Biogas Full Scale Model

 


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FELDA Palm Iidustries Sdn Bhd - Biogas Project: Generating Electricity from Waste Palm Oil Mill Effluent (POME)


 BACKGROUND

Palm oil mill effluent (POME) is often regarded as a nuisance for the milling operation in terms of its unfriendly environmental impact. The bad news is that if the raw effluent is discharged into the river it can destroy all aquatic life in it. This threat causes the Department of Environment (DOE) to constantly monitor the quality of mill effluent to ensure that it is safe for discharge into water courses.

 

However, the good news is that the natural digestion of the effluent that takes about three months produces a large quantity of biogas containing about 65% methane. This gas can be burnt in a boiler to produce steam that can drive a steam turbine coupled to an electricity generator or it can be used in a gas engine coupled to the generator for producing electricity.

 

In Malaysia, the effluent ponds of all mills produce this gas. Methane is a green house gas (GHG) and if it is freely emitted to the atmosphere, it can contribute to global warming. The effect of methane as a GHG is many times stronger than, say, carbon dioxide. The temperature of the earth is slowly but surely rising and if it is high enough, it could cause the melting of ice at the north and south poles. This eventually results in the rise of water levels in the oceans of the planet and the consequences on flooding of land masses and on climate change will be catastrophic. Most countries are now considering how to mitigate the emission of GHG by replacing fossil fuels, which we use for power generation and powering vehicles with RE. Some of the RE source materials are biomass such as wood, palm oil mill wastes like fibre, shell and empty fruit bunches. At the moment, most of the empty fruit bunches produced by palm oil mills are dumped in estates as a fertilizer or just disposed off elsewhere serving no useful purpose.

 

                  pome

                               Typical open lagoon POME treatment

 

In Malaysia, RE initiatives are supported by Government policies, which are included in planning documents such as the Ninth Malaysia Plan (five years) and Outline Perspective Plan (ten years). The electricity generation from these RE resources is targeted at around 300 MWe in Peninsular Malaysia and 50 MWe in Sabah  at the end of the Ninth Malaysia Plan period.

 

The Small Renewable Energy Power Programme (SREP) was introduced by the government to promote and encourage the use of renewable resources. This was followed by the launch of the Biomass-based Power Generation and Cogeneration in the Palm Oil Industry (BioGen) Project, currently being implemented by Pusat Tenaga Malaysia (PTM) and co-funded by the Government of Malaysia, United Nations Development Programme (UNDP), Global Environment Facility (GEF) and the Malaysian private sector to catalyze the implementation of SREP. The project objectives are to promote effective demonstration of the techno-economic viability, design, development and sustainable operation & maintenance of biomass-based grid connected power generation/CHP projects. The project also promotes utilization of biomass and biogas for power generation and cogeneration.  Hence, in September 2006, BioGen selected two demonstration host projects as its full scale model (FSM) projects one for biomass and the other for biogas. 

 

After having put in place several fundamental aspects required of a FSM project, the Biogen Project team in July 2006 together with their Project committee invited a few candidates to host the intended FSM projects through a tender exercise. The committee comprised distinguished members from several major stakeholders such as the Ministry of Energy, Water and Communications (MEWC), Economic Planning Unit (EPU), Malaysian Palm Oil Board (MPOB), Bank Pembangunan Malaysia Berhad (BPMB), Tenaga Nasional Berhad (TNB), UNDP and PTM , who were all involved in the tendering, evaluation and selection processes. As a result, MHES Asia Sdn Bhd and Felda Serting Hilir were selected to host the biomass and biogas projects respectively.

 

PROJECT OVERVIEW

The project by Felda Serting Hilir located at Jempol, Negeri Sembilan with support from BioGen, is poised to become a land mark for giving birth to a full scale model biogas based grid connected power plant. This FSM project is specifically targeted to generate 600 kWe of electric power out of which 500 kWe will be fed to the national electricity grid . You, as an electricity consumer, may not realize it but soon you may be using electricity originating from the smelly effluent ponds, which you may abhor now!

