Draft Final Report

PROMOTION OF RENEWABLE ENERGY, ENERGY EFFICIENCY AND GREENHOUSE GAS ABATEMENT (PREGA)

Indonesia

Utilization of Biogas Generated from the Anaerobic Treatment of Palm Oil Mills Effluent (POME) as Indigenous Energy Source for Rural Energy Supply and Electrification
A Pre-Feasibility Study Report1

June 2004

Prepared by the National Technical Experts from P.T. Chazaro Gerbang Internasional.

Table of Contents
Table of Contents .................................................................................................................. ii List of Figures ...................................................................................................................... iv List of Tables........................................................................................................................ iv List of Abbreviations..............................................................................................................v 1 2 3 4 Executive Summary .......................................................................................................1 Map of the Project..........................................................................................................3 Introduction ....................................................................................................................4 Background ....................................................................................................................4 4.1 4.2 4.3 4.4 4.5 4.6 5 5.1 5.2 5.3 5.4 5.5 5.6 5.7 6 7 Sector Description ..................................................................................................5 Constraints and issues related to the project sector................................................5 Sustainable development objectives ......................................................................5 Government policy and strategy relevant to the project sector..............................6 Overlap of the governments and ADBs policies and strategies in this sector.....6 Benefits of the project ............................................................................................7 About the Project....................................................................................................8 Project goal.............................................................................................................8 Project objective.....................................................................................................8 Poverty reduction ...................................................................................................8 Technology transfer ...............................................................................................9 Project partners.......................................................................................................9 Product or service generated by the project ...........................................................9

General Description of the Proposed Project .................................................................8

Project Implementation Plan ........................................................................................10 Contribution to Sustainable Development ...................................................................10 7.1 7.2 Long-term GHG and local pollutants reduction...................................................10 Other benefits .......................................................................................................10 Current production and delivery patterns.............................................................11 Project boundary and monitoring domain............................................................13 Baseline methodology and calculation of the baseline emissions .......................13 Calculation of total project GHG emissions and net emission reduction ............14

Project Baseline and GHG Abatement Calculation .....................................................11 8.1 8.2 8.3 8.4

GHG emission reduction monitoring and verification.................................................16

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10 10.1 10.2 10.3 11 11.1 11.2 12 12.1 12.2 13 13.1 13.2 14

Financial Analysis of the Project .............................................................................16 Estimation of Overall Cost Estimates ..................................................................16 Project Financial Analyses ...................................................................................16 Financing Plan......................................................................................................17 Economic Analyses..................................................................................................18 Project Economic Analysis ..................................................................................18 Statement of poverty reduction impact ................................................................18 Stakeholders comments ..........................................................................................18 Invitation letters to the Stakeholders....................................................................18 Comments on the Project by above stakeholders.................................................18 Key factors impacting project & baseline emissions ...............................................19 Key Factors ..........................................................................................................19 Project Uncertainties ............................................................................................20 Conclusion and Recommendation............................................................................20

Annex 1 Technical Analyses...................................................................................Annex 1-1 Annex 2 Financial and Economic Analyses............................................................Annex 2-1

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List of Figures
Figure 1 Map of the project location......................................................................................3 Figure 2 Flow chart of current production and delivery patterns.........................................12 Figure 3 Schematic diagram of project boundary ................................................................13 Figure 4 Concept for Integrated Waste Water Treatment (palm oil mill with 2 separators)Annex 1-2 Figure 5 Configuration of pilot plant (D1 active digester, D2 in standby mode) ...Annex 1-4 Figure 6 System for flotation test............................................................................Annex 1-7 Figure 7 Efficiency as function of COD-loading rate based on COD-dissolved ....Annex 1-9 Figure 8 Comparison of sludge profiles in digester D1 and D2 ...........................Annex 1-10 Figure 9 The velocity of flotation and sedimentation ...........................................Annex 1-11

List of Tables
Table 1 Parameters for estimating CH4 emission from POME...........................................14 Table 2 Parameters for estimating GHG emission by fossil fuel consumption ...................14 Table 3 Baseline emission from the project activity ............................................................15 Table 4 Data to be collected in order to monitor emission from the project activity ..........16 Table 5 Financing Plan.........................................................................................................17 Table 6 Composition of Waste Water.....................................................................Annex 1-3 Table 7 Specific data of the support material..........................................................Annex 1-5 Table 8 Data of Digester D1 in up flow mode ........................................................Annex 1-7 Table 9 Result evaluation for digester D1...............................................................Annex 1-7 Table 10 Data Digester D2 down flow mode..........................................................Annex 1-8 Table 11 Result of evaluation for digester D2 ........................................................Annex 1-8 Table 12 Analytical Data ......................................................................................Annex 1-11 Table 13 Nutrient content of POME .....................................................................Annex 1-12 Table 14 Mass Balance of Kjeldahl-N ..................................................................Annex 1-12 Table 15 Summary of Technical and Financial Parameters....................................Annex 2-1 Table 16 Weighted Average of Capital Cost ..........................................................Annex 2-2 Table 17 Financial and Economic Price..................................................................Annex 2-3 Table 18 Financial Analysis....................................................................................Annex 2-4 Table 19 Economic Analysis ..................................................................................Annex 2-5

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List of Abbreviations
ADB ALGAS BOD BPPT CDM COD CPO EFB FFB GHG GoI IPB IPCC IOPRI MPR PLN POME PTPN UNFCCC WACC Asian Development Bank Asia Least-cost Greenhouse gas Abatement Strategy Biological Oxygen Demand Badan Pengkajian dan Penerapan Teknologi (Agency for Assessment and Application of Technology) Clean Development Mechanism Chemical Oxygen Demand Crude Palm Oil Empty Fruit Bunch Fresh Fruit Bunch Greenhouse Gasses Government of Indonesia Institut Pertanian Bogor (Bogor Institute of Agriculture) International Panel of Climate Change Indonesian Oil Palm Research Institute Majelis Permusyawaratan Rakyat Perusahaan Listrik Negara Palm Oil Mill Effluent Perseroan Terbatas Perkebunan Nusantara (Nusantara State Enterprise for Estate Crops) United Nations Framework Convention on Climate Change Weighted Average of Capital Cost

1 Executive Summary
Site Development Rationale The problems associated with aerobic treatment of palm oil mill effluent (POME) using a pond system are long retention time (90-120 days), large area required, high demand for maintenance, loss of nutrition and high emission of methane. With the increased worldwide concern on environmentally friendly production processes particularly the greenhouse gas (GHG) emission of methane, it is important to develop an alternative concept for POME treatment. With more efficient POME treatment plant, it is expected that large pond can be reduced significantly. In addition, the process will easily tap the generated methane gas (biogas) and utilize it for electricity generation. Objective The project goal is promoting environmentally friendly and clean palm oil production process. This goal in the long term will increase the value of Indonesias palm oil products thus increasing product competitiveness. Having more competitive product means that in the future, the palm oil industry can become one of Indonesias main income generating industries. Other than that the project will achieve the following targets: a. Implementing better POME treatment using Anaerobic Treatment Plant b. Introducing better use of POME treatment products. Technical Description The proposed concept will consist of the following components: Sludge separation system Fixed Bed Anaerobic Digestion system (with CH4 capturing capability: 0.56 m3 biogas/kg COD degraded or 15,400 m3 CH4/day) Thermal drying unit Composting unit Biogas fuelled generation set with installed capacity of 1900 kW.

Solid material will be separated from the fresh POME using the so-called dissolved floatation separator. Dissolved floatation seems to be suitable for the separation of sludge from fresh POME. Almost all the suspended solids can be removed and the liquid phase contained less Chemical Oxygen Demand [COD (30 50 mg/L)] and nitrogen (60 70 mg/L). The fixed bed digester was successfully applied for the anaerobic treatment of POME. Approximately 90% of the dissolved COD can be degraded and transformed to useable biogas. The effluent contained COD ranging between 1500 4000 mg/L, which can be directly used for land application. In addition, a specific electricity production of 26 kWh per ton Fresh Fruit Bunch (FFB) can be expected if all of the biogas is used by a gas fuelled generating set. Output of the Project The project will be able to treat POME more efficiently than the former method of treatment. The system will be able to degrade 90% of dissolved COD and transform it to biogas. Biogas production is 15,400 m3 CH4 per day.

