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Top 4 Reasons Why Biofuel Pellets are Quickly Replacing LPG and Diesel in India?

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There is very little awareness around the fact that Biofuel Pellets are completely capable of replacing LPG and Diesel. And the application and usage of Pellets range from a small stove in a canteen to sophisticated heating burners in an injection moulding or a plastic moulding factory. Here are top 4 reasons why there’s sudden surge in usage of Pellets in India.

1. Pellets Are Highly Cost Effective As Compared To LPG & Diesel

Pellets are also highly cost effective in comparison to Diesel and LPG. One kg of LPG will roughly cost you around Rs.70/-. And to replace the one kg of LPG or one kg of diesel, you need two to two and a half kilograms of Pellets, which will cost you anywhere between Rs.40/- to Rs.50/- which much more cost effective. Because of this reason, the usage of Pellets is increasing in India. However, a large population of people are still not aware about this great cost effective benefit.

2. The Indian Government is Encouraging the Usage of Environment-Friendly Fuels

The Indian Government in many states of India is encouraging the usage of environment friendly fuels which have less CO2 emission. Solid Biofuels fall under the category of less CO2 emitting fuels. Pellets, which are an extension of Biomass emit very little CO2.

Currently, the Indian snack businesses that are present across many states in India, make snacks in huge clusters. They have been operating in the Indian snacks business since about thirty to fifty years. The main source of fuel to cook the snacks was always coal, raw wood, saw dust, diesel or LPG.

Earlier, they were located on the outskirts of the cities. Hence, though the CO2 emission was high due to these fuels, it didn’t directly and quickly impact the population living in the cities. But recently, they have shifted to main areas inside the city. And hence, now the CO2 emission has become dangerous for the people living in the locality.

So as the resolution, the Indian government has actively pushed the agenda to use a less smoke creating and cleaner source of fuel. And Biomass Pellets completely qualify this condition.

3. Pellets Allow the Usage of Automation

Although raw fuel sources like coal, raw wood, and saw dust are much cheaper, Indian snack businesses are slowly shifting towards the usage of Pellets. And a reason for this shift is because Pellets allow the usage of automation for effective functioning.

Because of automation, the process parameters can be controlled perfectly to a Tee. For example, a manufacturer is required to have 180 degrees of temperature to roast certain snacks, a Pellet burner assures him a level of temperature, close to 180 degrees with very little hassle.

So there are Pellet burners which allow you to set the temperature, monitor the temperature and you can control the temperature to the required centigrade, as per the type of snack. These aspects of controlling and monitoring are not possible in raw fuels.

In case of raw fuels, many a times they are heterogeneous, there moisture levels are not known, their ash content is not known and their exact type is not known. This is also one strong reason why many food manufacturing businesses are shifting to Pellets.

4. From Canteens to Plastic Moulding There’s a Sudden Increase in Usage of Pellets

To understand this sudden surge of usage of Pellets, let’s consider a popular example. The increase in usage of 4G internet isn’t there because it is cheap. It is because the handsets that allow 4G internet to function have become a lot cheaper than they were before. Hence, people can afford buying the handsets and thereby, there is a steep surge in the usage of 4G internet.

Likewise, five years ago in Pellets, there was no improved Burner eco-system or hardware. The Pellet Burner’s hardware was not even sophisticated enough to be used by the manufacturers in a suitable format.

Today, the cost of these Pellet burners have gone down and the efficiency and sophistication have improved tremendously. And this is another strong reason that is driving the usage of Pellets across industries. Be it a small diary, a small snack manufacturer, a canteen or a large injection or plastic moulding manufacturing plant, Pellets have become highly popular.

In a nutshell, the cost effectiveness of Pellets and their burners, the improved efficiency of the burners and the advanced automation attached to them, are factors leading to a surge in usage of Pellets across the country.

What Are The 4 Main Business Challenges in Biomass?

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There are many great advantages of solid Biofuel that comes from Biomass. Firstly, it is primarily manufactured through agricultural waste or agricultural residue and even industrial waste.

