BiomassSupplyOptimization

Takingbiomasstothenextlevel:Adjusting tothefuelsupplychallenge
1. 2. 3. 4. ConsiderationsinTraditionalBiomassProjects FuelSecurityStrategiesandApproaches AddingaShippingComponent BuildingontheShippingComponent

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AsiaRenewables
ASIARENEWABLESPTE.LTD.
AsiaRenewablesisacleanenergycompanyfocusing oninvestmentin,andendtoenddevelopmentof, replicablerenewableenergy,carbonabatementand sustainabledevelopmentassetsinemergingmarkets. AsiaRenewables iscurrentlyengagedinthe developmentofseveralbiomasstoenergyplants, developmentofgeothermal,andsolarprojectsin China,India,ThailandandIndonesia. Highlyexperienceddevelopmentteamsbasedin SingaporeandBeijingwithaprojectofficeinChennai. Proventrackrecordofdevelopment,operationand investmentinlandfillgas,biomass/biogas,geothermal, hydroandsolarprojects. CriticaldealcapacityinChinese,Japanese,Korean, IndonesianandTamil. www.asiarenewables.org Wellestablishedindustryandgovernmentrelationships.

Renewable Energy and Carbon Abatement for Emerging Markets

1.ConsiderationsinTraditionalBiomassProjects
1. 2. 3. 4. 5. ConsiderationsinTraditionalBiomassProjects FuelSecurityStrategiesandApproaches AddingaShippingComponent BuildingontheShippingComponent FinalComments

Renewable Energy and Carbon Abatement for Emerging Markets

1.Landscape
Globalbiomasselectricitycapacity:47GW 7%oftotalRenewableEnergy(RE)investmentAsia Strongeconomicgrowthandpowerdemand Abundantresources:>30%oftheworldstotal Governmentshaveambitioustargets Largeuntappedpotential
Countries ASEAN China Utilization 3,000 MW 2,200 MW Potential 56,000 MW 24,000 MW
Biomass Power Production
Rest of World 31% US 31%

Spain 4% Canada 5% UK 5% Japan 5% Finland 5%

Germany 7% Brazil 7%

Opportunities

Richinbiomassresources: Target 5.5GWby2010;30GWby2020 Favorablesubsidy(Benchmarktariffofcoalfiredpower+ $0.0366/kWh),Availabilityoflocalfinancingandmature domestictechnology

China

Opportunities

Agriculturebasedeconomyandmultiharvest 108miltons/yr SupportfromtheGovernment:Feedintariff,PPAandtax Indonesia:OuterIslandOpportunity Thailand:Additional$0.09/kWhadderfor7years

ASEAN

Considerations
Heavilyrelationshipdriven 5149 ownership Difficultiesinincentivepoliciesimplementation:Nofixed electricityofftakeprice

Considerations
Indonesia:Noforeignownershipofpowerplants<10MW Lackoflocalknowledgeaboutopportunitiesandproject implementation Differentworkingstandardsforsafety,environmentaletc not imposingtoomuchforeignworkingpracticesontolocals

Renewable Energy and Carbon Abatement for Emerging Markets

IntroductiontoBiomassPowerPlants
1 2 3 4 5

palm plantation & FFB

palm oil mill

palm EFB

road transportation

storage

Biomasscombustionisoneof theoldestandsimplestformof energyproduction. Itisconsideredrenewableand carbonneutral. Therearemaytypesofbiomass firedpowerplantsincluding simplecombustion,gasification, plasma,etc. Cheapestandmost straightforwardandmostrobust issimplecombustionwithmulti fuelandalargerboilertohandle moremoisture.
Renewable Energy and Carbon Abatement for Emerging Markets

PracticalChokeIssues
Traditional biomasspowerplant assessmentlooksatarangeoffactors.
DifficultyofFinancing FuelSecurity ClimateandSeasonal LocalUtilization SameKindofProjectinthe Area Stablerevenue(FixedPPA) Stablerevenue(FixedPPA) SoftLoadfromGovernment SoftLoadfromGovernment CDMrecognitionoftheproject CDMrecognitionoftheproject