The project will surely reduce COD to 30-50% of original condition. The project will also be able to reduce Nitrogen content to 60-70% of original concentration. Besides reducing environmental load, the project will generate organic fertiliser, compost, and also nutrient rich slurry that can generate more income. The electricity production will reduce the current use of diesel fuel and can be supplied to the grid. The annual power generated will be used 900 MWh own use, while the rest 13,980 MWh will be supplied to the grid. The income from electricity selling will be around US$ 699,067. CO2 reduction due the project can reach 70,953 tonnes per year. Benefit of the Project There are many benefits of the project. The environmental benefit consists of: reduction of environmental load from effluent, less use of synthetic fertiliser and more organic fertiliser, less land is used for POME treatment and of course GHG gas recovery. There are also social benefits such as more job opportunities for operators and plantation workers. Selling electricity will indirectly increase workers welfare through increase of wages, annual bonuses, etc. Conclusion The project is financially and economically feasible. Technically, the project will improve the performance of POME treatment and in general will improve the quality of the environment. The product value of crude palm oil (CPO) will be higher because it will be environmentally friendly CPO. The project is financially feasible. At the discount factor of 12%, it provides the FIRR with- and without certified emission reduction (CER) of 29,92% and 17%, respectively. Similarly, it generates EIRR with- and without CER of respectively 29,78% and 19,32%. Annual power generation is more or less 14,880 MWh, and the plant will use approximately 900 MWh, and the rest will be fed to the grid. The electricity selling will generate revenue as much as US$ 699,067.

2 Map of the Project

Figure 1 Map of the project location

3 Introduction
Wastewater treatment facility is one of the most important components in the palm oil production. This facility is normally used to treat a large volume of POME generated during the production of CPO before the effluent is safely discharged to the surrounding environment through water canal or river. The project is proposed based on the request of palm oil mill factory belonging to PTPN XIII located at Sanggau District, West Kalimantan province. The objective of the project is to develop a more efficient POME treatment plant using an anaerobic fixed bed reactor and sludge separation. The produced methane gas will be used to generate electricity for supplying the electricity need of the factory. The PTPN XIII Palm Oil Mill factory at Sanggau processes about 60 tons FFB per hour and produces approximately 13 tonnes (22% of FFB) of CPO per hour. With the conventional pond system it will require 7-10 Ha area to process of POME in order to safely discharge the already treated POME to the environment. The process technology will be adopted from the extensive research and development on new process for POME treatment using anaerobic fixed bed reactor and sludge separation. The Indonesian Oil Palm Research Institute (IOPRI), Medan in cooperation with UTEC GmbH, Germany, conducted this research2.

4 Background
There is currently a worldwide discussion about environmentally friendly production processes (e.g. zero waste concept, integrated waste management, etc.), with the aim to defining standards for an eco label. In view to the requirements of an eco label, there are needs for: Minimisation of emissions, Utilization of nutrients, Utilization of renewable energy sources (such as biomass); the pond system is not acceptable in its current existing form.

The problems associated with aerobic treatment of POME using a pond system are long retention time (90-120 days), large area requirement, high demand for maintenance, loss of nutrition and high emission of methane. Specifically, the generated POME is approximately 3.8 m3 for each ton of Crude Palm Oil produced. Thus the factory with limited land availability will face a hard problem in managing POME. With the above-mentioned worldwide concern on environmentally friendly production processes particularly the emission of methane, it is important to develop an alternative and efficient concept for POME treatment.

2 Presented on Palm Oil Workshop on Integrated Management and Environmentally Sound of Palm Oil Mill Industrial Waste (Penanganan Terpadu Limbah Industri Kelapa Sawit yang Berwawasan Lingkungan), Medan, 2000.

4.1 Sector Description

World consumption for palm oil in 1993-1997 was around 92.03 million tonnes and this number is expected to grow to 117.88 million tonnes in 2003-2007. Indonesia as the second largest palm oil producer can only supply around 6 million tonnes CPO while Malaysia can supply more or less 8-9 million tonnes of CPO. Indonesia is expected to be the largest CPO producer in the world. The developments below show this tendency: a. There is continual land conversion to palm plantation in Indonesia while Malaysia suffers from land limitation. Palm plantation area in 183 was around 405,600 ha, while in 1995 the number reaches 1,952,000 ha b. The plantations are relatively young so in the next 15 years they will produce CPO at maximum c. Production of CPO also increases. In 1983 the total production reached 983,000 tonnes, in 1994 it reached 4,000,000 tonnes, and in 1999 the CPO production reached 5.9 million tonnes. Palm oil in the future might become one of Indonesias main source of income in the agriculture sector, thus the palm oil industry deserves greater attention.

4.2 Constraints and issues related to the project sector

In the Indonesias palm oil industry, the utilisation of biogas is new. This new technology is not yet widely applied by plantations in Indonesia. In fact, there exists only a pilot plant. Therefore, the first constraint is lack of technology dissemination. The condition is worsened by the fact that to install such technology, a significant amount of investment is needed. Compared to the currently applied wastewater treatment technology, in short term the new technology is economically not feasible. Making the condition worse is the environment awareness of plantations owners still low, despite strong world demand for environment friendly products. Although the government is supporting clean production concept for CPO production, there is no recommended technology that is environmentally friendly and in the longterm economically feasible. Being environmentally friendly and producer of biogas, the POME anaerobic technology should be fully supported by the government. Financing should not be a problem because palm oil industry is now in a very good condition in terms of world pricing and production. The state owned plantation or private plantation should be able to finance the development of the new technology.

4.3 Sustainable development objectives

Important contributions of the project to the sustainable development concept are: environmental equity and social responsibility. The new technology is proved to be able to reduce the land demand that was huge when using old anaerobic pond technology. This fact means that available land could be used to plant more palm tress. Less retention time of the new technology also gives impact to the production of CPO. Production of CPO can be speeded up so that the plantation can produce more CPO.

Production of more CPO means more people are employed. This condition opens new job market for the people in the surrounding area of the plantation. More jobs to the people will improve the welfare of the community and also in the long term, the regional economy. More jobs also mean that less people are in poverty or in other words more jobs will reduce poverty. The technology is proved to perform better than older POME treatment technology. This means less pollutant loads are released to the environment. Less pollutant load will make the environment able to regenerate naturally and less environmental damage will occur. Better environment quality is for sure important for the future generation.

4.4 Government policy and strategy relevant to the project sector

The government of Indonesia (GoI) is supporting the development of palm oil industry. GoI realises that palm oil industry is an important source of national income, so GoI facilitates improvement in the sector. Environmental protection is one of the important issues that GoI would like to address. The world demands for CPO with inherent good environment quality. This means the production process of CPO should be in line with environmental guidelines or no pollution to the environment. GoI has implemented several strategies such as carrying capacity policy and end of pipe policy. However, these two policies have not been performing very well. GoI finally realised that the approach should be more or less holistic. Holistic approach will request every step of production to consider environment aspect. This holistic approach is called clean production approach or zero emission approach. In clean production approach, the producers should consider environmental aspect in every step of the production line. The target is reducing pollution in every step and improving efficiency. This approach should be used in combination with other policies i.e. carrying capacity and end of pipe policies. The combination of approaches will result in maximal environmental performance. Cleaner production has some advantages such as: a. There is economic benefit in the clean production practice because of efficiency b. Prevent environmental damage and slowing down the degradation of environment quality c. Maintain and strengthen long-term economic development and competitiveness d. Supporting the principle of environmental equity e. Maintain the natural ecosystem and f. Improving products competitiveness internationally.

4.5 Overlap of the governments and ADBs policies and strategies in this sector
At the Earth Summit held in Rio de Janeiro in 1992, 155 countries signed the United Nations Framework Convention on Climate Change (UNFCCC), which entered into effect in 1994. The goal of the UNFCCC is to stabilize concentrations of carbon dioxide and other greenhouse gases, and it calls on developed countries (including Russia and the

countries of Eastern Europe), known as the Annex I Parties, to lead the way in taking steps to cut down GHG emissions so that emissions in 2000 are at the same level as in 1990. Indonesia signed the UNFCCC on June 5, 1992. On August 1, 1994, the President approved the UNFCCC Ratification Law (Law No. 6/1994), and on August 23, 1994, the instrument of ratification was submitted to the UN Secretary General and Indonesia became a signatory country. Indonesia signed the Kyoto Protocol in July 1998. Subsequently, the Environment Minister established a National Committee on Climate Change and Environment to tackle the problem of global warming. The translation of the Kyoto Protocol has now been completed, and a translation certificate obtained from the UNFCCC. In the future, the LH is to prepare a bill for ratification of the Protocol that will be submitted to the President via the Ministry of Foreign Affairs. It is expected that the Majelis Permusyawaratan Rakyat (MPR) ratify the Protocol after approval by the President. Indonesia has drawn up a master plan for promoting the Clean Development Mechanism (CDM) with support from Germany and the Netherlands, and although the members of the above National Committee on Climate Change and Environment have been chosen, the chairman has yet to be appointed. CDM approval procedures and an approval agency are also lacking, and urgent action is required to establish the necessary agencies and structures for the practical implementation and operation of CDM projects.