Secondly, it is enormously beneficial for the environment. It emits extremely low greenhouse gases. And thirdly, it is also much more cost effective than fuels like LPG & Petrol.

Despite of these advantages, Biomass has many challenges pertaining to its business function. And here are the top 4 main business challenges in Biomass.

1. Availability of Biomass is Seasonal & There Can Be a Shortage

It is observed that the availability of Biomass is scarce & seasonal. Indian Farmers eventually burn the crop residue because of unfeasible evacuation. They mainly do so because the process of disposal is relatively expensive for the Farmers.

The organizations operating in Bioenergy require biomass throughout the year: Hence, they need to store biomass for long periods of time and this can be nearly six months on average.

However, Indian economy is agrarian in nature. Each year, there is nearly 200 million tons of agricultural residue generated in India, which has no commercial use. So the idea of unavailability or shortage of Biomass exists to a certain extent, but isn’t a massive challenge due to an enormous quantity of agricultural residue each year.

2. Viability of Transport & Distance Issues

Biomass in its loose form has much higher weight in terms of volume & relatively lower mass. For example, a truck with a capacity of ten tons will carry only four tons of Biomass.

This puts a limit on the transport effectiveness of Biomass. Hence, generating Bioenergy becomes viable, merely in small radii’s and are closer to the hubs of biomass availability.

Hence, it is challenging for Biomass to be transported from one place to another, especially when it’s a long distance journey.

However, there is a long-term resolution to overcome this challenge. By having the manufacturing plant closer to the source of Biomass, these transport & distance issues can be resolved.

3. Farmers Receive Less Incentives for Their Participation in Biomass Activity

The double trouble problem of storage along with transport, increases the cost in terms of supply chain & reduces Biofuel’s economic value discovery. At present, the Indian farmer receives only twenty percent of the economic value. This leads to reduction of economic incentive for the farmer.

Due to lack of healthy incentives, the farmer is discouraged to heavily participate in Biomass activities like selling agricultural residue or helping with transport for wages.

The only resolution for this issue is to create more incentivizing opportunities for farmers so that it encourages them to participate more in the Biomass business.

4. Automation is Missing in Biomass Activities

In India, in terms of collection and processing of Biomass, no company has invested so far in the mechanization of these processes. This leads to scalability issues.

If we decide to undertake a huge task of 100 acres of Biomass collection, it’s not viable due to the lack of automation or mechanization. The machine intelligence factor is missing and there’s a lot of manual labour involved. This also affects the speed at which the work gets done in the Bioenergy segment.

However, as a part of resolution, we can take inspiration from countries like China, Canada & Vietnam. These countries have adequate Research & Development in the Bioenergy domain and they also possess sophisticated mechanized equipment for all the Biomass processes.

Despite of these challenges, we still have a great amount opportunity to resolve them and increase the expansion of Biomass in India. The expansion of Biomass business in India will greatly support the Indian economy in the long-run.

9 Powerful Indicators & Emerging Trends For Biofuel Growth in India (No. 9 is Eye-Opening)

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To the uninitiated, Biofuels are fuels that have been extracted from crops and plants. The advantage of Plant-based fuels is that they come from renewable energy sources. They can be grown in mostly any place and have a record of lower carbon emissions when compared to fossil fuels like petroleum, coal and natural gas.

1. Did You Know That Biofuel is Used Since 20 yrs in India?

Ethanol is a renewable biofuel because it is made from biomass. India commenced the usage of ethanol as an option for automotive fuel in 2003. Based on this the (MoPNG) that is the Ministry of Petroleum & Natural Gas dispensed a notification in September 2002. As per this notification, it become mandatory to have a blend of 5% ethanol in nine major sugar producing states & four union territories from the year 2003. However, due to shortage in ethanol during 2004-05, the blending mandate was made optional in October 2004. It later was resumed in October 2006 in the 2nd phase with an eventual rise to 10% blending.

Instead of bearing this unnecessary cost, companies can invest the money in employing the rural population for several job opportunities that involve labour work, facilitation, loading and transport work. There can be employment opportunities for people who can be involved in the activities of raw material and residue collection.