BiomassProject Viability

OptimizedLogistics OptimizedLogistics Insurance Insurance LongTermContract LongTermContract BackUpSupply BackUpSupply MultiFuel MultiFuel CoFiredwithCoal CoFiredwithCoal

PlantSize: Small=Uneconomic Typically<25MW Fuelhauldistance increases41%withevery doublingofsize

Technology: UnprovenorExotic

HighInvestmentCost andO&MCost OnlysuitableinCountries OnlysuitableinCountries withcentralizedcollection withcentralizedcollection system.eg.Thailand system.eg.Thailand Taxincentives Taxincentives Beneficialelectricitytariff Beneficialelectricitytariff Multiplerevenuestreams Multiplerevenuestreams (electricity,ash,CERs) (electricity,ash,CERs)

Directreplicationof Directreplicationof existingoperationalplant existingoperationalplant Providetrainingforlocal Providetrainingforlocal expertise expertise

Renewable Energy and Carbon Abatement for Emerging Markets

SampleIllustrativeProject
Greenfield 12MWPowerPlant
FuelSource Coconutresidue Fuelsourceonprojectsite,fullyownedbyprojectowner Technology circulatingfluidizedbedboiler Location AccessibilityoftheSite Rawwater:quantity,quality,cost Ashdisposalorsale Transmissionlineandconnectiontogrid Preferentialofftakeadder FuelSource Coconutresidue Fuelsourceonprojectsite,fullyownedby projectowner Noalternativeusesforcoconutresidue YearlyFuelAmountRequired:120,000 tonnesofbiomass@4000Kcal/kg Comparision,for12MWcoalplant,need 80,000tonnes@6000kcal/kg
Renewable Energy and Carbon Abatement for Emerging Markets

Financial Projections & Metrics Total CAPEX Post Tax NPV@12% Post Tax IRR Average annual electricity revenue Average annual CERs US$ 20 mil US$430,000 20+% US$ 7 mil 50,000

2.FuelSecurityStrategiesandApproaches
1. 2. 3. 4. 5. ConsiderationsinTraditionalBiomassProjects FuelSecurityStrategiesandApproaches AddingaShippingComponent BuildingontheShippingComponent FinalCommentsandProfiles

Renewable Energy and Carbon Abatement for Emerging Markets

FocusonBiomassFuelSupply
Themostcriticalaspectsofbiomasspower plantarethesourceofbiomassfuelandthe robustsupplystrategyofbiomassfuel.
SensitivityAnalysis:Change(%)ofNPV@12% 10% Improvement CERPrice PowerSalePrice FuelCost O&MCost 2% 46% 27% 5% 10% Deterioration 2% 46% 27% 5%

Renewable Energy and Carbon Abatement for Emerging Markets

FuelStrategies
Thisstrategyexposesthe developertosignificantsecurityof supplyrisk,giventhedependence on: i)Location,whichisoftentimes offgrid andwithoutlocaloff takecounterparties ii)Feedstockavailabilitythatmay beaffectedbydroughtand seasonalvariationinqualityand quantity iii)Localfarmersandindustries whocontrolpriceandsupply iv)Specificfueltypesandsources thatmayhavealternativeuses

Mostbiomassfuelstrategies includethreephases: Identifyingbiomassrich agriculturalregions

