National Energy Policy Office

(NEPO)

FINAL REPORT

Thailand Biomass-Based Power Generation and Cogeneration Within Small Rural Industries

BLACK & VEATCH (THAILAND)

November 2000 1

Table of Contents

1.0 Executive Summary .................................................................................................1

.......................................................................................................1

1.1.1 ......................................................................................2 2.0 Executive Summary....................................................................................................1 2.1 Introduction...........................................................................................................1 2.1.1 Study Objective............................................................................................1 2.1.2 Study Scope of Work...................................................................................1 2.1.3 Biomass Energy Overview...........................................................................2 2.1.4 Small Power Producers (SPP) Program Overview......................................3 2.2 Thailand Biomass Resource Assessment..............................................................3 2.3 Candidate Technologies........................................................................................6 2.3.1 Biomass Fuel Concerns................................................................................6 2.3.2 Thermochemical Conversion Options.........................................................6 2.4 Candidate Facility Selection..................................................................................6 2.4.1 Identification and Screening of Candidate Facilities...................................7 2.4.2 Memorandum of Understanding (MOU) Development..............................7 2.4.3 Data Collection.............................................................................................8 2.4.4 Preliminary Assessment...............................................................................8 2.5 Facility Feasibility Studies....................................................................................8 1. Sommai Rice Mill Co., Ltd. ............................................................................10 2. Sanan Muang Rice Mill Co., Ltd. ...................................................................10 3. Thitiporn Thanya Rice Mill Co., Ltd. .............................................................11 4. Plan Creations Co., Ltd. ..................................................................................11 5. Chumporn Palm Oil Industry Plc.....................................................................11 Karnchanaburi Sugar Industry Co., Ltd. ............................................................12 Woodwork Creation Co., Ltd. ............................................................................12 Mitr Kalasin Sugar Co., Ltd. ..............................................................................13 Liang Hong Chai Rice Mill Co., Ltd. ................................................................13 Southern Palm Oil Industry (1993) Co., Ltd. ....................................................13 2.6 Promotion of Biomass in Thailands Energy Future..........................................14 2.6.1 Black & Veatch Comments on the SPP Program Regulations.................14 2.6.2 Other Factors Impacting Biomass Project Development..........................14 2.6.3 Incentives....................................................................................................15 3.0 Introduction.................................................................................................................1 3.1 Study Objective.....................................................................................................1

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3.2 Study Scope of Work............................................................................................1 3.2.1 Task Details..................................................................................................2 3.2.2 Activities by Task........................................................................................4 3.3 Biomass Energy Overview....................................................................................6 3.3.1 Modern Biomass Applications.....................................................................6 3.3.1.1 Distributed Generation. There are many situations where the development of small, modular distributed generators can be more economical than investing in expensive transmission and distribution systems. One possible scenario is the use of an anaerobic digester or biomass gasifier coupled with an engine-generator to provide gas, heat, and electricity at the village scale..............................................................................6 3.3.1.2 Utility Plants. For environmental reasons, utilities are increasingly looking for renewable resources to add to their generation mix. Biomass is an attractive renewable option because the technology is well understood and can be baseloaded, unlike the intermittent output of solar and wind plants. Properly conceived, a biomass plant can use waste fuels from the surrounding area that are available at low, zero, or even negative cost (tipping fees). Fuels can consist of urban wood waste, agricultural residues, and other waste fuels. ........................................................................................7 3.3.1.3 Industrial Power Generation and Cogeneration. Many agricultural processing and rural industries have large electrical and thermal demands and a ready supply of biomass waste fuels. In many cases, these facilities can economically burn the waste to met at least a portion of their electrical demand and possibly generate process steam as well. Specific industries with potential include palm oil (Figure 3-1), sugar cane milling, wood processing (Figure 3-2), and rice milling. ................................................7 3.3.2 Biomass Energy in Thailand........................................................................8 3.3.3 Small Power Producers Program Overview................................................9 4.0 Thailand Biomass Fuel Resource Assessment (Task 1.1).........................................1 4.1 Fuel Supply Overview...........................................................................................1 4.2 Rice Husk..............................................................................................................5 4.3 Palm Oil Residues.................................................................................................8 4.4 Bagasse................................................................................................................11 4.5 Wood Residues....................................................................................................13 4.6 Corncob...............................................................................................................16 4.7 Cassava Residues.................................................................................................18 4.8 Distillery Slop .....................................................................................................21 4.9 Coconut Residues ...............................................................................................23 4.10 Sawdust..............................................................................................................26 5.0 Identification of Candidate Technologies (Task 1.7)................................................1 November 7, 2000 TC-2 Final Report

5.1 Biomass Fuel Concerns.........................................................................................1 5.2 Thermochemical Conversion Options..................................................................1 5.2.1 Mass Burn Stoker Boiler..............................................................................2 5.2.2 Stoker Boiler................................................................................................2 5.2.3 Bubbling Fluidized Bed...............................................................................2 5.2.4 Circulating Fluidized Bed............................................................................3 5.2.5 Gasification..................................................................................................3 5.2.6 Conversion Options Conclusion..................................................................4 5.3 Emission Controls.................................................................................................6 5.3.1 Nitrogen Oxide Control...............................................................................6 5.3.2 Particulate Emissions Control......................................................................7 6.0 Identification and Screening of Candidate Facilities (Task 1.2 & Task 1.3)............1 6.1 Identification Process............................................................................................1 6.2 Screening of Candidate Facilities..........................................................................1 7.0 Development of a Memorandum of Understanding (Task 1.4).................................1 7.1 Potential Project Owners.......................................................................................1 7.1.1 Facility Owner..............................................................................................1 7.1.2 Developer.....................................................................................................1 7.1.3 Advisor.........................................................................................................2 7.2 Generic MOU........................................................................................................2 8.0 Candidate Facility Data Collection (Task 1.5)...........................................................1 9.0 Preliminary Assessment of Selected Facilities (Task 1.6).........................................1 10.0 Feasibility Study Summary Results (Task 2)...........................................................1 10.1 Facilities Studied.................................................................................................1 10.2 Study Assumptions .............................................................................................3 10.3 Summary Results.................................................................................................4 10.3.1 Sommai Rice Mill Co., Ltd. ......................................................................6 10.3.2 Sanan Muang Rice Mill Co., Ltd. .............................................................7 10.3.3 Thitiporn Thanya Rice Mill Co., Ltd. .......................................................7 10.3.4 Plan Creations Co., Ltd. ............................................................................7 10.3.5 Chumporn Palm Oil Industry Plc. .............................................................8 10.3.6 Karnchanaburi Sugar Industry Co., Ltd. ...................................................9 10.3.7 Woodwork Creation Co., Ltd. .................................................................10 10.3.8 Mitr Kalasin Sugar Co., Ltd. ...................................................................11 10.3.9 Liang Hong Chai Rice Mill Co., Ltd. .....................................................11 10.3.10 Southern Palm Oil Industry (1993) Co., Ltd. .......................................12

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11.0 Presentation of Study Results to Facility Owners (Task 3.1 and Task 3.2)............1 11.1 Sommai Rice Mill Co., Ltd. ...............................................................................1 11.2 Sanan Muang Rice Mill Co., Ltd. ......................................................................2 11.3 Thitiporn Thanya Rice Mill Co., Ltd..................................................................3 11.4 Plan Creations Co., Ltd. .....................................................................................4 11.5 Chumporn Palm Oil Industry Plc........................................................................4 11.6 Karnchanaburi Sugar Industry Co., Ltd..............................................................6 11.7 Woodwork Creation Co., Ltd. ............................................................................7 11.8 Mitr Kalasin Sugar Co., Ltd. ..............................................................................8 11.9 Liang Hong Chai Rice Mill Co., Ltd..................................................................9 11.10 Southern Palm Oil Industry (1993) Co., Ltd. ................................................10 12.0 SPP Program Regulations Review...........................................................................1 12.1 SPP Program Regulations Overview..................................................................1 12.1.1 Basis for the SPP Program.........................................................................1 12.1.2 Least Cost Planning and the SPP Regulations...........................................2 12.1.3 SPP Regulations.........................................................................................2 12.1.3.1 Definition of an SPP. Under the Regulations for the Purchase of Power from Small Power Producers, an SPP must utilize one of the following as fuel or prime mover:.................................................................................................................................2 12.1.3.2 Conditions for Purchase. The SPP Regulations establish the following conditions for purchases from SPPs:..................................................................................3 12.1.3.3 SPP Payments. Payments to the SPP can consist of an energy-only payment for electricity (kWh) delivered or may include an energy and capacity payment. No capacity payments are made for contracts with a term of less than 5 years. For terms of 5 to 25 years, capacity payments are equal to EGATs long-run avoided cost during the contracted term...................................................................................................................3 12.1.3.4 SPP Maintenance and Availability. To receive capacity payments, SPPs must provide electricity during the months of March through June, and in September and October, and electricity must be supplied not less than 7,008 hours per year. For biomass and garbage-burning facilities, the annual hours must be at least 4,672 hours per year and supply must occur from March through June. A monthly capacity factor of not less than 51 percent is also a condition, with payments for the month reduced if this condition is not met. SPPs shall be able to reduce power supply during the utility offpeak demand period to no less than 65 percent of the contracted capacity (40 percent in the eastern gulf provinces until 2001). In case of notification of need, the facility must be able to generate with at least 30 minutes advanced notification...................................4

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12.1.3.5 Failure to Perform. Should the SPP be unable to supply at a monthly capacity factor of at least 51 percent, capacity payments will be reduced by 50 percent during the month. The capacity payment may also be reduced should the annual minimum hours of supply not be achieved. Should the SPP be unable to provide output at the level in the contract, the SPP will be provided 18 months in which to rectify the situation, thereafter, the contracted capacity will be adjusted to reflect the facility capability. Deductions in the capacity payment may also occur should the SPP not be able to respond to dispatch instructions within the allotted time period. .....................................4 12.1.3.6 SPP Application Procedure and Evaluation Criteria. Candidate SPPs must submit a proposal (to the Head Office of EGAT) and be approved into the SPP program. The application shall include the following:.....................................................4 12.2 Current Status of the SPP Program ....................................................................7 12.3 Black & Veatch Comments on Current Regulations..........................................9 12.3.1 Capacity and Energy Payments.................................................................9 12.3.2 Contract Term..........................................................................................10 12.3.3 Comments on EGAT Regulations...........................................................10 12.3.3.1 Minimum Take Liability...................................................................................10 12.3.3.2 Generation Shortfall (Item K.3 page 9/28).......................................................11 12.3.3.3 Period of Sale.....................................................................................................12 12.4 Conclusion.........................................................................................................12 List of Tables

1-2 ................................................17

Table 2-1 Most Viable Biomass Fuels in Thailand ...........................................................................4 Table 2-2 Facility Summary................................................................................................................9 Table 4-2 Most Viable Biomass Fuels................................................................................................2 Table 4-3 Comparison of Thailand Biomass Fuel Supply Studiesa...................................................4

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Table 4-3 Rice Husk Characteristics...................................................................................................6 Table 4-4 Palm Oil Residue (EFB, Fiber, Shell) Characteristics.......................................................9 Table 4-5 Bagasse Characteristics....................................................................................................11 Table 4-6 Wood Residue Characteristics..........................................................................................14 Table 4-7 Corncob Characteristics....................................................................................................16 Table 4-8 Cassava Residue Characteristics......................................................................................19 Table 4-9 Distillery Slop Characteristics..........................................................................................21 Table 4-10 Coconut Residue Characteristics......................................................................................24 Table 4-11 Sawdust Characteristics....................................................................................................26 Table 10-4 Summary of Financial Analyses.........................................................................................6 Table 10-2 Summary Results of Proposed New Power Facilities .....................................................14 Table 10-3 Summary Results of Proposed Facility Modifications ...................................................15 Table 10-4 Summary Results of Proposed New Power Facilities .....................................................16 Table 11-5 Summary Results Sommai Rice Mill Facility....................................................................1 Table 11-2 Summary Results Sanan Muang Rice Mill Facility...........................................................2

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Table 11-3 Summary Results Thitiporn Thanya Rice Mill Facility.....................................................3 Table 11-4 Summary Results Plan Creations Facility.........................................................................4 Table 11-5 Summary Results Chumporn Palm Oil Facility.................................................................6 Table 11-6 Summary Results Karnchanaburi Sugar Industry Facility.................................................7 Table 11-7 Summary Results Woodwork Creation Facility................................................................8 Table 11-8 Summary Results Mitr Kalasin Sugar Facility...................................................................9 Table 11-9 Summary Results Liang Hong Chai Facility...................................................................10 Table 11-10 Summary Results Southern Palm Oil Facility.................................................................11 Table 12-6 Power Purchases from Small Power Producers as of February 2000................................8

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List of Figures

Figure 2-1. Aggregate Potential Net Electric Capacity from Most Viable Residues and Candidate Facility Locations..............................................................................................5 Figure 3-2. Fresh Oil Palm Bunch at a Thailand Palm Oil Mill.......................................7 Figure 3-3. Harvesting of Rubber from a Parawood Plantation. ....................................8 Figure 4-4. Aggregate Potential Net Electric Capacity from Most Viable Residues.......3 Figure 4-2. Rice Husk Distribution...................................................................................7 Figure 4-3. Palm Oil Residue Distribution.....................................................................10 Figure 4-4. Bagasse Distribution.....................................................................................12 Figure 4-5. Parawood Residue Distribution....................................................................15 Figure 4-6. Corncob Distribution....................................................................................17 Figure 4-7. Cassava Residue Distribution.......................................................................20 Figure 4-8. Distillery Slop Distribution..........................................................................22 Figure 4-9. Coconut Residue Distribution......................................................................25 Figure 10-5. Candidate Facility Locations........................................................................2 .............................................................................................................................................3 Figure 10-2. Baht/US$ Daily Average Interbank Exchange Rate (Source: http://www.onada.com)......................................................................................................3 Figure 10-3. Typical Biomass Power Plant Configuration...............................................5 27.9......................................................................................................................................4 Figure 12-6. Variation in Sugarcane Output Between 1993 and 1999...........................12

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1.0

Executive Summary

1.1

1.1.1 1.1.2 1.1.3 1.1.4

1.2 1.3

1.3.1 1.3.2

1.4

1.4.1 1.4.2 1.4.3 1.4.4

1.5 1.6

1.6.1

12 12 12 13 13 14 16 16 16 16 16 17 17 17 18 111

1.6.2

1.6.3

111 112 112 1-4 114 1-5

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10

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10

November 7, 2000

TC-2

Final Report

(.)

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1

World Energy Council, Renewable Energy Resource: Opportunities and Constraints 1990-2020, 1993

November 7, 2000

TC-3

Final Report

 ( ) ( )

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..

2528 .. 2540 46% 25% .. 2540 28 %

1.1.4

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101

1,491

2 3

NEPO Website, www.nepo.go.th/power/pw-spp-purch00-02-E.html Arthur Anderson, Thailand Power Pool and Electricity Supply Industry Reform Study- Phase 1 Final Report, Volume 5, March 1, 2000.

November 7, 2000

TC-4

Final Report

1.2

. 9

1-1

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- 1-1 ,

20 / 2.3 3.7 , / * 14,10 , 0 /. 9,800 234, /375 **

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50 2.253.5 10,000 14,100 160248

5.8 1.8 10,000 15,500 118

- 100 / - 17 - 46 - ** 85%

November 7, 2000

TC-5

Final Report

779 1,043 ()

1-1

- 300

November 7, 2000

TC-6

Final Report

. . .

. .

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1-1

10
Final Report

November 7, 2000

TC-7

1.3

1.3.1

1.3.2

Mass burn stoker boiler Stoker boiler (stationary sloping grate, traveling grate, and vibrating grate) Fluidized bed boiler (bubbling and circulating) Gasification with combustion in a close-coupled boiler Pulverized fuel suspension fired boiler

Stoker boiler Fluidized bed Gasifier Stoker Suspension-firing

Fluidized Bed

Suspension firing Gasification

Stoker

boiler

1.4

November 7, 2000

TC-8

Final Report

1.4.1

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(1993)

November 7, 2000

TC-9

Final Report

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November 7, 2000

TC-10

Final Report

2 2

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250 / 13,800 / 5 65,200 / 9.1 ( 8.0 ) ( 25.5 %)

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500

November 7, 2000

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Final Report

27,600 / 7 51,400 / 9.1 ( 8.0 )

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November 7, 2000

TC-12

Final Report

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November 7, 2000

TC-13

Final Report

76,000

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November 7, 2000

TC-14

Final Report

1.6

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November 7, 2000

TC-15

Final Report

1.6.3

10

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. 300

November 7, 2000

TC-16

Final Report

 1-2 2 98,670 86,900 1,225,8 68 18,708 27,600 79,000 1,113,9 00 18,708 . . 3 . . 31,680 54,000 510,300 21,900 . .

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8,800 8,800 9.71 32.6

8,000 8,000 9.27 25.5

8,000 8,000 9.27 26.4

8,800 8,800 10.59 7.95

1,850 1,850 1.95 18.9

3,100 3,100 8.65 4.4

5,600 5,600 13.4 13.3

3,300 3,300 9.73 7.6

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2.0 Executive Summary

2.1 Introduction This Executive Summary and Final Report have been prepared by Black & Veatch according to the Terms of Reference for the Thailand Biomass-Based Power Generation and Cogeneration within Small Rural Industries study. This study has been commissioned by the National Energy Policy Office (NEPO) of Thailand. The report presents many aspects related to biomass energy and includes summaries of biomass power plant feasibility studies done for ten sites in Thailand. The Executive Summary presents key concepts and findings of the study and includes discussion of the study background, resource assessment, technologies, facility selection, feasibility study summaries, and promotion of renewables in Thailands future. 2.1.1 Study Objective The ultimate objective of this study is to develop biomass-based power generation as a source of electricity in Thailand. Using biomass agricultural residues in power generation and cogeneration schemes have the benefits of helping the involved facility to be self-sufficient in meeting its own electricity and process heat demands, while eliminating the problem of waste disposal. Developing the biomass energy resource will also benefit Thailands economy because it helps the country to become less dependent on imported fossil fuels. The specific goals of this study are as follows: To review the existing status of biomass fuels in Thailand. To conduct feasibility studies on 10 small rural industries in order to assess their potential for biomass-based power generation and cogeneration. To demonstrate the financial viability of biomass-based power generation or cogeneration at the facilities in order to encourage investment decisions of the owners towards implementing the projects. To assist the facilities to implement power generation and cogeneration, and to enter EGATs SPP Program. 2.1.2 Study Scope of Work In support of the objective given above, three main study tasks were identified as outlined below: Task 1 Data Collection and Prefeasibility Study This task included preliminary work in support of the feasibility studies. Black & Veatch collected data and conducted prefeasibility studies to identify potential fuels, facilities, and technology for biomass-based power generation or 1 Final Report

January 5, 2001

cogeneration. A standard Memorandum of Understanding (MOU) between NEPO, the facility owner/developer, and Black & Veatch was developed and the regulations of the SPP program were reviewed. Task 2 Feasibility Studies Black & Veatch performed feasibility studies for ten power plants burning biomass fuels (rice husks, bagasse, wood, etc.) at sites throughout Thailand. The feasibility studies are contained in a separate report to the Final Report. The studies assess feasibility in the following areas: technical, economic, financial, commercial, socioeconomic, ecological, juridical, and political. Assist Development of Biomass-Based Power Generation Owners were presented the results of their respective feasibility studies and then assisted in initial project implementation activities. A handbook was developed outlining the procedure for entering the SPP program, including all responsibilities and performance standards for the SPP.

Task 3

2.1.3 Biomass Energy Overview About 12 percent of the world's energy comes from the use of biomass fuels, which include items as diverse as residential yard waste, manure, agricultural residues, and dedicated energy crops.1 In industrialized nations, bioenergy facilities typically use biomass fuels in large industrial cogeneration applications (pulp and paper production, sugar cane milling, etc.). Conversely, developing nations largely rely on biomass for rural cook stoves or small industries. Such applications are relatively inefficient and dirty. Increasing industrialization and household income are driving the economies of developing nations to implement cleaner and more efficient biomass technologies. Environmental concerns may help make biomass an economically competitive fuel. Because biomass fuels are generally less dense, lower in energy content, and more difficult to handle than fossil fuels, they usually do not compare favorably to fossil fuels on an economic basis. However, biomass fuels have several important environmental advantages. Biomass fuels are renewable, and sustainable use is greenhouse gas neutral (biomass combustion releases no more carbon dioxide than absorbed during the plants growth). Biomass fuels contain little sulfur compared to coal (reduced sulfur dioxide emissions) and have lower combustion temperatures (reduced nitrogen oxide emissions). However, unless biomass is efficiently and cleanly converted to a secondary energy form, the environmental benefits are only partially realized, if at all. For this reason, efficient, modern biomass utilization must be favored over traditional applications. The use of biomass as an energy source is widely practiced throughout Thailand industries, particularly in rural and agricultural areas. Major industrial users of biomass energy include sugar cane milling, rice milling, palm oil production, and the wood products industry. Although biomass energy use has been increasing at 8 percent annual growth
1

World Energy Council, Renewable Energy Resources: Opportunities and Constraints 1990-2020, 1993.

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Final Report

recently, this rate has not been as fast as the overall growth in industrial energy use. Consequently, the share of biomass energy used in industrial processes has steadily dropped from 46 percent in 1985, to 25 percent in 1996. Interestingly, although overall industrial energy use declined when the financial crisis started in 1997, use of agricultural and wood residues actually climbed, increasing the share of biomass energy to 28 percent. 2.1.4 Small Power Producers (SPP) Program Overview Small rural industries engaged in biomass power production may sell excess generation back to the grid through the SPP program. The SPP program was initiated by the National Energy Policy Council and is implemented by Thailand electricity authorities (EGAT, PEA, MEA). Benefits of the program include conservation of fossil fuels, reduced fuel imports, conservation of foreign hard currency, and distributed generation. The intent of the program is to realize these external benefits, yet result in a direct cost to ratepayers that is no higher than supplying electricity without SPP projects. The SPP regulations establish several conditions for purchases from SPPs. These include a purchased capacity limitation of 60 MW (up to 90 MW in certain locations) and the stipulation that EGAT be the sole purchaser of electricity. Payments to the SPP can consist of an energy-only payment for electricity delivered (kWh) or an energy and a capacity payment. Capacity payments are made for contracts that are 5 to 25 years (firm) and that meet certain other requirements. Although capacity payments provide substantial revenue to power projects, only three out of the 24 biomass projects accepted so far into the SPP program receive such payments.2 Furthermore, only 6.8 percent (101 MW) of the total SPP capacity connected to the EGAT system (1,491 MW) involves waste or renewable resources.3 2.2 Thailand Biomass Resource Assessment Black & Veatch conducted a biomass fuel supply review for Thailand. The review investigated nine types of biomass as possible fuel for power and cogeneration plants: rice husk, oil palm residues, bagasse, wood residues, corncob, cassava residues, distillery slop, coconut residues, and sawdust. Availability, distribution, production rates and forecasts, involved industries, prices, and the general suitability of the fuels for power production were assessed. This section provides a summary of the investigation.

Table 2-1 provides basic information on the most viable fuels identified: rice husk, palm oil residues, bagasse (from sugar cane milling), and wood residues. Other fuels examined are not considered as viable for various reasons. Corncobs and coconut residues
2 3

NEPO website, www.nepo.go.th/power/pw-spp-purch00-02-E.html Arthur Anderson, Thailand Power Pool and Electricity Supply Industry Reform Study-Phase 1 Final Report, Volume 5, March 1,2000.

January 5, 2001

Final Report

are generally left scattered, making collection difficult. They are suitable supplementary fuels but are not a significant source of energy for power generation. Because of their high moisture content, cassava residues and distillery slop are not likely to find widespread implementation as fuels.
Table 2-1 Most Viable Biomass Fuels in Thailand Fuel Source output, 106 tonne/yr Available residue, 10 tonne/yr Higher heating value, kJ/kg Fuel consumption, tonne/yr/MW b Aggregate power generation potential, MW
6 a

Rice husk 20 2.3-3.7 14,100 9,800 234-375

Palm Oil Residues 2.2 0.41-0.74 10,800 14,050 33-53

Bagasse 50 2.25-3.5 10,000 14,100 160-248

Wood Residues 5.8 1.8 10,000 15,500 118

Notes: a Each biomass was estimated based on the following assumptions. Rice-husk Based on rice mills of capacity minimum 100 tonnes of paddy/day. Palm Oil Residues Based on the 17 crude palm oil extracting facilities. Residues consist of shells, fibre, and empty fruit bunch. Bagasse Based on the 46 Sugar mills. Wood Residues Included discarded processed wood and sawdust from general sawmills and parawood processing facilities and small logs from parawood plantation forest. b A uniform 85 percent capacity factor is assumed in this study.

