Biomass Price Analysis Report_main Report

18th March 2011

Biomass Price Analysis Report

Dalkia Energy Services Ltd

Formerly DSCL Energy Services Co Ltd.

Ist Floor, 70, Great Eastern Center,

Nehru Place,

Submitted to:

Rajasthan Renewable Energy Corporation Ltd.,

E-166, Yudhisthir Marg, C-Scheme,

Jaipur-302005

Biomass Fuel Supply Study in the State of Rajasthan

Rajasthan Renewable Energy Corporation Ltd.

Client Name Rajasthan Renewable Energy Corporation Ltd. Document No. 5515

Project Name Biomass Fuel Supply Study in the State of Rajasthan Rev. 0

Prepared by: SSS Checked by: MS Approved by: AG Date: 11th Mar. 2011 Issue Version: 0 of 41

TABLE OF CONTENTS

1. INTRODUCTION ............................................................................................................. 6

2. EXECUTIVE SUMMARY .................................................................................................. 7

3. APPROACH & METHODOLOGY FOR THE FIELD STUDY .................................................... 8

4. FINDINGS .................................................................................................................... 11

4.1 Farmer survey ..................................................................................................................................... 11

4.1.1 Current prices ............................................................................................................................. 11

4.1.2 Price trend .................................................................................................................................. 15

4.2 Trader survey ...................................................................................................................................... 16

4.2.1 Current prices ............................................................................................................................. 16

4.2.2 Trader margin ............................................................................................................................. 18

4.3 Juliflora price survey ........................................................................................................................... 21

4.3.1 Current prices ............................................................................................................................. 21

4.3.2 Price trend-Juliflora .................................................................................................................... 23

4.4 Seasonal variation in prices-power plants ........................................................................................... 24

4.5 Competitive prices paid by different users .......................................................................................... 28

4.5.1 Power plants ............................................................................................................................... 28

4.5.2 Brick kilns .................................................................................................................................... 32

4.5.3 Briquetting units ......................................................................................................................... 34

4.5.4 Overall comparasion................................................................................................................... 35

4.6 Comparative analysis with coal/lignite ............................................................................................... 36

5. BIOMASS POLICY REVIEW ............................................................................................ 39





6. RECOMMENDATIONS .................................................................................................. 40

6.1 Price trend .......................................................................................................................................... 40

6.2 Projected price .................................................................................................................................... 40

6.3 Recommendations on transparent mechanism for biomass price linkage ........................................... 41





LIST OF TABLES

Table 1: District farmer biomass price survey ..................................................................................................... 11

Table 2: Biomass prices-districts having power plants ......................................................................................... 14

Table 3: Farmer average biomass selling price in last five years .......................................................................... 15

Table 4: District trader biomass price survey ....................................................................................................... 16

Table 5: Trade margin ........................................................................................................................................... 18

Table 6: Juliflora costing ....................................................................................................................................... 21

Table 7: Trend analysis of landed cost of Juliflora ................................................................................................ 23

Table 8: Average landed cost at factory gate for various months in FY 2010-11 (Rs/MT) ................................... 24

Table 9: % biomass procured in season ................................................................................................................ 27

Table 10: Trend of landed cost of biomass at factory gate .................................................................................. 28

Table 11: Average fuel procurement cost paid by power plants for last three years .......................................... 30

Table 12: District Brick kiln .................................................................................................................................. 32

Table 13: District briquetting units ....................................................................................................................... 34

Table 14: Biomass comparative prices ................................................................................................................. 35

Table 15: Biomass comparison with coal .............................................................................................................. 36

Table 16: Biomass comparison with lignite .......................................................................................................... 37





LIST OF FIGURES

Figure 1: Map-operating biomass power plants in Rajasthan ................................................................................ 8

Figure 2: Field survey ............................................................................................................................................ 10

Figure 3: District farmer Biomass price survey ..................................................................................................... 13

Figure 4: Farmer average biomass selling price in last five years ......................................................................... 16

Figure 5: District trader biomass price survey ...................................................................................................... 18

Figure 6: Trade margin.......................................................................................................................................... 20

Figure 7: Trend analysis of landed cost of Juli flora .............................................................................................. 23

Figure 8: Trend of landed cost of biomass at factory gate for various months in FY 2010-11 ............................. 26

Figure 9: Trend of landed cost of biomass at factory gate ................................................................................... 29

Figure 10: Average fuel procurement cost paid by power plants for last three years ......................................... 31

Figure 11: Biomass comparison with coal ............................................................................................................ 36

Figure 12: Biomass comparison with lignite ......................................................................................................... 37





1. INTRODUCTION

In the order dated 11th Oct., 2010, Rajasthan Electricity Regulatory Commission (RERC) had

nominated Rajasthan Renewable Energy Corporation Ltd., nodal agency for the promotion of

renewable energy in the state, to get the prices and the price trend of main biomass fuel in the state

studied/surveyed, particularly in respect of mustard crop waste and Juliflora biomass. In response to

the mentioned order, Rajasthan Renewable Energy Corporation Limited had invited proposal from

Consultants for carrying out ‘’Biomass Fuel Supply Studies in the State’. The basic TOR of the study

was as following:

i. District wise estimates of surplus biomass that is available for energy production on

a long term sustainable basis.

ii. Biomass price and price trend

iii. Average calorific value of fuel and loss during storage.