Securingbiomasssupply contractswithboth individualandindustrial suppliers

Customizingapowerplant basedonthetypeand availabilityoffeedstock withintheregion

Renewable Energy and Carbon Abatement for Emerging Markets

MultipleLinesofDefenseStrategy
ChineseBiomassPlant Need:250,000tonnes/yr Available:Harvestseason DecembertoApril:692,000 tonnes 100,000tonnesstoragefacility 40dedicatedstaff Inworstcasescenario,ifsomeonesomehowgeta permitforanewplantandbreachesallotherdefenses,it willtakethemmorethan3yrstopermitandcommission theplantsoatleastlimitedperiodofreturns. GEOGRAPHIC:50kmradiusinwhichnootherbiomassplants canbebuilt(enoughforoversupply). INDUSTRIALESTATE:Plantismonopolyproviderofsteamtoadjacent industrialpark. CARTEL:Thereisaprovincialcartel ofbiomassplantsintheprovincethat meetsregularlytocontrolandpunishanybadagencies/farmers/suppliers, compareprices,andsupporteachotherwithfuel. FUELDIVERSITY 3layersfromverydifferentsources.Local sourcesfrom farmers,offshore sourcesofindustrialbiomassfromoutsideprovinceforwood andotherindustries.Citybackupsupportformunicipalwoodwaste.
Renewable Energy and Carbon Abatement for Emerging Markets

1.GreenhouseGasMarketBasis
1. 2. 3. 4. 5. ConsiderationsinTraditionalBiomassProjects FuelSecurityStrategiesandApproaches AddingaShippingComponent BuildingontheShippingComponent FinalCommentsandProfiles

Renewable Energy and Carbon Abatement for Emerging Markets

AFuelShippingStrategy
India Replicable12MWbiomassplants
Projectdescription

Plantwillgenerateelectricityandsteamthroughthecombustion ofdrypalmempty fruitbunches(EFB),otherwasteproductsfromthepalmoilindustry,wasteproducts fromotheragriculturalindustriesandupto25%coalifnecessary.Toensureflexibility, theboilershavespecificallybeendesignedtocombustarangeoffueltypesatvarying moisturecontents.Biomasswillbesourcedfrom(i)neighbouring farmsandmillsand, forpriceandcontingencyreasons,(ii)IndonesiaandMalaysiaundervariousfuel supplyarrangements.AsiaRenewablesisequityholderinprojectsalongwith domesticandforeignpartners. Thefirstpowerplant,isalreadyatanadvancedstageofdevelopmentwithalldue diligence,sitepreparation,landleasing,licensingandpermitting,andpowerofftake agreementssigned.AdesignspecificationandRFQsenttoshortlistedEPCcompanies andawaitingsubmissions.Financialcloseandgroundbreakingfor2Q:2010. Thesecondpowerplantisabrownfield expansiontothefirstplant.Allinitialdue diligence,landleasing,sitepreparationandcontractnegotiationshavebeencompleted. Thelicensingandpermitting,technicalspecification,projectfinancingandpowerpurchase agreementsarecurrentlybeingprocessed,andfinancialclosefor3Q,2010. Otherfourplants:Thelandacquisition,licensingandpermitting,technicalspecification, projectfinancingandpowerpurchaseagreementsareunderprocessing.Financialcloseis targetedfor2010to2011.
Renewable Energy and Carbon Abatement for Emerging Markets

Rationale

Willproducetwoprimaryandthreepossiblesecondaryrevenuestreams: SaleofelectricitytoProvincialBoardwithfavourablebiomasselectricitytariff(80GWhpa atUS9.7c/kWh)andrenewableenergypolicy; Saleofelectricitytoneighboringchemicalsplantviacaptiveofftakeagreementatthe prevailingbiomasselectricitytariff(10GWhpaatUS9.7c/kWh); PotentialgenerationofCERsforthesubstitutionofnonrenewableenergyinthestategrid (65,000CERspaperplant),positiveexposuretocarboncreditgenerationside; Potentialexcesssteamsalestoneighbouringindustrialpark;and Possibleashsalesforfertilizeruse.