 

There are more good news. This electricity is not given away free to TNB but for a good price of 21 sen per unit (kWh) as agreed under the Renewable Energy Power Purchase Agreement (REPPA) with TNB. This agreement which was not an easily concluded one, which had to go through numerous dialogues with stakeholders and TNB with encouragement from MEWC and several other bodies, has now become a reality.

 

Serting Palm Oil Mill has a rated processing capacity of 54 tonnes of fresh fruits (commonly referred to as FFB) per hour. The waste water or the mill effluent from processing operation generates about 40 tonnes of effluent per hour, which before the implementation of the RE project is discharged into two cooling ponds alternating daily. After cooling, the effluent is pumped into six steel anaerobic digestion tanks having a capacity of 3,600 cubic meters. Here the effluent undergoes a series of microbial reaction resulting in the generation of methane gas. This methane gas is what the Serting project will be cashing in on for its RE power production.

 

If before the methane gas is just left unattended having no value attached to it, now with the new RE project the gas is collected and scrubbed for removing contaminants like hydrogen sulphide (H2S) and then used for power production. This is partly a retrofitted project as the collection, cleaning and final storage of methane gas involves the use of the existing steel anaerobic digestion tanks. However, to facilitate the collection of the gas the top portion of the tanks has been sealed. Refurbishment was also undertaken as the tanks had undergone severe corrosion due to the hydrogen sulphide generated during effluent digestion over the past ten years.

 

 tank1     tank2

Corroded part at top layer of the tank            Anaerobic Digester tank with

                                                                 capacity of 3600m3

                                                                       Refurbishment work at top part of the tank

 

Several changes will be made to the process flow of the POME to facilitate this RE biogas project, firstly the operation of the two cooling ponds will be discontinued and the function of the six steel anaerobic digestion tanks will be reorganized. In this new arrangement the 1st anaerobic digestion tank will be converted into a holding tank where the POME is stored temporarily at a temperature of 70 o C. From the holding tank the effluent will be pumped into the next three steel tanks at the required temperature range of 50 o C to 52 o C, typical for thermophillic digestion. The methane gas produced from this digestion process will be then passed on to the gas dewatering well where it is dried before being admitted to the biogas storage tank. From the storage tank, the gas will then be sent to the gas purifier to remove traces of hydrogen sulphide before it is used in the gas engines which is coupled to electric generators for power generation. It should be noted that the use of tank number 3 from the previous system will be discontinued in the new process.

 

diagram2Project concept of the Felda biogas project under BioGen Demonstration Full Scale Model

This project is nearing completion and RE enthusiasts in Malaysia are going to have a field day when it is commissioned by the end of this year. This mill certainly can furnish sufficient data to convince would-be investors on the great potential for RE development in Malaysia.

 

Financial Analysis

As this project is capable of mitigating methane emission (a green house gas), it will qualify for Certified Emission Reduction (CER) certificates as it is a clean development mechanism (CDM). For this project the CER sale itself can generate revenue of about RM 2,170,387 per year for the period between 2008 to 2012.

 

Additionally, the revenue from the sale of electricity to TNB can generate an income of about RM735,000 per year based on the potential of exporting 500 kWe of electricity to the grid. At an Internal rate of return (IRR) of 10.29% the pay back period of about four years is indeed an attractive business proposition worth considering.

 

No.

Income

Details

1

Sale of CER per year  (2008 to 2012)

RM 2,170,387

2

Sale of electricity to TNB

RM 735,000/year

3

Investment Capex

RM 6,050,000

4

Funded by (Debt to equity ratio)

80:20

5

Selling rate

RM 0.21 per kWh

6

Internal rate of returns (IRR)

10.29 %

7

Payback period

4.3 years

How to go about in getting approval & benefits

Many investors are keen to invest in RE projects but do not seem to know how to go about it. This write up is specifically aimed at disseminating all relevant information related to an actual project. Even though this is a PTM supported project it was still subjected to all the laid out procedures.

