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From ‘dirty’ gas to clean energy

Sludge from palm oil mill, when left idle, emit dirty gases like methane. Plantation companies tell OOI TEE CHING how they use green technology, in the form of biogas plants, to turn these agricultural waste to fuel up their mills and light up community houses and schools in their estates. 


PALM oil millers in Malaysia are leading the way in “greening” the palm oil supply chain by capturing greenhouse gas before it enters the atmosphere and turning it into green energy and organic fertiliser. 

Millers capture greenhouse gas from the sludge and turn it into renewable energy by investing in biogas plants. These anaerobic digesters behave like our stomach, containing friendly bacteria that feed on organic matter to produce flammable gas called methane and digestate that can be turned into fertiliser.

In an interview with Business Times, Sime Darby Plantation Sdn Bhd managing director Datuk Franki Anthony Dass noted his company’s involvement in biogas plants has gained momentum in recent years because this environmentally-friendly initiative of stemming greenhouse gas emissions has its socio-economic benefits, too.

Apart from producing renewable electricity, the biogas anaerobic digestion process also converts environmentally polluting sludge into organic fertiliser that can be used to increase the yield of planted crops. 

By running a large combined steam and power generator, a palm oil mill becomes a self-sustaining powerhouse lighting up the houses, places of worships, schools and sporting facility in the estate, Franki explained.

Planters get to reduce their reliance on fossil fuels and any surplus electricity can be sold to Tenaga Nasional Bhd (TNB) if the mill happens to be located near the power grid, he added.

Sime Darby has, so far, put up two biogas plants in Peninsular Malaysia. In working towards reducing its operation’s carbon footprint, the group aims to have 18 mills installed with methane capturing facility by 2020. 

Palm oil clients from developed nations, like the EU, are happy to learn of the green movement among oil palm estates to capture and recycle these greenhouse gas into good use. This effort adds value to the notion that palm biodiesel is responsibly produced with environmental protection in mind.

If palm oil mills are located near TNB’s grid and they have excess electricity to sell to the government, they can bid for the renewable energy quota laid out by government agency Sustainable Energy Development Authority (Seda).

An agency under the Energy, Green Technology and Water Ministry, Seda facilitates supply and renewable energy usage in Malaysia via feed-in tariff (FiT). This mechanism guarantees renewable energy producers a premium selling price over that generated from depleting and finite sources such as oil, gas and coal. 

Seda divides the renewable energy fund – among biogas, biomass, small hydro and solar photovoltaic – on a quota basis. Todate, biomass and biogas projects are allocated 222MW or only 37 per cent of the total 601MW renewable energy quota. 

Oil palm biogas plant operators, which had successfully bid for the renewable energy quota and accorded licences by Seda receive 32 sen per kWh under the feed-in tariff (FiT) when they hook up to the national grid. If they had leverage on home grown technology, use agricultural waste and efficient gas technology they would receive bonus incentives of 5 sen per KWh, 8 sen per KWh and 2 sen per KWh, respectively.

At the current FiT for qualified biogas plant operator, one can only expect minimal returns after 10 years. Franki said a more targetted package of government incentives could spur more palm oil millers to invest in waste-to-energy projects and help reinforce the notion that oil palm planting is a sustainable practice that balances the needs of People, Planet and Profits.

BELL Group, the pioneer among palm oil millers in installing biogas power plants, concurred with Sime Darby that energy recovery from waste is ultimately a waste management issue and not just a green power plant activity. 

BELL Group chief executive officer Puan Sri Liana Low noted the onus and cost of connecting biogas plants to TNB’s grid lie with palm oil millers. It can be very costly if the mill is located a few kilometres away from the power grid.

She suggests the cost of laying the cable be shared between TNB and renewable energy producers. “Apart from the formidable cost of cabling up, there is also the logistical and technical challenge if there is a fault or sabotage of the connecting cable. This burden is too taxing on palm oil millers.”

