High Pressure Cogeneration for Sugar Sector in Pakistan

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Context

Pakistan’s sugar sector is the second largest agro-based industry in Pakistan with one of the highest annual contributions to the country’s GDP. While processed cane sugar is the main produce of the industry, bagasse, the fibrous husk left after processing, is a useful by-product that is burnt to produce steam for electricity generation. However, though Pakistan’s sugar sector has an annual availability of 4.4 million metric tons of bagasse, 46% of this produce is wasted in inefficient, low-pressure cogeneration systems. An alternative is to use high-pressure cogeneration (HPC) systems that consume less and produce more energy. However such systems are costly to install and require technical expertise that is not readily available in Pakistan. Financing is difficult to obtain and the regulatory system does little to encourage such investments.
The High-Pressure Cogeneration (HP Cogen) Pakistan project under the EU funded Switch Asia Programme aims to promote the use of HP Cogen systems by facilitating the sale of electricity generated in the sugar mills to the national grid or to allied industrial units. They are doing this by garnering the support of government authorities, introducing supportive policies and facilitating the implementation of HP Cogen technologies As a result of switching, not only will sugar mills produce more efficiently, but Pakistan’s electricity shortage will also be reduced.

Objectives

To encourage greater switch to Cogen technologies in 70 Pakistani sugar mills, thereby increasing productivity and competitiveness.
To encourage greater generation of electricity that can be sold

Expected Results

  • A regulatory National Bagasse Power Support Cell will be established at the Pakistan Sugar Mills Association (PMSA) to offer technical, financial support to sugar mill staff
  • Implementation strategies  and relevant standardized technical practices will be developed
  • Staff of the sugar mills will be trained to ensure that regulatory standards are upheld
  • A marketing network will be created to ensure constant technological upgrades
  • Financial risk assessments will be prepared for bagasse power-based projects
  • Toolkits will be developed to facilitate the use of the State Bank of Pakistan’s (SBP) Credit Guarantees and schemes to financing power plants using renewable power
  • Information will be provided to the five major financial Investors in Pakistan on the prospects of bagasse based power cogeneration.
  • Trainings will be provided to sugar mill staff on the toolkits and the Clean Development Mechanism (CDM) which allows emission-reduction projects in developing countries to earn certified emission reduction credits globally
  • Complete funding will be provided for at least 10 HP Cogen projects
  • Project documents will be prepared to bid for CDM financing for at least 10 projects
  • A multi-stakeholder platform will be prepared for bagasse power based systems
  • Policy level support will be provided for clean energy and more efficient energy systems with Sugar Sector stakeholders, Private Power and Infrastructure Board and the Power Distribution Companies (DISCO’s)
  • Conduct consultations and meetings to facilitate the adoption of special tariff schemes for HP Cogen
“Running a high-pressure boiler is very difficult, so this project is really useful.. Once our application is approved we will have 24 months to complete it and then we will be able to sell 26.5 MW to the grid. Our accountants have calculated an IRR of 24%! This is great for our profits – it is very difficult to make a profit now just from sugar. But it will also greatly relieve the load shedding in the villages surrounding Sheikh Bhir Ko, near Hyderabad, in Sindh. ” Mr. Khalid Hayat (Chief Operating Officer), Faran Sugar Mills, Hyderabad, Sindh
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