B1. D.Gupta-Case studies to illustrate the role of technology and business

Case Studies to Illustrate the Role of Technology
and Business Enabling Environment and
Ecosystem
Debarshi Gupta
Research Associate, WISE

Indonesia National Stakeholders’ Workshop on Accessible and Affordable Sustainable Energy Options
Held at Indonesian Institute of Sciences (LIPI), Jakarta, Indonesia

Three Case Studies
1.

Husk Power System in Bihar Province in India

2.

Proposed Business Models for Community RE
based Off-Grid Projects – India

3.


Small Power Producers Program (1992) and Very
Small Power Producers Program (2002) in
Thailand

Case Study :1
HUSK POWER SYSTEM IN BIHAR
PROVINCE IN INDIA

Electrification Scenario of Bihar Province

Total No of Households

18.94 million

Households having access to electricity for lightning
3.09 million (16%)

Households using solar lighting systems

0.1 million (0.5%)


Households with no access to electricity
15.73 million (83%)

Technology Enabling Environment








83% households in the province do not have access to centralized
grid electricity
Availability of ample as well as cheap manpower who can be
engaged in O&M of plants
Bihar province produces around 4.7 million MT of rice per annum
from which about 1.34 million MT rice husk can be made
available.

Ample quantity of rice husk offers a cheap source of fuel supply
for power generation projects.
Local supply chain.
Robustness and simplicity of the technology attracts investment.

Technology Description










Multi-fuel Gasifiers: Gasifiers can use multiple types of feedstock such as


Rice husk




Wheat husk



Mustard stems



Corn cobs



Wood chips

Unique Gasifier Design: Allows for easy disposal of biomass char, lack of which results in tar
formation.
Remote Plant Monitoring System: Low cost system to monitor plant performance via internet.

Pre-paid Meters: Enables electricity to be sold like mobile phone talk-times where consumers get
their meter charged with the amount of money they have and the meter automatically disconnects
supply after the credit is exhausted.
To minimize the cost, locally available gasifiers are used with modified gas engines that are able to
operate 100% producer gas.

HPS uses standard biomass gasification technology which is suitable for rice husk based power
generation.

HUSK POWER SYSTEM

Biomass Gasifier System
Gasifier
Filters

Business Enabling Environment






Financial assistance from the Government of India up to 90% of installation cost
for decentralized distributed RE generation technologies.
As per the section 14 of Electricity Act, 2003, RE based stand alone/off-grid
projects established by a person for generation and distribution of electricity in
the notified rural area by the state government shall not require any license for
such generation and distribution of electricity.
As per Rural Electrification Policy of GoI , persons exempted under the section 14
from licensing would be free from licensing obligations and the purview of the
appropriate Commission in matters pertaining to determination of tariffs and
universal supply obligations applicable to licensees.



Access to finance from commercial banks.



Access to market by substituting diesel based power with rice husk based power.


Cost , Revenue and Operational Details
1

2

• Cost of Rice Husk: 2.0 to 2.4 US Cents per Kg
• Load provided to Consumers: 2 CFLs of 15W each

3

• Supply Hours: 7-8 Hrs per day

4

• Requirement of Rice Husk: 50-60 Kg per Hour

5
6

7


8
9

• Manpower Requirement: 4-5 people per plant
• Distribution Area Covered: 1-2 Km Radius
• ROI allowed by Central Bank of India: 12.25%
• Average Tariff paid by Consumer: 33 to 38 US Cents per
kWh
• Project Cost Includes Power Generation Plant and Basic
Power Distribution Network excluding cost of poles

Implementation Arrangement

Farmers get their Rice
milled free of cost at
the Rice Mill

Business Model of Husk Based Power Generation Plant


Approx. Cost Component for a 32 kW
System
$ 290,
25%

Approx. Expected Revenue from 32 kW
System
$ 81,
6%

$ 290,
25%

$ 16,
1%

$ 242,
19%

$968,

74%
$ 145,
13%
$ 81,
7%

$ 339,
30%
Revenue from Dom. Users (Rs 150x400 Consumers)

Cost of Husk

O & M Cost

Collection from Cottage Industries

Maintenance Expenses

Misc Expenses


Sale of Bio Char

EMI to Bank

Revenue from CDM Benefit

Husk Power Business Profile

BOOM
(Build, Own,
Operate &
Maintain)

Global

Tanzania
Uganda

Nepal

BOM
(Build,
Operate &
Maintain)

Footprint

BM
(Build &
Maintain)

Shell
Foundation

BOOM
• All activities
may be done
at its own by
engaging
local people
also

BOM
• System may
be owned by
self while all
associated
activities may
be
outsourced.

