USAID Cane/Energy Assessment Program

Electric Power From Cane Residues in Thailand ATECHNICAL AND ECONOMIC ANALYSIS

SEPTEMBER 1986

RONCO CONSULTING CORPORATION, 1611 N.KENT ST., SUITE 200, ARLINGTON, VIRGINIA 22209

(2/It

CANE/ENERGY SYSTEMS ASSESSMENT PROGRAM

ELECTRIC POWER FROM CANE RESIDUES IN THAILAND

A TECHNICAL AND ECONOMIC ANALYSIS

September 1986

Contributors:

Alan Jacobs, Director, A.I.D. Office of Energy Franklin Tugwell, Program Manager

John Kadyszewski, Study Coordinator

Donald Hertzmar,-

William Keenliside

Phachon Khantachuana Eric Larson

Allan Phillips Robert Wi iams

Secretarial Staff: Belindia Coles Kay Livingston Andrea Arden Chiara Walsh

ELECTRIC POWER FROM CANE RESIDUES IN THAILAND

A TECHNICAL AND ECONOMIC ANALYSIS

Table of Contents

Executive Summary

I. Background

L.1 The Sugar Industry in Thailand 1 1.2 Electricity 6 1.3 Economic Development in Thailand 10 1.4 Technical Options in Cane Energy 12

2. The Resource Base 15

2.1 Introduction 152.2 Estimates of Available Residues 15 2.3 Harvesting and Delivering Cane Residues 16 2.4 Agronomic Impacts 18 2.5 Costs 19

3. Power Generation 23

3.1 Electricity Production in Thailand 23 3.2 Current Sugar Industry Operations in Thailand 24 3.3 Options for Power Generation 25 3.4 Mill Modifications Required for Off-Season

Power Generation 253.5 Technical Analysis for Five Sugar Mills

Assuming Minimum Investment 313.6 Conclusions for Technical Analysis Assuming

Minimum Investment 40 3.7 Technical Analysis Assuming Investment in

New Equipment 413.S Conclusions for Technical Analysis for New

Investment 47

4. Economic Analysis 53

4.1 Costs of Electric Power Production From Modified Existing Equipment 53

4.2 Cost of Electric Power Production With New Boiler/Generator Technology 56

4.3 Present Value Analysis 58 4.4 Economics of Electricity Generation in

Thailand 61 4.5 Impacts of Electricity Sales by Sugar Mills

on Markets 64 4.6 Sensitivity Analysis 65 4.7 Conclusions 81

5. New Technologies 86

5.1 Introduction 86 5.2 Benefits and Costs: A Preliminary Assessment

for Thailand 86 5.3 Technical Performance 90 5.4 Economic Assessment 92 5.5 Combining Gas Turbines with Modifications to

the Mill/Refinery 92 5.6 Conclusions 95

6. Implementation 99

Appendix A: Financial Tables 101 Appendix B: Mill Tables Ill Appendix C: A Suggested Method for Computing Avoided Costs 117 Appendix D: Emerging Power Generation Technologies 121

References 139

Figures

1. Background

1.1 Thailand's Sugar Quota System 3

1.2 World Sugar Production 5

1.3 Exports of Sugar 51.4 Household Electricity Demand 9

3. Power Generation

3.1 Relation Between Heat Value& Moisture Content of Bagasse 28

3.2 Existing Mill 323.3 Mill After Minimum Investment 37

3.4 Mill With New Power Plant 42

4. Economic Analysis

4.1 Costs of Power Output (Old Mills, Base Case) 57 4.2 Costs of Power Output (New Mills, Base Case) 594.3 Baseline Case Scenario 604.3.1 NPV's of Power Output (Old Mills, Base Case) 624.3.2 NPV's of Power Output (New Mills, Base Case) 63 4.6.1 Costs of Power Output (All Mills, Best Case) 664.6.2 Costs of Power Output (All Mills, Worst Case) 67 4.6.3 Internal Rates of Return (Old Mills) 69

4.6.4 Internal Rates of Return (New Mills) 70 4.6.5 Investment Payback (Old Mills) 71

4.6.6 Investment Payback (New Mills) 72 4.6.7 NPV of Power Output (Sensitivity to Power

Prices)

4.6.8 Costs of Power Output (Sensitivity to Farmer

74

76Pay ments)

4.6.9 NPV of Power Output (Sensitivity to Farmer

Payments) 774.6.10 Effects of Capital Costs on Prices 78 4.6.11 NPV of Power Output (Sensitivity to Capital

Costs) 79 4.6.12 NPV of Power Output (Sensitivity to Capital

Costs) 80

5. New Technologies

5.1 Capital Costs for Generating Systems 87 5.2 Allowable Capital Cost for New Technology

(Ind irec tly-Fired) 93

5.3 Allowable Capital Cost for New Technology

(Directly-Fired) 94 5.4 Gas Turbine With Evaporative Regeneration 96

EXECUTIVE, SUMMARY

This study presents the findings of a team of specialists that visited Thailand earlyin 1986 to investigate ways in which the sugar cane industry might improve itseconomic prospects by selling new products.(l) The study was sponsored by the United States Agency for International Development.

Following uiscussions with representatives of government agencies and the sugarindustry, the team travelled to the Central and Eastern regions of the country,visiting eleven mills, two cane growers' associations and an agricultural extensionstation. The was able to observeteam also harvest and transport operations in several locations.(2)

After examining a number of alternative products and their markets, the team hasconcluded that the most attractive option for the Thai sugar industry would be thegeneration of electricity for sale to the national grid during the off season, i.e. when the mills are not grinding cane and can devote their boilers and turbines exclusivelyto this purpose. For fuel the team recommends the use of cane residues, the topsand leaves left in the field after the harvest (also known as cane "trash").

This report contains a detailed analysis of the technical and economic considerationsthat would have to be taken into account should the Thai industry choose to begingenerating electricity for sale as a commercial product.

(l)The team was composed of the following:1. Dr. Franklin Tugwell, Manager of the AID Cane/Energy Systems Assessment Program and Specialist in Energy Policy and economics;

2. Mr. John Kadyszewski, Study Coordinator from the AID Office of Energy and combustion engineer; 3. Dr. Donald Hertzrnark, energy economist; 4. Dr. Allan Phillips, Chairman of the Department of AgriculturalEngineering, University of Puerto Rico; 5. Dr. William Keenliside, mill/power specialist at the Audubon SugarInstitute, Louisiana State University;6. Mr. Mit Pramuanvorachat, private sector specialist, USAID Bangkok.

(2)In all of these activities the team received the most generous assistance and support from public and private official alike. The team's program of visits wasfollowed by a detailed questionnaire to a select group of representative millsadministered by Professor Phachon Khantachuana of King Mongkut's Institute of Technology.

EXECUTIVE SUMMARY

The overall findings of this analysis are quite positive: For many sugar mills as well as cane farmers electricity sales appear to represent an attractive opportunity,providing a welcome new source of income in financially difficult times but requiring only modest capital investments. Funds committed to this activity appearlikely to earn a high rate of return. For the nation as a whole, generatingelectricity at sugar mills would provide new electricity supplies at a price that is equal to or lower than that which can currently be obtained. It would also permitthe electric utility, by relying on private industry, to avoid spending valuable foreignexchange for as much as several hundred megawatts of new capacity.

There are two major uncertainties in the approach suggested here. The first istechnical: Trash collecton and transport to mills for combustion, though under studyin other countries, is not done elsewhere on the kind of scale envisioned. Fortunately, this uncertainty can be addressed at relatively low cost by r pilot program to test the approach recommended by the team--described in Chapte, s Twoand Three. Once proved, it can then be replicated at other locations. The second uncertainty is institutional: Private electricity sales must be approved by the Government of Thailand and the resulting power must be introduced to the grid in a carefully planned fashion. Here too, however, conditions appear' encouraging sincespokesmen for the key Government agencies and for EGAT (the Electricity Generating Authority of Thailand) have expressed a willingness to consider such an option if the price is reasonable.

The body of this report begins with a background chapter that reviews the recent history and status of the Thai sugar industry and its role in the world sugar tradingsystem, and then outlines the structure, operation and growth prospects of the electric utility of Thailand as it relates to the economic development of the country as a whole.

Chapter Two focuses on the resource base, cane residues left on the field after harvest. Drawing on analyses completed in other cane-growing locations, the teamestimates that material sufficient to sustain between 270 and 715 megawatts of generating capacity can be collected, transported, and processed into fuel. Thischapter suggests an appropriate set of technical steps to manage the trash-collection process, and details the cost calculations which form the basis of the economic analysis (Chapter Four).

In Chapter Three, the team presents the results of its analysis of power generationoptions and technologies. Because it was impossible to obtain detailed informationfrom every mill, the team chose a representative sample of five mills to arrive at preliminary technical estimates of such things as generating capacity, fuel demands,and investment needs(3). Using this sample, the analysis presents a range of alternative approaches to power generation, beginning with minor alterations of current boilers and generators and moving to alterations of existing equipment to achieve greater efficiencies.

