Power from Biomass

ÐŽ§RADIANCE POWER PROJECTЎЁ

Business Plan

Executive Summary

Submitted to

ÐŽ§SAKSHAMЎЁ

IIM, LUCKNOW

Developed By:

Piyush Kataria

Santosh Bhagat

INSTITUTE OF MANAGEMENT,

NIRMA UNIVERSITY

AHMEDABAD

JULY 2007

Email: piyush.kataria@gmail.com

bhagatsantosh@yahoo.com

Executive Summary

Contents:

Ñ"ж Business Overview

Ñ"ж Mission

Ñ"ж Vision

Ñ"ж Execution Plan

Ñ"ж Management Strategy

Ñ"ж Market opportunity

Ñ"ж Feasibility and Financial Analysis

Ñ"ж Risks associated

Ñ"ж Mitigating the risks

Ñ"ж Future Plans

Executive Summary

Business Overview

Energy, especially from fossil fuels, is a key ingredient for all sectors of a modern economy and plays a fundamental role in improving the quality of life in less developed economies. In 2007, India is ranked fifth in the world in terms of energy demand; accounting for 3.6% of total energy consumed, and is expected to grow at 4.8% in the future. India imports 70% of the oil it uses, and the country has been hit hard by the increasing price of oil, uncertainty and environmental hazards that are concerned with the consumption of fossil fuels. In such context, bio energy constitutes a suitable alternative source of energy for India, as large amounts of raw material are available to be harnessed.

Among various options available for bio-energy, bio-diesel, bio-ethanol and biomass gasification are three major options, which have huge potential in India to develop as energy sources and where investments made would be economical. The objective of this Business Plan is to review the option of electricity generation through the use of biomass energy.

Mission

To fulfill the energy needs of the citizen of India while utilizing the renewable sources and hereby providing pollution free and waste free life to the citizens.

Vision 2012

To utilize newer sources of the agriculture waste for the purpose of electricity generation and double the start up capacity in five years.

Execution Plan

The plan will look at various aspects that are needed to be reviewed for the successful implementation of the biogas plant. The first step would be the feasibility study for the plant. It would look after the constraints such as the raw material supply, the processing of the biomass in to electricity, the consistency in energy generation, the supply side of the electricity, and various other factors that might directly or indirectly affect the generation of electricity.

Once the feasibility study is done selection of site for establishing the plant takes the driverÐŽ¦s seat. The plant must be located where the raw-material access and energy supply is not a problem. A closed loop must be made in collaboration with the local farmers and mills (sugarcane, wood, rice processing plants) for the uninterrupted supply of biomass. The capacity of the plant must be decided keeping in mind the investments in to account. Also storage capacity must be decided for the biomass as a major portion of it is cyclical in nature. Next in line is the study of the market for electricity in the region and planning for the distribution of the same. The marketing strategy needs to be finalized to take care of the supply side.

Keeping all the above factors in to account, site near Surat which is a hub for various textile mills, chemical plants and others small and medium enterprises has been identified. There are more than one thousand textile mills located in Gujrat and out of these more than 50 percent mills are situated in this area only. These centers would ensure constant demand for the electricity, where generally the demand is higher than the supply. The region also encompasses various rice mills, sugar mills and other factories which can be reliable sources of biomass. The production of other crops in the near vicinity may also support the biomass supply. Hence the project has a sustainable demand and supply.

Management Strategy

All the above must be backed by innovative management strategy. This must take care of the issues that would differentiate this power plant from others. The purpose of the power plant is not only to fulfill demands for the power supply of the industry but also accomplish the demands of the nearby villagers and farmers at a moderate cost. The true challenge for the management would be to device following strategies:

„« Uninterrupted supply of biomass, taking care of the seasonality and affordability.

„« Economical generation of electricity while maintaining updated technology.

„« Minimizing risks cyclical nature of the electricity demand.

„« Development of nearby villages and social welfare by creating economic opportunities for rural citizens.

These strategies are of utmost importance for the sustainability of the plant. Supply can be taken care by building good relations with local farmers and mill owners. In fact plans are to make them partners of the plant. They would in turn get benefits such as extra income through what normally would have been wastage for them.

Cyclical nature of the