4.6 Benefits of the project

The project will benefit the environment very well. The application of improved POME treatment plant will reduce pollutants concentration significantly. The treated water effluent can be safely released to the water body. Other benefits such as the production of compost and also organic fertilizer can improve the economy of the people and the plantation owner. The use of organic fertilizer for agriculture will improve the total environment quality not only for the area in the vicinity of plantation but also other areas that are using fertilizer from the plantation. The use of organic fertilizer will also reduce the dependency to synthetic fertilizer thus reducing the dependency on fossil-based resources. In the long-term, this effort will improve sustainable development in the area. The plantation will also be self- sustaining by producing own organic fertilizer. Self-sustaining fertilizer demand will improve economic condition of the plantation in general. The community nearby can work in the plantation. As one of the impacts is more production, more people can work, thus reducing unemployment rate and alleviating poverty. From the selling of electricity, the plantation will improve the cash flow. One ton of FFB equals to 26 kWh of electricity from biogas per hour, the plantation can produce 60 tonnes of FFB. That means that per hour, the plantation is potentially able to produce 1560 kWh per hour. This is a significant number because for each kWh PLN can pay more or less IDR 500. Producing own electricity will also benefit the plantation. There will be no dependency on PLN or diesel generator. In general, the use of electricity from biogas will reduce the emission of air pollutants especially GHG.

5 General Description of the Proposed Project

5.1 About the Project
Project Title Utilisation of Biogas Generated from the Anaerobic Treatment of Palm Oil Mills Effluent (POME) as Indigenous Energy Source for Rural Energy Supply and Electrification Location Owner District Province Country : PTPN XIII (PT. Perkebunan Nusantara XIII) : Sanggau : West Kalimantan : Indonesia

5.2 Project goal

As mentioned earlier, the palm oil industry will grow bigger in the future and as the market needs environmentally friendly products, the palm oil industry should also produce environmentally friendly products. Therefore the project goal is promoting clean and environmentally friendly palm oil production process. This goal in the long term will increase the value of Indonesias palm oil products thus increasing the competitiveness of the product. Having more competitive product means that in the future, the palm oil industry can become one of Indonesias main source of income. Promoting clean production also supports the principles of environmental equity. Sustainable development principle says that the development should satisfy current need without jeopardising future needs. Therefore environmental equity is one of the important components.

5.3 Project objectives

Environmentally friendly palm oil production process consists of many components. Clean production means that from the origin or raw material until the waste production, environment considerations should be involved. One important component is waste treatment because production efficiency can only reach around 20%-25% (In the case of PTPN XIII is 22% of FFB is converted to CPO), so the objectives of the project: a. Implementing better POME treatment using Anaerobic Treatment Plant b. Introducing better use of POME treatment products.

5.4 Poverty reduction

The anaerobic treatment plant will need less land area, thus more land can be converted to palm plantation. Increasing the plant area means increasing the number of palm trees, increasing the need to maintain those palm trees, increasing production rate and finally increasing the need of manpower.

The indirect positive impact of anaerobic treatment plant is the opening of new job market. More people can be employed by the plantation management, thus reducing unemployment rate and in the long term, alleviating poverty in the area.

5.5 Technology transfer

The technology to be transferred through this project is the POME anaerobic treatment plant technology. As mentioned earlier, IOPRI will cooperate with UTEC GmbH, Germany.

5.6 Project partners

Current project partners are: a. IOPRI (Indonesian Oil Palm Research Institute) b. UTEC (Umwelt Technologie) GmbH, Germany c. PTPN XIII, Sangau. IOPRI and UTEC GmbH will be the technology agents. UTEC GmbH, which has the technology, will transfer it to the experts in IOPRI. In the future, IOPRI experts should disseminate the technology to all palm plantations in Indonesia. PTPN XIII is the owner of the plantation. The bigger project will be installed at PTPN XIIIs facility. PTPN XIII will also be the disseminating agent because every one in the palm oil business should know the success story of this advanced POME treatment utilisation.

5.7 Product or service generated by the project

From the process flow chart on Figure 4 in the Annex, there are 5 products to be generated, namely: biogas, treated water, treated slurry, fertilizer, and compost. Treated water will be released to the nearest water body. Treated slurry and fertilizer can be used by the plantation or, especially for the fertilizer, can be sold outside to farmers or other plantations. Compost can be used by the plantation it self. Another important product is electricity from biogas. For products that are dependent on ambient temperature such as fertilizer or compost, the production rate will depend on the weather. When it is wet season, the production of compost or fertilizer might be lower than in the dry season. The fertilizer and compost are good organic materials for the soil and good for plants. As the production rate is considered to be constant at 60 tonnes FFB per hour, then the production of biogas should also be constant. This is assuming that the treatment plant works at the same efficiency all the time. With such big production it is calculated that in an hour the biogas plant could produce electricity equal to 1,560 kWh. Higher or lower temperature might affect the performance of the anaerobic bed. For the biogas production, lower temperature means less production of biogas and vice versa for higher temperature. As the plantation location is in the tropical area then the temperature difference is not so much to affect the production rate of biogas.

6 Project Implementation Plan

The following project activities and milestones are foreseen: Survey, investigation, preparation of FS report Finalization of Technical Design and Engineering Construction of plant Starting commercial operation Mid 2004 End 2004 End 2005 2006

7 Contribution to Sustainable Development

7.1 Long-term GHG and local pollutants reduction
Methane (CH4) has higher warming potential than CO2 so recovering the CH4 will significantly give positive impact to the environment. The CH4 generated will be used to generate power. The current generation system in the area is using Diesel Generators then the emission factor is 1 kg CO2/kWh electricity produced. Interconnecting the new system to the grid means reducing possible CO2 emission from the operation of diesel generators. The system will reduce GHG emissions of about 70,953 tonnes of CO2 equivalent. The number will reach 1,135,248 tonnes of CO2 equivalent in 2022, after 15 years of operation (lifetime of the system).

7.2 Other benefits

Less land will be used for POME treatment and treated effluent can be released to the water body. Carrying capacity of the environment especially the water body will be recovered because less pollutant is released. Other benefits such as the production of compost and organic fertilizer also can improve the economy of the people and or the plantation owner. The use of organic fertilizer for agriculture will improve the total environment quality not only for the area in the vicinity of plantation but also other areas that are using fertilizer from the plantation. The use of organic fertilizer will also reduce the dependency to synthetic fertilizer thus reducing the dependency on fossil-based resources. In the long-term, this effort will improve sustainable development in the area. The plantation will also be self-sustaining by producing its own organic fertilizer. Self-sustaining fertilizer demand will improve economic condition of the plantation in general. The community near the plantation can work for the plantation. Thus unemployment will be reduced and poverty will be significantly alleviated. From electricity selling, the plantation will improve the cash flow. One ton of FFB equals to 26 kWh electricity from biogas and per hour the plantation can produce 60 tonnes of FFB. That means per hour the plantation is potentially able to produce 1,560 kWh per hour. This is a significant number because for each kWh PLN can pay more or less IDR 500. Producing own electricity will also benefit the plantation. There will be no dependency on PLN or diesel generator. In general the use of electricity from biogas will reduce the emission of air pollutants especially GHG.

