Tips for Choosing PKS

For the CPO producers, tenera is preferred because the thick coir (mesocarp fiber) will produce more CPO. Whereas for PKS (palm kernel shell) users such as power plants and a number of industries, the type of dura palm oil is preferred. PKS tenera has a thin shell (0.5-4 mm) so that the calorific value tends to be lower than the dura with a thicker shell (2-8 mm). Old palm oil plantations usually use tenera types to maximize CPO yield, while old palm oil plantations usually use a type of dura. PKS as a byproduct or one of the solid wastes in a CPO mill is actually not a major concern for palm oil mills, and CPO is clearly the main focus. PKS is primarily a concern of traders and users, so quality factors emerge as a consequence of buying and selling transactions.

Indonesia has around 12 million hectares of palm oil plantations at present, consisting of 4.8 million hectares of smallholder plantations, 6.2 million hectares of private plantations and 0.8 million hectares of state plantations. There are still many regions in Indonesia that use the type of dura on their palm oil plantations. Smallholder palm oil or community palm oil plantations are one of the many that produce this type of dura palm. When PKS demand increases sharply as it is today, especially for export markets to Japan and Korea (more information read here), then PKS dura types are the first choice. In practice it is difficult to find PKS that is 100% dura because the source of palm oil fruits used in CPO production also comes from various sources. The source of the nucleus (company plantation) can be the majority in the form of tenera, while palm oil from community plantations can be the majority of the dura. The composition of the dura and tenera also varies depending on composition the nucleus and plasma plantations. For example, a CPO mill with a nucleus plantation which is majority still new plants so that the palm oil fruit majority comes from the community plantation. Or it could be that the nucleus plantation has entered the replanting phase so that supply is limited and relies on community plantations and so on.

According to botany, dura-type plants have dominant alela homosigot (sh + sh +) so produce thick shells. Whereas hybrids from dura with pisifera, which are tenera-type plants that have alela heterosigot (sh + sh-) have thin shells and are surrounded by fiber rings in the mesocarp. Pisifera type plants themselves have recessive alela homosigot (sh-sh-) so they do not form shells. Generally this type of pisifera is not used as a commercial for palm oil plantations because it fails to form fruit. But indeed there are several types of pisifera that are still fertile and capable of reproducing. Dura type plants can also be said to be parent plants because the tenera type is a crossing of dura and pisifera.

Higher Power Plant Efficiency Demands Higher Fuel Quality

When we want to refuel our vehicle at a gas station, of course we choose what fuel is most suitable for our vehicle. Our vehicles will be able to run optimally when using the appropriate fuel. Over spec fuel quality or too low (under spec) will only provide less optimal performance. Technically, the vehicle has been designed with a certain pressure ratio on the combustion system, if the quality of the fuel is too high then low compression is difficult to burn perfectly, and vice versa. In the operation of vehicles, even fuel that burns prematurely or after time will produce a performance that is not optimal. High-quality fuels also have higher prices so that they are economically also not profitable, as are low quality fuels, although they are cheaper but performance is also below standard.

The analogy above is also more or less the same for electricity generation. The higher the level of efficiency the higher the quality of the fuel required because the operating conditions are also above the average, for example compression, temperature and so on. If the quality of gasoline is expressed by octane numbers, or on diesel oil the quality is stated by cetan numbers, then in solid fuels such as wood pellets the size of quality is expressed as a caloric value. Other elements that are also considered in fuel are elements that can damage the equipments or machines used. Especially for wood pellets, high potassium and chlorine content can have a bad effect on the power plant. Potassium will be a deposit / fouling on boiler pipes thereby reducing its efficiency, while corrosive chlorine will shorten the life of the power plant.

In 2030, Japan will implement the use of power plants with higher efficiency, which is a minimum of 41%, while most of the efficiency of coal power plants currently ranges from 30-35%. To achieve an efficiency level of more than 41% the technology used is ultra supercritical pulverized coal. Ultra supercritical pulverized coal technology is basically a further development of pulverized coal technology that is most widely used by coal power plants or more than 95% in the entire world today. The difference in ultra supercritical pulverized technology with pulverized is the use of higher pressure and temperature so that its efficiency is also higher. Modification of the power plant can also be done to increase the efficiency. The use of biomass fuels such as wood pellets can be done by cofiring or full firing (100% wood pellets). The characteristics of the fuel used will also affect the boiler technology used.

