GREEN ENERGY FROM PALM-BASED BIOGAS BELL Group s Experience On Biogas Capture

Transcription

1 GREEN ENERGY FROM PALM-BASED BIOGAS BELL Group s Experience On Biogas Capture Liana Low CEO BELL Group of Companies November 2013 Kuala Lumpur Convention Centre

2 At PIPOC 2007, I spoke on Revenue Maximization and Zero Waste In Palm Oil Mill - Current Development and Future Direction In this presentation will be looking at some of the policies that have held us back from maximizing this potential as an Industry and as a Nation. Suggestions on the way forward will also be highlighted here-in.

3 Malaysia is blessed to have a successful & progressive palm oil industry. Year after year, businesses and our country are benefiting tremendously from the industry s palm products. After all is said and done, it is the Sustainability of the palm oil industry that is the main objective of this conference & subsequent dialogues the Palm Oil Industry CANNOT FAIL! If the palm oil industry fails, Malaysia s Economy will face challenges and loose its competitive edge. Oil Palm Plantation Sector is now facing chronic labor problems caused by limits on immigrant plantation labor, which is already a serious impact to the Industry. Now is the time for aggressive innovation within the public and the private sectors Total Waste Management and Biogas Capture Technology is a step in that direction.

4 21 st CENTURY CHALLENGES FOR THE PALM OIL INDUSTRY THE INDUSTRY S RESPONSE TECHNOLOGY - OUR APPROACH POLICIES - THE WAY FORWARD

5 21st CENTURY CHALLENGES FOR THE PALM OIL INDUSTRY The modern palm oil mill faces many unique challenges today compared to several years ago: High Volumes of waste (Solid and liquid Biomass): As the throughput of palm oil mills gets higher over the years, the volumes of waste they churn out also increase proportionally. These high volumes have become very cumbersome to handle.

6 GHG Emmissions: The large volumes of waste generated and decompose, they emit Green House Gases (GHG) into the atmosphere. POME (Palm Oil Mill Effluent) in particular emits Biogas containing 65% Methane which 21 times more harmful than CO 2 e. Methane (CH 4 ) ANAEROBIC POND

7 THE INDUSTRY S RESPONSE To address these challenges, the palm oil milling industry has rapidly evolved into a one stop centre for Innovation and Sustainability solely based on 100% private sector initiative. Milling activities have long since grown from just traditional milling to more value-added downstream production. We are now witnessing a transformation of Palm Oil Mills into Food Processing Plants with other integrated downstream activities on site. At the heart of all of this, is the Boiler Station, which is a RE Power Plant that provides steam and power to all the facilities on site

8 The Modern Palm Oil Mill Emphasis is on a power plant as the primary, stand alone component supplying steam and power to the palm oil mill, and other surrounding downstream facilities At BELL, we are passionate about Renewable Energy Technology; we are one of the pioneers of this Innovative Business Model in Malaysia

9 TECHNOLOGY - OUR APPROACH BELL Biogas Program is a combination of application knowhow & high performance products. We manage the whole process from Feed to Hydrogen Sulphide removal with better process economics & higher efficiency. BELL BDP (Biogas Digestion Product) answers the needs for enhancing the production of biogas. By improving the efficiency of the microbes, the substrate load can be increased. This results in more and cleaner biogas being produced. Digestate treatment is part of the biogas process that is difficult to deal with. As the digestate contains nutrients useful for plants as well as other organic matter, it can be used as bio-fertilizer. The solid-liquid separation, which is one of BELL s key competencies, enables nutrient recovery and recycling into the bio-fertilizer.

10 We have a Biogas Flaring Facility at BELL Green Power Sdn. Bhd., Melaka. Our CDM based Biogas Power Plant is at BELL Eco Power Sdn. Bhd., Batu Pahat, has a capacity of 2MW and currently generating green electricity to the National Grid

11 Mixers Gas Engines. Anaerobic Digester Tanks Scrubbers Carbosys

12 Glass-Fused Steel Tanks Mild Steel Tanks Versus Glass-Fused Steel Tanks Mild Steel Tanks BIOTANQ structures are engineered with a The life span of the mild steel tank is very predicted minimum 30 year design life in much dependant on the application & the accordance with the requirements of ISO process environment. Most mild steel Part 1, & incorporate the relevant digester will operate for years. international design standards. Corrosion set in during 3 rd year of usage. The BIOTANQ tanks can be coated to suit There is no corrosion protection for the mild the ph range of With the corrosion steel tanks & the waste/gas will be in contact resistance of the glass application the with the tank walls. waste/gas is not in contact with the steel. The installation of a 4000m³ tank took approx days to complete. The installation of the mild steel tank 4000m³ takes approx 1 month.

