rice husk electricity

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h t t p : / /ww w.e ls ev ie r.c o m /l o ca te / b i o m b i oe

Viability of off-grid electricity spply sing rice

hs!: A case stdy from Soth Asia

Sbhes ". #hattacharyya$

%nstitte of &nergy and Sstainable Development' De (ontfort )niversity' *eicester' )+

a rt i c l e in fo

Article history:,eceived -5 ne 01

,eceived in revised form

10 (ay 04

Accepted 4 ne 04

Available online

+eywords: 2s!

power 3inancial

viability

ff-grid electrification

Soth Asia

&lectricity access

a b s t r a ct

,ice hs!-based electricity generation and spply has been poplaried in Soth Asia by

the 2s! 6ower Systems 726S8 and the Decentralised &nergy Systems %ndia 7D&S%8' two

enterprises that have sccessflly provided electricity access sing this resorce. 9he

prpose of this paper is to analye the conditions nder which a small-scale rral power

spply bsiness becomes viable and to eplore whether larger plants can be sed to

electrify a clster of villages. #ased on the financial analysis of alternative spply options

considering residential and prodctive demands for electricity nder different scenarios'

the paper shows that serving low electricity consming cstomers alone leads to part

capacity tiliation of the electricity generation plant and reslts in a high cost of spply.

2igher electricity se improves the financial viability bt sch consmption behavior

benefits high consming cstomers greatly. 9he integration of rice mill demand' partic-

larly dring the off-pea! period' with a predominant residential pea! demand system

improves the viability and brings the levelised cost of spply down. 3inally' larger plantsbring down the cost s ignificantly to offer a competitive spply. #t the higher investment

need and the ris!s related to monopoly spply of hs! from the rice mill' organiational

challenges of managing a larger distribtion area and the ris! of plant failre can

adversely affect the investor interest. (oreover' the reglatory ncertainties and the

potential for grid etension can hinder bsiness activities in this area.

; 0-4 9he Athor. 6blished by &lsevier *td. 9his is an open access article nder the ""#=5.

&-mail addresses: sbhesbHdm.ac. !'sbhesIbhattac haryyaHyahoo.co m.http:/ /d.doi.o rg/0.0B/C.bio mbioe.04.0B.000>B->514/; 0-4 9he Athor. 6blishedby &lsevier *td. 9his is an open access article nder the "" #< license

7http://creative c ommons. org/licenses/by/1.0 /8.
http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://www.sciencedirect.com/science/journal/09619534http://www.elsevier.com/locate/biombioehttp://www.elsevier.com/locate/biombioehttp://www.elsevier.com/locate/biombioehttp://www.elsevier.com/locate/biombioehttp://www.elsevier.com/locate/biombioehttp://www.elsevier.com/locate/biombioehttp://www.elsevier.com/locate/biombioehttp://www.elsevier.com/locate/biombioehttp://www.elsevier.com/locate/biombioehttp://creativecommons.org/licenses/by/3.0/http://creativecommons.org/licenses/by/3.0/http://creativecommons.org/licenses/by/3.0/http://creativecommons.org/licenses/by/3.0/mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://creativecommons.org/licenses/by/3.0/http://creativecommons.org/licenses/by/3.0/http://creativecommons.org/licenses/by/3.0/http://www.elsevier.com/locate/biombioehttp://www.elsevier.com/locate/biombioehttp://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://creativecommons.org/licenses/by/3.0/mailto:[email protected]:[email protected]://dx.doi.org/10.1016/j.biombioe.2014.06.002http://creativecommons.org/licenses/by/3.0/http://creativecommons.org/licenses/by/3.0/http://www.sciencedirect.com/science/journal/09619534


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45b i o m a s s a n d b i o e n e r g y B J 70 4 8 4 4e5 4

significant part of it is sed as a sorce of energy' mainly for

coo!ing prposes and for parboiling of rice. 9he rest is brnt

in the field' creating environmental polltion.

2owever' few attempts have been made in Soth Asia'

particlarly in %ndia' to tilie rice hs! for electricity gener-

ation. 9he (inistry of Eew and ,enewable &nergy in %ndia

has been promoting biomass gasification proCects nder

varios schemes and it is reported that there are B0 mini

rice hs! powered electricity plants operating in variosparts of the contry. #t the sccess of 2s! 6ower

Systems 726S8 as a private' off-grid electricity prodcer and

spplier has renewed the commercial interest in this

waste-to-electricity conversion. ther contries in the

region however have been slow in eploiting the resorce

commercially. 9here is a single 50 !K rice-hs! based power

plant operating in #angladesh 7namely Dreams 6ower

*imited in Faipr8' while 6a!istan does not seem to have

yet eperimented with rice hs! as a sorce of power. 9he

lessons from sccessfl commercial ventres in the region

can spport wider application of this waste to electricity

technology.


