• Biomass fuel price is determined for the first year of a control period and linked to an indexation formula for each subsequent year of the tariff period (current prices are as per Table 22). • Alternatively, each state electricity regulatory commission can determine the biomass price through an independent survey. This would then be finalized by a state level committee • Two different options for fuel price adjustment (every project developer can exercise the option once during the regulation period) have been provided as follows: o Application of an indexation formula (Text box 2) o A flat normative escalation of 5% per year • The biomass base price is subject to revision at the end of each control period.4.4.6 KenyaKenya is one of the few sub-Saharan African countries that have stipulated feed-in tariffs forrenewable energy (including bagasse-based cogeneration). The Ministry of Energy first introducedthe feed-in Tariff Policy in 2008. The 2008 feed-in tariffs for cogeneration provided for US¢ 7.0/kWhfor firm electricity generation and US¢ 4.5/kWh for non-firm electricity generation. In 2010, theterms have been further improved by increasing the feed-in tariffs for firm and non-firmcogeneration to a maximum of US¢ 8.0/kWh and US¢ 6.0/kWh, respectively.However, at these tariffs, some of the existing cogeneration plants are finding it difficult to operatethe plants during off-crop periods as paper mills are offering more attractive prices for bagasse.Kibot sugar has invested about $ 14 million in setting up a paper mill based on bagasse36.SummarizingIt is seen that several and different methodologies have been developed and deployed at differentpoints of time in different countries, such as: • Avoided cost method-fuel alternative • Fiber price alternative • Survey method • Fixing price once and periodic escalation thereafterIn China on the other hand, it is looked from the perspective of fair prices to the farmers4.5 Pricing of bagasse by NEPRA4.5.1 Generic tariff (Upfront)Pakistan’s National Electric Power Regulatory Authority (NEPRA), in their determination of upfronttariff for bagasse based cogeneration projects37, fixed the price of bagasse linked to imported coalbased on the BTU value of each fuel. (Bagasse based cogeneration plants were free to use otherbiomass fuels to supplement their fuel requirement, while plants envisaging use of coal forcogeneration as supplementary fuel was excluded from eligibility for upfront tariff). In their initial36 Thomson Reuters Foundation-May 6, 201137 NEPRA – Determination of the authority in the matter of suo-moto proceedings for development of upfronttariff for new bagasse based cogeneration power projects, (29-May-13)Client Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 51 of 69
discussions with various stakeholders, several alternatives were considered including gas and localcoal. Gas was not considered pragmatic in the long-term basis due to uncertainty of availability.Local coal was also not considered since prices are not published by any government agency in thecountry. The price for fuel adjustment is determined as per published coal price at Richards BayTerminal in the Argus API3 for each month and adding the cost of marine transportation and freight.The basic reference price of bagasse was accordingly, determined as follows:Table 23: Determination of Bagasse Price for Reference Year under Upfront TariffParticulars UOM Value 2013Reference year 6,905 23,810Net Calorific Value (Bagasse) BTU/kg 98 641.8Net Calorific Value (Coal BTU/kg 81.4 19.19Exchange Rate Rs/US$ 0.0814 100.7Bunker index 2,861.1FOB Price of imported coal US$/MTMarine freight US$/MTMarine Insurance (0.1% of coal) US$/MTCIF Price of Coal US$/MTBagasse Price Rs./MTThe determination also provides for fuel price indexation as per methodology indicated below:Table 24: Illustrative Fuel Price Indexation Methodology (Upfront Tariff)S. No. Particulars UOM Value Reference 2013 DeterminationA Reference Price of Bagasse Rs./MT 2,861.12 2013 DeterminationB Marine Freight Rs./MT 19.19 Argus API4 Index Bunker index price for 380-CST forC Revised FOB Price of Coal US$/MT 77.31 2013 Bunker index price for 380-CST forD Bunker Index Reference 641.8 2015 (F =B x E/D)E Bunker Index Revised 629.6 0.1% of coal priceF Revised Marine Freight US$/MT 18.83 for 2015 (I= (C+ F + G) x H)G Marine Insurance US$/MT 0.08 2013 DeterminationH Exchange Rate USD to Rs 101.60 2013 Determination (L=I x J/K)I Revised CIF Price of Coal Rs./MT 9,775.25J NCV of Bagasse BTU/kg 6,905.00K NCV of Coal BTU/kg 23,810.0L Revised Price of Bagasse Rs./MT 2,834.86Client Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 52 of 69
4.5.2 NEPRA-Project specific fuel pricingIn the determination of tariff for an IPP (SSJD Bio-Energy Ltd.), the following basis was used for fuelpricing38:• Fuel considered for the biomass are bagasse (80%) and other biomass (20%), procured within 100 km radius of the plant• In the absence of established market for ascertaining the actual price of biomass, the price was linked to the price of coal on BTU basis. Linkage to coal also provides for an index for adjustment of fuel cost component of the tariff. Methodology to determine coal price was similar to the that considered for determining the upfront tariff for bagasse cogeneration, viz. FOB price of coal was determined based on prices published by Argus API4 index, corresponding to a standard NCV of 6000 kCal/kg; marine freight was computed from data obtained from local banks on the landed price of coal imported by cement manufacturers. The reference price was fixed and indexed to the monthly average of Bunker Index 380-CST (for HFO – 380 Centi Stokes, being the most widely shipped bunker fuel). Insurance was also determined based on data provided by local banks and fixed at 0.1% per ton of FOB Coal price• In determining, the inland transportation cost, a generic formula was established considering average transportation distance of 50 km, average truck load of 10 T, truck mileage of 3 km per liter of