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Development of a business plan for rural electricity generation (DG) system based on biomass

Biomass combustion and co-firing for electricty and heat

Alholmens Kraft, Finland, the world's largest biomass-fired power plant

Combustion is the most common way of converting solid biomass fuels to energy. Worldwide, it already provides over 90% of the energy generated from biomass, a significant part of which in the form of traditional uses for cooking and heating. Biomass of different forms can also be used to produce power (and heat) in small-scale distributed generation facilities used for rural electrification, in industrial scale applications, as well as in larger scale electricity generation and district heating plants.

Clean Development Mechanism market status: 

[This information is kindly provided by the UNEP Risoe Centre Carbon Markets Group]

Project developers of biomass projects in the CDM pipeline apply a variety of different CDM methodologies due to a variety of different feedstock and sectors where biomass projects are applied. Methodologies include ACM6 “Consolidated methodology for electricity generation from biomass residues”, ACM3 “Emissions reduction through partial substitution of fossil fuels with alternative fuels or less carbon intensive fuels in cement manufacture”, AMS-I.A.: Electricity generation by the user and AM36 “Fuel switch from fossil fuels to biomass residues in heat generation equipment”.

CDM projects based on biomass represent 13.6% of all CDM projects in the pipeline. Biomass projects have been the main driving force of CDM project development in many developing countries where agriculture is the main industry and agricultural wastes are abundant. Of the 277 registered projects, 168 are small-scale projects. [media:image:4] Example CDM project:

Title: “35 MW Bagasse Based Cogeneration Project” by Mumias Sugar Company Limited (MSCL) (CDM Ref. No. 1404)
Mumias Sugar is the leading sugar manufacturer in Kenya. It sells sugar through appointed distributors nationwide. The company has diversified into power production. The technology to be employed for the Mumias Cogeneration Project will be based on the conventional steam power cycle involving direct combustion of biomass (bagasse) in a boiler to raise steam, which is then expanded through a condensing extraction turbine to generate electricity. Some of the steam generated will be used in the sugar plant processes and equipment.
Project investment: USD 20'000'000
Project CO2 reduction over a crediting period of 10 years: 1'295'914 tCO2e
Expected CER revenue (USD 10/CER): USD 12'959'140

To develop a commercial model for biomass distributed electricity generation based on an assessment of development needs namely technology, financing mechanisms, capacity building at local level for establishing RESCOs. 


28° 36' 0" N, 77° 12' 0" E
Main activity and output: 
  • Review DG programmes based on available literature & information;
  • Conduct a feasibility analysis to assess business attractiveness considering market potential and resource availability;
  • Select appropriate technology, design and implementation of pilot plant;
  • Conduct further feasibility analysis based on implementation experience;
  • Develop financing mechanisms for investment in, & commercial expansion of, such projects in consultation with banks;
  • Identify agencies and capacity building needs for the development of rural energy supply companies (RESCOs); 
  • Prepare a business plan;
  • Hold a bilateral workshop in New Delhi.

Create and manage a web site during the project period

Expected impact: 
  • Expansion of rural energy access and clean energy network. An acceleration of investment in distributed energy systems based on renewable technology and local resources would supplement the efforts on grid expansion in India to meet the target of ‘Energy for all by 2012'.
  • Positive impact on the environment through the reduction in GHG emission (from the supply of electricity from fossil fuel based alternatives);
  • Poverty alleviation through increased income from the utilisation of wastes and the generation of direct and indirect employment from the development of RESCOs;
  • Social impact as the availability of electricity in the unserved/underserved areas would improve quality of life.