The ash of wood pellet required for industries such as electricity generation can be up to 6% according to the American pellet fuel institute (PFI). But chemical ash is an important consideration in the use of the power plant. South Korea for example currently requires a maximum chlorine level of 500 ppm (500 mg / kg) or Japan requires a maximum potassium level of 1000 ppm (1000 mg / kg). This makes the production of wood pellets follow these specifications if the specifications are not appropriate. A number of special pretreatments need to be done to achieve these specifications. The potential of wood pellets from energy plantations in Indonesia is very large, as are pellet fuels from agricultural or plantation waste such as palm oil empty fruit bunches which are estimated to reach approximately 38 million tons per year. But once again the specifications of the pellets (wood pellets or agro waste pellets) produced need to be adjusted to the needs of power plants in Japan or South Korea - two countries that are highly energy dependent - of course if the pellet producers are export oriented. What are the next pretreatment questions that need to be done on the production of the pellet? InsyaAllah, we discussed on another occasion.

Export Wood Pellet: To Japan or Korea?

Market aspect is an important factor for a production, including wood pellets. The understanding of market characteristics will also determine the success of marketing these products. Korea and Japan are the two largest wood pellet markets today in Asia, so a number of export-oriented producers are trying to fill the market. The wood pellet market for Europe has generally not been a priority, this is because large capacity is needed for shipping there, for example 40,000 - 60,000 tons / shipment, which this wood pellet producer in Indonesia cannot meet the quantity because its production capacity is still small. Delivery of wood pellets to Korea and Japan from Indonesia, almost all of them still use containers, because the volume is not large.

What is the difference between the wood pellet market between Japan and Korea? Then, why do Indonesian pellet wood producers need to consider this? The use of wood pellets for power plants both Japan and Korea is policy driven, namely Renewable Portfolio Standard (RPS) in Korea and Feed in Tariff (FIT) in Japan. But also how the mechanism of supplying wood pellets in the two countries is different. Japanese buyers prefer long-term contracts with fixed prices, wood pellet producers also enter sustainability criteria (for example proven by FSC), good forest management practices and stable macroeconomic conditions. While Korean buyers prefer the price of cheap wood pellets in "open markets" with short-term contracts.

Facing the above market conditions is certainly also different in reacting. The Korean market is perceived to be easier and always prices follow the market, but with this condition wood pellet producers are competing to improve their efficiency so that the selling price of their pellets can be cheap and accepted by the Korean market. This is evident from wood pellet producers in Vietnam, namely the low-price strategy proved to be the main supplier of wood pellets in Korea. But along with the limitations of raw materials and rising oil prices, the price will be corrected by these conditions. As for the Japanese market, it requires a deep study and very carefully calculation, so that only large producers can do it. Fixed prices, long contracts and large volumes are also at risk of causing losses to producers, if inflation occurs in producer countries because the feed in tariff policy (FIT) is set for a period of 20 years. This also needs to be anticipated by wood pellet producers if they want to enter the Japan market.

Biomass fuels get a 4.3% share in Japan in their 2030 energy projections. This means biomass accounts for 4.3% of 245 million MW per year with renewable energy or around 6,000 MW of biomass. To achieve this capacity, approximately 22.2 million tons of wood pellets are needed per year. At present most of the wood pellets imported by Japan come from Canada. Of the 374,000 tons of wood pellets imported by Japan in 2016, around 75% came from Canada. Whereas in 2017, wood pellets imported from Canada dropped to around 65%, then Vietnam filled quite a lot in that year, followed by China. Canada tries to continue to maintain its market share in Japan because they feel able to fulfill its requirements. The 20-year long contract in the FIT mechanism is also considered more attractive than the Canadian medium-sized supply contracts to Europe, such as with Drax in the UK for 11 years, for example in 2020 they began the contract so in 2040 the new contract ended or Japan become the wood pellet offtaker for that 20 years. In addition, the long-standing factors of the wood and its processed products business from Canada were also used to strengthen the market share of wood pellets in Japan. On the other hand, Indonesian export of wood pellets to Japan is still very small.

