partners for africa project workshop on “policy dialogue ... · pdf filepartners for...

1

Partners for Africa Project Workshop on “Policy Dialogue on Co-generation and Bio-ethanol for

Southern Africa”

Durban, South Africa

June 2004

Driving Forces and Benefits from Sugarcane Co-products , Investments and Policy Issues in

SADC Countries

Prof. F. D. YambaCentre for Energy, Environment and Engineering ZambiaPrivate Bag E721Lusaka, ZAMBIATel/Fax: +260 - 1 - 240267Email: [email protected] / [email protected]

mailto:[email protected]

mailto:[email protected]

2

BACKGROUND (1)

Resource availability for sugarcane co-products (ethanol and electricity) has been adequately addressed in the previous presentation.

The aim of this presentation is to discuss driving forces and benefits from sugarcane co-products investments and policy issues

3

BACKGROUND (2)

Driving forces include:• Sustainability and competitiveness of

sugar industry• Environmental concerns from both local

and global perspectivesBenefits include:• Financial• Environmental

Policy issues

4

DRIVING FORCES (1)

Sustainability and competitiveness of the sugar industry• The sugar industry is a major worldwide industry that

faces many problems, since sugar prices are extremely volatile

• The sugar industry also faces difficulties such as competition due to saturated markets in industrialised countries, and competition from other sweeteners

• For the sugar industry to be sustainable and competitive, there is increased need for it to diversify its product portfolio by investing in co-products such as ethanol and surplus electricity

5

DRIVING FORCES (2)

Environmental concerns• At a global level, the need to contribute to efforts to

reduce GHG emissions aimed at achieving stabilsation of GHG concentrations in the atmosphere cannot be over-emphasised

6

DRIVING FORCES (3)

Regional Concerns (1)At a regional level, the following issues provide an excellent opportunity to implement an ethanol programme in Southern Africa.

•Petroleum products are a drain on foreign exchange •Local pollution (CO, NOx, UHC, Soot)•Lead, which has historically been added to gasoline in

order to increase its octane number, has been identified as a dangerous pollutant since low levels of exposure to lead causes a range of learning and neurological defects; children are most vulnerable

7

DRIVING FORCES (4)

Regional Issues (Continued)•In most parts of the world, use of lead additives in

gasoline has been eliminated, except for most parts of Africa

•Instead of lead, other additives can be blended with gasoline. MTBE (methyl tertiary butyl ether) is most commonly used, but is increasingly being viewed as a poor choice, because it leads to significant ground water contamination.

•Another additive option is MMT, a manganese compound, but it also faces different concerns over potential health risks, and is thus viewed controversial

8

DRIVING FORCES (5)

Regional Issues (Continued)•Another approach is for refineries to manufacture high

octane gasoline through use of catalytic reforming units. For many refineries in Africa, this will require upgrades and large capital outlays

•Fortunately, octane can be boosted from natural bearing fuels such as ethanol from crops – such as sugarcane, sweet sorghum, etc

9

Key Elements Required to Ensure Ethanol and Surplus Electricity Generation from Co-gen Systems Programmes Succeed

TechnologyAvailability of feedstock at low costLand availability, if large scale production is envisagedEconomics/financial viabilityEnvironmental benefitsA regulatory fiscal and policy framework

10

TECHNOLOGY (1)ETHANOL PRODUCTION (1)

Figure: Alcohol Distillery Flow Diagram

11

TECHNOLOGY (2)ETHANOL- Extractive Hydrolysis Concept &

Distillery Scheme

FEED STOCK TREATMENT

EXTRACTIVEHYDROLYSIS

JUICETREATMENT

ANDEVAPORATION

SYRUP STORAGE

AND HANDLING

FERMENTATIONMPRDISTILLATION

SPENT WASH

RECYCLESYSTEM

MOLECULARSIEVE

DEHYDRATION

FUELETHANOL

BOILERTURBINE

COOLINGTOWER

PROCESSWATER ETHANOL

STORAGE

Figure: Configuration of the Distillery Complex

12

STATE-OF-THE-ART BIOMASS BASED TECHNOLOGIES (1)

Improved combustion in traditional boilers (steam use optimisation and combustion control)

CEST (Condensing Extraction Steam Turbine) (High Pressure boilers)

BIG/CC (Biomass Integrated Gasifier Combined Cycle) (Combination of gas turbine and steam turbines)

13

EXAMPLE OF CEST (1)

Schematic Diagram of Possible Cane Sugar Application of a High Pressure Condensing –Extraction Steam Turbine (CEST) Cogeneration System.

