electricity by replacing coal or diesel. The Ministry of New and Renewable Energy (mnre) promotes two technologies.
.jpg "Mohini Bai's cattlefeed has to compete with Surya Chambal power plant's raw material demand")
One is combustion; it uses biomass in place of coal in thermal power plants. The other is gasification, in which the biomass is partially burned and converted into gas, which then powers generators. But with the cost of biomass rising, companies are running into financial difficulties and looking for ways to keep going.
Ranjan employs 30 people to collect mustard husk from village sarpanchs and famers who also act as contractors. One such contractor is 53-year-old Sita Ram Nagar of Digod village, where Mohini Bai’s family lives on cattle farming. He grows mustard, wheat and soybean on his own farm, a little above a hectare. He also gets other farmers to grow this crop for him. At the start of every season he pays small farmers Rs 2,000 per ha, committing them to grow mustard and sell him all the husk.
Nagar’s is one of the 100-odd trucks that carry husk to Ranjan’s power plant every day. The plant needs 250 tonnes of husk every day. The raw material that feeds the power plant is eating into the fodder stock in villages. Small dairy farmers find it difficult to keep their animal farms going.
Fodder crisis
Sagari Ramdas, co-director of the non- profit Anthra in Hyderabad, researches on livestock production. She anticipates a fodder crisis in Andhra Pradesh. So do poor farmers in the state. Most of the biomass plants are using rice bran, rice husk and the husk of various pulses—red gram, green gram, groundnut cake, black gram, horse gram. “All these are critical food for milch animals. Specially for the poor farmers who cannot afford to purchase oil cakes,” she said.
Andhra Pradesh was the first state to set up biomass energy plants, an official of the nodal Non-conventional Energy Development Corporation of Andhra Pradesh (nedcap) told Down To Earth. The corporation gave licences to power producers who set up their plants too close to one another and ended up competing for raw material, the official added. According to nedcap, 67 biomass power projects amounting to a capacity of 404 MW were sanctioned in the state based on the availability of biomass in 1998 and 1999. Of these 18 projects with a combined capacity of 133.75 MW were cancelled, the coroporation’s website stated.
The cancellation though did not help fodder security in the state or in the country. A study sponsored by mnre in 2004-05 showed that on a countrywide average, around 50 per cent of electricity generated in biomass power projects was derived from rice husk, 30 per cent from wood (mainly Prosopis juliflora ) and the remaining 20 per cent was from agricultural residues. “Rice straw is used as fodder; juliflora is used as fuel by the very poor, who also gather and sell these for a living. They have little bargaining power,” Ramdas said. According to a senior official in mnre, about a third of biomass power producers are using poor villagers’ fuel because it is low-hanging fruit; collecting and transporting of agricultural residues to the power plant is far more cumbersome.
mnre promoted bagasse, rice husk, straw, cotton stalk, coconut shells, soy husk, de-oiled cakes, coffee waste, jute wastes, groundnut shells, saw dust, among biomass power producers. A former mnre official told Down To Earth that there is little monitoring of biomass being used by power plants. The use is determined by state policies,” he said.
P N Bhat, chairperson of World Buffaloes Trust and author of the Planning Commission report of the working group on animal husbandry and dairying, said rice straw and wheat husk are most widely used for fodder. “If their costs go up, the cost of milk production will go up; the poorest dairy farmers will suffer the most,” he said.
De-oiled cakes, Bhat said, are an important source of protein for cattle.
An Andhra Pradesh biomass power plant owner, who did not want to be named, said 30 per cent of the biomass he uses comprises pulse husk and de-oiled cakes because rice husk is expensive and scarce. In the midst of the scramble for husk between fast-growing trees that yield wood are emerging a clear choice for generating green power.
Power grows on juliflora
Perumal is a trader who collects, chips and transports wood to a 7.5 MW biomass power plant operated by Orient Green Power Limited (ogpl), located in Vandavasi, taluk headquarters in Tamil Nadu’s Tiruvannamalai district. He deals in all varieties of local wood— P juliflora, a thorny tree that grows wild, casuarina and eucalyptus, tall short-term trees that are harvested once in three years, and neem, cashew and mango. “This wild plant is now being cultivated specially to fuel power plants. The demand for its wood suddenly went up from 2005 onwards,” Perumal said.