(3)These range from a small mill (2200 tons/day capacity) to a very large mill (11000

tons/day capacity).

ii

EXECUTIVE SUMMARY

This analysis demonstrates that power generation is likely to be technically feasiblein many mills with very withlittle investment, but grows increasingly productiveadjustments to improve the performance of boilers originally designed primarily for sugar operations. An important implication of this analysis is that electricity sales(provided they are institutionally acceptable to the utility and that mills can securethe necessary fuel) can begin with little risk and, once proven as a commercial venture, can be made more profitable in an incremental fashion.

Finally, to illustrate the technical implications of major capital commitmentsreplace boiler and turbine systems

that with efficient, high-pressure equipment of thekind usecd in Hawaii by sugar companies, the report presents twu "hypothetical"scenarios--i.e. scenarios that do not refer to specific mills, but which serve toillustrate the possible benefits from major new investment.

Drawing on the technical options presented in Chapter Three, Chapter Four analyzesthe financial and economic costs and benefits of electricity sales. The conclusion,as noted earlier, is that electricity sales are likely to prove financially attractive tomost mills and will become more so as managers gain confidence and makeinvestments to improve efficiency. Of particular importance is the finding that,after costs of pronuction (at generous rates of return) have been covered, electricitycan be sold to the grid at prices that are lower thAn the transfer price currently paidto EGAT by the Provincial Electric Authority, ti. agency charged with distributing power to rural reSions of the country.

Finally, because technical advances in electricity generation appear likely in thenext few years, the study includes a chapter which describes some of these andprovides rough estimates of the amounts of power that might be 'obtainable as newkinds of equipment become commercially available on a wide scale.(4) The purposehere is to suggest to those planning the expansion of Thailand's electric capacity,and to private investors considering private generation, that they carefully monitordevelopments so that they may be at the forefront of this changing technical field.

(k4)Information on emerging technologies and estimates of potential powerproduction were provided by Eric Larson and Robert Williams of the PrincetonUniversity Center for Energy and Environmental Studies.

iii

Chapter One

BACKGROUND

1.1. The Sugar Industry in Thailand

1.1.1 Recent History

Sugar has been cultivated in of the industry was largely

Thailand since the for domestic pur

17th century. poses until the

However, mid-1970's.

the output In the

1960-1961 crop year, 2.19 million tons of cane was grown on just 441,000 rai (about73,500 ha). By 1975-1976, the total output increased to almost 20 million tons of cane on 2.35 million rai (about 392,000 ha). In the past 10 years production has goneas high as 30.2 million tons (1981-1932) while falling to 40% of that level in 1979-1980.

The instability which marks the sugar industry worldwide is fully reflected in the Thai sugar sector. Great fortunes are made in the years of high prices (1973-74,1979-80). These profits support the lean years of high production and low prices(19S0-1931, 1934-19S5). \Vith most of the world's sugar output subject to varioustypes of orderly marketing agreements, quotas, contracts, and other "extra-market" devices, the 20% which is traded in relatively free international markets must bear the brunt of any variations in yields, output, and demand.

For such nations as Thailand, with half or more of their total output sold on theworld market and therefore subject to its vagaries, the annual variations in earningsfrom sugar are substantial. This boom-bust cycle helps explain the continual patternof government involvement in the sugar business in Thailand, as elsewhere. Thefollowing list of government interventions is suggestive of the nature of the industry:

1937 First government sugar mill in northern Thailand 1960 Ban on sugar imports due to excess production1961 First price assistance program for industry 1965 Repeal of 1961 price program1968 Limits on production and milling 1970 Government leads program to consolidate mills 1974 Introduction of sugar export duties 1982 Introduction of 70:30 profit sharing system 1984 New sugar act aims to control acreage and milling

1

BACKGROUND

1.1.2 Production and Processing

In the 1950's and early 1960's, sugar growing was well distributed around the Kingdom with none of the four regions having as much as 40% of the market. Then, the marginal production areas were in the Northeast and the North. By the late 1970's the North and the East were about equal in production while tle Central produced more than 60% of the Kingdom's cane crop. The tremendous increase in Thailand's sugar production was fueled largely by the cultivation increases in the Central region and only secondarily by increases in the other regions. (About 50% of the increased land area came from the Central Region. However, since the yields there are normally about 10-25% higher than in the other regions, at least two thirds of the total increase in production came from the Central region. About 25% of the output increase appears to have come from rising yields.)

The tables below show th'e changes in the Thai sugar industry from 1961 to the present.

Table 1.1: Cane Production in Thailand 1961-1984 (000 tons)

Region North East Northeast Central Kingdom

Year 1961-62 279 872 233 811 2,195 1970-71 198 1,826 219 4,342 6,585 1975-76 1,615 3,340 900 13,243 19,099 1979-80 1,901 2,447 1,478 6,785 12,612 (drought) 1984-85 3,606 4,141 3,327 13,798 25,053

Sources: Kees Bot, "Employment and Incomes in Sugar Cane Cultivation in Thailand," 1981: Office of the Cane and Sugar Board, "Laboratory Results, 1984-85"

Table 1.2: Sugar Cane Milling Output 1961- 1984

Sugar Year Factories Capacity Production

t/d '000t 1961-62 40 20,974 151.3 1970-71 27 42,017 532.4 1975-76 42 137,874 1,603.5 1979-80 43 169,711 1,035.0 1984-85 45 288,097 2,468.4

Sources: Kees Bot, op cit, and Office of the Cane and Sugar Board, op. cit.

2

BACKGROUND

Capacity in the cane industry has expanded more rapidly than has cane production.Perhaps as significant, the average mill size has grown from 524 t/d in 1961 to 6400t/d in 1984. Growing mill size serves to intensify the competition among millers for cane since larger mills require substantial secure supplies of cane to keep operating.

The current sugar law apportions quotas to each mill based on a moving three year average production level. DomeF' c sugar prices are set significantly higher than current international prices. Each mill group receives a domestic market allocation, an international (export) allocation, and a surplus allocation. Smaller mills receive aproportionately larger share of the domestic allocation than do the larger mills. Current quotas are set at a level of production substantially lower than the 1985-86level. However, by basing the allocations on an average of past production, the current quota system presents a formidable disincentive to reducing capacity byshutting older mills.

1.1.3 Outlook for Thailand's Sugar Industry

With low international prices and continued overproduction, the domestic market becomes the key to recovering costs during the year. At current prices,international sales cover just the cost to buy cane from farmers while domesticsales pay some of the fixed expenses. Under such a condition, most millers choose to stay in the business. Only a small increase in prices from present levels could create substantial profits for the industry.

Figure 1.1: Thailands Sugar Quota System

Quota "A" bl 2/kg (refined) domestic market ($0.21/lb)

Quota "B" b5/kg international mkt ($0.087/lb)

Quota "C" surplus crop

3

BACKGROUND

1.1.4 Role in Asia and World Industries

From a peripheral role in the 1960's to a major one today, Thailand's sugar industryhas progressed to the top ten of the world's exporters. Within the Southeast Asiaregion, Thailand has becorne the largest exporter of sugar and one of the largestproducers in all of the Asia-Pacific region.(Figures 1.2 and 1.3) It is still too earlyto tell what form the industry's shakeout will take or whether another good year will provide enough optimism for another five years. Thailand's relative exclusion fromthe U.S. sugar quota system has hurt the industry but has undoubtedly forced on it efficiencies which enable it to turn profit at lower prices thana can those countries which rely on the U.S. market for their profitability.

For the crop year 1984/85, Thailand had a quota of just 35,560 tons, 1.4% of totalU.S. imports. The three largest quota holders, the Dominican Republic, Brazil, and the Philippines together account for about 45% of U.S. imports. As a result, Thailand does not 'iew the U.S. market as a savior.

For the 600,000 tons marketed internationally by the Thailand Cane Sugar Boardunder Quota B, the U.S. market represents 6% of the total. This may raise averageprices under Quota B by $0.0073/lb., 8.3% above current world market prices.

Within Asia, however, only India, China, and Australia produce more sugar than Thailand. Of countries in the USAID system, Thailand has the second-largest sugaroutput. On a worldwide basis, Thailand accounted for just 2.5% of output in1984/85. But this makes the Kingdom the tenth largest producer in the world.

Since sugar output is high relative to domestic consumption, Thailand ranks fifth among world exporters at 5.4% of the world market. (Cuba, Brazil, and France together account for more than 40% of world exports.)

With sugar beet production down in the EEC over the past five years, the cane sugarworld has gained but for the offsetting increases in USSR output. Worldwide, sugardemand has remained virtually level since 1981/82, owing largely to market penetration by high fructose corn sweetener.

The outlook for Thailand in the world sugar market continues to be problematic.Because the Thai economy does not depend as heavily on sugar as do the economies of many other sugar producers, Thailand can afford and may be willing to maintain productive capacity in spite of the vagueness of the market.(l)

FIGURE 1.2

WORLD SUGAR PRODUCTION, 1984-85 Share of Total Output

N.America (9.2%)

Asia-Pacific (2 1.4) Carib. & C. Am.

(12.2%)

Middle E. (2.6%)

Africa (8.1%) S. America (14.9%)

USSR (9.2%),

Other EUR (8.4%) EEC (13.9%)

FIGURE 1.3

EXPORTS OF SUGAR, 1984-85 Share of Total Output

Other (7.2%)

Asia-Pacific Carib. & C. Am. (30.9%) (21.9%)

(8.7%) S. America (12.7%)

EEC (18.5%)

5

BACKGROUND

1.2 Electricity

1.2.1 General Description

Thailand's power sector consists of three state enterprises. The Electric GeneratingAuthority of Thailand (EGAT) is responsible for generation and transmission. TheProvincial Electric Authority (PEA) and the metropolitan Electric Authority (MEA)are responsible for distribution to the entire Kingdom outside Bangkok and theBangkok metropolis, respectively. In addition, EGAT supplies power directly to ten large industrial customers.

