1. Economics Aspect on Power Generation by Biomass in Thailand Surachet Tamronglak, Ph.D. Director Biomass One-Stop Clearing House Biomass to Energy, Bangkok, February 14, 2006

2. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 Agenda  General assumptions  Economics of large scale power plants  Economics of small scale gasifiers  CDM aspects

3. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 General Assumptions  Investment includes development, EPC, IDC and grid connection costs  BOI privilege granted  D/E ratio : 3:1  Loan period : 7 years  Interest : 6%  Constant loan drawdown during construction  WACC : 7.5%

4. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 General Assumptions (cont’d)  Project life : 15 or 20 years  Power cost during plant startup included  Admin. Charge of 2% of total power sales for projects larger than 1 MW  Fixed fuel prices  Fixed power tariff (average peak and off-peak TOU rates plus Ft)  Fixed exchange rate (Baht 40 / US$)

5. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 Rice Husk Fired Power Plant  Gross capacity 6 MW (net 5.3 MW)  Total investments Baht 340 mil.  Project life 20 years  Fuel price : Baht 750/ton (incld. transportation)  Fuel consumption 67,000 tons/year  O&M 3%  Net power sales 37 GWh/year  IRR 7.25%  NPV Baht -3.4 mil.

6. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 Palm EFB Fired Power Plant  Gross capacity 6 MW (net 5 MW)  Total investments Baht 420 mil.  Project life 20 years  Fuel price : Baht 300/ton (incld. transportation)  Fuel consumption 103,000 tons/yr  O&M 4%  Net power sales 35.1 GWh/year  IRR 7.07%  NPV Baht -7.4 mil.

7. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 1-MW Gasifier Power Plant  Gross capacity 1 MW (net 0.9 MW)  Total investments Baht 45 mil.  Project life 15 years  Fuel price : Baht 500/ton (incld. transportation)  Fuel consumption 10,800 tons/year  O&M 5%  Net power sales 6.5 GWh/year  IRR 30%  NPV Baht 30 mil.

8. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 120-kW Gasifier Power Plant  Gross capacity 120 kW (net 102 kW)  Total investments Baht 6.7 mil.  Project life 15 years  Fuel price : Baht 500/ton (incld. transportation)  Fuel consumption 1,300 tons/year  O&M 10%  Net power sales 0.73 GWh/year  IRR 0.33%  NPV Baht -1.5 mil.

9. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 Coal & Natural Gas in Power Generation Natural Gas Coal

10. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 Natural Gas Demand Year Total (MMSCFD) Power Generation (%) GSP (Petrochem) (%) Industry (%) 20053,00074179 20156,360662212 Transportation is not included yet.

11. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 Natural Gas Supply YearDomestic (%) New Domestic (%) Piped Import (%) LNG Import (%) 200574-26- 201531321522 Supply includes 3P (33 tcf), while proven reserve (1P) is approximately 12.5 tcf At 2005 production level, (3P) R/P is around 45 yrs (~ 15 yrs for 1P) At 2015 production level, R/P is much shorter LNG import starts in 2010. More import needed, if transportation is included

12. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 Grid Emission Factors (ton/MWh) Low Coal Medium Coal High Coal

13. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 CDM Aspect – Case Study 1/3 Case Study:  8.8 MW (net) biomass power plant  480 million Baht investment  D/E ratio : 3:1  Interest 6.5%  20-year plant life  Without CDM, IRR 11%, NPV 84.5 mil.  CER prices : $7.5 and $15 per ton

14. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 CDM Aspect – Case Study 2/3 ScenarioLow Coal Medium Coal High Coal Add.Rev. (mil.Baht/yr) 10.811.812.8 NPV (mil.Baht) 179.7188.5197.3 IRR (%) 13.113.313.5 Without CDM, NPV = 84.5 mil.Baht, IRR = 11 % $7.5 net CER price

15. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 CDM Aspect – Case Study 3/3 ScenarioLow Coal Medium Coal High Coal Add.Rev. (mil.Baht/yr) 21.523.525.5 NPV (mil.Baht) 274.8292.4310.0 IRR (%) 21.523.525.5 $15 net CER price

16. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 CDM Aspect – All RE Potential ScenarioLow Coal Medium Coal High Coal Add.Rev. (mil.Baht/yr) 3,9504,3204,690 $15 net CER price Total RE potential = 12,200 GWh/yr or 1,860 MW (biomass 1,400 MW, biogas 160, solar 100 MW, wind 100 MW and MSW 100 MW)

17. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 Conclusions  Economy of scales works here  Fuel cost is also a critical factor  Some small scale projects and projects burning difficult fuels need help  CDM can be beneficial

18. Biomass One-stop Clearing House Biomass to Energy Bangkok, February 14, 2006 Thank you for your attention Tel: +66-1-837-8525 surachet@efe.or.th