Incentivising supply side to boost biofuels briquettes manufacturers

Ashvin Patil, Founder & Director, Biofuels Junction Pvt. Ltd. in an interview with EPR Magazine, talks about the significance of biofuels in achieving clean energy. He further highlights the benefits of shifting from oil, gas and fossil fuels to biofuels.

 Can you brief us through your company profile?

Biofuels Junction is one of the largest aggregators of biomass briquettes and pellets made from Agro and wood waste. The Clean Energy start-up was launched in 2016. The industrial requirement for clean fuel has been rising as the push has got stronger from the government to switch to clean energy. Large industries like tyre, FMCG, Chemical, Pharma, beverages manufacturers have shifted to using agro waste based briquettes and pellets. However, on the supply side, the industry is highly unorganised and quality too is inconsistent. This is a serious production challenge for large industries for which biomass is a critical element of their manufacturing process.

We are addressing this market gap for some of the largest brands in India like HUL, Marico, Pepsico. Biofuels, over the last 4 years, has mapped reliable and top quality suppliers to secure Briquettes and Pellet supply for their enterprise customers. In 2019, Biofuels also entered in production of these clean energy products by acquiring plants in strategic locations. Biofuels Junction with a vision to be a performance leader in the clean energy sector by providing sustainable, socially responsible, energy solutions by being partner of choice for all stakeholders, started as an aggregation business for briquettes however soon matured into manufacturer of briquette and pellets. BJPL has a state of the art Pellet manufacturing facility in Nagpur with a Pellet brand named BioSpark. Pellet fuels (or pellets) are biofuels made from compressed organic matter or biomass and can be made from any one of five general categories of biomass: industrial waste and co-products, food waste, agricultural residues and energy crops.

BJPL’s long term goal is to achieve cleaner environment by replacing fossil fuels and contribution towards rural economy by way of augmenting farmer income.

The growth drivers for BJPL would be backward and forward integration, backward integration to assure raw material supply and forward integration demand sustainability, with a yearly growth and a production capacity of 50,000 tons (as of March’2020), BJPL plans to scale up its demand side by geographically expanding focus on commercial pellet market and boiler management contracts.

Biofuels raised Series A last year and will be looking to raise Series B next year.

How far are biofuels adopted as a model of clean energy across the industries?

Industry has embraced biofuels as a form of clean energy across applications and geographies. Over past decade large corporations have adopted biofuels for lower pollution parameters and cost savings. This shift was spearheaded by the Multinationals (MNCs) and now accepted by the MSMEs too. Thus, in terms of replacement it has been replacing usage of Crude derivatives such as Furnace Oil and Gas successfully for cost savings. Recently, the shift is also happening to replace Coal for pollution related issues. Pharma, Chemical, Tyres and Food Industries were the first one to shift while industrials such Steel and Cement are yet to accept this. We foresee Power sector to be of the biggest users of biofuels going ahead – a trend which is in line with developed countries. So, biofuels are no more a hard sell to the industry, but a prerequisite and convenience.

How do you deal with challenges in terms of demand v/s availability of biofuels for industries?

The Business strategy at BJPL is to identify good quality suppliers, empower them to become large manufacturers of clean energy products and work exclusively with us. The Company is also looking to add to their own manufacturing plants at strategic locations from where the logistical challenge of procuring raw materials and transporting the final product to customers can be minimised. Biofuels has a briquette manufacturing factory at Mandangarh (Ratnagiri District) and Thane. BJPL has also signed 10 exclusive briquette suppliers.

Since the demand for clean and green energy is the new high, how do you select the parameters for commercial and industrial grade pellets?

What differentiates commercial and industrial grade pellets is the specification-the size and calorific value. Commercial usage is normally for a small but specific application such as food and moulding industry. Industrial on the other hand is at larger scale with usage for steam or heat generation for various purposes. Industrial grade pellets can accept pellet diameter from 6mm to 12mm and length also is flexible and GCV range also is 3500 Kcal/kg onwards. Commercial grade pellets are only 6 or 8mm in diameter with stricter range for ash and moisture (mostly below 5 percent) and calorific values upwards of 4200 Kcal/kg. Also the packaging matters in commercial grade while Industrial being large scale is flexible on type and quality of packaging. Most important is the pricing and clearly commercial pellets can be sold as branded with premium, which is not at all needed for Industrial grade pellets. 

What are the technical and manpower requirements to maintain efficient operations?

Biofuels do help maintain efficient operations as it is easy and clean to handle vis-à-vis other fuels, especially Coal. Since the moisture is always below 12-15 percent and being non-inflammable it is safe and predictive in its usage unlike coal or lignite where the ash and moisture vary with season.

This eases most technical and manpower requirement to run an efficient operation at Industrial boilers. Manpower is mostly as per the IBR (Indian Boiler Regulations) act and hence mandatorily followed – hence technical manpower is inevitable.  Charging biocoal in furnace is a skilled job and need experienced workers for efficiency.  Experienced operator is desired to get best output from biomass briquettes – which depend on type of base raw material of the biomass.

Technical requirement is mostly minimal for biomass boilers as the pollution parameters are mostly well within the allowed range. To better those further typically wet scrubber or ventury scrubbers / bag filters are used before the chimney. A well-equipped laboratory can help monitor fuel quality and hence boiler performance.

Separately for usage of pellets for commercial use – the equipment are most with electronic control (SCADA system) etc which takes care of feed rate etc hence technical manpower or other auxiliary requirements are much lower.

You aim at creating a clean environment by replacing fossil fuels. Under the present environmental circumstances what kind of additional initiatives would you suggest to propel the use of clean energy?

Under current environment, world is moving to clean fuel to fight pollution and damage to the environment. Thus there is an underlying and strong acceptance to its usage across sectors and geographies. However, what can be done to accelerate the usage is incentivizing the supply side.

On the demand side, the benefits from shifting from fossil fuel to biofuels are many such as 30 – 50 percent cost savings vis-à-vis furnace oil or Gas when replaced with briquettes or while using pellets instead of LPG and Diesel its almost 50 – 60 percent. Not to mention the strong adherence to pollution norms is automatically achieved hence stronger compliance.

However, on the supply side the benefits appear easy but are difficult to achieve or deceptive.  Also this being an unorganised and geographically distributed industry, it is difficult to achieve any economies of scale and hence little cost benefits. With very low barriers to entry and non-targeted government incentives, the industry has had many opportunists coming in and leaving a scar of unviability. What is needed to incentivize the supply side is to have targeted approach towards easing logistics which is almost 15-30 percent of the cost of goods sold. Also incentive on actual sales which would keep genuine players / manufacturers motivated. Ideally, there should be NIL GST (vs 5 percent now) on biofuels to propel its usage. While the capital subsidies can be done away with as these results in the opportunists or marginal / fragile manufacturers to disturb the demand supply. Genuine manufacturers should get help in terms of relaxed labor norms and other regulatory norms since it’s an environment friendly product.

“In a nutshell, supply side should be incentivized with NIL GST on the end product and relaxed operating norms.”