BM
• All activities
except
collection of
revenue etc.
may be kept
in own hands.

HPS

Global Strategic
Partnership

Case Study : 2
Proposed Business Models for Community RE based
Off-Grid Projects – India

Issues in Operation of RE Based
Off-grid Projects







The investment cost and cost of generation of RE based off grid
project is high.
Consumers are reluctant to pay the higher rate for purchase of
electricity compared to subsidized electricity tariff offered by
utility in the adjoining electrified area.
Low paying capacity of consumers located in remote area.
In the absence of regulatory oversight, chances of exploitation
of the consumer by the investors by charging high tariff.
In case of extension of conventional grid, efforts made to build
the infrastructure for the decentralized generating system would
be redundant and the system becomes idle.

Characteristics of Proposed Business Model









Business model proposed must work in off-grid & grid connected
set up
Consumer should not pay more than electricity tariff in adjoining
areas (not more than DISCOM tariff) / existing expenditure on
lighting load
Compliant with EA 2003, existing policies
Create structure for flow of subsidy
As far as possible, internalization of costs of Rural Electrification
Should make use of existing institutional structure
Should promote private sector involvement

Off-grid Generation Based Distribution
Franchisee

Institutional & Contractual Structure

Electrification
of Rural Area

Roles & Responsibilities of
Key Stakeholders (1/3)
Government of India


Provide CFA to DISCOM to support Off-grid RE projects

Forum of Regulators



Model Regulations for Off-grid Renewable Energy Generation and Supply
Develop guidelines for development of feed-in tariff for small scale renewable energy generators
for off-grid supply

Central Electricity Authority


Develop model grid connectivity guidelines for small RE systems

State Electricity Regulatory Commission


Adoption of Model Regulations with suitable adjustments to take into consideration state specific
factors



Notify State Regulations for Regulations for Off-grid Renewable Energy Generation and Supply



Issue Tariff order for Off-grid renewable energy generation

Roles & Responsibilities of
Key Stakeholders (2/3)
DISCOM



Must allow each project on “first come first serve” basis
DISCOM submit tariff petition to SERC for determination of retail supply
tariff



Enter into Franchisee Agreement and PPA with PD



Provide FIT to PD;



Request to GoI for CFA if / as required



Take into consideration off-grid schemes while planning grid expansion

Rural Local Body


Confirm un-electrified status of village / hamlet / pada



Confirm number of households & establishments



Provide consent to PD for generating and distributing electricity

Roles & Responsibilities of
Key Stakeholders (3/3)
ODGBDF


Identification of project scheme



Finalization of technology based on resource availability



Confirm State Government’s notification of rural area from RLB



Undertaking of prefeasibility study



Development of DPR



Agreement b/w DISCOM and PD



Financial closure & project commissioning




Provide electricity to consumers and receive tariff as paid by consumer of local
DISCOM
Receive FIT minus consumer tariff from DISCOM

Consumer


Pay charges to ODGBDF

Case Study 3
Small Power Producers Program (1992)
and
Very Small Power Producers Program (2002)
in Thailand

Rationale







80% of Thailand’s total primary energy consumption
comes from fossil fuel.
The SPP programme was launched in 1992 and the
VSPP programme was launched in 2002 in view of
utilizing alternative energy as a major source of energy
supply in the country for replacing oil import.
To ensure energy security of the country.
To promote an integrated green energy utilization in
communities.
To enhance the development of alternative energy
technology industry.

Salient features of SPP & VSPP
SPP

VSPP

Small Power Producers
( > 10 MW - ≤ 90 MW)

Very Small Power Producers
( ≤ 10 MW)

The program is designed to sale electricity to
EGAT

The program is designed to sale electricity directly to
the distribution utility ( MEA & PEA )

Tariff is set as per avoided cost of generating
electricity by EGAT

The tariff is set equal to the wholesale rate the
distribution utility pays to EGAT

Power purchase contract signed for 5-25 years

Regulation on VSPP allowed net metering and
simplified interconnection procedures

Rates proved suitable for biomass based power
project only

Other RE resources are viable in this regulation

As of June 2011 , 2201 MW projects were
under operation / consideration

As of June 2011 , 5708 MW projects were under
operation / consideration

Provision of “ Adders” to Stimulate RE
Development


Thailand’s “adder” program, ensures guaranteed purchases and
attractive tariff rates to eligible grid-connected renewable power
projects. The policy directive was implemented in early 2007.



