St KITTS & NEVISSt KITTS & NEVIS

SUGAR TRANSITION SUGAR TRANSITION PROGRAMMEPROGRAMME

Outline of presentationOutline of presentation Events leading to the closure of the IndustryEvents leading to the closure of the Industry Financial Implications of the closureFinancial Implications of the closure Social ImplicationsSocial Implications Land use a pivotal problemLand use a pivotal problem Current Power generation opportunityCurrent Power generation opportunity Fuel ethanol opportunityFuel ethanol opportunity Emerging technologies – energy cane,Emerging technologies – energy cane, Reforestation, pelletization, Methanation & Reforestation, pelletization, Methanation &

Gasification Gasification Trading in Carbon CreditsTrading in Carbon Credits

SITUATIONSITUATION

Decision taken to close factory after Decision taken to close factory after consultations with all stakeholders.consultations with all stakeholders.

EU announced price cut of sugar 39%EU announced price cut of sugar 39% Factory already a high cost producer over Factory already a high cost producer over

40cents per pound.40cents per pound. High cost of cane and railway main High cost of cane and railway main

contributorscontributors Best production 40,000 sugar land 12,000acresBest production 40,000 sugar land 12,000acres

Situation Cont….Situation Cont….

Mounting national debt (336billion) – sugar Mounting national debt (336billion) – sugar industry contributing 36 million per year.industry contributing 36 million per year.

Sugar production fall to 12,000 on 7000acres.Sugar production fall to 12,000 on 7000acres. 1540 person made redundant on July 30,20051540 person made redundant on July 30,2005 Demographics of workers – 300 women Demographics of workers – 300 women

average age 45. 300 workers from Guyana and average age 45. 300 workers from Guyana and Dominican RepublicDominican Republic

Situation Cont…Situation Cont…

Average age of men 43 years.Average age of men 43 years. Most of the work force do not have Most of the work force do not have

transferable skills.transferable skills.

Land IssuesLand Issues

Non- Sugar Agriculture to take up about 1000 acres Non- Sugar Agriculture to take up about 1000 acres of land.of land.

Sugar cane has been allocated 5500 acres of land.Sugar cane has been allocated 5500 acres of land. Good for soil conservation Good for soil conservation Good for esthetics and scenic beauty of landscapeGood for esthetics and scenic beauty of landscape Employee preference to continue the custom in sugar Employee preference to continue the custom in sugar

cane cultivationcane cultivation

Land is limited highly competitiveLand is limited highly competitive

Power GenerationPower Generation

Owned by Gov’t – 22MW peak loadOwned by Gov’t – 22MW peak load Aging infrastructure of diesel units total Aging infrastructure of diesel units total

installed capacity 30MW.installed capacity 30MW. Need to replace 10MW immediately.Need to replace 10MW immediately. Cost of electricity 42.3cents per KWh.Cost of electricity 42.3cents per KWh. Oil price continually increasing.Oil price continually increasing.

Strategic issuesStrategic issues

If cane is unattended it will destroy the If cane is unattended it will destroy the appearance of the island called “Sugar City”appearance of the island called “Sugar City”

Factory located near to city center and Factory located near to city center and railway- narrow gauge expensive to maintain.railway- narrow gauge expensive to maintain.

Commercial railway attraction- Senic Railway Commercial railway attraction- Senic Railway

Strategic IssuesStrategic Issues

Sugar Cane is good for land maintenance Sugar Cane is good for land maintenance Volcanic soils subject to erosion.Volcanic soils subject to erosion. Cane grows easily except in drought – yields Cane grows easily except in drought – yields

dropdrop

OpportunitiesOpportunities

It is estimated that below 400,000 tonne cane it will It is estimated that below 400,000 tonne cane it will not be feasible to do cogennot be feasible to do cogen

CBI allows duty free ethanol to the USACBI allows duty free ethanol to the USA Replace 10MW of electrical power 50% usage.Replace 10MW of electrical power 50% usage. 12million litres - ethanol12million litres - ethanol Retain about 600 jobs.Retain about 600 jobs. Technology – for conversion – GasifierTechnology – for conversion – Gasifier

200kw/tonne – 20MW!!!200kw/tonne – 20MW!!!