diesel, other truck overheads and profit at 50% of the fuel costs and loading and unloading charges also at 50% of fuel cost.The price determined for the base year is as follows:Table 25: Illustrative Fuel Price determined for a biomass power plantS. No. Particulars UOM Value Remarks Argus API 4 Index, April 2012A FOB Price of Coal US$/T 97.75 Coal imported from Richards Bay, South Africa by Cement Manufacturers in PakB Marine Freight US$/T 29.39 (C = A X 0.1%) (D= A + B+ C)C Insurance US$/T 0.10 Month preceding tariff determinationD CIF Price US$/T 127.23 (F= D X E)E Exchange Rate Rs/US$ 86.00 Assumed for tariff determinationF CIF Reference Price of Coal Rs./T 10,942.19 Assumed for tariff determinationG NCV of Coal kCal/kg 6,000.00 (I = F/G X H)H NCV of Biomass kCal/kg 1740I Reference price of Biomass Rs./T 3,173.23 Assumed for tariff determination US$/T 36.9J Average distance for Assumed for tariff determination transportation km 50 Assumed for tariff determination HSD Price as determined by OGRAK Load per truck MT 10L Mileage km/Liter 3M Diesel cost Rs./Liter 10738 Source: NEPRA - Determination of the Authority in the matter of Tariff Petition filed by SSJD Bio-EnergyLimited for approval of Generation Tariff in respect of 12 MW Biomass Energy Power Project (Case No.NEPRA/TRF-202/SSJD-2011), 28th June, 2012Client Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 53 of 69
S. No. Particulars UOM Value Remarks N Fuel Cost of transportation Rs./T 178.33 [N = (M/L x J)/K] O Truck Overheads Rs./T 89.17 [O= 50% x N] P Handling Costs Rs./T 89.17 [P= 50% x N] Q Total Logistics cost Rs./T 356.67 [Q= N +O+ P] R Biomass cost including Logistics Rs./T 3,529.90 [R = I + Q]Key differences in this determination as compared to the methodology for determination of upfronttariff for bagasse cogeneration are• Addition of transportation cost• Indexation for transportation cost included• Working capital is only 30 days as against 45 days for normative principles4.5.3 Review of the NEPRA price linkage methodologyNEPRA determined the price of bagasse with linkage to imported coal on heat value basis fordetermination of tariff citing the following specific considerations. • There is no source of information that publishes the price of bagasse • No index is available for adjustment of bagasse price • Absence of source of information on price of local coal • Linkage to price of gas on BTU basis was not viewed as pragmatic due to uncertainty of the future market and depletion of local reserves.The tariff methodology thus links the price of bagasse to the imported coal price as published forRichards Bay Terminal in the Argus McCloskey's API 4 (All Price Index) for each month while addingto it the cost of marine freight and insurance. Bagasse price the year 2013 was accordingly revisedfor 2015 as shown in the following table39.Table 26 : Bagasse price for ‘FIT’ UOM Value Notation Reference Rs./MT 2,861.12 BFP Ref 2013 DeterminationS. No. Parameter Rs./MT 2013 Determination A Reference Price of Bagasse US$/MT 19.19 CPFOB Argus API4 Index B Marine Freight 77.31 Rev C Revised FOB Price of Coal US$/MT Bunker index price for 380-CST for US$/MT 641.8219 BIX Ref 2013 D Bunker Index Reference USD To Bunker index price for 380-CST for 629.6417 BIX Rev 2015 E Bunker Index Revised Rs (F =B x E/D) Rs./MT 18.83 MF Rev 0.1% of coal price F Revised Marine Freight 0.08 MI Rev for 2015 G Marine Insurance 101.60 ER Rev H Exchange Rate 9,775.25 CPCIF (I= (C+ F + G) x H) I Revised CIF Price of Coal39 NEPRA Tariff determination: NEPRA/R/TRF-UTB-2013/10164-10166 dated July 7, 2015Client Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 54 of 69
S. No. Parameter UOM Value Notation Reference Rev J NCV of Bagasse BTU/kg 6,905.00 2013 Determination K NCV of Coal BTU/kg 23,810.00 BFP Rev 2013 Determination L Revised Price of Bagasse Rs./MT 2,834.86 (L=I x J/K)Thus, bagasse price in 2015 was fixed lower than what was provided in 2013. This has happened dueto downturn in the prices of coal globally. It may be possible to persuade sugar industry to acceptsuch a situation arising out of change in the global scenario and taking into consideration thatbagasse is only a by-product. However, it would be very difficult to convince farmers to reduce theprices of residues, even though they may otherwise be wasting it. Farmers normally do not acceptany linkage to global prices as would be evidenced from price trend of support price for farmproduces announced by Government annually.There is very high volatility of prices of coal and other energy resources in the global market. Weundertook a review of the historical coal price (FOB)40, corresponding changes in the bunker indexvalues41 and exchange rates to determine the trajectory of movement of the CIF price of coal andthe corresponding biomass cost, if linked to coal. For same period, we plotted the correspondingvalues of firewood price as used for determination of CPI Index42. The results are shown below.Rs./kCal 6.00 5.00 4.00 3.00 2.00 1.00 - Coal Price CIF Firewood price Figure 33: Historical variation in price of coal and firewoodBased on the above, the movement of price of bagasse benchmarked to the price of coal and theprice of firewood is as follows43 :40 http://www.indexmundi.com/commodities/?commodity=coal-south-african&months=6041 http://www.bunkerindex.com/prices/bixfree_1306.php?priceindex_id=242 http://www.pbs.gov.pk/cpi?page=143 Assuming 3,100 kCal/kg as the heating value of woodClient Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 55 of 69