Aggregate power generation potential from all residues surveyed in this study ranges from 779 to 1,043 MW. This value is for residues not already in use and does not account for generation gains by increases in existing process or power generation efficiency (e.g., sugar cane milling). Figure 2-1 shows distribution of capacity developable from the four most viable fuels. The most promising provinces account for about 300 MW of developable capacity and include Suratthani, Suphan Buri, Kanchanaburi, Nakhon Sawan, Nakhon Ratchasi, Udon Thani, Kamphaeng Phet, Krabi, Trang, and Nakhon Sri Thammarat.

January 5, 2001

Final Report

Khon Kaen Kamphaeng Phet Nakorn Sawan Uthai Thani

Kalasin

Roi Et

Chumporn

Surat Thani

Krabi Trang

Figure 2-1.

Aggregate Potential Net Electric Capacity from Most Viable Residues and Candidate Facility Locations.

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Final Report

2.3 Candidate Technologies This section discusses the various technology considerations applicable for the candidate facilities included in this project. 2.3.1 Biomass Fuel Concerns Experience has shown that biomass fuels can be successfully burned by all of the major combustion technologies provided that characteristics of the biomass have been properly evaluated and accounted for in the design. Compared to coal, biomass fuels are generally less dense, have a lower energy content, and are more difficult to handle. In addition to these concerns, the ash of biomass fuels usually has high levels of alkali components, which can cause slagging, fouling, and tube wastage. The ash of some biomass fuels is also highly abrasive (notably rice husks). The problems associated with alkali materials vary widely between different fuels and are best determined through experience, although slagging potential can be determined by analysis of fuel properties to a limited extent. Lower combustion temperatures reduce slagging significantly. 2.3.2 Thermochemical Conversion Options Proven conversion systems for burning biomass fuels include the following: Mass burn stoker boilers. Stoker boilers (stationary sloping grate, travelling grate, and vibrating grate). Fluidized bed boilers (bubbling and circulating). Gasification with combustion in a close-coupled boiler. Pulverized fuel suspension fired boilers. Each of these technologies has advantages and disadvantages, and all have been commercially proven with biomass. Stoker boilers are widely in use but are not always the most appropriate choice. For example, rice husks are most easily fired in fluidized beds or gasifiers because the lower operation temperatures reduce the risk of slagging. Stokers and suspension-fired units may also be used, but precautions should be taken to minimize slagging potential. Fluidized beds are good choices in general because they can tolerate wide variations in fuel moisture and size. Suspension firing is not suitable for most biomass fuels because they are usually difficult to grind. Gasification may be a suitable choice, but lacks widespread technical and commercial acceptance. Due to their widespread availability, relatively low cost, and reasonable efficiency, stoker boilers were recommended for the facilities studied in this report. 2.4 Candidate Facility Selection Candidate facility selection involved identification and screening of candidate facilities, development of MOUs, data collection, and preliminary assessment of promising sites for full feasibility study.

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2.4.1 Identification and Screening of Candidate Facilities To identify potential sites, the study team contacted various agro-industrial associations, approached sites that generate large amounts of residues, and developed a questionnaire to solicit facility information and interest in project development. Initial site selection guidelines for identification of suitable facilities included: Availability of biomass supply for power generation or cogeneration. Biomass disposal concerns and the intention to develop a power plant. Capability and experience of the facility owner(s) in developing power plants. One of the most important aspects in site selection was owner willingness to proceed with a power project. Because of the downturn in the economy, many facilities were uncomfortable with making large investments, especially in power generation, a field outside their regular business. For this reason, the study team had more difficulty than expected locating candidate facilities. 2.4.2 Memorandum of Understanding (MOU) Development Having identified potential sites and established a desire in the facility owners to proceed with the study, the next step in the process was to develop a MOU between the owner, NEPO, and Black & Veatch. The MOU outlines the commitment of the owner to pursue development of a biomass power facility if the feasibility study determines the proposed facility to be technically, environmentally, and financially viable. Through execution of the MOU, it is understood that NEPO is financing the study under the assumption that the facility owner will pursue further development of a viable project or refund half the cost of the study unless acceptable reasons are provided to NEPO in writing. The MOU defines the internal rate of return (IRR) for determining financial viability at 23 percent. The study team eventually received signed MOUs from each of the ten facilities: Sommai Rice Mill Co., Ltd. Facility in Roi Et Province Sanan Muang Rice Mill Co., Ltd. in Kamphaeng Phet Province Thitiporn Thanya Rice Mill Co., Ltd. in Nakorn Sawan Province Plan Creations Co., Ltd. in Trang Province Chumporn Palm Oil Industry Plc., in Chumporn Province Karnchanaburi Sugar Industry Co., Ltd. in Uthai Thani Province Woodwork Creation Co., Ltd. in Krabi Province Mitr Kalasin Sugar Co., Ltd. in Kalasin Province Liang Hong Chai Rice Mill Co., Ltd. in Khon Kaen Province Southern Palm Oil Industry (1993) Co., Ltd. in Surat Thani Province

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2.4.3 Data Collection Following identification and initial screening of prospective facilities, Black & Veatch provided detailed data requests to facility owners. Data requests were facility specific and were used to help Black & Veatch identify the optimal configuration of the power facility, evaluate project feasibility, and identify other benefits of the project. Of particular importance was the quantity of biomass fuel available to the project, reliability of supply, and other characteristics of the fuel. Other information collected included water resource data, process descriptions, plant layouts, maps, labor requirements, current waste disposal practices, cost of electricity purchases, process steam needs, hours of operation, and plans for future expansion. 2.4.4 Preliminary Assessment When review of this information indicated a favorable potential for development, facility site visits were arranged to perform a preliminary assessment of the selected facility. The assessment was accomplished through review of the existing facilities, discussions with the staff, and gathering of other pertinent facility information. Each assessment addresses the facilitys potential for power plant development or modification. None of the assessments completed identified any obvious development problems that would preclude further investigation in a feasibility study. 2.5 Facility Feasibility Studies This section summarizes the feasibility studies for the ten facilities and the presentations made to facility owners. Figure 2-1 shows the location of the facilities and Table 2-2 summarizes results of the studies. Due to the length of the project and other factors, two major assumptions were changed during the course of the study. These are the exchange rate for financial evaluation and the capital cost basis. Because the study commenced near the start of the financial crises, the Baht to US dollar exchange rate has fluctuated significantly over the course of this study. Evaluation of the first four sites was initially issued in June 1998 and used an exchange rate of 43.53 Baht/US$. Since that time the exchange rate has dropped significantly. The financial analysis for the last six sites reflects this drop and assumes an exchange rate of 37.15 Baht/US$. Secondly, there is an overall increase in project costs for facilities. This increase is due to two factors. Assumed equipment sourcing changed from Pacific Rim (e.g. Chinese) suppliers to higher cost European and US suppliers. These suppliers provided higher cost information. The last six sites were smaller resulting in higher specific costs due to economies of a scale.

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Table 2-2
Facility Summary Facility Facility type New plant or modifications? Residue available from facility, t/yr Total residue use, t/yr Residue type Annual heat available, GJ/yr Net plant heat rate, kJ/kWh Net plant output, kW Output sold to EGAT, kW Cogeneration? Steam flow, tonne/hr Est. total project cost, US$ mil IRR (base case), percent IRR at 43.5 Baht/US$ exchange rate IRR at 20% reduced capital cost IRR for alternative study (see writeup) Sommai Rice Mill Rice mill New 98,670 86,900 Rice husk 1,225,868 18,708 8,800 8,800 No 9.71 32.6 Sanan Muang Rice Mill Rice mill New 13,800 79,000 Rice husk 1,113,900 18,708 8,000 8,000 No 9.27 25.5 Thitiporn Thanya Rice Mill Rice mill New 27,600 79,000 Rice husk 1,113,900 18,708 8,000 8,000 No 9.27 26.4 Plan Creations Wood products New 4,000 134,000 Wood waste 1,380,200 21,015 8,800 8,800 No 10.59 7.9 38.5 Chumporn Palm Oil Palm oil mill Mods. 89,100 111,860 Palm oil res. othersa 1,564,000b 49,500c 4,550 2,520 Yes, 31.85 5.0 20.4 15.8 29.4 39-69 Karnchanaburi Sugar Mill Sugar mill Mods. 20,834 34,216 Bagasse, corncob 406,980 47,205c d 1,850 1,850 No 1.95 18.9 15.9 26.7 27.5 Woodwork Creation Wood products New 31,680 54,000 Wood waste 510,300 21,900 3,100 3,100 No 8.65 4.4 2.1 8.5 25 Mitr Kalasin Sugar Mill Sugar mill New 76,000 76,000 Bagasse 725,040 17,400 5,600 5,600 No 13.4 13.3 9.8 20.1 46 Liang Hong Chai Rice Mill Rice mill New 33,000 33,000 Rice husk 465,300 18,700 3,300 3,300 No 9.73 7.6 5.1 12.6 13-29 Southern Palm Oil Palm oil mill New 73,500 73,500 Palm oil res. othersa 1,072,932b 21,700e 6,200 5,366 Yes, 13.9e 14.6 11.6 8.4 17.9 13-25

Notes: a Chumporn Palm: palm oil residues (fiber, shells, empty fruit bunch), biogas, coconut husks; Southern Palm: palm oil residues (fiber and shells only), biogas. b Chumporn Palm: includes biogas use of 6,000,000 m3/yr (136,000 GJ/yr); Southern Palm: includes biogas use of 3,570,000 m3/yr (80,682 GJ/yr). c Based on existing power facility performance information considering proposed modifications. d Includes credit for surplus power generated by the existing sugar mill during the on-season. e Average value. Southern Palm Oil requires varying amounts of process steam depending on the season.

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Based on the assumptions noted in each study, the results of the studies indicate that all ten of the candidate facilities are technically and environmentally viable. A variety of biomass fuels were examined in the studies including rice husk (4 facilities), wood waste (2), palm oil residues (2), and bagasse (2) as primary fuels and coconut husks (1), biogas (2), and corncobs (1) as supplementary fuels. Both entirely new power facilities and modifications to existing plant power facilities were examined. The power outputs examined ranged from 1.9 MW to 8.8 MW net for the base case analyses. In support of financial sensitivity analyses, some preliminary investigations were done for facilities sized up to 30 MW. Cogeneration of steam was a very significant design factor for the two palm oil mills and played a lesser role for the other facilities. In general, the studies found relatively few technical or environmental obstacles. In base case analyses, the financial viability of the facilities was mixed. Three of the facilities identified (Sommai, Sanan Muang, and Thitiporn Thanya rice mills) surpassed the financial IRR hurdle of 23 percent in the base case analyses. Black & Veatch investigated alternative scenarios aimed at improving the financial rating of the other facilities. These studies, which are preliminary in nature, indicate that several factors could change to raise the IRR above 23 percent for these projects. In some cases, such as simply accounting for the value of cogenerated steam at the Chumporn Palm Oil Mill, the improvement in IRR can be dramatic and is compelling from an investment standpoint. The results of the studies for each site and owner reaction to the studies are briefly discussed below. 1. Sommai Rice Mill Co., Ltd. A new power facility was studied at the Sommai Rice Mill Co., Ltd. located in Roi Et. After an expansion that would raise the facility milling capacity to 1,300 tonnes of paddy per day, it is estimated that 100,000 tonne/year of rice husk could be available for power production. The proposed rice husk power plant would have a gross output of 10.0 MW (8.8 MW net). The feasibility study concludes that the proposed development is technically, environmentally, and financially viable (IRR of 32.6 percent). The study results were presented to the facility owner who decided to pursue further project development. The development is proceeding well as a joint venture between Sommai and EGCO (Electricity Generating Plc.), and has reached the step at which a contractor is being selected to provide engineering, procurement, and construction services for the project. 2. Sanan Muang Rice Mill Co., Ltd. A new power facility was studied at the Sanan Muang Rice Mill Co., Ltd. in Kamphaeng Phet. Rice husk from the 250 tonne paddy per day mill would be supplemented with husks from five other area mills. Total husks available for power production are estimated to be 79,000 tonne/year. The proposed power plant would have a

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gross output of 9.1 MW (8.0 MW net). The study concludes that the proposed development is technically, environmentally, and financially viable (IRR of 25.5 percent). The study results were presented to the facility owner. The owner is interested in further project development through a joint venture with other interested investor(s). 3. Thitiporn Thanya Rice Mill Co., Ltd. A new power facility was studied at the Thitiporn Thanya Rice Mill Co., Ltd. located in Nakorn Sawan. Rice husk from the 500 tonne paddy per day mill would be supplemented with husks from seven other area mills. Total husks available for power production are estimated to be 79,000 tonne/year. The proposed power plant would have a gross output of 9.1 MW (8.0 MW net). The study concludes that the proposed development is technically, environmentally and financially viable (IRR of 26.4 percent). The study results were presented to the facility owner who is interested in further project development through a joint venture with interested investor(s). However, the owner has exhibited some hesitancy since the plant would depend on outside fuel sources. 4. Plan Creations Co., Ltd. A new power facility was studied at the Plan Creations Co., Ltd. parawood processing plant located in Trang. Only about 4,000 tonne/year of wood waste would be available from the facility. Additional residues could be obtained from other area mills and a large forestry residue collection operation. Total wood waste would be about 134,000 tonne/year, which is sufficient to power a facility with a gross output of 10.0 MW (8.8 MW net). The feasibility study concludes that the proposed development is technically and environmentally viable, but financially marginal (IRR of 7.95 percent) in the base case analysis. If a larger facility could be built, the project may be more viable. Black & Veatch investigated the economics at a plant size of 28 MW and found that the IRR would increase to 38.5 percent at this size. The owner was presented the study results but is interested in implementation of a small (about 2 MW) system at the site. At present the owner is soliciting project price information from a vendor. 5. Chumporn Palm Oil Industry Plc. Power facility modifications were studied at the Chumporn Palm Oil Industry Plc. palm oil mill located in Chumporn. Preliminary technical and economic analysis found that combustion of additional fuels using existing equipment for power generation up to 3.7 MW is viable. The fuels used include facility wastes of palm shell, fiber, and empty fruit bunch (EFB); biogas produced by the processing facility; and coconut husk and additional palm shell procured from the surrounding area. In addition, modifications to the facility to allow greater power production were studied. The configuration selected utilizes a low pressure condensing turbine to capture and generate power from the exhaust of the existing back pressure steam turbine, a condenser to recover turbine and process exhaust steam, an

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improved makeup water treatment system, and other modifications. The average gross plant output under this configuration would be approximately 5.4 MW (3.0 MW increase over the current capacity). The feasibility study concluded that the proposed development is technically and environmentally viable, and financially viable under certain conditions (base case IRR of 20.4 percent). The new power plant will allow CPOI to operate at a higher palm oil production capacity because of increased steam cogeneration. It was found that inclusion of this benefit would make the project very attractive financially (IRR ranging from 39 to 69 percent for steam value of 5 to 15 US$/tonne, respectively). Study results were presented to the facility, who generally concurred with the study but expressed some concern over recent fluctuations in the price of outside supplementary fuel. The facility would like to expand their processing capabilities in the near future. This will likely require some sort of upgrade to the power and steam systems. Karnchanaburi Sugar Industry Co., Ltd. Power facility modifications were studied at the Karnchanaburi Sugar Industry Co., Ltd. located in Uthai Thani. The sugar mill currently operates a cogeneration facility with a maximum gross electrical output of 17.5 MW. Depending on the steam needs of the sugar mill, there is unused and unsold electrical capacity averaging about 455 kW at the plant. In addition, excess bagasse and/or supplemental corncobs could be burned in the off-season to provide power to the grid on a firm basis. The combination of the excess existing power production, excess bagasse fuel, and supplemental corncob fuel can provide a total of 1,850 kW net (capacity factor: 53.2 percent). Minor plant modifications and new equipment additions would be required. The feasibility study concludes that the proposed development is technically and environmentally viable, and financially viable under certain conditions (IRR of 18.9 percent). Additional analysis found that increases in sugar milling efficiency would allow enough bagasse to be produced so that combustion of supplemental corncob fuel would not be required. The IRR under this scenario increases significantly to 27.5. Study results were presented to the facility owner who is interested and agreed to further development. Woodwork Creation Co., Ltd. A new power facility was studied at the Woodwork Creation Co., Ltd. parawood processing plant located in Krabi. A total of 31,680 tonne/yr of wood residue will be available at the facility after an upcoming expansion. In the base case analysis, a small amount of fuel from the surrounding are is used, bringing the total fuel consumption to 54,000 tonne/year and allowing a plant with a gross output of 3.55 MW (3.1 MW net). The analysis for this case was financially marginal (IRR of 4.4 percent). If a larger facility (about 30 MW) could be built at the site or in the area, more favorable economics would be January 5, 2001 12 Final Report

achieved. Black & Veatch estimates an IRR of 25 percent that at this size, subject to the assumptions presented in the full report. The study results are under further consideration by the owner. Mitr Kalasin Sugar Co., Ltd. A new power facility was studied at the Mitr Kalasin Sugar Co., Ltd. sugar mill located in Kalasin. The high pressure boiler for the proposed power plant would be fueled with 76,000 tonne/yr of excess bagasse produced by the sugar mill. The new power plant would have a gross output of 6.1 MW (5.6 MW net) and would operate year-round. The existing power facility (16.4 MW gross) would remain and would supply the processing operations with the required steam and power. The feasibility study concludes that the proposed development is technically and environmentally viable, but financially marginal (base case IRR of 13.3 percent). An alternative option utilizes the existing equipment with minor additions and modifications to produce about 3.2 MW. This preliminary option has a much higher IRR of 46 percent. Both options were presented to the facility, which is considering further development. Liang Hong Chai Rice Mill Co., Ltd. A new power facility was studied at the Liang Hong Chai Rice Mill Co., Ltd. located in Khon Kaen. Liang Hong Chai owns two rice mills that together could supply approximately 33,000 tonne/yr of rice husk for power production. This level of residue would allow a power plant of 3.8 MW gross (3.3 MW net). At this size, the financial feasibility of the site is marginal (IRR of 7.6 percent). If a larger facility (about 13.4 MW) could be built at the site, more favorable economics would be achieved. Black & Veatch estimates an IRR of 29 percent that at this size, subject to assumptions presented in the full report. The study results are under further consideration by the owner. Southern Palm Oil Industry (1993) Co., Ltd. A new power facility was studied at the Southern Palm Oil Industry (1993) Co., Ltd. mill located in Surat Thani. The boiler for the proposed power plant would be fueled with fiber, shells, and biogas produced by the processing facility. The power plant would have a gross output of 7.0 MW (6.2 MW net) and would generate process steam. The existing power facility (880 kW) would remain and would be used for backup purposes. The feasibility study concludes that the proposed development is technically and environmentally viable, but financially marginal (IRR of 11.6 percent) in the base case. However, due to increased steam production, the new power plant will allow SPOI to operate at a higher palm oil production capacity. If this benefit is included in the financial analysis and a larger plant size (28.3 MW) is assumed, significantly higher financial returns are attainable. Black & Veatch estimates that IRR of about 25 percent are possible under this scenario. January 5, 2001 13 Final Report

The study results were presented to the facility owner. Although the financial performance of the power project is marginal under base case assumptions, the facility would like to expand their palm oil processing capabilities in the near future. This will likely require some sort of upgrade to the mill power and steam systems. 2.6 Promotion of Biomass in Thailands Energy Future As discussed previously, the percent of biomass capacity in the SPP program is small and mostly contracted on a non-firm basis. Black & Veatch feels that there are several reasons for this relating to the current SPP program regulations (dated January 1998) and other factors. 2.6.1 Black & Veatch Comments on the SPP Program Regulations The present SPP regulations for biomass were established for payment of capacity and energy based on the long-term avoided cost of electricity from a fuel oil plant. However, biomass plants cannot be economically competitive on this basis: Due to dispersed fuel, most biomass plants are small (about 5-30 MW) compared to fuel oil based plants. Thus, the capital cost per megawatt of a biomass power plant is usually higher than that for fuel oil power plants. The fixed rate for the energy payment is based on the net plant heat rate for a combined cycle power plant, which is 9,070 kJ/kWh (8,600 Btu/kWh). Even with leading edge technology, biomass plants cannot achieve this level of efficiency and are thus less competitive. 2.6.2 Other Factors Impacting Biomass Project Development Owing to the existing regulations and other factors, very few biomass power plants have sold electricity to the grid through firm contracts. Other reasons for the lack of biomass-based power generation in Thailand include: Energy prices do not reflect external social costs such as air pollution, carbon dioxide emissions, socioeconomic impacts, fuel imports, etc. Investors or lenders would like to minimize biomass fuel supply risk simply by establishing long term supply contracts, but these are very difficult to achieve. Alternative methods of risk management are often not explored. Host facilities are often not familiar with the power generation business and are wary of making large investments in businesses outside their core experience. In addition to relatively high specific capital costs, development costs for biomass plants are similar to larger plants, even though the capacities are much smaller. The combination of high up-front capital costs, unfamiliar technology, and unmanageable fuel supply risk, makes financing of biomass projects more difficult and January 5, 2001 14 Final Report

expensive than conventional energy plants. The result is that those plants that are built may not be able to produce electricity at rates as low as conventional technologies. 2.6.3 Incentives A variety of incentive measures have been implemented around the world to encourage biomass and other renewable energy sources. Beyond direct increases in capacity and energy prices, Thailand should examine several measures: Set a target for biomass and other renewable power plant generating capacity for the next 10 years. Establish a competitive subsidy scheme to encourage development of new renewable energy power plants. Promote marketing of biomass and other renewable energy sources as green energy to encourage public support of projects. Collaborate with specific high potential industries (e.g., sugar cane milling) to promote higher efficiency plants and expanded biomass power generation. Investigate alternative funding mechanisms to provide long-term loans with low interest rates to biomass projects. Any incentive offered should be cognizant of the liberalization of the electricity supply industry and flexible enough to respond to changing market conditions. NEPO has begun a successful campaign to promote renewable energy. This effort will be further strengthened by the recent commissioning of an initiative to subsidize up to 300 MW of renewable energy projects through the Energy Conservation Promotion Program (ENCON) fund. The capacity, which will be bid on a competitive basis, will be an important step to further the long-term energy policy goals of Thailand.

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3.0 Introduction
This Final Report has been prepared by Black & Veatch according to the Terms of Reference (TOR) for the Biomass-Based Power Generation and Cogeneration Within Small Rural Industries study commissioned by the National Energy Policy Office (NEPO) of Thailand. NEPO is promoting the use of biomass, such as wood waste, bagasse, rice husks, and oil palm residues, as fuel for electricity and steam production in small rural industries. The benefits of this policy include reduction of petroleum imports, conservation of natural resources, and strengthening of rural economies. Under the Small Power Producers (SPP) program, electricity generated by such plants can be sold to the Electricity Generating Authority of Thailand (EGAT). NEPO has commissioned Black & Veatch to perform a study of biomass power and cogeneration projects and to prepare this Final Report to summarize the results of the project. This report presents many aspects related to biomass energy and includes summaries of ten biomass power plant feasibility studies done for sites around Thailand. This section of the report provides a description of the study objective, scope of work, and approach. The section also includes a brief overview of biomass energy. 3.1 Study Objective The ultimate objective of this study is to develop biomass-based power generation as a source of electricity in Thailand. Using biomass agricultural residues in power generation and cogeneration schemes have the benefits of helping the involved facility to be self-sufficient in meeting its own electricity and process heat demands, while eliminating the problem of waste disposal. Developing the biomass energy resource will also benefit Thailands economy because it helps the country to become less dependent on imported fossil fuels. The specific goals of this study are as follows: To review the existing status of biomass fuels in Thailand. To conduct feasibility studies on 10 small rural industries in order to assess their potential for biomass-based power generation and cogeneration. To demonstrate the financial viability of biomass-based power generation or cogeneration at the facilities in order to encourage investment decisions of the owners towards implementing the projects. To assist the facilities to implement power generation and cogeneration, and to enter EGATs SPP Program. 3.2 Study Scope of Work This subsection details the scope of work for the project.