Dalkia Energy Services Ltd. (DESL) was awarded the contract for carrying out the study. During the

inception phase, DESL has also performed a comparative assessment of biomass price with coal E

Auction-price and Lignite Price (which is available from Rajasthan State Mines & Minerals Ltd.) in

order to rationalize the biomass price.

It was also decided that the entire assessment work be carried out in two phases-the 1st one on

‘Biomass Price Analysis’ and the 2nd one on availability, average calorific value and losses during

storage.

This present report is being submitted covering the findings from the 1st phase of assessment work

on price and price trend and comparative assessment of biomass prices with E-Auction coal price

and lignite price. The report has been structured as follows:

i. Executive summary-Covering the snapshot summary of the findings

ii. Approach and methodology

iii. Analysis-Detailing the findings

iv. Recommendations report on prices of biomass for power generation.





2. EXECUTIVE SUMMARY

DESL has carried out this study by carrying out extensive field survey covering the districts having

biomass power plants.

The 1st part of the report on biomass price scenario, analysis and conclusions on prevailing and

projected prices of biomass for the power plant is prepared and presented herewith.

During the field survey, farmers, traders, operating power plants, forest department, agriculture

department, other Govt. agencies, brick kilns and other industries were visited in different districts

and requisite details were collected. The summarized findings are as following:

The present average prices of biomass of all the power plants have been assessed at Rs.

2077/T average. However, this price seems to be as a result of some market distortion, likely

reason being draught of last year and panic buying by the power plants.

The projected price has been worked out based on competitive scenario analysis and

projected as follows:

o Based on farmers price and efficient logistics management-Rs 1896/T

o Based on coal and lignite (Competitive user end)-Rs 2469/T

o Based on Juliflora (Developmental alternative)-Rs 2135/T

It is therefore, recommended that for the year 2011-12 the price of Rs 1896/T may be considered

and for the next year Rs. 2146/T based on the price trend at the farmer’s end (refer Figure 4) &

trader’s margin (Table 5) and also benchmarking against Juliflora price of Rs. 2135/T.

In the longer term, Juliflora would be the benchmark against which prices would prevail. The policy

announced by the State on use of Juliflora in the power plant should therefore, be vigorously

implemented to ensure sustainable operation of biomass based power plants in the State.





3. APPROACH & METHODOLOGY FOR THE FIELD STUDY

In order to assess the price and price trend, DESL has visited Govt. Offices, Agriculture Department,

Forest Department, Farmers, Traders, operating Biomass Power plants, Brick Kilns, & other

industries in different districts in the state of Rajasthan.

Figure 1: Map-operating biomass power plants in Rajasthan1

The methodology for the study includes the field survey and secondary data available from various

sources including Government departments and DESL database.

1 Note: 15.0 MW Captive Power Plant at Birla Corporation Limited at Chanderia, Chittaurgarh District is registered under Biomass Policy.

However, power is not using biomass as fuel.





The following information was collected in the field study:

By interacting with farmers in various districts, the information about the crops being

grown and field end prices of biomass was gathered.

The survey team interacted with traders in various districts to revalidate the data on

prices quoted by farmers. Traders also provided the information about export/import of

biomass in the area.

Forest department was visited to know the royalty charges being paid to Forest

Department for uprooting of Juliflora. The central farms under the agriculture

department were also visited to know about auction price of Juliflora.

The operating power plants were visited to gather information on fuel purchase sources,

purchase prices, fuel logistics, proof of purchase at different periods over the year for

the past three years.

The local brick kilns and other industries in various districts were visited to know about

the biomass being used by the industry for power and steam generation. This also

helped in further validating biomass purchase price.

Other Govt. agencies such as Rajasthan State Mines & Minerals Limited were visited to

know the price of lignite and central farms under the Agriculture department were

visited to know the auction price of Juliflora.

The detailed survey data and statistical information have been provided in the attached

annexure (I-IX)

The methodology adopted for field survey is illustrated in the Figure 2.





Figure 2: Field Survey

Field end prices.