14

EXAMPLE OF CEST (2)

Cogeneration System with Extracting – Condensing Steam Turbine.

15

EXAMPLE OF BIG/CC

Combined Cycle with Integrated Atmospheric Gasifier

16

FEEDSTOCKS FOR ETHANOL PRODUCTION (1)

Ethanol can be obtained from many different feedstocks, in fact from any sugar containing raw material, which can be classified into three main groups:

• Sugars: (i.e. sugarcane, molasses, fruits, etc) that can be converted to ethanol through fermentation and distillation

• Starches: (i.e. grains like maize, root crops like cassava), which must be first be hydrolysed to fermentable sugars

• Cellulose (i.e. woody material, agricultural waste, black liquor from pulp and paper which must be converted to sugars by action of mineral acids

17

FEEDSTOCKS FOR ETHANOL PRODUCTION (2)

From an economic point of view, very few materials can seriously be considered as feedsockFrom SADC’s perspective, sugarcane and sweet sorghum offer us promising feedstocks (examples: Brazil, Malawi, India, Kenya and Zimbabwe)Quantities of ethanol and feedstock required depend on the demand, which in turn is influenced by the level of blending (5%, 10%, 15%)Feedstocks requirements based on available specification for unleaded gasoline based on a maxim of 10% v/v ethanol.

18

FEEDSTOCKS REQUIREMENTS THROUGH THE BLENDING ROUTE AT 10% BLENDING (SELECTED COUNTRIES)

2525523.5861.7273.01138280011,380TOTAL

96094.2 5.338.043.33500.8433Zimbabwe

41500.3 -19.018.71300.7187Zambia

2298714.6 (819.8)216.01035.821000.210,358South Africa

73457.7 (33.1)-33.11800.4331Namibia

15756.8 (3.5)3.67.1400.571Mozambique

GHG Saving (tonnes)

Ethanol Deficit (million litres)

Ethanol Availability

(million litres)

Ethanol Equiv. (million litres/yr)

Total lead used (t/yr)

Lead concentration

(g/litre)

Gasoline Consummed

(million litres/yr)

Country

The deficit may be met by two possible routes:•Expansion of sugarcane estate•Use of sweet sorghum as feedstock (400,000 – 500,000ha)

19

FEEDSTOCK LIMITATIONS AND ALTERNATIVES (1)

Present feedstock – Cane molasses•Limited availability – byproduct of sugar factories•Limitations on waste water control

New possible agro-based feedstocks•Sugar bearing•Remunerative for the farmers-Low cultivation costs•Viable for alcohol production•Giving zero discharge of waste water

20

FEEDSTOCK LIMITATIONS AND ALTERNATIVES (2)ETHANOL – Sweet sorghum as feedstock

Sugar bearing FeedstockShort cycle crop –3.5 monthsCan be grown across warm climate regionsEasier to grow and handle (Viz-a-Viz sugarcane)Low cultivation costsKnown to farmers – Robust crop- Practices similar to sugarcaneGives fodder for cattleGives bagasse similar to sugarcane – Energy for distilleries

21

LIMITATIONS AND ALTERNATIVES (3)ETHANOL – Sweet sorghum Vs Sugarcane Properties Sugar Cane Sweet Sorghum

Crop cycle 10-11 months 3.5-4 months (Grown twice/ year)

Yield per Acre 28-32 ton 17-22 tons X twice / year = 34 to 44 Tons

Sugar content 11-13% 9-11%

Conventional ethanol yield

68-74 lit/ton 45-55 lit/ton of stalks

Water requirement 100% 65 – 70% of cane

Fertilizer requirement

100% 35 – 40% of cane

Bagasse Availability

30% of cane 28 – 30 % of sweet sorghum

22

FEEDSTOCK REQUIREMENTS AND POTENTIAL SURPLUS ELECTRICITY GENERATED FROM SOUTHERN AFRICA’S FACTORIES BASED ON CURRENT & PROJECTED BASGASSE AVAILABILITY