Rs./kCal 6 5 4 R² = 0.9122 3 2 1 R² = 0.8182 0 Bagasse Price (Benchmarked to Coal) Bagasse Price (Benchmarked to Wood) Linear (Bagasse Price (Benchmarked to Coal)) Linear (Bagasse Price (Benchmarked to Wood)) Figure 34: Variation in price of bagasseThe CIF price of coal for the period (after the upfront tariff determination for bagasse) variedbetween Rs 5,890 –11,125 per MT. During this period, the firewood price varied between Rs 12,650–15,130 per MT. The bagasse price, benchmarked to the price of coal therefore varied between Rs1,700 -3,200/MT (US$ 16-30) while the price when benchmarked to the price of firewood variedbetween Rs 7,300-8,750/MT (US$ 70-83/MT). 12,649 Minimum Maximum 15,130 11,128RS./MT 5,890 7,312 8,746 1,708 3,227 COAL CIF F I R EW OOD BAGASSE BAGASSE (BENC H MARKED TO (BENC H MARKED TO COAL) F I R EW OOD ) Figure 35: Range of fuel priceThe volatility of determined bagasse would fluctuate by over 100% if linked to coal compared toabout 20% if linked to firewood. It is obvious that the prices of other biomasses would find a rangecloser to the price of rice husk i.e US$ 87/T as and when such residues are utilised on commercialbasis in energy plants.Summarizing • Linking biomass price to an alternative fuel traded in the market is a good idea • However, linking the price to a highly volatile commodity such as coal would create both economic and social problem-feeling of uncertainty amongst investors in projects and non- acceptance of reduction in price by farmersClient Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 56 of 69
• Rationale for considering coal, which is not permitted as fuel alternative in biomass power plant has not been clearly stated nor reasons given why RLNG or RFO has not been considered• Fuel wood is transparently traded in Pakistan and as such linkage with wood should have wide acceptance and would also be fair to all• Alternatively, prices can be fixed on the basis of periodic survey as has been done by the Biomass resource assessment study team recently• It has also been seen that the actual prices of biomass in the market obtained from surveys are more closely linked to prices of furnace oil and fuel wood4.5.4 Recommendations on pricing methodologyIt is recommended to follow the principle of linkage to the prices of commercially traded fuel.However, the same should be based on locally available fuel, prices of which do not fluctuateheavily. Fortunately, for Pakistan, it would be easy to do this against fuel wood. There is already asystem of tracking the fuel wood prices in the country. Pakistan Bureau of Statistics publishesmonthly price data for 53 commodities including firewood, based on which consumer price indicesare determined. 900 800 788 773 700 742 700 675 692 600 600 607 625 618 625RS./40 KG 500 500 550 400 400 400 490 450 300 200 100 - Figure 36: Regional variation in the price of firewoodIt should be possible to establish clear linkage between the prevalent fuel wood price and prices ofbiomass, which can be used as fuel for power plant. This price may be established for a pre-determined regulation period (2 to 5 years). The annual escalation factor can be either fixed at say,8% or linked to price indices.The principles for logistic cost developed by NEPRA can be adopted to determine the landed cost ofbiomass to the projects. The following table illustrates the determined biomass price (the NCV hasbeen assumed 3000 kCal/Kg) based on the suggested methodology. Prices of all biomasses can befixed accordingly taking into NCV for the particular biomass.Table 27: Determined price of biomass UOM Value Remarks Rs./40 kg 602S. No. ParticularsA Firewood cost (Retail)Client Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 57 of 69
S. No. Particulars UOM Value RemarksB Firewood cost (per kg) Rs./kg 15 (B=A/40)C NCV of Wood kCal/kg AssumptionD Firewood cost (Energy basis) Rs./1000 kCal 3,010 (D = B/C x 1000)E Rice Husk Cost Rs./kg 5F NCV of Rice husk kCal/kg 8 AssumptionG Rice husk cost (energy basis) Rs./1000 kCal (G = E/Fx 1000)H Source cost of fuel as a % of retail price 3,000 (H = G/D%)I Reference price for biomass Rs./MT 3 (I=B x H% x 1000)J Average distance for transportation km AssumptionK Load per truck MT 53% AssumptionL Mileage km/Liter 8,027 AssumptionM Diesel cost Rs./Liter OGRA DeterminationN Fuel Cost of transportation Rs./T 50 [N = (M/L x J)/K]O Truck Overheads Rs./T 10 [O= 50% x N]P Handling Costs Rs./T 3 [P= 50% x N]Q Total Logistics cost Rs./T 73 [Q= N +O+ P]R Firewood cost including logistics Rs./T 121 [R = I + Q]S Exchange rate US$/Rs 60 Current exchange rateT Equivalent biomass cost US$/MT 60 242 8,268 105 79It is seen that the price so determined is almost the same as was observed during the market surveyin 2014. It is recommended to adopt this methodology and test it out for few years for establishingthe validity.4.6 Monetary & fiscal incentivesThe following incentive scheme as per RE policy of 2006 should be extended to all the different typesof biomass power projects. i. Exemption from customs duty or sale tax for machinery equipment and spares (including construction machinery, equipment, and specialized vehicles imported on temporary basis) meant for the initial installation or for balancing, modernization, maintenance, replacement, or expansion after commissioning of projects for power generation utilizing renewable energy resources (specifically, small hydro, wind, and solar), subject to fulfillment of conditions under the relevant SRO. ii. Exemption from income tax, including turnover rate tax and withholding tax on imports. iii. Repatriation of equity along with dividends freely allowed, subject to rules and regulations prescribed by the State Bank of Pakistan. iv. Parties may raise local and foreign finance in accordance with regulations applicable to industry in general. GOP approval may be required in accordance with such regulations. v. Non-Muslims and non-residents shall be exempted from payment of Zakat on dividends paid by the company.Client Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 58 of 69
