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T

o meet the increasing electricity


demand of the emerging tiger has
appeared as a big challenge for
the developing economy of
Bangladesh. Keeping continuity in pro-
viding dependable energy at affordable
price is the major test for survival in the
competitive market due to free global
access, which is the biggest problem
for a resource constraint country like
Bangladesh and this has influenced &
slowed down the development of the
country. Indigenous natural gas is the
main pillar of commercial energy of
Bangladesh and its remaining recover-
able reserve is inadequate. If signifi-
cantly large proven reserve is not
added to this immediately then it will
not be possible to supply gas as per
demand by the existing reserve onward
from 2012. Alternative fuel supply will
take time, require high investment and
the price of electricity produced with
these will be several times higher than
the prevailing rate. Secondly, any
option other than local
coal is fraught with
import dependency
and unreliable avail-
ability. Therefore, to be
self-sufficient, the best
way will be the elec-
tricity generation sys-
tem based on indige-
nous fuel & local
resources than the
same based on import
dependent fuel.
Generating electricity
from eight million tons
of rice husk available
from 40 million tons of
rice produced annually
in the country may be a
realistic step towards
the golden dream for
solution of electricity
crisis. Instead of unidi-
rectional utilization of
this husk for electricity
generation, if multiple benefits as well
as economic elements like Silica, There
is no doubt; if the related project is con-
sidered as Green Project under CDM
then cumulative results will make the
project commercially profitable. So,
instead of ignoring the rice husk, let us
take steps to keep the pace of economy
of the country by harnessing financial
benefits from this gold mine for the bet-
terment of people. Rice husk is consid-
ered to be an environmentally friendly
fuel because it can mitigate CO2, SOx
and NOx emissions when compared
with coal.
Background Database with Historical
Rice Production Trend:
Technology with time has improved
and progressed so much so that it has
reduced the labour, produced more,
increased quality & its conservation
status and that has lead towards ensur-
ing food security. This is equally true
for Bangladesh also. In every sphere the
technology is becoming dynamic &
lively and needs more application,
investment and commitment. Our pop-
ulation is increasing and conversely the
productive acreage is decreasing but
still due to the innovative and tireless
efforts of the farmers and agriculturists
we are more or less at par with our
demand. But food production will pose
a serious challenge in the coming days
because of the rapid depletion of the
productive land & water though rice is
the staple food for us and feed nearly
half of the world population. In the past
three decades the steadily increased
rice production reduced the food short-
age. If the past patterns continue, area,
production, yield, and pesticides of
coarse rice for the World, Asia (includ-
ing Bangladesh), America, Europe,
Africa and Oceania would increase at
constant annual growth rates.
Description of the Project & its Multi
Dimensional Economic Output
Rice harvested from the paddy fields
consists of paddy rice and rice straw.
During the threshing
operation, the straw is
separated from the
paddy rice. Paddy rice
is sent to the rice mills
where the rice is first
parboiled, then dried &
sent to the milling
machines to produce
rough and polished
rice, rice husk & rice
bran.
From the rice husk,
heat energy, ash &
greenhouse gas emit
when the husk is burnt
in the power plant. The
heat energy is used to
generate steam to run
the steam turbines,
which in turn run the
generators that will
produce electricity.
Rice husk ash will be
Electricity from Rise Husk
Engr. Emdadul Haque
22
ARTI CLE
processed into high-quality
ash for the cement industry,
steel forging mills and of
other specialized industry.
The demand for high-quali-
ty, rice husk-derived silica
for the specialized industry
will increase substantially in
the years to come as new
developments in the special
industries have discovered
that rice husk ash is an
excellent source of raw
material for the manufac-
ture of high-value products.
Rice bran is used as raw
material for the manufac-
ture of high-quality,
exportable & local rice bran
cooking oil for health-con-
scious people, pellets for
poultry, fish and other ani-
mal feeds & special pellets
for power plant fuel use.
In summary, the following is
a color-coded flow chart of
the component-wise description as
mentioned above:
1. Rice Harvest From Paddy Fields ->
Paddy Rice + Rice Straw
2. Rice Paddy -> Coarse / Polished Rice
+ Rice Husk + Rice Bran
3. Rice Husk ->
Electricity + Rice Ash +
Greenhouse Gases
4. Rice Ash -> Cement
Manufacture Additive
+ Steel Forging Mills +
Specialized Industry
Raw Materials
5. Rice Bran ->
Cooking Oil + Poultry
Feed + Fuel Pellets
Project Financing
Modality
Obtaining finance for
biomass and biogas
projects was a major
problem until 2000.
