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Low price of electricity generated by bagasse discourages investors

Last update: 14:17 | 11/10/2017

VietNamNet Bridge - Sugar mill owners remain cautious about plans to generate electricity from bagasse, while experts say the low price of electricity produced from bagasse makes investors hesitate to invest in the field.


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The stiff competition in the sugar industry and the tariff removal under ATIGA (ASEAN Trade in Goods Agreement) , to commence from 2018, has placed big challenges on Vietnam’s sugar industry. 

The industry is less competitive than other regional countries with higher production costs.

Post-sugar and by-sugar production to create higher added value is a must for sugar mills. Generating electricity from bagasse is a solution.

According to chair of the Vietnam Sugar & Sugarcane Association Pham Quoc Doanh, one ton of sugarcane creates 0.3 tons of bagasse which can generate 100-120 kwh of electricity.

Five pre-feasibility studies conducted by German Technical Cooperation Agency (GTZ), MOIT and involved parties at the sugar mills of Phung Hiep, Vi Thanh, Dak Lak, Lam Son and Nghe An to find optional solutions to improve the revenue of sugar projects made public on October 3 in Hanoi.

Vietnam now has 11 sugar mills that generate electricity from bagasse. These include KCP (39 MW) with capacity equal to a medium-size power plant, Thanh Thanh Cong Gia Lai (34.6 MW) and Khanh Hoa (60 MW).

The total designed capacity of the bagasse-using power projects at the 11 sugar mills is 351.6 MW, but only 99.9 MW had been connected to the national grid by early 2017. The current electricity purchase price is 5.8 cent per kwh, applied to CHP (combined heat and power generation) biomass projects.

It is estimated that the total electricity output the sugar industry can generate is 2.346 million MWh, which is equal to the volume of electricity annually consumed by 450,000 households in Vietnam, according to a GTZ research work in 2017.

The total designed capacity of the bagasse-using power projects at the 11 sugar mills is 351.6 MW, but only 99.9 MW had been connected to the national grid by early 2017. The current electricity purchase price is 5.8 cent per kwh, applied to CHP (combined heat and power generation) biomass projects.

GTZ is now running a project aiming to increase the output of biomass power plants by improving efficiency. The project encourages plants to use alternative biomass by-products during non-sugarcane pressing time (the sugarcane pressing time only lasts 180 days a year). If plants can increase their capacity and efficiency, the capability of accessing bank loans will be high.

However, Doanh emphasized that the problem lies in the electricity price of 5.8 per kwh at which EVN buys from sugar mills. The price level is low compared with the price of electricity made of straw and rice husk, now at over 7 cent per kwh, thus discouraging investment.

According to Doanh, bagasse now can be exported to Japan at the price of over VND500,000 per ton. 

An analyst commented that the price level of 5.8 cent per kwh is just a bit higher than the price of electricity from small-scale hydropower plants.


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Thanh Mai

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