Palm Oil Millers Need More Incentives to Become Green IPP

IN recent months, there has been a lot of talk on the need to set up more oil palm biomass and biogas power generation projects given their huge potential as a renewable energy for the country.

As demand for sustainable energy from clean indigenous sources becomes more pressing, the Government is actively promoting the utilisation of biomass feedstock such as empty fruit branches (EFB) and palm oil mill effluent, which are envisaged to take up an increasing stake in Malaysia’s electric power generation.

Oil palm plantation players, particularly millers, are strongly urged to actively harness the abundant oil palm biomass derived from the country’s large oil palm plantation operations. To date, there are 411 local palm oil millers with the potential to be independent power producers (IPPs) of sustainable green energy.

However, despite the urgent call by the Government, palm oil millers are not keen on and many are still toying with the idea of venturing into biogas and biomass power generation.

In some cases, millers claim that power generation with EFB as feed stock is a low profit business proposition given the fact there are many other high value-added products that could be produced from biomass. Apart from the high initial capital needed to set up a power-producing plant, the low tariff on green energy is also another pertinent factor why oil palm producers are not keen to become green IPPs.

Nonetheless, one should not put the blame entirely on the palm oil millers for their lack of interest in becoming green energy producers.

Many claim that the Government’s call is not practical given that there are still no clear-cut biomass policy and sufficient incentives to convince millers to develop such projects.

The Government will need to provide more attractive incentives for the palm oil industry to make full use of the biomass feedstocks to first generate electricity in their mills and gradually selling its electricty to the national power grid where ever possible.

One incentive could be an increase in the tariff on green energy from 21 sen per unit to between 29 and 40 sen. Sabah, for example, is an ideal candidate to generate electricity from oil palm biomass as the state produces over 30% of Malaysia’s total palm oil production but very little of its biomass is being commercially utilised.

Unlike in the peninsula, which has enough electricity supply from fossil fuel-run power plants, and Sarawak from hydro power, Sabah could look at its palm oil mills as a source for electricity to overcome the power shortage supply especially in its east coast.

Sabah currently has about 1.3 million hectares of oil palm plantations and over 120 palm oil mills. The state last year produced about 25 million tonnes of fresh fruit bunches, which translates into over five million tonnes of EFB.

Despite the claims of huge EFB volume in Sabah, industry players said the biomass feedstock in actual fact is not easily available due to poor road conditions and the scattered nature of palm oil mills makes transportation cost a major problem to the success of the project.

It is believed that the Sabah government is currently planning to set up a company to purchase the EFB and also a mechanism to regulate its price and supply.

Source : The Star by Hanim Adnan

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