The program is called “adder” because it adds additional payment to
RE generators on top of the normal prices that power producer would
receive when selling electricity to the power utilities.




The amount of adder varies, depending on the RE technology used . The
provision will be for 7 years from COD.
In case of SPP using biomass as source of energy the adder rates are
determined via bidding , where as for other RE sources the adder rates
are fixed.

Technology Enabling Environment
Adder cost of power generation from RE

VSPP

SPP

(< 10 MW)

(> 10 MW-< 90 MW

500 MW

530 MW

Cogeneration

Cogeneration

Renewable
Promotion
• Fixed Adder cost

Renewable

• Adder cost for renewable power producers by term of support for 7 years and 10 years for power
generation from wind and solar;
*special cost in 3 provinces in Southern of Thailand
฿ /kWh

Special*

Biomass

0.30 – 0.50

1.00

Biogas

0.30 – 0.50

1.00

SPP
Type

Adder
(Baht/kWh)

MSW

2.50

Wind

3.50

Solar

8.00

Other Renewable

0.30

Total

Fixed

Bidding

Fuel
Capacity
(MW)
100

Mini-Hydro (50-200 kW)

0.80

1.00

115

Micro-Hydro (< 50 kW)

1.50

1.00

15

MSW

2.50 – 3.50

1.00

300

Wind

3.50 – 4.50

1.50

530

Solar

8.0

1.50

Business Enabling Environment
• Revolving Fund with 4% interest rate & 7 years of payment term;
• Encourage RE project to be CDM project;
• ESCO Venture Capital
Project Feature: Set up fund to promote investment in energy conservation and
renewable energy development projects

Energy Conservation Promotion Fund

ESCO Fund
The objective is to stimulate more than THB 1,250 million (USD
40 million) investments in renewable energy and energy
efficiency

ESCO Venture Capital
Carbon Market

Equity Investment

Equipment Leasing

Technical Assistance Credit Guarantee Facility

Subprojects to Achieve Objective of the ESCO Fund (1/2)






ESCO Venture Capital. Capital will be raised in partnership with Energy Service
Companies (ESCOs) to raise capital for investments in energy saving projects of the
ESCO. Investment criteria applied are: i) size of equity investment is 30 percent of
registered capital but limited to THB 50 million per project; ii) investment period of
5-7 years; iii) exit method of selling back the shares to the entrepreneur, or find
new strategic partners and; iv) board seat is required in the company.
Equity Investment. The ESCO fund will make equity investments in energy efficiency
or renewable energy projects. Investment criteria applied are: i) size of equity
investment: 10-50 percent of total investment cost but limited to THB 50 million per
project; ii) investment period of 5-7 years; and iii) exit method of selling back the
shares to the entrepreneur, or find new strategic partners.
Equipment Leasing. The leasing criteria include: i) 100 percent of equipment cost
but limited to THB 10 million per project; ii) repayment duration of 5 years; and iii)
interest rate of 4 percent per annum.

Subprojects to Achieve Objective of the ESCO Fund (2/2)






Carbon Market. The ESCO fund will support project owners in developing
CDM documents, Project Idea Note (PIN) and Project Design Document
(PDD).
Technical Assistance. The ESCO fund will provide financial support for
technical assistance, e.g. energy audit, feasibility study. The support is
limited to THB 100,000 per project and this support must be reimbursed to
the ESCO Fund.
Credit Guarantee Facility. The fund will cooperate with financial institutions
or credit guarantee agencies to assist entrepreneurs in accessing long-term
loans from banks by providing a credit guarantee depending on the project
risk and limited to THB 10 million at a low premium rate.

Lessons Learned





SPP and VSPP programs have provided impetus to renewable
energy sector of Thailand which in turn has helped the country to
diversify its energy sources.
Use of indigenously available renewable energy resources has
reduced country’s reliance on import.
Government support in terms of adder and ESCO funding.

Thank you for the attention !