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4B b i o m a s s a n d b i o e n e r g y B J 70 4 8 4 4 e5 4

reported in @= that a 1 !K plant prodces B t of incense

stic!sper year. Silica precipitation is sold for miing with

cement. 9he innovative approach towards revene

generation from varios prodcts srely helps in improving

its financial position.

9he 26S claims that in the process it retrns more to the

local commnity than that it collects throgh its electricity

bills. &ach plant engages 1e4 staff e a plant operator' an

electrician' a hs! loader and a bill collector' who are ta!enfrom local yoths and trained by the company' throgh which

abot 400 O per month is recycled into the local economy.

9he rice mills spplying hs! to the power plant receive

abot 5 Oper tonne of hs! 7or abot 500 Oper year for a 1

!K plant8' an etra sorce of income for the mills that is

often shared the rice mill cstomers throgh a redced fee

for milling. 9he incense stic! ma!ing activity mentioned

previosly also provides earning opportnities to local

women. %n addition' in some cases' the bill collector also

acts a Mtravelling salesmanN who ta!es orders from the

hoseholds' procres them in bl! from the nearby town

and delivers to the hoseholds for a small commission.

9his ensres an etra income for the bill collector and thehoseholds get their goods at wholesale rates. 9his

inclsive bsiness model 7see 3ig. -8 has wor!ed well for the

company.

9he company has sccessflly etended its bsiness to

more than 100 villages to provide electricity to more than

00'000 people installing J4 plants. 26S initiates the process

for installing a new plant pon receipt of a reLest from a

village or the local athority' for which an initial deposit is

ta!en from the interested villagers to cover p to three

months cost of electricity. )pon enlisting the interest of sf-

ficient nmber of consmers' the feasibility of a biomass-

based plant is carried ot' which identifies a secre sorce

of fel spply for the plant' and verifies the economic viabilityof the bsiness. 9he installation process ta!es abot three

months and a local team is set p to operate the system on

a

3ig. - e 9he 26S bsiness model.

daily basis. A typical plant can serve' depending on the sie

of the village and willing consmers' p to 4 villages with

abot

400 consmers within a radis of -.5 !m of the plant.

9he spply is given for a fied period of time' normally for

Be= h in the evening sing a 1 phase 0 V system.

"onsmers pay a connection charge and a flat monthly fee

7varying between O and .5 O8 for the basic level of

service 7 compact florescent lamps and a mobile

charging point' called the

10 K pac!age8. 2owever' cstomied pac!ages are also

available and consmers with a higher level of consmption

benefit from a lower nit rate. Small commercial enterprises

are also spplied with electricity bt they generally pay a

higher flat rate of 4e4.5Oper month de to higher demand.

9he 26S aims to provide electricity to -0 million people in

-0'000 villages by installing 1000 plants by 0-=. %t has sc-

cessflly managed to secre fnds from a variety of sorces

in the past' inclding charitable sorces and financial in-

stittions. Althogh the plants initially followed the #ild'

wn' perate and (aintain 7#(8 model' the 26S is also

employing other modes of operation' namely the #ild' wnand (aintain 7#(8 and #ild and (aintain 7#(8 lately to

grow faster. %n the #( model' the company loo!s after

the entire chain of the bsiness' which in trn reLires a

dedi- cated set of staff that needs growing with new

plants . 9he overhead can be high and the company faces

the investment challenge. %n the #( model' the bsiness

is partly shared with an entreprener who ma!es a small

contribtion to capital 7abot -0?8. 9he 26S maintains the

plant and gets a rental fee bt the operational aspects are

ta!en care of by the entreprener. 9his redces some of the

management tas!s for the 26S' and bilds a local networ! of

entrepreners bt the 26S still faces investment challenge.

