Biomass power plant seeking final investment decision


PNG Biomass will reach a final investment decision in the fourth quarter of 2018 for its proposed power plant located in the Markham Valley, Project Director Michael Henson tells Business Advantage PNG.

Project Director of PNG Biomass, Michael Henson (middle) with the landowners’ term sheet. Source: PNG Biomass

Construction of the PNG Biomass power plant, a wholly-owned Oil Search subsidiary, will support local businesses and residences through a 33 per cent increase in power supply to the Ramu grid, says Henson.

Local businesses face a loss of production as a result of blackouts and fluctuating power quality, forcing many businesses to generate their own power through diesel generation.

With equipment used by businesses often incorporating sensitive electronics, Henson says power surges can easily damage equipment, leading to a further loss of production.

‘The power plant uses a local plantation for its fuel source.’

‘The PNG Biomass project aims to provide a long-term stable power supply, which will hopefully encourage businesses back on the grid and support the development of the country.’

Henson says the project itself will also generate business opportunities for landowners, which is likely to have a positive impact on the economy.

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Tree farming

The power plant uses a local plantation for its fuel source, instead of imported diesel.

The company’s tree farming operations requires a large workforce and creates a range of business opportunities for local companies and landowners, Henson says.

These opportunities include development of plantations, community nurseries, cash crop businesses (intercropping), and the provision of support services to the larger operation.

‘The plantations of 16,000 hectares are near the power plant site.’

The project came in response to an open international tender by PNG Power in 2010 for an independent power producer to generate 30–50 megawatts for the Ramu grid.

After a transparent selection process, the project was selected as part of the least costly development plan for the Ramu grid and signed a power purchasing agreement with PNG Power in December 2015.

Utility scale

The project will be the first utility-scale renewable biomass power generation project in Papua New Guinea, providing 30MW of power to the Ramu grid.

‘We are currently awaiting final investment decision,’ he says. ‘If we get the green light, the construction of the power plant will commence and plantation establishment will scale up.’

The plantations of 16,000 hectares are near the power plant site, and established on degraded and underutilised Kunai grasslands and areas invaded by exotic invasive woody-weed species, such as rain tree.

‘The renewable biomass power supplied to the grid will be one of several types of power.’

Construction of the power plant is likely to commence towards the end of 2018, with key work including civil works to support the boilers and steam turbines, carnage, steel fabrication and piping for the boilers, as well as a range of electrical works.

First power to the grid is anticipated in March 2021. Initially there will be 15MW supplied to the grid, with the additional 15MW coming online six to 12 months later.

The renewable biomass power supplied to the grid will be one of several types of power, resulting in a complementary generation mix, which is important when meeting demand and mitigating risk.

Markham Valley landowners at an information session. Source: PNG Biomass

Different market segments

Henson says the mix in power supply allows for powering different market segments using different technologies and fuels.

Compared with a diesel or fuel oil alternative, the project will create 385 more jobs during the establishment phase, with an additional 450 more full-time jobs for PNG nationals for the duration of the expected 25 years of operations, he says.

In addition to local employment opportunities, the project will provide a range of training initiatives for the local workforce, with new agricultural technology and techniques incorporated.

The entire project is estimated to boost household income by K740 million over its 25-year project life, Henson adds.

Henson says the project will displace high cost diesel and high polluting heavy fuel oil, reducing emissions and demonstrating that utility-scale renewable independent power production projects can be financed in Papua New Guinea.

‘This project will pave the way for further development of private sector renewable projects in the country.’

The Markham Valley project remains PNG Biomass’ focus, but Henson says the company has scoped out smaller scale opportunities, including satellite plants and mini-grid solutions, which it will explore in the future.

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