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8 Project Baseline and GHG Abatement Calculation

8.1 Current production and delivery patterns
Considering the chemical contents and physical properties of POME, the most efficient system used in the initial stage of the wastewater plant is the anaerobic treatment. The current system meets the requirement of the palm oil mill operator to safely discharge the treated POME. However, the system releases methane gas (CH4) into the atmosphere as the by-product of anaerobic digestion of POME. The treatment of POME happens actually by an anaerobic/aerobic pond system. In the first view the pond system has some advantages as: a. Simple system b. Low investment costs for technical equipment, c. Low energy demand. But, a more detailed investigation shows that there are several negative aspects identified as follows: a. High demand for area ( 7-10 ha for an oil mill with 60 t FFB/h). The area needed to treat POME using traditional method is quite large. On average between 7-10 hectares of land is needed to treat POME with production capacity of 60 tons FFB/h b. High demand for de-sludging of the pond and handling of the sludge c. In oil mills, which use two-phase-separators all the fruit sludge goes to the ponds. The suspended solids, which are not degraded, settle down and are enriched. The ponds silt up without periodical sludge removal. The consequence is that the active volume of the ponds and the hydraulic retention time of the wastewater in the ponds decrease and the purification capacity are reduced. Furthermore it is rather difficult to take out the sludge sediment all over the area because of the extended area and depth of the ponds d. Lost of nutrients. All nutrients needed for the plantation (N, P, K, Mg, and Ca) in the effluent are discharged to the river and pollute the environment e. High emissions of methane. Nearly all-organic matters are anaerobic degraded and transformed to methane and carbon dioxide. Because high volume of FFB is processed then the emission of Methane is also high. At minimum 10 m3 methane are emitted per ton FFB

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Figure 2 Flow chart of current production and delivery patterns The electricity generation in Sanggau is under the administration of PLN branch Singkawang. Diesel generators supply the grid with capacities around 140 kW to 600 kW.

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8.2 Project boundary and monitoring domain

The following is the schematic diagram of project boundary.
SHELL

FIBRE CPO EMPTY FRUIT BUNCH

FRESH FRUIT BUNCH

CPO PLANT

POME

DIGESTER BIOGAS PLANT

TREATED EFLUENT

ELECTRICITY

FUEL

DIESEL GENERATOR SET

CH4

Figure 3 Schematic diagram of project boundary The project boundary consists of the diesel generator set and the biogas digester. Other component of CPO production is not part of the project boundary. The shaded boxes are the important components for calculating GHG emission reduction.

8.3 Baseline methodology and calculation of the baseline emissions

The baseline scenario is defined as the most likely future scenario in the absence of the proposed project activity. The baseline scenario is the continued uncontrolled release of GHG to the atmosphere, similarly to most palm oil mills in Indonesia and the use of diesel generator. Methane Release This project activity assumes the 100% CH4 emission and will not include the recovery of CO2 emission from the biogas in accordance with the IPCC guideline. Formulae used to estimate the CH4 emission is as follows: CH4 emission (tons CO2 eq./year) =

CPO production (t ) POME yield in the CPO production (m 3 / t ) Biogas yield (m 3 / m 3 ) CH 4 fraction in biogas (m 3 / m 3 ) CH 4 density (t / m 3 ) GWP (CH 4 )
CPO production =

CPO yield (t / t ) FFB received (t / y )

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Table 1 Parameters for estimating CH4 emission from POME

Parameters FFB received CPO yield POME yield in the CPO production Biogas yield from POME CH4 fraction in biogas CH4 density GWP CH4

Value 432,000 0.22 3.86 16.8 0.62 0.00071 21

Unit t/year tonsCPO /tonsFFB m3-POME/tonsCPO m3-Biogas/m3-POME m3- CH4 /m3-Biogas tonsCH4 / m3-CH4 -

Using the values above CH4 emission is 56,973 tons CO2 eq/year. GHG Emission due to Fossil Fuel Consumption Formula for estimating GHG emission by fossil fuel consumption is follow. CO2 Emission (tonsCO2 eq./year) = Electrical Demand to operate(kWh) emission factor of diesel (kg CO2 eq / kWh) / 1000 Parameters for estimating GHG emission by fossil fuel consumption are shown in Table 2.
Table 2 Parameters for estimating GHG emission by fossil fuel consumption

Parameters Own electricity demand Emission factor3 of CO2

Value 900 1

Unit MWh/year Kg CO2/kWh

The factory needs 900 MWh per year that is supplied by local grid. The grid is supplied using diesel generators, so the baseline emission will be 900 tons CO2 per year (1 kg CO2/kWh). The project will generate electricity and be able to supply its own electrical demand. This means the project will not emit any GHG.

8.4 Calculation of total project GHG emissions and net emission reduction
As the project will use own produced electricity, there is no emission from the project (fossil fuel usage). The emission due to methane released is also minimised to 0. The emission reduction is achieved by recovering CH4 and also fossil fuel avoidance (from power generation). The formula emission avoidance of fossil fuel usage is as follows.
Emission Avoidance (kg CO 2 / year ) = (Gross Electricity Generation Own Use) Emission Factor Gross annual production is:

Parameters
3

Value

Unit

Source: UNFCCC Indicative Simplified Baseline for Small Scale Project

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CH4 recovered Heat value of CH4 Conversion of coefficient from heat to electricity Power generation efficiency Electricity supply

2,713 55,400 0.33 0.3 13,980

Tons CH4 r/year MJ/tonsCH4 kWh/MJ kWh/kWh (%) MWh/year

Annual power production by the project is 13,980 MWh; using 1 ton CO2/MWh emission factor then the emission reduction will be 13,980 tons CO2/year. Reducing own use of 900 MWh/year then the fossil fuel avoidance will be 13,080 tons CO2/year. The CH4 recovery is 56,973 tons CO2/year. Using the formula below the net emission reduction can be calculated.
Emission Re duction = (CH 4 Re cov ery + Fossil Fuel Avoidance) project GHG emission

where: CH4 recovery Fuel Avoidance : 56,973 tons CO2/year : 13,080 tons CO2/year

Project GHG emission: 0 tons CO2/year Using the numbers above the Net Emission Reduction can reach 70,053
Table 3 Baseline emission from the project activity Items Emission reduction by CH4 recovery Unit/Year tonsCO2 eq/y 2007 2008-2012 2013-2021 2007-2022

56.973 tonsCO2 eq/y 13.080 tonsCO2 eq/y 70.053

284.865

512.757

911.568

Emission reduction by fossil fuel conversion Total Emission Reduction

65.400 350.265

117.720 630.477

209.280 1.120.848

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9 GHG emission reduction monitoring and verification

For the evaluation of the effect from this project activity in PTPN XIII palm oil plant in West Kalimantan, the following monitoring plan shall be performed. The following data will be collected.
Table 4 Data to be collected in order to monitor emission from the project activity
No Data variable Data Unit Measured (m), calculated (c) or estimated (e) m Recording frequency Proportion of For how long is Comment data to be archived data monitored to be kept 100% 15 years (project Data will be period) aggregated monthly and yearly 15 years (project Data will be period) aggregated monthly and yearly 15 years (project Data will be period) aggregated monthly and yearly 15 years (project Data will be period) aggregated monthly and yearly 15 years (project Data will be period) aggregated monthly and yearly 15 years (project period)

FFB reception from plantation

t/year

Every FFB reception by truck Every FFB reception by truck Once a day

FFB reception from other producers POME yield from CPO produced Biogas yield from POME

t/year

100%

m3m POME/tonsF FB m3Biogas/ m3POME m

100%

Once a day

100%

CH4 fraction in m3- CH4/ m3-m POME biogas

Once a day

100%

Gross electricity MWh produce

Once a day

100%

10 Financial Analysis of the Project

10.1 Estimation of Overall Cost Estimates
Financial analysis is prepared to provide a better picture of the profitability of the project. Based on the technical and financial parameters as summarized in Table 15 of the Annex, it can be seen that the total cost consist of investment, operational and maintenance cost is USD 3,122,060. From electricity sales, the project can generate annual income of US$ 699.067 and CER annual revenue of US$ 354,765.

10.2 Project Financial Analyses

The financial analysis in Table 18 of the Annex shows that the FIRR at 12% discount factor is 29,92% with CER revenue and 17% without CER revenue. Similarly at 12%

16

discount factor provides the FNPV of IDR 24,381 million with CER Revenue and IDR 6,043 million without CER revenue. Meanwhile if it uses the discount factor similar to WACC of 4.77% (see Table 16 and financial plan Table 5), the FNPV with CER revenue will be IDR 53,608 million, and FNPV without CER revenue will be IDR 23,252 million. The above analysis shows that the project is financially feasible.

