Considerable scope for tapping the region’s biomass potential-

Southeast Asia holds immense potential for the generation of electricity through agro residues as well as waste-to-energy (WtE) sources. While the market is in a nascent stage at present, it is rapidly emerging as an attractive destination for biomass-based project development. Ravi Krishnaswamy, vice-president, energy and environment, Frost & Sullivan Asia Pacific, says, “An estimated capacity of 561 MW was added in the biomass and WtE segments across the Southeast Asia region in 2014. In terms of value, this translates into about $1.12 billion. Our forecast by 2019 is that we expect the annual market to go to 886 MW, entailing a value of $1.85 billion, across all countries.”

Tapping the biomass segment is a win-win proposition as it promotes energy security in areas with poor electricity access, while simultaneously contributing towards climate change mitigation. Biomass resources can be tapped in several forms (solid, liquids, and gaseous) for heat generation and power generation, and used as biofuel for the transport sector.

Estimates suggest that the region produces nearly 230 million tonnes of biomass per annum. The main types of feedstock available in the region include rice husk, palm oil, wood residues, and bagasse. However, growth in the biomass segment in the Southeast Asia region has not been outstanding. Except for a few countries, the potential largely remains untapped. Meanwhile, in several other Southeast Asian countries, biomass is still being used in its traditional form, mainly for cooking and heating purposes. This is particularly prominent in low-income areas, which lack access to modern fuels.

Thailand is considered to be the most favourable country for biomass-based investments. Other emerging countries include the Philippines, Indonesia, Malaysia, and Vietnam. Southeast Asia Infrastructure provides a snapshot of the current scenario, policies, and plans of selected countries…

Thailand

According to estimates, by the end of the first quarter of 2014, Thailand had an installed capacity of 2,351.28 MW in the biomass power generation space, 274.94 MW in the biogas space, and another 47.48 MW of municipal solid waste-based power. Thailand was one of the early movers in introducing feed-in tariff (FiT) mechanisms for renewable energy. Accordingly, the country has been able to attract considerable investments in the bioenergy space on the back of a strong policy and regulatory regime.

The government’s Alternative Energy Development Plan for the period 2012-21 intends to increase alternative energy consumption to 25 per cent of total energy consumption (by 2021). A target of 4,800 MW for the biomass segment and 3,600 MW for the biogas segment (by 2021) has been set.

Besides being active in the biomass-based power and heat generation space, Thailand has been a pioneer in the biofuels segment. As of mid-2014, the country had a bioethanol production capacity of 4.79 million litres per day (mld) across 21 plants and biodiesel production capacity of 4.96 mld across 11 plants. A target of 9 million litres per day, 7.2 mld and 3 mld has been set for ethanol, biodiesel, and advanced biofuels respectively.

Indonesia

Indonesia’s bioenergy potential is estimated to be 49,810 MW. The country’s installed capacity as of end-2013 was 90.5 MW (76 MW through palm waste and 14.5 MW from municipal solid waste) in the grid-connected space and 1,626 MW in the off-grid space. However, the government now has a keen interest in promoting this segment.

Indonesia is also a major producer of bio-fuels. However, most suppliers resort to the export markets. The government is taking active steps to encourage this segment. It had raised the biofuel subsidy considerably to boost the production of palm oil for biofuel production. It also intends to regulate the use of biomass/waste for export purposes.

The Indonesian government is committed to promoting the bioenergy and biofuel segment and is working towards the resolution of issues related to financing, infrastructure, etc. to ensure the long-term sustainability of these projects. The country is targeting a share of 10 per cent for bioenergy sources by 2025 and 14 per cent by 2050.

The Philippines

The country has immense potential in the biomass-based power generation space. The main sources of crop residue include sugarcane bagasse, rice straw, rice hulls, corn cobs, corn stovers, coconut shell, and coconut husks. These resources can go a long way in meeting the country’s rapidly increasing energy demand. At present, these resources are being used in the traditional form, mainly for cooking purposes. However, the segment has now started to attract investments for the setting up of large projects.

The country’s FiT mechanism was implemented in 2012. Despite this, the country has demonstrated an impressive growth so far and the trend is expected to continue in the future. According to International Renewable Energy Agency estimates, as of April 2014, 65 biomass projects had been awarded, and the total grid-connected installed capacity was 143 MW.

Malaysia

Palm oil, oil palm biomass, and biogas are major feedstock for the promotion of biomass-based segments (including biofuels) in the country. Malaysia, in fact, is one of the largest producers and exporters of palm oil in the world. As of end-January 2014, the country reportedly had an installed capacity of slightly over 50 MW in the biomass space and 11.73 MW in the biogas segment. One of the key barriers to growth in the segment is the competing uses of biomass, resulting in uncertainties regarding the long-term availability of biomass for electricity generation. In such a scenario, fuel pricing becomes a challenge; logistical challenges and transportation also add to the cost of the fuel. There are also issues related to grid interconnection due to the remote location of palm oil mills in many cases.

In the biofuel space, as of May 2014, a total of 55 biodiesel manufacturing licences with a total annual capacity of 6.18 million tonnes were approved under the Malaysian Biofuel Industry Act, 2007. In the biogas space, as of July 2014, 66 plants had been completed. By 2020, all palm oil mills are to install biogas facilities (or methane avoidance). Besides, Malaysia is also attracting considerable investments for the development of biopellets.

Conclusion

With rising energy demand and increasing pressure to reduce dependence on fossil fuels, several Southeast Asian countries have given a direction to their alternative energy sector over the past few years. In such a scenario, the biomass segment stands to benefit immensely given the region’s substantial potential and the multiple forms that biomass sources can take in the transport as well as  heat and power generation space. That said, maintaining policy continuity will be the key to ensuring the long-term sustainability of investments.