EGAT is generally considered one of the most efficient electric generating utilitiesin any aeveloping country and carries out training for other LDC utilities. Theefficiency of the generating system is borne out by the low prices at which EGATtransfers power to the two distribution companies. The current average transferprice is baht 1.36/kwh. This corresponds to $0.052/kwh at current exchange rates.Retail prices range from $0-060-$0.081/kwh depending nn the demand category and volume.

The technical competence of the public utilities is evidenced by the low levels ofautogeneration among major industries in the Kingdom. Indeed, only thoseindustries with readily available resources - eg. sugar, rice milling, forest products produce much of their own oower.

EGAT-generated power currently accounts for about 96% of the power distributed by the system. The remainder comes from small volumes purchased fromElectricit6 du Laos and the National Energy Administration's mini-micro hydroelectric sites. In addition, PEA generates a small amount of electricity fromdiesels (66 M\W installed capacity) to serve areas which are not yet on the national grid.

1.2.2 Growth of the EGAT System

Since 1961, EGAT's output has increased more than 45 times, from 467 GWhannually to over 21,000 GWh per year. While demand has increased tremendouslyfrom all economic sectors and from the Kingdom's different regions, there has been a market shift toward the dominance of industrial electricity demand for the systemas a whole. Table 1.3, below, shows the change in the output of sincethe system1961.

The shift from a demand structure based on intermittent demands by household and commercial consumers to one based more broadly on industrial use of mechanicaldrive, has permitted EGAT to shift its generating mix from one based largely on small (40-60 MW) hydro and diesel units to one which relies largely on baseloadplants using oil, gas, and coal. Under the current structure of demand, fuel pricesand transmission and distribution costs do not dominate the cost of providing service as they did withi the 1960's demand structure. However, such a system must relyever more heavily on high load factors to amortize the plants. Such high load factors can come only from industrial demand in the Thai context.

6

BACKGROUND

Table 1.3: EGAT Electricity Sales 961-1984 (GWh)*

1961 1972 rate 1984 (approx) %/yr %/yr

Energy Sold MEA 467 4909 18.3 10448 8.8PEA N/A 2587 N/A 8990 14.8

Total 467 7496 21.9 19349 11.1

Source: EGAT, "The Electric Future of Thailand," 1984, p.17 - sales differ from generation by amount of line losses

Table 1.4: EGAT Capacity and Generation Mix 1979-1984 and 1988 planned (%)

Type 1979 1984 1988

Hydro C

31.53 G

22.19 C

25.77 G

17.48 C

30.84 G

18.25

Thermal Coal/lignite Residual oil Gas/oil Gas (only) Diesel/gas Diesel

68.47 7.28

54.36 .... .... .... 6.82

77.81 8.34

62.55

2.37

74.23 9.99

12.68 43.48 3.95 1.50 2.63

82.52 10.09 32.07 NA

37.00(2) NA 0.06

69.16 13.45 10.40 38.11 1.68 .... 2.47

79.55 19.10 5.62 NA

54.77(2)

0.06

Imported NA 4.72 NA 3.30 NA 2.19

Total MW/GWh 2883 13,964.55 5855 21,066 7137 29,453

Sources: Asian Development Bank, "Asian Electric Power Utilities Data Book, 1985", and EGAT, op cit.

From 1961 to 1975 the system grew from almost nothing to almost 7500 GWh inannual sales, a tenfold increase in per capita consumption and a 22% annual growthrate. Through the price increases and recessions of the 1975-84 period, electricitysales still grew at a pace exceeding 10% Kingdom-wide, almost 15% in rural areas.

7

BACKGROUND

Revenues of EGAT have grown commensurately. From $358 million in 1979 (b7.2billion) to $1.0 billion in 1984 (b26.6 billion), the utility has seen steady rises in sales. Other measures of financial health are more equivocal. Heavy capitalinvestments with large foreign borrowings have 7educed the ability of the enterprise to remain liquid without continued injections of debt capital.(3) The growthrequirements of the electric power system will continue to rely on large foreign borrowings as long as :he self financing ratio remains at its current low level.

The rate of growth in electricity demand is expected by EGAT to remain above 10% for the rest of the 1980's. This is due. at least in part, to the rapid pace of rural electrification. In the areas served by PEA, demand may grow at an annual rate of better than 15% in the residential sector. Current plans to encourage the movement of industry to rural areas will further raise the electricity demand outside Bangkok.(4)

Current projections of rural electricity demand indicate that PF3A demand will exceed half the EGAT total demand by the end of 1986. With its more "peaked"demand profile, EGAT will need to aad relatively more to capacity than to total generation. EGAT expects to add more than 300 MW annually from 1985-1993 and 400 M\\, after that. At best, they expect the load factor to renain steady at 67%. If that load factor faiis, then the adoitional capacity required to rneet the peak will cost relatively more per kilowatt hour to amortize the investments. Data prepared for EGAT forecasts indicate that residential demand is expected to rise as a proportion of total capacity.(Figure 1.4) Since EGAT's load profiles show residential demand to be less constant than industrial demand, then, other things equal, the load factor should fall. Table 1.5 shows the effects of different compositions of demand.

Table 1.5: Sectoral Power Demand for Selected Years, 1965-2000 (GWh,. %below)

Year Residential Industrial Other Total

1965 311.52 (28.3)

545.07 (49.6)

242.98 (22.1)

1009.57

1975 1490.00 (19.96)

4836.00 (64.8)

1170.00 (15.2)

7496.00

1985 4905.00 (24.8)

9974.00 (50.3)

4939.00 (24.9)

19818.00

1995 11957.00 (31.0)

18214.00 (47.3)

8365.00 (21.7)

38536.00

2000 16986.00 (34.9)

21329.00 (43.9)

10319.00 (21.2)

48634.00

Source: EGAT, op cit, p.94

8

FIGURE 1.4

HOUSEHOLD ELECTRICITY DEMAND, 1985-2000 17 (lnW/year) 17

15

14

13

12

11

10

, ,

4/ 3/

I

2

1.985 1/0 1995 2000

BR

BACKGROUND

With current capacity standing at about 6 GW, system expansion plans call for an adaitional 6.5 GW by 2000. Under current financing conditions for EGAT and with their current construction costs of about $1 161/kw, the foreign borrowing component will exceed $6.2 billion over the next 15 years.

The average size of the EGAT's generating facilities has risen during the past 10 years. In 1975, the utility relied heavily on small hydroelectric, diesel, and steam power plants. During the past 5 years, however, the development of the Kingdom's gas and lignite deposits has combined with increased baseload demand to raise the average power plant size. EGAT's expansion plans call for thermal plants in excess of 300 MW each except in the southern part of the Kingdom. Many of these units will be built for dual firing (gas/oil, gas/coal) and will use domestic energy resources until the imported coal plants are built in the late 1990's.

Implicati c- s:

o Thailand has a well run and well planned Plectric generating and distribution system

o Expansion of the system is heavily leveraged with less than 20% of annual investment coming from internal funds

o Shifts of demand to rural areas and to households will add to generation requirements while putting downward pressure on load factors

o Current capital costs per new kw equal $1161. That is, a new 300 MW plant will cost over $330 million

o With annual capacity additions growing from 200 MW/yr to 400 MW./yr, the cumulative investment costs will exceed $6 billion by 2000

o For the mid and late 1980's, natural gas has become the Kingdom's most important electric generation source, oil has sharply declined

o By the late 1990's, the annual increments to capacity will be expected to come from imported coal rather than domestic resources

1.3 Economic Development in Thailand

Through the 1960's, development in Thailand proceeded at a rapid pace, as much as 12% in one year (real). Since 1960, per capita GDP has grown in every year but 1972. Current rates of growth are in the 4-6% range for GDP growth and the 3.5-4.5% range for per capita income.

10

BACKGROUND

During the entire period, the share of consumption accounted for by, government has grown relative to private consumption while investment has remained fairlyconstant at about 30% of GDP. By 1986, the share of government in the economyhad reached i8%), according to the NESDB. Almost half of the government share isinvestment, rather than consumption for example the electric power industry, roads,irrigation works and the like.

The results of such structural changes can be seen in the changing composition ofnational output in the Kingdom. In 1960, almost 40% of the GDP originated inagriculture. By 1982 that figure had declined to 20%. Manufacturing, just 12% ofGDP in 1960, rose to 20% by 1982, while services increased from 466% to 57%.

Within the manufacturing sector, heavy manufacturing had the highest rates ofgrowth. The relatively slower growth in food processing and beverages representsprimarily domestic demand growth, since the products of such industries face stiffertrade barriers than do many other manufactured products from the country.

The new five year plan calls for a continued shift into manufacturing and services for both domestic and export targets. The goal of the government is to move intohigher value goods and services. In the government literature the value of goods andserice exports is slated to expand at roughly Twice the rate of the volumes of commodities.