4.7 Technology developmentIt is recommended that AEDB in cooperation with the few technical and agricultural universitiesprepare and implement a plan for development of technology and local manufacturing and servicingcapabilities particularly for the following equipments and systems: i. Harvesting, baling and fuel preparation machineries for straw, stalks and cotton sticksii. Storage bins for biomassiii. Technologies and machines for briquetting and pelletisation of straw, trash and husksiv. Biomass gasification and gas clean up devicesv. Bio-fuel manufacturing system for grain wastes4.8 Institutional arrangementA number of governmental, non-governmental, academic and private sector players in the biomassspace would be involved in developing and implementing the policy framework for promotingbiomass power. Following table has been prepared to indicate the key stakeholders that are likely tobe involved in this and the role they would be playing. This table has been prepared based on theexperience of the Consultants in policy related work in China and India. It is recommended thatAEDB in consultation with the Ministry of Water and Power and Ministry of Agriculture of FederalGovernment and relevant representatives from Provincial Governments form a working group todesign a formal structure for institutionalizing the arrangement.Table 28: Institutional arrangementStakeholders Engagement level Resource Project Biomass Technology Incentives Capacity pricing development building management development High Low High -AEDB Nodal agency & coordinator Low Low High Medium Medium High - HighNEPRA - Medium - - High - High Low - HighMoW&P Medium Medium High - --MoA High - - High - HighMoF - - - High - HighProvinc ial High High - High - HighGovernments - High --Power utilities - MediumTechnical - -univer sitiesAgricultural High Mediumuniver sitiesManufacturers of - Highagricultural &powerequipme ntsPSQCA - -Client Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 59 of 69
5 Annexes5.1 Annex-1: Terms of reference and stakeholders consulted5.1.1 Terms of referenceObjectives of the Study: The objective of the assignment is to provide advisory services andrecommendations for incentivizing investment in modern biomass conversion technologies,particularly Biomass Gasification Technologies (BGTs), to the Alternative Energy Development Board(AEDB) and other relevant stakeholders and to conduct the necessary activities for theestablishment of rules and regulations for BGTs under the prevailing RE Policy 2006. The consultancyfirm will also provide similar recommendations to be integrated in other existent policies/plans thatcould support the promotion and adoption of biomass /BGTs in different sectors of the economysuch as power generations, industrial co-generations (combined heat and power) in SME Industries,rural electrification, etc., and the minimum quality standards for import and local manufacture ofbiomass gasification equipment.Overall scope of work: The overall scope of work for the project is as below:Main Duties Measurable outputs to be achieved1. Review of existing legislation, analysis Preliminary drafts of IRRs, policy recommendationsand formulation of preliminary drafts for promotion of BGTs, minimum quality standards, recommendations on capacity building for local manufacturers are prepared and shared with relevant organizations for onward discussions during the mission2. Consultations with key stakeholders that Mission plan including dates of meetings andinclude tri-partite meetings between consultations with relevant stakeholders areAEDB, UNIDO and key stakeholders and planned and arranged;consultation sessions to present/ explain Collection and compilation of feedback from thethe recommendations and collect relevant stakeholders during the tri-partitefeedback from a wider range of meetings and half-day sessions in the form ofstakeholders meeting notes and mission report3. Preparation of second drafts of the IRRs, Final drafts of the (i) IRRs, (ii) PolicyRecommendations for other relevant recommendations and (iii) minimum qualitypolicies/ plans standards (iv) recommendations on capacity building for local manufacturers are prepared and shared with stakeholders for onward discussion during the workshop; Concept of the national stakeholder workshop prepared4. Presentation of Final Drafts during a National Stakeholders Workshop conducted andNational Stakeholder Workshop final set of feedback from all relevant stakeholders collected5. Submission of Final Policy document and Final IRRs, policy recommendations, qualityQuality standards standards and recommendations on capacity building for local manufacturers are prepared with all the feedback from the stakeholders incorporated for official endorsementClient Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 60 of 69
5.1.2 Stakeholders consultedStakeholders consulted at various stages include the following: Preliminary consultation (1st draft) Stakeholder workshop (final draft)Government, public se ctor organizations,institutions • Alternative Energy Development Board • Federal Bureau of Revenue • Alternative Energy Development Board • MoWP • Federal Bureau of Revenue • Central Power Purchasing Authority • Central Power Purchasing Authority • National Electric Power Regulatory Authority • National Electric Power Regulatory Authority • Energy Department, Punjab • Energy Department, Punjab • Energy Department, Sindh • Agriculture Department, Government of • Agriculture Department, Sindh • Energy and Power Department, KPK Punjab • Agriculture Department, KPK • State Bank of Pakistan • AJK Planning Development Organization • Small and Medium Enterprises Development • AJK Agriculture Department • State Bank of Pakistan Authori ty • Small and Medium Enterprises Development • Pakistan Standards for Quality Control Authori ty As s ocia ti on • Pakistan Standards for Quality ControlAcademic As s ocia ti on • National University of Science and • MEPCO Technol ogy • LESCO • University of Agriculture, Faisalabad • IESCO • NRSPIndustry and trade associations • RSPN • Pakistan Agriculture & Dairy Farmers • NARC/PARC As s ocia ti on • NEECA • All Pakistan Textile Mills Association • NFEH • Pakistan Sugar Mills Association • Punjab Bio-Energy Company • National University of Science and • JDW Group Technol ogyInternational organizations • Pakistan Council of Renewable Energy • GIZ Technol ogi es • Punjab Bio-Energy Company • JDW Group • Faran Sugar Mill • HSML • DESCON • GFG • Islamabad Chamber of Commerce and I ndus tr y • IFC • SAARC • USAID • UNRCClient Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 61 of 69