(oreover' verifying the Lality of the local entreprener is achallenging tas! and the speed of replication sing this

approach remains nclear. 9he company transfers the

ownership after a specified period of time' pon recovering

the cost of investment. 9he #ild and (aintain model

essentially transforms the 26S into a technology spplier

where its role is limited to spply of the eLipment for a

fee and maintaining the plant throgh a maintenance

contract. 9he spply bsiness is nderta!en by a local

entreprener and the 26S does not get involved in this

activity' althogh the entreprener ses the 26Sbrand for the

spply. 9hs the bsiness ses the franchisee model in this

case and as long as the franchisee is able to finance the in-

vestment and is capable of rnning it effectively' the bsinesscan grow. Althogh this is a proven approach in many other

bsinesses' in the contet of rral electricity spply this has

not been widely sed. 9his model reLires a strong Lality

control and standardiation of the bsiness operation bt it

is not clear whether or to what etent this has been developed

in 26S.

9hs' a rapid replication of activities which is necessary

for achieving the company target of electrifying -0 million

people by 0-= depends to a large etent how the above

bsiness models wor!. 9his epansion demands significant

energy resorces' financial resorces' management

capabilities' s!illed local staff' and commensrate

manfactring capabilities. %t is not clear whether thecompany can ensre all the sccess factors to ensre a
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rapid growth. %t is reported that the hs! price has

significantly increased since its plants have started


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b i o m a s s a n d b i o e n e r g y B J 7 0 -4 8 4 4 e5 4 4=

operation. (oreover' the niche areas for its operation where

consmers can afford high tariffs may be difficlt to find in

the ftre' which can limit the growth prospect. "riticspoint

ot that 26S only operates in niche areas where villages had

been receiving diesel-based electricity from local

entrepreners and the relatively rich consmers in those

areas were alreadypaying high charges for their electricity.

26S has ths dis- placed diesel-based generation by

offering electricity at a cheaper rate. %n addition' the plantsie ranges between 5 !K and 50 !K' which fails to eploit

the economies of scale and scope and affects the bsiness

prospects. "learly' the replication isse reLires frther

investigation.

.. D&S% 6ower

9he Decentralised &nergy Systems %ndia 6rivate *imited 7D&S%

6ower8' a not-for-profit company set p in ->>B with aims to

provide affordable and clean decentralied energy to rral

commnities for rral development' offers an integrated so-

ltion comprising of bilding and operating decentralied

power plants' creating rral service infrastrctre throghmini/micro grids' engaging with the local commnity for

establishing partnership models and organiation strctres

for commnity-based management of the services' and

providing training for capacity bilding in rral areas for

micro-enterprise and bsiness development. 9hese activities

are nderta!en throgh sister organiations' sch as D&S%

6ower Framdyog 7D6F8 for village level bsinesses and en-

terprises and D&S% (antra for training and capacity bilding.

%n addition' Coint ventres and partnerships are also estab-

lished for energy service and village enterprises.

9he first plant of D&S% 6ower was set p in ->>B in a

village in (adhya 6radesh 7%ndia8 and relied on biomass

gasification systems. %t has set p -B power plants in totalby 0-' with installed capacities ranging between -- !K

and -0 !K. %n most cases' D&S% 6ower acts as the rral

independent power prodcer and enters into a power

prchase agreement with the byersP organiation 7which

cold be an individal entity' a co-operative society or an

association of byers8. %t serves mainly rral enterprises

and small indstries that wold otherwise rely on diesel

generators for their electricity spply to complement

nreliable grid spply. %t also assists in the development of

micro-enterprises' often lin!ed to agricltre. 9he company

also enters into biomass prchase agreements with local

sppliers 7who can be villager grops or commercial

sppliers8.2owever' beyond this niche area of operation' D&S% 6ower

has also installed for mini-grid systems to spply electricity

to hoseholds' micro-enterprises and mobile phone towers'

where an anchor load 7sch as the mobile phone towers8 is

generally inclded in the system that offers the base load

and increases the financial secrity for the operation. )ntil

0'

-0 mobile phone towers have been connected to its eisting

power plants and it plans to epand this to another 0

towers in two years. (oreover' the emphasis is on

generating as mch electricity as possible throgh the

inclsion of micro- enterprises. 9his redces the average

cost of spply that in trn enhances viability of the micro-enterprises. 9his inter- dependence is eploited to ensre

affordable power as well as rral economic development.