SREP approval from the Special Committee on Renewable Energy (SCORE) under the purview of MEWC is the initial document to be applied for by the project developer in developing the RE power plant. Once the approval from SCORE is obtained, the developer will be given two years to commission the project. The license for generating and selling the electricity can be sought from the Energy Commission prior to the commissioning date.

In the case of the Serting Project the finalized detailed design was ready in August, 2007 and received SCORE approval within a month.

 

Financial Model and Loan Application  

Another important document that the applicant must focus on is the Financial Model, as the processing of the loan, incentives, as well as REPPA negotiation will be based on this document.  Further, approval will be received by the applicant from the relevant parties within two months after submitting the completed loan / incentives applications which should include documents such as the corporate form, audited account, REPPA, Fuel Supply Agreement (FSA), etc

For this project the loan applied for was RM 6.1 million under the Renewable Energy Business Fund (REBF) scheme (soft loan) at BPMB.

 

  

Regulatory and Other Approvals

To obtain the Development Order (DO) from Majlis Daerah prior to the construction of the power plant, the developer should seek consent and approval from the following parties as listed below:

·    Department of Environment (DOE) for zoning and sitting matters

·    Jabatan Pengairan dan Saliran & Jabatan Bekalan Air

·    TNB (cabling and grid) and Jabatan Kerja Raya

·   Department of Health and Safety (DOSH) for site land development and engineering work

 

Status and Progress of the Project

Progress of the project as at August 2008 is 55% and is expected to be completed by November 2008. Negotiation is in progress with TNB to conclude a simplified REPPA using energy harvesting concept. Evaluation will be made by TNB by considering the design type, cost, location, etc.  It takes about four months for the finalization.

Generally a consultant will be appointed by the project developer to ensure the smooth development of the project starting from design to commissioning. CST Engineering was selected as the Engineering, Procurement, Construction and Commissioning (EPCC) for the project in July 2007. The construction workers and equipment which was mobilized in mid August 2007 marked the start of the project.

 

Lessons learnt

There were a number of lessons learnt from the experience gained in implementing a project of this nature, being the first of this kind in Malaysia .

 

  1. It is important to get involvement and clearance from Local Authorities during the initial stages (DOE, Majlis Daerah etc.) because it can cause delay to the overall project progress if the developers cannot follow the stipulated procedures.    
  2. Project implementation – developers should conclude soft activities like REPPA, Loan, CDM validation and related issues to ensure all requirements are in place before the onset of the project. The current project by Felda conformed to all requirements and had a good start .
  3. Interconnection – developers should get involved with TNB from the planning stage since sale of electricity will depend on the load requirement. Thus viability of the project will be in jeopardy in the absence of a dialogue and agreement with TNB on the issue of power purchase.  
  4. Loan / incentive etc – For small developers, this issue is important to be considered as the ratio of financing is only 80% maximum and the process is indeed tedious. The financial close is the last activity that can happen after all these activities have been taken care of.
  5. Project team – even though the size of a SREP is small compared to large power stations the processing activities are similar, as such a multidiscipline team is required.

Conclusion

This demonstration project by Felda with support from Pusat Tenaga Malaysia is indeed a land mark for establishing the potential of setting up a full scale biogas based grid connected electricity generation project in Malaysia. This project can convince potential investors that it is possible to generate electricity from the biogas emitted by the 400 odd palm oil mills in Malaysia. This also will address the problem of global warming contributed by methane, which is classified as 21 times worse than carbon dioxide as a green house gas (GHG). This project used the right technology and innovative people for trapping the biogas from the effluent digestion tanks for harnessing electricity, no doubt a proactive action to prove that this project is viable technically as well as financially.