5.2 Annex-2: List of suppliers of equipment for biomass harvesting equipment (India)Name Contact Details Key Products ManufacturedKishan Agro CONTACT PERSON: S. Jagjeet Singh Rotavator, Straw Reaper,Industries Combine Drum, Harvester ADDRESS: Karamsar Rara Sahib, Ahmedgarh Road, wheat Thresher, HarvesterHarjit Agro Ludhiana, Punjab, India Paddy Thresher, Paddy Basket,Works PHONE: +91-9463690913, +91-9814545762, +91- Wheat Basket 9872580957 EMAIL: [email protected] Wheat Thresher, Cultivator, WEBSITE: www.kishanagroindia.punjabtrade.com Paddy Thresher, Spray Pump, CONTACT PERSON: Harjit Singh Seed Drill, Puddler, Plough, Disc ADDRESS: Near Power House Office, Main Road, Harrow, Zero Till Drill Talwandi bhai, Punjab , India PHONE: +91 98763 94976, +91 94173 64332, +91 94172 65036Avtar Singh EMAIL: [email protected] Rotavator, Straw Reaper,& Sons WEBSITE: www.harjitagroworks.punjabtrade.com Harambha Thresher, Paddy CONTACT PERSON: Randhir Singh Thresher, Roto Seeder, Zero TillNew Guru ADDRESS: Near Railway Crossing, Bus Stand DrillNanak Agri Road, Ahmedgarh, Distt. Sangrur, Punjab, IndiaWorks PHONE: +91 98142 46278 Self Harvester Combine, Mud EMAIL: [email protected] Loader, Tractor Trolley, Reaper,Balkar WEBSITE: www.avtarsingh.punjabtrade.com Harrow, Cultivator and otherCombines CONTACT PERSON: Sukhwinder Singh Agriculture Equipments ADDRESS: Smana Road, Ghagga, Patiala, Punjab - 147102, India Multi Crop Harvester Combine, Tractor Driven Combine, Track PHONE: +91 98151 94487, +91 98724 30485 Combine, Straw Reaper, Laser EMAIL: [email protected] Land Leveler, Multi Crop WEBSI TE:www.gurunanakagriwork s.pun jabtrade.com Threasher, Rotavator, Self CONTACT PERSON: Balkar Singh Combine Harvester ADDRESS: Handiaya Chowk, Barnala, Punjab - 148101, India PHONE: +91 94630 65584, +91 98152 61331 EMAIL: [email protected], [email protected] WEBSITE: www.punjabtrade.com/balkar-combinesClient Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 62 of 69
5.3 Annex-3: China biomass energy policy -extract“Under the background of the global energy crisis and global warming, the development of biomassenergy utilization technology has very important practical and long-term significance in replacing thefossil energy and realizing the sustainable development of human beings. China’s energy security hasbecome increasingly prominent, environmental constraints have increasingly enhanced and energy-saving and emission-reduction situation is grim. In this context, to vigorously adjust the energystructure and to develop the renewable alternative energy sources with the green, clean, low-carbon as the core have become top priorities. Biomass energy, with huge amount of resources andstable supply, can substitute coal, oil and gas in huge quantities. While effectively supplying theenergy, it can significantly reduce pollution and achieve the zero emissions of CO2, complying withthe idea of the sustainable development of the society. Therefore, in recent years, governments atall levels in China have continuously increased attention on biomass and introduced a series ofpolicies and measures; at present, the basic biomass energy policy system has been formed. Basicframework of China’s biomass energy development policy takes the Renewable energy law as thebasis, Medium- and long-term development plan for renewable energy as the long-term goal, eachfive-year plan as the short-term plan, to attract producers and users to join and participate in thedevelopment and utilization of biomass energy through the establishment of a series of effectiveincentive mechanism to promote the rapid development of biomass energy industry and advancethe healthy and rapid development of the biomass energy industry.Legal basisRenewable Energy Law of the People’s Republic of China was issued in 2005 and was carried outformally on January 1, 2006. This is the first law on energy in China. It indicates that the Chinesegovernment has explicated the position of the renewable energy including biomass energy in themodern energy and has given great preferential support. Chapter I of this law points out that theState encourages and supports the use of biomass energy; Chapter IV “Promotion and Application”emphasizes again that the State encourages the clean and efficient development and utilization ofthe biomass fuels, encourages the development of energy crops; if gas and heat produced by usingthe biomass resources comply with the network technology standard of city gas pipeline networkand heat pipe network, enterprises operating gas pipeline network and heat pipe network shallreceive its network entry.At the end of 2009, the State revised the Renewable energy law, and the revised edition wasimplemented on April 1, 2010. The Amendment has established the Renewable Energy DevelopmentFund to arrange the dispatching of the additional cost of renewable energy from a national scope byspecial arrangement and implemented full protection of the acquisition for renewable energy powergeneration.Target systemIn Medium- and long-t erm development plan for renewable energy issued in 2007, emphasis shouldbe laid on the development of biomass power generation, biogas, densified biofuels and fuel andbiology liquid fuel. According to the requirements of China’s economic and social development andthe biomass energy utilization technology, emphasis should be laid on the development of biomasspower generation, biogas, densified biofuels and fuel and biology liquid fuel. By 2010, the totalClient Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 63 of 69
