Straw synergy

Suqian Biomass Power Generation Ltd is located in the north of Jiangsu Province.

Across the countryside of China, autumn is the season when farmers burn off stalk and straw left over from the year's harvest.

The ashes can be used as a fertilizer, but smoke darkens the sky and pollutes the air. Such scenes are now rarely seen in the Suqian area of East China's Jiangsu Province. It is the site of the nation's first self-developed straw-fired power plant.

Suqian Biomass Power Generation Ltd is operated by China Energy Conservation Investment Corp (CECIC) - the country's flagship State-owned enterprise for renewable energy - which invested 248 million yuan for construction of the facility.

It went into commercial operation in April. By October, it generated a total of 35 million kilowatt-hours of electricity.

"The plant is just in its initial stage of development. We now have an installed capacity of 24 megawatts, from two units each generating 12 megawatts," says Wang Di, general manager of the CECIC power plant.

"I predict the generation capacity will reach 130 million kilowatts yearly that will require between 150,000 and 200,000 tons of stalk and straw."

There is a policy incentive for Wang's enthusiasm, he says. "Our electricity is sold to the national grid at a unit price of 0.89 yuan, 0.25 yuan higher than coal-fired power plants."

CECIC chose Suqian as the site for its pilot project because Jiangsu Province adopted a policy in 2005 that promised a "reasonable investment return" for renewable energy power plants that use locally developed equipment.

Suqian in the north of Jiangsu, where people are dependent on agriculture, has plentiful residue crop resources.

But the local promise could not be met because the State's unified subsidy to biomass power plants was pegged at 0.25 yuan. Although the straw-burning plant receives a subsidy that other renewable energy power industries do not have, Wang says it is still on a narrow margin - but can survive.

The price for straw is set by the market as it is used as animal feed and material in other industries.

"The price goes up and down in line with market changes and is by no means stable," Wang says. "Now the price is around 300 yuan a ton, but if the price goes up, we might run at a loss.

"We spend most of our money on purchasing straw, which costs about 60 million yuan yearly. If the subsidy can be raised to 0.45 yuan per kilowatt-hour, we then can earn good money."

There are also other challenges facing the plant. Within 100 sq km in Suqian, there are six other straw-fired plants planned, most of which would be State-owned. But the total output of straw in the area is 770,000 tons yearly, of which one fourth would be needed by each plant.

Wang's is now the only in commercial operation. If the other six are built, they will compete for straw supplies and probably bring feedstock from more distant places, resulting in higher transportation costs.

As China is making a concerted effort in energy conservation and emission control, the CECIC power plant, as a State-owned company, should play a leading role in the implementation of government policies, Wang points out.

"Only after we try this project can the government know where the remaining problems are and what adjustments should be made," Wang says. "We also believe environmentally friendly projects have a very bright future. So the plant is a worthy project even though it doesn't make much money at the moment."

According to a statement by the National Development and Reform Commission (NDRC), green electricity will have priority in sales to the grid and large thermal power companies in the future must produce 5 percent of electricity using more environmentally beneficial processes.

As well, straw-burning power plants are usually built in rural areas and can help create jobs for local farmers and increase their income through sales of crop stubble.

"It is a model of industry supporting agriculture," Wang notes.

He buys straw from agencies for farmers or national collection sites at a price of about 300 yuan a ton, but prices vary by different material. Rice husk, for example, costs 260 yuan a ton, 100 yuan less than straw.

"We call it a straw-fired power plant, but actually, the feed is more than straw," Wang says, "Any crop stalk that meets our standard on heat efficiency and moisture content is possible, including rice husk, cotton stalk, corn core, peanut husk and sugar cane refuse."

China has abundant crop refuse resources. Statistics by Chinabyte.com show the annual crop of straw and stalk is about 650 million tons a year. By 2010 the figure is expected to rise to 726 million tons, the energy equivalent of 350 million tons of standard coal.

Statistics also show that each year over 200 million tons of straw and stalk are directly burned by farmers to clear land and put nutrients back in the soil. The traditional technique not only wastes resources but also causes air pollution.

Planners say that building straw-fired power plants will reduce carbon dioxide emissions and tons of standard coal will be saved every year. The leftover cinders, rich in potassium, magnesium, phosphorus and calcium, can be returned to the fields as fertilizer.

With those benefits, Wang is confident about the future. "I have noticed our national leaders talk more frequently about renewable energy."

Officials from a number of central government agencies, including the powerful NDRC, have visited his plant to learn about the price of electricity and investment return.

"Right now I gather that some thing big is soon going to happen to our industry," he says.

(China Daily 11/19/2007 page3)