2. An Encouraging National Policy On Biofuels in India

In the year 2008, the Ministry of New & Renewable Energy, set up a National Policy on Biofuels. The policy’s aim was to limit the country’s dependence on foreign crude and also limit future carbon footprint. Under this policy, from October 2008, it was proposed that the blending level of bio-ethanol with petrol should be at 5%, leading to a target of 20% blending of bio-ethanol by the year 2017.

At present, the Government is executing the (EBP) Ethanol Blended Petrol Programme as per which the OMCs sell petrol blended with ethanol up to 10%. This programme has been extended to all regions of India except the Union Territories of Andaman Nicobar & Lakshadweep islands with effect from 1st of April, 2019. The aim is also to promote the use of alternative & environment friendly fuels. This intervention also aims at reducing India’s import dependency on other countries for energy requirements & give a powerful boost to the agriculture sector of India.

3. Did You Know That India Was Able To Achieve The Ethanol Target As Per National Policy?

During the ethanol supply year 2018-19 nearly 189 CR Litres of ethanol was supplied by grain based distilleries and sugar mills to OMCs thus achieving the 5% blending target. Also in the (ESY) ethanol supply year 2019-20, 195 CR Litres of ethanol was supplied for blending with petrol to achieve 5.6% blending. The Government has 10% blending target for mixing ethanol with petrol by 2022 & 20% blending target by 2030 & 5% blending of biodiesel in diesel in India by 2030.

4. Did You Know That Biofuels Are Cheaper Than LPG or Furnace Oil?

The overall cost-benefit of using Biofuels is much higher. They are cleaner fuels that produce relatively fewer emissions on burning. With the increased demand for biofuels, they have the potential of becoming cheaper in the future as well. Biofuels are 20-50% cheaper than LPG & Furnace Oil. One of the main reasons why Biofuels are cheaper is because they can be made locally by using local materials.

Biofuels are flexible and can be easily mixed with other fuels. Also, Ethanol & biodiesel are much better for automobile engines than fossil fuels. They can be used as additives to improve performance even if they are not the main fuel source.

5. Renowned Companies Using Biofuel Aggressively

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Thermax is a renowned engineering company providing sustainable solutions in energy & environment. It has successfully commissioned a biomass boiler for an FMCG major in India. Another such organization taking initiatives in the Biofuel segment is Forbes Marshall.

Bharat Petroleum, Indian Oil and Reliance Industries are other few giants involved in the Biofuel domain.

6. NTPC On 5% Inclusion in Power Generation to be Biofuels

NTPC is planning to replace 5% of coal by pellets/torrefied pellets made of agriculture residue in its power plants. List of power plants & daily pellets/torrefied pellets requirement is given in following table.

7. Local Food & Snacks Businesses Shifting to Biofuel

Right from small time snacks manufacturers, to dairy business owners, to roasting food item businesses, all are shifting from diesel or LPG based burners to Pellet based burners. And in the process they are achieving 50% cost benefit and their break-even is anywhere between three months to nine months. The Bakery business is another huge business that is shifting to Pellet based burners.

8. Government Offering Capital Subsidies

In terms of policies, our Government first started incentivising the suppliers. Since this product was new, very few people were willing to take risks to go for the manufacturing units. So in order to promote this industry, the Government provided capital subsidy for small time manufacturers to put up solid biofuel manufacturing projects in the rural areas. Earlier, it was 25% subsidy on the capital for the manufacturers. And for the convenience and ease of operations, these subsidies were provided through local government bodies.

9. By 2022, biofuel Will Become a Rs. 50,000 CRORE Business

Dharmendra Pradhan, Minister of State (Independent Charge) for Petroleum & Natural Gas once mentioned few years ago at the National conference on Biofuels that the biofuel business in our country is expected to reach Rs.50,000 crore by 2022 and this is based on the demand for petrol & diesel in the India

“With five per cent blending of bio-diesel, the requirement of bio-diesel will be 675 crore litres by 2022 or a business size of around ₹27,000 crore while ethanol requirement for 10 per cent ethanol blended petrol will be 450 crore litres or a business size of ₹23,000 crore,” said Pradhan while speaking in the same national conference on biofuels which was held in 2016.