installed capacity of the biomass power generation had reached 5,500,000 KW; the annual utilizationrate of the densified biofuels had been up to 1,000,000 MT and that of the biogas to 19,000,000,000cubic meters, that of the non-grain raw material fuel ethanol had been increased by 2,000,000 MTand that of the biodiesel had reached 200,000 MT. By 2020, the total installed capacity of thebiomass power generation will have reached 30,000,000 kW; the annual utilization rate of thedensified biofuels will have been up to 50,000,000 MT and that of the biogas to 44,000,000,000cubic meters that of the non-grain raw material fuel ethanol to 10,000,000 MT and that of thebiodiesel to 2,000,000 MT.Since 1995, China has brought the biomass energy into the national five-year plan system. In the9thfive-year plan (from 1996 to 2000), high efficient anaerobic technology applied in treating high-concentration organic wastewater and urban garbage were listed as key science and technologyprograms. During the 10th five-year plan (from 2001 to 2005), Planning of the development ofagricultural biomass energy industry was introduced. Since the 11th five-year plan, each five-year plancontains the special planning for the biomass energy industry. Scheme for the comprehensiveutilization and implementation of the crop straws during the 12th five-year plan issued in 2011 pointsout to further develop and utilize the crop straw in huge output in China, and it is planned to achievethe straw comprehensive utilization rate of over 80% and the straw energy utilization rate of 13% by2015. “12thFive-Year Plan” for renewable energy development and “12th Five-Year Plan” for biomassenergy development (2011-2015) issued in 2012 stipulates that by 2015, the annual utilization rateof the biomass energy will have exceeded 50,000,000 MT of standard coal. And when the totalinstalled capacity of the biomass power generation reaches 13,000,000kw and the annual powergeneration is up to about 78,000,000,000 kW, the annual biomass supply shall be up to22,000,000,000 cubic meters, densified biofuels to 10,000,000 MT and biology liquid fuel to5,000,000 MT. At present, planning for biomass energy in the 13th five-year plan is being developed.Incentive mechanismsConsidering that the development and utilization of biomass energy has the remarkablecomprehensive benefit for the traditional energy replacement and the protection of the ecologicalenvironment, but its development and utilization cost is temporarily unable to compete with thetraditional energy, so the Chinese government has adopted a series of incentive measures to sharethe cost which is higher than that of the development and utilization of the traditional energy withthe community, or the finance departments at all levels commit huge sums of money to grantsubsidies for the development and utilization of biomass energy to encourage enterprises and usersto participate in the development of biomass energy. Main incentive means include front-endincentive for encouraging the biomass energy industry production chain, and market back-endincentive to stimulate the sales and use, as well as some indirect incentive measures to promote thedevelopment of the whole industry.Front-end incentive1) Subsidies for feedstockFeedstock base subsidies: Forestry raw materials base subsidy criterion is 30 Yuan/are; the amountof subsidy is checked and ratified by the Ministry of Finance according to this criterion and the rawClient Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 64 of 69
materials base implementation plan verified. In principle, agricultural raw materials base subsidy isverified as 27 yuan/acre; the specific criterion is approved according to saline-alkali soil, that andother different types of land. The amount of subsidy is appraised and decided by the Ministry ofFinance according to the specific criterion and the raw materials base implementation plan verified.Straw subsidy: For the enterprise with the registered capital of more than 10 million Yuan, whosestraw energy utilization complies with the local straw comprehensive utilization planning and theamount of annual consumption of straw exceeds 10,000 MT (including 10,000 MT) and straw energyproducts have been on sale and which has stable users, the subsidy of about 140 Yuan will begranted for the straw per ton in energy utilization to the enterprise according to the types andquantities of straw energy products which are actually sold every year, as well as types andquantities of straw for converting the consumption. However, straw grid-connected powergeneration project does not enjoy the special subsidy.Fuel ethanol subsidy: For the production of the denatured fuel ethanol and losses incurred duringthe process of allocation and sales of the denatured fuel ethanol, the state finance sets quotas forsubsidies to the production enterprises; in 2012, the amounts of subsidy for the grain ethanol andnon-grain ethanol are respectively 500 Yuan/ton and 750 Yuan/ton.2) Project fundingRural household biogas project: In 2003, China listed the rural biogas construction into the scope ofnational debt fund support; during the period of 2003 to 2013, China has invested more than billionsin supporting rural household biogas, biogas service system and the construction of breedingaquatics village and co-peasant household biogas in average every year.Green Energy County project: The highest subsidy granted by the central finance to each greenenergy county is about 25 million Yuan; the construction contents include biogas centralized gassupply engineering, biomass gasification engineering, biomass briquette fuel engineering and otherrenewable energy development and utilization engineering.Urban heating engineering project: Notice on developing the construction of the biomass briquetteboiler heating demonstration project issued in 2014 stipulates that it is planned to build 120 biomassbriquette boiler heating demonstration projects on a national scale during the period from 2014 to2015, especially in Beijing, Tianjin, Hebei and Shandong, Yangtze River Delta region, Pearl River Deltaregion and other areas with serious atmospheric pollution prevention and control situation andheavier tasks in reducing coal consumption, and the total investment is about 5 billion Yuan.3) Low-interest loanFor the renewable energy development and utilization project which is listed in the nationalrenewable energy industry development guidance catalogue and which meets the credit conditions,discount interest funds may be arranged under the premises that bank loans are in place and projectcontracting unit or individual has paid the interest. Discount interest fund is determined according tothe actual bank loans in place, contract rate of interest and the actual amount rate of interest paid;the discount period is 1-3 years and the maximum annual discount rate does not exceed 3%.Client Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 65 of 69