Previous year biomass assessment study Farmer

Trader Field end purchase price

Export/import & sale price

Field

Survey

Quantum of purchase

Source of purchase & purchase price

Power Plant

Brick Kiln & other

Industries

Quantum of purchase

Periodicity of purchase

Price at purchase-weighment slips, invoices

Juliflora pricing

Forest Department

Other Govt. Agencies

Price of lignite at source

Coal e-auction price from Coal India magazine-‘Coal Insights’

RREC Biomass policy

Auction price of Juliflora from Central Farms under agriculture

department





4. FINDINGS

4.1 FARMER SURVEY

4.1.1 CURRENT PRICES

The biomass prices prevalent during the survey period (Dec-Feb, 2010-2011) show wide variations between

district to district (Table-1). During the survey, most of the farmers indicated that bulk of the residue is sold

during the seasonal period. About 30% of the produce is stored at farmers end for selling at higher prices

during off-season. In determining average price therefore, we have computed on the following basis:

70% sold at lower price

30% sold at higher price

This is also in line with observations from the analysis of purchase data from the power plants-about 72%

purchase by power plants is being done during seasonal period. (Cross reference from power plant analysis

in Table 9).

Table 1: District farmer biomass price survey 2

Sr. No. Districts Farmer Biomass Selling Price

/Field Price (Rs/MT)

Mustard Husk

Minimum Maximum Average

1 Kota 1300 1400 1330

2 Alwar 1400 1800 1520

3 Jaipur 1900 2100 1960

4 Baran 800 1100 890

5 Barmer 800 900 830

6 Bharatpur 800 1000 860

2 Source: Farmer Survey -Annexure I





Sr. No. Districts Farmer Biomass Selling Price

/Field Price (Rs/MT)

Mustard Husk

7 Bikaner 1500 1800 1590

8 Churu 1100 1350 1175

9 Jhunjhunu 1600 1900 1690

10 Bundi 1100 1300 1160

11 Dausa 1600 1800 1660

12 Dhaulpur 1200 1500 1290

13 Ganganagar 1600 1800 1660

14 Hanumangarh 1600 1800 1660

15 Jaisalmer 900 1000 930

16 Jalore 1800 2000 1860

17 Jhalawar 700 1000 790

18 Jodhpur 900 1000 930

19 Karauli 1000 1400 1120

20 Ajmer 1500 1700 1560

21 Nagaur 1500 1700 1560

22 Pali 1500 1800 1590

23 S. Madhopur 1500 1700 1560

24 Sikar 1500 2000 1650

25 Sirohi 1800 2100 1890

26 Tonk 1300 1400 1330

Average 1315 1552 1386





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Jaip

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Avg. Farmer Biomass Selling Price /Field Price (Rs/MT)

Farmer Biomass Selling Price /Field Price (Rs/MT)

Figure 3: District farmer biomass price survey

From the Farmer Survey, following conclusions are drawn:

The farmer selling price is varying from Rs. 700/MT to Rs. 2100/MT and the average district price is

coming out to be Rs. 1386/MT.

Districts Jaipur, Sirohi, Jalore have high farmer selling price due to high demand in that area. One of

the important reasons is that all these districts have operating biomass based power plants

(Figure1).

Amongst the districts, which have lower prices:

o Bharatpur because of low local demand (No power plant) and abundant availability.

o Barmer and Jhalawar districts have neither power plant (refer Figure 1) nor other

competitive industries like brick kiln (refer Annexure III).

Other districts can be considered representing the average scenario

In case of the districts, which have power plants (operating or about to be commissioned), the

average price is higher by about Rs 300/T as would be seen from Table 2.





Table 2: Biomass prices-districts having power plants

Sr. No.

Districts

Farmer Biomass Selling Price /Field Price (Rs/MT)

Mustard Husk


1 Kota 1300 1400 1330

2 Jaipur 1900 2100 1960

3 Ganganagar 1600 1800 1660

4 Hanumangarh 1600 1800 1660

5 Jalore 1800 2000 1860

6 Nagaur 1500 1700 1560

7 Sirohi 1800 2100 1890

8 Tonk 1300 1400 1330

Average

1656.25





4.1.2 PRICE TREND

DESL has been carrying out biomass fuel assessment study for development of power plants all over the

country including the State of Rajasthan since for more than 5 years. With a view to determine the price

trend, DESL data base available for the districts as under has been used as shown in the following table.

Table 3: Farmer average biomass selling price in last five years3

Sr. No.

Districts

FY

2006-07

2007-08

2008-09

2009-10

2010-11


1 Alwar 652

1400 1800

1520

2 Bharatpur 750

800 1000

860

3 Churu

800

1100 1350 1175

4 Jhunjhunu

900

1600 1900 1690

5 Ganganagar 770

1100

1600 1800

1660

6 Hanumangarh

900

1600 1800 1660

7 Tonk 650

1059

1300 1400

1330

Average price at different ends

705 850 1019 1200 1343 1579 1414

Biomass price increase as a percentage over last year

20 20 18 18

3 Source: DESL Data base- Annexure VI





Figure 4: Farmer average biomass selling price in last five years

The biomass prices at farmers end have been increasing almost at a constant rate from FY 2006-07

to FY 2010-11. In the current year also, the price increase has been at 18% compared to previous

year.

From the Figure3, prices at farmers’ end are projected at Rs. 1650/MT and Rs. 1900/MT for the

years 2011 and 2012 respectively.

