1. Tariff design and Policy framework - Grid connected Biomass Based Power Plants G R Narsimha Rao The Energy and Resources Institute Bangalore Workshop on ‘Innovative and Sustainable Energy Technologies for Developing Countries : Opportunities and Challenges 28 th May 2014, New Delhi

2. Content a)Type of biomass power plants b)Operational efficiency c)Fuel linkage d)Tariff design parameters e) Major deviations in tariffs f) Recommendations : Sustainable biomass power plants

3. Type of Biomass Power Plants a)Conventional power plant – Steam cycle - Power plants 2 - 30 MW range b)Co – generation power plants - Sugar Industry - Paper Industry - Distilleries c)Gasification - Small scale IPPs - Rice Mills Limitation of biomass power plant : Dedicated energy forestry Source of biomass

4. Biomass Power Plants : Conversion Technologies  Conventional power plant conversion efficiency increase with large size to be cost – effective Biomass based power plants cannot use this route as the size of the power station is determined by the size of the fuel resource availability  Pyrolysis and Gasification offers greater efficiency than combustion based steam cycles - Pyrolysis : Solid biomass to Liquid - Gasification : Solid biomass to Gaseous Converted biomass intermediates can be burned in engines or gas turbines to generate power

5. Biomass Power Plants : Operational efficiency Type of PlantOperational Efficiency,% Conventional Power Plant upto 15 MW 16 - 25 upto 30 MW > 30 Co-generation Power Plant Thermal energy base operation ~ 80 Electrical energy base operation ~ 65 Gasification Power Plant Large scale gasification ( > 25MW) ~ 40 Medium scale gasification 30 - 35 Small scale gasification 20 - 25

6. Fuel Linkage

7. Contract with rice mills & agro process units; Contact with plantations (tea, coffee etc.,); Contract with forest department; Social forestry, privately developed plantations.

8. StateKarnatakaAndhra PradeshTamil NaduMaharashtra Rice Husk40 - 5025 - 5236 - 48 Maize / Corn432744 - 47 Coffee Husk55 Wood Chips2747 - 49 Jaliflora< 18< 2329 Chilli powder25 30 Pam oil< 10 Agro waste < 22< 30 Average fuel cost in AP is lower compared to other southern states, but still biomass power plants (IPPs) are not really attracted with prevailing tariff. ( Unit : US $ per MT) Fuel Linkage : Landed cost of fuel

9. Tariff : Methodology for biomass based power plants Power Generation –Capacity Installed Power Generation Auxiliary Consumption Plant Load Factor Useful Life Fuel Related Assumptions –Heat Rate –Bagasse / Biomass During & After Stablisation period Base Price (FY 14-15) Goss Calorific Value (GCV) Fuel Price Escalation Operation & Maintenance –Total O&M Expenses –Escalation

10. a)Project Cost b)Plant Load Factor (PLF) c)Operation and Maintenance Expenses (O & M Expenses) d)Interest on working capital e)Auxiliary Consumption f)Fuel Price g)Fuel Cost escalation h)Fuel Consumption Tariff : Cost components for biomass based power plant

11. ParameterCo-GenBio-mass Project Cost – million USD/MW0.60.8 Debt: equity70:30 Return on Equity ( RoE) 16% Interest on Term Loan11% Depreciation Rate7% Minimum Alternate Tax ( MAT) on RoE 7.5% Plant load factor (PLF)60%75% O& M expense including insurance as % of project cost3%4% O & M escalation per annum5% Interest on working capital on two months bill12.5% Auxiliary Consumption8%9% Fuel price- US $./ Metric Ton2025 Fuel Cost escalation per annum5% Specific fuel Consumption-kg/unit1.61.16 Most of the Biomass developers have favoured a 2-part tariff Tariff : Cost components for biomass based power plant

12. Biomass Power Plant: Conventional Boiler Q : 27 MT/h H : 65 kg/cm 2 T : 480 0 C Eff : 80 ± 2% Heat Value : 805 k.Cal/kg Power Output : 6.5 MW Exhaust Heat Value : 792 k.Cal/kg Turbine Cooling tower Turbine Efficiency : { (6500 X 860) / (27000 X 805)} X 100 : 25.7 % Boiler Efficiency : 78 – 80 % Plant Efficiency : (0.257 X 0.78) X 100 : 20.0% Plant Heat Rate : ( 860 / 0.2 ) : 4300 k.Cal/kg  Large number of grid connected biomass power plants : 6 - 8 MW Plant Heat Rate

13. Biomass Power Plant: Cogeneration Use of High Pressure boilers results into steam economy

14. Crushing Capacity TCD Installed Boiler Design (Pressure, Flow, Temp.) Kg/cm 2, TPH, 0 C Installed Turbine MW Internal Cons. MW Export – Grid MW 360042 / 64 / 4109.23.65.5 400042 / 75 / 42416.13.87.2 450066 / 85 / 51015.55.110.4 3500110 / 100 / 54020.04.015.0 4800107 / 120 / 54024.25.218.0 4800107 / 120 /52524.05.518.2 1000067 / (100 +120) / 485 / 510)15 + 33.7510.025.5 Export of power depends on initial equipment design Plant operating efficiency depends on fuel availability Cogeneration: Sugar Sector