%n addition to focssing on the niche mar!et' there are

other distinctive featres of D&S% 6ower approach to the

bsiness. D&S% 6ower has installed ndergrond cables to

connect consmers' which is a costlier option' althogh it is

less prone to theft and is a more secre option. %ts pricing

policy is based on the services it offers and not often focses

on electricity pricing as sch. 3or eample' for a light point

of

B0 K a fied rate of J.1 )S cents 7or 5 %ndian rpees8 per dayis charged while micro-enterprises pay a fied fee for the

service. Similarly' one hor of irrigation water spply

from a

1.=5 !K pmp is charged at - O 7or B0 %ndian rpees8 @5. 9he

company also offers a range of bill collection options e daily

for small hoseholds and micro-enterprises and monthly for

bigger indstrial/insti ttional consmers. Althogh this ap-

pears to be wor!ing for them at the moment' the daily

collection of revene is a labor intensive' costly option.

(oreover' it follows the #ild-perate-9ransfer model of

operation wherein it hands over the plant to the local com-

mnity or village grops after a period of operation.

*i!e 26S' D&S% 6ower has also registered a small-scaleproCect with the "D( #oard for establishing -00 biomass

gasifier-based decentralied' power plants in the District of

Araria in #ihar state 7%ndia8. 9he plants will be of 50 !K ca-

pacity with the eception of a few -00 !K plants. %n total'

5.-5 (K of capacity was epected to be installed by 0

which will redce abot 1B0 ! tonnes of " emission over

the first ten years of the proCect. 2owever' with only a few

plants set p so far' the company has significantly

nderachieved in terms of emissions redction and

capacity addition targets. Althogh the company epansion

plan maintains that it aims to achieve its -00 village target

in 1 to 5 years' and wold establish 5pilot plants in 0-1'

the otloo! remains ncertain.Apparently' the investment challenge is the most impor-

tant barrier faced by D&S% 6ower. Khile a 50 !K gasifier

plant costs 45'000 O' an eLivalent diesel generator capacity

costsCst -0'000 O. %n addition' the village co-operatives or

associ- ations have limited borrowing capacity and do not

have the reLired deposit or ban! garantees for availing

any debt finance. Similarly' in the absence of a ban!able

agreement with the co-operatives or the byers' the

company cannot finance its proCects. 9his constraint

appears to be having a significant effect on the bsiness

epansion of the company. %n addition' the technical

capacity to deliver plants and hman capacity to operate

and maintain them are also constrained.

1. #siness case of power generation fromhs!

9o analye the economic and financial viability of rice-hs!

based power spply bsiness' we present a set of cases

based on available information and realistic assmptions. 9he

proprietary natre of financial information of eisting com-

panies leaves some information gap. 3rther' some costs'

particlarly the capital cost of biomass gasifiers can vary

depending on the technology sorce' components sed and

the degree of environmental protection considered at theproCect site. 9he analysis presented here follows a scenario

approach where different plant sies' different levels of
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4J b i o m a s s a n d b i o e n e r g y B J 70 4 8 4 4 e5 4

sing only -B.5? of the capacity 7or BB? of the capacity

considering a B h cycle8. 9he second scenario allows for dif-

ferential hosehold demand based on consmer mi. %t is

assmed that >0? of the hoseholds se the basic level of

demand while the rest -0? se a moderate level of electricity

at =5 K per hosehold. %n addition' 10 commercial nits are

considered instead of 0 nits each sing B0 K. 9he demand

increases marginally bt a 0 !K plant still can service theload at =J? loading for a B h cycle. 9he third scenario

modifies the residential load slightly to ensre a -00?

loading of theplant.


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b i o m a s s a n d b i o e n e r g y B J 7 0 -4 8 4 4 e5 4 4>

g8 9he lower calorific vale of hs! on dry basis is ta!en as

-.B (/!g @1' 4 and the conversion efficiency of gasifier is

ta!en as 0?.

h8 9he cost of debt is ta!en at 5.5? y

while the rate ofretrn

on eLity is ta!en as -0? y

. 9he weighted average cost

of capital is sed to determine the discont rate.

i8 A straight-line depreciation is sed after allowing a 0?

salvage vale for the asset at the end of its life. Kheregrant capital is sed' it is assmed that the grant capital

redces the capital reLired for investment and the

depreciation charge is redced accordingly. Althogh the

grant capital can be treated differently in acconting

terms' the above provides a simple treatment of the

grant.

C8 %t is assmed that the company is not paying any ta

and hence the ta benefit arising from debt capital does

not apply here.

