Southeast Asia set for biomass boom

Asia is a key supplier of biomass feedstock to markets such as Europe or the United States but within the region, new opportunities and investments in biomass are emerging, particularly in Southeast Asia.

Of the Asian countries, China, Japan and Korea currently lead the region in biomass projects due to a combination of a high level of technological capability and government targets on renewable energy sources.

Further south, however, Southeast Asia is fast becoming an attractive market for developing biomass as an energy source, given that it produces nearly 230 million tonnes of feedstock annually.

Such biomass from crop residues, municipal solid waste and forest residues such as wood is available in abundance and investors are beginning to recognise the potential to harness this source for energy.

“Asia is home to one-third of the world’s attainable biomass,” says Jerome Le Borgne, Southeast Asia, Africa and Pacific Sales Director, DP Cleantech.

“A lot of resources, particularly residues from forests, wood processing and agriculture, are available but not being used, with the exception of the feedstock generated by the palm oil and sugar industries.”

“There is an urgent need to utilize these wastes for commercial electricity and heat production to reduce the reliance on conventional energy sources, and to cater to the needs of the industries as well as urban and rural communities”, adds Le Borgne.

Public sector drivers

According to Suchitra Sriram, program manager, Energy and Environment, Frost & Sullivan, governments in Southeast Asia have introduced industry-friendly policies to stimulate biomass power growth, such as the feed-in tariff policy, which is designed to accelerate investment in renewable energy technologies by offering long-term contracts to renewable energy producers based on the cost of generation of each technology.

In addition, governments have also provided project developers with investment incentives, guaranteed minimum prices, power purchase agreements with the utility grid, exemptions pertaining to the import of equipment and certain tax credits.

For instance, Thailand was an early mover in identifying the industry’s underlying opportunities and had formulated policies to encourage biomass projects through the Very Small Power Producers (VSPPs) scheme introduced in 2001.

The country has set an ambitious target to achieve 3.7 gigawatts (GW) of biomass capacity by 2022.

Meanwhile in Indonesia, power companies from other countries have been entering the local biomass power market.

Biomass is a relatively new industry in Southeast Asia, and our expertise in fuel analysis and combustion plays a large part in helping local contractors and developers develop and execute the right solution for their situation. Furthermore, the push to utilise biomass for primary generation of biofuels provides a further opportunity for value to be added in the secondary combustion of the waste by products

Jerome Le Borgne, Southeast Asia, Africa and Pacific sales director, DP Cleantech

Last year, the Indonesian state-owned public power corporation PLN agreed to construct a biomass power plant that would generate power by incinerating wood chips on Sumatra together with the US company General Electric (GE).

For the wood chips, it plans to use acacia and eucalyptus, small quantities of which can maintain high combustion temperatures. The power plant’s output will be 1,000 kW, and it will be able to supply electricity to 1,000 households at the beginning of 2014. The construction costs will come to US$5 million (450 million yen) in total, which includes the cost of a 100 hectare plantation.

In addition, the Korea Electric Power Industrial Development (KEPID) Group, the country’s largest utility, revealed in September 2012 that it will build a biomass power generation project worth 1.5 trillion rupiah (US$ 155 million) in Pasaman Regency on West Sumatra, Indonesia, by using industrial waste products generated through the process of producing palm oil.

The Philippine government also aims to encourage more biomass-based projects by introducing a slew of policies and schemes to boost the industry.

Le Borgne notes that “thanks in part to these favourable conditions”, DP Cleantech has recently signed a contract to build a 12 MWe biomass power plant with Philippine power producer AseaOne Power Corporation (AOPC).

The plant is part of an initiative to meet the clean energy needs of the rapidly growing island tourism in Panay and Guimaras (island provinces in Visayas, a major island group in the country). The 12 MWe power plant will be built in Aklan, Panay and help to reduce chronic power shortages and carbon emissions in this province.

The primary feedstock will come from local sustainable agricultural rice crop residues – rice husk and rice straw, as well as woodchips.