15. Technical Performance S No Name Power PlantDistrictInstalled Capacity, MW Boiler / TurbineFuel Consumption per day, MT Q, TPH / Pr, BarAir / Water 1 Indra Power Energies Ltd.Koppal630 / 65Water225 2 Koganti Power Pvt. Ltd.Raichur7.535 / 65Water250 3 Koppal Green Power Ltd.Koppal630 / 65Water200 4 Power Onicks Ltd.Bellary6 (8 MW upgraded)32 / 65Water250 5 Ravikiran Power Project Pvt LtdKoppal7.533 / 75Water200 6 RK Power Gen Private Ltd.Chitradurga20100 / 106 (Spread Stoker) Air325 (for 12 MW) Major operating plants 6 MW Range Operating Heat Rate of Plants: 4300 k Cal / kWh Plant Efficiency: ~ 20% Specific fuel consumption : > 1.4 kg / kWh Auxiliary power consumption: 12 ± 1 % Sample Survey : Operating plants in Karnataka state

16. Technical Performance (Major Deviation) Based on annual basis Specific fuel consumption is 1.8 – 2.2 kg / kWh for 6 MW biomass power plants (It is mainly due to number of starts / lower operating loads) ParameterUnit6 MW15 MW Boiler (Q, H)TPH / bar28 / 6575 / 105 Boiler Efficiency% 80 ± 282 ± 2 Turbine Efficiency% 26 ± 129 ± 1 Turbine Heat RateK Cal / kWh33002965 Plant Efficiency% 20 ± 123 ± 1 Plant Heat RateK Cal / kWh43003740 Fuel Gross Calorific ValueK Cal /kg3040 (Rice husk) Sp. Fuel ConsumptionKg / kWh1.41.2 Auxiliary Power Consumption% 12 ± 111 ± 1

17. Tariff Workings (Major Deviation) Auxiliary power consumption & Fuel consumption (or plant heat rate) S No ComponentValueRemarks aProject costUSD 0.9 million per MW bPlant load factor75% cO & M Expenses4% of Project cost with 5%escalation per annum dInterest on Working Capital12.5% on two months bills eAuxiliary consumption9%  12 ± 1 fFuel PriceUSD 20 per MT gFuel cost escalation5% of fuel cost escalation hFuel consumption1.16 kg / kWh as reasonable SEC  1.4 +

18. Gasifier based grid connected biomass power plants Name of Power Plant Village/District Installed Capacity, KW Status BERIKabbugiri /Tumkur150Not in operation BERIKabbugiri, Tumkur225Not in operation BERIBethamangala, Tumkur500 1 x 200 + 1 x 100 operational Specific fuel consumption: 1.1 – 1.2 kg/kWh (dry wood) Cost of wood purchased : 2.5 – 2.7 US cent per kg Utility buyback price (PPA): 3.9 US cent per kWh Actual operating cost : > 12US cent per kWh ( at lower cost of wood) Auxiliary power consumption: 15%

19. Two part Tariff : I. Fixed cost It is very important to consider intermediate cost (additional) to maintain plant performance & PLF Value : Rs per kWh

20. Two part Tariff : II. Variable cost ParametersBiomass Power Plant Rating Water Cooled CondenserAir Cooled Condenser 6 MW15 MW6 MW15 MW Plant Heat rate, K.Cal/kg4300374046014002 Plant Efficiency, %202318.721.5 Rice Husk –Gross Calorific Value, K.Cal/kg : 3040 Specific Fuel Consumption(kg/ Wh)1.411.231.511.32 Prevailing average price of Rice Husk : USD 43 per MT Variable Charge, cent per kWh6.05.36.55.7 Based on the capacity of the plant and technology adopted (like water or air cooled condenser), variable cost has been worked out

21. Biomass based power plant : Tariff (working) Two part Tariff : Fixed + Variable cost ParametersBiomass Power Plant Rating/Type Water Cooled CondenserAir Cooled Condenser 6 MW15 MW6 MW15 MW Fixed Cost, cent per kWh 3 for New Plants 3.5 for old plants (10 years) 3.3 Average of 20 years period 3.1 for New Plants 3.75 for old plants (10 years) 3.6 Average of 20 years period Variable Cost, cent per kWh6.05.36.55.7 Total operational cost, cent per kWh 9.38.610.19.3

22. Regulator Issue : Cost of Fuel ( Rice Husk Market Price) Rice Husk price linkage with paddy minimum support price (MSP) fixed by the Government Financial YearMSP of paddy Rice husk price (avg) Rs.per Qnt.Rs.per MT 2008-09900* & 930**9000 & 93001800 2009-101000 & 103010000 & 103002050 2010-111000 & 103010000 & 103002050 2011-121080 & 110010800 & 110002200 2012-131250 & 127012500 & 127002500 * Common grade ** A grade Source: Rice husk price collected from millers & IPPs MSP of paddy from APMC Sample calculation for the year 2012-13 Cost of 1 MT of paddy (MSP) Rs.12500/- Quantity of Husk generated 20% Cost of 1 MT of rice husk Rs.12500 x 0.2 : Rs.2500/- Based on local demand fuel price vary significantly

23. Sustainability of Biomass power plants Recommendations :  Biomass projects : where fuel cost component is variable therefore its important that biomass tariff should have both separate fixed and variable tariff components;  Fixed cost can be fixed for 20 years basis;  Escalation in variable cost is linked with the indexation mechanism (or) actual cost incurred towards fuel in review year;  Variable cost review period should be 2 years;  To ensure availability of biomass and reduce the biomass price volatility among biomass power projects follow the Govt. guidelines; (a minimum radial distance of 50 kM between plants)  Not to allow plants to go for OPEN ACCESS, it will result in higher volatility in local biomass price; Govt. policy should support the development of technologies  potential to compete with fossil fuels within reasonable length not only to grow the fuel at low cost  to convert it to electricity in a highly efficient manner (like Fluidized bed gasifiers, gas turbines & combined cycles)

24. THANK YOU