4.2 TRADER SURVEY


For each district, we have interviewed number of traders and gathered information on biomass being

traded, export/import of biomass, the minimum and maximum biomass selling price etc. The

summary of biomass price at traders’ end is shown in the table below.

Table 4: District trader biomass price survey4

Sr. No. Districts

Traders Selling Rate

(Rs/MT)


1 Kota 1600 1700 1630

4 Source: Trader survey Annexure- II

706850

1020

1200

1414

0100200300400500600700800900

10001100120013001400150016001700180019002000

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Rs/

MT

FY

1900

1650





Sr. No. Districts Traders Selling Rate

(Rs/MT)


2 Alwar 1800 2050 1875

3 Jaipur 2600 2750 2645

4 Baran 1200 1500 1290

5 Barmer - - -

6 Bharatpur 1300 1500 1360

7 Bikaner 1800 2100 1890

8 Churu 1700 2000 1850

9 Jhunjhunu 1900 2100 1960

10 Bundi 1600 1750 1645

11 Dausa 1800 2000 1860

12 Dhaulpur 1900 2100 1960

13 Ganganagar 2000 2300 2090

14 Hanumangarh 2000 2300 2090

15 Jaisalmer - - -

16 Jalore 2100 2300 2160

17 Jhalawar 900 1200 990

18 Jodhpur 1200 1400 1260

19 Karauli 1500 2000 1650

20 Ajmer 1800 2000 1860

21 Nagaur 1900 2100 1960

22 Pali 1900 2150 1975

23 S. Madhopur 1800 1900 1830

24 Sikar 1900 2100 1960

25 Sirohi 2100 2200 2130

26 Tonk 1800 2000 1860

Average 1754 1979 1823





Figure 5: District trader biomass price survey

On average basis, trader is selling the biomass between Rs. 1754/MT to Rs. 1979/MT and the overall

average selling price at trader end is around Rs. 1823/MT. The detailed list of traders with biomasses

being traded, biomass prices who have been interviewed in various districts is attached as Annexure II.

4.2.2 TRADER MARGIN

Trader’s margin has also been analyzed as shown in the table below.

Table 5: Trade margin5

Sr. No. Districts

Trade Margin(Rs/MT)

1 Kota 300

2 Alwar 355

3 Jaipur 685

5 Source: District Farmer Price Survey & District Trader Price Survey- Annexure I & Annexure II

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Average Trader Sale Price (Rs/MT)

Average Trader Sale Price (Rs/MT)





Sr. No. Districts

Trade Margin(Rs/MT)

4 Baran 400

5 Barmer -

6 Bharatpur 500

7 Bikaner 300

8 Churu 675

9 Jhunjhunu 270

10 Bundi 485

11 Dausa 200

12 Dhaulpur 670

13 Ganganagar 430

14 Hanumangarh 430

15 Jaisalmer -

16 Jalore 300

17 Jhalawar 200

18 Jodhpur 330

19 Karauli 530

20 Ajmer 300

21 Nagaur 400

22 Pali 385

23 S. Madhopur 270

24 Sikar 310

25 Sirohi 240

26 Tonk 530

Average 346





Figure 6: Trade margin

Trader’s margin also includes the transportation, loading and unloading of the biomass.

Average traders margin including handling and transportation cost about Rs 346/T.

Considering the average transportation cost of about Rs 100-150/T, as has been seen from the cost

data from power plants, trader’s margin is about Rs 200/T which includes both cost of storage and

handling losses.

The trade profit has accordingly been estimated at about Rs 100/T.

Thus, it can be concluded that price rise is mostly on account of increase at the farmers’ end and

trade including import and export do not have significant impact on the prices.

0

100

200

300

400

500

600

700

800

Trade Margin(Rs/MT)

Trade Margin(Rs/MT)





4.3 JULIFLORA PRICE SURVEY


In the state of Rajasthan, Juliflora is available to the power plant from three different sources namely

Auction by central farms under the department of Agriculture

By State Forest department

Directly from traders and farmers

The cost of procurement from these different sources for FY 2010-11 has been computed as shown in the

following table. Detail information on auction price by Central Farms under Agriculture Department,

Royalty Charges being paid to Forest Department and purchase price of Juliflora from farmers/traders has

been provided at Annexure-VIII.