9he cost of electricity spply for different scenarios and

considering alternative debt-eLity combinations and grant

capital share is calclated. 9he levelised cost of electricityspply is sed as the indicator. 9he levelised cost is the real'

constant cost of spplying electricity that if recovered from

consmers over the lifetime of the plant wold meet all

costs associated with constrction' operation and

decommissioning of a generating plant. 9his generally

considers capital e- penditres' operating and maintenance

costs' fel costs' and any costs involved in dismantling and

decommissioning the plant. &Lation - provides the

mathematical relationship for

the levelised cost of electricity.

eeLity ratio is not worse than 50:50. %f it charges O per

month' the company needs at least 50? capital grant sb-

sidy to rn the bsiness' nless other sorces of income can

ma!e p for the loss. As other income tends to be limited in

natre' it becomes clear that providing access to poor

hoseholds with limited demand remains a vlnerable

bsiness.

%n scenario ' the levelised cost of spply redces to

0.4 O per !Kh for a capital sbsidy of -00? while the cost

varies between 0.14 O and 0.4 O per !Kh for no capital

sbsidy 7see 3ig. 18. Althogh better plant tiliation redces

the levelised cost of spply' the revene wold not

change if all residential consmers are charged at the same

rate. "onse- Lently' when different consmer categories

se different levels of electricity' a differential tariff is

reLired to recover the cost. A higher flat rate for the high-

end consmers con- stittes a simple soltion in this case'

which may end p in a lower average rate for this category

de to higher electricity consmption. 9he tariff per Katt

instead of watt-hors is ths a simple bt effective way of

passing higher charges to poorer consmers in disgise.

%n the third scenario where the capacity is flly tilied for

the B h period of spply' the levelised cost redces even

frther. 9his scenario' as epected' prodces the lowest cost

of spply 7see 3ig. 48 and the levelised cost with fll grant

fnding compares Lite well with the low rates reported by

26S. %t needs to be mentioned that this analysis sed a

higher capital investment cost compared to that reported

by 26S'

which ecldes the possibility of achieving the same ot-

6resent vale of Qcapital costG R( costG fel costS*"& T6resent worth eLivalent of electricity consmed

7-8Q S

3or scenario -' the reslt of the levelised cost analysis is

shown in 3ig. . As epected' the lowest levelised cost is ob-

tained when the entire capital reLirement comes from

grants and the cost for this scenario comes to =0 O (Kh

.

#t if no grant is received' the cost of spply that has to be

borne by the consmers varies between 400 O (Kh

to

4>0 O (Kh

depending on the share of debt and eLity. 9his

clearly shows that part load operation of the system is a

costly option despite the low capital cost per !K compared

to other technologies 7sch as solar 6V or wind8. "learly' both26S and D&S% 6ower have realied this and sed adeLate

hoseholds and/or micro-enterprises to ensre high plant

capacity tiliation.

2owever' the important isse is whether or not a flat rate

charge of O or .5 O per month per hosehold can recover

the epenses in scenario -. As the consmers se only

5.5 !Kh per month' their effective tariff varies between

0.1B O !Kh

and 0.4B Oper !Kh depending on O and .5 O

monthly charges' which is considerably higher than the

prevailing rate for grid-based electricity. 9herefore' as long

as the levelised cost of electricity spply is below the above

tariff' the bsiness becomes viable in this scenario. %f the

company charges .5 O per month' even withot sbsidy itcan operate the bsiness profitably as long as the debt

comes as 26S. 9he reslt of this scenario spports the claim

made by 26S that they are in an advantageos position

compared to other renewable technologies.


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50 b i o m a s s a n d b i o e n e r g y B J 70 4 8 4 4 e5 4

3ig. 1 e *evelised cost of spply for scenario . Eote: FS e grant share.

local and indigenos design of the plant and 8 the plant is

operated near fll loadby enlisting adeLate nmber of con-

smers' preferably with some demanding more than Cst the

basic level of spply 710 K per hosehold8. Althogh the cost

of spply remains higher than the prevailing grid-based

spply' the bsiness can be rn viably with a sitably

designed tariff system. 9he difference in the approach

between 26S and D&S% 6ower can be nderstood from this

analysis. 26S has ensred viability by enlisting adeLate

nmber of residential cstomers whereas D&S% 6ower

enlisted the spport of micro- enterprises. 9his avoids

reliance on a large nmber of very small consmers as the

bsiness or commercial load tends to be mch higher than

the basic level of residential demand. 2owever' the cost per

!Kh incident on the poor tends to be higher than thoseconsming more in the absence of any cross-sbsidy or

direct sbsidy. 9his tends to be tre in any electricity

system e more so in a privately owned and operated

system' bt mitigating measres are often sed throgh

direct social safety nets and/or sbsidied spply schemes.