Pradhan sees the size of the biofuels industry rising to close to ₹1.25 lakh crore by 2040, if the demand for petrol and diesel grows as per the International Energy Agency’s outlook.

How Biofuel Can Provide Jobs, Increase Farmer’s Income & Boost Rural Economy in India?

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To the uninitiated, Biofuels are fuels that have been extracted from crops and plants. The advantage of Plant-based fuels is that they come from renewable energy sources. They can be grown in mostly any place and have a record of lower carbon emissions when compared to fossil fuels like petroleum, coal and natural gas.

How 90% Biofuel Manufacturing Plants In Rural Areas Providing a Large Number of Jobs?

Most of the Biofuel is manufactured from agricultural residue. Hence, majority of the manufacturing plants for Biofuel are located close to the agricultural lands in India, which are the source fields for Biofuel. In this case, these agricultural lands are dominantly based in the rural areas in India. The main reason for having the facilitations in the rural areas is to save a lot of unnecessary cost that is spent on logistics and transportation from the source of manufacturing to the place of market.  

Instead of bearing this unnecessary cost, companies can invest the money in employing the rural population for several job opportunities that involve labour work, facilitation, loading and transport work. There can be employment opportunities for people who can be involved in the activities of raw material and residue collection.

How All the Waste Can Generate Revenue for the Farmers & Provide Additional Employment?

When we refer to raw material for Biofuel, we are referring to agricultural residue. Which has very little to almost nil commercial value. Any crop that generates fibrous material can be treated as a raw material for solid Biofuel. For e.g. Soybean residue is a typical example of agricultural residue that can be used as Biofuel. The Soybean residue after harvesting has no significant value and its disposal process is also a little costly for the farmer. Hence, they leave it unattended.

This creates a great employment opportunity again to boost the rural economy. As mentioned earlier, there are certain established business models where a team of collection labors is employed for residue collection and transport. Along with this, as a part of the business model, Farmers get an opportunity to sell the residue to the plant owners. This helps farmers earn extra income along with regular alternative employment. This same methodology can be followed even for cotton stalk and other crops. Thus, the waste gets purchased from farmers producing good income for them. This also encourages them to do more plantation in the Biofuel segment in turn create more income opportunities for themselves.

How Farmers Can Get Paid Per Acre?

In quantifying terms, on an average, one acre of land generates nearly one ton of Soy & close to six hundred kilos of cotton. And farmers can get paid anywhere between Rs.500/- to Rs.1000/- per acre.

What’s The Potential For This Form Of Rural Employment?

It’s surprising to know that there is almost 200 million tonnes of agricultural residue which is wasted every year. And since India belongs to an agrarian economy, this massive agricultural residue will continue to be wasted every year in future. Hence, the employment and income opportunities provided by the Biofuel segment are huge every year and can solve a lot of unemployment problems and generate substantial income for our farmers.

How Farmers Can Get Paid Per Acre?

In quantifying terms, on an average, one acre of land generates nearly one ton of Soy & close to six hundred kilos of cotton. And farmers can get paid anywhere between Rs.500/- to Rs.1000/- per acre.

How Farmers Can Have Alternative Income Through Energy Crop Plantation?

Energy crop plantation involves cultivating crops which are specially going to be utilized for fuel consumption. This is a trend following by many developing and developed countries and has become a booming sector. Some examples of such crops are king grass or napier grass and even bamboo plantation.

Energy crop plantation provides another great advantage to convert adversity into opportunity. Farmers many a times face challenges with less fertile lands. Energy crop plantation can also be done successfully on less fertile lands.

In a nutshell, local crops as per local regions like Coffee in South India or Rice in West Bengal and many other crops can also be utilized as agricultural residue for Biofuel. This makes the concept of utilizing the Biofuel segment to boost rural economy, a PAN India concept.

Challenges and way forward in the urban sector

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