Most of Indonesia's wood pellets are exported to Korea, which is estimated according to the Global Trade Atlas Data of 63,000 tons in 2014 and fell slightly to 61,500 tons in 2015. Since implementing RPS (Renewable Portfolio Standard) in 2012 Korea is committed to increasing use of renewable energy, especially biomass and more specifically wood pellets in the energy sector. Based on the RPS, Korea requires a coal power plant to use a minimum of 2% renewable energy in 2012, with an increase of 0.5% / year to 2020. By 2020 they will need a minimum of 10% renewable energy with a composition of 60% renewable energy coming from wood biomass , while the remaining 40% from other sources and estimated wood pellets will be more than 10 million tons. Why are most of Indonesia's wood pellets exported to Korea? There are several factors that influence this, namely the requirements for export wood pellets to Korea are not as strict as Japan, most Indonesian wood pellet producers have small capacity with limited raw materials, making them more suitable for short-term contracts and prices offered by Indonesian wood pellet producers can compete with other producers such as Vietnam, Thailand and Malaysia. Wood pellet is basically a new product for the energy sector, so that the issue of dynamic prices in the "open market" or international market, besides the supply-demand factor, world energy prices in general are very influential, especially petroleum oil.

Indonesia, although currently still does not have large market share or still not calculated in the sector but its potential is very large. Factor of tropical climate, large and fertile land is an extraordinary basic capital to become a biomass producer. Besides that, with a location closer to the market or user country than Canada, namely Japan and Korea, it is also an advantage. If the Indonesian deposit interest rate is eliminated or minimally reduced, then the level of passion for business is also an extraordinary driving force. Do not let the high deposit interest rate backfire, which is a disaster, one of which is late in innovating in the era of bioeconomy, even though resources are abundant. Some Indonesian wood pellet producers such as South Pacific in Jepara, Central Java and Singpellet in West Sumatra also have the concept of an energy plantation for the production of wood pellets with Short Rotation Coppice / SRC. The production of wood pellets from the energy plantation is the best scenario for the market penetration of Japanese and Korean wood pellets. To design a large capacity wood pellet production from the energy plantation, you can read here. Muslim bioeconomy models with the integration of wood pellet production from energy plantations, sheep farms which are the best assets of Muslims and honey bee farms, will excel and become the main players in the bioeconomy era. InshaAllah. China is predicted to also become a big market for wood pellets, reviews of which we will write later. Insha Allah

Delay in the Construction of Biomass Power Plant in Japan and Its Impact on PKS Supply from Indonesia and Malaysia

An ambitious program always requires careful preparation to achieve the goals as expected. Moreover, the ambitious program is related to a strategic sector such as energy, so preparation also needs to be more serious. Hurry to be realized immediately and reach the target will further aggravate the situation and bring losses in the end. This readiness also involves many parties so that synchronization is not easy and supporting infrastructure. One of the ambitious programs in the energy sector, especially renewable energy and more specifically the use of biomass, is a power generation program in Japan. Japan as the most energy-dependent country, the sustainability of energy supply is very important, so government policy is needed for this. After the tragedy or accident at the Fukushima nuclear plant in March 2011, Japan began using renewable energy as an important energy source. The use of biomass as an energy source is targeted at 4-6 GW by 2030, and even this condition spurs developers so that there is a surplus of almost 3 times as much. This condition makes a special policy to control this so that not all are approved for the development of the power plants.

Regarding the use of biomass as an energy source, European Union countries even put a portion of biomass at 70% in their renewable energy program. The first RED (Renewable Energy Directive) program from the European Union will end in 2020. RED I aims to reduce emissions by 20% and the use of renewable energy to reach 20% by 2020, the program is also well known for its 20-20-20 target. At present the European Union has also prepared RED II to replace RED I which will soon be over. At the RED II the target to be achieved is a 30% reduction in emissions and 32% renewable energy use. For biomass energy, Europe is currently the largest producer of wood pellets, estimated at 13.5 million tons / year while consuming 18.8 million tons / year year, meaning there is still a shortfall of 5.3 million tons / year. America and Canada are the main suppliers of wood pellet needs of European countries with the majority of the use of wood pellets for electricity generation. Indonesia as a tropical country and rich in various biomass, especially woody biomass, has the potential to become the world's leading producer of wood pellets. Along with the increasing portion of renewable energy in the RED II program that will be proclaimed, the use of wood pellets is also getting bigger.