She urges the government to consider revising the nation’s electrification master plan. One can look to Indonesia where the authorities have facilitated isolated grids that are close to several biogas and biomass power plants for the benefit of rural communities. “A joint study between the World Bank and the Indonesian government showed installation of isolated grids proved to be cost effective in rural and island electrification.”

It is common knowledge that solar only thrives on a few hours of intense sunlight while biogas power plants are able to run 24 hours a day, seven days a week. At current technology, solar conversion to electricity efficiency is only around 15 per cent while for biogas, it is close to 60 per cent. That means the conversion of biogas to electricity is four times more efficient than sunlight to power.

There had been reports that the government’s allocation of renewable energy quota to the solar sector is seen to be inefficient use of the renewable energy fund. Also, compared to biogas investments, the solar sector is highly dependent on foreign technology and imports. 

Given the relatively limited FiT budget, which is funded by a 1.6 per cent levy on electricity bills of heavy users in Peninsular Malaysia and Sabah, it would a step in the right direction for Seda to further fine-tune its incentives to spur more participation from the biogas sector.

Current first generation biogas plants take about a month to generate a reasonable amount of biomethane. Going forward, Low highlighted that biotechnologists and engineers are seen working on second generation know-how that could speed up the digestion by 10 times to just three days.

Separately, Kuala Lumpur Kepong Bhd (KLK) executive director Roy Lim Kiam Chye concurred that Seda’s FiT for qualified biogas plant should take into consideration the high investment and maintenance cost millers have to shoulder.

“The current package of tariffs for biogas plant operators of 42 sen per KWh, which include bonus incentives for agricultural waste management and engine efficiency, is still too low. It has got to be higher as biogas plants doubles up as a carbon emission savings initiative,” he said.

“This year’s 25MW quota allocated to biomass and biogas operators, or 39 per cent of total 65MW renewable energy quota is actually not enough. If a higher quota allocation is accorded to biogas plant operators, it can also help light up more energy-starved places in Sabah,” he added. 

“It would be to the government’s interest to further incentivise and widen the renewable energy quota to biogas plant operators. Apart from its relatively high energy conversion efficiency that makes payment from the renewable energy fund worthwhile, palm oil millers’ investment in this biotechnology initiative leads to cleaner air and creation of more high-skilled jobs,” Lim said.

KLK has, so far, installed a biogas plant in Sabah. By 2020, it aims to put up three more at its estates in Peninsular Malaysia.

Not all 368 palm oil mills throughout Peninsular Malaysia and Sabah can benefit from Seda’s FiT because many are located far away from the national power grid and the cost to connect is just not commercially viable.

Going forward, Lim noted there is still much potential in biogas because millers can leverage on local know-how to purify biomethane and sell them as compressed natural gas to industrial users such as oleochemical producers or as transport fuel for taxis and express buses. There is also the possibility of compressing the methane into cooking gas tanks for household use in remote areas.

Felda Global Ventures Holdings Bhd (FGV) group president and chief executive officer Mohd Emir Mavani Abdullah said the group has, so far, put up 13 biogas plants at its estates. 

“By 2020, we aim to push this figure to 51. As the world’s largest crude palm oil producer, we’re committed to reducing our carbon footprint and improving our environmental friendly practices for the benefit of our community.”

He highlighted FGV’s biogas facility at Umas palm oil mill in Tawau, Sabah is now generating 1MW for a rural electrification. Settlers, commercial entities and staff quarters are benefiting from this effort. 

Over at Lahad Datu, FGV’s biogas plant at Mercu Puspita mill is also generating 1MW for use by residents at Bandar Cenderawasih township.

In theory, biogas plant operators is accorded a maximum FiT incentives of up to 47 sen per KWh. In practice, however, FGV’s Mavani concurred with KLK’s Lim that biogas plant operators can only achieve 42 sen per KWh. “We’re not able to benefit from the 5 sen per KWh incentive for homegrown technology because currently there are no local gas turbines manufacturers we can source from. We’ve no choice but to import them from Germany and Spain,” he said.

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