OpportunitiesOpportunities

The best converter of energy is the sugar cane.The best converter of energy is the sugar cane. It is the resource closest to oil in energy value It is the resource closest to oil in energy value

and the only source availableand the only source available With limited Land area the energy cane can With limited Land area the energy cane can

provide 400,000 tonne?provide 400,000 tonne? Where is the Technology/Feasibility.Where is the Technology/Feasibility. What will be the impact on the economy of St What will be the impact on the economy of St

Kitts and Nevis.Kitts and Nevis.

Emerging TechnologiesEmerging Technologies

Biomass Pellets – ProductionBiomass Pellets – Production From woodFrom wood From bagasseFrom bagasse For Gasification processFor Gasification process

Out putsOut puts Electrical EnergyElectrical Energy EthanolEthanol Co2Co2 Export of BiomassExport of Biomass Reduction in Green House Gases – Trade in carbon creditsReduction in Green House Gases – Trade in carbon credits

Country MapCountry Map

St Kitts & NevisSt Kitts & Nevis

Geography Geography Area: St. Kitts 168 sq. km. (65 sq. mi.); Nevis Area: St. Kitts 168 sq. km. (65 sq. mi.); Nevis 93 sq. km. (36 sq. mi.).93 sq. km. (36 sq. mi.).Cities: Cities: CapitalCapital--Basseterre (pop. about --Basseterre (pop. about 15,000).15,000).Terrain: Generally mountainous; highest Terrain: Generally mountainous; highest elevations are 1,156 m. (3,792 ft.) at Mt. elevations are 1,156 m. (3,792 ft.) at Mt. Liamuiga on St. Kitts and 985 m. (3,232 ft.) at Liamuiga on St. Kitts and 985 m. (3,232 ft.) at Nevis peak on Nevis.Nevis peak on Nevis.Climate: Tropical. Climate: Tropical.

Biomass Prod. Cont…Biomass Prod. Cont…

Sugar Cane once occupied about 12,000acresSugar Cane once occupied about 12,000acres Competition for land has reduced this …Competition for land has reduced this … Land above 1000feet dedicated to Forest Land above 1000feet dedicated to Forest Consideration for commercialization of forest Consideration for commercialization of forest

reserves and extension on marginal lands to promote reserves and extension on marginal lands to promote soil conservation and simultaneous production of soil conservation and simultaneous production of energy. energy.

Estimated land for reforestation – 1000 acres?Estimated land for reforestation – 1000 acres?

Evaluation of Business ProposalsEvaluation of Business Proposals

Company ACompany A A company with synergies from linking the A company with synergies from linking the

production facilities of pellet, ethanol and production facilities of pellet, ethanol and electricity production.electricity production.

Value of investment – UDS 28 millionValue of investment – UDS 28 million 6 MW Energy Plant – 50,000 kwh /yr- $13,7166 MW Energy Plant – 50,000 kwh /yr- $13,716 Ethanol Factory 7,000 m 3Ethanol Factory 7,000 m 3

Company ACompany A

FACILITYFACILITY CAPACITYCAPACITY USD (Thousand)USD (Thousand)

Energy plantEnergy plant 6 MW (8.600h)6 MW (8.600h) $13.716$13.716

Ethanol factoryEthanol factory 7,000 m37,000 m3 $3,740$3,740

Pellet factoryPellet factory 40,000 Metric 40,000 Metric tonton

$6,050$6,050

Harvest/ Harvest/ TransportTransport

4 harvesters4 harvesters

9 tractors9 tractors

20 trucks20 trucks

$4,800$4,800

SUMSUM $28,306$28,306

Company ACompany AGOSKN inputGOSKN input Invited to tender on 20% in equityInvited to tender on 20% in equity

Land RequirementLand Requirement 5050 hectares [lease hold]5050 hectares [lease hold]

JobsJobs Approx. 800Approx. 800

Environmental IssuesEnvironmental Issues Soil erosionSoil erosion

Soil & water pollutionSoil & water pollution

Air pollutionAir pollution

Company BCompany B

Profitable Sugar Cane-Derived Profitable Sugar Cane-Derived Energy SystemEnergy System

September 19, 2005September 19, 2005 2020

Company BCompany B

A system of 3 inter-connected plants, processing:A system of 3 inter-connected plants, processing:

1.1. Sugarcane to Ethanol (Bagasse is byproduct)Sugarcane to Ethanol (Bagasse is byproduct)

2.2. Bagasse to synthetic Natural Gas Bagasse to synthetic Natural Gas

3.3. Natural Gas to ElectricityNatural Gas to Electricity

The last 2 plants provide excess heat to the firstThe last 2 plants provide excess heat to the first

Sugarcane Ethanol and EnergySugarcane Ethanol and Energy

Sugarcane Ethanol Plant

GasificationElectric Power Plant

Sugar Cane

Synthetic Natural Gas

Ethanol

Electric Power

1.