Map of Japan's biomass power plant status, red means it's already operating, yellow means that in the development stage, blue means planning.

Japan applies FIT (feed in tarrif) to encourage the use of renewable energy in electricity production. FIT has been implemented since 2012 and there are significant differences regarding the company's interest in the FIT. There has been a surge in interest of up to tens of times compared to before it was implemented by FIT with the number of power plants reaching 1,028 in 2017 or 5 years after the application of FIT. The highest surge of interest in solar power plants is solar PV up to more than 10 times, while for biomass it has jumped about 3 times. PKS is even a favorite fuel for the power plants. In March 2017, 38% of the FITs approved in the "general wood" category used PKS as their fuel or energy source. This makes export PKS can be a very attractive business opportunity. Electricity production costs also decreased with the implementation of the FIT. The biggest reduction in costs in solar PV power plants reached 38%, while in biomass power plants with an average capacity of 19 MW there was a 16% reduction in costs. While a review of the environmental aspects of carbon emissions (CO2 reduction) has also decreased by 6 points.

In 2019, it was originally planned that most of the power plants that had been built had been operating, but this year there were still many power plants not yet operating. This means there is a delay than planned. There are many factors that cause delays in both technical aspects such as connection to the grid and manufacturing the equipment and non-technical aspects such as capital and the availability of biomass fuel supplies. One example on the equipment side is that there are only 4 or 5 boiler manufacturers for power plants in the country so overwhelmed with high demand. Many of these power plants use biomass fuel in the form of wood pellets and PKS. For wood pellets Indonesia also has a great opportunity as will be done by Sri Lanka, for more details can be read here. As for PKS as the largest CPO producer in the world with palm oil plantations reaching 12 million hectares, Indonesia's potential is very large, second in Malaysia, with palm oil plantations reaching 5 million hectares.

PKS exports from Indonesia had a downturn some time ago due to high export duties ( tax plus levy) which totaled $ 17 per ton, whereas this did not happen in Malaysia because it was not charged as in Indonesia. Export duty out of PKS in Indonesia is associated with CPO prices. Many parties actually want the PKS exit duty in Indonesia to be eliminated as in Malaysia or at a minimum reduced so that it can be more competitive. This is because PKS is waste and exporting is part of the waste solution. The 15% decline in CPO prices in the international market turned out to have reduced PKS export levies to 0 so that they only paid $ 7 per ton of tax. But when CPO prices rise, the export duty (export tariff) also rises. Based on the Regulation of the Indonesian Minister of Finance (PMK) No. 152 / PMK.05 / 2018 which has been in effect since December 4, 2018, the government levy to be zero (US $ 0 / ton) all export levy rates if international CPO prices are below US $ 570 / ton. Meanwhile, if the CPO price is in the range of US $ 570-US $ 619 / ton, then the PKS export levy becomes US $ 5 / ton, whereas if the international CPO price has returned to normal, which is above US $ 619 / ton, PKS export levies become $ 10 / ton. If added with a tax of US $ 7 / ton, then when CPO prices are below US $ 570 then only tax is worth US $ 7 / ton like now, but later when CPO prices rise in the range of US $ 570-US $ 619 / ton, then export taxes and levies become US $ 12 / ton, whereas when CPO prices have been above US $ 619 / ton, PKS export taxes and levies have become US $ 17 / ton. Higher taxes and export levies make PKS prices less competitive.

PKS exporters who have collected a lot of PKS in the hope that they can be sent or exported in large numbers by 2019 are disappointed. Expectations and plans did not match reality. Japan is still continuing the FIT program but the realization is expected to have a delay. The collection and accumulation of PKS for a long time will not only damage the PKS if it is piled up too long, but of course it will cost more for storage. The planned realization, which was supposed to be 2019 but backwards become 2022-2023, would certainly wait for very long 3-4 years for the storage of the PKS. Whereas for wood pellet fuels for 3-4 years, it can be used to make energy plantations and wood pellet factories. The potential of industrial plantations (HTI) for energy plantations and production of wood pellets in Indonesia is very large, for more details can be read here.

Soon Sri Lanka Will Produce Massive Wood Pellets From Its Energy Plantations, Indonesia?

