Biopower in Asia: Growth in Cogeneration and Power Production

Asia has numerous agricultural resources and agro industries, resulting in a large quantity of agricultural biowastes that are a significant fuel resource. During the past decade there has been an excellent growth in biomass power generation in Asia and this rapid expansion is mainly due to favourable government policies, an increased number of equity investors and lenders, good return on investment and revenue from the Clean Development Mechanism (CDM). Biomass-based cogeneration (combined heat and power) is a key sector: in India, for example, there has been phenomenal growth in the sugar cogeneration sector over the last 15 years.

Most of the sugar cogeneration systems developed in sugar mills during early days were purposely designed with lower efficiency in order to get rid of all the bagasse produced – and there were no schemes available to sell excess electricity to the grid. (Image below shows a modern sugar cogeneration plant.)

India initially started implementing 67 bar steam cycle cogeneration plants. Based on the experiences gained and lessons learnt from the operation of those plants, several 87 bar sugar cogeneration systems were installed six to seven years ago. Now, the industry is using very high pressure systems of up to 110 bar. A few such systems are already in operation and there are more than 20 projects under various stages of execution. Coupled with the improving efficiency of the steam cycle, a lot of developments have been taking place on the processing side too and the steam consumption has come down to as low as 350–360 kg of steam per tonne of cane milled.

Most of the sugar mills in Asia are very old; for instance there are several sugar mills in the Philippines that have been operating for more than 50 years. However, over the last 15 years, there has been tremendous technological development due to the possibility of selling excess electricity to the grid.

Certainly, sugar industries in Thailand, Indonesia, the Philippines and Vietnam have significant scope for the development of modern high-pressure cogeneration plants and the annual power generation potentials are above 6000, 3500, 2500 and 1500 GWh, respectively. The most common cogeneration plant sizes range from 10 MWe to 50 MWe.

In a modern cogeneration plan it is possible to produce up to 110–125 kWh of electricity per tonne of sugar cane milled, instead of the current 30–50 kWh. Table 1, above, gives the generation potential with different steam cycle options.

Palm Waste Cogeneration

There has been a major change in the palm waste power generation industry technology during the last five years. Previously, boiler ash removal along with clinker was a manual operation, but now the operation has become automatic, resulting in increased efficiency. These days, empty fruit bunches (EFBs) are also used as a boiler fuel along with fibre and shell. Some of the equipment suppliers are even trying to use 100% EFB for their boilers and they are likely to succeed in the near future.

A decade ago, palm shells were used as road material throughout Malaysia and many other countries. But at present, the price of palm shell has gone up as high as US$50/tonne (€36/tonne). This is mainly owed to the Clean Development Mechanism. Specifically, several cement industries have started using palm shell as an alternative to coal for obtaining Certified Emission Reduction (CER) revenue.

The major issue is the high potassium content in the ash, which results in the formation of clinker. Research is on-going to resolve this problem. Currently, four or five modern cogeneration plants using EFB as fuel are under installation and a few plants are in operation, although they are not currently able to use 100% EFB as planned.

(Image of modern palm cogeneration plant, left.)

While palm oil production is under close examination for the environmental impact that its plantations can have, the palm oil industries in Malaysia, Indonesia and Thailand have good potential for high-pressure modern cogeneration plants at above 8000, 5000 and 500 GWh, respectively. The most common plant sizes range from 2 MWe to 15 MWe.

Rice Husk to Power

In Asia, the growth of rice husk power plant projects started in mid 1990s. As with other sectors, during the last decade, boiler technology has considerably improved: today the plants are fully automated and there are many equipment suppliers capable of supplying rice husk power plants with proven technology. (See image of rice husk-fired power plant below.)

Rice husk prices are very high (up to $50/tonne, €36/tonne) in several parts of Asia, though in contrast, rice husk is still being dumped and/or simply being burnt in several other parts of Asia. There are many such examples in various parts of the Philippines, Laos, Cambodia, for instance. In many of these areas diesel generators are often used due to lack of grid connection, power shortages and outages from the grid distribution system. So regions such as these are ideal for the installation of these types of power plants as the rice husk prices are still low and additional CER revenues from avoidance of methane emission from decay of rice husks are possible in the places where rice husk is dumped.

Due to advanced technology, some of these biomass projects produce high quality ash which is exported to Europe, Japan, Korea and other countries and where prices as high as $400/tonne (€286/tonne) may be obtained. This solves the problem of ash disposal in rice husk – which is very significant in rice husk due to the presence of a very high (up to 20%) percentage of ash. For some projects, the business strategy is even more focused on rice husk ash production than on power generation.