13 Glass-Fused Steel Tanks Mild Steel Tanks For the installation of the Glass Fused to Steel The welded mild steel tank is constructed tanks, the works are carried out at ground from the ground upwards & therefore the last level with the use of specialised Jack ring of the tank is install at approx 12m above equipment. Therefore, from a Safety aspect, the ground, having a requirement for no work is carried out at height. workers, tools, equipment & materials to be at height increasing the risk of hazards & accidents. Installed on the BIOTANQ digester tanks are double membrane gas holders having a storage volume of 810m³. The gas holder provides a constant pressure output of 8bar for the use with the gas engines, regardless of the volume of gas within the BIODOME there will be an output under pressure. From a calculation of the mild steel tank with 22.2m diameter & 1 m high roof the gas volume would be 129m³ Calculation, V = ⅓ ( π x r 2 x h ) The fixed mild steel roof only allows gas to be withdrawn under pressure when the roof space is full; once the volume within the roof is reduced the pressure is lost & therefore gas to be drawn out with the use of a pump which creating potential vacuum situation.

14 Biogas Air pipe Glass fused wall POME Chopper Pump Chopper pump draws POME from tank, pumps it to ventury chamber.

15 Biogas Glass fused wall Air pipe POME Chopper Pump Biogas is aspirated through air pipe, mix with POME and injected into the tank.

16 Higher efficiency Clog-free operation 3-Dimensional mixing pattern eliminates formation of surface scum

17 The Carbosys equipment is the main component of an integrated system we use to analyze the methane that is captured from biogas Carbosys Integrated System

18 To remove Hydrogen Sulphide (H 2 S) from biogas, we use three Scrubber Towers Three (3) Scrubber Towers If Hydrogen Sulphide is not removed, it undergoes chemical reactions with sulphur dioxide (a product from the internal combustion) to form an acid which causes corrosion and wear on the Gas Engines

19 The physical principle prevalent in the gas engines is Internal Combustion Gas Engines Here biogas is used as fuel and burnt in the presence of oxygen to generate electricity The electricity, generated, is exported to the National Grid

20 Continual success of Palmbased Biogas Program depends on the sustenance of the project One major source of sustenance for this project is its revenue landscape. These include:

21 The Malaysian Feed-in Tariff system is the main source of revenue for our Renewable Energy projects It was brought into force by the Renewable Energy Act 2011, enforced by the Sustainable Energy Development Authority Malaysia (SEDA) It provides a platform where: individuals or companies (who are eligible to sell renewable energy) can sell electricity at a certain rate (FiT Degression rate) for a period of time to companies that are licensed distributors of electricity (e.g. TNB, SESB, NUR)

22 CDM is another landscape through which we have obtained revenue for this project in the past We were issued carbon credits by UNFCCC for emission reduction achieved by our CDM Biogas project This is usually verified by Designated Operational Entity under the Kyoto Protocol Each unit of CER can be traded or sold One unit of CER is equivalent to 1Mton of Carbon Dioxide Reduction

23 The CDM initiative encourages institutions and countries to reduce their carbon emission and rewards them for doing so. In implementing this system, we have faced many challenges The main challenge we have faced is that supply of CERs for trading is high while demand is low. As a result of low demand, we have not been able to sell all our harvested CERs. At BELL Eco Power Sdn. Bhd., we have harvested a total of 19,000 CERs then but only sold 7,000 CERs at a rate of 16USD per unit of CER. Thomson Reuters Point Carbon predict that oversupply in carbon credit market could hit 1.4 billion credits by 2020

24 This surplus has resulted in the continuous fall of carbon prices It has also caused a reduction in the amount of CERs that are sold How high supply and low demand of CER have affected price ($) of CER

25 Besides the generation of biogas, the Anaerobic Digester Biogas System also helps in the separation of the liquid and solids that constitute POME The digestate solids obtained from the Anaerobic Digester are sent to a Dewatering machine where residual liquid is removed from the solids The dewatered solids are then sold as bio-fertilizers With BELL strong dedication to water chemistry and water treatment, BELL is able to offer application know-how to improve quality of water recovery from the residual liquid. Dewatered Solid

26 Reducing our carbon footprint should be the collective goal of all key players in the Palm Oil Industry It is important to identify and maintain the revenue landscape so as to ensure sustenance of the project For continuous success in greening the Palm Oil Industry, It is important to utilize the resources available to continuously develop and improve People, Process and Product (3Ps) People = Engineers & Technicians replace unskilled workers Process = Reduce Process Time Reduce Process Space Increase Process Output Process Automation Product = state-of-the-art innovative products

27 THE WAY FORWARD Through the Entry Point Project 5 (EPP 5) under the National Key Economic Areas (NKEA) formed in 2010, Malaysia is set on course to implement biogas technology in all palm oil mills across the country by the year In line with this, MPOB has proposed that with effect from 1st January 2014, all new palm oil mills and existing ones are mandated to install full biogas capture or methane avoidance facilities. As of September 2013, only 60 out of 430 mills have installed biogas facilities and only 4 RE Producers are exporting green electricity to the National Grid. WHY?