A Sri Lankan company, Trinco Pellets will produce wood pellets from fast-rotating plant, namely gliricidae and is planned to produce in 2020-2021. Its production capacity reaches 150,000 tons / year with the main market to Japan. The company aims to plant 1 billion gliricidae trees with the target of producing 15 million tons of gliricidae wood. In addition to the production of wood pellets, the wood is also used for electricity generation. Of course this is a breakthrough and acceleration for the development of the wood pellet industry. Indonesia clearly has far greater potential, and it can also be a reference for even a model to spur the spirit to play a greater role in the world wood pellet sector in particular and bioeconomy in general.

Gliricidae with calliandra are a group of legume plants that have roots that can bind nitrogen to fertilize the soil. Both can also be coppice so that they can be harvested every year and replanting is done after approximately 20 years. For additional references about calliandra and gamal can be read here. Optimization of energy plantations both calliandra or gliricidae is by raising both sheep and also can be sheep farms with cattle. This is because calliandra and gliricidae leaves are very good for animal feed because of the high protein content and the amount produced from the energy plantation is very much. For example if each hectare produces 20 tons of leaves, then for a 1,000 hectare plantation it will produce 20,000 tons of leaf waste. For more details, please read here. With this pattern, we are not only produce wood pellets, but also meat production, which is currently Indonedia still in a deficit. Integration of large plantations with large farms will provide optimal results, as can be read here. Insha Allah.

EFB Pellet is Difficult Accepted by the Market, It's Time for EFB Charcoal Briquette to Come as a Solution

When the EFB pellet properties cannot be accepted by the market, and the solution to upgrade the fuel is not yet economical, it needs a precise solution that can really solve the problem. Most power plants that use pellets as fuel use pulverized combustion technology, where pellet EFBs that have high chlorine levels are less acceptable. Chlorine is corrosive to metals so that the lifetime of the power plant is short. Whereas EFB pellets will be more suitable for power plants that use fluidized bed combustion technology, or even gasification, as a reference can be read here.

The right solution to overcome the EFB problem is to be processed into EFB charcoal briquette, which is by briquetting and followed by carbonization. The market segment of EFB charcoal briquette for barbecues is clearly very different from a power plant. So the product specifications needed are also a little different. Electricity needs for the production of EFB charcoal briquette can also use the EFB, so some of it is used for fuel in electricity generation and partly for the raw materials of the EFB charcoal briquette. The electricity needs for the production of charcoal briquette EFB are not as big as for palm oil mills and also do not need steam, so they do not have to use steam turbines, but it can be with Stirling engines which are external combustion engines, ORC (Organic Rankine Cycle) or even gasification.

EFB is the most solid waste produced by palm oil mills, as an illustration for palm oil mills with a capacity of 60 tons / hour FFB will produce 264 tons of EFB. The EFB continues to be produced and if it is not treated it will cause more problems. Most EFB is currently only as waste and untapped. As a profit-oriented business entity the palm oil industry, EFB processing or utilization is certainly sought not only to overcome environmental problems but also generate profits. And with the production of EFB charcoal briquette, InsyaAllah, this goal can be achieved. Although the quality of the EFB charcoal briquette will be below the sawdust charcoal briquette, which is woody biomass raw material, there should be a reasonable price for the charcoal briquette EFB product.

The main markets or users of sawdust charcoal briquette are Turkey, Middle East and Saudi Arabia, which use them to roast meat, especially lamb. The charcoal briquette EFB can be used for substitution or an alternative to the sawdust charcoal briquette. Even for the palm oil mill industry which has very large land, it can also develop the livestock industry on the land. Cattle farming in oil palm plantations has started to be done a lot, but what about sheep? Why are sheep farms not getting enough attention? I try to explain in writing here, to try to answer the question above. As in palm oil cultivation on its extensive plantations using certain techniques to maintain its productivity, so also with livestock businesses should also use certain techniques to maintain productivity such as rotation grazing.

The implementation of the EFB charcoal briquette business and livestock in the palm oil industry also requires processes, such as adjusting the company's organizational structure. If the current palm oil industry company organization is only divided into plantation units and CPO mill units, then for the development of new businesses it can create new divisions such as the EFB charcoal briquette division, sheep breeding division and so on, so that the potential of land and all resources can be optimized.