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3.2.1 Task Details Task 1 Data Collection and Prefeasibility Study 1. Review the existing status of biomass fuels in Thailand, including types, availability, production rates, forecasts, and the specific industry involved. Review the potential of each type of biomass resource for electricity generation, the prices of each type of biomass resource in the existing market, and other uses of the biomass resources. Geographical location of the biomass resources is also important. 2. Gather background information regarding the existing small rural industries producing agricultural residues which can be used as biomass fuels in Thailand. Review technical aspects of the industries including the process energy requirements and energy consumption. Review the standards and regulations of the Small Power Producers Program. 3. Locate a minimum of 10 facilities which have potential for biomass-based power generation or cogeneration. Touch base with personnel of the identified facilities in order to initiate a working relationship. 4. Develop a Memorandum of Understanding (MOU). The MOU will commit the facility owners to pursue project implementation if the project provides to be commercially viable. The Consultant should seek to sign MOUs with 10 facilities. Projects with MOUs will have the highest priority for subsequent feasibility studies. 5. Conduct detailed data collection of the 10 facilities which have signed MOUs. This may include field surveys of the actual site. The data collected in this step will be used in the detailed feasibility study of Task 2, therefore the data should include technical, economic, and ecological information. 6. Evaluate the collected data and make preliminary assessment of biomass-based power generation and cogeneration in specific small rural industries. Complete other appropriate pre-feasibility tasks. 7. Compile a list of local and/or foreign suppliers of biomass-based power generation and cogeneration equipment. Locate contractors capable of installation of the equipment. Obtain prices of the equipment, installation costs, operations and maintenance costs, etc. Task 2 Feasibility Study The tasks to be undertaken are identical for each of the 10 small rural industries which are capable of implementing biomass-based power generation or cogeneration projects and have signed MOUs. A project to be suitably evaluated is the to be placed within the system to which it belongs, and therefore, the evaluation is to consider the interrelationships of the project and the other natural and socioeconomic components of the project system. The basic components of a detailed feasibility study are: 1. Technical Feasibility: Determine the present status and future prospects of the local technological capacity, and requirement for foreign technology. Conduct preliminary January 5, 2001 2 Final Report

2.

3.

4.

5. 6. 7. 8.

designs. Assess human and material requirements. Evaluate topographical and geological conditions, etc. Economic Feasibility: Establish costs and benefits related to the project from an overall economic and social point of view. Assess indirect effects and evaluate the project economic attractiveness. Financial Feasibility: Establish costs and benefits related to the project from the point of view of the beneficiary of the project. Assess the financial attractiveness through the use of financial indicators. Establish a financing plan for the project. Assess the past financial performance of the beneficiary of the project and potential for future sound financial performance. Commercial Feasibility: Assess the status and prospects for the project product(s) to meet demands of the current market. Survey the suitability of commercial systems for distribution of the project product(s), and of the systems to supply raw materials and other inputs. Socioeconomic Feasibility: Evaluate the effects of the project with regard to the society involved, for instance creation or reduction of employment, etc. Ecological Feasibility: Asses the impacts and benefits of the project to the ecological environment. Check standards on ecological pollution. Juridical Feasibility: Check existing laws and other juridical constraints, and obligations favoring (or discouraging) the development and operation of the project. Political Feasibility: Evaluate the regional and sectoral planning, policy, and objectives. Determine whether the project implementation is consistent with relevant sectoral/energy policies.

Task 3 Assist Facility Owners to Invest in Biomass-Based Power Generation and Cogeneration Once biomass-based power generation and cogeneration has proved to be feasible, the next step is to assist the facilities to implement the project. The details of this work are as follows: 1. Present the results of the feasibility studies to the respective facility owner. The presentation should emphasize how implementing cogeneration can help the owners save operation costs by producing electricity on-site and negating the cost of disposing biomass residue. 2. Demonstrate the commercial viability of implementing biomass-based power generation and cogeneration to the facility owners. This includes briefing the owners on EGATs SPP Program, and how owners can sell excess electricity back to the grid. Substantial economic and financial data should be presented to the owners in order to persuade them to invest in cogeneration projects are their facilities. 3. Produce a handbook for facility owners in Thai and English explaining the procedure for entering EGATs SPP Program, including all relevant implications concerned such

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as commercial and juridical aspects. The handbooks should also identify financing sources for the project implementation. 3.2.2 Activities by Task This section describes the task activities undertaken by Black & Veatch (corresponding sections of this report are given to the right of the task title). Details on these tasks are provided in the Detailed Work Plan and Methodology document prepared by Black & Veatch. Task 1 Data Collection and Prefeasibility Study Black & Veatch collected data and conducted prefeasibility studies to identify potential fuels, facilities, and technology for biomass-based power generation or cogeneration. The following subtasks were performed.

Task 1.1 Status of Fuel Supply Section 4 The existing status of biomass fuels in Thailand was reviewed. Fuels reviewed included rice husk, palm oil residues, bagasse, wood residues, corncobs, cassava residues, distillery slop, coconut residues, and sawdust. Availability, location, production rates, forecasts, industries involved, prices, and the general suitability of the fuel for power production were assessed. Task 1.2 Identification of Candidate Facilities Section 6 and 12 Candidate industries and specific facilities with good potential for biomass power generation were identified (Section 6). Such facilities included rice mills, sugar mills, palm oil mills, etc. This task also reviewed the regulations and requirements of the SPP program (Section 12). Task 1.3 Screening of Candidate Facilities Section 6 A screening approach was used to select ten preferred facilities for further analysis. A key consideration in light of the economic crisis was owner willingness to proceed with the project. Task 1.4 Development of a Memorandum of Understanding Section 7 A generic Memorandum of Understanding (MOU) was developed. The MOU commits facility owners to pursue project implementation in the event the project proves to be financially viable. An MOU was signed with each of the ten selected facilities and is included with the site feasibility studies. Task 1.5 Detailed Data Collection for Selected Facilities Section 8 Site visits followed by continued dialog were used to collect data from the selected facilities for use in the feasibility studies. Task 1.6 Preliminary Assessment of Selected Facilities Section 9 Black & Veatch made a preliminary evaluation of each of the biomass facilities based on data collected in Task 1.5. Topics covered generally included current operations, power potential, proposed facility features, environmental aspects, January 5, 2001 4 Final Report

socioeconomic aspects, economic aspects, and elevation and climatological data. In addition, a conclusion is provided for each of the preliminary assessments that indicates whether a full feasibility study of the proposed power plant is warranted. Task 1.7 Identification of Candidate Technologies Section 5 Technologies appropriate for biomass power plants were characterized. This characterization takes into account potential fuels and plant size range. A list of relevant equipment vendors was produced. Task 2 Feasibility Studies Black & Veatch performed a feasibility study for each of the ten sites for which an MOU had been signed. The feasibility studies are available as separate documents. The feasibility studies consider the interrelationship of the project with all surrounding systems. The basic components of each feasibility study are: Task 3 Technical Feasibility Economic Feasibility Financial Feasibility Commercial Feasibility Socioeconomic Feasibility Ecological Feasibility Juridical Feasibility Political Feasibility

Assist Development of Biomass-Based Power Generation Owners were given the results of their respective feasibility studies and then assisted in initial project implementation activities. The following subtasks were performed.

Task 3.1 Presentation of Feasibility Study Results to Facility Owners Section 11 Representatives of Black & Veatch made presentations to facility owners for each of the facilities found to be viable. Task 3.2 Develop Owner Understanding of Project Benefits Section 11 In addition to making the presentation above, Black & Veatch presented and explained the financial results of the project pro forma and the benefits and regulations of the SPP program to the facility owners. Task 3.3 SPP Program Handbook Preparation Black & Veatch has prepared a handbook outlining the procedure for entering the SPP program, including all responsibilities and performance standards for the SPP. The Handbook itself is issued concurrently with the Final Report.

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3.3 Biomass Energy Overview Biomass has been used by human civilization as a primary energy source for more than 1 million years. Today, about 12 percent of the world's energy comes from the use of biomass fuels.4 In industrialized nations, bioenergy facilities typically use waste fuels such as residue from pulp and paper production in large scale power and process steam applications. Conversely, developing nations have largely relied on biomass to provide fuel for rural cook stoves. These stoves are relatively inefficient and dirty. Increasing industrialization and household income are driving the economies of developing nations to implement cleaner and more efficient biomass technologies. Biomass is any material of recent biological origin. Biomass fuels include items as diverse as residential yard clippings, manure, urban wood waste, and dedicated energy crops. Compared to coal, biomass fuels are generally less dense, have a lower energy content, and are more difficult to handle. With some exceptions, these qualities generally make biomass fuels economically disadvantaged compared to fossil fuels. Environmental concerns may help make biomass an economically competitive fuel. Unlike fossil fuels, biomass fuels are renewable and do not contribute to greenhouse gas emissions. Biomass combustion releases no more carbon dioxide (CO2) than the plant absorbed during its growing cycle and which would be released during the biomass natural decay process. Fossil fuel combustion releases CO2 into the atmosphere that has been stored for centuries under the surface of the earth. Biomass fuels contain little sulfur compared to coal, resulting in decreased production of sulfur dioxide (SO2). They also have lower combustion temperatures that help reduce nitrogen oxide (NOx) emissions. However, unless biomass is efficiently and cleanly converted to a secondary energy form, the environmental benefits are only partially realized, if at all. For this reason efficient, modern biomass utilization must be favored over traditional applications. 3.3.1 Modern Biomass Applications Besides such simple changes as improved cook stoves, modern biomass technology has many applications throughout the world. Three of these applications are distributed generation, utility plants, and industrial cogeneration. 3.3.1.1 Distributed Generation. There are many situations where the development of small, modular distributed generators can be more economical than investing in expensive transmission and distribution systems. One possible scenario is the use of an anaerobic digester or biomass gasifier coupled with an engine-generator to provide gas, heat, and electricity at the village scale.

World Energy Council, Renewable Energy Resources: Opportunities and Constraints 1990-2020, 1993.

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3.3.1.2 Utility Plants. For environmental reasons, utilities are increasingly looking for renewable resources to add to their generation mix. Biomass is an attractive renewable option because the technology is well understood and can be baseloaded, unlike the intermittent output of solar and wind plants. Properly conceived, a biomass plant can use waste fuels from the surrounding area that are available at low, zero, or even negative cost (tipping fees). Fuels can consist of urban wood waste, agricultural residues, and other waste fuels. 3.3.1.3 Industrial Power Generation and Cogeneration. Many agricultural processing and rural industries have large electrical and thermal demands and a ready supply of biomass waste fuels. In many cases, these facilities can economically burn the waste to met at least a portion of their electrical demand and possibly generate process steam as well. Specific industries with potential include palm oil (Figure 3-1), sugar cane milling, wood processing (Figure 3-2), and rice milling. Thailand, which has been an agrarian country for most of its history, has widespread agricultural and rural industry that could benefit from modern application of biomass technologies. Biomass energy use in Thailand is discussed in the next section.

Figure 3-2. Fresh Oil Palm Bunch at a Thailand Palm Oil Mill.

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Figure 3-3. Harvesting of Rubber from a Parawood Plantation.

3.3.2 Biomass Energy in Thailand The use of biomass as an energy source is widely practiced throughout Thailand industries, particularly in rural and agricultural areas. Out of 754 industries surveyed in recent study, 71 percent still use fuelwood as a source of energy.5 Figure 3-3 shows industrial energy use and the amount of industrial energy derived from two biomass types: fuelwood and agricultural residues. This figure also plots the fraction of total industrial energy use derived from biomass sources. Use of biomass as an energy source has not been rising as fast as total industrial energy use. For this reason, the share of biomass energy used in industrial processes has steadily dropped from 46 percent in 1985, to 25 percent in 1996, despite averaging 8 percent annual growth over the period. Although overall industrial energy use declined in 1997 with the financial crisis, use of agricultural and wood residues actually climbed, increasing the share of biomass energy to 28 percent. The increase was nearly entirely due to an almost 25 percent surge in fuelwood consumption. This increase in fuelwood consumption underscores its importance as a locally available inexpensive fuel.

Panyathanya, W., S. Rawiwan, S. Benjachaya, A Survey of Industrial Fuelwood Consumption in Thailand, 1993.

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800

50%

700

45%

40% 600 35% Fuelwood 500 Crop residues Total Industry Biomass Share of Total Industry 400 25% 30%

300

20%

15% 200 10% 100

5%

0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

0%

Year

Figure 3-3. Industrial Energy Use in Thailand.6 As Thailands economy recovers, the share of biomass energy used in industry is likely to continue falling even though overall use of biomass as a primary energy source will likely rise. In either case, biomass use could be reduced even while maintaining electrical capacity growth if modern, efficient biomass energy conversion systems were widely adopted. Properly implemented policy encouraging sustainable and efficient use of biomass fuels will benefit Thailand in several ways. Benefits include reduced dependency on foreign energy sources, strengthening of rural economies through creation of local fuel markets and jobs, and addition of renewable baseload power with minimal environmental impact. Regardless of policy, biomass will continue to be heavily relied on in many industries such as sugar cane and palm oil milling. 3.3.3 Small Power Producers Program Overview Small rural industries engaged in power production from biomass may sell their excess energy generation back to the electrical grid through the Small Power Producers (SPP) Program. The SPP program was initiated by the National Energy Policy Council and implemented by the Electricity Generating Authority of Thailand (EGAT), Metropolitan Electricity Authority (MEA), and Provincial Electricity Authority (PEA). The SPP program was initiated based on the conclusions of the National Energy Policy Council that:

Extracted from the Regional Wood Energy Development Programme in Asia (RWEDP) biomass energy use database located at: http://www.rwedp.org/cgi-bin/consumptionQuery.pl.

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generation from non-conventional energy, waste or residual fuels and cogeneration increases efficiency in the use of primary energy and by-product energy sources and helps to reduce the financial burden of the public sector with respect to investment in electricity generation and distribution.

The national and external benefits of the SPP program include the conservation of fossil fuels, reduced fuel imports, conservation of foreign hard currency, and distributed generation benefits. The intent of the program is to realize these external benefits, yet result in a direct cost to ratepayers that is no higher than the alternative of supplying electricity without SPP projects. The SPP regulations establish several conditions for purchases from SPPs. These include a purchased capacity limitation of 60 MW (up to 90 MW in certain locations) and the stipulation that EGAT be the sole purchaser of electricity. Payments to the SPP can consist of an energy-only payment for electricity delivered (kWh) or an energy and a capacity payment. No capacity payments are made for contracts with a term of less than 5 years (non-firm contracts). In order to receive capacity payments (given under firm contracts) the SPP must meet certain criteria (for example, contract length of 5 to 25 years, minimum hours of operation, etc.). Although capacity payments provide substantial revenue to power projects, only three out of the 24 biomass projects accepted so far into the SPP program receive such payments. All projects examined in this study were designed from the outset to qualify for the capacity payments. Candidate SPPs must file applications for sale of power to EGAT and must undergo evaluation to be certain the proposed project meets all terms of the SPP program. Black & Veatch has prepared guidelines to assist developers and facilities entering the SPP program. These are included in the Development and Construction Handbook of this study, issued jointly with this Final Report.

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4.0 Thailand Biomass Fuel Resource Assessment (Task 1.1)

This fuel supply review investigates nine types of biomass resources as potential fuel for power and cogeneration plants: Rice husk Oil palm residues Bagasse Wood residues Corncob Cassava residues Distillery slop Coconut residues Sawdust This section of the Final Report provides updated information on the fuels and draws conclusions concerning the viability of each biomass fuel. Availability, distribution, production rates, forecasts, industries involved, prices, and the general suitability of the fuels for power production are assessed and presented in the following sections. The section starts with a general overview of the biomass fuel supply situation in Thailand. 4.1 Fuel Supply Overview Thailand is a nation rich in agricultural and forestry resources that provide potential sources for biomass fuel. This study attempted to identify viable biomass fuels and quantify their attributes. Table 4-1 provides basic information on the most viable fuels identified: rice husk, palm oil residues, bagasse, and wood residues (including sawdust). Each of these fuels is associated with a particular industry where they are produced as byproducts (rice milling, palm oil production, sugar cane milling and wood products, respectively). Since the fuel is concentrated at the milling site, it is generally inexpensive transportation costs are avoided and the resource might otherwise represent a disposal problem. The other fuels are not considered as viable for various reasons. Corncobs and coconut residues are generally left scattered, making collection difficult. They are suitable supplementary fuels but are not a significant source of energy for power generation. Because of their high moisture content, cassava residues and distillery slop are not likely to find widespread implementation as fuels.

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Table 4-2 Most Viable Biomass Fuels Fuel Source output, 106 tonne/yr Available unused residue, 106 tonne/yr a Higher heating value, kJ/kg Fuel consumption, tonne/yr/MW b Aggregate power generation potential, MW
Notes:
a

Rice husk 20 2.3-3.7 14,100 9,800 234-375

Palm Oil Residues 2.2 0.41-0.74 10,800 14,050 33-53

Bagasse 50 2.25-3.5 10,000 14,100 160-248

Wood Residues 5.8 1.8 10,000 15,500 118

Each biomass was estimated based on the following assumptions. Rice-husk Based on rice mills of capacity minimum 100 tonnes of paddy/day. Palm Oil Residues Based on the 17 crude palm oil extracting facilities. Residues consist of shells, fibre, and empty fruit bunch. Bagasse Based on the 46 Sugar mills. Wood Residues Included discarded processed wood and sawdust from general sawmills and parawood processing facilities and small logs from parawood plantation forest. b A uniform 85 percent capacity factor is assumed in this study.

Aggregate power generation potential from all residues surveyed in this study ranges from 779 to 1,043 MW. It should be noted that this value is for residues not already in use and does not account for generation gains by increases in existing process or power generation efficiency (e.g., sugar cane milling). As such, the estimates are for incremental capacity and are slightly conservative. Figure 4-1 shows distribution of this capacity in the various provinces. The most promising provinces account for about 300 MW of developable capacity and include Suratthani, Suphan Buri, Kanchanaburi, Nakhon Sawan, Nakhon Ratchasi, Udon Thani, Kamphaeng Phet, Krabi, Trang, and Nakhon Sri Thammarat. Similar fuel supply studies have been performed by other researchers and organizations. These are compared in Table 4-2.7, 8 The results of these investigations vary widely depending on three primary factors: Initial assessment of residue source production. Estimates can be based on crop production, which vary significantly from year to year. Amount of residue potentially available and ultimately suitable for economic power generation. Some fuels, such as palm oil residues, are concentrated at few sites and are thus easy to collect and highly suitable for power generation. Others, such as rice husk, are scattered over thousands of mills throughout the country and have alternative competitive uses. The viability of this fuel is highly site specific.

EC-ASEAN COGEN Program, Evaluation of Conditions for Electricity Production Based on Biomass, August 1998, available at: http://www.nepo.go.th/encon/encon-DANCED.html. 8 Charles M. Kinoshita, et al, Potential for Biomass Electricity in four Asian Countries, presented at the 32nd Intersociety Energy Conversion Engineering Conference, 1997.

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Figure 4-4. Aggregate Potential Net Electric Capacity from Most Viable Residues.

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Table 4-3 Comparison of Thailand Biomass Fuel Supply Studiesa Industry Source output, 106 tonne/yr Black & Veatch (average) EC-ASEAN COGEN Kinoshita, et al Residue produced, 106 tonne/yr Black & Veatch (average) EC-ASEAN COGEN Kinoshita, et ala Available residue, 106 tonne/yrc Black & Veatch (average) EC-ASEAN COGEN Program Kinoshita, et ala Potential power generation, GWh/yr Black & Veatch (average) EC-ASEAN COGEN Kinoshita, et al Capacity factor, percent Black & Veatch EC-ASEAN COGEN Kinoshita, et al Rice husk Rice paddy 20 22 20 4.6 4.8 5.6 3.0 0.79 2.77 2,270 400 1,261 85 68 85 Palm Oil Residues
Fresh fruit bunch

Bagasse Sugar cane 50 50.5b 43 14.5 14.6b 10.3 2.88 14.6b 5.16 1,520 5,700 970 85 29 30

Wood Residues Wood 5.8 >17b 3.48 Unknown 1.8 Unknown 880 Unknown 85 Unknown

2.2 2.25 <1 0.97 0.95 0.31 0.58 0.95 0.16 320 350 27 85 63 85

Potential generation capacity, MW Black & Veatch (average) 305 43 204 118 EC-ASEAN COGEN 66 69 1,900 950 Kinoshita, et al 170 4 370 Notes: a Values in italics are derived. Values in bold are assumed. All residue quantities from Kinoshita have been converted from dry-basis assuming moisture contents of 10, 30, and 50 percent, for rice husk, palm oil residues, and bagasse, respectively b There is some uncertainty as to the number used to calculate to the power potential. c Different assumptions are used for residue availability. In general, B&V estimate is for residues readily collectible and not already in use, COGEN number is for residue structurally available, Kinoshita estimate is 50 percent of total production.

Assumptions concerning power conversion efficiency, plant capacity factor, and operation profile (year-round or seasonal). These factors affect the potential energy production (MWh) and the associated plant capacities (MW). As an example of the differences that can arise, the specific case of bagasse-based power generation, one of the most promising fuels, is examined. Black & Veatch assumed that production of sugar cane, the source of bagasse, would average about 50 million tonnes per year. This assumption is based on the production target set by the Thailand government. Actual production has varied from 37.8 to 58 million tonnes (average 49.4) January 5, 2001 4 Final Report

over the period from 1993 to 1999. Kinoshita assumed production of 43 million tonnes, whereas COGEN used the value for 1994/95 of 50.5 million tonnes. The percent bagasse residue produced from the sugar cane was similar for the three studies: 29, 24, and 29 percent for Black & Veatch, Kinoshita, and COGEN, respectively. The largest differences between the three estimates arise due to the assumptions used to determine what percentage of the potential residue is ultimately available for power production. Black & Veatch assumed that only those residues that are not used currently at the mills would be available (about 20 percent of the total bagasse). This estimate does not include upgrades of existing mills to higher efficiency power systems. Kinoshita and COGEN assume that 50 and 100 percent, respectively, of total bagasse supply could be used. These assumptions would require replacement or extensive upgrades to a significant portion of the existing mill systems in Thailand. To determine the electricity generation potential from the available residues, an energy conversion efficiency factor is applied. Black & Veatch estimates 527 kWh/tonne bagasse (TB). This number is equivalent to a net plant heat rate of about 19,060 kJ/kWh (LHV). Kinoshita and COGEN appear to use estimates of 190 and 333 kWh/TB, respectively. For reference, the two sugar mills examined for this study currently have very low conversion efficiencies of about 60 kWh/TB. The higher conversion efficiency estimated by Black & Veatch is due to the assumption that the bagasse would be used in dedicated (non-cogeneration) power plants built alongside existing mill systems, which would be retained to meet process steam and power requirements. The new power facilities would burn the excess bagasse produced by the mills. Such an arrangement allows for year-round operation of the power plant to provide firm power to the grid. As such, Black & Veatch assumed a capacity factor of 85 percent compared to about 30 percent used for each of the other two studies. Ultimately, this results in a smaller estimate of new capacity of 204 MW for this study. The much higher COGEN program estimate (1900 MW) is more indicative of the industry potential if most mill power systems in Thailand are upgraded or replaced. The Kinoshita estimate (370 MW) lies between the two extremes. Black & Veatch feels that, given observed reluctance of the sugar mill industry to develop higher efficiency plants, the estimate prepared for bagasse-based power generation is a realistic view of the near-term potential. To the extent that sugar mills migrate towards higher efficiency equipment (which is advisable when plants are established, relocated, or rehabilitated), the potential for power generation from bagasse will increase. As there is tremendous potential in this industry, such a transition should be encouraged. The following sections present data on availability, distribution, production rates, involved industries, prices, etc., of nine biomass fuels: rice husk, oil palm residues, bagasse, wood residues, corncob, cassava residues, distillery slop, coconut residues, and sawdust. 4.2 Rice Husk Rice is grown in every region of Thailand including the Southern region. Paddy production over the period from 1986/87 to 1995/96 has averaged about 20 million tonnes January 5, 2001 5 Final Report

per year. Despite decreasing planted and harvested area and a strong dependence on weather, production over the 5 year period from 1992 to 1996 was stable. The government has targeted a 1 to 2 percent increase in production through increased yield while maintaining nearly the same planted area. Rice husk is produced during paddy milling. Information on this resource is given in Table 4-3. Based on milling statistics, rice husk constitutes about 23 percent of the paddy weight. Potential residue availability by province is shown in Figure 4-2. Assuming an annual paddy production of 20 million tonnes and a residue collectivity of 50 to 80 percent, the availability of this resource is estimated at 2.3 to 3.68 million tonnes per year. Based on a heating value of 13,500 kJ/kg and the preceding assumptions, aggregate power generation potential from rice husk ranges from 234 to 375 MW. Rice husk has been used as fuel for power plants in Thailand. There are currently four power plants with the ability to burn rice husk accepted into the EGAT SPP program. The total capacity of the plants is 66.8 MW. Some of the plants burn other biomass fuels (e.g., wood chips) with the rice husk. Three of the plants are contracted to sell power to EGAT on a firm basis. Plans to develop other rice husk based power plants have stalled since the financial crisis began. Most of the 40,000 rice mills located in Thailand are small and are not suited for power production from their own supply of rice husk. However, there are 215 mills with capacities ranging from 100 to 2,000 tonnes of paddy per day. Five of these mills are
Table 4-3 Rice Husk Characteristics Source industry Source of biomass Source output, tonne/yr Supply forecast Biomass production rate, percent of source In process use, percent of source Total biomass supply, percent of source Biomass collectivity, percent of supply Total biomass availability, tonne/yr Higher heating value, kJ/kg Fuel consumption, tonne/yr/MW Aggregate power generation potential, MW Price, Baht/tonne Other uses Rice mills, ~40,500 mills in country Rice paddy 20,000,000 (avg. 1986-1995) Slightly increase, 1 to 2 percent per year 23 negligible 23 50-80 2,300,000-3,680,000 14,100 9,800 234-375 50-100 Soil conditioner, fuel, brick making

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Figure 4-2. Rice Husk Distribution.

