News Column

From `dirty' gas to clean energy

June 30, 2014

Ooi Tee Ching

EFFICIENT WASTE MANAGEMENT: Plantation firms tell Ooi Tee Ching how they use biogas to turn greenhouse gas into green energy and organic fertiliser, and also to fuel up their mills and light up community houses and schools

PALM oil millers in Malaysia are leading the way in "greening" the palm oil supply chain by turning the greenhouse gas into green energy and organic fertiliser.

Millers capture the gas from the sludge before it enters the atmosphere, and turns it into renewable energy using biogas plants. These anaerobic digesters behave like our stomach. They contain friendly bacteria that feed on organic matter to produce flammable gas called methane and digestate that can then be turned into fertiliser.

In an interview with Business Times, Sime Darby Plantation Sdn Bhd managing director Datuk Franki Anthony Dass said his company's involvement in biogas plants gained momentum in recent years because the environmentally friendly initiative of stemming greenhouse gas emissions has its socio-economic benefits, too.

Apart from producing renewable electricity, the biogas anaerobic digestion process also converts environmentally polluting sludge into organic fertiliser that can be used to increase the yield of planted crops. By running a large combined steam and power generator, a palm oil mill becomes a self-sustaining powerhouse that lights up houses, places of worships, schools and sports facilities, Franki added.

So far, Sime Darby has two biogas plants in Peninsular Malaysia. In working towards reducing its (operation's) carbon footprint, the group aims to have 18 mills by 2020.

Palm biodiesel is responsibly produced with environmental protection in mind.

If palm oil mills are located near Tenaga Nasional Bhd's (TNB) grid, excessive electricity can be sold to the government by bidding for the renewable energy quota laid out by the Sustainable Energy Development Authority (Seda).

Seda facilitates supply and renewable energy usage in Malaysia via the feed-in tariff (FiT). This mechanism guarantees a premium selling price over renewable energy generated from depleting and finite sources such as oil, gas and coal.

The fund is given to biogas, biomass, small hydro and solar photovoltaic on a quota basis. To date, biomass and biogas projects are allocated 222 megawatts (MW), or 37 per cent, of the total 601MW renewable energy quota.

Biogas plant operators which have successfully bid for the quota and accorded licences by Seda will receive 32 sen per kWh under FiT when they connect to the national grid. If they incorporate homegrown technology, use agricultural waste and adopt efficient gas technology, they will receive bonus incentives of five sen per kilowatt-hour (kWh), eight sen per kWh and two sen per kWh, respectively.

At the current FiT for qualified biogas plant operators, one can only expect minimal returns after 10 years.

Franki said a more targeted package of government incentives could spur more palm oil millers to invest in waste-to-energy projects.

Bell Group, a pioneer in installing biogas power plants, concurred with Sime Darby that energy recovery from mill sludge is ultimately a waste management issue and not just a green power plant activity.

Bell Group chief executive officer Puan Sri Liana Low noted that the onus and cost of connecting biogas plants to TNB's grid lie with palm oil millers. It can be very costly if the mill is located a few kilometres away from the power grid.

She suggests that the cost of laying the cable be shared between TNB and the renewable energy producers. "Apart from the formidable cost of cabling up, there is also the logistical and technical challenge if there is a fault or sabotage of the connecting cable. This is too taxing on millers."

Low urges the government to consider revising the nation's electrification master plan. One can look to Indonesia where the authorities have facilitated isolated grids close to several biogas and biomass power plants for the benefit of rural communities.

"A joint study between the World Bank and the Indonesian government showed installation of isolated grids are cost-effective in rural and island electrification," she added.

It is common knowledge that solar thrives on a few hours of intense sunlight while biogas power plants are able to run 24 hours a day, seven days a week. At current technology, solar conversion to electricity efficiency is only around 15 per cent while for biogas, it is close to 60 per cent. This means the conversion of biogas to electricity is four times more efficient. Besides, compared with biogas, the solar sector is highly dependent on foreign technology and imports.

Given the relatively limited FiT budget, which is funded by a 1.6 per cent levy on electricity bills of heavy users in Peninsular Malaysia and Sabah, it would be a step in the right direction for Seda to further fine tune its incentives to spur more participation from the biogas sector.

Currently, first-generation biogas plants take about a month to generate a reasonable amount of biomethane, but going forward, as highlighted by Low, second generation know-how could speed up the digestion by 10 times to just three days.

Separately, Kuala Lumpur Kepong Bhd (KLK) executive director Roy Lim Kiam Chye concurred that Seda's FiT for qualified biogas plant should take into consideration the high investment and maintenance cost millers have to shoulder.

"The current package of tariffs for biogas plant operators of 42 sen per kWh, which includes bonus incentives for agricultural waste management and engine efficiency, is too low. It has to be higher as biogas plants double up as carbon emission savings initiatives," he said.

"If a higher quota allocation is accorded to biogas plant operators, it can help light up more energy-starved places in Sabah.

"Apart from its relatively high energy conversion efficiency that makes payment from the renewable energy fund worthwhile, palm oil millers' investment in biotechnology initiative leads to cleaner air and creation of more high-skilled jobs," Lim said.

KLK has a biogas plant in Sabah. By 2020, it aims to put up three more at its estates in the Peninsular Malaysia.

Not all 368 palm oil mills throughout the peninsula and Sabah can benefit from FiT because many are located far away from the national power grid and the hook-up cost is not commercially viable.

Going forward, Lim noted that there is still much potential in biogas because millers can leverage on the local know-how to purify biomethane and sell them as compressed natural gas to industrial users such as oleochemical producers, taxis and express buses. There is also an option of compressing it into cooking gas.

Felda Global Ventures Holdings Bhd (FGV) group president and chief executive officer Mohd Emir Mavani Abdullah said the group has 13 biogas plants.

"By 2020, we aim to push this to 51." In theory, biogas plant operators are accorded a maximum FiT incentives of up to 47 sen per kWh. In practice, however, Emir Mavani concurred with Lim that biogas plant operators can only achieve 42 sen per kWh.

"We're not able to benefit from the five sen per kWh incentive for homegrown technology because currently there are no local gas turbine manufacturers we can source from. We have no choice but to import them from Germany and Spain," he said.

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Source: Business Times (Malaysia)

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