Indonesia plans to increase biomass utilisation

  • Market: Biomass
  • 29/07/21

Indonesia is expected to achieve near decarbonisation by 2050 by utilising renewables such as biomass, as well as co-firing coal with biomass, according to a long-term projection by the UN Framework Convention on Climate Change (UNFCCC).

The country will have 13GW of biomass and 23GW of biomass-coal co-firing installed power generation capacity connected to carbon capture and storage (CCS) by 2050, the UNFCCC said. Only a small amount of biomass energy was previously used in rural residential areas from 2000-19, according to the UNFCCC.

The report also pointed out that biomass-coal co-firing connected to CCS will play a crucial part in the country's greenhouse gas mitigation plans for the power sector, with securing a large amount of solid biomass supplies required.

Biomass-coal co-firing connected to CCS accounted for none of Indonesia's power mix in 2019, while renewables were at 16pc. The report projects biomass-coal co-firing connected to CCS will account for 8pc of the overall power mix by 2050, with renewables making up 43pc. Renewables include hydropower, geothermal, solar, biomass, biofuel and wind.

State-owned utility PLN implemented co-firing of biomass at 17 power plants as of June this year. There were 114 Indonesian power plants that completed test co-firing last year by substituting up to 10pc of coal with biomass pellets derived from all types of organic waste. Biomass raw materials can be processed waste, tree branches, leaves, rice husks, sawdust and grass.

Indonesia is Asia-Pacific's biggest palm kernel shell (PKS) exporter and the third-largest wood pellet exporter after Vietnam and Malaysia. It exported 3.17mn t of PKS and 311,000t of wood pellets in 2020.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

Railway equipment group warns of boxcar shortage


08/04/24
News
08/04/24

Railway equipment group warns of boxcar shortage

Washington, 8 April (Argus) — The Railway Supply Institute (RSI) is urging federal regulators to help avoid a so-called "boxcar cliff," fearing lower compensation rates are contributing to a shortage of boxcars in the US. Boxcars are essentially rented to railroads, which compensate the owners by paying car hire rates. US rail regulator the US Surface Transportation Board (STB), with a regulation known as the Arbitration Rule, has established a default rate for railcars, primarily boxcars, that do not have a negotiated rate. Those cars are assigned a rate that is equal to the lowest negotiated rate in effect for that equipment type at the end of the previous quarter. Other cars, such as tank cars and gondolas, usually have rates set in negotiated agreements to move various commodities. The problem is that the default rates can often be as low as 17¢/hour for a boxcar, which often costs more than $150,000 to build, according to RSI. It is difficult to negotiate a higher car hire rate with railroads because are very aware of that 17¢/hour default rate, said Paul Titterton, president of North American operations at railcar leasing company GATX. Those car owners also have to compete with TTX, a railcar pooling company owned by the largest railroads, that are exempt from these rules. TTX did not respond to calls for comment. Because they control TTX, railroads can invest and set boxcar rates they consider to be remunerative, Titterton said. There are about 100,000 boxcars in North America, and the low compensation rate is disincentivizing shippers from building and buying new boxcars, said Patty Long, president of RSI, which represents rail car makers and parts manufacturers. The existing "car hire system discourages investment in this integral component of our rail transportation fleet, with boxcars providing efficient shipping for crucial American commodities," she said. Boxcars are used to haul a wide array of goods including pulp, paper, beverages and canned goods. The default rate does not respond to changing market conditions, such as the shrinking equipment fleet, Long said. That low compensation rate contributed to a 38pc decline in the number of boxcars in the US since 2008, RSI said. And the aging boxcar fleet is expected to decline another 22pc by 2030. RSI has petitioned the STB to revisit its Arbitration Rule and reevaluate the way compensation is determined. Industry trade group the Association of American Railroads said it is reviewing the petition and deciding on its next steps. STB's Railroad-Shipper Transportation Advisory Council last year urged the agency to look into ways to head off the "boxcar cliff." The group noted that most railcars have a 50-year lifespan, and the retirement of boxcars built in the 1970s and 1980s is accelerating. "As a result, the North American railroad system and shippers across the US face a devastating boxcar shortfall without sufficient new production to replace thousands of mandated and other planned boxcar retirements," the group said in a March 2023 white paper. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Enviva to reject Sumitomo wood pellet contract