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large and have capacities over 1,000 tonne/day. Because of the limited number of large mills, it may be necessary to build central power plants fed with husks from several mills in the surrounding area. This concept was shown to be technically and economically feasible for two sites evaluated in this study: Sanan Muang, a 250 tonne/day mill, and Thitiporn Thanya, a 500 tonne/day mill. In conclusion, in combination with appropriate technology and sufficient quantity, rice husk is a viable fuel for power plants. Detailed study of specific sites and the surrounding area is required to ensure adequate fuel supply and long-term availability. Additional information on rice husk as a potential biomass fuel is available in Annex 1. 4.3 Palm Oil Residues Palm oil is produced throughout tropical regions of the world from oil palm trees. In Thailand, oil palm trees are grown mainly in the Southern region in Krabi, Surat Thani, Chumporn, and Satun. In 1995, about 886,000 rai were harvested producing 2.17 million tonnes. Oil palm production has been increasing rapidly (22 percent per year over the period form 1987 to 1995), and future annual growth rates are predicted to be 10 to 15 percent. This will be achieved through increased productivity and harvested area. Fresh fruit bunches (FFB) harvested from oil palm trees are the raw material for the palm oil industry. FFB consist of fruit stems, commonly known as empty fruit bunches (EFB), and fruits, which contain crude palm oil, fiber, and nuts. The nut portion of the fruits contains a shelled kernel, which can be further processed to produce palm kernel oil. Solid residues (EFB, fiber, and shells) account for about 44 percent of the FFB weight. Properties of the solid residues are given in Table 4-4. Potential residue availability by province is shown in Figure 4-3. In general, palm oil mills use the solid byproducts (primarily shells and fiber) of the processing operations to provide steam to mill operations. The fuels are typically burned in low pressure watertube boilers. Some mills also include back pressure steam turbines for cogeneration of electricity and diesel generators for backup power production. In general, production of steam and electricity is not given much economic value by mill owners, and overall system efficiencies are poor. Biogas produced by anaerobic treatment of mill effluents may be used as fuel, but this is not common practice. In addition, oil palm trees at the end of their useful production life might be used as fuel. These trees otherwise represent a disposal problem. There are no known power facilities utilizing this resource.

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Table 4-4 Palm Oil Residue (EFB, Fiber, Shell) Characteristics Source industry Source of biomass Source output, tonne/yr Supply forecast Biomass production rate, percent of source In process use, percent of source Total biomass supply, percent of source Biomass collectivity, percent of supply Total biomass availability, tonne/yr Higher heating value, kJ/kg Fuel consumption, tonne/yr/MW Aggregate power generation potential, MW Price, Baht/tonne Other uses Palm oil mills Fresh fruit bunches 2,176,000 (1995) 10 to 15 percent growth per year 44 (EFB: 23-25; Fiber: 11-15, Shell: 6-8) 10-20 24-34 90-100 470,000-740,000 8,400-18,250 (avg. ~10,800) 14,050 33-53 0-200 Fertilizer

Assuming an annual FFB production of 2.2 million tonnes, the availability of this resource is estimated at 470 to 740 thousand tonnes per year. Based on an average heating value of 10,800 kJ/kg and the preceding assumptions, power generation potential ranges from 33 to 53 MW. This figure does not include any contribution from biogas produced by treatment of mill effluent, old age palm trees, or palm fronds. In addition, the figure does not consider improvements to existing mill power systems. A study by Songkla University indicates that there are 52 palm oil mills in Thailand. Of this number only about 20 percent have cogeneration systems, ranging from less than 1 MW to 3.5 MW in electrical capacity. There are currently no palm oil mills enrolled in the SPP program. A 40 MW plant was proposed, but plans did not materialize after the financial crisis. In conclusion, palm oil residues are a proven fuel for cogeneration plants. Cogeneration at new facilities, in addition to modernization and expansion of existing facilities, appears viable. Combustion of EFB and other process residues will allow for significantly larger plants that can benefit from economies of scale. Nevertheless, detailed site-specific study is required to ascertain the viability of individual projects. Additional information on palm oil residues as a potential biomass fuel is available in Annex 2.

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Figure 4-3. Palm Oil Residue Distribution.

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4.4 Bagasse Bagasse is the fiber residue remaining after sugar cane has been processed to remove the sugar laden juice. In Thailand, sugar cane is grown primarily in the Central region with some production in the Northern and Northeast regions. Annual production of sugar cane over the period from 1985 to 1996 was about 40 million tonnes. During this period, production grew at an average rate of 13.7 percent per year. The government has set a target annual production of 50 million tonnes. Sugar milling is seasonal and only lasts 4 to 5 months. During the off-season, mill maintenance is performed. Sugar mills require large amounts of steam and electricity to process sugar cane. Sugar mills burn bagasse to provide the steam for these operations. (Bagasse properties and distribution are given in Table 4-5 and Figure 4-4, respectively.) The steam drives cane shredders, mills, and other mechanical drive turbines. The steam is also passed through back pressure turbine generators for cogeneration of electricity. Turbine exhaust steam is used for sugar juice heating and evaporation. The high demand for steam and large quantities of bagasse may result in excess electricity production. Fourteen sugar mills have entered the SPP program to sell excess power to EGAT on a non-firm basis. Based on milling statistics, bagasse constitutes 28 to 30 percent of the cane. Because of the large amount of bagasse used for steam and power supply, typically 7 percent of the cane weight remains as excess. Assuming an annual cane production of 50 million tonnes, the annual availability of this resource is estimated at 2.25 to 3.5 million tonnes. Based on a heating value of 10,000 kJ/kg, power generation potential from the excess bagasse ranges from 160 to 248 MW. Significant additional capacity could be obtained through upgrades of existing mill power systems.
Table 4-5 Bagasse Characteristics Source industry Source of biomass Source output, tonne/yr Supply forecast Biomass production rate, percent of source In process use, percent of source Total biomass supply, percent of source Biomass collectivity, percent of supply Total biomass availability, tonne/yr Higher heating value, kJ/kg Fuel consumption, tonne/yr/MW Aggregate power generation potential, MW Price, Baht/tonne Other uses Sugar mills Sugar cane 50,000,000 (as planned) Stable 28-30 23 5-7 90-100 2,250,000-3,500,000 (excess only) 10,000 14,100 160-248 (existing excess bagasse only) 0-150 Production of medium density fiber board, fuel

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Figure 4-4. Bagasse Distribution.

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Because it is viewed as a waste product, bagasse generally has low economic value to mill owners in Thailand. For this reason, mill power systems are typically inefficient and do not attempt to conserve bagasse. Mills can employ many methods to increase bagasse production, and reduce steam and power requirements. These approaches could allow a mill to build sufficient bagasse supply to operate a power plant year-round and sell to EGAT on a firm basis as an SPP. (Alternatively, other fuels could be burned during the off-season.) This approach is not currently taken. Although there are fourteen sugar mills accepted into the SPP program, all are scheduled to sell power on a non-firm basis. Contracted sales to EGAT total 70.5 MW. Various approaches can be taken to upgrade mills to allow for power export to the grid. These range from simple upgrades to sell existing excess capacity to the grid (onseason operation), to development of new central power plants with associated mill processing improvements (year-round operation). The condition and age of existing mill power equipment, as well as the willingness of the mill owner to invest capital in a power project, is a strong factor in the approach taken. Options must be assessed at each site to determine the most viable alternative. In general, improvements can usually be made. Additional information on bagasse as a potential biomass fuel is available in Annex 3. 4.5 Wood Residues Wood residues include chips, bark, and sawdust produced within various wood processing industries including sawmills, furniture factories, and other industries (e.g., toys, packing cases, crates, etc.). Excluding parawood from rubber tress, in-country wood production in Thailand has decreased dramatically from about 2,000,000 m3 in 1988, to 35,000 m3 in 1995. The deficit has been made up with imports of raw saw logs and processed wood. From 1991 to 1995, wood imports averaged about 3.7 million m3 or 2.6 million tonnes annually; processed wood was about 55 percent of total imports. A major source of domestic wood is parawood from old age para-rubber trees. An IFTC marketing study estimates that parawood production averages about 4.57 million m3 or 3.2 million tonnes annually. Unlike the other wood resources, parawood production is relatively stable. It is planted largely in the Southern region as shown in Figure 4-5. Processing of parawood, saw logs, and processed wood occurs at sawmills and production plants and is accompanied by residue production of 30 to 60 percent (average 53 percent). There are more than 400 sawmills and 400 parawood factories in Thailand. The aggregate properties of residues produced in these industries are given in Table 4-6.

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Table 4-6 Wood Residue Characteristics Source industry Source of biomass Source output, tonne/yr Supply forecast Biomass production rate, percent of source In process use, percent of source Total biomass supply, percent of source Biomass collectivity, percent of supply Total biomass availability, tonne/yr Higher heating value, kJ/kg Fuel consumption, tonne/yr/MW Aggregate power generation potential, MW Price, Baht/tonne Other uses Sawmills, production plants Saw logs, parawood trees, processed wood 5,800,000 Fluctuating 53 (average) negligible 53 60 1,836,000 10,000 15,500 118 50-100 Fuel, particle board, charcoal

Based on a residue percentage of 53 percent and a collectivity of 60 percent, the annual availability of this resource is estimated at 1.84 million tonnes. Based on a heating value of 10,000 kJ/kg, power generation potential from wood residues is about 118 MW. There are currently five power plants with the ability to burn wood residues accepted into the EGAT SPP program. The total capacity of the plants is 120 MW. Most of the plants burn other biomass fuels (e.g., rice husk, black liquor) with the wood. Two of the plants are contracted to sell power to EGAT on a firm basis. The largest of the five is a 56.7 MW plant located at a paper mill. The plant is owned by Advance Agro, Plc. Wood combustion for power production is well understood. In the U.S., there is about 7,000 MW of installed wood power capacity. However, in Thailand, alternative uses compete strongly for wood residues. These include fuel for domestic heating and cooking, charcoal production, and particle board production. Because of these alternate uses, the fuel supply of any proposed power plant will have to be examined in detail. Additional information on wood residues as a potential biomass fuel is available in Annex 4.

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Figure 4-5. Parawood Residue Distribution.

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4.6 Corncob Corn plants are the source of corncob, which remains after the ear is milled to remove the corn seed. Corn is grown mainly in the Northern region (about 48 percent), with the remainder grown primarily in the Central and Northeast regions. Annual production of corn over the period from 1986 to 1996 was about 3.88 million tonnes. The government has set a target for increased corn production through increased planted area and productivity. Accordingly, it is expected that production will increase at about 5 percent annually. Generally, corn is grown in two crops per year. The growing season is 90 to 110 days. Corn is mostly milled using portable milling machines at locations around the plantations. Thus, most of the residue (corncob) is left scattered in the field, posing collection difficulty. A small portion is processed in milling shops located in provinces that grow the crop. Based on milling statistics, corncob constitutes about 25 percent of the corn seed weight. Further information on corncob as a potential biomass resource is given in Table 4-7. Potential residue availability by province is shown in Figure 4-6. Based on a residue percentage of 25 percent and a collectivity of 50 percent, the annual availability of this resource is estimated at 500,000 tonnes. Based on a heating value of 15,000 kJ/kg, power generation potential from corncobs is estimated at 54 MW. It is believed that there are currently no power plants burning corncob accepted into the EGAT SPP program. However, there is a cogeneration plant fired with corncob in Lop Buri. In addition, one of the sugar mills examined in this study has used corncobs a supplemental fuel in the past. The corncobs were fed directly into the sugar mill boiler without need for chipping or grinding.
Table 4-7 Corncob Characteristics Source industry Source of biomass Source output, tonne/yr Supply forecast Biomass production rate, percent of source In process use, percent of source Total biomass supply, percent of source Biomass collectivity, percent of supply Total biomass availability, tonne/yr Higher heating value, kJ/kg Fuel consumption, tonne/yr/MW Aggregate power generation potential, MW Price, Baht/tonne Other uses Corn milling/agriculture Corn 4,000,000 5 percent increase per year 25 negligible 25 50 500,000 15,000 9,200 54 300-400 Furfuryl alcohol, fertilizer, fuel

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Figure 4-6. Corncob Distribution.

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Based on experience with corncobs it appears to be a viable fuel. However, collection of large enough quantities to support a central power plant would likely be difficult and costly. The most likely role for corncobs will be as a supplementary fuel. This concept was examined in the feasibility study for Karnchanaburi Sugar Industry Co., Ltd. Additional information on corncobs as a potential biomass fuel is available in Annex 5. 4.7 Cassava Residues Cassava, the source of tapioca, is a bushy tropical plant producing starch-rich tubers (the underground portion of the plant). In Thailand, cassava is produced mainly in the Northeast region, with some production in the Central and Northern regions. Production of cassava roots over the period from 1987 to 1995 has averaged about 20 million tonnes per year. Production has been decreasing slightly due to competitive export market conditions. Cassava is processed to make to make two major products: tapioca pellets and starch/flour. Approximately 75 to 80 percent of cassava production is exported (primarily as pellets). The remainder is consumed in country. Direct use of cassava as fuel for power generation is not economically viable because the present cost is too high compared to other alternative fuels. However, production of tapioca starch produces waste tapioca skin (peelings) and slurry that could be potential low cost fuels. Information on these residues is given in Table 4-8. Based on milling statistics, slurry production is about 30 percent of the raw cassava weight, while skin production is 5 to 10 percent. Potential residue availability by province is shown in Figure 4-7. Tapioca starch factory capacity is about 7 million tonnes in terms of raw cassava. Based on this level of production and a collectivity of 90 to 100 percent, total residue availability is 2.5 to 2.8 million tonnes per year. Laboratory tests of skin and slurry samples reveal that they have high moisture contents of 67 and 83 percent, respectively. Dry heating values were measured at 15,100 and 15,500 kJ/kg, respectively. In order to utilize cassava residues as fuel, a moisture separation or drying process would be necessary. This would imply additional cost and overall efficiency loss. Based on a reduction in moisture content to 40 percent, it is estimated that heating values would be around 9,150 kJ/kg. Using the residue availability given above, power potential from this resource is estimated at 75 to 84 MW.

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Table 4-8 Cassava Residue Characteristics Source industry Source of biomass Source output, tonne/yr Supply forecast Biomass production rate, percent of source In process use, percent of source Total biomass supply, percent of source Biomass collectivity, percent of supply Total biomass availability, tonne/yr Higher heating value, kJ/kg Fuel consumption, tonne/yr/MW Aggregate power generation potential, MW Price, Baht/tonne Other uses Tapioca starch factory Cassava 7,000,000 Stable 40 (Slurry: 30; Skin: 10) negligible 40 90-100 2,520,000-2,800,000 (67-83 percent moisture) 9,150 (dried to 40 percent moisture) 17,100 (average at 40 percent moisture) 75-84 Slurry: 100-200; Skins: 250-300 Slurry: alcohol, pellet admixture; Skins: fertilizer

Slurry waste may be used for alcohol production or as an admixture for pellet production. The skins are normally left to decompose as fertilizer. The prices of cassava wastes vary by location and quantity available and range from 100 to 300 Baht/tonne. Limited information is available on the use of cassava wastes as a boiler fuel. Because of the high moisture content, the residues would require drying before use in a boiler. More research is required to determine if such a scheme is feasible, both technically and economically. Additional information on cassava residues as a potential biomass fuel is available in Annex 6.

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Figure 4-7. Cassava Residue Distribution.

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4.8 Distillery Slop Distillery slop (also known as spent wash, molasses distiller's solubles, dunder, or stillage) is a waste product of liquor production from sugar cane molasses. Thirteen distilleries are located throughout Thailand with the greatest concentration in the Central region. Most of the distilleries have capacities of 12 to 16 million liters of 100 percent alcohol per year, with one, located in Pathum Thani having a capacity of 56 million liters per year. Total liquor production in Thailand has averaged 750 million liters (about 30 percent alcohol) recently. It is expected that production will increase slightly due to the introduction of competition in the liquor industry. The properties of distillery slop are given in Table 4-9. Distribution throughout the provinces is shown in Figure 4-8. Distillery slop consists of organic substances including yeast, ammonia phosphate, and molasses residue. Because of the high organic content, direct discharge of slop into waterways would pollute the water. Thus, distillery slop requires treatment before disposal is allowed. Modern technology is available for treatment and includes: evaporation followed by incineration, use of an upflow anaerobic sludge blanket, and use of an upflow anaerobic sludge blanket followed by activated sludge. However, these techniques are expensive for distillery owners to implement. Current recommended practice for the disposal of distillery slop is to contain it in a closely monitored evaporation pond. When the slop dries, it looks like a solid slurry and can be used as fertilizer. In Thailand, there have been long term experiments on the direct use of unconcentrated slop as fertilizer for rice paddy. Encouraging increases in rice yield have been observed.
Table 4-9 Distillery Slop Characteristics Source industry Source of biomass Source output, liter/yr Supply forecast Biomass production rate, percent of source In process use, percent of source Total biomass supply, percent of source Biomass collectivity, percent of supply Total biomass availability, tonne/yr* Higher heating value, kJ/kg
* * * * *

Whiskey distillery factory Whiskey 750,000,000 Slightly increase 48 (300 percent x 16 percent) negligible 48 90-100 356,000-396,000 15,500 7,700 46-52 No commercial value Fuel, fertilizer

Fuel consumption, tonne/yr/MW Price, Baht/tonne Other uses

*

Aggregate power generation potential, MW

Values are for concentrated distillery slop (1.35 percent moisture).

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Figure 4-8. Distillery Slop Distribution.

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Production of each liter of liquor produces about 3 liters of distillery slop. Based on an annual liquor production of 750 million liters, about 2,250 million liters of slop are produced annually. However, due to high moisture content, the slop must be concentrated before it can be used to fuel a boiler. It is estimated that about 16 percent of the distillery slop would be available in a concentrated form suitable for use as fuel. Thus, about 360,000 m3 of concentrated slop is available annually (approximately 396,000 tonne/yr). Assuming a nearly dry (moisture: 1.35 percent) heating value of 15,500 kJ/kg, power generation potential is estimated to be 46 to 52 MW. It needs to be emphasized that this estimate is based on the indicated moisture content. In order to utilize distillery slop as fuel, a moisture separation or drying process would be necessary. This would imply additional cost and overall efficiency loss. At least one distillery is equipped with an evaporation and incineration process that uses evaporated slop as fuel for incinerators. Slop produced in the distillation process has a solids content of about 16 percent. The diluted slop is passed through an evaporator system in order to concentrate the slop to a solids content of 60 percent. The concentrated slop is then burned in the incinerators, which are initially heated using heavy oil. The incinerators produce process steam for use in the distillery. As indicated above, distillery slop can be directly used as a fertilizer. In contrast, use of slop as fuel for steam generation involves installation of expensive evaporation and steam generation equipment. The amount of slop generated from one or two distillery plants may not be sufficient to justify the economics of a power plant. Thus, the potential for power generation for this resource does not appear viable. Additional information on distillery slop as a potential biomass fuel is available in Annex 7. 4.9 Coconut Residues Coconut is grown in every region of Thailand but is concentrated in the Central and Southern regions, which together produce over 90 percent of the total. Surat Thani, Prachuap Khiri Khan, and Chumporn are among provinces with the highest production. Coconut production over the period 1986 to 1995 has averaged about 1.4 million tonnes per year. Production is relatively stable. Coconut is either directly consumed or used to produce coconut oil or milk. A small fraction (less than 1 percent) is exported. Because of the variety of end uses, processing of coconut is non-uniform. Generally, coconut fiber is a major waste product and is peeled off by planters in order to reduce transportation costs. Merchants come to buy the peeled coconut to sell to distributors who will sell to local markets and factories. In certain areas, the coconut meat is extracted, chipped, and left to dry in the open air. These chips are sold to factories to make coconut oil.

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Table 4-10 Coconut Residue Characteristics Source industry Source of biomass Source output, tonne/yr Supply forecast Biomass production rate, percent of source In process use, percent of source Total biomass supply, percent of source Biomass collectivity, percent of supply Total biomass availability, tonne/yr Higher heating value, kJ/kg Fuel consumption, tonne/yr/MW Aggregate power generation potential, MW Price, Baht/tonne Other uses Coconut plantations, peeling shops and oil mills Coconut 1,400,000 Stable 47 (Fiber 35; Shell: 12) negligible 47 Fiber: 60; shell 40 361,000 16,500 (average) 8,400 43 Fiber: 50; Shell: 500-800 Fiber: furniture, fertilizer; Shell: fuel, carbon powder

Coconuts are comprised of fiber (35 percent), shell (12 percent), meat (28 percent), and juice (25 percent). Fiber, shell, and meat residue are the major coconut residues. Meat residue after extraction of milk is relatively small. Fiber and shell properties are given in Table 4-10. Distribution of the residues is shown in Figure 4-9. Based on an annual coconut production of 1.4 million tonnes and assumed collection levels of 60 percent for fiber and 40 percent for shell, residue availability is 294,000 tonne/yr and 67,200 tonne/yr, respectively. Based on an average heating value of 16,500 kJ/kg, estimated power generation potential is 43 MW. Common uses of coconut fiber and coconut shell are as stuffing material for furniture components and as fuel and carbon powder, respectively. This review indicates that there is a potential for power generation using coconut residues. However, collection of an adequate supply for a power plant may be difficult because the residues are generally widely scattered. The residues may be more aptly used as a supplemental fuel. To achieve sufficient economies of scale, a coconut oil factory or group of factories could be a developer for this resource. However, suitability of this type of supply needs to be studied in detail and on an area-specific basis. Additional information on coconut residues as a potential biomass fuel is available in Annex 8.

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Figure 4-9. Coconut Residue Distribution.