4) Tax reliefValue added tax (VAT) relief: The tax authorities implement the measures for the refund uponcollection of VAT for the self-produced comprehensive utilization of products (see Appendix for theproduct catalogue) sold by taxpayers with the 4 kinds of agricultural and forestry residues as the rawmaterials, such as: three residues (logging residues, bucking residues and processing residues), smallfirewood, crop straw and bagasse. The specific proportion of tax rebates are respectively 100% in2009 and 80% in 2010.Income tax relief: 90% tax of the income of the enterprise from producing products which are notrestricted and forbidden by the state and which comply with the relevant national and industrystandards and whose main raw materials are resources specified in Catalogue of Resources forComprehensive Utilization Entitling Ent erprises to Income Tax Preferences is reduced and included inthe total income.Back-end incentives1) Quota systemUnder the Renewable energy law, National Development and Reform Commission and otherrelevant departments have developed the targets for the overall medium- and long-termdevelopment of biomass energy and introduced quota system policy in the fields of biomass powergeneration and biology liquid fuel to request that power companies and oil companies should have acertain portion of the energy from the biomass energy in the supply of electricity and fuel, thusturning the policies completely rely on government financial support in the past to the marketmechanism under the control of the government to create conditions for the large-scaledevelopment of biomass energy. At present, the main quota policy is carried out on the closedmeasures to promote fuel ethanol; 5 provinces and 27 cities in China have forced to promote E10gasoline. In addition, the design idea about renewable energy power quota system has been formed,and the policy on the biomass green power quota will soon be implemented.2) Pricing mechanismFixed feed-in tariff: Since 2010, the new agricultural and forestry biomass power generation projectshave uniformly implemented the benchmark feed-in tariff of 0.75 Yuan per kilowatt-hour (includingtax). But the mixed fuel power generation projects of which conventional energy exceeds 20% in thepower generation heat consumed, as the conventional energy power generation projects implementthe benchmark feed-in tariff of the local coal-fired power plants and do not enjoy the subsidiaryfeed-in tariff.Fuel ethanol price: Fuel ethanol sales channels uniformly take the result from 90# gasoline price overthe same period published by the National Development and Reform Committee multiplying theequivalent coefficient of 0.9111 of the sales cost of vehicle ethanol gasoline deployment as thedomestic sales settlement price of fuel ethanol, providing price protection for the fuel ethanolproduction enterprises.Other auxiliary incentive measure sClient Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 66 of 69
1) Environmental protection measures: Among the environmental protection measures of localgovernments at all levels, instructions for the ban on burning coal, restrictions on automobileexhaust and air pollutants emissions promote the development of biomass briquette fuel and fuelethanol in another way. Meanwhile, environmental protection indexes for the ban on burning strawguarantee the adequate supply of biomass.2) Development of the standards: Biogas Standardization Technical Committee has developed thebiogas industry standards to regulate the development of the industry. Fuel ethanol E10 andbiodiesel B5 standards have been widely accepted by the industry. In addition, product standard ofthe biomass briquette fuel, standard equipment, engineering and service system are beingdeveloped.BE Sustainable, May 2015: An overview of biomass energy polic y in China-Jie Xu and ZhenhongYuan, Guangzhou Institute of Energy Conversion, Chinese Academy of Sciences, Guangzhou ChinaClient Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 67 of 69
5.4 Annex-4: Scope of Work for Biomass Assessment SurveyThe scope of work covers biomass fuel supply studies along with their prices and price trend in<<name of province>>. The study report should result in detailed estimates of district wise surplusbiomass that is available for energy production on a long- term sustainable basis. The report shouldalso indicate the district wise current price of biomass fuel (i.e. for FY 20XX-XX) with increase in theirprice during last 3 years. The annual escalation factor in biomass fuel prices and their periodicrevision thereof and losses in storage and average calorific value of bi omass fuel is required in thestudy report.The methodology and scope of work must cover at least the following:• The biomass fuel supply study should verify the district wise surplus biomass that is available for energy production, based on macro level assessment, as well as actual field visits.• Published statistical data and the field data should be compiled and the trend of the biomass growth should be established that can be used as a valid estimate for the subsequent period. The reported data from the Ministryof Agriculture/ Agriculture Department/ Forest Department for annual crop/residue production may be used as the strong statistical ground reference data sets. Other reported and published data should also be used appropriately.