28 COMPANY CAPACITY (MW) FiT CD 1. BELL Eco Power Sdn. Bhd Nov Achi Jaya Plantations Sdn. Bhd Feb Felda Palm Industries Sdn. Bhd May Biopower Climate Care Sdn. Bhd Aug-13 Source : SEDA Malaysia Official Website (

29 QUESTION: Why so few palm oil millers installed biogas capture systems from the time the EPP was introduced in 2010 until now??? The Problem? 1. High Capital Cost We have spent over RM 20 Millions on our 2MW Biogas Plant since project inception till date. This is because as pioneers, we faced a very steep learning curve. We deployed the most advance Biogas Digestion Product taking Energy Recovery to the next level. At RM 9 Millions per MW, newer biogas plants can be set up for RM18 Millions still a relatively high figure.

30 2. Economic Viability Current FiT rate is non competitive and unduly lengthens the project payback period. With the yearly degression mechanism, the FiT rate will eventually be on par with the Coal-fired power plant electricity rate. A 60 MT/hr palm oil mill installing a biogas power plant of MW capacity will gain about RM 3.34 Millions in revenue, RM 1.84 Millions in net profit and a payback period of 9-10 years. Low Price of CERs Gas Flaring is no longer an attractive revenue landscape for palm oil millers. A 60 MT/hr palm oil mill will generate an estimate of 30,000-40,000 tonnes of CO2eq. With the current market price of 0.60/tCo2e, the revenue generated for such a mill would be approximately RM 90,500 per year not even enough to cover the consultation fees!!

31 3. Non- favorable RE Policies Conditions for revocation of Approval: The Renewable Energy Act 2011 makes it very easy for licenses to be revoked even though the testing, commissioning and approval of biomass and biogas projects (under this Act) already make it very tedious for palm oil millers to comply. " Clause 10 (1) (a) allows for revocation of feed in approval for ANY noncompliance with any provisions of the Electricity Supply Act or Regulations. This provisions is unnecessarily restrictive and not necessary as there are already several levels of penalty provided for under the Electricity Supply Act and Regulations. This legislative requirement causes the bankability of the project to be called into question. "

32 3. Non- favorable RE Policies Additional Technical Requirements: The Renewable Energy Act 2011, Regulations and Guidelines stipulate numerous technical requirements, most of which are already provided for or can be provided for under the Electricity Supply Act 1990 or Electricity Regulations It would be appropriate to allow for all statutory technical requirements in respect to RE power generations or distribution to fall back to Energy Commission; or the Department of Occupational Safety and Health under the Factories and Machinery Act. This will simplify compliance.

33 3. Non- favorable RE Policies Fluctuation of Green Technology Financing Scheme Policies As at 11 th October 2013, the GTFS policy has changed overnight without notice; to either 30% Government guarantee or 2% bank interest rebate (as opposed to the 60% Government guarantee and 2% bank interest rebate in force for over the last 2 years). This sort of change is not healthy for GTFS applicants who already began the process long ago. It upsets initial banking projections and forces a recalculation of the same. Criteria for Green Technology Financing Scheme - should be open to new and also existing Palm Oil Mill Waste Management Renewable Energy projects.

34 The Government of Malaysia is focusing on the wrong renewables like Solar Photovoltaic Energy. Solar PV is the energy of the future, possibly ten years from now. Solar PV Technology needs further development to reduce its carbon footprints. What happen at the end of solar PV lifetime?? The solar PV product cost is dropping as technology improved & solar PV technology is changing rapidly. The cost of solar PV product may drop by about 50 % within the next five years, only then should the government consider subsidizing solar PV energy through the RE Act. For now Malaysia has a viable alternative in renewable energy - Palm Oil Waste from Palm Oil Mills.

35 The government ought to be dealing with the palm oil industry s immediate problems huge Biogas and Biomass waste from palm oil mills. Energy from POME is a Waste Management Issue and NOT just Power Generation Plants. They are there to manage our waste more sustainable; to treat our waste safely and effectively and the benefit of a modern POME waste facility is that we get energy or electricity. That s the way to look at it. Hence, our challenges must be addressed from this perspective if we are to see lasting results for the palm oil industry. We recommend as the following:

36 Our recommendation to the Government

37 Our recommendation to the Government POLICY REVIEWS 1. Revision of FiT Rates and Simplify the Process: We recommend higher FiT rates and/or a wider range of applicable Bonus FiT to make Biogas capture projects more competitive & attractive especially for the palm oil millers. Also, installing, testing, commissioning and approval of biomass and biogas projects should be simplified. 2. Financial Support/Incentives: Financial support should be given especially to Independent Commercial Millers to ease the burden placed on them by the high project capital outlay. The Independent Commercial Millers are vehicles assisting Smallfarmers in processing their crops.