At 40% of the economy, agricultural commodities still represent the backbone of the goods sector. Of the important foodstuffs, only rice and fruits can be sold intounregulated markets. The other major commodities, cassava, sugar, rubber, palm oil must all face some trade barriers in both developed and less developed nations, Inaddition, many of Thailand's customer nations have had great success recently with improving their own outputs of agricultural commodities. As a result, traditionalagricultural commodities will remain an important, though slow-growing and trouolesome sector of the economy. For example, increased self sufficiency amongmany of Thailand's rice will them relycustomers lead to increasingly on the international rice market to buy residuals. withAs the wheat market, suchpurchases will reduce the stability of the market as it will need to absorb most of the variability in demand from a shrinking proportion of the total supply. Continuedreliance on the commodities markets may be accompanied by increased concerns about medium term foreign debt as the 1990's approach. Purchases of militaryhardware and financing of large capital projects have created a sizeable foreigndebt. Such financial considerations may increase the pressure on export industrieswhile heating up the competition for foreign exchange for investments in the early1990's.

11

BACKGROUND

1.4 Technical Options in Cane Energy

The economic dimensions of the technical alternatives for the cane industry center around the markets for the inputs and outputs of the industry and the financial aspects of the proposed changes in output mix. The team was prepared to consider a number of energy production options for the sugar industry. These included:

o Electricity for the national grid

o Ethanol fuel additives

o Briquettes of solid fuel

o Other materials - pulp, fiberboard

The team chose electricity because the other options did not appear to yield the types of benefits for the industry as a whole that electric~ty production can. For example, the structure of petroleum fuel prices in Thailand cannot assist the marketing of ethanol. Moreover, the government has made clear on several occasions since 1982 its lack of interest in the fuel. Briquetting technology can be evaluated as an adjunct to a larger project but the market for solid fuels in Thailand does not appear to be large enough to materially assist the industry as a whole. Similarly, the market for other materials derived from baggasse does not appear large enough to warrant investments by mill owners. On the other hand, the electricity market in Thailand is expanding rapidly. EGAT, though well run, may have to compete for financing with other government agencies if it continues to finance, heavily with debt. Improved use of the electrical generating capacities in sugar mills can provide the equivalent of one or more year's growth in electricity demand. From the standpoint of natiornal impact, electrical generation is the area which can most benefit the Kingdom.

The economic evaluation of technical options for the industry will focus on altetnative markets for inputs, primarily cane trash, and on the output market for electricity. One important economic consideration related to cane trash is the impact of collection and use on the market for feed. Economic analysis of inputs must also consider what will happen to su-ply of cane trash with changes in price. The output markets are the province of th: millers and of the electric generating company, EGAT, and the electricity distribution companies, PEA and MEC.

1.4.1 Input Markets Analysis

Chapters Two and Four discuss the economics of the various field alternatives for providing the mill with sufficient material to produce the assumed level of electric power. One primary factor affecting the amount of material available will be the competing markets for field trash. In particular, the analysis compares the value of field trash as feed, fertilizer and field cover, and as an energy resource.

12

BACKGROUND

The competing uses of field trash will provide a floor value which millers purchasingthe trash fur energy will need to exceed in order to make the resource available for energy uses. \\here a competing use can outbid energy users, the key issue is the volume ot the trash that can be absorbed by those other uses. In Thailand, there is a limited market for fresh cane trash for use as animal feeu. The market is constrainea by the short time which cane trash remains "fresh" and by transport requirements.

Somhe volumes of bagasse will likely be available as inputs to electricity productionduring the non-crushing season. The value of this resource will be determined largely by its value as an input to such other markets as fiberboard and pulp. Once an electricity program is established, the amount of surplus bagasse available may grow if mills adopt a more aggressive program toward efficiency in the combustion of bagasse. Our case studies will examine the economics of investing in improved efficiency of combustion for electricity production.

13

BACKGROUND

Notes

(1) All data from Foreign Agricultural Service, "World Sugar and Molasses Situation

and Outlook", May 1, 1985.

(2) Includes gas used in dual fuel capability plants.

(3) This is a common phenomenon for undercapitalized fast growing firms. Where a recourse to equity markets is possible, the firm will usually raise capital throughsuch share markets. Where share sales are not possible the firm must resort to borrowing to provide the needed capital.

(4) All figures from EGAT, "The Electric Future of Thailand," and the World Bank, "Thailand Energy Assessment."

14

Chapter Two

THE RESOURCE BASE

2.1. Introduction

The study team recommends the use of cane residues to fuel sugar mill boilers forelectricity production. Cane residues are the leaves and tops of cane plants thatremain behind in the field after the harvest. In Thailand, as elsewhere in the world,these represent a significant agricultural biomass resource that is underutilized.From preliminary observations, it appears th .t as much as 6.5 million tons ofresidues (at 35% moisture) could reasonably be harvested per year. These wouldsupport, if burned with minimal improvements, as much as 270 megawatts ofgenerating capacity. If burned in more efficient boilers, they would sustain as much as 715 megawatts.

The sugar cane plant produces, along with sugar, very large amounts of fiber--itmay, in fact, be the most efficient of all commercial plants in producinglignocellulosic material.(l) A portion of this fiber reaches the mill in the canestalks, and, after processing, takes the form of bagasse which is used to generate3team and electricity to power the extraction process. Generally speaking, each tonof milled stalks produces one-third ton of bagasse (at 50% moisture). A very largeamount of fiber, however, is left in the field after harvest in the form of cane residues.

2.2. Estimates of Available Residues

The precise amount of fiber available from cane residues can be expected to varywith plant varieties, climate and soil conditions, cultivation procedures andharvesting practices. Available evidence, however, suggests that where the cane ishand-harvested without burning, as in Thailand, the fiber in residues can be expectedto equal or exceed that which reaches the mill in the harvested stalks.(2)

In the most detailed examination of this problem completed to date, a study team inthe Dominican Republic concluded onthat, average, there was 0.67 tons of cropresidues left in the field (at 50% moisture) for every ton of cane stalksharvested.(3) The cane involved was cut and topped by machete, without burning.Measurements were taken for a range of varieties under widely differing growingcondiiions. Informal field visits completed in the ,Central and Eastern Regionssuggest that the amounts of field trash in Thailand are of the same magnicude.

A portion of these cane residues are already collected in Thailand for sale to amill. and freshly cut green tops are occasionally collected for farm animals. feed

In most cases, however, the residues are burned or left on the field to decompose.,

15

THE RESOURCE BASE

Cane residues are in most respects similar to bagasse as a boiler fuel, but if they are allowed to dry in the field and are stored correctly their fuel value is greater. Tests in the Dominican Republic revealed that if the residues were allowed to dry in the field for 4-6 days, moisture content dropped from 50% at harvest to 30% or lower. Further drying during storage could result in a fuel of 20%-25% moisture, significantly enhancing its usefulness as a source of energy.(4) In this analysis the team has used a moisture content of 35% as its "base case," but has also calculated the results of fuel burned at 25% to demonstrate the additional benefits that might be obtained.

In gross terms Thailand's 23 million tons of cane could, therefore, be expected to produce 13 million tons (at 35% moisture) of high-quality boiler fuel. Depending on the efficiency of the combustion equipment in which it is utilized, this represents fuel enough to sustain from 540 to 1 ,30 megawatts of electricity production.

However, not all of this material can or should be collected. In years in which a new crop is planted (plant crop years) a portion of the residues should remain on the field to provide organic matter for the soil. And a light cover of residues is often desirabie in ratioon years to retain moisture and inhibit weed growth while tile new shoots of cane are establishing themselves.

For purposes of this analysis,.1he study team has assumed that the most intensive harvesting of cane residues will occur on fields that will be replanted immediately, since the harvest will not damage the rattoon plants and the residues are often burned off anyway. Accurdingly, the team has estimated, for purposes of approximating the total available resource base, that in fields to be planted with a new crop (one-third of the total) 80% of the residues would be harvested, while in the remainder (two-thirds of the total), only 35% of the material would be collected. This comes to an average of 50% of the total, or 6.5 million tons of fuel at 35% moisture or 5.9 million tons of fuel at 25% moisture. At the two levels of efficiency described later in this study (see Chapter Three), this fuel would sustain from 270 to 715 MW of generating capacity. This figure, of course, represents only a theoretical estimate of what might be attained, but it does illustrate the potential of this underutilized resource.

2.3. Harvesting and Delivering Cane Residues

Experience with the collection of cane trash is very limited in the sugar industry. In the Dominican Republic it is harvested by hand and transported by oxen to provide the feedstock for the mra-iufacture of furfural. In India it is often removed from the field by hand and stacked for use as thatching material and cattle feed. Nowhere, however, is it currently collected on a large scale fcr boiler fuel. To remedy this lack of knowledge, a program of field tests is scheduled to begin in early Fall 1986, in Jamaica in conjunction with a project designed to convert the Monymusk estate in that country to electricity production.(5) Also, the Government of Puerto Rico has just announced a plan to test techniques for the production and management of

16

THE RESOURCE BASE

high-tonnage cane and its residues for comburtion in the Aguirre region of thatisland. The conditions in these areas, however, are somewhat different from those in Thailand.(6) Accordingly, the team assumes (see Chapter Six) that attempts at cane-residue co-generation in Thailand will be preceded by a program of fieldexperimentation, similar to that underway in Jamaica, to test a variety oftechniques for harvesting, baling, transporting and processing trash for use as a fuel.