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4.10 Sawdust Sawdust is produced in wood sawing and milling activities. Section 3.4 indicates that total wood processed in Thailand is on the order of 5.8 million tonnes per year. This figure includes domestically produced wood, imported wood, and parawood from old age rubber trees. Industries involved include sawmills and factories that make wood products. Section 3.5 indicates there are more than 400 saw mills and more than 400 parawood factories in Thailand. No statistics were readily available to demonstrate sawdust availability. An estimate was made based on observations of sawmill operations. A figure of 7 percent in terms of weight of wood input is considered a reasonable estimate of the sawdust generated. This number would vary significantly with the number of sawing operations undergone by a particular piece of wood. Net availability is generally much less because a significant amount is dispersed in the form of dust, perhaps more than 50 percent. Table 4-11 summarizes the potential for this biomass fuel. Based on a net availability of 4 percent, and an assumed collectivity of 95 percent, this resource would amount to about 220,400 tonne/yr. With a heating value of 10,300 kJ/kg, power generation potential is about 16 MW. Distributed over the whole country, this potential is not significant. Because of the limited quantities, dedicated sawdust fired power facilities are not likely to be viable. However, sawdust could be easily burned with the other wood wastes that are in relative abundance at wood processing facilities.
Table 4-11 Sawdust Characteristics Source industry Source of biomass Source output, tonne/yr Supply forecast Biomass production rate, percent of source In process use, percent of source Total biomass supply, percent of source Biomass collectivity, percent of supply Total biomass availability, tonne/yr Higher heating value, kJ/kg Fuel consumption, tonne/yr/MW Aggregate power generation potential, MW Price, Baht/tonne Other uses Wood products Wood 5,800,000 Fluctuating 7 3 4 95 220,400 10,300 13,400 16 0-300 Joss-stick, fuel, mushroom planting

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5.0 Identification of Candidate Technologies (Task 1.7)

Worldwide experience indicates that biomass fuels can be successfully burned by all of the major combustion technologies currently used in steam generation provided that characteristics of the biomass have been properly evaluated and accounted for in the design. This section discusses the various technology considerations as applicable for the candidate facilities included in this project. 5.1 Biomass Fuel Concerns Compared to coal, biomass fuels are generally less dense, have a lower energy content, and are more difficult to handle. In addition to these concerns, the ash of biomass fuels usually has high levels of alkali components. The alkali components, typically potassium and sodium compounds such as potassium oxide (K2O) and sodium oxide (Na2O), cause the ash to remain sticky at a much lower temperature than coal ash. This increased stickiness creates the potential for substantial slagging and fouling problems, along with accelerated tube wastage. The ash of some biomass fuels is also highly abrasive (notably rice husks). The problems associated with alkali materials in biomass vary widely between different biomass fuels. To a certain extent, slagging potential can be determined by analysis of fuel properties. However, the slagging tendency of a particular fuel cannot be predicted from fuel properties alone. Boiler design and operating conditions (especially temperature) have a large impact on the nature of deposits. Gasification of high alkali fuels and subsequent combustion of the gas in the boiler may reduce ash deposition. The success of this approach depends on maintaining gasification temperatures below combustion temperatures. Temperatures of 1,400F (760C) and below have been shown to significantly reduce deposition.9 Common biomass fuels with the highest alkali contents are typically nut hulls, rice and grain straws, and grasses. The hulls of rice and grains typically have a much lower alkali content than the straw. Therefore, if a unit will only burn rice husks, some of the design parameters applied to biomass fuels with much higher alkali material contents may be relaxed. However, if any rice straw or other local biomass is likely to be included in the fuel mix in addition to the rice husks, the design parameters discussed should be strictly applied. 5.2 Thermochemical Conversion Options There are several proven conversion systems for burning biomass fuels. These include the following: Mass burn stoker boilers.
9

Thomas R. Miles, et al, Alkali Deposits Found in Biomass Power Plants, April 15, 1995.

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 Stoker boilers (stationary sloping grate, travelling grate, and vibrating grate). Bubbling fluidized bed boilers. Circulating fluidized bed boilers. Gasification with combustion in a close-coupled boiler. Pulverized fuel suspension fired boilers. 5.2.1 Mass Burn Stoker Boiler Mass burn stoker boilers offer very good fuel flexibility, but these units are typically larger and more costly than the other types of boilers. This is because mass burn units have historically been designed to burn unprocessed municipal solid waste (MSW). MSW can vary significantly in size, heating value, and moisture content, and thus requires special accommodations in the boiler design. Fuel flexibility and the ability to accommodate a wide variation in fuel properties are generally not required for biomass boilers. 5.2.2 Stoker Boiler Stoker combustion is a proven technology that has been successfully used with biomass fuels (primarily wood) for many years. In the vibrating grate variety, fuel is fed through the front wall of the boiler above the grate. Because most biomass readily devolatilizes, much of the fuel burns in suspension above the grate. Unburned particles and ash settle on the grate and protect it from the high combustion temperatures. The vibration of the grate causes ash accumulated on the grate to move toward the discharge end of the grate where it falls into the bottom ash collection and conveying system. Because stoker boilers have been in widespread use for many years, local manufacturers and maintenance companies are available in many countries (including Thailand). For this reason, capital costs for stoker boilers can be comparatively low. 5.2.3 Bubbling Fluidized Bed Combustion of biomass fuels in fluidized beds has been commercially applied for more than 20 years. A bubbling fluidized bed consists of fuel, ash from the fuel, inert material (sand), and possibly a sorbent (e.g. limestone) to reduce sulfur emissions. The fluidized state of the bed is maintained by hot air flowing upward through the bed. The air causes the bed material to rise and separate, and creates circulation patterns throughout the bed. Because of the turbulent bed mixing, heat transfer rates are very high and combustion efficiency is good. Consequently, combustion temperatures can be kept low compared to stoker boilers. This reduces NOx formation and is an advantage with biomass fuels, because they may have relatively low ash fusion temperatures. Low ash fusion temperatures can lead to excessive boiler slagging.

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Due to the large amount of heat stored in the bed material, the bubbling fluidized bed has the potential to accommodate a wider range of fuel heating values and moisture contents than the stoker boiler. This may make them an ideal choice for centrally located power plants fed with several different biomass residues. However, despite the apparent acceptance of bubbling bed technology, recent bubbling bed experience in Thailand is somewhat discouraging. 5.2.4 Circulating Fluidized Bed Circulating fluidized bed units also offer a high degree of fuel flexibility and would be a suitable technology for burning biomass. While early circulating fluidized bed units were in the size range appropriate for most biomass plants (10-50 MW), present circulating fluidized bed technology is focusing on fossil fueled units of 200 to 300 MW. Although manufacturers quote small circulating fluidized bed units, these units generally cost more than other combustion technologies, making them difficult to justify for biomass plants. Additionally, on a recent 35 MW rice husk power project, one of the major circulating fluidized bed suppliers declined to bid. The supplier stated that the technology was not the best approach to burning rice husk or rice straw. 5.2.5 Gasification Another potential conversion option is gasification. Gasification is typically characterized as incomplete combustion of a fuel to produce a fuel gas of low to medium heating value. Gasification lies between the extremes of combustion and pyrolysis (anaerobic thermal decomposition) and occurs as the amount of oxygen supplied to the burning biomass is decreased. Combustible constituents in the fuel gas include methane, carbon monoxide, hydrogen, and some higher hydrocarbons; inert constituents are primarily nitrogen, carbon dioxide, and water vapor. Depending on the gasification scheme used, the heating value of the fuel gas generally ranges between 3.7 and 7.5 MJ/Nm3 (100200 Btu/scf) for direct gasifiers, and between 11 and 17 MJ/Nm3 (300-450 Btu/scf) for indirect gasifiers. By comparison, natural gas has a heating value of around 37 MJ/Nm3 (1,000 Btu/scf). Direct gasifiers have been used extensively worldwide, including over 1 million small vehicles gasifiers used during World War II. Most development effort is now focussed on generally higher efficiency indirect gasifiers. Gasification expands the use of solid biomass to include all the uses of natural gas and petroleum-based fuels, giving it a distinct advantage over combustion. Besides providing higher efficiency power generation through advanced processes, the fuel gas can be used for the chemical synthesis of methanol, ammonia, and gasoline. Gasification is also better suited for providing precise process heat control (e.g., for glass-making). Energy conversion options for the fuel gas include close-coupled boilers, internal combustion engines, gas turbines, and fuel cells. Of these, only close-coupled boilers are considered technically mature for large scale applications.

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There are only a few suppliers of proven gasification systems in the world. One of the most successful fuels gasified is rice husk, which can be troublesome to combust directly. Several rice husk gasifiers are located in Malaysia. 5.2.6 Conversion Options Conclusion Although stoker boilers are widely in use, they are not always the most appropriate technical choice. For example, rice husks are most easily fired in fluidized beds or gasifiers because the lower operation temperatures reduce the risk of slagging. Stokers and suspension-fired units may also be used, but precautions should be taken to minimize the slagging potential. Fluidized beds are good choices in general because they can tolerate wide variations in fuel moisture content and size. Suspension firing is not suitable for most of the biomass fuels (except rice husks) due to their higher moisture contents and densities (which make them more difficult to be ground) compared to non-biomass fuels. Gasification may be a suitable choice, but lacks widespread technical and commercial acceptance. A comparison of the capital cost, ash characteristics and fuel compatabilities of the various combustion technologies are provided in Tables 5-1, 5-2 and 5-3, respectively. Due to their widespread availability, relatively low cost, and reasonable efficiency, stoker boilers were recommended for each of the new power facilities studied in this report.

Table 5-1 General Technical Compatibility Ratings (L-Low, M-Medium, H-High) for Various Fuels and Boiler Types Boiler Type Pulverized Fuel Fuel type Stoker Bubbling Bed Suspension Fired
Rice husk Oil palm residues Bagasse Wood chip Corncob Cassava residues M L M H M M H M H H M M M L L L L L

Distillery slop*
Coconut residues

L
M

M
M

L
L

*Assuming that the distillery slop has undergone an evaporation process.

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Plant Size1

Table 5-2 Steam Generator Technology Comparison for Different Plant Sizes Boiler type Pulv. Fuel Stoker2 Bubbling Bed Susp. Fired

Gross: 3.4 MW Net: 3.0 MW Boiler cost (equipment only), $M3 Balance of plant cost over base, $M Total cost over base, $M Total cost over base, $/kWnet Gross: 5.7 MW Net: 5.0 MW Boiler cost (equipment only), $M3 Balance of plant cost over base, $M Total cost over base, $M Total cost over base, $/kWnet Gross: 8.0 MW Net: 7.0 MW Boiler cost (equipment only), $M3 Balance of plant cost over base, $M Total cost over base, $M Total cost over base, $/kWnet Gross: 10.0 MW Net: 8.8 MW Boiler cost (equipment only), $M3 Balance of plant cost over base, $M Total cost over base, $M Total cost over base, $/kWnet 4.25 ---5.70 0.86 2.31 263 5.40 0.86 2.01 229 4.0 ---5.30 0.61 1.91 272 5.00 0.61 1.61 229 3.8 ---4.80 0.50 1.50 300 4.60 0.50 1.30 260 3.6 ---4.30 0.37 1.07 357 4.20 0.37 0.97 323

Notes 1. 12% auxiliary load assumed in calculating net output. 2. Stoker used as base plant for cost comparisons. 3. Values represent approximate costs for European supplied boiler and

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Table 5-3 Steam Generator Technology Ash Characteristics Comparison Boiler type Stoker Fly Ash: Percent of total ash Particle size Bottom Ash: Percent of total ash Particle size
a

Bubbling

Pulverized Fuel Suspension Fired 90 Extra Fine 10 N/Ab

40 Fine 60 Coarse

90 Fine Waste N/Aa

Bottom ash from bubbling fluidized beds may include scrap metal, rocks, agglomerated bed material, etc. b Bottom ash from pulverized fuel boilers may be gathered through either a wet or dry collection system. Particle size is thus not applicable.

5.3 Emission Controls Emissions of concern from biomass plants include nitrogen oxides and particulates (sulfur content of biomass is typically very low). Injection of urea or ammonia (selective non-catalytic reduction) can be used to reduce nitrogen oxide emissions, while electrostatic precipitators (ESP) or fabric filters (FF) can be used to control particulate emissions. 5.3.1 Nitrogen Oxide Control The large majority of biomass boilers rely on selective non-catalytic reduction (SNCR) for control of nitrogen oxide emissions. SNCR is a commercially available technology to control NOx emissions from fossil fueled boilers. Rather than a catalyst to achieve NOx reductions, SNCR systems rely on an appropriate reagent injection temperature, good reagent-gas mixing, and adequate reaction time. SNCR systems can use either ammonia (marketed as Thermal DeNOX systems) or urea (marketed as NOxOUT systems) as a reagent. Ammonia or urea is injected into areas of the steam generator where the flue gas temperature ranges from 1,500 to 2,200F. It is expected that the SNCR system would achieve approximately 50 percent NOx reduction, with ammonia slip between 10 and 15 ppmvd. Lower ammonia slip values can be achieved with lower reduction capabilities. The major considerations for the NOx reduction potential of an SNCR system are 1) the boiler temperature profile, as a function of load, and 2) the geometry, which affects reagent and flue gas mixing. The ideal temperature ranges from 1,500 to 2,200F based on the inlet concentration of NOx. Injection above the high end of the temperature range will result in increased NOx emissions. Hydrogen can be injected along with ammonia (or additives to the urea reagent) to extend the effective range of the SNCR process down to 1,300F. The specific geometry of each boiler dictates the positioning of reagent injection

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lances to ensure relatively good NOx reduction performance with relatively low ammonia slip. 5.3.2 Particulate Emissions Control A review of the United States Environmental Protection Agency database shows that both ESPs and FFs have been used in biomass-fired power plants. A general review of these two technologies is provided in this section. ESPs have several advantages over the FFs in biomass applications. ESPs have low risk potential for fire while the bags in FFs are combustible to varying degrees depending on the material of the bags. These bags can be set on fire by hot embers carried over from the boiler. Typically, the ESPs have lower O&M costs since they operate on lower pressure drop that relates to lower power usage by the fans compared to the FFs. In addition, the ESPs do not have maintenance costs related to periodic bag replacement that are inherent in the FFs. Black & Veatch has designed biomass fired power plants that utilize ESPs as the emission control technology. FFs hold the advantages of potential capital cost savings and offer greater flexibility in maintaining emission limits over a wide range of conditions compared to the ESPs. The capital cost savings are realized in cases when the ash is difficult to collect, the emission limits are strict, or the ash loading is large. These factors impact the ESP sizing such that an ESP gets proportionally large as compared to an FF, which is unaffected by these same parameters. The ESP must be designed for the worst fuel analysis and flue gas conditions. The FF performance is not as sensitive as the ESP to changes in operating parameters such as flue gas temperature and flow rate. These parameters can adversely impact ESP performance to a significant extent. In summary, the ESPs and the FFs have advantages and disadvantages that may favor their selection in a given application. The selection of the appropriate control technology for a biomass project can only be made based upon a comprehensive evaluation of the specific project design and economic analysis criteria.

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6.0 Identification and Screening of Candidate Facilities (Task 1.2 & Task 1.3)
Section 4 and Section 5 of this report established the various biomass fuels and technologies suitable for further study. Application of these fuels and technologies at selected sites was investigated for ten facilities. The first step in this process was identification and screening of candidate facilities, as discussed in this section. 6.1 Identification Process In parallel with the collection of agricultural biomass data, the study team contacted various associations of agro-industries to make known to them this feasibility study of the biomass fired power/generations sponsored by NEPO and conducted by Black & Veatch. In the beginning, the associations contacted included Federation of Thai Industries, Sugarcane Factories Association, Thai Rice Mills Association, and Tapioca Factories Association. The intent was to seek interest of their members in pursuing development of the biomass projects. The team also approached directly, either in person or by correspondence, the selected agro-industrial firms or factories which appear to generate large quantity of residues. The team also developed a questionnaire form for the facility owners to indicate their interest in development of a biomass fired power plant and to provide the biomass information. This questionnaire is attached in Annex 9. The initial site selection guidelines developed for identification of suitable facilities include the following: Availability of biomass supply for power generation or cogeneration at each site. Biomass disposal concerns and the intention to develop a power plant. Capability of the facility owner(s) to develop the power plant. Experience of the facility owner(s) involving power plant development. 6.2 Screening of Candidate Facilities As it turned out, one of the most important aspects in initial site selection was owner willingness to proceed with a power project. Because of the downturn in Thailands economy, many facilities were uncomfortable with making large investments, especially in power generation, a field that is outside of their regular business. For this reason, the study team had difficulty locating facilities interested in proceeding with the study process. Screening to narrow the field of candidate facilities to a manageable number was not formally practiced. Practically, facilities screened themselves by either choosing to pursue this opportunity or to forgo it. Fortunately, facilities making the decision to proceed were generally well suited for further study.

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One of the first milestones in the process through which potential facilities could advance to a candidate facility was the execution of a Memorandum of Understanding (MOU) between NEPO, the facility owner/developer, and Black & Veatch. The purpose of such an MOU is to have a facility-specific document which clearly illustrates the interest of the facility in pursuing further facility development should the project be both technically and commercially viable. With these criteria as a basis, a draft generic MOU was approved by NEPO for use in early discussions with the potential facilities. A copy of the generic (non-facility specific MOU) is attached in Annex 10. For further discussion of MOU development see the next section. The study team eventually received signed MOUs from each of the following ten facilities: Sommai Rice Mill Co., Ltd. Facility in Roi Et Province Sanan Muang Rice Mill Co., Ltd. in Kamphaeng Phet Province Thitiporn Thanya Rice Mill Co., Ltd. in Nakorn Sawan Province Plan Creations Co., Ltd. in Trang Province Chumporn Palm Oil Industry Plc., in Chumporn Province Karnchanaburi Sugar Industry Co., Ltd. in Uthai Thani Province Woodwork Creation Co., Ltd. in Krabi Province Mitr Kalasin Sugar Co., Ltd. in Kalasin Province Liang Hong Chai Rice Mill Co., Ltd. in Khon Kaen Province Southern Palm Oil Industry (1993) Co., Ltd. in Surat Thani Province

Each of the ten facilities for which an MOU was obtained underwent preliminarily assessment and was approved by NEPO as a Candidate Facility for further screening in a feasibility study.

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7.0 Development of a Memorandum of Understanding (Task 1.4)

Having identified potential sites and established a desire in the facility owners to proceed with the study, the next step in the process was to develop a Memorandum of Understanding (MOU) between the owner, NEPO, and Black & Veatch. In general, the MOU outlines the commitment that the owner intends to pursue development of a biomass power facility if the feasibility study determines the proposed facility to be technically, environmentally, and financially viable. The MOU generally identifies the facility, outlines the essential technical requirements, and defines the expected successful internal rate of return. Through execution of the MOU, it is understood that NEPO is financing the study under the assumption that the facility owner will pursue further development or, if this is not the case, then the facility will fund one-half of the cost of the feasibility study performed for their proposed development unless acceptable reasons notified to NEPO in writing. This last provision is an insurance measure that the facility truly has the intent of moving forward with development of their proposed facility in order for NEPO to fund the feasibility study, or will cover a portion of the costs if they do not move forward with a technically and commercially viable project. 7.1 Potential Project Owners There are three categories of people who might qualify as the project owner in developing the project. These are described in the following sections. 7.1.1 Facility Owner Facility owners are the owners of biomass residues. A few facility owners could proceed to develop a project by themselves, but some could not proceed for a variety of reasons: Insufficient biomass residue created by their own processing facilities to fuel a plant of sufficient capacity to be economically feasible. Lack of experience in initiating and implementing projects of this type. Lack of financial support for the project. For these reasons, facilities owners may wish to cooperate with other biomass suppliers in the area or may team with outside developers or advisors. 7.1.2 Developer Another possible role is one of a developer. Usually the developer has no facilities that produce biomass residues but knows how to obtain financial support, develop a procedure for project implementation, etc. The developer may join the facility owners to form a project development team.

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7.1.3 Advisor Sometimes a project may be developed through a promoter or an advisor, who normally has creditability to locate financing sources. Most developers or facility owners usually have limited capital investment. In order to finance the whole project, they usually have a financial advisor and developer (or facility owner) who can act as the project owner/developer. 7.2 Generic MOU After review of the MOU relationship discussion submitted in the Detailed Work Plan and Methodology, it was strongly recommended that one standard MOU be used for each potential project. Black & Veatch believes a separate but standard form for each facility will best protect NEPOs interest in future commitments. By utilizing a separate MOU for each facility, the process is simplified and the commitment is specific to a potential facility. Therefore, if a developer is pursuing three potential facility developments, but only one proves to be viable (as shown in the feasibility study results), there is no doubt that the commitment for each facility stands on its own. A draft generic MOU was developed. This form has been set up to work for each potential facility with only minor modifications needed based on the number of developer/owner(s) and location of the potential facility. For each of the sites selected for full feasibility study, an MOU was executed prior to commencement of study work.

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8.0 Candidate Facility Data Collection (Task 1.5)

Following identification and initial screening (Task 1.2 and 1.3) of prospective facilities, Black & Veatch provided detailed data requests to facility owners. Data requests were facility specific and were used to help Black & Veatch identify the optimal configuration of the power facility, evaluate project feasibility, and identify other benefits of the project. Of particular importance was the quantity of biomass fuel available to the project, reliability of supply, and other characteristics of the fuel (heat content, ash and moisture content, delivery methods, cost, etc.). When available, detailed historical data from the facility owner was utilized to develop this information. Other relevant information collected included process descriptions, plant layouts, maps, labor requirements, cost of current waste disposal practices, cost of electricity purchases, need for process steam, hours of facility operation, and plans for future expansion. In addition, Black & Veatch personnel visited each of the candidate facilities for further data collection in support of making a preliminary assessment on project viability. During the site visits, Black & Veatch personnel met with representatives of the candidate facilities to discuss different aspects (technical, financial, environmental, and socioeconomic) of the current plant operations and the proposed power project. Facility tours were conducted after the discussions and photographs were taken of the facilities. A field reconnaissance report was prepared summarizing the data collected.

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9.0 Preliminary Assessment of Selected Facilities (Task 1.6)

The first milestone indicating a mutual interest in developing the site for power generation/cogenration is through signature of an MOU between NEPO, the facility Owner/Developer, and Black & Veatch (see Section 6 of this report). Once this milestone has been accomplished, a cursory review of the information included in the facility survey questionnaire (consistency of quantity of fuel, quality of fuel, availability of supplemental fuel, etc.) was performed. When review of this information indicated a favorable potential for development, facility site visits were arranged to perform a preliminary assessment of the selected facility. The assessment was accomplished through review of the existing facilities, discussions with the staff, and gathering of other pertinent facility information. These steps were followed and site visits were performed by Black & Veatch personnel between February 1998 and April 1999 for the following ten facilities: Sommai Rice Mill Co., Ltd. in Roi Et Province Sanan Muang Rice Mill Co., Ltd. in Kamphaeng Phet Province Thitiporn Thanya Rice Mill Co., Ltd. in Nakorn Sawan Province Plan Creations Co., Ltd. in Trang Province Chumporn Palm Oil Industry Plc. in Chumporn Province Karnchanaburi Sugar Industry Co., Ltd. in Uthai Thani Province Woodwork Creation Co., Ltd. in Krabi Province Mitr Kalasin Sugar Co., Ltd. in Kalasin Province Liang Hong Chai Rice Mill Co., Ltd. in Khon Kaen Province Southern Palm Oil Industry (1993) Co., Ltd. in Surat Thani Province The resulting preliminary assessments for these ten sites were issued to NEPO. Each preliminary assessment addresses the initial review of a facilitys potential for power plant development or modification. Topics covered generally include current operations, power potential, proposed facility features, environmental aspects, socioeconomic aspects, economic aspects, and elevation and climatological data. In addition, a conclusion is provided for each of the preliminary assessments that indicates whether a full feasibility study of the proposed power plant is warranted. None of the ten assessments completed identified any obvious development problems that would preclude further investigation in a feasibility study (although potential difficulties were occasionally identified for further investigation). The ten sites were fully investigated in feasibility studies as described in the next section of this report.