2.

3.

Bagasse

St.Kitts: (1) Ethanol PlantSt.Kitts: (1) Ethanol Plant

1. Sugarcane Ethanol Plant

Sugar Cane

Annual Inflows Sugar Cane (Estimated) 221,200 tonnesHectars Harvested 3,197 Hec.

Total Inflows:

Annual Outflows Ethanol* 4,207,768 gallonsBagasse 32,074 tonnesCO2 12,166 tonnesDDGS (Distillers Dry Grns) 11,588 tonnes

*Equivalent Energy= 319,513 MBtu

*Equivalent Barrels of Oil= 55,088

St. KI TTS-NEVI SSugarCane Ethanol Plant

Company B St.Kitts: PlantCompany B St.Kitts: Plant

Gasification Plant

Bagasse

2.

No. of Parallel Lines: 10

Annual Inflows tonnes

Bagasse, Dry 32,074Water (for Steam) 30,454

Total Inflows: 62,528

Annual Outflows tonnes

Methane Total 9,941CO2 High Purity 28,911Activated Carbon 962Water (steam condensed) 22,143Ash (from char) 572

Total Outflows: 62,528

Methane EXPORTED: 8,812MBtu= 418,043

Equivalent Barrels of Oil= 72,076

Gasifcation Plant

St. KITTS-NEVIS

GasifierGasifier

Cracker

Biomass

Raw Gas

Syn-Gas

Methanator

Gasifier System

CO2

Methane (SNG)

Active Carbon

Steam

AB

C

1

32

St.Kitts: (3) Electric Power PlantSt.Kitts: (3) Electric Power Plant

Electric Power Plant

Synthetic Natural Gas

3.

SNG Electric Power PlantSt. KI TTS-NEVI SAnnual Inflows

Methane EXPORTED 8,812 tonnes

Total Inflows:

Annual Outflows Power Capacity (base load) 11 MWElectric Energy Generated 61,197 MWh

Heat to Ethanol Plant

St.Kitts: Estimated Capital CostsSt.Kitts: Estimated Capital Costs

Plant Component US$ million

Sugar Cane Ethanol Plant 5.3 Gasification 16.7Electric Power 11.7

System Total Capital Cost 33.7

Project Capital Cost EstimateSt. KITTS-NEVIS

St.Kitts: Pro Forma RevenuesSt.Kitts: Pro Forma Revenues

St. KITTS-NEVIS

Export Item Unit Qty/y US $/unit million US $

1. Ethanol Plant: Ethanol gallon 4,207,768 $2 8.42DDGS (Distillers Dry Grains) tonne 11,588 $90 1.04

High-Purity CO2 tonne 12,166 $70 0.85

2. Gasification Plant

High-Purity CO2 tonne 28,911 $70 2.02Activated Carbon tonne 962 $1,500 1.44

3. Electric Power PlantCont. Baseload Elect. (24/7) MWh 61,197 $125 7.65

Total Operating Revenues 21.43

A. Pro Forma Operating Revenues

Company BCompany B

Superior to conventional Sugar or Superior to conventional Sugar or Ethanol solutionsEthanol solutions

Superior to conventionally-fuelled Superior to conventionally-fuelled Electric Power PlantElectric Power Plant

Retains 100% of the sugarcane Retains 100% of the sugarcane infrastructure; adds jobsinfrastructure; adds jobs

2 Energy Renewable Products, will 2 Energy Renewable Products, will Appreciate in Value: Ethanol & Appreciate in Value: Ethanol & Nat. GasNat. Gas

Biomass Energy segment can be Biomass Energy segment can be expanded (low capital cost) expanded (low capital cost)

Company BCompany BFACILITYFACILITY CAPACITYCAPACITY USD (Thousand)USD (Thousand)