Pending verification by a program of field trials, the team recommends the following approach:(7)

1. The leaves and tops, after harvest, are raked into windrows. Much of the moisture loss will have cccurred before this operation takes place. It canbe done by tractor-drawn mechanical rakes (the assumption here) or byhand.

2. The material is allowed to continue drying for 4-6 days. As noted, the residues can be expected to reach a moisture of 30% or less during this period.

3. Large baler/compactors, pulled by tractors, compact the material into bales of 1/3 ton, measuring 1.85 meters in diameter and 1.23 meters in length. The balers are commercially available and relatively inexpensive.(S)

4. The bales are moved to outdoor storage sites near the cane fields usingbale movers. Decentralized storage is important, as the material required fer power production is bulky and would occupy too much space if stored at the site of the power plant.

5. The bales will continue to dry, covered if necessary, bringing moisture levels down to as low as 20% or less.(9)

6. Bales are transported to the mill for shredding and combustion as they are needed. Transportation will take place via the same types of vehicles,and along the same routes, that are currently used for cane.

Whether this or another approach to the management of cane residues is adopted,the conditions in Thailand appear generally favorable to the exploitation of this resource. Among the factors that contribute to this conclusion are the following:

A. Climate

Desirable attribu.es of a biomass fuel include low moisture content and year-roundavailability, both of which are highly dependent on climate. A long, dry harvest season provides good conditions for drying the cane trash in the field at low or negligible cost.

17

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THE RESOURCE BASE

B. Field Conditions

The team's observations of field ccnditions in the areas studied indicate that they are very favorable to the operation of field equipmenT for raking, baling, bale transport, and storage. The cane fields are mostly flat, well drained, relatively free of obstructions, and can be entered by trucks arcd other transport vehicles. Tractors are in common use for tillage and fields are conditioned for access of tractors and trucks.

C. Labor Force

Labor for cane cutting and loading seems to be readily available in Thailand. The

field operations are very labor-intensive and the workers' productivity could be increased by mechanizing cutting or loading. However, at prevailing wage rates and productivity levels, cane iscut and loaded at a cost inthe neighborhood of b50 - b75 per ton. This is a rough estimate based on information gathered in the study.Mechanical harvesting and loading can cost as much as b200 b250 per ton in thehigher cost areas, so it isnot expected that the basic harvest methods will changerapidly. The current method is favorable to the delivery of clean, uniformly topped cane and the production of field trash that isalmost completely free of soil and therefore a good biomass fuel.

D. Spatial Distribution of Can--Fields

A concentration of cane fields close to the power plant reduces the transportdistance and makes it easier and less expensive to use field trash for biomass fuel. The Kanchanaburi area in particular has a high concentration of mills which is favorable to these operations.

2.4. Agronomic Impacts

The removal of cane residues will affect the field conditions in a number of ways,but studies conducted elsewhere suggest that these can be accommodated without serious problems, aL least in the short term. Note that the analysis presented here assu,.es that only 35%0 of the residues will be removed from fields where rattoon crops are t0 be grown. Where this is done in such a way as to leave a uniform cover of residues, the effects can be expected to be minimal. Where most of the trash isremoved, as in plant crop fields, the impacts will be greater, but still manageable.In either case, the team recommends that a testing program be adopted for the first project so that the agricultural effects can be carefully monitored.

A. \Weed Control

Studies conducted elsewhere suggest that some weed growth will result from the removal of cane trash cove since sunlight will reach the soil more readily.

Herbicides, already used incane planting, are effective in controlling excess weed growth when as much as 75% of the cover is removed. Even where 100% of the cover is removed, herbicides applications have resulted in an acceptable level of weed control.(l 0)

18

http:assu,.es

THE RESOURCE BASE

B. Moisture Retention

In those areas where moisture retention is a problem, the removal of all cane trash may be inadvisable, since a light cover of cane trash may lower the rate of evaporation. As the importance of this variable is quite site specific, it should be

removal of residues, like the removal of crops,

evaluated and the results incorporated in the design methodology.

of the trash collection

C. Fertility

Cane residues contain a variety of nutrients (among them, N, P, K, and S), and the will result in the loss of nutrients

which may require an increase in fertilizer applications as a consequence. Research at the Hawaiian Sugar Producer's Association, interestingly enough, suggests thatthe removal of cane trash will actually enhance the availability of Nitrugen, and thus be beneficial.(l )

D. Changed Agricultural Practices.

Because cane residues will become, in effect, a new crop, farmers may be willing to change varieties and add agricultural inputs to produce more residues in associationwith cane. Research in Puerto Rico and elsewhere has identifiea a number of varieties that produce prodigious amounts of..tops and leaves, and Thai extension services and farmers may want to explore the economic attractiveness of these. The value of cane residues may also justify greater attention to such things as caneplant diseases (White Leaf Disease, Ratoon Stunting Disease), ratooning practices,and fertilizer appiications.

2.5. Costs

The cost for field trash delivered at a mill has five major components:

A. Return to Farmer for Cane Residues.

The income to the farmer after all costs are paid for making cane trash available to mills is fixed in this study at b30/ton, as described in Chapter Four. This is equivalent to an increase in the farmer's return from the cane he has grown of more than 5% after allowing for costs of poduction. In order to iliustrate the impact of changes in farmer income, the analysis presents sensitivity studies using bl0/ton,b50/ton, b!00/ton, and b150/ton.

B. Labor

Labor cost calculaLtins were based on the assumption that unskilled labor receives b60/day and skilled labor, such as tractor operators, receive b160/day. The team assumed that each farmer/laborer team collects, loads, stores, and bales 10moves tons of trash a day in the out of crop period. The farmer/laborer team requires two shifts of skilled and unskilled labor per tractor day.

19

THE RESOURCE BASE

C. Tractor Power

Tractor costs were based on the assumption of one hour per annual ton of powerplant input at a cost of b72/hour, figured on the basis of 20% return on investment over five years, an operating time of 3000 hours a year, and a purchase price of b650,000.

D. Other Field Equipment: Balers, Rakes and Loaders.

The cost of other field equipment was based on the following assumptions: a rate of return on investment of 20% per year over a five year working lifetime; the assumption that each baler can process 8000 tons/year, aod that each baler requires one rake and two loaders; costs for balers, rakes and loaders, respectively, at b351,000, b62,400, and b78,000.

E. Transport.

Transport costs are .omputed on the basis of b60/ton for the small mill and b75/tonfor the large mill. Tii: i-, based on current costs for transporting excess bagasseduring the season.

20

THE RESOURCE BASE

Notes

(1) For a discussion of the productive capacity of the sugar cane plant, see Alex Alexander, The Energy Cane Alternative (New York: Elsevier), 1985.

(2) Alexander and his associates at the University of Puerto Rico measured the dry-matter content of machine-harvested cane stalks and residues andconcluded that for each 7.9 tons of stalks there were associated 6.7 tons of tops and leaves. Assuming that some 15% of the weight of the stalks composed of sucrose and other sugars,

was these data suggests that fiber quantities

in stalks and residues were about equal. See Alex Alexander, The Energy Cane Alternative (New York: Elsevier, 1985), 46. Barney Eiland and others atUSDA in Florida have measured available trash in fields that have been burnedand mechanically harvested. Their conclusion is that, in general, 2-3 tons of dry matter can be recovered from fields that yielded 20 tons/acre at harvest. This would be the equivalent of about 5 tons of green matter. Eiland alsoestimates that the burning removes another 2-3 tons per acre. Extrapolatingthese estimates, the Florida experience suggests that 10 tons of trash at 50% moisture may be available for every 20 tons of cane harvested by mechanical means. Again, since the 20 tons can be expected to produce between 6 and 7 tons of bagasse, the fuel value of the trash exceeds that of the bagasse. AsEiland stresses, however, the challenge is in collecting the material at a costthat makes economic sense. See B.R. Eiland and J.E. Clyton, "Unburned andBurned Sugarcane Harvesting in Florida," Transactions of the ASAE (Vol. 26, No. 5, 1983).

(3) This study was sponsored by the electric utility of the Dominican Republic.Because of the similarity of conditions, the study team working in Thailandrelied heavily on the results of research in the Dominican Republic in makingestimates. For further details, see the summary in Allan Phillips, "Cane CropResidue for Biomass Fuel," available at the Department of AgriculturalEngineering, University of Puerto Rico, Mayaguez; and Republica Dominicana,Corporacion Dominicana de Electricidad, "Estudio de cuantificacion, recogida,acopio, manipulacion, transporte y almacenamiento del barbojo en los ingeniosBarahona, Consuelo y Quisqueya; Informe Final" (Santo Domingo: DCE, 1983).

(4) Using current boilers and turbines in Thailand, the team estimates a powerpotential of 180 kwh/ton at 30% moisture and 245 kwh/ton at 25% moisture.

(5) See U.S. A.I.D., "Cane Production for Sugar and Electric Power in Jamaica,"(Washington, D.C.: Bioenergy Systems and Technology Project, 1984).

21

THE RESOURCE BASE

(6) Of particular importance is the fact that the cane is grown on large estates in both Jamaica and Puerto Rico.