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10.0 Feasibility Study Summary Results (Task 2)

In accordance with Task 2, Black & Veatch prepared a full feasibility study for ten selected agro-industrial facilities. This section presents the facilities studied, structure of the feasibility studies, general study assumptions, and the summary results of each study. In general, the feasibility studies were performed using the best data available from the sites. As not all facilities had detailed information readily accessible, assumptions often had to be made to complete the studies. These assumptions are identified in the individual study reports. 10.1 Facilities Studied As discussed in Section 8 of this report, preliminary assessments of the following ten potential facilities resulted in the recommendation that these sites be considered candidate facilities and be further investigated through a full feasibility study: Sommai Rice Mill Co., Ltd. Facility in Roi Et Province Sanan Muang Rice Mill Co., Ltd. in Kamphaeng Phet Province Thitiporn Thanya Rice Mill Co., Ltd. in Nakorn Sawan Province Plan Creations Co., Ltd. in Trang Province Chumporn Palm Oil Industry Plc., in Chumporn Province Karnchanaburi Sugar Industry Co., Ltd. in Uthai Thani Province Woodwork Creation Co., Ltd. in Krabi Province Mitr Kalasin Sugar Co., Ltd. in Kalasin Province Liang Hong Chai Rice Mill Co., Ltd. in Khon Kaen Province

Southern Palm Oil Industry (1993) Co., Ltd. in Surat Thani Province A map showing the location of these candidate facilities is included as Figure 10-1. As can be seen on the map, the facilities are distributed throughout the four regions of Thailand.

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Figure 10-5. Candidate Facility Locations.

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10.2 Study Assumptions Aside from facility specific information, most of the underlying assumptions were kept the same during the course of the study. There are two exceptions to this: the exchange rate used in the financial evaluation and the capital cost basis. As shown in Figure 10-2, the Baht to US dollar exchange rate has fluctuated significantly over the course of this study. Evaluation of the first four sites was initially issued in June 1998 and used an exchange rate of 43.53 Baht/US$. Since that time the exchange rate has dropped significantly. The financial analysis in the last six sites reflects this drop and assumes an exchange rate of 37.15 Baht/US$. To determine the effect of the exchange rate movement, sensitivity analyses for each site assessed in the last six sites were performed at +/-4 Baht/US$ and at the original exchange rate used for the first four sites.
55

50

Exchange Rate, Baht/US$

45

First 4 Sites 43.53 Baht/US$

40

35

Final 6 Sites 37.15 Baht/US$

30

25
Initial Investigations Evaluation Period for First Four Sites Evaluation Period for Final Six Sites

20
Jan-97 Apr-97 Jul-97 Oct-97 Jan-98 Apr-98

Jul-98

Oct-98

Jan-99

Apr-99

Jul-99

Oct-99

Jan-00

Date

Figure 10-2. Baht/US$ Daily Average Interbank Exchange Rate (Source: http://www.onada.com).

There is an overall increase in project costs for the last six sites relative to the first four sites. (Tables 10-2, 10-3, and 10-4 at the end of this section contain pricing information for the sites). This increase is due to two factors. First, total project costs for the first four sites were developed assuming aggressive international sourcing (including Chinese manufacturers). Financial sensitivity analyses were performed to provide information on alternatively sourced equipment. Costs for the last six sites were developed assuming that equipment with extensive performance records and proven reliability would be used. This implies that generally higher cost US, European, and Japanese equipment suppliers would be specified, resulting in higher total project costs. Second, the first four January 5, 2001 3 Final Report

sites focused on new facilities 9 to 10 MW gross in size, whereas the last six sites examined new facilities 3.5 to 7 MW gross in size. Economies of scale are significant in this size range, with specific costs ($/kW) increasing as project size decreases. The combination of different suppliers with better costing information and smaller facility size for the base case analyses results in increased project costs ($/kW) for the last six sites. It is possible that significant cost reductions could be obtained through aggressive international sourcing while still maintaining technical acceptability. Therefore, an additional financial sensitivity analysis was performed for each of the last six sites where the direct EPC cost was reduced 20 percent from the base case. 10.3 Summary Results Based on the assumptions noted in each feasibility study, the results of the studies indicate that all of the ten candidate facilities are technically and environmentally viable. A variety of biomass fuels were examined in the studies including rice husk (4 facilities), wood wastes (2), palm oil residues (2), and bagasse (2) as primary fuels and coconut husks (1), biogas (2), and corncobs (1) as supplementary fuels. Combustion of these fuels is generally considered proven and stoker grate boilers were specified for all the sites based on their widespread availability and relatively low capital cost. Both entirely new power facilities and modifications to existing plant power facilities were examined, although most studies examined new power facilities. A typical plant configuration for a new facility is shown in Figure 10-3. The power outputs examined ranged from 1.9 MW to 8.8 MW net for the base case analyses. In support of financial sensitivity analyses, some preliminary investigations were done for facilities sized up to 30 MW. Cogeneration of steam was a very significant design factor for the two palm oil mills and played a lesser role for the other facilities. In general, the studies found relatively few technical or environmental obstacles.

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F
S Y S T E M B O U N D A R Y

lu e

a s

P O

P L A

t e a m G e n e r a t o r S t e a m P T u r b in e E A B o ile r F e e d w a t e r P u x ilia r y o w e r

o w e r f o r x p o r t

ir

L P

C o n d e n s e r / P r o c e s s U s e

M W

a k e u p a t e r

P S

F u e l F u e l r e p a r a t io n

a r t ic u la t e o n t r o l

u p p le m e n t a l F u e l f r o m F u e l S u r r o u n d in g A r e a W B F

t o r a g e
S Y S T E M B O U N D A R Y

a s t e B y p r o d u c tB o i l e r ( F u e l) B lo w d o w r o c e s s in g p e r a t io n s o r

A C P

s h o n d e n s a t e r o c e s s S R e t u r n

io m a s s P e e d s t o c kO P

t e a m

o w e r ( f r o m G r id P o w e r P la n t )

Figure 10-3. Typical Biomass Power Plant Configuration.

However, the financial viability of the facilities is mixed as demonstrated in Table 10-1. Only three of the facilities identified (Sommai Rice Mill, Sanan Muang Rice Mill, and Thitiporn Thanya Rice Mill) surpassed the initial financial internal rate of return hurdle of 23 percent in the base case financial analyses. (The 23 percent figure is established in the MOU as the minimum rate of return requiring facility owners/developers to either proceed with the project or repay NEPO for the cost of the study.) Black & Veatch investigated alternative scenarios aimed at improving the financial rating of the remaining facilities. These studies, which are preliminary in nature, indicate that several factors could change to improve the viability of these projects. In some cases, such as simply accounting for the value of cogenerated steam at the Chumporn Palm Oil Mill, the improvement in IRR can be dramatic and is compelling from an investment standpoint. In other cases, the base case IRR can only be improved significantly by a combination of several positive factors, some of which would require aggressive implementation. For this reason, the long term prospects for development at these sites appears limited.

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Table 10-4 Summary of Financial Analyses Facility Sommai Rice Mill Co., Ltd. Sanan Muang Rice Mill Co., Ltd. Thitiporn Thanya Rice Mill Co., Ltd. Plan Creations Co., Ltd. Chumporn Palm Oil Industry Plc. Karnchanaburi Sugar Industry Co., Ltd. Woodwork Creation Co., Ltd. Mitr Kalasin Sugar Co., Ltd. Liang Hong Chai Rice Mill Co., Ltd. Southern Palm Oil Industry (1993) Co., Ltd. Base Case IRR 32.6 25.5 26.4 8.2 20.4 18.9 4.4 Alternative Study IRR NA NA NA 38.5 39 to 69 27.5 25 Features of Alternative Study NA NA NA Larger facility Added revenue to account for avoided steam generation cost Existing boiler efficiency increase to save bagasse Larger facility, more efficient facility, drier fuel, lower project cost basis ($/kW) Modification of existing facility rather than new plant Larger facility, lower project cost basis ($/kW) Added revenue to account for avoided steam generation cost, larger facility Development Status EPC bid stage Under further consideration Under further consideration Under further consideration Under further consideration Under further consideration Under further consideration Development proceeding Under further consideration Under further consideration

13.3 7.6 11.6

46 13 to 29 13 to 25

At this time, eight of the ten facilities either are under active development or are under further consideration by the owners. For any project that proceeds with development, additional development activities should include detailed evaluations of fuel supply (quantity, quality, etc.), as well as power facility conceptual design to support and confirm assumptions in the feasibility study, development of a more detailed project capital cost estimate with specific vendor pricing on major equipment, and additional pro forma analyses as new data warrants. The first four studies examined building entirely new facilities. Table 10-2 at the end of this section summarizes the major attributes of these studies. Of the last six studies, two of the studies examined modifications to existing facility power plants, while four of the studies examined entirely new power facilities. Table 10-3 summarizes the results of the two power facility modification studies. Table 10-4 summarizes the results of the new power facility studies for the last set of sites. (Table 2-2 in the Executive Summary provides a side by comparison of major facility features for all sites.) The results of the studies for each site are briefly discussed below. 10.3.1 Sommai Rice Mill Co., Ltd. A new power facility was studied at the Sommai Rice Mill Co., Ltd. located in Roi Et province, Thailand. The Sommai rice mill currently processes about 1,000 tonne/day of January 5, 2001 6 Final Report

rice paddy in two process lines of 700 tonne/day and 300 tonne/day. An additional process line of 300 tonne/day is under construction. When the facility expansion is completed, it is anticipated that an average of 98,670 tonne/yr of rice husk will be generated at the plant. The feasibility of building a new power plant at the Sommai rice mill facility was studied. The boiler for the plant would be fueled with rice husk and would generate steam for use in a turbine generator with a gross output of 10.0 MW. Net plant output is estimated at 8.8 MW. The feasibility study concludes that the proposed development is technically, environmentally, and financially viable (IRR of 32.6 percent). 10.3.2 Sanan Muang Rice Mill Co., Ltd. A new power facility was studied at the Sanan Muang Rice Mill Co., Ltd. located in Kamphaeng Phet province, Thailand. The Sanan Muang rice mill currently processes about 250 tonne/day of rice paddy. Typical operation of a rice mill yields 23 tonnes of rice husks for every 100 tonnes of rice paddy. Thus, on average about 13,800 tonne/yr of rice husk is generated at the plant. Additional rice husks are also available from five facilities in the surrounding area (within 50 km). It is anticipated that a total of about 79,000 tonne/yr of rice husks would be available to fuel the proposed power facility. The feasibility of building a new power plant at the Sanan Muang facility was studied. The boiler for the plant would be fueled with rice husk and would generate steam for use in a turbine generator with a gross output of 9.1 MW. Net plant output is estimated at 8.0 MW. The feasibility study concludes that the proposed development is technically, environmentally, and financially viable (IRR of 25.5 percent). 10.3.3 Thitiporn Thanya Rice Mill Co., Ltd. A new power facility was studied at the Thitiporn Thanya Rice Mill Co., Ltd. located in Nakorn Sawan province, Thailand. The Thitiporn Thanya rice mill currently processes 500 tonne/day of rice paddy. Typical operation of a rice mill yields 23 tonnes of rice husks for every 100 tonnes of rice paddy. Thus, on average about 27,600 tonne/yr of rice husk is generated at the plant. Additional rice husks are also available from seven facilities in the surrounding area (within 50 km). It is anticipated that a total of about 79,000 tonne/yr of rice husks would be available to fuel the proposed power facility. The feasibility of building a new power plant at the Thitiporn Thanya facility was studied. The boiler for the plant would be fueled with rice husk and would generate steam for use in a turbine generator with a gross output of 9.1 MW. Net plant output is estimated at 8.0 MW. The feasibility study concludes that the proposed development is technically, environmentally and financially viable (IRR of 26.4 percent). 10.3.4 Plan Creations Co., Ltd. A new power facility was studied at the Plan Creations Co., Ltd. parawood processing plant located in Trang province, Thailand. Plan Creations makes educational

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toys from rubber wood (parawood). The residue from the process is a combination of bark, outer cuts, curfs (from sawing), sawdust (from sanding operations), and discarded stock (low quality, diseased, discolored, etc.). It is estimated that about 4,000 tonne/yr of residue will be available at the facility. In order to take advantage of economies of scale, additional wood resources were sought. About 14,000 tonnes of parawood residue could be delivered from area manufacturing facilities. An additional 116,000 tonnes could be obtained by implementing forestry residue collection operations over an area of about 15,000 rais. The total fuel available would then be about 134,000 tonne/yr. The feasibility of building a power plant at the Plan Creations site was studied. The boiler for the plant would be fueled with wood residues and would generate steam for use in a turbine generator with a gross output of 10.0 MW. Net plant output is estimated at 8.8 MW. The feasibility study concludes that the proposed development is technically and environmentally viable, but financially marginal (IRR of 7.95 percent). Following the base case analysis, the study team investigated what factors would have to change to increase the viability of a power plant at this site. It was found that a large increase in fuel consumption and plant size would allow an IRR of about 38.5 percent. In the most optimistic scenario analyzed, where about 74 percent (356,000 tonnes) of all available parawood logging residues from the Trang province are collected, a power plant of about 28 MW net is possible. The extent to which additional fuel can be collected at a relatively low cost (320 Baht/tonne) will determine the ability of the project to achieve the higher rates of return. 10.3.5 Chumporn Palm Oil Industry Plc. Power facility modifications were studied at the Chumporn Palm Oil Industry Plc. (CPOI) palm oil mill located in Chumporn province, Thailand. CPOI processes fresh oil palm to produce crude palm oil, refined palm oil, and palm kernel oil. There are various biomass residues produced in the process including palm shells, fiber, empty fruit bunch (EFB), and biogas (to be produced from a new wastewater treatment system). CPOI currently burns all the solid byproducts of the production process in a power plant located at the site. The plant produces power and process steam for the operations. The power plant has an installed maximum capacity of 4.3 MW gross but currently only produces about 2.4 MW gross (1.9 MW net) on average. Several modifications were proposed for CPOI to improve efficiency and increase power output. Preliminary technical and economic analysis found that combustion of additional fuel up to the current facility capacity (4.3 MW) is viable. Fuels used include palm shell, palm fiber, EFB, and biogas produced by the expanded processing facility, and coconut husk fiber and additional shell procured from the surrounding area. Due to its lower cost, coconut husk is preferred over old age palm trees, which will become a disposal problem as the palm plantation matures. Major capital improvements required for this

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option include a new shredder to prepare the additional EFB and minor upgrades to the existing interconnection to allow electricity to be sold to the grid. Additional modifications were selected for further analysis. The final configuration utilizes a low pressure condensing turbine to capture and generate power from the exhaust of the existing back pressure steam turbine, a condenser to recover turbine and process exhaust steam, an improved makeup water treatment system, and other modifications. The average gross plant output under this configuration would be approximately 5.4 MW, an increase of 3.0 MW over the existing plant. Peak plant output will be about 6.4 MW gross. The new configuration would also allow more process steam to be generated allowing for greater palm oil production capacity. The feasibility study concluded that the proposed development is technically and environmentally viable, but financially marginal (base case IRR of 20.4 percent). These conclusions are based on preliminary assumptions concerning process data, future production, and equipment requirements and costs. Additional study work and detailed data collection may be required to determine the optimal plant modifications and associated financial returns. In addition, the new power plant will allow CPOI to operate at a higher palm oil production capacity. The value of this benefit was not included in the base case financial analysis but was evaluated through sensitivity analysis by assigning a value to the cogenerated steam. It was found that inclusion of this benefit would make the project very attractive financially (IRR ranging from 39 to 69 percent for steam value of 5 to 15 US$/tonne, respectively). 10.3.6 Karnchanaburi Sugar Industry Co., Ltd. Power facility modifications were studied at the Karnchanaburi Sugar Industry Co., Ltd. (KSI) located in Uthai Thani province, Thailand. KSI mills sugarcane to extract its juice for the production of sugar. Bagasse is produced as residue in the process. KSI currently burns a portion of the bagasse in a power plant located at the site to produce power and process steam for the milling operation. The maximum capacity of the power plant is 17.5 MW gross. Based on recent statistics, about 21,000 tonnes of excess bagasse remain at the end of the processing season. Depending on the steam needs of the processing operations, there is unused and unsold electrical capacity at the plant. This surplus power could be sold to the grid but is not currently. During the on-season (about 100 days), the plant could export the excess power, which is estimated to average about 455 kW. In addition, during both the on and off-season, excess bagasse could be utilized in existing idle mill power equipment with the intent to export firm power to the grid year-round. To supplement the bagasse supply, corncobs would be gathered from the surrounding area. The combination of the excess existing power production, excess bagasse fuel, and supplemental corncob fuel can provide a total of 1,850 kW net at an annual capacity factor of 53.2 percent. This option would use the existing factory boilers, turbine-generators, and tie line to PEA. New equipment

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required includes interconnection equipment, additional condensing capacity, and piping and valving upgrades. The feasibility study concludes that the proposed development is technically and environmentally viable, and financially viable under certain conditions (IRR of 18.9 percent). These conclusions are based on relatively conservative assumptions concerning process data, future crop production, and equipment requirements and costs. Additional study work and detailed data collection may be required to determine the optimal plant modifications and associated financial returns. Additional analysis found that increases in sugar milling efficiency would allow enough bagasse to be produced so that combustion of supplemental corncob fuel would not be required. The IRR under this scenario increases significantly to 27.5. 10.3.7 Woodwork Creation Co., Ltd. A new power facility was studied at the Woodwork Creation Co., Ltd. located in Krabi province, Thailand. Woodwork Creation makes processed wood sheets from rubber wood (parawood). Residue produced by the process includes bark, sawdust, and wood chips. A total of 40,320 tonne/yr of residue will be generated at the facility after an upcoming expansion. Some of this fuel is used to power an existing steam boiler at the facility. Limited additional fuel could be purchased from the surrounding area. The total fuel available to the power facility would be 54,000 tonne/yr. The feasibility of building a new power plant at the Woodwork Creation site was studied. The boiler for the plant would be fueled with wood residues and would generate steam for use in a turbine generator with a gross output of 3.55 MW. Net plant output is estimated at 3.1 MW. The feasibility study concludes that the proposed development is technically and environmentally viable, but financially marginal (IRR of 4.4 percent). Following the base case analysis the study team investigated what factors would have to change to increase the viability of a power plant at this site. It was found that the following factors, when combined, would allow an IRR of almost 25 percent: Large increase in base fuel supply (additional 300,000 tonnes). Reduced moisture content assumption of 40 percent for the additional fuel (base assumption is 60 percent). 15 percent improvement in net plant heat rate over base assumption. 25 percent decrease in project cost basis over base assumption. The combination of these assumptions resulted in a plant with a net output of about 30 MW and a total project cost of about US$1,060/kW. The extent to which the above requirements can be met will determine the ability of the project to achieve the higher rates of return. As some of these requirements are fairly aggressive, it may be difficult to obtain acceptable rates of return at this site.

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10.3.8 Mitr Kalasin Sugar Co., Ltd. A new power facility was studied at the Mitr Kalasin Sugar Co., Ltd. (MKS) located in Kalasin province, Thailand. MKS mills sugarcane to extract its juice for the production of sugar. Bagasse is produced as residue in the process. MKS currently burns a portion of the bagasse in a power plant located at the site to produce power and process steam for the milling operation. The maximum capacity of the power plant is 16.4 MW gross. Based on recent statistics, about 76,000 tonnes of excess bagasse remain at the end of the processing season. The study investigated the feasibility of building an entirely new power plant fueled with the excess bagasse produced by the processing facility. A boiler would generate steam for use in a turbine generator with a gross output of 6.1 MW. Net plant output is estimated at 5.6 MW. The existing power facility would remain and would supply the processing operations with required steam and power. The feasibility study concludes that the proposed development is technically and environmentally viable, but financially marginal (base case IRR of 13.3 percent). An alternative generation option, which involves modification to the existing power facility rather than construction of a new plant, initially appears more promising from a financial standpoint. The modifications would allow about 3 MW to be exported from one of the existing generators at an annual capacity factor of 71 percent (firm basis). Because of greatly reduced capital requirements, the projected IRR for this case is much higher, 46 percent. Due to time and budget constraints, this option was only briefly analyzed; additional study work and detailed data collection would be required to properly assess this option. 10.3.9 Liang Hong Chai Rice Mill Co., Ltd. A new power facility was studied at the Liang Hong Chai Rice Mill Co., Ltd. (LHC) located in Khon Kaen province, Thailand. LHC owns two rice mills, each of which currently processes a maximum of 250 tonnes of rice paddy per day or about 75,000 tonnes of paddy per year (150,000 tonnes per year total). The proposed development would be at the newer facility, which is about 5 km from the old plant. A total of approximately 33,000 tonne/yr of rice husk will be available for power production. The feasibility of building a new power plant at the new LHC facility was studied. The boiler for the plant would be fueled with rice husk and would generate steam for use in a turbine generator with a gross output of 3.8 MW. Net plant output is estimated at 3.3 MW. The feasibility study concludes that the proposed development is technically and environmentally viable, but financially marginal (IRR of 7.6 percent). Following the base case analysis the study team investigated what factors would have to change to increase the viability of a power plant at this site. It was found that the following factors, when combined, would allow an IRR of about 29 percent:

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 Increase in rice husk supply from 33,000 to 133,000 tonne/yr. Additional rice husk could be procured from the Nakorn Ratchasima province. 20 percent decrease in project cost basis over base assumption. The combination of these assumptions resulted in a plant with a net output of about 13.4 MW and a total project cost of about US$1,550/kW. This additional investigation appears encouraging and indicates that a rice husk power plant in the area, if not at this site, might be viable. 10.3.10 Southern Palm Oil Industry (1993) Co., Ltd. A new power facility was studied at the Southern Palm Oil Industry (1993) Co., Ltd. (SPOI) palm oil mill located in Surat Thani province, Thailand. SPOI processes fresh oil palm to produce crude palm oil. There are various biomass residues produced in the process including palm shells, fiber, EFB, and biogas (to be produced from a new wastewater treatment system). SPOI currently burns the shells and fiber in a power plant located at the site. The plant produces power and process steam for the operations. The existing power plant has an installed capacity of 880 kW gross. SPOI would like to expand palm oil production but is limited by the power and steam production of its existing power plant. The feasibility of building an entirely new power plant at the SPOI site was studied. The boiler for the plant would be fueled with fiber and shells produced by the processing facility (EFB would not be burned). The boiler would generate steam for use in a turbine generator with a gross output of 7.0 MW. Net plant output is estimated at 6.2 MW. The existing power facility would remain and would be used for backup purposes. The feasibility study concludes that the proposed development is technically and environmentally viable, but financially marginal (IRR of 11.6 percent). However, due to increased steam production, the new power plant will allow SPOI to operate at a higher palm oil production capacity. The value of this benefit was not included in the base case financial analysis but was evaluated through sensitivity analysis by assigning a value to the cogenerated steam. It was found that inclusion of this benefit would not improve the IRR above the hurdle rate without making other changes to the project. It was found that the following factors, when combined, would allow an IRR of about 25 percent: Increase in plant size to 28.3 MW through additional fuel supply from the surrounding area. Increase in palm oil mill processing time such that 40,000 tonne/yr of steam are required over current needs. This might be obtained by increasing low season operation from 16 hr/day to 24 hr/day. The additional steam is valued at $10/tonne in the pro forma analysis. The resulting IRR of 25 percent exceeds the hurdle rate. This indicates that development of an enhanced cogeneration plant at this site is promising. To fully establish the financial impact of the modifications, SPOI or an outside developer would need to

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investigate this issue further. The investigation would need to consider all impacts, positive and negative, that the power facility modifications would have on the processing operations.

