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Rising fuel costs make biomass energy unattractive

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Biomass energy developers in have been feeling the pinch of rising fuel prices over the past few months. With the kharif crop failing due to drought this year, the price of rice husk, which has the highest calorific value among the biomass used, is likely to go up further. Also, the recent floods in the state will add to the rising price of biomass.

Andhra Pradesh has the highest number of biomass power plants in the country (40), with a majority of them having 6 Mw capacity. The total installed capacity is about 220 Mw.

The rice husk price, around Rs 400 a tonne a few years ago, is around now Rs 2,500. Driven by the demand-supply situation, the price touched Rs 3,500 tonne in summer, according to the Manager of the Biomass Energy Developers Association, N Seeta Ramudu.

This apart, woody biomass is used in huge quantities. With handling and transport charges, the landing cost of the woody biomass, which has high moisture content as it is kept out in the open, is around Rs 2,000 per tonne.

Jungli kikar (acacia) is preferred, as it has the next highest calorific value to rice husk. There is also competition building up for rice husk, as some bulk drug manufacturers are shifting to rice husk to cut the cost of fuel.

It is estimated that about 1.6 kg of fuel — husk or woody or any other form of biomass — is needed to produce a kilowatt of energy. At full capacity, a 6 Mw unit will produce 144,000 lakh kilowatts of energy daily and implies that on average about 230 tonnes of biomass is needed.

Most companies maintain biomass inventory for about 15 days. “Biomass stocks have to be bought on cash. Maintaining huge inventories is not possible,” said Seeta Ramudu.

Biomass energy companies have signed a power purchase agreement (PPA) with Transmission Corporation of AP (AP Transco). Under this, they are currently allowed to charge a tariff of Rs 3.8 per unit and are running at a plant load factor of 80 per cent. The state government has banned the sale of power to third parties.

Biomass energy producers have filed a petition with the Appellate Tribunal, seeking a revision of the tariff to Rs 4.65 per unit. AP Transco has moved the Supreme Court, stating that the existing tariff is based on established procedures. The two parties are waiting for the case to be listed at the apex court.

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