Energy plantEnergy plant 6 MW (8.600h)6 MW (8.600h) $13.100$13.100

Ethanol factoryEthanol factory 3,804,491gallons3,804,491gallons $4.800$4.800

GasificationGasification 40,000 Metric ton40,000 Metric ton $15,100$15,100

Harvest/ TransportHarvest/ Transport 4 harvesters4 harvesters

9 tractors9 tractors

20 trucks20 trucks

$4,800$4,800

SUMSUM $33,000$33,000

Company CCompany C This company is mainly focused on accessing a This company is mainly focused on accessing a

power purchase agreement and indicated a power purchase agreement and indicated a willingness to produce 32MW of power to the island. willingness to produce 32MW of power to the island. The sugarcane and ethanol production appears to be a The sugarcane and ethanol production appears to be a compromised to their main thrust to produce power compromised to their main thrust to produce power from petroleum coke. from petroleum coke.

The sugarcane operations is estimated to support a The sugarcane operations is estimated to support a 6MW power plant.6MW power plant.

Forecasted profits after two years.Forecasted profits after two years. Ready source of funding available.Ready source of funding available. Return plant to government after twenty years.Return plant to government after twenty years.

FACILITYFACILITY CAPACITYCAPACITY USD USD (Thousand)(Thousand)

Energy plantEnergy plant 6 MW (8.600h)6 MW (8.600h) $18,000$18,000

Ethanol factoryEthanol factory 5,000,000 gallons5,000,000 gallons $12,580$12,580

SugarSugar 12,00012,000

Harvest/ TransportHarvest/ Transport 4 harvesters4 harvesters

9 tractors9 tractors

20 trucks20 trucks

$4,800$4,800

SUMSUM $33,998$33,998

Company C

GOSKN inputGOSKN input Power Purchase Agreement.Power Purchase Agreement.

Land RequirementLand Requirement 7500 acres [lease hold]7500 acres [lease hold]

JobsJobs Approx. 400Approx. 400

Environmental IssuesEnvironmental Issues Soil erosionSoil erosion

Soil & water pollutionSoil & water pollution

Air pollutionAir pollution

Comparison of Business Comparison of Business ProposalsProposals

AA BB CC

InvestmentInvestment US$28.31MUS$28.31M US$33.00MUS$33.00M US$34MUS$34M

ElectricityElectricity 50GWh50GWh 60GWh60GWh 63GWh63GWh

Cost of KwhCost of Kwh 16 cents16 cents 12 cents12 cents 16.7 cents16.7 cents

Selling priceSelling price 40.8 cents40.8 cents 32.6 cents32.6 cents

ProfitProfit US$6.1MUS$6.1M US$5.35MUS$5.35M US$7.26MUS$7.26M

Government ResponseGovernment Response

Replace 8MW power with two 4 MW units in Replace 8MW power with two 4 MW units in two years.two years.

Convert from the use of light fuels to heavy Convert from the use of light fuels to heavy fuels ………. $58 to $60 per barrelfuels ………. $58 to $60 per barrel

To operate diesel plant on Heavy bunker ‘C’ To operate diesel plant on Heavy bunker ‘C’ …will see a 40% drop in electricity cost to …will see a 40% drop in electricity cost to 25.7 cents per kwh plus 1 cents fuel surcharge 25.7 cents per kwh plus 1 cents fuel surcharge will cost 38 cents per kwh. will cost 38 cents per kwh.

Government ResponseGovernment Response

Set up energy Task Force to plot energy conservation Set up energy Task Force to plot energy conservation and alternative energy strategy.and alternative energy strategy.

Considering Wind, Solar heaters, Geothermal etc.Considering Wind, Solar heaters, Geothermal etc. Need for policy guideline on land availability and Need for policy guideline on land availability and

tenure.tenure. Energy security policyEnergy security policy Power purchase agreements/Utilities RegulatoryPower purchase agreements/Utilities Regulatory Ownership structure for engaging business sector in Ownership structure for engaging business sector in

Biomass/energy- Political issue, history of ownershipBiomass/energy- Political issue, history of ownership Policy for Purchase of ethanol & local usePolicy for Purchase of ethanol & local use

Future prospectsFuture prospects

Pending proposal to produce ethanol from Pending proposal to produce ethanol from bagasse using gasification technology.bagasse using gasification technology.

Feasibility study being conducted by Feasibility study being conducted by Government in collaboration with UNDP, Government in collaboration with UNDP, IICA & CREPDIICA & CREPD