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Table 10-2 Summary Results of Proposed New Power Facilities Facility General Facility Information Facility type Province Facility annual capacity, tonne/yr Fuel Information Facility residue type (solid fuels) Ratio of residue to capacity Facility residue, tonne/yr Reserved residue for mill, tonne/yr Additional residue purchased, tonne/yr Total residue available, tonne/yr Composite heating value (HHV), kJ/kg Annual heat input available, GJ/yr Power Plant Characteristics Estimated plant capacity factor, percent Boiler efficiency, percent Gross turbine heat rate, kJ/kWh Auxiliary power, percent Calculated net plant heat rate, kJ/kWh Cogeneration? Steam flow, tonne/hr Power Potential Calculated solid fuel burn rate, tonne/hr Calculated total fuel burn rate, GJ/hr Calculated gross plant capacity, kW Calculated net plant capacity, kW Average internal process use, kW "Firm" capacity for sale to grid, kW Annual energy sales to grid, GWh Economic Aspects Estimated total project cost, US$ milc Estimated total project cost, US$/kW Internal rate of return (IRR), percent
c c net

Sommai

Sanan Muang Rice mill Kamphaeng Phet 60,000 Rice husk 0.23 13,800 0 65,200

Thitiporn Thanya Rice mill Nakorn Sawan 120,000 Rice husk 0.23 27,600 0 51,400 79,000 14,100 1,113,900 85 82 13,500 12 18,708 No 10.6 149.5 9,100 8,000 0 8,000 59.6 9.27 1,160 26.4 20.0

Plan Creations

Rice mill Roi Et 429,000a Rice husk 0.23 98,670 0 0 86,900

b

Wood products Trang 10,000 Wood waste 0.40 4,000 0 130,000 134,000 10,300 1,380,200 85 73 13,500 12 21,015 No 18.0 184.9 10,000 8,800 0 8,800 65.5 10.59 1,200 7.95 5.1

79,000 14,100 1,113,900 85 82 13,500 12 18,708 No 10.6 149.5 9,100 8,000 0 8,000 59.6 9.27 1,160 25.5 19.2

14,100 1,225,868 85 82 13,500 12 18,708 No 11.7 164.6 10,000 8,800 0 8,800 65.5 9.71 1,100 32.6

IRR for European equipment, percent 24.6 Notes: a After proposed facility expansion. b Fuel supply limited to keep plant size at 10 MW gross. c Costs based on use of Chinese equipment.

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Table 10-3 Summary Results of Proposed Facility Modifications Facility General Facility Information Facility type Province Facility annual capacity, tonne/yr Fuel Information Facility residue type (solid fuels) Ratio of residue to capacity Facility residue, tonne/yr Reserved residue for mill, tonne/yr Additional residue purchased: quantity, tonne/yr Total residue available, tonne/yr Composite heating value (HHV), kJ/kg Annual heat input available, GJ/yr Power Plant Characteristics Estimated plant capacity factor, percent Boiler efficiency, percent Auxiliary power, percent Average net plant heat rate, kJ/kWh Cogeneration? Steam flow, tonne/hr Power Potential Average solid fuel burn rate, tonne/hr Average total fuel burn rate, GJ/hr Average gross plant output, kW Average net plant output, kW Average internal process use, kW "Firm" capacity for sale to grid, kW Annual energy sales to grid, GWh Economic Aspects Estimated total project cost, US$ mil Estimated total project cost, US$/kWnet Internal rate of return (IRR), percent IRR at exchange rate of 43.5 Baht/US$ IRR at 20 percent reduced capital cost 5.0 1,887 (per additional net kW) 20.4 15.78 29.41 1.95 1,054 18.9 15.94 26.68 15.5 217.1 5,400 4,550
e

Chumporn Palm Oil Industry Palm oil mill Chumporn 270,000

a

Karnchanaburi Sugar Industry Sugar mill Uthai Thani 1,000,000

Oil palm fiber, shell, empty fruit bunches 0.33 89,100 0 Palm shell and coconut husk: 22,760 111,860 12,765 1,564,000 82 70
c b

Bagasse 0.25 250,000 229,166 Corncobs: 13,382 34,216 11,895 406,980 53.2 72-80c 8c

16.1c 49,500
c

47,205c d No 7.3 87.3 2,000 1,850 0 1,850 8.62

Yes, 31.85

2,030f 2,520 18.1

IRR for alternative study (see writeup) 39-69 27.5 Notes: a After proposed facility expansion. b Includes biogas use of 6,000,000 m3/yr (136,000 GJ/yr). c Based on existing power facility performance information considering proposed modifications. d Includes credit for surplus power generated by the existing facility during the on-season. e Previous: approximately 1,900 kW average. f Electricity required for milling operations.

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Table 10-4 Summary Results of Proposed New Power Facilities Facility General Facility Information Facility type Province Facility annual capacity, tonne/yr Fuel Information Facility residue type (solid fuels) Ratio of residue to capacity Facility residue, tonne/yr Reserved residue for mill, tonne/yr Additional residue purchased, tonne/yr Total residue available, tonne/yr Composite heating value (HHV), kJ/kg Annual heat input available, GJ/yr Power Plant Characteristics Estimated plant capacity factor, percent Boiler efficiency, percent Gross turbine heat rate, kJ/kWh Auxiliary power, percent Calculated net plant heat rate, kJ/kWh Cogeneration? Steam flow, tonne/hr Power Potential Calculated solid fuel burn rate, tonne/hr Calculated total fuel burn rate, GJ/hr Calculated gross plant capacity, kW Calculated net plant capacity, kW Average internal process use, kW "Firm" capacity for sale to grid, kW Annual energy sales to grid, GWh Economic Aspects Estimated total project cost, US$ mil Estimated total project cost, US$/kWnet Internal rate of return (IRR), percent IRR at exchange rate of 43.5 Baht/US$ IRR at 20 percent reduced capital cost 8.65 2,800 4.4 2.1 8.5 13.4 2,400 13.3 9.8 20.1 9.73 2,950 7.6 5.1 12.6 14.6 2,350 11.6 8.4 17.9 7.3 68.5 3,550 3,100 0 3,100 23 10.2 97.4 6,100 5,600 0 5,600 42 4.4 62.5 3,800 3,300 0 3,300 25 9.3d 135.5d 7,000 6,200 834d e 5,366d 42.5 85 70 13,500 12 21,900 No 85 77 12,400 8c 17,400 No 85 82 13,500 12 18,700 No 90.4 77 14,680d 12 21,700d Yes, 13.9d Wood waste 0.50 40,320 8,640 22,320 54,000 9,450 510,300 Bagasse 0.27 369,000 293,000 0 76,000 9,540 725,040 Rice husk 0.22-0.23 33,000 0 0 33,000 14,100 465,300 Oil palm fiber, shell 0.21 73,500 0 0 73,500 13,500 1,072,932b Wood prod. Krabi 80,640
a

Woodwork Mitr Kalasin Liang Hong Southern Palm Creation Sugar Mill Chai Rice Mill Oil Industry Sugar mill Kalasin 1,360,000 Rice mill Khon Kaen 150,000 Palm oil mill Surat Thani 350,000a

IRR for alternative study (see writeup) 25 46 13-29 13-25 Notes: a After proposed facility expansion. b Includes biogas use of 3,570,000 m3/yr (80,682 GJ/yr). c Based on existing power facility performance information. d Average value. SPOI requires varying amounts of process steam depending on the season. e Electricity required for milling operations.

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11.0 Presentation of Study Results to Facility Owners (Task 3.1 and Task 3.2)
Before signing MOUs, the facility owners were informed of the merits of using biomass as fuel for power generation and cogeneration projects including details of the sale of excess power to EGAT under the SPP program. All of the facility owners were interested in the potential project benefits and hence signed the MOUs. Follow-on presentations were made to facilities for which the study results were positive in order to assist them with project implementation. The following sections describe the presentation of study results made to each of the facility owners. 11.1 Sommai Rice Mill Co., Ltd. Among the rice mill facilities studied, Sommai is the largest with a milling capacity of about 1,000 tonnes of paddy per day. The facility aggregately produces about 87,000 tonnes of rice husk per year. It was determined that Sommai can install up to a 10 MW (gross) plant with an investment of US$11.4 million. The financial return on this investment (Internal Rate of Return, IRR) is very favorable at about 33 percent. Other details of the Sommai facility are shown in Table 11-1.
Table 11-5 Summary Results Sommai Rice Mill Facility

Item Gross plant capacity, MW Net plant capacity, MW Investment, $US million Fuel type Fuel consumption, tonnes/yr Total fuel cost, Baht/tonne Operating hours per year Revenue from EGAT, million Baht/yr Internal rate of return, percent Source of fuel supply, tonnes/yr Sommai Rice Mill

Result 10 8.8 11.424 Rice Husk 87,000 100 7446 114 33 87,000

The study team went to present the study results to Mr. Sommai in September 1998 in Roi Et. Mr. Sommai had expressed interest in pursuing project development further. In the meanwhile, EGCO (Electricity Generating Plc.) was interested in developing a project of this kind. The study team met to present details of the study to EGCO. Furthermore, the team made arrangements and escorted the EGCO project development team several times to meet and discuss possible joint venture development with Sommai in Roi Et. At present, January 5, 2001 1 Final Report

EGCO has obtained funding support for project development from OECF of Japan. The development of this facility is proceeding well as a joint venture with Sommai, and has reached the step at which a contractor is being selected to provide engineering, procurement, and construction (EPC) services. 11.2 Sanan Muang Rice Mill Co., Ltd. Sanan Muang Rice Mill, with a rice husk supply of 13,800 tonne/yr, is smaller than Sommai and requires additional rice husk from the surrounding area to make a new power development viable. Three cases were studied (for details see Table 11-2). These cases vary in plant generating capacity depending on the quantity of rice husk supply. Case 1 is a study of a power facility with a capacity of 9.1 MW (gross) supplied by the facilitys own rice husk and supplemental husk from other rice mills within a 25 km radius. This case yielded an IRR of 25.5 percent, which is greater than the hurdle rate of 23 percent. Case 2 used rice husk produced from three nearby facilities and resulted in a 5.6 MW generating capacity. Case 3 used only the husk available at Sanan Muang and resulted in a 1.8 MW generating capacity. Due to economies of scale, Case 2 and 3 do not have attractive IRRs: 13.70 and 0.54 percent, respectively.
Table 11-2 Summary Results Sanan Muang Rice Mill Facility Item Gross plant capacity, MW Net plant capacity, MW Investment, $US million Fuel type Fuel consumption, tonnes/yr Total fuel cost, Baht/tonne Operating hours per year Revenue from EGAT, million Baht/yr Internal rate of return, percent Source of fuel supply, tonnes/yr Sanan Muang Rice Mill Kanutanjakij Rice Mill Nitinun Supakij # 1 Rice Mill Nitinun Supakij # 2 Rice Mill Supachai Rice Mill Sawangtavorn Rice Mill 13,800 16,560 11,040 8,832 22,080 6,624 13,800 16,560 11,040 8,832 13,800 Case 1 9.0 8.0 10.952 Rice Husk 79,000 100-250 7,446 100 25.52 Case 2 5.6 5.0 9.640 Rice Husk 50,000 100-200 7,446 64 13.70 Case 3 1.8 1.6 4.931 Rice Husk 13,800 100 7,446 20 0.54

Since the IRR of Case 1 is greater than the hurdle rate of 23 percent, the study team presented the results of Case 1 to the facility owner, Mr. Sanan. Mr. Sanan expressed interest in further project development through a joint venture with another interested January 5, 2001 2 Final Report

investor. Mr. Sanan did not express much concern about the long term supply availability of rice husk from the other facilities in the area. 11.3 Thitiporn Thanya Rice Mill Co., Ltd. Thitiporn Thanya Rice Mill, with a rice husk supply of 27,600 tonne/yr, is smaller than Sommai and requires additional rice husk from the surrounding area to make a new power development viable. Three cases were studied (for details see Table 11-3). These cases vary in plant generating capacity depending on the quantity of rice husk supply. Case 1 is a study of a power facility with a capacity of about 9.1 MW (gross) supplied by the facilitys own rice husk and supplemental husk from all other rice mills within a 25 km radius. This case yielded an IRR of 26.4 percent, which is greater then the hurdle rate of 23 percent. Case 2 used rice husk produced from three nearby facilities and resulted in a 5.6 MW generating capacity. Case 3 used only the husk available at Thitiporn Thanya and resulted in a 3.2 MW generating capacity. Due to economies of scale, Case 2 and 3 do not have attractive IRRs: 14.6 and 7.23 percent, respectively.
Table 11-3 Summary Results Thitiporn Thanya Rice Mill Facility Item Gross plant capacity, MW Net plant capacity, MW Investment, $US million Fuel type Fuel consumption, tonnes/yr Total fuel cost, Baht/tonne Operating hours per year Revenue from EGAT, million Baht/yr Internal rate of return, percent Source of fuel supply, tonnes/yr Thitiporn Thanya Rice Mill Ruengthai Rice Mill Wangbau Rice Mill Amnaouypol Rice Mill Hnongyao Rice Mill Hnongben Rice Mill Hwangdee Rice Mill Charoenkij Rice Mill 27,600 3,312 11,040 8,280 3,312 3,312 13,800 8,280 27,600 3,312 11,040 8,280 27,600 Case 1 9.0 8.0 10.947 Rice Husk 79,000 100-250 7,446 100 26.42 Case 2 5.6 5.0 9.680 Rice Husk 50,000 100-250 7,446 64 14.55 Case 3 3.2 2.8 7.476 Rice Husk 27,600 100 7,446 36 7.23

The study team presented the study results of Case 1 to the facility owner. The owner expressed interest in further project development, but noted that his facility would have to depend on rice husk from other facilities in the area in order to become a viable project for development. He was very concerned about receiving a guarantee of long term January 5, 2001 3 Final Report

rice husk availability from other sources. This concern highlights the importance of long term supply contracts for biomass in development of biomass based power generation. 11.4 Plan Creations Co., Ltd. In initial analyses, the feasibility of a new power development at the Plan Creations site was not found viable, yielding an IRR of 7.95 percent (for details see Table 10-4). The results were unfavorable due to high investment cost relative to the plant size under study (i.e., economies of scale) and expensive fuel costs. The latter includes opportunity, collection, transportation, and wood chipping costs. Black & Veatch investigated alternate scenarios in attempt to improve the project economics. If a larger facility could be built, the project may be more viable. Black & Veatch investigated the economics at plant sizes of 18 and 28 MW and found that the IRR would increase to 28.6 and 38.5, respectively (see Table 11-4). The owner was presented these new results but is interested in implementation of a small (about 2 MW) system at the site. At present, the owner is soliciting project price information from a vendor.
Table 11-4 Summary Results Plan Creations Facility

Table Header Gross plant capacity, MW Net plant capacity, MW Investment, US$ million Fuel type Fuel consumption, tonne/yr Total fuel costs, Baht/tonne Operating hours per year Revenue from EGAT, million Baht/yr Internal rate of return, percent Source of fuel supply: Internal: Wood res., tonnes/yr External: Bark, tonne/yr Small log, tonne/yr

Result 10 8.8 12.6 Wood Waste 134,000 200-450 7,446 114 7.95 4,000 14,000 116,000

Option 1 20.9 18.4 19.1 Wood Waste 254,000 35-350 7,446 238 28.6 4,000 14,000 236,000

Option 2 31.7
27.9

26.7 Wood Waste 374,000 35-350 7,446 360 38.5 4,000 14,000 356,000

11.5 Chumporn Palm Oil Industry Plc. Several modifications were proposed for the Chumporn Palm Oil Industry Plc. (CPOI) to improve the efficiency and increase power output of the existing power plant. The final configuration selected includes the following modifications: Combustion of additional fuel to fully utilize existing boiler and turbine generator capacity. Addition of a low pressure condensing turbine to generate power from the exhaust of the existing back pressure steam turbine. Recovery of turbine and process exhaust steam through a condenser with cooling tower. January 5, 2001 4 Final Report

 Improvement of the makeup water treatment system by addition of a reverse osmosis system. Table 11-5 presents a summary of the study results. With the selected modifications, the average gross plant output would be 5.4 MW, or an increase of about 3.0 MW over the existing plant output. Under this configuration, CPOI would be able to sell about 2.5 MW of power to EGAT on a firm basis. The proposed development would yield a base case IRR of 20.4 percent with an estimated total project cost of about US$5.8 million. The base case IRR is slightly lower than the hurdle rate of 23 percent. However, optimistic sensitivity analyses result in IRRs that are higher than the hurdle rate. The study team presented and discussed the study results Mr. Suriya, who is the assistant managing director of the palm oil mill. In general, Mr. Suriya agreed with the study results but raised a concern on the fluctuating prices of biomass. He pointed out that the price of oil palm shell has increased from 150 to 400 Baht/tonne since last year. Additionally, he noted that there might also be a price increase in coconut husk, which was considered as an inexpensive supplemental fuel in the feasibility study. The study team explained the sensitivity analysis and suggested to estimate the results of a fuel price increase through a pro forma model. Mr. Suriya was to look into the details of the study report and discuss with the facility owner. It should be noted that the facility would like to expand their processing capabilities in the near future. This will likely require some sort of upgrade to the mill power and steam systems similar to that proposed for this study.

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Table 11-5 Summary Results Chumporn Palm Oil Facility

Item Gross plant capacity, MW Net plant capacity, MW Net sold to grid, MW Investment, US$ million Fuel type Total fuel cost, Baht/tonne Operating hours per year Revenue from EGAT, million Baht/yr Internal rate of return, percent Source of fuel supply: Internal: Shell, tonne/yr Fibre, tonne/yr Empty bunch, tonne/yr Biogas, cu.m/yr External: Shell, tonne/yr Coconut husk, tonne/yr

Result 5.40 4.55 2.52 5.767 Oil palm waste, biogas, and coconut husk 0-150 7,200 34 20.4 18,900 32,400 37,800 6,000,000 18,000 4,760

11.6 Karnchanaburi Sugar Industry Co., Ltd. Four options for developing the Karnchanaburi Sugar Industry were proposed: 1. Use existing excess boiler and turbine capacity to generate additional power for export on-season, non-firm basis. 2. Add condensing capacity so that a boiler and turbine set can generate additional power for export on and off-season, firm basis. 3. Add new high-pressure boiler and turbo-generator equipment, using surplus bagasse for power production year round, firm basis. 4. Develop an entirely new core cogeneration plant utilizing high efficiency boilers and turbines for power production year round, firm basis. However, with the owners concern of limited capital investment, only two possible options (options 1 and 2) were left. Option 1, which involves selling excess power to EGAT on a non-firm basis, is a popular option among the sugar mill facilities. This option, however, does not fit the purpose of this study, which is to sell excess power on a firm basis. Option 2 involves adding condensing capacity to generate additional output for sale to EGAT on a firm basis during the on and off-season. Under this option, a secondary fuel, corncob, would be required to supplement the bagasse supply. The results of study are summarized in Table 11-6. The IRR was found to be 18.9 percent with an estimated total project cost of US$2.37 million. Additional analysis January 5, 2001 6 Final Report

found that increases in sugar milling efficiency would allow enough bagasse to be produced so that combustion of supplemental corncob fuel would not be required. The IRR under this scenario increases significantly to 27.5. Study results were presented to the facility owner who is interested and agreed to further development.
Table 11-6 Summary Results Karnchanaburi Sugar Industry Facility

Item Gross plant capacity, MW Net plant capacity, MW Investment, US$ million Fuel type Fuel consumption, tonne/yr Total fuel cost, Baht/tonne Operating hours per year Revenue from EGAT, million Baht/yr Internal rate of return, percent Source of fuel supply: Internal: Bagasse, tonne/yr External: Corncob, tonne/yr

Original Option 2 2.0 1.85 2.371 Bagasse, corncob 34,216 50-275 4,660 20 18.9 20,833 13,382

Increased Efficiency 2.0 1.85 2.371 Bagasse 43,333 50 4,660 20 27.51 43,333

11.7 Woodwork Creation Co., Ltd. In initial investigations, the feasibility of a new power development at the Woodwork Creations Co. Ltd. site was not found attractive, yielding a low IRR of 4.22 percent (see Table 11-7). Similar to the Plan Creations site, the factors contributing to the unattractive results were: limited fuel supply and power facility size, high investment cost relative to the plant size, and relatively expensive fuel costs. Black & Veatch investigated alternate scenarios in attempt to improve the project economics. If a larger facility could be built, the project may be more viable. Black & Veatch investigated the economics at a plant size of 30 MW and found that the IRR would increase to 24.7.

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Table 11-7 Summary Results Woodwork Creation Facility

Item Gross plant capacity, MW Net plant capacity, MW Investment, US$ million Fuel type Fuel consumption, tonne/yr Total fuel cost, Baht/tonne Operating hours per year Revenue from EGAT, million Baht/yr Internal rate of return, percent Source of fuel supply: Internal: Bark, tonne/yr Sawdust, tonne/yr Chip and discards, tonne/yr External: Bark, tonne/yr Small log, tonne/yr

Original Analysis 3.55 3.10 10.235 Wood waste 54,000 35-250 7,446 43.6 4.4 15,552 6,048 10,080 11,520 10,800

Larger Facility 34.0 30.0 31.8 Wood Waste 354,000 35-350 7,446 419 24.7 15,552 6,048 10,080 11,520 310,800

11.8 Mitr Kalasin Sugar Co., Ltd. Similar to the feasibility study of the Karnchanaburi Sugar Mill, four options were proposed for developing the Mitr Kalasin Sugar Co., Ltd.: 1. Use existing excess boiler and turbine capacity to generate additional power for export on-season, non-firm basis. 2. Add condensing capacity so that a boiler and turbine set can generate additional power for export on and off-season, firm basis. 3. Add new high-pressure boiler and turbo-generator equipment, using surplus bagasse for power production year round, firm basis. 4. Develop an entirely new core cogeneration plant utilizing high efficiency boilers and turbines for power production year round, firm basis. Option 1 was not considered because of the non-firm export of power to EGAT. Option 4, which involves developing an entirely new central power plant, was disregarded because the existing cogeneration facility is just relocated and does not need to be replaced. The remaining two options were analyzed in more detail and the study results are summarized in Table 11-8. Option 2 involves adding condensing capacity so that a boiler and turbine set can generate 3.2 MW gross power for export on and off-season on a firm basis. This option was estimated to cost US$2.6 million. Due to time and budget constraints, this option was only briefly researched. With a new high pressure boiler and turbine generator, option 3 could generate 6.1 MW gross power but at a larger investment January 5, 2001 8 Final Report

of US$15.6 million. Option 2 yielded an IRR of 46 percent compared to 13.3 percent for option 3. The study team presented these results to representatives (coordinators) of the facility owner. In general, they agree with the option alternatives and the results of study. They intended to forward the study report to the facility for review and consideration of implementation.
Table 11-8 Summary Results Mitr Kalasin Sugar Facility

Item Gross plant capacity, MW Net plant capacity, MW Investment, US$ million Fuel type Fuel consumption, tonne/yr Total fuel cost, Baht/tonne Operating hours per year Revenue from EGAT, million Baht/yr Internal rate of return, percent

Option 2 3.2 2.96 2.60 Bagasse 76,000 0 6,220 34.3 46

Option 3 6.1 5.6 15.645 Bagasse 76,000 0 7,446 77.7 13.3

11.9 Liang Hong Chai Rice Mill Co., Ltd. The initial feasibility study of building a new power facility at the Liang Hong Chai Rice Mill Co., Ltd. yielded an IRR of 7.6 percent, which is much lower than the hurdle rate of 23 percent. The low IRR was due to the high investment cost relative to the plant size being studied. The latter was limited by the availability of rice husk, which was obtained only from the two Liang Hong Chai facilities. For the base case analysis, no other sources of fuel supply were identified in the vicinity of the proposed site. However, the study team did perform an alternative analysis of a larger size plant supplemented with rice husk from the Nakorn Ratchasima province. The results of this study are favorable (see Table 11-9) and indicate that a rice husk based power plant located somewhere in the area, if not at Liang Hong Chai site, might be feasible. A summary of study results is presented in Table 10-9. The owner of the facility was informed of the study results and was given a copy of the report.

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Table 11-9 Summary Results Liang Hong Chai Facility

Item Gross plant capacity, MW Net plant capacity, MW Investment, US$ million Fuel type Fuel consumption, tonne/yr Total fuel cost, Baht/tonne Operating hours per year Revenue from EGAT, million Baht/yr Internal rate of return, percent Source of fuel supply: New rice mill: Rice husk, tonne/yr Old rice mill: Rice husk, tonne/yr Nakon Ratchasima rice husks, tonne/yr

Original 3.8 3.3 11.480 Rice husk 33,000 0 7,446 45.7 7.6 16,500 16,500

Option 1 9.5 8.4 15.0 Rice husk 83,000 0-350 7,446 116.3 24.88 16,500 16,500 50,000

Option 2 15.2 13.4 20.8 Rice husk 133,000 0-350 7,446 185.6 29.24 16,500 16,500 100,000

11.10 Southern Palm Oil Industry (1993) Co., Ltd. The feasibility study of building a new power facility at the Southern Palm Oil Industry (1993) Co., Ltd. yielded a low IRR of 11.6 percent as shown in Table 10-10. The low IRR is due to high investment cost relative to the plant size studied. The plant size was restricted by the facility owners request of using the fuel supply of the facility only and by not considering empty fruit bunch as a potential fuel. The proposed plant generating capacity could be increased by procuring additional fuel sources from another palm oil facility owned by the company and from other facilities in the area. At larger sizes, the plant would likely have more favorable economics, as could be determined by preliminary further study (see Section 9.3.10 and Table 11-10). The study team discussed the study results with the owner of facility and a copy of the report was provided. It should be noted that the facility would like to expand their processing capabilities in the near future. This will likely require some sort of upgrade to the mill power and steam systems similar to the configuration proposed for this study.