10.3 Financing Plan

Table 5 Financing Plan
Local (USD) FUND REQUIRED Proposed Project Capital Expenditure Operating Expenditure Financial charges during development TOTAL PROJECT REQUIREMENT SOURCES OF FUNDS Proposed ADB loan Other loan Equity or capital contributions Government Other sources Subsidies for operation Internal cash generation TOTAL SOURCES Foreign (USD) Total (USD) %

1,364,050 106,273 1,470,323

1,631,668 20,069 1,651,737

2,995,718 126,342 3,122,060

95.95% 4.05% 0.00% 100.00%

312,206 156,103 312,206 780,515

2,341,545 2,341,545

2,341,545 312,206 156,103 312,206 3,122,060

75.00% 10.00% 5.00% 10.00% 0.00% 0.00% 100.00%

17

11 Economic Analyses
11.1 Project Economic Analysis
The detailed economic calculation is summarized in Table 19 presented in the Annex of the report. The EIRR based on 12% discount factor is found to be 29.78% and 19.32% for respectively with- and without CER revenue. Similarly, with CER revenue it gives ENPV of IDR 22,469 million, and without CER revenue it gives ENPV of IDR 8,734 million. Meanwhile if use the discount factor equals to WACC of 4.77% (see Table 16 and financial plan Table 5), the ENPV with CER revenue will be IDR 71.978 million and ENPV without CER revenue will be IDR 35,506 million. The above shows that the project is economically feasible.

11.2 Statement of poverty reduction impact

The project will be using the skilled and unskilled labour. The unskilled labour majority comes from the poor village community. Realization of this project will promote the development of alternative energy for electricity in Indonesia that electricity is highly beneficial for improving public welfare, enhancing the intellectual life of the nation, making the development of other economic sectors, and advancing the economy. It is expected that national standards will be improved due to the creation of social capital, assurance of wage income and improvement in living conditions.

12 Stakeholders comments
12.1 Invitation letters to the Stakeholders
The project was introduced and outlined including the risks and benefits to officials/staff of related institutions and/or organizations that have been contacted personally, by fax and letters. They have been asked for their comments or no objection regarding the technical, environmental and social issues. The stakeholders identified for the project are as follows. Directorate General for Electricity and Energy Utilization (DGEEU) Bogor Institute of Agriculture (IPB) Indonesian Oil Palm Research Institute (IOPRI) Agency for Assessment and Application of Technology (BPPT) District Office of Environment

12.2 Comments on the Project by above stakeholders

As of date, all organizations have shown their interest to support the project concept and most of them emphasized the socio-economic and environmental importance of the project.

18

The District Office of Environment is basically supporting the project concept, as it will improve the environment condition particularly improving water quality of the river around the palm oil mills. IOPRI one of the active institute active in palm oil research anticipates that the presented study will be very promising to be disseminated to Palm Oil Mills in Indonesia. IPB also confirmed that this anaerobic POME treatment concept is also considered as an innovative technique that may have a prospective future. BPPT together with PTPN III (owner of the palm oil plantation and mill located at Sangau, West Kalimantan) are expecting that full-scale plant can be introduced and installed at PTPN XIIIs facility. PTPN XIII will also be ready also disseminating the success story of this advanced POME treatment utilisation.

13 Key factors impacting project & baseline emissions

13.1 Key Factors
Legal The interest for the development of the anaerobic POME treatment plant is based on the fact that this technology also produces burnable biogas as by product. Technically this biogas can also be used to generate combined heat and power (CHP) system. Having Ministerial Decree no. 1122 K/30/MEM/2002 of PSK Tersebar that encourage of private to generate electricity using renewable energy sources and sell electricity to PLN grid will have an economic impact for the palm oil mill to develop the anaerobic POME treatment plant. However, there are still some improvements of the decree that are required. The most important item is the duration of electricity purchase contract is not specified in the decree. This makes PLN only agree to sign the electricity purchase agreement (contract) on yearly basis. It may become a financial problem if later the contract cannot be extended due to any reasons. Political The above-described Ministerial Decree on PSK Tersebar is applicable since its issuance on 12 June 2002. However, many of PLN officials are not fully understand about the background, aim, and benefit behind that PSK Tersebar decree. Additionally, they are also not fully aware about the simplified procedures for the implementation of PSK Tersebar. Economic The base production cost (HPP) of electricity of PLN in Java is approximately 7 US cents/kWh. According to the PSK Tersebar decree, the electricity will be paid by PLN at 5.6 US cents/kWh (at medium voltage). The HPP of 7 US cents/kWh may not become lower outside Java island as most of as most of current generating plant of PLN in outside Java is still rely on diesel oil. Baseline GHG emissions The government of Indonesia is introducing the so-called Green Energy Program to promote the use of renewable energy sources and energy efficient technologies. Aim of this program is to reduce the use of fossil fuel particularly for electricity generation in order to retard energy resources depletion. This program may
19

influence the GHG emission baseline. As far as Outside Java is concerned, however, the GHG emission rate of 1 kg CO2/kWh will more or less remain un-changed.

13.2 Project Uncertainties

The most critical aspect would be the political stability of the country and the consistency of the related government policies (e.g. PSK Tersebar and Green Energy policies). The environment damage (because of e.g. poverty and deforestation) that may lead to nature disaster such as flooding and climate change that lead to extreme drought that are beyond human control.

14 Conclusion and Recommendation

The study confirms that the anaerobic treatment plant for POME is technically, financially and economically viable. Furthermore, the discussions with the involved stakeholders and other related institution revealed a high interest towards the proposed development. Technically the project will improve the performance of POME treatment and in general will improve the quality of environment. The product value of CPO will be appreciated because considering the environmentally friendly process produces it. The project is financially feasible. At the discount factor of 12%, it provides the FIRR with- and without CER of 29,92% and 17%, respectively. Similarly, it generates EIRR with- and without CER of respectively 29,78% and 19,32%. Annual power generation is more or less 14,880 MWh, and the plant will use approximately 900 MWh and the rest will be fed to the grid. The electricity selling will generate revenue as much as US$ 699,067. The sludge generated from the process can be directly distributed to the palm estate as fertilizer or to be dried that later can be used as fertilizer. The sale of this natural fertilizer is not considered. However, before further steps in implementation are undertaken a more detailed case or feasibility study should be prepared to further verify the overall frame conditions of the project. A comprehensive survey of the site must be carried out. The detailed design of the scheme should provide an even more accurate cost estimation and financial and economic analysis.

20

Annex 1 Technical Analyses

Current Practice and Proposed Concept

Considering the chemical contents and physical properties of POME, the most efficient system used in the initial stage of the wastewater plant is the anaerobic treatment. The current system meets the requirement of the palm oil mill operator to safely discharge the treated POME. However, the system releases methane gas (CH4) into the atmosphere as the by-product of anaerobic digestion of POME. The treatment of POME happens actually by an anaerobic/aerobic pond system. In the first view the pond system has some advantages as: a. Simple system b. Low investment costs for technical equipment, c. Low energy demand. But, a more detailed investigation shows that there are several negative aspects identified as the followings: a. High demand for area ( 7-10 ha for an oil mill with 60 t FFB/h). The area needed to treat POME using traditional method is quite large. On average between 7-10 hectares of land is needed to treat POME with production capacity of 60 tons FFB/h b. High demand for de-sludging of the pond and handling of the sludge c. In oil mills, which use two-phase-separators all the fruit sludge goes to the ponds. The suspended solids, which are not degraded, settle down and are enriched. The ponds silt up without a periodical sludge removal. The consequence is, that the active volume of the ponds and the hydraulic retention time of the wastewater in the ponds decrease and the purification capacity are reduced. Furthermore it is rather difficult to take out the sludge sediment all over the area because of the extended area and depth of the ponds. d. Lost of nutrients. All nutrients (N, P, K, Mg, and Ca) in the effluent are discharged to the river, pollute the environment and are for the plantation. e. High emissions of methane. Nearly all-organic matters are anaerobic degraded and transformed to methane and carbon dioxide. Because high volume of FFB is processed then the emission of Methane is also high. At minimum 10-m3 methane are emitted per ton FFB.
Proposed Concept

The concept has been proposed by IOPRI and UTEC with a process scheme as presented in Figure 4. The process is briefly explained as follows.

Annex 1-1

Source: Anaerobic Treatment of POME, IOPRI, 2000.