08/04/24
News
08/04/24

Enviva to reject Sumitomo wood pellet contract

Singapore, 8 April (Argus) — US wood pellet producer Enviva has filed a US court motion seeking to reject a term wood pellet offtake agreement with Japanese trading house Sumitomo. The 2 April motion, filed with the US Bankruptcy Court for the Eastern District of Virginia, seeks to enable Enviva to submit an order to reject the 2018 cfr Iwakuni biomass fuel supply agreement with Sumitomo. This 2018 agreement, also known as the Sumitomo Kaita contract, is one of the term pellet offtake agreements within Enviva's Japanese trading portfolio. Sumitomo acts as an intermediary broker, buying wood pellets for Kaita Biomass Power, court documents stated. Sumitomo has acted in similar brokering capacities for several other consumers. The Sumitomo Kaita contract is the first term deal rejected, after Enviva last month filed for Chapter 11 bankruptcy protection and released a restructuring plan . Rejection of an agreement under US bankruptcy proceedings does not imply the termination of that agreement but "is treated as a breach of contract, and any damage claim arising from that breach is treated as if it arose immediately before the bankruptcy was filed", according to US legal firm Troutman Pepper . Enviva has set up a group comprising a subset of its management and advisors, known as the RTB team, to review and renegotiate existing term contracts. The review was possibly among a series of measures laid out and considered by Enviva late last year, when concerns regarding its liquidity first emerged . Lead-up The RTB team carried out due diligence measures on the Sumitomo Kaita contract and "determined that the existing contractual pricing will yield negative operating margins over the life of the contract with a negative net present value on the operating margin", based on statements made in court filings by Alvarez and Marsal North America (A&M), Enviva's financial adviser in the Chapter 11 proceedings. Attempts by the RTB team at contacting Kaita since late November last year — to renegotiate contractual terms such as pricing, volume and pellet origin — have been unsuccessful, according to A&M. The Japanese consumer appears to be neither keen on amending the Sumitomo Kaita contract nor engaging directly with Enviva and its RTB team, court filings by A&M revealed. A&M said the rejection of the Sumitomo Kaita contract will be appropriate in the commercial interest of Enviva and its stakeholders. Kaita's boiler plants could possibly be operating on soft wood, commonly found in US sources, as opposed to Asian hard wood pellets, according to a market participant. Kaita could possibly trial Asian hard wood as an alternative biomass feedstock, if similar soft wood is unable to be secured. Enviva is required under the restructuring support agreement to submit a draft on its long-term business plan by 10 June and a finalised version by 5 July. Some considerations in this business plan includes rejecting certain contracts that do not help in the company's reorganisation efforts and documenting contracts that are renegotiated. By Jun Bin Phua Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Indonesia’s Paiton power plant to boost biomass use


08/04/24
News
08/04/24

Indonesia’s Paiton power plant to boost biomass use

Manila, 8 April (Argus) — Indonesia's 4.71GW Paiton coal-fired power plant, the country's largest power generation facility, is to increase biomass use as part of the country's emissions reduction efforts. PLN EPI, which is the fuel procurement subsidiary of state-owned utility PLN, has increased biomass delivery targets for the power plant in east Java to 259,581t in 2024, an increase of nearly 60pc compared with last year, the company said. The 800MW No.1 and No.2 units are expected to consume a combined 154,519t this year, a 10pc increase compared with 2023. Biomass consumption at the 600MW No.9 unit is expected to increase more than fourfold to 105,062t from 22,741t in 2023. The increase at No.9 is because of the full implementation of biomass co-firing following initial test runs in 2023, PLN EPI said. The rest of the generation units at Paiton have yet to start biomass co-firing as they are owned by private-sector companies. Only No.1, No.2 and No.9 are owned by PLN, which is required to implement co-firing at its coal power plants. These three units currently use 5pc biomass but PLN aims to increase this to at least 10pc over the next few years, it said. Paiton mainly uses wood sawdust as its biomass source. PLN EPI said it has already agreed supply contracts for most of this year's supplies. It is looking at sources located close to the power plant to minimise transportation costs and help develop a biomass economy for surrounding areas. By Antonio delos Reyes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Japan’s Hibikinada biomass plant to shut for conversion


08/04/24
News
08/04/24

Japan’s Hibikinada biomass plant to shut for conversion

Tokyo, 8 April (Argus) — Japanese housing and energy company Daiwa House Industry will close this week the 112MW biomass and coal co-fired generation unit at its Hibikinada power complex to fully convert it to biomass. Daiwa plans to shut the unit at Kitakyushu city in south Japan's Fukuoka prefecture on 11 April, according to a notice by Japan Electric Power Exchange (Jepx). The unit plans to convert fully to biomass by April 2026, with the unit off line from this week for preparations to only burn biomass as a generation fuel, Daiwa said. Japan's power producers plan to cut 189MW of thermal capacity during the week to 14 April, with the closure of 6.7GW outstripping the addition of 6.6GW, according to Argus' survey based on a notice by Jepx. The difference incorporates the net drop in oil-fired capacity of 700MW and the net increase in coal-fired capacity of 104MW and gas-fired capacity of 407MW. Mild spring weather has finally arrived in many areas of the country that has capped electricity demand. Japan's total power demand averaged 88GW during 1-7 April, down by 6pc from the previous week, show data from nationwide transmission system operator the Organisation for Cross-regional Co-ordination of Transmission Operators. By Reina Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more