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Published on November 5, 2007

If the Energy Ministry cannot control the spread of very small power producers (VSPP) that use biomass as fuel, existing biomass factories will face soaring fuel costs, say private operators.

At present, the Energy Ministry, through the Energy Policy and Planning Office, encourages private companies to participate in VSPP projects with a capacity of less than 10 megawatts by using biomass - rice husks, sugar-cane bagasse and wood waste - as fuel. Their proposals are submitted to the Energy Ministry, which considers approving VSPP projects without limitations. These projects will receive additional electricity fees of 30 satang a unit from the normal power-purchase rate.

Energy permanent secretary Pornchai Rujiprapha said power production from biomass plants would increase to 2,800MW by 2011, compared with current capacity of 1,977MW.

AT Biopower, located in Phichit province, uses rice husks as the fuel for a power plant of 20MW capacity. Deputy CEO Natee Sithiprasasana said the government's policy of promoting VSPPs is in the right direction, because Thailand has the capacity to produce another 2,070-3,130MW of power.

However, he said the government should also look into the question of a future scarcity of biomass. The availability of rice husks and sugar-cane bagasse is not sufficient for potential power plants.

The availability of these sources is running out, because of the government's policy of promoting biomass power plants. Natee said biomass power plants that used rice husks as fuel were already facing rising prices. When AT Biopower was first set up, rice husks went for only Bt400 a tonne, including transport, but higher demand has raised the price to Bt800 a tonne. The doubling of the price severely affects power plants, because fuel accounts for 70-80 per cent of production costs.

"The Energy Ministry's policy of promoting VSPPs' use of biomass as fuel will create incentives for major rice millers to invest in power plants," Pornchai said. "If this is the case, it will affect existing biomass power plants, because they buy rice husks mainly from millers."

He said if the government continued to promote an unlimited number of power plants, the policy would drive up prices even more.

Visit Akaravinak is president of Electricity Generating (Egco), a major shareholder in Ed Green, which uses rice husks as fuel to produce 9.8MW of power. He said Ed Green's power plant was affected by a raw-material sourcing problem.

When Ed Green's power plant was first set up in 2003, rice husks were only Bt200 a tonne, excluding transport. But now, the price has risen to Bt600. Ever since a big rice mill located close to Ed Green's power plant invested in its own power plant, the company has found it more difficult to obtain fuel.

"To let the price of biomass rise considerably is not beneficial to the policy of promoting biomass power production, because the fuel accounts for 80 per cent of the cost," he said. "The operators may be forced to reduce production costs by other means, such as applying low technology, which will affect the environment. Ed Green exists because Egco wants to promote the image of a green-energy campaign."

He urged the government to take care of the first generation of operators that started their projects to respond to the government's campaign to use biomass.

Watcharapong Thongrung

 The Nation