Table 6: Juliflora costing6

Work Description

Auction by Central Farms under Agriculture

Department

State Forest Department Direct from

Traders/ Farmers

Rs / MT Rs / MT Rs/ MT

State Average Forest Deptt. Royalty Charges/ Basic Cost

1250 730 1900

Cutting cost through contractor included in above 300 included in above

Transportation cost from forest (average transportation distance of around 75 KM is considered)

600 600 included in above

Loading & Unloading Cost 140 140 included in above

6 Source: Agriculture department, Forest department, power plant- Annexure VIII.





Work Description

Auction by Central Farms under Agriculture

Department

State Forest Department Direct from

Traders/ Farmers

Rs / MT Rs / MT Rs/ MT

Chipping Cost in the Plant 225 225 225

Sub-Total 2215 1995 2125

Average Moisture Loss considered for Price Calculation (Moisture Level in landed Juliflora is 15 -- 20 % and inherent moisture level is around 8%)

10% 10% 10%

Total cost of chipped Juliflora at plant considering moisture loss

2377 2135 2338

It is clear from the table above that:

The cost of Juliflora varies, lowest at Rs 2135/T when purchased from State forest department and

highest at Rs 2377 when purchased from central farm under agricultural department





4.3.2 PRICE TREND-JULIFLORA

DESL has analyzed the price trend of Juliflora for last 3 years. The percentage increase in landed cost over

previous year in FY2009-10 and FY2010-11 is around 10.56% and 19.45% respectively. This trend is also in

line with average increase of 18% in prices at farmers end observed for other biomasses.

Table 7: Trend analysis of landed cost of Juliflora7

Year Landed Cost of Juliflora at factory Gate

from Central Farms by Agriculture % Increase in Landed Cost over

Previous Year (%)

2008-09 1800 -

2009-10 1990 10.56%

2010-11 2377 19.45%

Figure 7: Trend analysis of landed cost of Juliflora

7 Source: Central Farms under Agriculture Department- Annexure VIII

1800

1990

2377

1500

1600

1700

1800

1900

2000

2100

2200

2300

2400

2500

2008-09 2009-10 2010-11

Rs.

/MT

Trend of Landed Cost of Juliflora





4.4 SEASONAL VARIATION IN PRICES-POWER PLANTS

The seasonal price variation has been determined by collecting purchase data from the power plants as shown in the following Table. The detailed working

of monthly average landed cost is provided in Annexure IV.

Table 8: Average landed cost at factory gate for various months in FY 2010-11 (Rs/MT) 8

Months in FY 2010-11

Average Landed Cost at Factory Gate for various Months in FY 2010-11 (Rs./MT)

S M Env. Tech. Pvt. Ltd.

Surya Chambal

Power Ltd.

Kalpataru Power

Transmission Ltd. (Uniara)

Kalpataru Power Transmission Ltd. (Sri Ganganagar)

Sambhav Energy Ltd.

Sathyam Power

Pvt. Ltd.

Transtech Green Power

Pvt. Ltd.

Amrit Env. Tech. Pvt. Ltd.

Apr 1348 1505 1498 2389 2462 1851 2086 2415

May 1346 1591 1790 2187 2336 2148 2361 2416

Jun 1350

1968 2024 2326

2375 2290

Jul

1957 1869 2488

2321 2405

Aug 1599

1843 2497

2311 2462

Sep

1779 2207

2334 3050

Oct 1151 1962 1889 1636 2316

2634 2881

8 Source: Power Plant Survey - Annexure IV





Months in FY 2010-11

Average Landed Cost at Factory Gate for various Months in FY 2010-11 (Rs./MT)

S M Env. Tech. Pvt. Ltd.

Surya Chambal

Power Ltd.

Kalpataru Power

Transmission Ltd. (Uniara)

Kalpataru Power Transmission Ltd. (Sri Ganganagar)

Sambhav Energy Ltd.

Sathyam Power

Pvt. Ltd.

Transtech Green Power

Pvt. Ltd.

Amrit Env. Tech. Pvt. Ltd.

Nov

2226 2121 1133 2351

2773 2175

Dec

1852 1934 1033 2396

2690 2706

Jan

1800

1300

2860

Feb

2263

Mar

2473





Figure 8: Trend of landed cost of biomass at factory gate for various months in FY 2010-11

0

500

1000

1500

2000

2500

3000

3500

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Rs.

/MT

S M Env. Tech. Pvt. Ltd. Surya Chamcal Power Ltd.Kalpataru Power Transmission Ltd. (Uniara) Kalpataru Power Transmission Ltd. (Sri Ganganagar)Sambhav Energy Ltd. Sathyam Power Pvt. Ltd.Transtech Green Power Pvt. Ltd. Amrit Env. Tech. Pvt. Ltd.





Table 9: % biomass procured in season

Power Plant Name % Biomass Procured in

Season

S M Env. Tech. Pvt. Ltd., Dist. Baran 68.46%

Surya Chambal Power Ltd., Dist. Kota 86.61%

Kalpataru Power Transmission Ltd. , District Tonk 97.40%

Kalpataru Power Transmission Ltd. , District Sri Ganganagar 83.60%

Amrit Env. Tech. Pvt. Ltd., District Jaipur 26.87%

Overall Average 72.59%

From the pattern, it would be seen that the price behavior does not show any secular trend. The key

observations are as follows:

The prices are lowest in the period April to June (harvesting period for mustard) for all the plants

depending upon mustard residue as main fuel.