The ogpl plant has been able to run its power plant continuously because biomass was available. The plant consumes 280 tonnes of biomass per day. The average cost comes to Rs 1,800 per tonne—prices vary from Rs 1,350 a tonne for coconut husk to Rs 2,600 per tonne for juliflora, with most other woods hovering between Rs 1,600 and Rs 2,300 per tonne.
Their overall operational cost is Rs 2-2.5 per kWh. The Tamil Nadu Electricity Board pays the plant Rs 4.45 per unit of power generated, the highest in the country. Maharashtra and Andhra Pradesh closely follow with Rs 4.28 per unit and Rs 4.26 per unit, respectively. Tamil Nadu has an installed capacity of 110 MW, generating 864 million kWh annually.
Sustained supply of wood and agricultural waste is crucial, Krishna Kumar, managing directior of ogpl, said. “Procurement of raw material from the open market works fine for small plants of 5-7.5 MW capacity. But for those planning to set up 15-20 MW plants, only energy plantations will work,” he said.
Initially, biomass power plants procured fuelwood at a premium; this led to an overall price hike of 100 per cent. “These woods used to sell at an average of Rs 700-1,000 per tonne five years ago; now, the average price is Rs 1,800-2,300 per tonne, with juliflora being the most expensive,” Perumal said. “Not just biomass power plants, brick kilns, rice, oil and textile mills and even chemical and pharmaceutical units have started using biomass,” Perumal added.
It helps them save costs, he added. “Even college canteens and highway eateries have started using wood as fuel; I have delivery contracts with a number of engineering colleges and highway restaurants in this district,” Perumal said.
With so many contenders emerging for agricultural residue and fuel wood, biomass power plant owners are looking beyond national boundaries for viability. To make a profit they now look at carbon credits. “They are the plant’s lifeline,” Ranjan said. His power plant in Kota uses 1.4 kg husk for each unit of power that is generated; and for each megawatt generated in a year the company gets upto 7000 carbon credits from the CDM executive board, under the Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC).
The Indian cdm basket includes a number of biomass projects. One third of the 133 companies that earn carbon credits are biomass power projects. But they are small in size and add up to only eight per cent of the total Carbon Emission Reduction (CER is the unit for carbon credit) India earns. These figures are from the climate secretariat website giving record up to November 2009.
The 133 projects have sold 4,994,670 CER at the rate of US $ 17.7 per CER, about Rs 402.73 crore.
The CDM benefit from biomass projects, roughly 6,500 CER per MW generated in a year, would amount to about Rs 52.41 lakh. This means a 10 MW plant earns up to Rs 5.24 crore in a year in carbon credits.
The only hindrance to more biomass-fuelled projects getting cdm benefit is that the raw material is not sustainable nor are the prices predictable. That is the reason the government has begun to promote biomass plantations, explained Chandram Mookim of Global Green Carbon Consulting Services, business consulting firm in Jaipur. Ranjan has plans of planting the legume weed Prosopis Juliflora. The plant’s appeal is that it grows fast; its wood can feed his power plant. “It fetches carbon credits as it is a carbon sink and the cost of biomass plantation brings down the price of a tonne of biomass from Rs 2,000 to Rs 500,” Mookim said.
An official at MNRE said the ministry is implementing a UN Development Programme-Global Environment Facility-assisted project on Removal of Barriers to Biomass Power Generation in India. The aim of the project is to accelerate the adoption of biomass power technologies; it proposes removing barriers by promoting fast-growing trees and oil-bearing plants raised by local communities, he said. Taking its cue from the IISc study that mapped India’s potential for biomass energy, the ministry aims to generate 45,000 MW with fuel grown on 20 million ha of wasteland. One hectare it is assumed will yield 10 metric tonnes per annum of woody biomass.