72603630306Nil33.02050

49002450207Nil22.02030

40202010170Nil18.02020

32401620135Nil15.02010

27001350113Nil12.02000

BIG/CC (MW)

CEST (MW)

Traditional Boiler with Improved

Combustion (MW)

Traditional Boiler

BagasseResource

(million tonnes)Year

Assumption: Penetration level of 80%

23

CEST: PROVEN OF THE THREE (1)

Role of Bio-Energy (2030)

Hydro (29%)

Coal (55.5%)

Diesel/ G. turbine (1.2%)

Natural Gas/CBM (6.2%)

Wind (0.6%)

Biomass (2.5%)

Other/nuclear (5.0%)

Figure: SADC Projected Energy Supply Scenario 2030 (Total Energy 80.2 GW)

24

CEST: PROVEN OF THE THREE (2)

Role of Bio-Energy (2050)

Hydro (31.4%)

Coal (50.4%)

Diesel/ G. turbine (1.3%)

Natural Gas/CBM (8.7%)

Wind (0.9%)

Biomass (3.0%)

Other/nuclear (4.3%)

Figure : SADC Projected Energy Supply Scenario 2050 (Total Energy 115.2 GW)

25

ENVIRONMENTAL BENEFITS FROM USE OF CEST

Environmental Benefits (GHG Saving)

20.014.08.0GHG Saved (million tonnes)

205020302010Year

26

ECONOMICS/FINANCIAL VIABILITY (1)ETHANOL – Production Parameters

56.04100108000200.042,193,737492.86500

5.29

4.88

4.45

3.99

2.93

2.30

Investment,

(US$m)

16

14

12

10

6

4

Molasses production

(tonnes / hr)

0.04

0.04

0.04

0.04

0.04

0.04

Molasses-cane output ratio

580864002,217,396408.96400

570756001,655,682356.1350

560648001,211,236305.47300

550540001,007,183250.84250

53032400688,226160.04150

52021600462,29495.69100

Installed capacity, kL/day

O+M % of investment or output related

Investment Cost Molasses to Ethanol

(Anhydrous) Alcohol

production, (litres per

day)

Actual Annual output (tonne/ cane hr)

Actual output (tonne/cane hr)

Typical Factory

Size

Notes and Assumptions:1. Alcohol (RS) to cane ratio (litres/ tonne)=9=constant2. Molasses on cane, % = 4% (4 tonnes of molasses per 100 tonnes of cane crushed)3. Alcohol (Rectified Spirit, 94.68%) to molasses conversion ratio = 225 litres of rectified spirit per tonne of molasses4. Anhydrous alcohol (99.8%) from Rectified spirit (94.68), conversion ratio, % = 94.4% (94.4 litres of

anhydrous alcohol per 100 litres of rectified spirit)5. Rupees to US Dollar conversion = Rs 46 per USD

27

ECONOMICS/FINANCIAL VIABILITY (2)ETHANOL – Production Vs Molasses

E th an o l V s M o lasses P ro d u ctio n (fo r d ifferen t p lan t sizes)

0

20000

40000

60000

80000

100000

120000

4 6 10 12 14 16 20M olasses P rod. (tonne/hr)/P lant S ize

Ethanol Pro

d. (litres/day)

S e rie s1

28

ECONOMICS/FINANCIAL VIABILITY (3)

ETHANOL – Scenario 1 (BAU)

IR R V s Ethanol P rice (B A U )

0.00

20.00

40.00

60.00

80.00

0.1 0.2 0.3 0.4

Eth an o l P rice (U S $/L itre )

IRR (%)

10 0 t

150 t

2 50 t

3 0 0 t

3 50 t

4 0 0 t

50 0 t

29


ETHANOL – Scenario (CDM Spread)

IR R V s Eth an o l P rice (C D M - S p re ad )