However, for Kalpataru Power Transmission Ltd., District Sri Ganganagar, the price behaviors is

different as this plant also uses cotton sticks in a significant quantity and harvesting time for the

same is November and December.

The % of biomass procured during season is 72%.





4.5 COMPETITIVE PRICES PAID BY DIFFERENT USERS

The major competitive users of biomass are power plants, brick kilns and briquetting units and other

industries. The price paid by different users is given in the sections below.

4.5.1 POWER PLANTS

The working of weighted average landed cost of fuel at factory gate for FY 2008-09, FY 2009-10 & FY

2010-11 for various power plants is provided in Annexure IV.

Table 10: Trend of landed cost of biomass at factory gate9

Trend of landed Cost of Biomass at Factory Gate of Various Power Plants

Sr. No. Power Plant

Weighted Average Fuel Procurement Cost at

Factory Gate in FY 2008-09 (Rs./MT)

Weighted Average Fuel Procurement

Cost at Factory Gate in FY 2009-10

(Rs./MT)

Weighted Average Fuel Procurement

Cost at Factory Gate in FY 2010-

11 (Rs./MT)

1 S.M Environmental Technologies Pvt. Ltd.

500 1123 1426

2 Surya Chambal Power Ltd. 1255 1406 1902

3 Kalpataru Power Transmission Ltd. (Uniara)

1159 1194 1850

4 Kalpataru Power Transmission Ltd. (Ganganagar)

1283 1346 2132

5 Sambhav Energy Ltd.

2282 2358

6 Sathyam Power Pvt. Ltd.

1683 1944

7 Transtech Green Power Pvt. Ltd.

1927 2373

8 Amrit Environmental Technologies Pvt. Ltd.

2032 2169 2629

Overall Plant Average 1246 1641 2077

9 Source: Data collected from various power plants-Annexure IV





Figure 9: Trend of landed cost of biomass at factory gate

1246 1246 1246 1246 1246 1246 1246 1246

1641 1641 1641 1641 1641 1641 1641 1641

2077 2077 2077 2077 2077 2077 2077 2077

0

500

1000

1500

2000

2500

3000

S.M Envirnomental

Technologies Pvt. Ltd.

Surya Chambal Power Ltd.

Kalpataru Power Transmission Ltd.

(Uniara)

Kalpataru Power Transmission Ltd.

(Ganganagar)

Sambhav Energy Ltd.

Sathyam Power Pvt. Ltd.

Transtech Green Power Pvt. Ltd.

Amrit Environmental

Technologies Pvt. Ltd.

Rs.

/MT

Weighted Average Fuel Procurement Cost at Factory Gate in FY 2008-09 (Rs./MT)



Average Fuel Procurement Cost for all power plants in FY 2008-09 (Rs./MT)







From the above it is clear that:

The average cost at factory gate has increased from Rs1246/MT in 2008-09 to Rs.2077/MT in

2010-11 showing an unusually high increase of over 60% in three years.

The weighted average cost of fuel at factory gate for FY2010-11 is the highest for Amrit

Environmental Technologies Pvt. Ltd., District Jaipur as the demand for the biomass is very

high in district Jaipur because of high demand from many industries including Brick kilns &

briquetting units (refer Section 4.5.2 Brick Kiln & 4.5.3 Briquetting Units).

The lowest weighted average cost of fuel at factory gate for FY2010-11 is for S.M

Environmental Technologies Pvt. Ltd., District Baran as the plant has not yet started full

operation due to technical problems. Further, general demand in the district is also low

(very few brick kilns).

Table 11: Average fuel procurement cost paid by power plants for last three years

Average Fuel Procurement Cost for all power plants in FY

2008-09 (Rs./MT)

Average Fuel Procurement Cost for all power plants in FY

2009-10 (Rs./MT)


1246 1641 2077

% Change with respect to Previous Year

31.74% 26.53%





Figure 10: Average fuel procurement cost paid by power plants for last three years

1246

1641

2077

0100200300400500600700800900

100011001200130014001500160017001800190020002100220023002400250026002700280029003000310032003300

Ave

rage

Fu

el

Pro

cure

men

t C

ost

fo

r al

l po

wer

p

lan

ts in

FY

20

08

-0

9 (

Rs.

/MT)

Ave

rage

Fu

el

Pro

cure

men

t C

ost

fo

r al

l po

wer

p

lan

ts in

FY

20

09

-1

0 (

Rs.

/MT)

Ave

rage

Fu

el

Pro

cure

men

t C

ost

fo

r al

l po

wer

p

lan

ts in

FY

20

10

-1

1 (

Rs.

/MT)

Rs.

/MT

Trend Line of Average Landed Cost at factory Gate

3050

2550





In case the trend remains the same, the prices can rise to Rs. 2550/MT in the current year

and Rs 3050/MT next year.

However, with introduction of Juliflora policy, the price ceiling is likely get controlled against

the benchmark cost of the same as delivered to the factory gate.