While the government thrashes out ways and means to ensure raw material and boost green power plants, a biomass power plant had to shut shop unable to cope with the raw material crisis. Rising prices of biomass led the 7.5 MW Konark biomass power plant in Karnataka’s Tumkur district to close down in September 2008. M Kumaraiah bought the plant in 2007 because the earlier owner could not run it in the existing market conditions. “The rate of biomass has gone up phenomenally,” Kumaraiah said, “In 2005, when the plant became operational, rice husk cost Rs 800 per tonne, but now rice husk costs Rs 2,400 per tonne or even more, and groundnut husk costs Rs 3,000 per tonne. It is now impossible to produce power at the old tariff.” He attributes the steep rise in costs in areas close to Bengaluru to the rise in the number of small industries, brick kilns mostly, which now use biomass fuel.
When Konark power plant was commissioned in 2005, the tariff for power was Rs 3. 24 per unit. By 2007, Chandrashekhar, the then owner, found it impossible to run the plant at this tariff, and sold out to Kumaraiah. He ran the plant till September 2008, after which he too closed it down following losses. When in January 2009, the government offered a tariff rate of Rs 5 per unit, the plant ran for five months.
In May 2009, the order was withdrawn and the old rate was imposed causing the plant to close down again.
The 7.5 MW Konark biomass power plant in Tumkur district of Karnataka which generated Rs 1.01 crore in carbon credits by selling 12,599 CERs to Germany in 2009 still could not manage to sustain operation.
It operated for 2000 hours in 2009 but according to Kumariah, Managing Director of Konark corp the carbon credit benefit can not be used to meet the losses being incurred with operations, maintainance and raw material costs. “To run plant for a day, it costs about Rs. 6 lakhs for 270 tonnes of fuel and Rs 73,500 in fixed and variable costs,” he said.
The annual cost last year was Rs. 4.94 crore for the fuel for 2000 hours that the plant was operational and 2.68 crore for the remaining annual expenses. Kumariah said that the revenue generated with 132 million units last year, the revenue could offset Rs 4.25 crores at the tariff of Rs 3.24. “That is the reason we ran into losses of more than 1 crore in a year even with the CDM benefits coming our way,” he said.
Kumaraiah said he is going to take up the issue with the Karnataka Electricity Regulatory Commission (KERC) with other biomass power producers. They too find it difficult to run their plants at at power tariff that was fixed when the plants were commissioned, he said.
Andhra Pradesh biomass energy developers have often asked for higher tariffs as most units are dependent on rice husk whose prices have increased phenomenally in the last three years—from Rs 200 per tonne to Rs 1,500 per tonne. When the state government did not increase tariffs, it led to the closure of some plants. The promoters of 30 biomass power plants, with a capacity of 170 MW and investments of up to Rs 800 crore, recently issued a statement under the banner of Biomass Energy Developers’ Association that their key problem was procurement of biomass.
Karnataka biomass industry bodies have also said that availability of biomass is a crucial problem and asked for higher tariffs. Since the electricity tariffs are fixed for a certain period while the biomass prices are volatile, dependent on supply and demand in a certain region, many biomass plants have not been able to sustain operations in Karnataka, said Ramesh H Nagar, deputy general manager at Karnataka Renewable Energy Development Agency (KREDA). “Probably that is the reason we have not received applications for new biomass plants,” he added.
The government though is determined to pursue biomass energy. A senior official of MNRE said that electricity generation using biomass is being promoted by the government since it has little emissions. “Biomass contains carbon, hydrogen and oxygen molecules, complete combustion would produce carbon dioxide and water vapour. Partial burning produces carbon monoxide and hydrogen, which are combustible gases,” he said. He added that biomass gasifier gensets are aimed at replacing diesel gensets in rural applications like water pumping as well as industrial applications like captive power generation.
The target for the 11th five year plan, ending in 2012, is 500 MW of biomass power. “Many implementation troubles will come up in the plan period. It is unlikely that India will achieve even a fraction of the theoretical potential of 17,000 MW in the foreseeable future,” an MNRE official said.
With reporting by Niranjana Ramesh in Tamil Nadu. Ruhi Kandhari reported from Rajasthan and Aparna Pallavi from Karnataka