0.00

20.00

40.00

60.00

80.00

100.00

0.1 0.2 0.3 0.4

Eth an o l P rice (U S $/L itre )

IRR (%

)

10 0 t

150 t

2 50 t

3 0 0 t

3 50 t

4 0 0 t

50 0 t

30


ETHANOL – Scenario (33% CDM dp)

IR R V s Eth an o l P rice (C D M - 33% d p )

0.00

20.00

40.00

60.00

80.00

0.1 0.2 0.3Eth an o l P rice (U S $/L itre )

IRR

(%)

10 0 t

150 t

2 50 t

3 0 0 t

3 50 t

4 0 0 t

50 0 t

31

FINANCIAL BENEFITS FROM USE OF CEST (SURPLUS ELECTRICITY) (1)CO-GENERATION PARAMETERS

21250

17600

15300

13170

9260

5900

3530

Surplus (kW)

5/yr4752670080480240.280110.9730.02,193,737500

5/yr4852215080480199.38092.0830.02,217,396400

5/yr5001930080480173.68080.1830.01,655,682350

5/yr5251655080480148.98068.7830.01,211,236300

5/yr5701202060450122.36055.6530.01,007,183250

5/yr64076706045078.06035.5130.0688,226150

5/yr73045906045046.76021.2330.0462,294100

Power (kW)

OP. Pre (Bars)

Power (kW)

Steam (t/hr)

Op. Pres (bars)

Bagasse(t/hr)

O+M (% of Invest.)

Investment (US$/kWh)

Multi-stage TurbineBoiler

Investment Costs, and O+MCogeneration SpecificationsBagasse

content in cane (%)

Actual Annual output (tonne/ cane hr)

Typical Factory

Size (Tonne/ cane hr)

32

FINANCIAL BENEFITS FROM USE OF CEST (SURPLUS ELECTRICITY) (2)Power Capacity Vs Bagasse

B A G A S S E C O N S U M P T IO N V s P O W ER C A P A C IT Y FO R S EL EC T ED

S U G A R FA C T O R Y S IZ ES

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

21.23 35.51 55.65 68.78 80.18 92.08 110.97

B ag as s e co n s u m p tio n (to n n e /h ) / Facto ry S ize

Power Capacity (kW

Pow er C apacityPow er C apacity (S urplus)

100 150 250 300 350 400 500

33

FINANCIAL BENEFITS FROM USE OF CEST (SURPLUS ELECTRICITY) (3)FINANCIAL SCENARIO 1 (IRR VS TARIFFS)

IR R V s Tariff (B A U )

-1 0

0

1 0

2 0

3 0

4 0

5 0

0 .0 2 0 .0 4 0 .0 6 0 .0 8

Tariff (U S $/kW h)

IRR (%

)

10 0 t

150 t

2 50 t

3 0 0 t

3 50 t

4 0 0 t

50 0 t

34


IR R V s Tariffs (C D M -S ale of C ER s S pread)

-10

0

10

20

30

40

50

0.02 0.04 0.06 0.08

Tariff (US$/kWh)

IRR

(%)

100 t150 t2 50 t3 0 0 t3 50 t4 0 0 t50 0 t

35


IR R V s Tariff (C D M -33% D ow n P aym ent)

0.00

10.00

20.00

30.00

40.00

50.00

60.00

0.02 0.04 0.06 0.08

T ariff (U S $/k W h )

IRR (%)

10 0 t

150 t

2 50 t

3 0 0 t

3 50 t

4 0 0 t

50 0 t

36

POLICY ISSUES ON ETHANOL

Use of ethanol as an octane enhancerStandards in use of ethanol as an octane enhancerAgricultural policy on outgrower schemesPrivate sector participation in ethanol blending Fiscal incentives

37

POLICY ISSUES ON CO-GEN

Level of electricity tariff – currently most of the SAPP countries have low tariff (US-cents 2 – 4), which in most cases does not take account of environmental externalities Policy of IPPs Regional baseline is essential of CDM is to play a role towards investments.

partners for africa project workshop on “policy dialogue ... · pdf filepartners for...

Documents