Biomass

Highlights of "Upside for biomass" Focus Malaysia, April 27-May 3, 2013

According to the National Biomass Strategy 2020, biomass has the potential to contribute up to RM2.8b for the wood industry and RM2.4b for the palm oil industry by 2020.

According to Lux Research analyst Kalib Kersh, in a February 2013 report, 7b tonnes of biomass will be required by 2030 to replace all petroleum use for chemicals and fuels. For every metric tonnes of biomass used as fuel, there is an estimated reduction of more than one metric tonne of carbon dioxide emission.

Plantation players in Malaysia collectively produce about 80m tonnes of biomass annually. By 2020, this is expected to grow to 100m tonnes per annum. Oil palm biomass consists of fronds, trunks, empty fruit branches, palm kernel shells and fibre. Oil palm-based biomass is often pelletised to enable easy transportation.

To meet the country's renewable energy target of 410MW of installed biogas capacity by 2030, more than 3.5m and 9m tonnes of biomass need to be burned in 2015 and 2020 respectively.

According to Malaysian Palm Oil Board's report dated January 2013, a palm oil mill with an input of 250,000 tonnes of fresh fruit bunches per year can potentially generate an annual revenue of RM2.1m from the sale of biomass in its raw form.

A producer of biomass pellets can generate an income of RM8m per year, based on a market price of RM300 per tonnes, and a palm oil mill output of 60 tonnes/hectare. In addition, to the income from the sale of pellets, the use of pellets for fuel on a mill of that size can generate 1.85MW of energy, 1.25MW of which is used to power the mill. The remainder can be sold via the feed-in tariff (FiT) programme.

According to the Malaysian Investment DevelopmentAuthority (Mida), both existing and new companies using biomass to produce value-added products will be given pioneer status, with a tax exemption of 100% of the statutory income for a period of 10 years. The companies can also qualify for an investment tax allowance of 100% on the qualifying capital expenditure incurred within a period of 5 years.

Under Sustainable Energy Development Authority Malaysia's (Seda) FiT programme, companies utilising biomass for fuel can also sell their excess energy supply to Tenaga Nasional Bhd, opening up a new revenue stream from the purchase price of RM1.49 per kWh. Seda has allocated a cap of 23MW for the second half of 2013 under its FiT programme, compared to 4.05MW available. The cap will eventually be reduced to 13MW in the first half of 2014 to the 11.87MW available.

Immediate beneficiaries of the growth in demand will be the companies involved in the production, processing or equipment manufacturing and systems integrators for biomass products, such as Fitters Diversified Bhd, QL Resources Bhd and Boilermech Holdings Bhd.