Localbiomass downcoastline. Renewable Energy and Carbon Abatement for Emerging Markets

SupplyChainStrategy
International Local

1. ProvideOutofRegionSupplyChain Transshipbiomassfromother ASEANregionswhereconditionsare notyetsuitableforlocalplants Hedgesupplybyscalingupdemand simultaneously 2. DesignBoilersandFuelhandlingSystems toaccommodatewidevarietyof fueltypes e.g.woodwaste,softcoconut, peanutshellsandcoal 3. LocatePowerPlantNearMajorBreak bulkPort(<15km) Increasesgeographicareafrom whichfeedstockcanbesourced Createstheoptiontosellelectricity directlytotheportand neighbouringindustry

a c

Mills & Plantations

Mills & Plantations

A.Longterm supplycontract withdependable fuelsuppliers B.Formajoint venturewith commodity tradingfirm C.Invest directlyin agricultural operationsand businesses

Local Transportation

b
LocalPort

Shipping Companies

DestinationPort

PowerPlant

TruckingCompanies

Renewable Energy and Carbon Abatement for Emerging Markets

IntroductiontoBiomassFuelSupply
Indonesia, Malaysia P.. Plantation Pi Pii . India, Indonesia Domestic Coal

120,000tonnes dry EFB pa

coal can substitute up to 25% of fuel

28t trucks, avg 200km 3-7 days warfage, handling, customs, certificate of origin, insurance, security etc 10,000t oceangoing barges

Plantation Pa Indonesian Port Malaysian Port

Pb

P.. .

<40,000tonne available EFB pa , >230,000 by 2011

1-5 days warfage, handling, customs, insurance 10t trucks, avg. 15km

Indian Port

Tocontrolfuelandcosts,shipping donebyGreenpowerFuels,an associatedfuelsupply&logistics company

20t trucks, avg 200km

O&M

O&M

Plant

EPC

EPC

65,000CER/VERs pa 1-2MW, 8GWh

Neighbor Offtake Provincial Electricity Board

Carbon Offtaker
10-11MW, 80GWh

Renewable Energy and Carbon Abatement for Emerging Markets

SupplyChainSamplesctd.

agricultural plantation

road transport to mills

mills

Thereareavarietyofshipping companiesthatcanbecontracted totransportagriculturalwaste ASEANtodestinationport.

pre-port storage

road transport to port

Agricultural waste

origin Sea Port

sea transport

destination Sea Port

Dependingontheeconomiesof scaleandexpectedrateof biodegradation,agriculturalwaste couldbeshippedonboardocean goingbarges(10,000 12,000tonnescapacity)orlarger breakbulkvessels(50,000tonnes capacity).

10tonnetrucksarepopularly availableinmostareasofAsia.
biomass power plant storage road transport to plant

local biomass (bagasse, peanut shells, woodwaste, cashewnut wood)

Renewable Energy and Carbon Abatement for Emerging Markets

4.BuildingontheShippingComponent
1. 2. 3. 4. 5. ConsiderationsinTraditionalBiomassProjects FuelSecurityStrategiesandApproaches AddingaShippingComponent BuildingontheShippingComponent FinalCommentsandProfiles

Renewable Energy and Carbon Abatement for Emerging Markets

Regionalizingasupplychain
IndiaPlantispartofa6x12MWoverallproject(72MW).Economiesofscale andbargainingstrengththroughadditionalplants. Alsopossiblebackendinvestmentintofuelviaupstreamagribusinessesand plantations. NextstagethenopentoextendplatformbackintoThailand,Indonesia,Malaysia, Philippines,etc.wherefavorablerenewabletariffsandbiomasssupplyexist.

Renewable Energy and Carbon Abatement for Emerging Markets

1.GreenhouseGasMarketBasis
1. 2. 3. 4. 5. ConsiderationsinTraditionalBiomassProjects FuelSecurityStrategiesandApproaches AddingaShippingComponent BuildingontheShippingComponent FinalCommentsandProfiles

Renewable Energy and Carbon Abatement for Emerging Markets

FinalThoughts

EffectonCDM?

Fueltreatment?

Biodegradationof biomassfuel

Oilpriceriskfor transportationcost

Expansionoutof theregion?

Renewable Energy and Carbon Abatement for Emerging Markets