2ence any spport for additional income generation will

srelybe beneficial.

1.. &lectricity access with rice mill as an anchor load

Fiven that the electricity plant in the previos case has idle

capacity otside the evening pea! hors' the power plant

cold consider adding new demand to improve its financial

viability. 9he rice mill offers sch a load: it may not have a

good Lality power spply and the cost of spply may be

mch higher than the rice-hs! based spply. 9his

alternative case is considered below.

"learly' the energy demand for a rice mill will depend on

its sie' processing activities involved' level of atomation'

operation time and sch factors. 3or the prpose of this

analysis' the following assmptions are made:

a8 9he rice mill capacity is chosen in sch a way that

adeLate hs! can be sorced from the mill to meet the

demand for electricity generation

b8 Small mills in a village or small town location tend to be

indigenosly made and tend to consme more energy. %t is

assmed that the electricity consmption reLirement per

ton of raw rice processed is 41 !Kh (g

@1A.

3ig. 4 e *evelised cost of electricity spply for scenario 1. Eote: FS e grant share.


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b i o m a s s a n d b i o e n e r g y B J 7 0 -4 8 4 4 e5 4 5

c8 ,ice mills in %ndia can be categoried into two broad

grops: small sied ones with less than - tonne per hor

processing capacity and bigger mills. Small mills

generally operate a single shift of Be=hors for abot 00

days 7i.e.

-00 h of annal operation8 while larger mills rn two

shifts 7between 400 and 1000 h of annal operation8. %n

this case' we assme a single shift operation for -00 h

per year.d8 2s! availability is estimated considering a hs! to paddy

7or raw rice8 ratio of 0..

e8 %t is assmed that the rice mill operates dring day time

when the residential demand is not serviced. 9his in

effect etends the hors of operation of the power plant.

&lectricity demand is nli!ely to be constant for the

entireperiod of operation. %t is li!ely that the evening load

may be higher than the day load. 3or the sa!e of

simplicity of financial analysis' an eLivalent plant

loading is sed that generates the total amont of

electricity reLired to meet the total demand.

f8 Scenario 1 from the previos section is sed for electricity

demand for non-mill prposes.g8 9he power plant operates two shifts of B h and instead of

4 employees ses B employees' each receiving a

monthly wage of -00 O. 9his is logical given that the

wor! for bill collector and the plant technician does not

increase pro-portionately with hors of plant operation.

9he rice mill has to be sch that it prodces enogh rice

hs!s in a year to meet the electricity needs of the mill and

the village commnity. Fiven that the electricity demand

corre- sponding to scenario 1 is 41.J (Kh' and considering

41 !Kh electricity reLired for processing one tonne of rice'

we find that a rice mill of 0.4 t h

capacity operating in a

single shift ofB h for 00 days in a year will prodce sfficient rice hs!.

9he rice mill will reLire 0.B4 (Kh of electricity and the

power plant needs to prodce at least B4.44 (Kh per year.

9he rice mill will process 4J0 tonnes of raw rice per year

and will prodce >B tonnes of hs!s per year. 9he power

plant will reLire approimately >1 tonnes of hs!s for its

operation'

which can be procred from the rice mill directly.

3ig. 5 presents the levelised cost of spply for the inte-

grated power spply operation to the rice mill and the village

commnity. As can be seen' the cost of spply redces

considerably in this case de to higher plant tiliation rate.

9he lower end prices with capital sbsidy will be Lite

attractive to most consmers. &ven otherwise' the cost of

spply redces significantly. 2ence' it ma!es economic sense

to etend the spply to the rice mills' particlarly when the

operation does not coincide with the pea! demand. 9his will

benefit the rice mill by redcing its dependence on grid elec-

tricity' and providing a reliable spply at a reasonable price.

4ther consmers also benefit from this integration as the

overall cost of spply redces.