• Biomass utilization pattern for societal purposes should be derived. Biomass utilization in other industries like brick manufacturing, small and medium boilers and captive power plants should also be ascertained. Based on these utilization patterns, net quantity available for power generation to renewable power projects in different districts may be arrived at.• The crop-to-Residue Ratios (CRR), for different biomass species (and equivalent indicator for forestry waste) should also be verified with reported documents and using direct measurement methods. These should al so be cross verified and updated to provide better aggregated figure at district level.• Biomass growth should be estimated using the established reported data from Ministry of agriculture/ Agriculture Department/Forest department or other reported and published data.• Biomass fuel supply study should be carried out by actual data collection from various users, industries etc.• Recent trend of biomass price shall be assessed by verifying a ct u al price spread by the existing consumers, through verification of relevant records for the last harvesting season (specify period) including date of purchase, name of supplier, weighment slips, proof of payments made, mode of transportation, charges paid for labour, loading/unloading & transportation charges, additional charges like royalty, taxes, cess, etc. if applicable.• The calorific value of biomass fuel, that is available for power generation, is to be estimated district wise based on its ash and moisture contents and these data included in the report.• Based on the study and its findings, the consultant is required to recommend in tabulated form, district wise biomass availability for power generation, price, price escalation per year based on historical data for that district, periodic revision there of required, losses in storage, average calorific value• Assist the client in representing the case to the regulatory commission, if needed.Client Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 68 of 69
BIBLIOG RAPHY (REFERENCES -FOOTNOTES)1 National Power Policy, 2013, Government of Pakistan2 Policy for development of RE for power generation, Government of Pakistan, 20063 Factors Influencing grid interactive biomass power industry – India, TERI, India4 Dilemma & Strategy of Biomass Power Generation Industry Development in China: A Perspective of Industry Chain5 “Final Report on Biomass Atlas for Pakistan” “World Bank biomass mapping for Pakistan: Ph 1-3”, Jul-166 Biomass atlas for Pakistan-Apr-167 Assessment of options for biomass power generation, DfID (report prepared by DESL), Jun-118 Biomass regenerable energy, edited by D.O Hal, R P Overend, John Wiley & Sons9 Regional Consultation on Modern Applications of Biomass Energy, 6-10 Jan-97, Kuala Lumpur Malaysia10 http://www.agriculturalproductsindia.com/agricultural-machinery-equipments/agricultural-machinery- ha rves ti ng-ma chi nery.html11 “The operation of mechanical sugarcane harvesters and the competenc e of operators: A ergonomic approach”, Africa Journal of Agricultural Research, Academic Journals, Vol. 10 (15) pp 1832-1839, Apr-1512 Same as 713 Preparing national strategy for rural biomass RE development, ADB (TA No. 4810-PRC), Apr-0814 DESL r eport on Validation of fuel supply linkage model, MNRE, 200915 DESL database16 DESL Study: Biomass Fuel Supply Study in the state of Rajasthan, RRECL, 201117 http://www.eai.in/ref/ae/bio/powr/biomass_power.html18 Biomass drying technology update, M Worley, Harris Group Inc., BioPro Expo & Marketplace, Mar-11 -19 Energy production from biomass (part 1): overview of biomass P McKendry, Bioresource Technology 83 (2002) 37–46. Jul-0120 IRENA working paper on Renewable Energy Technologies: Cost Analysis Series- Volume -1: Biomass for Power Generation, Jun-1221 World Bank report considered lower values for biomass generation while estimating energy potential22 Taxes & incentives for renewable energy-KPMG International, 201423 Development goal of 30 GW for China’s biomass power generation: Will it be achieved?, Renewable and Sustainable Energy Reviews Journal 25 (2013) 310-31724 Power Systems Statistics, 2013-14, 39th Edition, NTDC25 Presentation on Power Sector in Pakistan to OICCI, Secretary, Ministry of Water and Power, Dec-1526 FOB Price of South African Coal : http://www.index mundi.com/commodities/?commodity=coal-south- a fri ca n&months =6027 Monthly review of price indices, Pakistan Bureau of Statistics, March, 201628 Feasibility Study for 3 MW Combined Heat and Power Biomass Gasification Plant in Pakistan, UNIDO, Jan- 14 (by DESL)29 Sugar Cane Bagasse Energy Cogeneration – Lessons from Mauritius, Mauritius Sugar Authority, Oct.-0530 Currently Rs 1225 (US$ 35) per ton – Source: Newsclip : Island Crisis Media Network, 15 Dec-1531 IEA Good Practice Guide -Bio-energy project development and Biomass supply32 Methodology & Specifications Guide, Argus Biomass Markets, Last updated Apr-1633 Argus Biomass Markets – Methodology and Specification Guide34 Development goal of China’s 30 GW Biomass power generation etc-Science Direct, Sep.-1335 CERC: Determination of levelised generic tariff for FY 2016-17 under Regulation 8, Mar-1636 Thomson Reuters Foundation-May-1137 NEPRA – Determination of the authority in the matter of suo-moto proceedings for development of upfront tariff for new bagasse based cogeneration power projects, May-1338 NEPRA - Determination of the Authority in the matter of Tariff Petition filed by SSJD Bio-Energy Limited (Case No. NEPRA/TRF-202/SSJD-2011), 28-Jun-1239 NEPRA Tariff determination: NEPRA/R/TRF-UTB-2013/10164-10166 dated 07-Jul-1540 http://www.indexmundi.com/commodities/?commodity=coal-south-african&months=6041 http://www.bunkerindex.com/prices/bixfree_1306.php?priceindex_id=242 http://www.pbs.gov.pk/cpi?page=143 Assuming 3,100 kCal/kg as the heating value of woodClient Name UNIDO DESL Project No. 9A0000005647Project Name Policy advisory services in Biomass gasification technology in Pakistan Version 3 (Final)Report Title Biomass management and pricing for power generation Page 69 of 69
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