4.5.2 BRICK KILNS

DESL team has visited the brick kilns in various districts to understand the biomass consumption by

brick kilns, purchase price of biomass etc. The summary of biomass purchase price at brick kilns’ end

is summarized in the table below. The detail list of brick kiln visited is attached as an annexure III.

Table 12: District Brick kiln 10

Sr. No.

Districts

Brick Kilns (Rs/MT)

Mustard Husk

Minimum Maximum

1 Kota 2000 3000

2 Alwar 2350 3200

3 Jaipur 2250 3000

4 Bharatpur 1800 2500

5 Bikaner 2200 2300

6 Churu 1800 2300

7 Jhunjhunu 2200 2400

10 Source: District Brick Kiln Price Survey- Annexure III





Sr. No.

Districts

Brick Kilns (Rs/MT)

Mustard Husk

8 Bundi 1500 2000

9 Dausa 2100 2600

10 Dhaulpur 1800 2200

11 Ganganagar 2100 2200

12 Hanumangarh 2100 2200

13 Karauli 1800 2000

14 Ajmer 2000 2100

15 Nagaur 2000 2100

16 Pali 2100 2300

17 S. Madhopur 1500 2100

18 Sikar 2350 2600

Average 1997 2394





4.5.3 BRIQUETTING UNITS

DESL team has visited the briquetting units in various districts to understand the briquetting sale

price and purchase price of biomass.

From the table below, it is clear that for biomass briquetting units, biomass purchase rate of biomass

is varying between Rs. 1400/MT to Rs. 2300/MT and sale price of briquettes is varying between Rs.

2530/MT to Rs. 3565/MT.

Table 13: District briquetting units11

Sr. No.

Districts

Briquetting Units (Rs/MT)

Purchase Sale

Minimum Maximum Minimum Maximum

1 Kota 1400 1800 2530 2990

2 Alwar 1800 2000 2990 3220

3 Jaipur 2000 2300 3220 3565

4 Bikaner 1800 2000 2990 3220

5 Bundi 1600 1800 2760 2990

6 Ganganagar 2000 2300 3220 3565

7 Hanumangarh 2000 2300 3220 3565

8 Tonk 1700 1900 2875 3105

Average price at different ends

1788 2050 2976 3278

11 Source: District Briquetting Unit Price Survey- Annexure III





4.5.4 OVERALL COMPARASION

Table 14: Biomass comparative prices

Comparative-Biomass prices/landed cost-Rs/Mt

2008-2009 2009-2010 2010-2011 Power Plant over others

Farmers sale price 1020 1200 1414 663

Traders sale price

1823 254

Juliflora landed at factory gate 1800 1990 2377 -300

Power plant landed cost 1246 1341 2077 0

Brick kilns- landed cost

2344 -267

Briquette plant- landed cost

1911 166

Mark up from farmer to Power Plant 226 141 663

Some of the critical observations are:

The marginal cost at factory gate over farmer’s price has shown a sharp increase of Rs

663/MT against earlier high of Rs 226/MT and trade margin over farmers price of about Rs

400/MT. This is indicative of some inefficiency and may be distressed purchase by power

plants.

By controlled purchase and sound management, it should be possible to contain this margin

up to Rs 400/T.





4.6 COMPARATIVE ANALYSIS WITH COAL/LIGNITE

From the analysis and findings so far, it has been established that the brick kilns are providing the

maximum competition. The alternate fuel for such kilns can be coal or lignite. Therefore,

comparative analysis has been carried out against the same for determining the likely relationship of

biomass prices with coal/lignite.

Table 15: Biomass comparison with coal12

Year

Coal Biomass Biomass

price (% of

coal price)

Average price Average

calorific value Cost/Heat Average price

Average

calorific value

Heat

value

Rs/MT Kcal/Kg Rs/Mcal Rs/MT Kcal/Kg Rs/Mcal

2009 3511 4095 0.86 1641 3297 0.50 58%

2010 3865 4095 0.94 2077 3297 0.63 67%

Figure 11: Biomass comparison with coal

Similar analysis against the lignite price was also carried out.

12 Source: Coal Insights by Coal India Ltd.-Annexure VII

0.86

0.94

0.50

0.6358%

67%

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

2009 2010

Rs/

Mca

l

FY

Coal Biomass Biomass price (% of coal price)





The competitive analysis of biomass with lignite is given below:

Table 16: Biomass comparison with Lignite13

Year

Lignite Biomass

Biomass price (% of lignite price)

Average price

Average calorific value Heat value

Average price

Average calorific value

Heat value

Rs/MT Kcal/Kg Rs/Mcal Rs/MT Kcal/Kg Rs/Mcal

2008 2456 3000 0.82 1246 3297 0.38 46%

2009 2539 3000 0.85 1641 3297 0.50 59%

2010 2761 3000 0.92 2077 3297 0.63 68%

Figure 12: Biomass comparison with lignite

The price linkage on heat value has increased from about 50% to over 60%. In the current year, this

percentage has increased to about 67%. As already indicated, in the current year the rise in prices of

13 Source: Rajasthan State Mines and Minerals Ltd.-Annexure-VII

0.82 0.850.92

0.38

0.50

0.63

46%

59%

68%

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

2008 2009 2010

Rs/

Mca

l

FYLignite Biomass

Biomass price (% of lignite price) Poly. (Lignite)

Poly. (Biomass price (% of lignite price))





biomass has been abnormally high. This is likely to get contained by more efficient purchases and

availability of Juliflora alternative.