38 Our recommendation to the Government CASE STUDY Thailand s RE sector has had intensive support from the domestic government through several support schemes. Examples of these schemes include, funding on Research and Development and Demonstration (R&D&D), direct subsidies (10% 30%) on biogas, 8-year tax holiday, soft loans and government joint investment schemes The Thai Government is absolutely supportive of its own Energy Security & passionately works for its own National Interests. The Thai RE Domestic Mandates are Game Changers.

39 Uses ROC as a tool to meet quota for % RE contribution of Total Energy sold to Consumers. Our recommendation to the Government POLICY REVIEWS 3. Offering Renewable Obligation Certificates: Our Malaysian government should support conversion technologies by offering Renewable Obligation Certificates (ROCs) to energy producers. These ROCs can be traded between energy producers and buyers, thus creating a liquid market to generate extra revenue for RE power generation. One ROC =1 Mwh of green electricity RE Producers OR Distributibution Licensees

40 Our recommendation to the Government PUBLIC /PRIVATE PARTNERSHIPS 4. Collaboration between Ministries and Stake-holders There must be cohesive collaboration between Ministries and Industry to support Waste Management Initiatives. This collaboration could be through technology transfer and/or funding. R No& individual D on Total can Waste bear Management the cost of this & Biogas alone. When Capture approached Technology collectively, Must Be Centralized contribution by by Government each is less so Initiative output before will its be implementation greater. is made Mandatory!

41 Our recommendation to the Government PUBLIC /PRIVATE PARTNERSHIPS 4. Collaboration between Ministries and Stake-holders We are all moving towards the same goal! INDUSTRY STAKEHOLDERS We must work TOGETHER to draft policies and share technology that will be beneficial to ALL. TECHNOLOGY + FUNDING GOVERNMENT MINISTRIES (MPOB/NRE/PEMANDU /SEDA) TECHNOLOGY PROVIDERS

42 Our recommendation to the Government REVIEW THE ROLE OF SEDA MALAYSIA 5. We propose a redefining of SEDA Malaysia s Roles - SEDA should move from its current Micro Role to a more important Macro Role Waste Management Strategies Municipal Waste Implement Mechanisms to address the Logistics of Distribution and Management of Municipal Waste into Clean Efficiency Renewable Energy instead of Landfills. Palm Oil Mill Waste (Biogas & Biomass) Spearhead and Centralize R & D on Energy Technology for Total Waste Management for the Palm Oil Milling Industry. Take advantage of the High Technologies available to revolutionize RE.

43 Our recommendation to the Government Establishing localized Carbon offsetting Mechanism 6. We propose the establishment of a localized Carbon offsetting Mechanism Once the mandatory Biogas capture regulation is enforced in Malaysia, palm oil millers are automatically disqualified from applying for CDM. Now the government and the industry must move towards developing localized carbon offsetting mechanisms for Voluntary Emission Reductions (VERs) These offsetting mechanisms could either be inter industry based or intra industry based wherein Organization A (offset buyer) purchases emissions reductions from Organization B to offset its carbon emissions The overall aim is to walk towards a carbon neutral industry

44 Our recommendation to the Government Establishing localized Carbon offsetting Mechanism The Validation and Verification of the VERs can be done by a local agency SIRIM Benefits Cleans the Environment Provides Funding for Innovative Low Carbon Projects Moves Malaysian Industries towards Carbon Neutrality.

45 The Malaysian Palm Oil Industry has been utilizing co-generation RE long before the issues of climate change. As such, our Palm Oil Industry must be the Forerunner in the RE Marathon and take the lead in the Green Revolution. We have the opportunity to beautify, clean up and modernise the Palm Oil Industry and change the western world s perspective on our methane emissions, dirty POMs and climate change. Methane could be upgraded to Biomethane as Vehicle Fuel, will significantly reduce the clout of the NGOs & actually shame western government who have only TALKED about a Low Carbon Transport Fuels.

46 Waste Management is a National Issue. The Palm Oil Industry is already facing immense pressure and competition from the rest of the world. High technology is needed to remain competitive but this is not cheap. We need a lot of support from the Government. Mandatory Biogas Capture Regulations are here to stay! To encourage palm oil millers to build biogas plants, the FiT rates need to be reviewed and more government-backed incentives need to be administered. Once all these are done, Malaysian Palm Oil Millers will have no problem with executing World-Class, State-of-the-Art Biogas Capture Projects.

47