Case study on Bagasse Energy Cogeneration in Mauritius by Dr Case study on Bagasse Energy Cogeneration in Mauritius by Dr. Kassiap Deepchand Technical Manager Mauritius Sugar Authority

Content of presentation Mauritius Sugar industry background Bagasse Energy Development policy issues - Sugar Sector Action Plan - Sugar Industry Efficiency Act - Bagasse Energy Investments - Institutional set up - Constraints to development Bagasse Energy projects

Content of presentation (ii) Electricity export Participation of stakeholders Project implementation experience Technology transfer options/lessons learnt Concluding remarks

Mauritius: Selected Indicators Population (million): 1.1 (2000) Area (km2): 1,865 Capital City: Port Louis GDP Growth Rate (%): 7 (2000) GNP per Capita (US$): 3,600 (2000) Official Exchange Rate: MRs. 29.5 = 1 US$ (Dec, 2001)

Mauritius: Selected Indicators (ii) Economic Activities: Agriculture, commerce, financial services, construction, textile manufacture, tourism Energy sources: Hydro, Bagasse, Solar, imported petroleum, imported coal. Installed capacity (MW): 498 Electricity consuption per Capita (kWh): 1,156 (2001) Electricity generation (GWh): 1,424 (1999) System Losses (%): 10.8 (1999)

Mauritian Cane Sugar Industry Introduced by Dutch - 17th Century Production reached - 650,000 tonnes Major net foreign exchange earner Provided industrial base for emergence of Mauritius as a semi-industrial society Ensured economic growth and social stability

Sugar Production/Exports Target: 650,000 tonnes Export: Sugar Protocol (ACP/EU) - 506,000 t Special Preferential Sugar Agreement (1995) - 40,000 t USA - 12,000 t Other Market - 8,000 t Local Market - 38,000 t

Cane Land Area/Ownership Total area - 186,000 ha Area under cane - 75,000 ha Miller Planter - 55% or .. Ha Number - 21 Size of holdings - 700 to 5,500 ha Small Growers - 45% or .. Ha Number - 35,000 Size of holding - 0.1 to 10 ha

Cane Sugar Industry - Background CROP 1998 Area under Tonnage of Cane Sugar Ha % T % Small Planters (<5 ha) 20274 28 114877 18 Large Planters 15620 21 95754 15 Miller Planters 37375 51 270325 43 Miller 149024 24 Total 73269 100 629980 100

Sharing of Sugar /By-products Growers Millers % % Sugar 78 22 Molasses 100 0 Filter Mud 100 0 Bagasse* 38 12 *Out of a Bagasse Transfer Price Fund for bagasse @ Rs100/t used for electricity export

Energy Status - Mauritius No oil, gas or coal reserves Renewable energy - hydro and sugar cane Hydro - 10 MW (fully exploited) Sugar Cane - 5.8 million tonnes Imported diesel, coal and gas

Evolution in Energy Demand Sharp level of increase due to: Expansion in EPZ and tourism; Quality of life improvement. Annual increase: Over 11% in consumption; 9.5% in maximum demand.

Sugar Sector Action Plan (1985) Reason: Rising demand in Preferential Market Rapid price increase as from 1975 Subsequent fall in price Profitability threatened Export duty increase Climatic conditions (cyclone/drought)

Sugar Sector Action Plan (ii) Objective: Restructure to maintain viability Modernise production both at field/factory Export duty relief Centralisation Energy from bagasse

Action Taken Add. Prod. speciality sugar Improve irrigation techniques Adoption of derocking/mechanisation Intensity research (variety/efficiency in field operations) Value added products, e.g. electricity

Sugar Industry Efficiency Act(1988) Objective: To provide for an efficient and viable sugar industry To promote agricultural diversification and diversification within sugar

Sugar Industry Efficiency Act (ii) Introduction of performance linked export duty rebate related to: (a) Improved sugar recovery (b) Enhanced use of bagasse for energy (c) Use of cane interline/rotational land for foodcrops Income tax Incentives for speciality sugars, investment in energy saving and investment in bagasse electricity

Investment Options (i) Utility to add 2 x 24 MW (fuel oil) (ii) Utility to invest in 40-50 MW coal plant (iii) IPP for 2 x 22 MW bagasse/coal plant Option (iii) was adopted in that: It would displace public sector investment It was economically more attractive

Definition of Cogeneration Energy system sequentially generating electrical power and thermal energy System common in cane sugar industry for a very long time

Bagasse Energy and Sugar Production Sugar Sector Action Plan: Emphasis on bagasse energy Active collaboration between Government and Private Sector Formulation of appropriate enactments (SIE Act) Industry presented a programme of investment US$130M for factory modernisation/irrigation/diversification inc. US$27M w.r.t bagasse energy

Bagasse Energy Development Objectives Optimise bagasse electricity for export with increase from 70 to 120 GWh implying a 22 MW bagasse/coal plant Use of cane field residues for additional electricity from cane biomass

Bagasse Energy Development Benefits Maintain long-term viability of sugar sector Increased investment in rehabilitation/modernisation Ensure continued viability of sugar sector sustained commitment for Sugar Protocol Saving on fossil fuel import Saving on boiler/turboalternator investment equivalent of 50% investment in sugar factories

Bagasse Energy - Investments (US$80M) 2 bagasse/coal plant at 2 regional factories Energy conservation in cane processing Bagasse saving and transport to central power plants Investment in transmission lines

Projected Capital Investment US$55M 22 MW power - US$24M Bagasse Saving - US$18M Studies on Cane Field Residues - US$1.6M Bagasse Transport Studies - US$1.3M GEF Grant of US$3.3M