On that basis, the prices of biomass is projected at Rs 2469/T.





5. BIOMASS POLICY REVIEW

Rajasthan is one of the few states in India to have a well defined policy for promoting the generation

of electricity from biomass. The salient features of the biomass policy issued by GoR in February

2010 and RERC’s order which helps in achieving sustainability of biomass based power plants are

being summarized below.

The policy has defined the catchment area depending upon the generation capacity of the

power plant in order to ensure biomass availability to the power plant and stabilization of

the prices over a period of time.

In order to facilitate faster project development and execution, mechanism of single

window clearance has been provided.

To maintain the PLF during the lean period, the policy is having the provision for 15%

utilization of fossil fuel by biomass based power plants during the lean period in some years

as per RERC order dated 17th August, 2009.

The biomass policy is being upgraded on regular basis depending upon feedback/suggestions

of the operating biomass based power plants.

The policy is having the provision for long term PPA which is required to achieve financial

attractiveness of the project and resulting in early financial closure of the project.

From long term reliability and promoting the low water consumption technology, policy is

having the preferential tariff provision for air cooled condenser based power plants as per

RERC orders dated 9th March 2007, 17th August, 2009 and 31st March, 2010.

In order to achieve long term fuel availability and to achieve biomass price stabilization, the

policy is also promoting the development of energy plantation (Juliflora) on Govt.

waste/barren/saline lands, Panchayat waste/barren/saline lands, degraded forest land and

private Khatidari land. The development of Juliflora plantation will not only spur the rural

economy by creating employment opportunities but also will have governing effect on

biomass prices in the long term.

Current lower price of Juliflora is Rs 2135/T when procured directly from the forest. Taking

advantage of this policy, the power plant should be able to get fuel at the same or lower

price.





Further, the price of biomass produced from Juliflora/other plantation shall be determined

on the basis of fuel cost prescribed by the RERC.

6. RECOMMENDATIONS

6.1 PRICE TREND

The current prices of biomass at the factory gate for the different power plants have been

assessed at:

Lowest average of Rs 1850/T (Excluding S M Baran ignored as the plant is not operating

due to technical reason) for Kalpataru Power Transmission at Uniara

Highest of Rs 2629/T for Amrit Environmental at Kotputli

Average of Rs 2077/T for all the plants put together

There has been sharp increase in the margin from framers end to Power plant end in the

current year from about Rs 200/T to over Rs 600/T. This should be containable to the

maximum mark up prevailing at the trade level, which is about Rs 400/T.

6.2 PROJECTED PRICE

The following price projection for the Year 2011-2012 has been made considering the

followings, which have direct or indirect impact on the biomass for competitive use:

Based on farmers price and trade margin (Competitive at source end)

Projected farmer end price for FY 2011-12-Rs 1650/T (Fig-4)

Projected farmer end price for FY 2012-13-Rs 1900/T (Fig-4)

Trade margin-Rs 346/T (Table-5)

Less trade profit-Rs 100/T

Based on the above factors, projected price for FY 2011-12

=Projected farmer end price for FY 2011-12 + Trade Margin – Trade Profit

= 1650+ 346-100 =Rs. 1896/MT





Based on the above factors, projected price for FY 2012-13

=Projected farmer end price for FY 2012-13 + Trade Margin – Trade Profit

= 1900+ 346-100 =Rs. 2146/MT

DESL recommend that power plants should procure maximum amount of biomass directly

from the farmers in order to reduce the average landed cost of fuel at the factory gate of

power plant.

Based on coal and lignite (Competitive user end)

Based on biomass comparative study with lignite, the projected price of biomass

is Rs 2469/T (ref. Figure 12).

Based on Juliflora (Developmental perspective)

Based on biomass Juliflora plantation, the projected biomass price is Rs. 2135/T

(ref. Table 6).

6.3 RECOMMENDATIONS ON TRANSPARENT MECHANISM FOR BIOMASS PRICE

LINKAGE

Based on the current survey and analysis, it has been established that there would be about 17% and

15% annual increase in the prices at the farmers end in FY 2011-12 and FY 2012-13 respectively.

However, as more and more Juliflora gets developed, the same would provide containment cushion

and it is likely that the prices would stabilize after 2-3 years.

It would be desirable to carry out a similar exercise in the next two years by which time sufficient

amount of Juliflora is likely to be available for the power plants.

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