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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 Page 2 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
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 Page 3 of 41
6. RECOMMENDATIONS .................................................................................................. 40
6.1 Price trend .......................................................................................................................................... 40
6.2 Projected price .................................................................................................................................... 40
6.3 Recommendations on transparent mechanism for biomass price linkage ........................................... 41
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 Page 4 of 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
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 Page 5 of 41
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
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 Page 6 of 41
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.
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 Page 7 of 41
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.
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 Page 8 of 41
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.
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 Page 9 of 41
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.
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 Page 10 of 41
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
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 Page 11 of 41
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
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 Page 12 of 41
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
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 Page 13 of 41
0
500
1000
1500
2000
2500
Jhal
awar
Bar
mer
Bh
arat
pu
r
Bar
an
Jais
alm
er
Jod
hp
ur
Kar
auli
Bu
nd
i
Ch
uru
Dh
olp
ur
Ko
ta
Ton
k
Alw
ar
Ajm
er
Nag
aur
S.M
adh
op
ur
Bik
aner
Pal
i
Sika
r
Dau
sa
Gan
gan
agar
Han
um
anga
rh
Jhu
njh
un
u
Jalo
re
Siro
hi
Jaip
ur
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.
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 Page 14 of 41
Table 2: Biomass prices-districts having power plants
Sr. No.
Districts
Farmer Biomass Selling Price /Field Price (Rs/MT)
Mustard Husk
Minimum Maximum Average
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
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 Page 15 of 41
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
Minimum Maximum Average
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
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 Page 16 of 41
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
4.2.1 CURRENT PRICES
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)
Minimum Maximum Average
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
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 Page 17 of 41
Sr. No. Districts Traders Selling Rate
(Rs/MT)
Minimum Maximum Average
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
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 Page 18 of 41
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
0
500
1000
1500
2000
2500
3000
Bar
mer
Jais
alm
er
Jhal
awar
Jod
hp
ur
Bar
an
Bh
arat
pu
r
Ko
ta
Bu
nd
i
Kar
auli
S.M
adh
op
ur
Ch
uru
Dau
sa
Ajm
er
Ton
k
Alw
ar
Bik
aner
Jhu
njh
un
u
Dh
olp
ur
Nag
aur
Sika
r
Pal
i
Gan
gan
agar
Han
um
anga
rh
Siro
hi
Jalo
re
Jaip
ur
Average Trader Sale Price (Rs/MT)
Average Trader Sale Price (Rs/MT)
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 Page 19 of 41
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
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 Page 20 of 41
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)
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 Page 21 of 41
4.3 JULIFLORA PRICE SURVEY
4.3.1 CURRENT PRICES
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.
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 Page 22 of 41
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
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 Page 23 of 41
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
Rajasthan Renewable Energy Corporation Ltd.
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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
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Client Name Rajasthan Renewable Energy Corporation Ltd. Document No. 5515
Project Name Biomass Fuel Supply Study in the State of Rajasthan Rev. 0
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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
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Client Name Rajasthan Renewable Energy Corporation Ltd. Document No. 5515
Project Name Biomass Fuel Supply Study in the State of Rajasthan Rev. 0
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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.
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
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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%.
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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
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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)
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)
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)
Average Fuel Procurement Cost for all power plants in FY 2010-11 (Rs./MT)
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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)
Average Fuel Procurement Cost for all power plants in FY 2010-11 (Rs./MT)
1246 1641 2077
% Change with respect to Previous Year
31.74% 26.53%
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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
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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
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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
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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
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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.
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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)
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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))
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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.
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Project Name Biomass Fuel Supply Study in the State of Rajasthan Rev. 0
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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.
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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
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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.