(7) This design is based on the research completed in the Dominican Republic for the electric utility as part of a plan for a trash-based power plant that is still under consideration. See the reports cited earlier.

(8) Other variations of materials handling approaches might be attractive in Thailan and should also be explored. The large bales offer a number of attractive features, but do requi :emechnical devices for handling because of their bulk and weight. Another option is to use small rectangular bales in the ra~rge of 40-50 kg weight. These can be handled manually and give a higher load density for transport, but would need to be covered by loose trash or plastic covers to prevent the absorption of moisture during storage.

(9) This conclusion is based on experiments conducted at the Univer-ity of Puerto Rico under the auspices of the Center for Energy and Environmental Research.

(10) See study by Phillips.

(11) See study, cited earlier, by Republica Dominicana.

22

Chapter Three

POWER GENERA'ION

The mills and power plants used by the sugar industry in Thailand have been designedand built primarily to produce raw, sugar and molasses. Many have added equipment to allow them to produce refined sugar as well.

Diversification of the sugar industry to produce products besides sugar will changedecisions on future investment and could alter management practices in the mill and power plant. Development of new products involves evaluation of new market requirements and careful con sideration of the costs and benefits to existing operations.

For a small investment, existing power plant equipment installed at sugar mills 'an generate electricity for sale to the grid at a profit. The largest portion of thisinvestment is for equipment to process baled tt'ash. Because trash is drier thanbagasse and improved boiler controls will be added, power plants at existing mills should attain 65 percent efficiency burning 35 percent moisture trash as c.posed tothe 55 percent efficiency they achieve on bagasse. Uncertainty exists concerningthe effect of higher boiler temperatures on current equipment and the ability 'o use existing evaporators at the sugar mill to condense steam for return to the boiler.

Even greater Inprovements in projected performance will be attained if turbine backpressures can be reduced on existing equipment. In addition, moving sugarrefinery operations to the off season can increase the amount of surplus electricityproduced as can improvements in plant operation, particularly decraasing the amount of down time.

If new mills specifically designed to produce electricity in conjunction with sugarprocessing are built, fuel requirements will be reduced to at least one third ofrequirements at existing mills. With new mills, surplus electricity will not only be generated during the crushing season but out of season as well. Investments in newmills will greatly increase the total amount of power Thailand's cane sector can contribute to national electricity production.

3.1. Electricity Production in Thailand

A review of general character'istics of the electricity sector in Thailand wasprovided in Chapter One. The policies and prices set by EGAT, the primaryproducer of power in Thailand, will effect the ability of mills to sell and profit from the sale of any power which they generate. The performance conditions which mill owners will hav(- to meet for power will be directly or indirectly determined byEGAT.

23

POWER GENERATION

Assuming EGAT agrees to purchase power, mill owners will have to negotiate the price to be paid for the category of power to be supplied EGAT. If EGAT follows practices currently used by U.S. utilities, the price they pay will depend on several factors including the quantity of power to be provided, the tifne the power will be available, and the reliability of supply. The i)ighest price would be paid for firm powver available to meet EGAT's peak demands because it could offset capital investments to build new capacity. Failure to deliver power in accordance with contract terms results in penalty charges which reimburse EGAT for maintainingstandby capability. The analysis presented here assumes that sugar mills will seek to provide firm power as reliably as other power generating facilities in order to be paid the higihest price.

If mill owners sell power to PEA or MEA, the price they receive will also depend on the quantity, time of supply, and reliability of power. The price PEA and MEA are willing to pay would be strongly influenced by the difference between their peak and average demand and EGAT demand charges.

3.2. Current Sugar Industry Operations in Thailand

While the milling season in many parts of the world lasts for seven or more months, in Thailand it varies across the country from about 75 to 150 days. In the Central Region which produces more than half of the total cane crushed, the season is much less than 100 days at the majority of mills.

.Mills in the Centra.l Region are mostly clusterea together and compete with each other for cane supplies. Mill owners assert that the length of the crushing season is determined more often by shortage of cane supplies than by bad weather.

Cane is delivered by trucks which are mechanically unloaded at the mill. Cane is processed and the bagasse used to fire the boilers which provide process steam and electricity for the plant. Wood, coal, oil, or bagasse left from the prior season is used to start the boilers at the beginning of the season.

Under normal operating conditions, bagasse slowly accumulates at the plant duringthe season. The quantity of bagasse left at the end of the season depends on a variety of factors, among them the efficiency of the boiler system and how smoothly the plant has run during the season. Bagasse consumption is higher if the mill is forced to start and stop because of equipment failure or inconsistency of cane suppiies. Several mills in the Central Region currently sell bagasse left at the end of the season to paper miils.

The Thai sugar industry has already installed electrical generation equipment with an overall capacity to produce about 250 MWh, which is more than enough to meet the total power needs of the industry. Several individual factories, however, do need to purchase power from the grid, particularly at the beginning of the crop. This is because they generate electricity in proportion to steam demand in the plant.(l) Power units were not designed as independent operations. Because refining operations do not begin until the end of the first week of crop, steam demand and conseauently electricity production are initially low.

24

POWER GENERATION

Some factories have installed excess generating capacity which is not used evenduring the crop and could be used to generate power for sale to the grid during cropif adequate fuel were available.

3.3. Options for Power Generation

The team examined several approaches to producing electricity as a co-product ofthe sugar industry. Producing electricity will require systems for supplying fuelthroughout the year and the introduction of some new equipment and operatingprocedures.

Demonstration by the sugar industry of the ability to supply electricity reliably willinfluence the Government of Thailand's decision to allow private generation of power and will influence the negotiations with potential electricity purchasers like EGAT and PEA on the price to be paid for power. Because the season when themills crush cane is short and boilers and generators are not used out of season, thiscapability can be demonstrated with minimum investment and risk.

The next section of this chapter will discuss technical considerations and equipmentrequired to generate power from trash out of season. It is followed by a sectionwhich analyzes technical performance at five specific sugar mills in Thailand. Later sections describe technical performance potential for equipment specificallydesigned to produce power in the sugar industry.

Y.4. Mill Modificacions Required For Off-Season Power Generation

To generate ejectricity during the idle season, the team assumed the mill will feedsurplus hagasse and cai., trash into existing installed generating equipment with aminimum investment in additional equipment. Under this scenario, the processing of sugar cane remains the major concern during the grinding season. After the grinding season, production of electricity becomes tne primary concern.

Because the existing sugar mills are not designed for the production and sale of power, several modifications must be made to existing plant equipment even under the minimum investment scenario discussed here. The modifications will vary frommill to mill. Although none of the changes proposed require use of new technology,the exact performance cannot be predicted in advance for conditions in Thailand. Changes which may be needed fall into five categories.

25

POWER GENERATION

3.4.1. Fuel Preparation Equipment

Sugar factories currently use bagasse for boiler fuel during the season. When the mill is operating, cane is crushed to extract sugar which produces the ground fibrous fuel, bagasse. The majority of boilers now used in sugar mills in Thailand are able to accept a wioe range of fuels although not without negative effects on boiler performance.

Boiler performance is not as important a factor in determining the profitability of sugar as it is for electricity. When a mill is selling power, optimum boiler performance directly affects profits.

Chapter Fwo discussed the characteristics of the fuel to be delivered to the plantfor use in the boilzers during the off season. The net calorific value ol this fuel is estimated to be 4337 BTU/lb at 35 percent moisture.(2) Fuel requirements for the boiler and consequently the capacity of fuel processing equipment to be installed depend on how efficiently the boiler transfers the calorific value of the fuel into steam.

Existing installed equipment is one component of boiler efficiency.(3) Fuel characteristics are another.(4) Optimum combustion for boilers in Thailand can be obtained by burning dry, small, uniform particles.(5) Fuel of this type will burn in suspension with maximum heat release rates and minimum excess air requirements. The fuel processing equipment will process baled trash and tops into fuel with appropriate characteristics to support optimum combustion.

Most mills currently have equipment for moving bagasse which would also be capable of moving bales of trash. Two primary pieces o! !quipment are needed to break up bales and shred trash in order to satisfy boiler fuel requirements.

A. Bale Processor

This device takes a whole bale and separates the layers of the bale such that the fibrous material can be fed to a grinding unit. John Deere makes a unit of this typewhich can handle S to 10 bales per hour (approximately 6 tons/hour) at a cost of about $8,500.

B. Shredder/Disintegrator

This device breaks trash into small uniform pieces. Two systems are offered in the United States. Champion Products produces a 3 foot chip and blow shredder rated at 25 to 30 tons per hour with an air carrier system for the shredded material. The cost of this unit, including motors etc. is $29,000. Silver Engineering produces a disintegrator with a rated capacity of 10 to 15 tons per hour, costing about $!5,000.

26

POWER GENERATION

The capital required for equipment is therefore about $3000 per ton trash per hour.Cost of installation will be site specific but will be about $1400 per ton trash perhour.

3.4.2. Boiler Modifications

Burning a different fuel will change various conditions within a boiler. The major

difference between bagasse and field trash as fuel is moisture content and possibly d. , content.