Figure 4 Concept for Integrated Waste Water Treatment (palm oil mill with 2 separators)

At the first step, the suspended solids are separated using flotation plant, decanter, in order to: a. Reduce the Chemical Oxygen Demand (COD), Biological Oxygen Demand (BOD), nitrogen and sand content b. Minimise the problems in the subsequent treatment steps as foaming, plugging, sedimentation. The waste water, which is polluted mainly with dissolved component, is fed to an anaerobic digester (fixed bed, UASB or other), where a. The pollutant is mainly degraded and transformed to useful biogas, b. The process occurs with a high performance and in a short time, c. The produced biogas is collected. The anaerobic pre-treated effluent can be used for land application to a. Utilize the nutrient, b. Save area, c. Minimise emissions and energy consumption Where a land application is not possible, the water can be treated aerobically (aerated ponds, activated sludge system) to fulfil the standards for discharging into a river. The sludge phase can be digested anaerobic in a totally mixed digester for production of biogas, if the aspect of energy is important. The digested sludge can be used for land application together with the wastewater to utilize the nutrients. The fresh and thickened sludge can also be dried (rotary drier, other) to produce feedstuff or a storable fertiliser. Furthermore the fresh sludge can be dried biologically by using the composting process. The sludge is mixed with chopped the empty fruit bunch (EFB) and the mixture is rotting

Annex 1-2

in heaps and will be transformed to a compost, which is enriched with nutrients. The mixture must be turned from time to time to evaporate a maximum of water. The favoured variations are marked in Figure 4. In the case that an oil mill has a 3-phase decanter the sludge separation is not necessary, but the alternatives for wastewater and sludge treatment are identical. The main components in the given concept for POME-treatment are: a. Anaerobic pre-treatment b. Sludge separation. Both steps were investigated by IOPRI through the experimental plant consists of anaerobic treatment plant and sludge separation as discussed in following sections.
Pilot Plant for Anaerobic Treatment

Anaerobic treatment of POME is performed using a pilot plant equipped with fixed bed digesters. The fixed bed technology was chosen, because this type of digester has low energy consumption, less risk in operation and an easy start up. Furthermore a high performance could be expected. The following aspects are from interest: a. performance (max. loading rate, efficiency, min. hydraulic retention time) b. risk of plugging c. Specific biogas production, composition of the biogas. The pilot plant was located at Pagar Marbau Palm Oil Mill of PTPN II, Medan. The main components of the plant are the fixed bed digester D1 and D2. Digester D1 was used for operation in up flow mode, digester D2 for down flow mode. Figure 5 presents the schematic configuration of the plant. The wastewater consists of the effluent from the separators, the condensate and cleaning water. The composition of the wastewater is given in Table 6. For comparison data from IOPRI (28.02.97) are added. The composition of the used POME varied in a wide range according to the operation conditions of the oil mill.
Table 6 Composition of Waste Water
Parameter
PH Tot. Solids Tot. Dissolved Solids Tot. Suspended Solids Total COD Dissolved COD Total Kjehld.-Nitrogen Total Phosphate K Mg

Unit
Mg/l Mg/l Mg/l Mg/l Mg/l Mg/l Mg/l Mg/l Mg/l

Used POME
4.0 4.5 10,000 30,000 8,000 19,000 1,000 5,000 12,000 25,000 8,000 16,000 90 16,000 90 850 110 924 17 - 152

Data of IOPRI
4.0 4.6 30,000 70,000 15,000 30,000 15,000 40,000 40,000 120,000 500 800 90 140 1,000 2,000 250 300

The technical data of the components:

Annex 1-3

Storage tanks (S1, S2) Volume Digesters (D1, D2) Total volume Active volume Diameter Total height Height of fixed bed Material Pumps Type Flow rate Gas counter Producer Type : Ritter : wet gas flow meter, drum type : processing cavity pumps : 60 L/h : 275 L (each) : 250 L : 40 cm : 250 cm : 200 cm : stainless steel : 335 L (each)

Source: Anaerobic Treatment of POME, IOPRI, 2000

Figure 5 Configuration of pilot plant (D1 active digester, D2 in standby mode)

The fresh wastewater is filled into the storage tanks S1 and S2, where the water cool down to ambient temperature, rests of oil float and are skimmed manually. The feeding pump P1 sucks water from the storage tank S2 and feed it into the bottom of the digester D1. The water passes the fixed bed to the top (up flow), where the effluent flows out. A part of the effluent is pumped by the circulation pump P2 back to the feeding system to dilute the

Annex 1-4

influent, to lift the pH and to optimise the distribution of substrate inside the digester. The surplus of the effluent flows into the top of digester D2 to keep this digester active. The water passes the fixed bed in down flow mode and is discharged finally. The operation control of the pumps and the variation of the daily amount of bed and recycled water happen by adjustable timers. The produced biogas is collected and is measured by gas counters. The digestion happens at ambient temperature (26-28o C) The following data were measured:

Daily amount of bed waste water and circulation rate Dissolved and total COD of fresh water and effluent PH in influent and effluent Daily gas production and methane concentration.

Furthermore from time to time the amount of incorporated sludge was determined. For this purpose this liquid was taken out step-by-step, whereby the liquid level in the digester was measured in the same time. The difference between the liquid volume taken out and the theoretical liquid volume of a certain part of the digester allows the calculation of the fixed sludge volume. In order to enrich and fix active bacteria in the digester with the aim to increase the performance of the digester a certain support material is used. The bacteria grow on the surface in the form of a bio film. Because they are fixed, they cannot be washed out, even if the digester has a high hydraulic load. Both digesters are filled to 90% with support material. The fixed bed consists of random packed, corrugated, cylindrical pipe sections. The technical data of the support material are given in Table 7.
Table 7 Specific data of the support material Producer Fraenkische Rohrweke Gmbh

Type Material Diameter Height Spec. Surface Empty space volume

Sludge Separation

Ewallporit PVC 50 50 180 95 Mm Mm m2 / m3 %

Separation of sludge was carried out using the principle of dissolved-air-flotation also called pressure-flotation. Principally using continuously working separators or decanters can do the separation of suspended solids. Both aggregates are expensive and have a high demand for maintenance and energy.

Annex 1-5

The flotation technology seems to be suitable alternative, from interest are: a. Amount of floatable solids, b. Velocity of the flotation process c. Concentration of the floated sludge d. Balance of nutrients in sludge and liquid phase During the trials the effluent of the oil mill from Pagar Marbau (PTPN II) was used. The unit is equipped with 2-phase-separators. The wastewater was taken from the effluent of the oil skimmer. The wastewater flow is split, 80% flows direct into a flotation basin, 20 % is pumped into a vessel, where air is dissolved in the water under high pressure (6 bar). The gas-enriched water is given back to the flotation basin passing a nozzle located at the end of the inlet pipe. After passing the nozzle the liquid is not under pressure anymore the dissolved gas cannot keep in the water, small fine bubbles are formed. The gas bubbles connect to the sludge particles with the consequence that the particles float up and form a swimming scum, which can be separated by a scraper. As demonstrated in Figure 6 transparent measuring cylinder (1L) and a vessel with max pressure of a 2 bar was used for the experiment. In the beginning the cylinder was filled up to 80 % with waste water, the vessel was filled half with normal tap water and air pumped in up to a pressure of 2 bar. After testing and optimisation of the bubble forming, the gas-enriched water was given into the cylinder at the bottom area until the cylinder was filled 100%. The tests were done with hot (60o C) and cool (28 o C) wastewater. A sedimentation test was done with identical wastewater and cylinder for comparison. Measured parameters were: Concentration of suspended solids in the waste water Volume of floated sludge as function of time Dry matter of the floated sludge Volume of sludge as function of time Nutrient content of wastewater, sludge and liquid phase.