But today, the situation
is completely different.
There are so many
equity funds, investors,
banks, financial institu-
tions and venture funds
available in the market,
looking for good projects to finance.
CDM is also one of the major reasons
for this sudden change. Several compa-
nies and big corporations are interested
for the green image. Today, biomass
and biogas projects offer decent return
on investments, especially
with the CDM revenue.
These investors are mainly
looking for credible, trust-
worthy project owners who
are fair with their dealings.
They also prefer to join
hands where project devel-
opment is done in a profes-
sional way. Some investors
also join hands from the
early stage itself bearing the
cost of initial assessment
and feasibility study. Equity
investors expect higher rate
of return than the lenders.
As a start, project owners
can conduct a quality feasi-
bility study (done by a neu-
tral party) and then try to
join hands with equity
investors to take the projects
to the next stages. It is better
to look at the project in an
open minded way, creating
trust between parties, to maximize the
benefit so that fair sharing agreements
can be reached. Any break in partner-
ship in the middle of discussion is often
costly for the investors, so they normal-
ly follow cautious approach in select-
ing the projects to
invest.
Normally financing
can be obtained from
commercial banks,
multilateral financing
institutions, develop-
ment financing institu-
tions and export credit
agencies. Generally, it
is easy to get corporate
loans from the banks
against acceptable col-
lateral. Though it is
easy, project owners
can take extra care to
check the projects thor-
oughly, conducting
necessary due dili-
gence, as banks may
not give adequate
attention, as their risk is
already covered by the
security given by the
Oryza Maps and Statistics (Aug 27, 2004)
Statistics shows that Bangladesh produces on an average 40 Million tons of rice yearly and that
in turn will give 8 Million tons of rice husk. If one forth of it is used to generate electricity that can
produce about 100-200 MW electricity.
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company.
In Southeast
Asia and
India there
is a growing
trend for
p r o j e c t
f i nanci ng.
Compar ed
to corporate
f i nanci ng,
p r o j e c t
financing is
a bit difficult
to get. But,
the projects
are general-
ly of low
risk, as banks will also ensure that all
security arrangements are in place by
conducting proper due diligence,
before granting the loan.
Lenders normally expect information
such as, general & legal description of
borrower and principal partners,
description of the business concept,
description of products, customers,
competitors, suppliers, corporate man-
agement, detailed technical analysis,
operation, raw materials, consumption,
output levels, financial data including
operating costs, projected cash flows,
working capital projections, financial
statements, financing plan, securities
and environmental aspects.
Export Credit Agencies provide insur-
ance (political, country risk and com-
mercial risk) or guarantee. The politi-
cal, country risk includes natural disas-
ters, war like conditions or legislative
measures implemented after the con-
clusion of the export agreement.
Normal coverage of risk is about 95%
but in some special cases 100% of the
risk is also covered. Commercial risk
includes insolvency and protracted
default. About 85-90% of the risk is
covered normally but in some special
cases, it can go up to 100% coverage.
In Bangladesh scenario, rice husk
power plants can be financed either by
PPP, private or 100% GOB financing.
Possible Location of the Project
Theoretically and ideally, the rice husk
power plants should be constructed
and installed in the same locality where
abundant supply of rice husks from rice
mills that can be procured within an
acceptable distance to avoid costly
transportation expenses when purchas-
ing the said raw materials. This trans-
port cost has a huge impact on the unit
cost of electricity produced and sold.
Major rice-producing areas such as cer-
tain districts in Rajshahi, Rangpur,
Khulna, Sylhet, Dhaka & Chittagong
divisions would be the most suitable
locations for the rice husk power
plants.
Plant generating capacities will be
based on the amount of rice husk avail-
able in those particular locations.
Those capable of producing large
amounts of rice husk will be able to
generate more electricity and more rice
husk ash.
Minimum rice husk commercial power
plant unit for continuous supply to the
overhead electricity transmission & dis-
tribution grid may be in the range of 3
5 Megawatts per unit. Each power
plant location may have as much as 2
5 units and in a cluster system cumula-
tively will generate up to 100 200
Megawatts.