Of late, ultra modern power plants with many environmental protection measures are being installed in Asia, which are on a par with those of developed nations. The rice industries in Indonesia, Vietnam, Thailand and Philippines have good potential for medium and high-pressure modern power plants and the annual power generation potentials under high-pressure modes are about 7500, 4000, 3000 and 1500 GWh, respectively. The most common plant sizes range from 2 MWe to 10 MWe.

Wood Waste

The use of wood waste to generate power is a mature technology which many boiler suppliers have mastered. The total power plant cost is lower for wood waste projects when compared to that of rice husk power plants. However, though wood waste is a good biomass fuel, the availability and sustainability of wood waste is limited in Asia due to issues such as deforestation. To ensure the sustainability of wood for boiler fuel, energy crop plantations are being considered in several places.

During the last decade, turbine technology has improved remarkably and even small sized turbines are available that offer reasonably good efficiency. Wood from demolition waste and forestry thinnings can also be used as fuel and there are a few projects in Singapore using such wastes to produce power.

The most common plant sizes range from 2 MW to 10 MW, though some are over 30 MW capacity. Rice husk and other biomass waste are also mixed in with the wood for fuel in some plants.

Other Types of Biofuel

While rice husk, sugar bagasse, palm oil waste and wood waste are the major biomass fuels in Asia, other biomass fuels are also used for power generation. These include rice straw, cane trash, corn cob, cassava rhizome, coconut shell, fibre and tree, palm tree, coffee husks, sunflower seeds, sunflower husks, cotton wastes, peanut shells, spent wheat grains, spent barley grains, tobacco wastes, cashew shells. Rarely, some of these other biomass fuels are also used exclusively (corn cob, coconut shell and coffee husk are few examples) however, often they are co-fired with other biomass fuels.


Five years ago, many industries in Asia did not believe they could produce biogas from industrial waste water and then implement biogas power plants. But today, biogas power is very common in Asia, especially in Thailand (with starch, palm oil, ethanol industries and piggery wastes) and the Philippines (piggery wastes). In Malaysia and Indonesia, several biogas power plants are at various stages of implementation.

The most commonly used systems are: up-flow anaerobic sludge blanket (UASB), anaerobic fixed film reactor (AFFR), continuous stirred tank reactor (CSTR), covered in-ground anaerobic reactor (CIGAR), covered lagoon (image, left), etc.

However, there are very few gas engine suppliers. Revenue from CDM is the key reason for the sudden development in biogas power technology and project development. Waste water and/or slurry from starch plants, palm oil plants, ethanol plants, poultry farms, cattle farms and piggery farms are ideal for biogas generation and power plants. Biogas from municipal solid waste (MSW) is also gaining in popularity. In cities, biodegradable wastes are separated from municipal solid wastes in order to produce biogas. Such systems are already in operation in Thailand, Singapore and India.


Gasification is an old technology used widely for running vehicles during World War II. Following the war, this technology remained dormant for a long period of time and serious R&D efforts were made only during the last 10 years, achieving some breakthroughs. Significant R&D efforts are also underway in Europe, USA, India, Japan, and China.  (Image of a 200-kW wood gassifier, below)

Steam turbine technology is not viable for capacities less than 1–2 MW. Hence, small-scale power generation is the main area of development for gasification technology. Gasification-based power generation is often attractive when compared to that of diesel-based power generation. Different types of gasifiers are available on the market and the selection of technology mainly depends upon the type of fuel used. In the coming years this technology will become a big boon for industries with low power requirement ranging from 100 kW–1 MW.

Gasification for large-scale power generation has also progressed to advanced stages of commercialization and several such plants have been installed in developed countries. Efforts are being made to reduce the investment cost, which is presently on the high side.

Project Development Considerations

Biopower project development is in some ways more of an art than a science. For some sites, a few days of expert study are enough to determine whether or not the site has the potential to implement biopower project. In cases where the investment options are immediately attractive, a feasibility study can be conducted straight away, whereas in complex cases for which the feasibility is doubtful, a pre-feasibility study will be needed.

Power generation/cogeneration plants require thorough risk assessment. Below are some of the important risks to be studied in detail:

  • technology risk
  • fuel supply and competition for the fuel
  • fuel price
  • construction contractor
  • operation and maintenance
  • investment cost overruns
  • operating cost overruns
  • interest rate
  • cash flow risk
  • environmental risk
  • management performance.