Althogh rice mills can install power generating stations

for own se' sch installations may not Lalify for govern-

ment spport schemes for rral electricity spply. (oreover'

the s!ill reLirement is very different for operating a power

plant and electricity distribtion bsiness compared to

rnning a rice mill. %n organiational terms' it ma!es better

sense to have separate entities dealing with two separate

bsinesses bt lin!ed to each other throgh contracts for

fel spply and electricity spply. Sch contractalarrangements are important to ensre ris! sharing'

ban!ability of in- vestments and reliability of bsiness

operations. 9he captive power spply model sed by D&S%

6ower follows this eample.

4. Viability of a scaled-p electricity spplysystem

,ice is the staple food of -.= billion people in Soth Asia. ,ice

is cltivated on B0 million hectares of land in the region

and abot 5 million tonnes of rice are prodced

annally' contribting 1? of global raw rice prodction. 3ivemaCor rice prodcers in the region are %ndia' #angladesh'

6a!istan' Eepal and Sri *an!a. %ndia prodced abot -5J (t

of raw rice 7orpaddy8 in 0- @- and has a total rice milling

capacity of abot

00 (t per year @J. %n addition' #angladesh prodced

5- million tonnes ofpaddy in 0- while Sri *an!a' Eepal and

6a!istan prodced abot -= (t of paddy @.

3ig. 5 e *evelised cost of electricity spply for integrated operation. Eote: FS e grant share.
http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002http://dx.doi.org/10.1016/j.biombioe.2014.06.002


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9able e 6otential for serving large consmer bases.

(ill

ca acit

2s!

rodction

6otential

electricit

(ill

consm tion

&cess

electricit

Ember of basic

demand consmers7t h

8 7t y

8 otpt 7(Kh y

8 7(Kh y

8 7(Kh y

8 that canbe served

>B0 B= 0B.4 4B5.B =0J=

1 440 00J 10>.B B>J.4 0'B10

4 >0 144 4.J >1. 4'=4

5 400 BJ0 5B B4 ='==

B JJ0 0B B>. 4JB.J 'B10

J 1J40 BJJ J5.B JB.4 J'14=

0 4J00 11B0 01 1J 15'414

,ice milling ta!es place both at the hosehold level

7sing hand ponding or pedal operated systems8 and in rice

mills. Fenerally' a small amont of raw rice is processed

at the hosehold level' mostly for own consmption. 9he

processing of raw rice ta!es two forms: dry hlling which

tends to ac- cont for a small share of total paddy

processing and processing of parboiled rice. ,ice milling

in the region was a licensed activity for a long time that

reserved the activity to small and medim-scale indstries.9his reslted in the pro- liferation of small mills throghot

the region. 2owever' these mills tend to be inefficient and

prodce poor Lality otpt 7higher percentage of bro!en

rice8. (oreover' becase many of them fall nder the

norganied sector' there is no systematic information abot

the nmber' distribtion and sie of rice mills. 2owever' it is

generally believed that the mini mills canprocess 50e100!g

of paddy per hor' small mills have a capacity of - tonne

per hor whereas larger' modern mills have capacities

ranging from tonnes per hor to -0 tonnes per hor.

Smaller mills operate a single shift of B h while modern

mills operate shifts or even 1 shifts bt tend to have a sea-

sonal operation.Assming a -shift operation of modern rice mills for 00

days per year' and considering that abot 10? of the

electricity that can be prodced from the hs! can be sed

to meet the energy needs of the mill' a simple estimation is

made of potential ecess electricity and the potential

nmber of consmers that can be served to meet the basic

demand of 10 Kper

consmer for B h a day for every day of the year 7see 9able 8.%t

can be seen that thosands of consmers can be served by

sch power plants and a large clster of villages 7orbloc!s8

can be considered as the basic nit of electrification.

Alternatively' ecess electricity from the mills can also be

sold to the grid if mills are grid connected or can be sold to

a small nmber of local prodctive sers 7e.g. irrigation

pmps' flor mills' food storage' etc.8. Sch larger plants ths

open p the possibility of inclding prodctive applications of

electricity beyond rice mill se' which in trn can cataly5eeconomic activities at the village level. Althogh agricltre

is the main rral activity in Soth Asia' food processing and

other agro-based indstrial activities 7sch as storing and

warehosing8' play a limited role yet de to lac! of

infrastrctre and reliable electricity spply. Khile small-

scale generating plants can only provide limited spply to

hoseholds and small commercial consmers' larger plants

can act as an agent for rral development.