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Table 11-10 Summary Results Southern Palm Oil Facility

Item Gross plant capacity, MW Net plant capacity, MW Net sold to grid, MW Investment, US$ million Fuel type Total fuel cost, Baht/tonne Operating hours per year Revenue from EGAT, million Baht/year Internal rate of return, percent Source of fuel supply (increase over current needs): Fiber, tonne/yr Shell, tonne/yr Biogas, cu.m./yr Other residues, tonne/yr

Original Study 7.0 6.2 5.4 16.9 Fiber, shell, and biogas 0-200 7,919 77 11.6

Larger Facility 33.0 29.1 28.3 46.6 Fiber, shell, empty bunch, biogas, and others 0-200 7,919 403.5 25

38,500 20,000 3,570,000

64,500 30,000 3,570,000 250,000

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12.0 SPP Program Regulations Review

This section provides a review of the regulations for the Small Power Producers (SPP) program. The SPP program was initiated by the National Energy Policy Council and implemented by the Electricity Generating Authority of Thailand (EGAT), Metropolitan Electricity Authority (MEA), and Provincial Electricity Authority (PEA). The objectives of the SPP program are to encourage the participation of SPPs in electricity generation, promote the use of domestic and renewable energy sources, promote higher efficiency use of primary energy, and reduce the financial burden of government investment in the electricity supply industry. The national and external benefits of the SPP program include the conservation of fossil fuels, reduced fuel imports, conservation of foreign hard currency, and distributed generation benefits. The intent of the program is to realize these external benefits, yet result in a direct cost to ratepayers that is no higher than the alternative of supplying electricity without SPP projects. Small rural industries engaged in power production from biomass may sell their excess energy generation back to the electrical grid through the SPP program. However, as of October 1999, only 6.8 percent of the total SPP capacity connected to the EGAT system (1,491 MW) involved waste or renewable resources.10 The large majority of the total capacity is natural gas based cogeneration. In the view of Black & Veatch, there are several reasons why this is the case, and these will be discussed in this section. First, however, an overview of the current SPP regulations and status of the program are given. 12.1 SPP Program Regulations Overview The SPP program was initiated by the National Energy Policy Council and implemented by the Electricity Generating Authority of Thailand (EGAT), Metropolitan Electricity Authority (MEA), and Provincial Electricity Authority (PEA). This section discusses the SPP program and regulations. 12.1.1 Basis for the SPP Program The SPP Program was initiated based on the conclusions of the National Energy Policy Council that:
generation from non-conventional energy, waste or residual fuels and cogeneration increases efficiency in the use of primary energy and by-product energy sources and helps to reduce the financial burden of the public sector with respect to investment in electricity generation and distribution.

The national and external benefits of the SPP program include the conservation of fossil fuels, reduced fuel imports, conservation of foreign hard currency, and distributed
10

Arthur Anderson, Thailand Power Pool and Electricity Supply Industry Reform Study - Phase I Final Report, Volume 5, March 1, 2000.

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generation benefits. The intent of the program is to realize these external benefits, yet result in a direct cost to ratepayers that is no higher than the alternative of supplying electricity without SPP projects. 12.1.2 Least Cost Planning and the SPP Regulations EGATs planning objective is to provide safe, adequate and reliable power supplies to consumers in the least cost manner. The least cost provision means that when the utility develops its system expansion plan, it plans to add capacity resources that will minimize the cumulative present worth of incremental system costs (CPWC) to ratepayers. Incremental system costs consist of fuel and operating costs, plus incremental fixed costs associated with capital investments. EGAT periodically updates its least cost system expansion plan, the current plan is its 1997 Power Development Plan, issued in December, 1997. Should a biomass or other renewable generation alternative be able to displace a part of the incremental capacity and energy in the least cost expansion plan and not increase the incremental cost of serving load once payments to the biomass facility are considered, then the plan including the biomass facilities would be preferred. This is because ratepayers would be no worse off in that their direct costs are no higher than the identified least cost plan, yet the nation would realize the additional benefits inherent in a renewable plant. This, in essence, is the logic behind the SPP program. It encourages biomass and renewable technologies if they are viable at the utilitys avoided cost. Avoided cost is the cost that the utility would have incurred had it not been for the purchase of capacity and energy from the (SPP) facility. 12.1.3 SPP Regulations 12.1.3.1 Definition of an SPP. Under the Regulations for the Purchase of Power from Small Power Producers, an SPP must utilize one of the following as fuel or prime mover: Non-conventional energy such as wind, solar, or mini-hydro. Waste or residues from agricultural or industrial processes. Garbage or dendrothermal sources for fuel. Any fuel used for cogeneration provided that certain efficiency standards are met. Non-cogeneration use of petroleum, natural gas, coal and nuclear fuels are specifically excluded except if the thermal energy produced by these fuels is supplementary and does not exceed 25 percent of the total thermal energy used in electricity generation each year.

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12.1.3.2 Conditions for Purchase. The SPP Regulations establish the following conditions for purchases from SPPs: EGAT will be the sole purchaser of electricity. The total capacity supplied by any SPP shall not exceed 60 MW at the connection point (90 MW in certain locations). The SPP must obtain and provide a copy of all required permits within 18 months of the SPP contract and before delivery can begin. The utility will operate the SPPs protective system and is able to make decisions related to system safety. The utility can also require the SPP to inspect and improve its distribution equipment if it may affect the utilitys system. A performance bond is required on the contract signing date, equal to 5 percent of the present value of the total receivable capacity payments. SPPs receiving capacity payments must also deposit security against early termination equal to 10 percent of the capacity payment to be received in the first 5 years of the contract. SPPs are responsible for the plant interconnection costs and equipment inspections. 12.1.3.3 SPP Payments. Payments to the SPP can consist of an energy-only payment for electricity (kWh) delivered or may include an energy and capacity payment. No capacity payments are made for contracts with a term of less than 5 years. For terms of 5 to 25 years, capacity payments are equal to EGATs long-run avoided cost during the contracted term. For SPPs receiving capacity payments, the energy payment is set equal to EGATs long-run avoided energy cost resulting from the SPP purchase. For other SPPs, energy payments equal EGATs short-run avoided energy cost resulting from the purchase. Energy payments are based on time of day rates for peak, partial peak and off-peak hours. The regulations also include a minimum take liability on behalf of EGAT, which guarantees the purchase of power from an SPP of at least 80 percent of the SPPs availability. If this amount is not met, it can be made up the following year or else EGAT will pay the SPP an energy payment for energy not taken.

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12.1.3.4 SPP Maintenance and Availability. To receive capacity payments, SPPs must provide electricity during the months of March through June, and in September and October, and electricity must be supplied not less than 7,008 hours per year. For biomass and garbage-burning facilities, the annual hours must be at least 4,672 hours per year and supply must occur from March through June. A monthly capacity factor of not less than 51 percent is also a condition, with payments for the month reduced if this condition is not met. SPPs shall be able to reduce power supply during the utility off-peak demand period to no less than 65 percent of the contracted capacity (40 percent in the eastern gulf provinces until 2001). In case of notification of need, the facility must be able to generate with at least 30 minutes advanced notification. The quality of electricity must also generally conform to the utilitys synchronization requirements. The SPP regulations also include a number of restrictions on maintenance. Major overhauls must be approved by EGAT and scheduled at least 6 months in advance and must occur during the off-peak period. Also, the total period of shut-down for maintenance is limited to 35 days in a 12-month period, although a carry forward of 45 days is allowed from previous periods. 12.1.3.5 Failure to Perform. Should the SPP be unable to supply at a monthly capacity factor of at least 51 percent, capacity payments will be reduced by 50 percent during the month. The capacity payment may also be reduced should the annual minimum hours of supply not be achieved. Should the SPP be unable to provide output at the level in the contract, the SPP will be provided 18 months in which to rectify the situation, thereafter, the contracted capacity will be adjusted to reflect the facility capability. Deductions in the capacity payment may also occur should the SPP not be able to respond to dispatch instructions within the allotted time period. In the event that the SPP wishes to reduce its contracted capacity after at least half the term has expired, it may do so provided adequate notice (between 1 and 3 years depending on the reduction of capacity) is given. Should the SPP terminate the contract before the end of the term, the utility shall recall the capacity payment equal to the difference between the capacity payment already received and the capacity payment corresponding to the effective term, plus an additional penalty of up to 10 percent if terminated within 5 years of the start of the contract. 12.1.3.6 SPP Application Procedure and Evaluation Criteria. Candidate SPPs must submit a proposal (to the Head Office of EGAT) and be approved into the SPP program. The application shall include the following: Evidence of Certificate of Incorporation as a juristic entity and the Memorandum of Association of such juristic entity. A layout drawing showing the location of the power plant. Installation site of the generator. January 5, 2001 4 Final Report

 Description of the electricity generation process. The proportional amount of thermal energy used in electricity production with respect to the total amount of energy used in the total thermal process. Details of the generator(s), Name Plate Ratings and their specifications. The Single Line Diagram and the Metering and Relaying Diagram for interconnection to the Power Utility (PU) system. The electrical capacity and energy to be supplied to the PU system at the connection point, together with the SPPs plan for electricity generation and consumption as well as power consumption of other nearby juristic entities using power generated by the SPP. The contracted period during which the SPP shall generate and supply electricity to the PU system. The quantity of backup power required by the SPP from the PU. The number of staff involved with operation of the generating system together with details on their qualifications and their professional engineering licenses. The fuel consumption per year and the average lower heating value of the fuel used in electricity production and cogeneration. The evaluation criteria used by EGAT to evaluate the application shall include the following, and applications should contain this additional information to facilitate the evaluation: Appropriateness of Project Appropriateness of the project with respect to technical and engineering aspects. Experience of the SPP (the Bidder), partners, and parent companies. Financial status and availability of income sources of the project, including electricity customers and steam customers. Availability and Appropriateness of Fuels Reliability of fuel procurement. Suitability of fuel reservation and fuel transportation.

Appropriateness of Site Location Appropriateness of the project site location as regards the security of the power system and the interconnection to the PU system. Environmental impact and the local public consent, including identifiable benefits resulting from the project. Appropriateness of Other Aspects Date to commence purchasing electricity, which will be based on precedence in time. January 5, 2001 Modifications of the model Electricity Purchase/Sales Contract. 5 Final Report

 Technical Information The proportional amount of thermal energy to be used in thermal processes other than electricity generation in relation to the total energy production. The proportional amount of the sum of the electricity produced and one half of thermal energy to be used in thermal processes in relation to the energy from petroleum and/or natural gas (based on lower heating value). Details of the power plant design and construction. For example: by which company is the power plant designed, and has there ever been any construction resembling the proposed one before? Schedules of the design period, the equipment delivery, the construction, and the operation startup. The date to commence electricity purchasing, which will be part of the Electricity Purchase/Sales Contract execution. Heat Balance Diagram. Information on Location Whether the SPP (the bidder) is the owner of the land where the power plant construction will be located or the land is to be rented or furnished by other means. Whether the land is in the area where water resources, fuels, and labor as well as other construction and power generating facilities can be easily supplied. Location of the power plant is in relation to power and steam customers, and to the PU connection point. A layout drawing detailing location and distance from the power plant should be attached. Feasibility for future expansion of power generating capacity and plan of the expansion if the SPP has developed it. Public relations plans to make known the power plant construction to the public in the project locality; if the bidder has prior experience in public relations work, details of the implementation and results accomplished should be submitted. Requests for Authorization Present evidence certifying that requests for authorization to the concerned authorities have been made for the construction of the generation facility, and for the generation and supply of electricity, including a study of environmental impact. Indicate the period of time during which authorization for construction of the facility, and for generation and supply of electricity, is expected to be granted.

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 Finance and Income Provide financial statements, (e.g., income statement, balance sheet and cash flow, including at least three previous annual reports of the bidder and partners). If the documents cannot be provided, reasons must be given and other evidence of financial status must be provided so as to enable the evaluation of the bidders financial status and actual ability to operate the project. Illustrate the project financing plan. Provide evidence of the project sponsors intention to offer a loan to the project. Provide the name list of electricity and steam users, together with the purchase amount of electricity and steam. Main Fuel and Procurement of Supplementary Fuels Provide evidence of fuel procurement, period of securing the fuels, transportation, transportation routes, and fuel storage. Plan for the use of supplementary fuels instead of main fuels, including details of such supplementary fuels procurement. Specifications of main fuels and supplementary fuels (e.g., gross calorific value, ash, and sulfur content in the case of coal). Fuel properties which have impact on the environment and proposed alleviation measures. Byproducts and Waste from the Power Plant Illustrate qualities and characteristics of waste created by the power plant, and the disposal plan. If byproducts from the power plant can be of use, what is the use, to whom they will be delivered or sold, what are the criteria of the purchase contract, and what will the price be? Administration and Management Detailed plan of the administration and management. For example, will the power plant monitoring be done by the bidder or by sub-contracting another party to perform the work. In the latter case, who will be contracted and what will be the principles specified in the hiring contract? Illustrate the plan for the power plant maintenance.

12.2 Current Status of the SPP Program Table 12-1 summarizes the status (as of February 2000) of power purchases from SPPs. Currently there are 40 SPP projects supplying power to the grid. About half (21) projects are supplying to the grid on a firm basis, and the remainder are supplying on a nonfirm basis. The table also lists the fuel types for the projects accepted into the program. Of

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the 40 projects, 24 use biomass or waste as fuel. The number of projects is encouraging; however, although biomass and waste fuels represent the majority of projects, they are very small portion of the total SPP electrical capacity. As of October 1999, only 6.8 percent (101 MW) of the total SPP capacity connected to the EGAT system (1,491 MW) involved waste or renewable resources.11 Furthermore, only three out of the 24 biomass projects were accepted into the SPP program on a firm basis. The rest are to supply power on a non-firm basis and as such do not receive valuable capacity payments from EGAT. An example of this are bagasse burning sugar mills, fourteen of which have signed up to supply non-firm power. The sugar mills export their excess power production when they are milling during the on-season, which is about four months. To export firm power, the mill power systems would need to operate during the off-season as well. This would typically require modification to mill power systems and supplemental fuel if the excess bagasse is not available. Both investigations of sugar mills for this study recommended changes to allow for year-round export of power on a firm basis.
Table 12-6 Power Purchases from Small Power Producers as of February 2000

Firm Proposals submitted Number of projects Generating capacity, MW Sale to EGAT, MW Accepted into the program* Number of projects Generating capacity, MW Sale to EGAT, MW Type of fuel** Waste Bagasse Paddy husk, wood chips Natural gas Coal Oil Biomass Black liquor Contracts signed Number of projects Generating capacity, MW Sale to EGAT, MW Supplying power to the grid
11

Non-Firm 26 631.36 180.31 23 591.86 175.61 1 14 3 1 2 1 1 20 556.40 149.57

Total 93 8,318.17 4,640.21 53 4,088.77 2,134.01 1 14 6 22 7 1 1 1 50 4,053.31 2,107.97

67 7,686.81 4,459.90 30 3,496.91 1,958.40 3 21 5 1 30 3,496.91 1,958.40

Arthur Anderson, Thailand Power Pool and Electricity Supply Industry Reform Study - Phase I Final Report, Volume 5, March 1, 2000.

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Number of projects 21 19 40 Generating capacity, MW 2,169.43 553.90 2,723.33 Sale to EGAT, MW 1,343.40 147.37 1,490.77 Source: NEPO website, http//www.nepo.go.th/power/pw-spp-purch00-02-E.html. * Excluding Small Power Producers not presented in the Proposal Security and withdraw. ** Some plants use more than one type of fuel. 12.3 Black & Veatch Comments on Current Regulations As discussed in the previous section, the percent of biomass capacity in the SPP program is small and mostly contracted on a non-firm basis. Black & Veatch feels that there are several reasons for this relating to the current SPP program regulations (dated January 1998), as discussed in this section. 12.3.1 Capacity and Energy Payments The present SPP regulations were established for payment of capacity and energy generated by a biomass power plant based on the long-term avoided cost of a fuel oil plant. This concept does not reflect the true nature of biomass power plant for the following reasons: The capacities of most biomass power plants are less than 10 MW because of wide geographical distribution of the fuel. However, the fixed rate for the capacity payment is based on fuel oil power plants which have capacities up to 100 MW. Because of the smaller capacity and the effects of economies of scale, the cost per megawatt of a biomass power plant is normally higher than that for fuel oil power plants.
Capacity Payment categorised by type of fuel (Baht/kW/month) Natural Fuel Oil/Others Coal Gas 164 204 227 302 203 253 281 374 229 285 317 422

Term of Contract

Greater than 5 years but not exceeding 10 years: Greater than 10 years but not exceeding 15 years: Greater than 15 years but not exceeding 20 years: Greater than 20 years but not exceeding 25 years:

The fixed rate for the energy payment is based on the net plant heat rate for a combined cycle power plant, which is 9,070 kJ/kWh or 8,600 Btu/kWh. However, biomass power plants, which are based on the use of steam turbine thermal cycles, have higher heat rates ranging from 17,800 to 22,000 Btu/kWh. This is due to the lower efficiency of this type of thermal cycle and the high moisture content and low heating value of biomass fuels. The higher the plant heat rate, the higher the cost to produce electricity from the plant. Thus,

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biomass plants are less energy efficient and more costly to operate than power plants operating on fossil fuels. Thus, instead of providing an incentive to power produced from biomass, the SPP regulations specify energy and capacity payment rates that are two low for biomass plant owners to obtain investment returns comparable to fossil fuel plants. 12.3.2 Contract Term One objective of this study was to promote biomass projects that could obtain longterm (greater than 5 years) firm contracts, which are required to receive capacity payments. Although capacity payments provide substantial revenue to power projects, only three out of the 24 biomass projects accepted so far into the SPP program receive such payments. The primary reason for this is that it is difficult to maintain an assured and constant supply of biomass for long periods of time. This is due to the following the reasons: In general, biomass fuels are a byproduct of some higher value process. For this reason, the amount of biomass waste generated can fluctuate greatly depending on such factors as market conditions, crop output, etc. The value of biomass waste byproducts is low compared to the primary products (for example, the price of rice husk compared to the price of rice paddy). Therefore, most biomass producers are not interested in long-term supply contracts and prefer shorter-term annual contracts. Most agricultural businesses providing sources of biomass are family managed. If the second generation is not willing to continue, the business will be discontinued. For the above reasons, most potential biomass suppliers are uncomfortable entering into long-term supply contracts. However, power plant utilities and project financiers may not be willing to build or lend to biomass facilities unless they have assurances of adequate fuel supply for the life of the project, which would likely be twenty years or greater. 12.3.3 Comments on EGAT Regulations The Black & Veatch study team has comments on specific regulations as discussed below. 12.3.3.1 Minimum Take Liability The SPP regulations include specifications on minimum take liability (No. 4, Item 4, page 19/28):
EGAT will purchase power from the SPP in the amount of no less than 80 percent of the SPPs availability in a particular year...

Black & Veatch comment EGAT should purchase all of the power generated by the biomass power plants because (1) the plants are time consuming to start up and cannot January 5, 2001 10 Final Report

vary output easily (they should be considered as base load plants as opposed to peaking plants); and (2) total biomass power plant capacity is small, and has minimal effect on the whole grid system. 12.3.3.2 Generation Shortfall (Item K.3 page 9/28) The SPP regulations include specifications on generation shortfall (Item K.3 page 9/28):
In case that the SPP is unable to increase its generation for supplying within the duration period in accordance with the PUs instruction as specified in Item I 1.3, the PU shall pay the SPP capacity payment for that month by deducting 4 percent per day of the capacity rate specified in the PUs announcement for every day that the SPP is unable to follow the PUs instruction.

Black & Veatch comment EGAT should not penalize the biomass power plant owners if the generation shortfall is caused by fuel shortage. As discussed in the section on contract terms, fuel supply can be largely uncontrollable. For example, during construction booms, rice husk is in high demand from brick manufacturers and the price of rice husk may become too expensive for electricity generation. Fuel supply can also be greatly affected by hydrological factors. The difference between the maximum and minimum fuel supply can be up to 50 percent due to climatic variations (see sugarcane production in Figure 12-1). Such uncontrollable factors result in investors and lenders who are unwilling to accept the risk of fluctuating fuel supply and the loss of the capacity payments. The study team suggests that plant operators have the flexibility to makeup shortfalls without penalty during periods in which the plant is running again.

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60

50

Sugarcane Crop Output, million tonnes

40

30

20

10

0 1993/94 1994/95 1995/96 1996/97 1997/98 1998/99

Crop Year

Figure 12-6. Variation in Sugarcane Output Between 1993 and 1999.

12.3.3.3 Period of Sale Certain periods of sale are required to qualify for the firm capacity payments (Item I.1 page 6/28):
For the types of generation processes defined under Item B.2, the annual hours must be no less than 4,672 hours per year and generation and sales must include the period of March, April, May, and June.

Black & Veatch comment some biomass fuels are seasonal with periods that conflict with the present regulation requirements. For example, bagasse is available only from December through April. It is partly for this reason that none of the sugarcane mills enrolled in the SPP program have firm contracts with EGAT. In order to generate power during the off-season, mills would either have to conserve bagasse or buy supplemental fuels. 12.4 Conclusion Owing to the existing regulations and other factors, very few biomass power plants have sold electricity to the grid through firm contracts. Other reasons for the lack of biomass-based power generation in Thailand include: Energy prices do not reflect external social costs such as air pollution, carbon dioxide emissions, socioeconomic impacts, fuel imports, etc.

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 Biomass energy projects suffer from not being in regular competition with conventional energy sources. For example, power purchase agreements are often written to favor conventional energy projects and do not consider the special requirements of renewable energy technologies. Investors or lenders would like to minimize biomass fuel supply risk simply by establishing long term supply contracts, but these are very difficult to achieve. Alternative methods of risk management are often not explored. Host facilities are often not familiar with the power generation business and are wary of making large investments in businesses outside their core experience. Biomass plants are small compared to conventional energy plants. The small size and the technology type results in relatively high capital costs. Furthermore, development costs for biomass plants are similar to larger plants, even though the capacities are much smaller. The combination of high up-front capital costs, unfamiliar technology, and unmanageable fuel supply risk, makes financing of biomass projects more difficult and expensive than conventional energy plants. The result is that those plants which are built may not be able to produce electricity at rates as low as conventional technologies, such as combined cycle plants burning natural gas. To encourage biomass and other renewable energy sources, governments around the world have instituted a variety of measures including investment credits, production subsidies, guaranteed buyback prices, and capacity mandates. Direct increases in capacity and energy prices in Thailand may not offer the total solution for renewable energy projects; several measures should be examined: Set a target for biomass and other renewable power plant generating capacity for the next 10 years. Establish a competitive subsidy scheme to encourage development of new renewable energy power plants. Promote marketing of biomass and other renewable energy sources as green energy to encourage public support of projects. Collaborate with specific high potential industries (such as sugar cane milling) to promote higher efficiency plants and expanded biomass power generation. Investigate alternative funding mechanisms to provide long-term loans with low interest rates to biomass projects (commercial banks normally provide limited loans with high interest rates). Any incentive offered to renewables should be should cognizant of the liberalization of the electricity supply industry and flexible enough to respond to changing market conditions.

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NEPO has begun a successful campaign to promote renewable energy. This effort will be further strengthened by the recent commissioning of an initiative to subsidize up to 300 MW of renewable energy projects through the Energy Conservation Promotion Program (ENCON) fund. The capacity, which will be bid on a competitive basis, will be an important step to further the long-term energy policy goals of Thailand.

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