The moisture content of the field trash to be burned during the off season isassumed for purposes of this study to be 35 percent compared to about 50 percentfor bagasse. As explained in Chapter Two, actual moisture content is likely to be 25 percent depending somewhat on the weather conditions that exist between caneharvest and colledtion of trash. A one percent change in moisture is equivalent to a2.3 percent change in calorific value. (See Figure 3.1)

Cane brought to the factory for processing ishand cut and manually loaded ontotrucks and hence contains little field soil. Trash will be raked and baled and is likelyto contain more field soil. Ash content for trash is assumed to be 5 percent but could easily be as high as 15 percent if care is not taken in the field to limit soilpicked up with trash. A one percent change in ash content corresponds to a two percent change in calorific value.

Burning field trash at 25 percent moisture significantly increases the heat release rate in the boiler and reduces excess air requirements leading to improved boi'.?rperformance. Higher heat release rates and use of less excess air increase furnace temperatures and exhaust gas temperatures.(6)

Larger g'adients between furnace temperature and exhaust gas temperature yieldhigher boiler efficiencies. Exhaust gas temperatures can be decreased by addingequipment to preheat boiler feed water (economisers) and to preheat combustion air. Some mills already have economisers installed. Of the five mills examined inthe case studies for this report, one has an economiser installed. For powerproduction usi-ig dry fuels, investment in economisers would yield high returns.

However, operating boilers with higher furnace temperatures is not standard in the sugar industry and will affect installed equipment and operating procedures.

For sugar mills that have water wall furnaces, burning dry fuels will cause noproblems.(7) This type of furnace is not widely used in the world sugar industry forboiler pressures under 500 psig and would be expensive to retrofit.

27

FIGURE 3.1

RELATION BETWEEN HEAT VALUE AND MOISTURE CONTENT OF BAGASSE

HEAT VALUE

BTU/LB

7000

6000

5000

4000

3000

0 5 10 15 20 25 30 35 40 45 50

MOISTURE CONTENT PERCENT

28

POWER GENERATION

For traditional boilers, the equipment most affected by higher temperatures are therefractocits and the grace. Boiler refractories and grates are designed to withstandspecified temperatures. Materials in these components limit maximum boiler temperatures. High temperature refractories (capable of withstanding 3000'F) are readily available and easily installed at low cost. Modifying or changing grates is much more expensive.

The effect ol higher furnace temperatures on grate temperatures depends onequipment design and operating conditions and will need to be studied for each site.In general, the action of combustion air passing throug the grate has a cooling effect.

Trash burned during the off season is likely to have more ash of diverse compositionbecause of the way it is harvested. Gases in the boiler are above the softening pointof ash found in the fuel.(8) Ash in the fuel will melt above certain temperaturesdepending on its composition. Excessive ash, particularly fine particles, can fall onthe grate at temperatures of the order of 2300'F causing problems. In addition, ash particles can be deposited on the boiler tubes lowering heat transfer rates.

The problems posed by higher temperatures in simple boilers, however, are notinsurmountable. Temperatures can always be controlled by limiting the rate atwhich fuel is fed. Reducing fuel feed, however, reduces steam production and may effect plant economics.

In sum, the extent of modifications needed must be determined for each boiler. Pilot operations can provide useful data and reduce uncertainty.

3.4.3. Boiler Controls

The use of mill boilers and generators for power production (rather than sugarproduct.on) imposes different conditions on system operation. Optimum powerproduction requires stable fuel supply and close monitoring of combustion characteristics. Significant gains over existing boiler efficiency can be obtained for relatively small investment in monitoring and control systems.

Existing instrumentation at sugar mills is inadequate tc get optimum powerproduction from existing boilers. To achieve better performance, sensors are needed at various locations in the boiler to monitor temperatures, pressures, and water and steam levels.

Improved control systems need to be installed for the following sections:

29

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POWER GENERATION

(a) Boiler feedwater supply

(b) Furnace draft

(c) Fuel flow

(d) Combustion air

The boilers already installed in the sugar factories in Thailand produce steam at an overall efficiency of about 54 percent. With suitable control systems the efficiency can be increased to 65 percent.

3.4.4. Equipment to Condense or Exhaust Excess Steam

Existing generators in Thailand's sugar mills use extraction *turbines to produce power.(9) \Vhen 'he mills are not operating, there is no demand for the exhaust steam from Lhe back of the turbine. In order to operate the boilers and generators during the off-season, equipment must be installed to allow the steam to be condensed.

The team considered several alternatives. The most attractive opion in the short term appears to be to use the evaporators in the sugar mill to condense the exhaust steam.(1o) it is also a means by which it may be possible to produce a large quantity of potable water for sale.

3.4.5. Electrical Synchronization System

To sell electricity to the grid, the sugar mill must have in place interface equipment which provides:

(a) Frequency and phase synchronization of the generated voltage with the voltage of the national grid.

(b) Overvoltage and surge protection to eliminate power surges into and out of the grid system if either the grid or the factory system goes off line.

(c) The option to disconnect the factory power system from the grid if the grid system has to be repaired.

Much of the necessary interface equipment has probably already been installed in sugar factories, but it may be necessary to upgrade this equipment so that more power can go from the mill to the grid.

30

POWER GENERATION

3.5. Technical Analysis for Five Sugar Mills Assuming Minimum Investment

The ream developed case studies using data from five specific mills in Thailand.The five mills were selected to represent a broad spectrum of power generatingcapacities so that conclusions from the analysis could be extrapolated to other mills in Thailand.

Analyses have been carried out separately for operation of the sugar mills during thecrushing season and for operation of the boilers and generators to produceelectricity out of the crushing season.

3.5.1. Operation During the Crushing Season

The production of electric power in a sugar iactory is not a new technology. Sugarfactories in Thailand are nearly self sufficient in power during the crushing season.The purpose of this analysis is to determine whether mills can either generate more

morepower or surplus bagasse during the crushing season using existing equipment.No attempt has been made to apply full material and energy balances to the complete sugar operations.

Most sugar mills in Thailand supply steam to associated refineries during thecrushing season. Because altering the power/steam balance (Figure 3.2) at existingmills may alter the ability to generate surplus power or bagasse, this section alsoincludes a brief analysis of the effect of shifting refining operations out of season.

The data used for this analysis has been obtained from three sources:

a. "Summary of Laboratory Reports" furnished by The Office of the Cane and Sugar Board.

b. Information supp d by the factories.

c. Mill survey conducted in Thailand.

3.5.1.1. Effect of Down Time on Production of Power and Excess Bagasse.

The primary factor effecting a sugar mill's ability to accumulate excess bagasse isthe mill's down time during the crushing season. Boilers need to be fed bagasse tocontinue processing even if crushing stops. Boilers are fed with bagasse from storage.

Tables 3.1 and 3.2 present information on the number of hours of down time at thefactories being analyzed. The maximum grinding rate has been calculated bydividing the quantity of cane ground by the actual number of hours of grinding time while the mean grinding rate has been calculated by dividing the quantity of cane ground by the total hours in the season.

31

FIGURE 3.2

EXISTING MILL

Prime Movers

ru Boiler

21 Bar 3600CR

55% Eff.

Condensate for Feedwater Processing

Cane

Mill

Bagasse 50% Moisture

Raw Sugar Molasses

Refined Sugar

POWER GENERATION

Table 3.1: Factory Down Time

DOWN TIME CROP LENGTH DOWN TIME ACTUAL GRINDING FACTORY HRS HRS 9 HRS

N.K.S.L. 361 2830 12.8 2469 E.S. 473 2540 18.6 2067M.P. 200 1965 10.1 1765 W.K. 477 1990 24.0 1513 N.K.T. 226 1850 12.2 1624

Table 3.2: Factory Grinding Rates

MAXIMUM GRINDING MEAN GRINDING FACTORY RATE T.P.H RATE T.P.H.

N.K.S.L. 95 83 E.S. 281 229M.P. 451 406 W.K. 465 353 N.K.T. 368 323

Table 3.3 shows the difference between a plant's ability to produce power and excess bagasse when running at the maximum grinding and what is actually producedat the mean grinding rate. Reducing down time will significantly increase both the amount of power generated and the quantity of surplus bagasse on a per hour basis. These calculations were made by:

A) Determining total steam production from the quantity and calorific value of bagasse.

B) Determining overall process steam demand from the amount of juiceextracted per ton of cane, the performance of the particular evaporatorsystem installed, the refinery demand, and the feed water heating demand.

33

POWER GENERATION

C) Determining total prime mover power demand for the factory from the fiber throughput, the number of mills and the shredder demand. Alsoincluded is the steam demand for other turbine drives in the factory.

D) Determining make up steam demand from the difference between steam exhausted from the prime movers and steam demands for the process. Additional steam required for the process, normally comes through the turbogenerator. Power production is related to make-up steam demand because make-up steam is often passed through the turbogenerator.

E) Determining excess bagasse by exerapolating from the difference between steam production capability and overall process steam demand.

Table 3.3: Mean vs Maximum Grinding Rate

MEAN GRINDING MAXIMUM GRINDING RATE RATE

FACTORY:- N.K.S.L. POWER PRODUCED MWh 2.35 2,6.3 EXCESS BAGASSE TPH * *

FACTORY:- E.S. POWER PRODUCED MWh 4.5 5.3 EXCESS BAGASSE TPH 9.5 13.1

FACTORY:- M.P. POWER PRODUCED MWh 8.0 9.4 EXCESS BAGASSE TPH 11.5 17.6

FACTORY:- W.K. POWER PRODUCED MWh 8.8 10.7 EXCESS BAGASSE TPH 8.2 10.1

FACTORY:- N.K.T. POWER PRODUCED MWh 6.5 7.3 EXCESS BAGASSE TPH .6 2.7

*Mills crushing less than 3000 tons per day are generally unable to generate surplus bagasse with existing equipment.