%n terms of cost of spply' two opposing forces are e-

pected to operate. n one hand' the nit cost of generating

plant 7O (K

8 is li!ely to redce as the sie increases. n

the other' the fel cost' distribtion cost and wages wold

increase. 9he fel cost increases proportionately withpower generation. 9he area to be served may increase

dispropor- tionately and the etension of low voltage lines

over long distances will increase distribtion losses and

affect power Lality. 9his will reLire a distribtion system

at -- !V or higher voltage level and accordingly' the cost

will increase. 3inally' the staff reLirement will increase in

proportion with

the area being serviced. #illing and collection cost can

3ig. B e *evelised cost of electricity spply for a 00 !K plant. Eote: FS e grant share.


11/12

b i o m a s s a n d b i o e n e r g y B J 7 0 -4 8 4 4 e5 4 51

increase rapidly. Accordingly' the accrate cost estimation is

rather difficlt in this case.

9o obtain a rogh idea abot the economic viability of a

larger plant' the following assmptions are retained:

a8 A rice mill of t h

is considered. 9his can feed an elec-

tricity plant of 00 !K.

b8 the capital reLirement per !K to be -000 O for a 00 !K

plantc8 5 staff will be employed for generation' distribtion and

spply management

d8 9he distribtion system is etended over a distance of

0 !m

e8 ther assmptions remain nchanged. %t is possible to

consider 4 h operation of the power plant bt in this

case' the available r ice hs! can spport a smaller

power plant capacity. (oreover' a hs!-based plant is

nli!ely to operate continosly for 4 h. %n this case' a

bac!-p will be reLired. 3or these reasons' a two-

shift operation is retained here.

9he levelised cost of electricity for no sbsidy case comesto ->0 O (Kh

. 9he cost redces frther with different

levels of sbsidy 7see 3ig. B8. 9he levelised cost in this case is

the lowest of all options considered in this stdy. "learly'

this shows that as long as sfficient nmber of willing con-

smers can be enlisted' and the power spply company can

manage to rn its village clster level operations' a bigger

bsiness can be profitably rn. Alternatively' the ecess

power can be sold to captive sers or to the grid at abrea!-

even price of ->0 O (Kh

to ma!e the ventre viable.

2owever' the tariff offered by the tility for by-bac! is not

as remnerative as this' which hinders financial viability of

sch power plants.

"learly' sch a scaling-p of the bsiness has its prosand cons. Abigger plant and larger area of operation may be

more attractive to investors willing to enter in the mini-grid

bsiness. Sch plants offer some economies of scale and

therefore can be a more efficient option economically. %t

may also be possible to ta!e advantage of carbon credits

either throgh the "D( programme or throgh other

volntary offset schemes. 9he byprodcts of electricity

prodction and the symbiotic relationship between the rice

mill' power plant and the local commnity can spport sch

systemspositively.


12/12


spply to mobile telephone towers8 to improve the financial

viability of the bsiness.

9he financial analysis of rice hs!-based power generation

shows that the levelised cost remains high compared to the

spply from the centralied grid when Cst the basic

demand 7of 10 K8 of hoseholds is met. 9his is de to low

plant tiliation factor bt the tariff based on Katts helps

generate the reLired revene to rn the system. As the

system tiliation improves either de to higher electricityconsmption by some or by integration of the spply

system to the rice mill' the levelised cost of spply redces.

2owever' the benefits of sch cost redction are

enCoyed by those who consme more when an inverted

bloc! tariff system is sed. 9he integration of rice millUs

electricity demand brings the costs down considerably de

to etended se of the facility dring off-pea! hors. Sch

integration can ensre an anchor load and can be beneficial

for the electricity spplier. 9he rice mill on the other hand

benefits from a reliable spply at a comparable price and

redces its cost arising ot of electricity disrption. Khile

the r ice mill can develop a power plant for its own

consmption' it is better to allow a specialied' separateentity to deal with the power generation bsiness and

develop contractal arrangements for fel and power

spply.

9he etension of the analysis to inclde larger power

plants for electricity distribtion to a clster of villages re-

slts in the cheapest cost of spply de to realiation of

economies of scale. 9he cost of spply in sch a case canbe

very competitive even withot any capital grants. 9his

sggests that it ma!es economic and financial sense for a

spply company to etend the bsiness to cover larger areas

as long as there are sfficient willing cstomers and

adeLate spply of rice hs!s from rice mills. 9his also can

promote economic activities in rral areas and promoteeconomic development rgently needed to redce rral

poverty.

rice husk electricity

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