Institutional Set-Up (i) Regulatory framework: - to promote private sector investment in power production and factory modernisation - to encourage efficient bagasse market - to attend to energy pricing/contracting (ii) Setting up of an ad-hoc technical committee comprising of MSA/Ministries of Public Utilities/Finance/and Economic Planning (iii) Setting up of a BEDP Coordination Unit at MSA

Constraints to Bagasse Energy 1. Price of bagasse (based on coal kWh at condensing mode) - Consolidation of milling activities excluding transport of bagasse 2. Funding and fiscal framework (huge capital required) - Enactments to induce investments e.g. tax free debentures, segregation of growing/milling activities w.r.t bagasse energy

Constraints to Bagasse Energy (ii) 3. Centralisation of cane milling activities - Reduction in number of mills closing of small ones in favour of higher capacity 4. kWh price - based on avoided costs (Technical Committee)

Table 1 -Bagasse based Power Plants in Mauritius up to year 2000 Factory Tonne Power Start Date Units from Units from Total Units cane per Bagasse Coal from Bagasse hour & Coal (GWh) (GWh) (GWh) FUEL 270 F Oct 1998 60 115 175 Deep River/ Beau Champ 270 F April 1998 70 85 155 Belle Vue 210 F April 2000 105 220 325 Médine 190 C 1980 20 - 20 Mon Tresor/ Mon Desert 105 C July 1998 14 - 14 Union St Aubin 150 C July 1997 16 - 16 Riche en Eau 130 C July 1998 17 - 17 Savannah 135 C July 1998 20 - 20 Mon Loisir 165 C July 1998 20 - 20 Mon Desert Alma 170 C Nov 1997 18 - 18 Total 3 F 360 GWh 420 GWh 780 GWh 7C 235 GWh F 125 GWh C F = Firm or Bagasse during crop and Coal during intercrop C = Continuous or Bagasse during crop season only

Table 2 -. Evolution of Bagasse (in tonnes) Table 2 - Evolution of Bagasse (in tonnes) saved and sold to firm power plant Factory 1988 1992 1998 DRBC 6844 13650 0 Beau Plan 0 0 6106 Belle Vue 90 7688 28524 Constance 8506 14980 0 MDA 897 7992 0 Mon Loisir 0 8749 0 Britannia 0 0 1239 Riche en Eau 0 3995 0

Evolution of sugar industry electricity export (1989 – 2002)

Bagasse Transfer Price Fund (BTPF) Comprises of 2 elements: Sale of electricity to the grid Sale of bagasse for purposes other than sugar manufacture

Bagasse Transfer Price Fund (BTPF) Accruals to BTPF Electricity kWh exported x Rs100/t bagasse = A Conversion Factor for continuous, factor was 360 kWh/tonne bagasse up to year 1995 and subsequently 400 kWt/tb for firm, factor is 440 kWh/t bagasse - Other uses – weight of bagasse x Rs100 = B BTPF = A + B

Sugar Investment Trust (SIT) Instituted in 1994 Shareholders Employees of sugar industry and institutions Cane growers

Sugar Investment Trust Share Ownership of: 20% in all milling companies 14% in 70 MW CTBV power plant 20% in 38 MW plant at FUEL 10% in 24.5 MW at DRBC Dividend paid 1999 4% 1998 6%

50% of BTPF in proportion to share of electricity Sharing of Revenue For cogenerator 60% income tax free 50% of BTPF in proportion to share of electricity exported For non miller-planters 38% of BTPF prorata on sugar production For miller-planters 12% of BTPF prorata on sugar production For SIT shareholders Share of dividend

Project Implementation Stages 1. Government policy definition on bagasse energy 2. Energy conservation measures and use in sugar factories 3. Public utility to establish energy demand forecast 4. MoU between utility/sugar company 5. Conduct of feasibility study 6. Signing of PPA

Project Implementation Stages (ii) 7. Raising of funds (PPA as bank guarantee) 8. Detailed design 9. Tendering for supply of equipment 10. Evaluation of tenders 11. Award of contract 12. Erection/Commissioning 13. Operation

Technology Transfer Opportunities Mauritius has acquired an indigenous experience on bagasse energy - 10 power plants of which 3 export firm power (coal and bagasse) and 7 export continuous power (bagasse only) - All plants located within 1,860 km2 and are easily accessible - Can share the experience inc. visits

Cane Sugar Industry Mauritius/Fiji Land area (km2) 1,860 16,000 Arable area (ha) 95,000 200,000 Area under cane 75,000 100,000 Cane production (x106) 5.8 4.0 Land ownership Private Tenant Mill ownership Private Government No of mills 11 4 Crushing capacity (daily)1,600-7,000 N/A Bagasse energy 10 plants 2 plants

Lessons Learnt/Recommendations - Bagasse based electricity linked with sugar as well as with power sector - Government support and clearly defined policy on bagasse as a substitute to fossil fuel - Full participation of all stakeholders right from conception to implementation with World Bank acting as “honest broker”

Lessons Learnt/Recommendations (ii) - Detailed feasibility with proper cost estimate to avoid delay in implementation - Bagasse/coal power plant associated with environmental advantages and benefit the sugar industry and the country at large - Bagasse saving and transport to central power plant is not advisable - rather cane milling operations should be centralised

Concluding Remarks Mauritius successfully implemented bagasse energy cogeneration on a commercial basis attributable to be the various entrepreneurs operating in an environment with clearly defined Government policy

Concluding Remarks But this success could have been jeopardised were it not the participation and involvement of all the stakeholders in the sugar industry especially the most vulnerable partners like the employees and the small cane growers. Government, through legislation and establishment of the Investment Trust coupled with the collaboration of the entrepreneurs has created the necessary environment which has led to the success of bagasse energy cogeneration.