Annex 1-6

Figure 6 System for flotation test Performance of the Anaerobic Process

The digester D1 was started up in June 1998 and ran until August 1999 without any problems. During this time the COD-loading rate was increased step-by-step from 3.0 kg O2/(m3*d) up to 7.0 kg O2/(m3*d), the hydraulic retention time could be shortened from 6.1 days to 1.7 days. The detailed data of the experiment periods are given in Table 8, results of the evaluation in Table 9.
Table 8 Data of Digester D1 in up flow mode
Flow Period Rate I/d pH Influent COD-diss mg/l COD-tot Mg/l pH Effluent COD-diss mg/l COD-tot mg/l Gas Prod. CH4 Cont. %

I/d 514 (426)** (504)** 831

1 2 3 4

41 108 122 145

5.0 4.4 4.6 4.5

12,750 11,560 12,050 10,050

19,120 15,300 14,670 12,100

6.8 6.7 6.7 6.7

1,235 1,168 1,165 1,070

(2,800)* 1,581 1,546 1,330

64 69 69 64

* influenced by inoculums sludge

** gas counter partly blocked

Table 9 Result evaluation for digester D1

Period Retention time d Loading rate kg O2/(m3*d) COD-diss COD-tot Efficiency % COD-diss COD-tot

1 2 3 4

6.1 2.3 2.1 1.7

2.1 5.0 5.9 5.9

3.2 6.7 7.2 7.0

90 90 90 90

90 89 89

Annex 1-7

From September 1999 until March 2000 the experiments were continued with the digester D2 in down flow mode. The COD-loading rate could increase from 4.0 O2/(m3*d) up to 13.2 O2/(m3*d); the minimal hydraulic retention time was 1.3 days. The detailed data of the experience run are shown in Table 10, the results of the evaluation in Table 11.
Table 10 Data Digester D2 down flow mode
Flow Period Rate I/d pH Influent COD-diss mg/l COD-tot Mg/l pH Effluent COD-diss mg/l COD-tot mg/l Gas Prod. CH4 Cont. %

I/d 552 820 924 1,250

1 2 3 4

76 118 176 192

4.9 4.6 4.6 4.4

12,200 11,500 11,970 13,300

14,900 14,500 15,700 17,250

6.9 6.9 6.8 6.6

769 675 1,195 1,570

1,278 1,200 2,418 3,140

66 65 64 62

Table 11 Result of evaluation for digester D2

Period Retention time d Loading rate kg O2/(m3*d) COD-diss COD-tot Efficiency % COD-diss COD-tot

1 2 3 4

3.3 2.1 1.4 1.3

3.7 5.4 8.1 510.2

4.5 6.8 11.0 13.2

94 94 90 88

92 84 82

It is obvious that the efficiency based on COD dissolved is in general higher than the comparable efficiency based on COD-total. The reason is that there is nearly no degradation of the suspended solids, because the retention time is too short for the more complex degradation process. Therefore it is more suitable to use the efficiency based on COD-dissolved. To demonstrate the performance of the digesters, the performances of up and down flow operation are demonstrated for comparison in Figure 7.

Annex 1-8

Figure 7 Efficiency as function of COD-loading rate based on COD-dissolved

Digester D1 has a constant removal efficiency of 90 % up to a loading rate of 6 O2/(m3*d), which decrease to 89 %, when the loading rate reach 10 O2/(m3*d). Experiments with higher loading rates have not been tried yet. The digesters were driven with original wastewater including Total Suspended Solids (TSS 1,000 5,000 mg/l). The sludge particles might have the consequence that they are enriched/concentrated in the digester and plug the fixed bed. In Figure 8 the measured sludge profiles are shown. It can be seen, that the Digester (up flow) has the max sludge content in the bottom area and the minimum in the top. The reason is that particles with a good sedimentation characteristic are enriched in the bottom area and that they are partly incorporated in the top, are washed out with the effluent. After 15 month operating time the maximum volume of sludge is calculated with 30 % at the bottom area. A risk of plugging was not determinable. In contrary the digester D2 (down flow) has the maximum sludge content in the top and the minimum at the bottom. The opposite effect is working, settled sludge is washed out with the effluent, and floated sludge is enriched in the top. After 15 months operating time in sequence according to the configuration shown in concentrated Figure 2 the maximum volume of incorporated sludge was 35 %. It happened during an experiment run with high loading rate and high gas production that the fed sludge floated up and formed a strong swimming scum with the consequence of foam formation and plugging of the fixed bed (see Figure 8, line 6).

Annex 1-9

Figure 8 Comparison of sludge profiles in digester D1 and D2

The most important conclusions of the experiments are: Fixed bed technology is suitable for the anaerobic treatment of POME A dissolved-COD-loading rate of 8 10 O2/(m3*d) and COD-removal rate of approximately 90 % is realistic parameters for dimensioning of a full-scale plant. The specific gas production is around 560 l gas per kg COD-degraded with a methane content of 62 % An up flow digester seems more suitable, when the wastewater content suspended solids, the down flow operation can be used for water without suspended solids.

Sludge Separation

In Figure 9 the velocity of flotation and sedimentation are shown for typical wastewater taken in Pagar Marbau. This parameter is important showing that retention time is better than older system.

Annex 1-10

Figure 9 The velocity of flotation and sedimentation Table 12 Analytical Data

Dry matter DM Suspended solids (TSS) Unit

Waste water Floated sludge Liquid phase

21,400 32,900 3.29 13,590

5,000

mg/l mg/l % mg/l

The essential results of the trial are summarized as follows: The total content of suspended solids can be separated by flotation without any sediment There is no difference in the flotation characteristic for cold and hot POME as long as the gas enriched water has ambient temperature With a vessel pressure of 2 bar 20 % of total wastewater flow is needed as gas enriched liquid. It can be expected, that the demand on gas-enriched liquid will decrease, when a pressure of 6 Bar is used. The floated sludge has a DM content of 3.2 % in minimum after a flotation time of 60 minutes. It can be expected, that the velocity and the DM-content can be increase with higher pressure in the vessel.

The results of flotation tests show that the flotation technology is an interesting alternative to other separation technologies and should be investigated in more detail.
Nitrogen balance

For investigation of the mass balance of nitrogen samples were taken in the palm oil mill in Pagar Marbau and Bah Jambi. The samples were collected direct from the effluent of

Annex 1-11

the 2-phase-separators. A certain amount was separated with a centrifuge in laboratory. Table 13 presents the analysis of the original effluent, the sludge phase and liquid phase. It can be seen, that the separation has no effect to the NH4-N and the phosphor concentration. These components are mainly dissolved in the liquid that cannot be enriched by separation of sludge.
Table 13 Nutrient content of POME
DM g/l COD mg/l N-Kj g/l NH4-N g/l P mg/l Mass balance %

Pagar Marbau

Effluent separator Sludge phase Liquid phase

Bah Jambi

32.1 72.7 19.0 42.21 55.16 27.2

44.830 24.300 66,350 37,500

0.64 1.70 0.32 0.76 1.01 0.38

0.10 0.17 0.13 0.27 0.25 0.14

126 137 112 138 140 124

100 23 77 100 24 76

Effluent separator Sludge phase Lquid phase

The mass balance for Kjeldahl-N has the following result:

Table 14 Mass Balance of Kjeldahl-N

Sample Pagar Marbau Effluent Sludge phase Liquid phase 100 % 61 % 39 %

Sample Bah Jambi 100 % 76 % 24 %

More than 60 % of N-K can be eliminated by sludge separation from the wastewater. The sludge phase has an N-K content of 1.0 1.7 g/l, concentration depend on the DM content of the sludge, according to the N content the protein concentration is 6.25 10.6 g/kg sludge or 113 145 g/kgDM. The N-load to waste water treatment plants can be reduced significantly The separated sludge has a high protein content, therefore it might be suitable to use sludge as feed stuff or as addition to a composting process to save nitrogen and to increase the nutrient content of the compost

Annex 1-12

System Design

The POME treatment plant proposed herein is to process the POME generated from the CPO mill with the capacity of 60 ton FFB/h. With this capacity the following data may be generated: CPO Mill Capacity Working time Amount of FFB Specific amount of POME Amount of POME Amount of POME COD-concentration Spec. COD-load Total COD-load
Sludge separation

: 60 t FFB/h : 20 h/d : 1200 t/d : 0.85 m3/t FFB : 3.86 m3-POME/tonsCPO : 1020 m3/d : 30,000 mg/l : 25.5 kg O2/(m3*d) : 30,600 kg/d.