To ensure flexibility, the plant’s boiler will be able to handle multiple fuels, and optimize the combustion of alternative and diverse fuel sources such as sugarcane waste, coco leafwood and woodchips. It will be completed in April 2014.

Adds Le Borgne: “This project will lead to the development of a balanced long term energy supply, whilst meeting environmental and social objectives with the additional multiplier benefit in terms of enhancing job generation and upgrading income levels in the agricultural sector which is the major beneficiary of the biomass power plant project.”

Biomass hubs in Asia

Across the Straits of Malacca, Malaysia has got its ambitions set on becoming the biomass hub for the region as it takes aggressive steps to build capacity.

The palm oil industry alone contributes to about 8 per cent or over RM 80 billion to the country’s gross national income (GNI), making it by far the largest contributor within the agricultural sector, naturally generating the largest amount of biomass.

Industry figures put this amount at 83 million dry tonnes in 2012 and this is likely to increase to 100 million dry tonnes by 2020.

Some of it, such as Palm Kernel Shell (PKS), is already exported to countries like Japan, China, Thailand and some parts of Europe for power generation. This feedstock is also extensively in demand domestically by local industries for burning to create bio-energy, thus creating supply shortages in the market.

“This is why the National Biomass Strategy 2020 (NBS 2020) had initially focused on oil palm biomass,” explains Timothy Ong, Interim Chairman for Pellet Association Malaysia and Vice President, Strategic Innovation, Agensi Inovasi Malaysia (AIM), Malaysia’s national innovation agency.

NBS 2020 sets out a strategy by the Malaysian government to build several value-added industries involving wood products, bioenergy, biofuels and bio-based chemicals from the country’s natural resources.

“While the strategy is initially focused on the palm oil industry, we have now extended the scope to include forestry and short-rotation biomass crops,” says Ong.

Take woody biomass for instance: As much as 2.7 million tonnes of woody biomass is available in Sarawak alone, predominantly from existing plantations. NBS 2020 will eventually help to facilitate the commercialisation of all biomass that is available in Malaysia, including sources such as rubber plantation biomass, rice husk and even municipal waste, he adds.

Malaysia is also attracting a growing number of international investors and potential technology partners who are interested in developing bio-pellets (made primarily of a biodegradable polymer, bio-pellets promote the growth and reproduction of aerobic and anaerobic bacteria, which in turn use the pellets as a carbon source to consume nutrients in water), second generation bioethanol, and others.

Locally, oil palm biomass is mainly used as bio-energy and being put back into the field in its raw form by plantation owners as fertilizer. There are a few biomass power plants that are burning Empty Fruit Bunches (EFB) and Palm Kernel Shell (PKS) to generate electricity. Other uses that exist on a small scale today include composting, wood products, animal feed, long dried fibres and eco-paper.

“We believe that the only way for local biomass owners to benefit is when they have a portfolio approach,” says Ong.

The appetite for biomass is also rapidly growing in neighbouring Singapore, as the city-state moves towards becoming a clean energy hub in Asia Pacific.

This is an example of fuel storage and handling system that can process the likes of wood waste, horticultural waste and other biomass sources. Image: DP Cleantech

In 2007, Singapore identified clean technology as a key driver of economic growth, allocating S$700 million to fund R&D, innovation and manpower development in the sector. In 2011, the sector received a further S$195 million boost into R&D activities.

The country’s first waste-to-energy facility launched last year features a woody biomass steam production plant on Jurong Island which can generate roughly 22 tonnes of process steam per hour. 

Sembcorp Industries, the energy and water solutions provider that developed the power plant, aims to supply one third of all of its customers on Jurong Island, roughly 12 square miles, with a renewable energy power source by 2014.

By the end of this year, a milestone project – a unique integrated biomass-solar power generation plant by the China Guangdong Nuclear Power Holding Corporation (CGNPC) – will also be completed.

Also located in the Jurong area, this US$33.6 million hybrid facility will generate 9.9-megawatts of electricity by drawing from a unique mix of waste biomass and solar energy.