Initially it will be wise to start with a
small pilot project plant to see its finan-
cial, technical, environmental and
other impact (positive & negative).
Based on the experience of this pilot
project plant
b r o a d e n
e x t e n s i v e
program can
be under
taken.
Candidate
for CDM
Rice husk to
power is not
a new tech-
n o l o g y ,
a l t h o u g h
rice husk is
a difficult
biomass fuel
c ompa r e d
with wood
and bagasse. A power plant in Thailand
is in continuous operation for the past
26 years.
In Southeast Asia, the growth in rice
husk power plant projects started in
mid 90's. Two rice husk power projects
implemented in Thailand changed the
whole outlook of industry. Project
developers in Southeast Asia gained
confidence by visiting these projects.
Today, there are several projects under
various stages of development and
implementation.
From the technological perspective, for
the last 10 years, good improvements
have been achieved and today the
plants are fully automated. These days,
for well designed plants the efficiency
of the boiler and the overall efficiency
of the power plant are very good.
From the commercial angle, there was
a considerable reduction in the total
investment cost. It is mainly due to the
competition of about 10 boiler suppli-
ers around the world, who have mas-
tered the technology.
Using the CDM revenue, in most of the
cases, it is worth going in for rice husk
power generation, as the project IRR is
attractive. However, you need to have
a good control over long term supply of
rice husk. In some project situations,
the projects are viable even without
CDM.
The most commonly used technology
in Southeast Asia is traveling grate and
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reciprocating step grate system.
However, in Thailand and India, FBC
system is widely used along with other
technologies.
Most common plant size ranges from 2
MW to 10 MW and today 22 MW size
capacities are also available in
Thailand. Efforts were made to develop
50 -75 MW size plant. A 30 MW power
plant was studied and operated in
Philippines and it materialized for
sometime but due to fuel collection
and transportation issues the plant was
shut down.
The rice husk price is very high (up to
40 USD/ton) in several parts of Asia.
Still it is dumped in several places.
These places are ideal for installation of
power plants due to low rice husk price
and additional CDM revenues from
decay. Encouraging situations are pre-
vailing in several parts of Philippines,
Laos, Cambodia, Africa and other
Asian countries.
With advancement in technology,
some of the projects produce high
quality ash and it is export to Europe,
Japan, Korea and other countries (price
as high as 400 USD/ton). It is very com-
mon practice, where the focus is more
on rice husk ash than power. This
solves the ash disposal problem, as rice
husk contains up to 80% silica.
These days, ultra modern power plants
are being installed in Southeast Asia
with a lot of environmental protection
measures, which are at par with devel-
oped countries.
Several rice husk projects around the
globe with sizes ranging from 450 kilo-
watts to 75 Megawatts abound.
Conclusion
It is apparent from the above fact that
there is a valuable and interrupted
source of energy hidden in our locally
available rice husk that can be judi-
ciously used to extract multiple value
addition and can solve our power
shortage partially but reliably and
locally. Furthermore useful & meaning-
ful extraction of various advantages
leaving no wastage can pave the way
for changing the mindset in other areas
like extraction of power & fertilizer
from the human waste, cow dung and
cow urine, domestic waste etc. It is
always the true strength of the develop-
ment if all the elements on which the
current mechanized dynamic civiliza-
tion evolve from the local root. It is
right time that Bangladesh should build
its own rice husk based power plant to
augment the power generation along
with other fuel source (CNG, furnace
oil, LNG, Diesel & Coal). Based on its
present rice producing capacity, it
should be worth mentioning that
around 100-200 MW of power can be
generated from available rice husk in
various part of the country.
(Note: The view expressed in this article
are author's personal view and do not
necessarily reflect that of the Bangladesh
Energy Regulatory Commission.)
Engr. Emdadul Haque
Member, Bangladesh Energy
Regulatory Commission
...being strengthened to meet people's expectation,
support economic development of the country
Bangladesh Petroleum Exploration & Production Company Limited
(A Company of Petrobangla)
BAPEX, Shahjalal Tower (4th Floor), 80/A-B Siddeshwari, Circular Road, Dhaka-1217.
PABX : 880-2-9360119-20, 9359582, Fax: 88-02-9355704
www.bapex.com.bd
EP
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