34

POWER GENERATION

Excess bagasse available during the crushing season could be used to produce powerduring the crushing season for sale. Table 3.4 gives the amount of power which could be produced from excess bagasse. Because it is relatively small, it may be better to store the surplus for use out of crop or for sale to other markets.

If the surplus is used out of crop, it will reduce the amount of field trash which needs to be collected. Table 3.5 presents how many days each mill can generate assuming use of its potential surplus.

Table 3.4: Power Production From Excess Bagasse

EXCESS BAGASSE EXTRA POWER FACTORY T.P.H. MWh

N.K..S.L .... E.S. 13.1 1.8 M.P. 17.6 2.5 W.K. 10.1 1.6 N.K.T. 2.7 0.4

Table 3.5: Operation of Mill on Excess Bagasse

BAGASSE POWER I OF DAYS HEAT RATE FACTORY M.T. MWh power BTU/kWh

N.K.S.L ...... 56,527 E.S. M.P.

41016 31491

7623 5380

34 19

49,833 48,733

W.K. 30138 6261 15 43,681 N.K.T. 12802 2317 4 51,242

35

POWER GENERATION

3.5.1.2. Effect of Moving Refinery Activities to the Off Season

Current sugar mills all use extraction turbines which exhaust steam at approximately 15 psig backpressure to meet process needs. Converting raw sugar to refined sugar requires large amounts of steam. If sugar is not refined during the crushing season, the need for make up steam is reduced yielding more excess bagasse.

Shutting down the refinery will also reduce power production where make Lip steam is first passed through the turbogenerator. (Figure 3.2) Shutting the refinery duringthe crushing season may mean the mill will need to buy some electricity from the grid.

Detailed analysis needs to be carried out for each site to examine thc costs and benefits of manipulating the steam and power balance. Table 3.6 shows the amount of steam which could be saved by moving refinery operations to the off season. This savings amounts to the equivalent of between 5 and 10 percent of the fuel required during the off season.

Table 3.6: Steam Savings From Operating Refinery Off-Season

STEAM FUEL FUEL SAVED SAVED SAVED MW

FACTORY lb/hr tph t/CROP POTENTIAL

N.K.S.L. 15752 3.8 10761 E.S. 34500 9.5 24168 1.3M.P. 57396 14.4 28339 1.95 W.K. 76204 20.9 41632 3.3 N.K.T. 51321 14.2 26242 1.9

3.5.2. Operation During the Off Season

Producing power when cane is not being crushed depends on having a sufficient fuelsupply. With existing equipment, the quantities of excess bagasse available are insufficient to meet fuel needs for operating the plant during the off season. Theteam's analysis assumes field trash will fuel the plant for this period. Figure 3.3diagrams the mill operation during the off season following minimum investment.

Producing power during the off season does not require operation of all sections ofthe mill. The sections of the sugar mill which will operate are the bagasse storage area, the boiler house, the turbogenerator, and the evaporators. The team proposesevaporators be used if possible to condense exhaust steam from the generator rather than installing expensive surface condensers.

36

MILL AFTER MINIMUM

Processing Boiler2

Cane Field Trash 21 Bar0'400'C

S350/ Moisture

FIGURE 3.3

INVESTMENT

r--- Auxiliary

Boiler Equipment

Turbogenerator 1 Bar

CConrdensing

Unit

E Bagasse

]Storage

Mill

Not Operating Out of Season

Processing

Refinery

Not Operating Out of Season

POWER GENERATION

At existing efficiencies with minimum investment, fuel costs will dominate electricity production costs. This section analyzes fuel demand for four conditions:

A. No changes in factory performance;

B. Improved boiler performance resulting from bUrning drier fuel and installing boiler controls;

C. Improved turbine performance resulting from reducing the turbine backpressure; and

D. Both improved boiler and turbine performance.

Table 3.7 presents fuel requirements per MWh of power for both 35 and 25 percentmoisture content fuels for four cases. These fuel requirements have been used to calculate power costs presented in Appendix A. Appendix B presents tables which illustrate how fuel requirements were calculated for each mill. The ash content of the fuel was assumed to be 5 percent for all cases. The assumptionr for each case are:

3.5.2.1. No changes in factory performance

Boiler and turbine performance are assumed to equal the actual performanceattained in each mill with bagasse as fuel during the cushing season. Boiler efficiency is about 55 percent across the mills. Turbine efficiency is about 70 percent with a backpressure of 15 to 20 psig depending on the factory.

3.5.2.2. Improved boiler performance

One modification recommended for existing plants is installation of control systenls to allow more precise operation of boilers. Relatively simple controls which monitor such things as combustion products in stack gases can yield improvements in boiler performance. Controls are particularly important if drier fuels are used because drier fuels have faster heat release rates and consequently boiler conditions can fluctuate more quickly.

Trash collected and stored for boiler fuel will be drier than bagasse and have highercalorific value. The team estimates the calorific value of trash at 25 percentmoisture content to be 5147 BTU/Ib and at 35 percent moisture content to be 4337 BTU/Ib. Among other things, boiler efficiency depends on fuel quality. For trash at 25 and 35 percent moisture cortent burned in existing boilers with improved control systems, combustion efficiencies should be at least 65 percent.

3.5.2.3. Higher turbine performance

Turbine efficiency depends on a number of variables including the number of stagesand the temperatures and pressures at each stage. During the crushing season, steam exhausted from the turbine is used to meet process demands. During the off season, there is no demand for the exhaust steam.

38

POWER GENERATION

The general steam to power efficiency of a turbine depends on the enthalpydifference between the inlet and exhaust steam. Reducing the exhaust pressure willdecrease the turbine water rate for the same power output thereby reducing fuel demand.

Some turbines designee to operate between specific temperature and pressureranges can be modified. The units installed at the mills examined for this study areall extraction turbines designed to operate with an exhaust pressure of between 15 and 20 psig.

if the turbines installed at mills in Thailand are impulse type extraction turbines, itis probably possible to reduce the exhaust pressure by 5 to 10 psig. If they arereaction type extraction turbines, it may not be possible. This case assumes turbinebackpressure to be 5 psig less than existing turbine conditions.

The overall efficiency of the turbine has been assumed to be 70 percent for existingconditions. If the exhaust pressure can the resultbe decreased, net would be toreduce the amount of fuel required per kWh generated.

3.5.2.4. Higher boiler performance and higher turbine performance.

The last case assumes 65 percent combustion efficiency in the boiler and a reduction of 5 psig in the turbine backpressure.

Table 3.7: Fuel Requirements (Tons/MWh)

Fuel Improved Reduced Higher BoilerMoisture Current Boiler Turbine and TurbineContent Performance Performance Backpressure Performance

25% 35% 25% 25%35% 35% 25% 35%

Mill 4.91 5.59 4.16 4.474.93 5.31 3.87 4.48NKSL 3.96 4.72 3.99 4.353.36 3.67 3.11 3.69ES 4.63 5.49 3.92 4.65 5.07 4.304.27 3.63WK 4.04 4.79 3.42 4.06 4.593.86 3.27 3.88NKT 4.20 4.99 3.56 4.22 4.62 3.913.89 3.29

39

POWER GENERATION

3.5.3. Potential Power Generation in Thailand Using Available Trash

The potential power generation in Thailand depends on the amount of trash which can be harvested and t, ansported at acceptable cost to mills able to produce powerwhen not crushing cane. Cane in Thailand is grown by region. Using crop data for 1984, Table 3.8 presents the amount of power that can be produced by region using trash collection assumptions presented in Chapter 2.

Table 3.8: Power Potential From Trash By Region

Power REGION II of Days MW Capacity

NORTH 190 46 NORTHEAST 200 40 EAST 200 50 CENTRAL 250 135

TOTAL -- 271

3.6. Conclusions for Technical Analysis Assuming Minimum Investment

A. The calculations show that the power production from trash is about 180 kWh/ton with 35 percent moisture and 245 kWh/ton with 25 percent moisture.

B. Serious consideration has to be given to the effect of burning dry fuels on furnace temperature to ensure that high temperatures will not damage boilers.

C. Improvements in fuel economy and steam usage can [educe fuel demand.

D. The total available power production for the whole country assuming that only 50 percent of the trash is collected, is about 270 MWh, using existing equipment.

40

POWER GENERATION

3.7. Technical Analysis Assuming Investment in New Equipment

The production of power in the Thailand sugar factories during the season when themill is not crushing cane, using the existing medium pressure steam boilers and extraction turbines, is rechnically feasible without major risk and could easilyprovide as much as 270 MW of installed capacity. The previous section discussed the power production options that were available to mills using existing equipment with slight modifications to produce electricity for sale. This section analyzes the improved performance possible with investment in new equipment. Chapter Four presents the financial and economic analysis for both approaches.

Currently, power production potential is limited by the quantity of field trash available and the performance of existing equipment. The quantity of fuel availablewill continue to depend predominantly on the demand for sugar produced from cane. Mill performance measured by efficiency of conversion of fuel to electricity cou