In view to a new concept for POME treatment it is necessary to separate the fruit sludge from the wastewater, because: a. The COD will be reduced (30 50 %) b. The nitrogen content decreases (60 70 %) c. The following treatment system has a smaller load and the operation conditions are optimised. Sludge elimination in front is also interesting in oil mills using a pond system, because the efficiency of the ponds will increase and the demand for maintenance will decrease. Furthermore a continuous separation of the fresh POME in front might be more suitable than a de-sludging of the large ponds. The required technology for sludge separation is well known and available in the market. The flotation technology looks suitable and might be an interesting alternative to separators and decanters.
Anaerobic treatment

An aerobic treatment pre-treatment of POME can be done successfully with fixed bed digesters. To minimise the risk of plugging and foam formation the suspended sludge particles should be eliminated in front. Approximately 90 % of the dissolved COD can be degraded and transformed to useable biogas. According to the COD-concentration in the influent the COD content in the effluent ranges between 1,500 and 4,000 mg/l with a pH of 6.5 and higher. Consequently the effluent can be used for land application. The dimension of the digester required to process the above mill is summarized as follows: COD-loading rate Efficiency Gas production Methane content : 9.0 kg O2/(m3*d) : 90 % : 0.56 m3biogas/kg COD-degraded : 62 %

Annex 1-13

COD-effluent Required volume of the digester Hydraulic retention time Chosen volume Methane gas production Diesel-equivalent

: 3,000 mg O2/l : 3,400 m3 (active volume) : 3.3 d : 4,000 m3 : 15,400 m3/d : 9,548 l/d.

Besides the aspect of wastewater treatment the energy production might be have a high importance for a palm oil mill. A specific electricity production of 26 kWh per ton FFB can be expected, if all biogas is used to generate electricity with a gas engine. The specific electricity demand of the factory is estimated to 15 17 kWh per ton FFB. The calculation demonstrated that the digester volume for the process is 4000 m3. This digester will generate Methane gas as much as 15,400 m3/d. The use of gas allows the substitutions of approximately 9,548 litres/day diesel fuels. This gas can also be utilised to run the boiler or drive the generating set to produce steam or electricity respectively. As the boiler is normally fuelled by the palm oil fruit wastes (e.g. mesocarp fibres and shells); it is recommended to use the gas for electricity generation. For a new palm oil mill, the option to integrate biogas to the new factory will be economically interesting. The combined heat and power (CHP) generating plant may be applicable for the process using gas engine. The gas engine should also allow the use of diesel to provide operational security for the factory. When the biogas is not available the CHP plant can be driven with diesel fuel.

Annex 1-14

Annex 2 Financial and Economic Analyses

Financial and Economic Summary
Table 15 Summary of Technical and Financial Parameters
TECHNICAL

Install capacity Paracitic load Operation hours Power generation REVENUE Power sales Sales price unit (med volatge) to HPP PLN Annual revenue CER revenue CO2 emission reduction GHG abatement price Revenue
INVESTMENT

kW % hours p.a kWh p.a.

1,878 6.00% 7,920 13,981,334

USD cent/kWh USD Ton CO2 p.a USD/ton CO2 USD

5 699,067 70,953.00 5 354,765

Equipment cost Per kW Investment cost Civil works Other cost USD/kW USD USD USD 1,500 2,817,000 100,000 60,000 2,977,000
OPERATION & MAINTENANCE

Fixed cost Labour cost Plant supervisor (3 persons) Skilled worker (6 persons) Unskilled worker (12 persons) Maintenance cost Other costs 1.00 0.90 0.80 USD p.a. USD p.a. USD p.a. USD p.a. USD p.a. USD p.a. 20,393 18,353 16,314 55,060 50,000 18,000 123,060 Variable cost Material Unskilled labour Others 70% 25% 5% USD p.a. USD p.a. USD p.a. 15,400 5,500 1,100 22,000 145,060 OTHERS Exchange rate USD 1 Discount factor Inflation rate IDR 8,500 12% 7%

Annex 2-1

Table 16 Weighted Average of Capital Cost

ADB loan Foreign loans Equity Domes-tic Governparticipatio loans ment funds n 312 10.0% 17.0% 30.0% 11.9% 7.0% 4.0% 4.0% 3.0% 4.8% 4.0% 4.0% 0.0% 4.6% 7.0% 0.7% 156 5.0% 7.0% 0.0% 10.0% 7.0% 2.8% 7.0% 0.4% 312 10.0% 10.0% 0.0% 10.0% 7.0% 2.8% 7.0% 0.7% 4.8% Total

A B C D E F G H I

Amount ($ '000) Weighting Nominal cost Tax rate Tax adjusted normal cost [Cx(1-D)] Inflation rate Real cost [(1+E)/(1+F)-1] Minimum rate Weighted component of WACC WACC real

2,342 75.0% 6.7% 40.0% 4.0% 0.0% 6.7% 40.0% 4.0%

3,122 100.0%

Annex 2-2

Table 17 Financial and Economic Price

Financial price (USD) Revenue Power sales CER revenue 699,067 354,765 1,053,832 INVESTMENT COST Equipment Civil works Other cost Total ANNUAL O&M COST Fixed cost Labour Skilled labour Unskilled labour Maintenance cost Other costs Sub-total Variable cost Material Unskilled labour Others Sub-total Total 15,400 5,500 1,100 22,000 145,060 131 47 9 187 1,233 0.930 0.419 0.930 122 20 9 150 1,052 38,746 16,314 50,000 18,000 123,060 329 139 425 153 1,046 0.930 0.419 0.930 0.930 306 58 395 142 902 2,817,000 100,000 60,000 2,977,000 23,945 850 510 25,305 0.930 0.930 0.930 22,263 790 474 23,528 5,942 3,016 8,958 1.000 0.749 5,942 2,259 8,201 Financial price (IDR'mil) Adjusment* Economic price (IDR'mil)

TOTAL COST

3,122,060

26,538

0.926

24,579

* economic price using domectic price numeraire

Annex 2-3

Table 18 Financial Analysis

Year Power sales GWh 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 PV @ 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 12.00% 0 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 0 0 0 0 0 85,022 Revenue Power IDR 'mil 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 36,134 425.00 CER IDR 'mil 3,016 3,016 3,016 3,016 3,016 3,016 3,016 3,016 3,016 3,016 3,016 3,016 3,016 3,016 3,016 18,338 215.68 Total IDR 'mil 8,958 8,958 8,958 8,958 8,958 8,958 8,958 8,958 8,958 8,958 8,958 8,958 8,958 8,958 8,958 54,472 640.68 Investment IDR 'mil 25,305 22,593 265.73 Cost O&M IDR 'mil 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 7,498 88.19 Total IDR 'mil 25,305 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 1,233 30,091 353.92 Net Benefits Net Benefits with CER without CER IDR 'mil (25,305) 7,725 7,725 7,725 7,725 7,725 7,725 7,725 7,725 7,725 7,725 7,725 7,725 7,725 7,725 7,725 24,381 286.76 IDR 'mil (25,305) 4,709 4,709 4,709 4,709 4,709 4,709 4,709 4,709 4,709 4,709 4,709 4,709 4,709 4,709 4,709 6,043 71.08

Per unit (IDR/kWh)

With CER revenue FIRR FNPV FNPV FNPV @ 4.77% 29.92% 12.00% 29.92% 53,608 (0) 24,381

Without CER revenue 17% 23,252 (7,603) 6,043

Annex 2-4

Table 19 Economic Analysis

Year Power sales GWh 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 PV @ 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 12.00% 0 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 13,981 0 0 0 0 0 85,022 Revenue Power IDR 'mil 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 5,942 36,134 425.00 CER IDR 'mil 2,259 2,259 2,259 2,259 2,259 2,259 2,259 2,259 2,259 2,259 2,259 2,259 2,259 2,259 2,259 13,735 161.54 Total IDR 'mil 8,201 8,201 8,201 8,201 8,201 8,201 8,201 8,201 8,201 8,201 8,201 8,201 8,201 8,201 8,201 49,869 586.54 21,007 247.07 Investment IDR 'mil 23,528 Cost O&M IDR 'mil 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 6,395 75.22 Total IDR 'mil 23,528 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 1,052 27,402 322.29 Net Benefits with CER IDR 'mil (23,528) 7,149 7,149 7,149 7,149 7,149 7,149 7,149 7,149 7,149 7,149 7,149 7,149 7,149 7,149 7,149 22,467 264.25 Net Benefits without CER IDR 'mil (23,528) 4,890 4,890 4,890 4,890 4,890 4,890 4,890 4,890 4,890 4,890 4,890 4,890 4,890 4,890 4,890 8,733 102.71

Per unit (IDR/kWh)

With CER revenue EIRR ENPV @ ENPV @ ENPV @ 4.77% 29.78% 12.00% 29.78% 71,978 0 22,469

Without CER revenue 19.32% 35,506 (5,728) 8,734

Annex 2-5