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Reports of CDM/JI Feasibility Studies: FY2008

Title of Feasibility Study (FS)Feasibility Study of the "Power Generation with Waste Material and Recovered Gas of Palm Oil Mill in Selangau, Malaysia" CDM Project
FYFY 2008
Main Implementing EntitySmart Energy Co., Ltd.
FS Partner(s)Sumitomo Heavy Industries Ltd.; Rimbunan Hijau Group; and Titan Energy Sdn Bhd.
Location of Project ActivityMalaysia (Sarawak State)
Summary of FS ReportPDF (444KB)
Description of Project ActivityThis project aims to build a biomass power plant adjacent to the Selangau palm oil mill. The biomass power plant plans to combust biomass residues from the mill to produce 16MW electricity and 75t/h steam. Generated steam and electricity would be consumed by the mill and remaining electricity would be sold to the grid system, which is owned and operated by Sarawak Energy. The project also plans to collect biogas from Palm Oil Mill Effluent (POME) and combust together with the biomass residues inside the boiler. The mill is owned by Rimbunan Hijau (RH) Group and managed by its subsidiary company Rimbunan Sawit Berhad (RSB). The mill is expected to increase its Fresh Fruit Bunch (FFB) processing capacity from 60t/h to 120t/h. The mill receives FFB from plantations that are also owned by RH Group. All the biomass residues for the biomass power plant is expected to be supplied from Selangau mill, thus the project does not depend on sourcing biomass residues from external sources. This proposed project would enable the mill to meet its future energy demand and gain new sources of revenue through sales of electricity, thus diversify its source of income and stabilize its business operation.
Targeted GHGCO2, and CH4
Category of Project ActivityWaste Management
Duration of Project Activity/ Crediting Period2011-2025 (15years) / 2011-2020 (10 years)
Baseline Scenario (including Methodology to be applied)The baseline scenario for this project is that Empty Fruit Bunch (EFB) is disposed to a landfill and POME is treated anaerobically in an open lagoon resulting in methane emission. A captive cogeneration power plant, fueled by fiber and shell, supplies electricity and steam to the palm oil mill, but it does not have enough power generation capacity to supply electricity to the grid system.
The project archives emissions reduction through (1) Avoidance of methane emission through alternative use of EFB as a fuel, (2) Avoidance of methane emission from the anaerobic lagoon, by collection of biogas to a tank, and (3) Providing renewable energy to replace electricity from the fossil fuel fired power plants. Two methodologies, ACM0006 "Consolidated methodology for electricity generation from biomass residues" (covering (1)and(3)), and ACM0014 "Mitigation of greenhouse gas emissions from treatment of industrial wastewater" (covering (2)) were selected for this project.
Demonstration of AdditionalityThis project is the first of its kind in Sarawak state to use CFB boiler to combust palm oil residues and generate electricity and steam. There is not enough knowledge and capacity to build and operate CFB boiler in Sarawak, thus there is a technology barrier, which prevents realization of the project. CDM allows technology transfer from Japan to Sarawak state and enable implementation of the project activity, thus this project is additional. Also without the CER, IRR of the project is 10.2%, which does not meet the benchmark IRR of 15%. For the project to achieve the bench mark IRR of 15%, the CER price must be over 12.73 USD/tCO2.
Estimation of GHG Emission ReductionsAnnual average 177,477tCO2; 1,774,770tCO2/10years
Monitoring Plan (including Methodology to be applied)This project activity requires monitoring of data and parameter for the two methodologies (i.e. ACM0006 and ACM0014). The main monitoring data and parameters for ACM 0006 includes quantity of biomass residues combusted in the project plant, the amount of electricity and steam generated, the amount of electricity sold to the grid, and the amount of electricity consumed for the pre-treatment of EFB. The main monitoring data and parameters for ACM0014 includes, COD values of the POME, the quantity of POME treated, the quantity of biogas collected, and the amount that was flared. This project is not planning to use trucks to transport biomass residues or apply sludge to a land, but these are accounted in the monitoring plan just in case such activities do happen.
Environmental Impact AnalysisThere is no legal requirement to conduct Environmental Impact Assessment (EIA) for the project. However, the project developer must submit Site Evaluation Report (SER) to the local Department of Environment (DOE). Also, "Stack Emission Monitoring Report" and "Wastewater Monitoring Report" must be submitted to the DOE on annual basis. The palm oil mill is already submitting the Stack Emission Monitoring Report to the local DOE, but it has not submitted the Wastewater Monitoring Report, because the lagoon is still not full and it has not released the treated POME to the river. SER must be submitted and obtain authorization from the DOE prior to the construction of the biomass power plant.
Issues and Tasks for Project MaterialisationElectricity sales price
Sales price of RM0.18/kWh for the project activity has been suggested by the Sarawak Energy. However, Power Purchase Agreement (PPA) has not been concluded, thus financial plan for the project activity cannot be finalized at this stage. The present Renewable Energy Power Purchase Agreement (REPPA) between the Independent Power Producer (IPP) and Sarawak Energy is decided upon project to project cases. There has been demand to increase the transparency on the pricing of the electricity. Sarawak Energy is considering increasing the electricity purchasing price and introducing fixed price for renewable energy.
Operational pattern of the power plant
The power generation of the biomass power plant depends on the operational rate of the palm oil processing mill as this will define the amount of biomass residues. From the palm oil mill management point of view, it is logical to consume the energy from the power plant during day time when the mill is operating and sell the electricity to the grid during night time when the mill is closed. This means that most of the electricity is sold to the grid during night time when the electricity purchase price is low (assuming variable electricity price). There needs to be a fine balance between the mill management and the power generation management to achieve maximum return from the two operations.
Projection of the FFB production
Capacity of the proposed power plant is based on the future availability of the biomass residues. This depends on the future FFB processing quantity by the palm oil mill, which consequently depends on the FFB production of the plantation. The realization of the project, thus depends on the reliability of the projection of the FFB production covering the crediting periods. Further examination on issues such as identification of risks associated with the failure to meet the FFB projection targets, the degree of reliability of the future production projections, risk management in terms of identifying alternative ways to secure biomass residues are necessary for the project developer to take appropriate risk management measures and achieve steady supply of biomass residues necessary for this power generation project.
Co-benefits EffectsImprovements in air and water quality, reduced odor from POME, and prevention of pest outbreaks are expected from this project. In order to quantify the "co-benefit" effects, the quality of the stack emission from the project power plant could be compared with the stack emission of a general coal power plant (as a baseline). The project power plant must submit the "Stack Emission Monitoring Report" to the DOE annually, thus there is no extra effort involved in the collection of the necessary data. For the assessment of the water quality, the quality of the treated POME could be analyzed and compared with the Malaysian wastewater quality standard. This data must also be submitted to the DOE on annual basis.

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