Elsewhere on the island, local cleantech firm ecoWise runs one of the country’s most recognisable biomass projects, the Biomass Co-generation System at the iconic Gardens by the Bay. Horticultural and wood waste sourced and processed by ecoWise serve as feedstock for the co-generation plant, which can produce up to 0.9 megwatts of electricity and 5.4 megawatts of heat.

However, there is a question mark over the potential of the biomass industry to develop further in Singapore due to the limited sources of feedstock. While this small and extremely densely populated island has some agriculture and forest areas, it imports most of its biomass from the neighbouring countries - Malaysia and Indonesia.

The bulk of local biomass comes from combustible, non-recoverable, non-reusable or non-recyclable waste, according to Singapore’s National Environment Agency. Part of this waste is recovered at landfills to generate electricity, which is fed into Singapore’s electricity grid. NEA says that the biomass in Singapore’s municipal waste is composed mainly of wood waste, horticultural waste, food waste and paper waste.

Trends and challenges

Agensi Inovasi Malaysia’s Ong notes that over the last few years, the biomass sector in Asia has seen the push towards higher value uses.

“This is eminent with the sprouting of technology companies with initiatives to attempt commercialization of second generation biofuels and bio-based chemicals.”

Still, main challenges seem to be sustainably meeting feedstock demand, and in some cases, overcoming technical impediments to efficient energy production.

Dr Jackson Ewing, research fellow at the Nanyang Technological University’s Centre for Non-Traditional Security (NTS) Studies notes that the latter technical problem can “likely be mitigated through continuing investment and experiential advances”.

“The former problem – where will the feed-in products come from and what will the implications of their usage for energy be– will be more difficult. There are already challenges throughout much of Southeast Asia stemming from deforestation, large monoculture oil palm and pulpwood plantations, biofuel impacts on food prices,” says Ewing.

Ong agrees: “In our local context, Malaysia’s biomass industry needs to apply a sustainable business model based on partnerships with local and international investors.”

“By utilizing the by-product of the palm oil industry to create additional wealth, we will be directly reducing CO2 emissions, which makes the industry more sustainable. If the biomass sector for Malaysia takes off, sustainable practices for industries in this new sector would result in a 12 per cent reduction in CO2 emission by 2020. This would have a positive impact on the industry as a whole.”

Adds Le Borgne: “Biomass is a relatively new industry in Southeast Asia, and our expertise in fuel analysis and combustion plays a large part in helping local contractors and developers develop and execute the right solution for their situation. Furthermore, the push to utilise biomass for primary generation of biofuels provides a further opportunity for value to be added in the secondary combustion of the waste by products.”

However, even though some governments are starting to offer support and incentives to develop the industry, the speed of policy implementation remains an issue, he says.. Even those who have already introduced them, like the Philippines, still need to make it easier for investors to navigate among different agencies to fulfil the formal requirements of running a biomass-based project. 

Then there is the challenge of educating and organising the farming community to collect the biomass.
Faced with relatively new demand for feedstock from the biomass industry, farmers in Southeast Asia are not as organized as their counterparts in Europe. Coordinating the collection of some biomass feedstock, especially agricultural waste like straw can be quite challenging, notes Le Borgne.

“Organizing the rural community to collect the biomass needs to be a priority in order to access these untapped resources,” he adds.

Finally, the finance sector in Southeast Asian countries is still rather hesitant to invest in biomass.

This is due to a general lack of understanding of the fundamental drivers of the industry’s economic viability, which increases the perceived level of risk. One key risk factor is the fuel type and the technology. A project can be successful only if a holistic approach is taken and the right technology is used, and design parameters such as fuel composition are taken into account.

Says Le Borgne: “Companies specialising solely in the biomass industry, such as DP CleanTech, are very well placed to educate and familiarise not only investors but power plant developers and operators. Over the last couple of years we have been working hard to embed this knowledge and drive the future success of biomass in SEA, and we hope to see an increase in investment levels and a corresponding growth in importance of biomass in the SEA energy mix.” 

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