Although several suppliers claim to be the best in the market, in fact very few have mastered the technology and it remains a great challenge for buyers to identify the right suppliers. There are some cases in which the buyers pay higher prices for lower quality and sometimes select unqualified equipment suppliers with inadequate experience and track record. For the successful operation of power plants throughout their lifetime, enough attention and finance should be given over for their maintenance too.

Until the mid-1990s, biomass products such as rice husk, wood waste, palm shells, empty fruit bunches (EFB) and so on, were considered to be ‘waste’ in Asia, but today it is even difficult to purchase these fuels at reasonable prices, with prices at the high end in many parts of southeast Asia and India. Consequently, project developers should carefully consider expected increases in the biomass fuel price and its availability throughout the plant’s lifetime. There are several cases in Asia where the power plant economics turned out to be completely different from projections in the feasibility studies, due to a sudden increase in fuel price and wrong fuel price projections.

Normally, financing can be obtained from commercial banks, multilateral financing institutions, development financing institutions and export credit agencies. However, while it is relatively easy to get corporate loans against acceptable collateral, project financing remains difficult and these days more and more bio-power projects get loans under project finance schemes from local banks.

Despite the current (July 2009) financial situation, circumstances are likely to improve within a year and there are many equity fund investors, banks, financial institutions and venture funds who are looking for good projects to finance. Investors are mainly looking for credible project owners and prefer to join hands where project development is done in a professional way. Some investors also prefer to engage with projects from the earliest stages, bearing the cost of initial assessment and feasibility studies. However, equity investors generally expect a higher rate of return than do more conventional lenders.

Technical due diligence will provide answers to several aspects and sometimes avoids costly mistakes. Financial due diligence will help with validating all assumptions and calculations. Some errors may occur while performing some complex financial modelling. Due diligence can also be used to check whether the equipment or EPC cost is reasonable. The ideal time to conduct due diligence is before signing the equipment supply contract. It is worth spending money on project due diligence in order to potentially save a considerable amount of project revenue during its life cycle. In Asia, project due diligence was not widely practised in the past for small-scale power plants, although today, more and more projects include due diligence in their development, irrespective of the size of the power plant.

Insurance is one of the most important aspects of developing a biomass power generation installation, for protecting the owner from several aspects of project risk. Problems can arise at any time while handling and transporting equipment and during construction and operation of the power plant. Comprehensive insurance is recommended during transportation, construction and operation. However, in Asia proper insurance arrangements are not usually made for power plant operation, although there are a very few exceptions.

Investment Costs and Potential CDM Revenue

For biopower projects of reasonable sizes, there is potential to obtain additional revenue from the Clean Development Mechanism (CDM). The revenue stream available will depend upon the electricity generation and usage, previous use of biomass, etc. For example, if the electricity generated from biopower plant replaces diesel generators, then the potential revenue is higher, when compared to that of replacement of grid electricity.

Market prices for Certified Emission Reductions were as high as €23/CER ($32/CER) mid-2008. Though the CER value is comparatively low (around €10/CER, $14/CER) a year later, still it brings additional revenue to the project. Nonetheless, for some complex situations where CDM applicability is in doubt, the voluntary emission reduction (VER) is another option to accrue additional revenue, though the VER price is very low.

Certainly, CDM revenue has played a very important role in the realization of more than 200 biopower projects in the last five years alone, and participants in the CDM programme have contributed towards reasonable development capital, helping to provide the initial push for several biopower projects in Asia. The role of the CDM after 2012 is not currently clear, though it is expected to be resolved at the planned UN COP meeting in Copenhagen in December 2009.

The total investment cost for a biopower project depends upon various factors, including fuel, plant size, country, nature of the project (upgrading/attachment/green field), plant availability, equipment quality, completeness.

The development cost is lower for countries/regions/locations where all the required commercial, technical and environmental information related to project implementation are readily available. To reduce the total project investment cost, developers need to prepare well in advance by collecting all relevant information related to the project.

Among these biomass projects, the investment costs for rice husk project is highest. Generally the cost ranges from $1.2–2.8 million (€0.9–2.0 million) per MW, depending upon various factors. As and indication, wood waste projects have investment costs ranging from $1.0–2.5 million (€0.7–1.8 million) per MW, while sugar cogeneration plants come in at between $0.9–2.0 million (€0.6–1.4 million) per MW.

P.K. Balasankari, B.E., M.Engg., Ph.D. is executive director of Renewable Cogen Asia. Arul Joe Mathias, B.E., M.Engg., MBA. is managing director.

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