Premium Renewable Energy to firm up more JVs by 1H11

“We expect to firm up a JV by the first half of 2011,” he said in an interview with The Edge Financial Daily.

Premium has the exclusive rights to a pyrolysis technology known as Rapid Thermal Processing (RTP), which converts any cellulosic biomass to bio-oil used for power generation in stationary diesel engines, in Malaysia and Indonesia. The technology is patented by Ensyn Technologies, Canada, Premium’s partner.

Premium entered into a memorandum of understanding (MOU) with Felda Palm Industries Sdn Bhd in July to build the first bio-oil plant in Felda Sahabat in Lahad Datu, Sabah.

Anand said the MOU with Felda will be a definite agreement within the first week of January.

The use of bio-oil in stationery diesel engines has a conversion efficiency of 40% to 45%, compared with direct combustion of biomass in boilers which only achieves16% to 18% conversion efficiency.

“[This allows us] to utilise our resources better and more efficiently,” Anand said.

Premium was identified as one of the two lead initiative owners for the seventh entry point project (EPP) for the palm oil National Key Economic Area (NKEA) under the Economic Transformation Programme (ETP), involving the commercialisation of second-generation biofuel.

The palm oil NKEA has key performance indicator of nine bio-oil plants to be developed by 2015, and 29 by 2020, with an annual production of 1.1 million tonnes and 3.8 million tonnes of bio-oil respectively. Production is expected to start in 2012.

The NKEA has also set a commercialisation time frame for the conversion of bio-oil to transport fuels by 4QFY14 as the latest technology becomes available.

This EPP will rely on RM3.2 billion in private funding over the next 10 years and generate RM3.3 billion in additional gross national income (GNI) in 2020.

Under the 10th Malaysia Plan, the government has also set a renewable energy target of 985MW or 5.5% of electricity generated by 2015. The bulk of the target, 330MW, will come from biomass.

The bio-oil plants will use palm biomass — empty fruit bunches (EFB), tree trunks and fronds — as feedstock.

“The oil palm industry generates 70 million tonnes of biomass per year. By converting about 20 million tonnes of EFB a year, we can produce six million tonnes of bio-oil annually, which is more than 60,000 barrels of crude oil per day, or 10% of what Malaysia produces. If all the biomass is converted to bio-oil, it will cushion Malaysia from depleting oil reserves,” Anand said.

The model US$40 million (RM126 million) bio-oil plant, with a capacity of 400 tonnes per day, produces 280 tonnes of bio-oil a day. It will need biomass from four or five mills as feedstock. Premium will also build smaller plants requiring 120 tonnes of biomass per day next to palm oil mills.

“When the plant is next to the mill, the biomass is just conveyed to the plant, you use zero fuel for transporting the waste to the plant. It’s more efficient,” said Anand.

Premium is not only looking at integrating palm oil mills with its bio-oil plants but also with biogas capture. Biogas from sludge ponds is channelled to the boilers used by mills to generate power.

“Now they use mesocarp fibre and palm kernel shell fibre. We can capture the methane and burn it in boilers and lower green house gas emissions and use the fibres as biomass for bio-oil plants instead,” Anand said.

He also revealed that the company, together with the Malaysian Palm Oil Board, is conducting a study on the sustainability of integrating the operations of palm oil mills, biogas capture and bio-oil plants.

Anand also stressed that bio-oil should not be confused with biodiesel.

“Many don’t realise the feedstock for bio-oil is biomass, not crude palm oil (CPO) as in biodiesel plants,” he said.

The production of palm biodiesel is fraught with many issues, the main two being the use of food to produce fuel, and the high prices of CPO. Premium’s technology and business model avoid these two issues. Also, the bio-oil plant would enter into contracts to ensure the supply of feedstock.

“In our case, we have two things — we lock in the long-term price for biomass and make the plantation company part of the venture so it can enjoy the upside.

“Our business model is to go into JVs with plantations where the technology owner and provider are part of the venture. It’s a win-win situation where the risks are shared and feedstock is secured,” said Anand.

Premium’s partner, Ensyn Technologies, was incorporated in 1984 to commercialise its proprietary biomass to liquid technology. It currently provides the world’s only rapid pyrolysis process that operates on a long-term commercial basis.

It is a world leader in the production of bio-oil through pyrolysis using renewable feedstock. Bio-oil is the next generation fuel that is produced from forest and agricultural residuals and does not rely on food-based crops as feedstock.

In September 2008, UOP LLC, a Honeywell company, and Ensyn formed a JV company named Envergent Technologies LLC to offer Ensyn’s RTP technology to convert second-generation biomass like forest and agricultural residuals to pyrolysis oil for use in power and industrial burners.

Envergent Technologies will also accelerate research and development to commercialise the next-generation UOP upgrading technology that would refine the RTP pyrolysis oil into transport fuels such as green gasoline, green diesel and green jet fuel.

UOP-Honeywell will be responsible for all design and fabrication works for the RTP bio-oil plant, including implementation of bio-oil facilities. It will also provide all the necessary warranties and representations for successful functioning of the RTP bio-oil plant.

Ensyn, meanwhile, entered into a JV with Premium Malaysia/Premium Renewable Energy Pte Ltd, Singapore, in November 2008 to further commercialise the production of bio-oil from oil palm biomass and other biomass available regionally.

Ensyn is based in Ottawa, Ontario, and also has operations in the US.

Click here to read the full story at The Edge Financial Daily