Trincomalee Biomass to Pellets

An innovative approach to securing long-term biomass supply

Context

The key to successful biomass-based projects is security of long-term supply of raw material.  This includes both access to raw material and having a robust supply-chain/logistics component in place. However, there is a “chicken and egg” challenge in that financing for such projects is not available until supply security is in place. However, the supply business in itself is not commercially viable, so it is difficult to attract project development funding.

InfraCo Asia, with its unique mandate, can play a critical role in addressing this gap during the development phase. What is also needed, however, is an innovative approach to securing the supply. Typically, biomass projects rely on owning agricultural or plantation land. This type of land can prove challenging in terms of obtaining permits, addressing the “food vs fuel” trade-off from a policy perspective, and the economic risks of mono-cultivation. Furthermore, growing raw material in a socially and environmentally sustainable manner is the key to accessing international markets for offtake purposes.

The Project

This project is centred around working with hundreds of thousands of small farmers in Sri Lanka to encourage them to plant a tree (Gliricidia) that grows abundantly in the country. The wood from these trees would then be converted into pellets. These farmers already use Gliricidia as a live (single) fence for their farms and as a shade tree.

 

The approach that the sponsor is taking to secure supply is two-fold. First, it is training the farmers on the multiple benefits coming from Gliricidia in addition to educating them about potential income to be generated from selling wood. As a nitrogen-fixing plant, Gliricidia improves soils which can lead to higher yields of the crops grown by farmers. The leaves are rich in proteins and can be used as fodder for animals and for fertiliser. Second, the sponsor is training and encouraging farmers to plant a triple fence around their land as well as intercropping Gliricidia with existing cash crops. This approach involves enlisting hundreds of thousands of farmers in Sri Lanka to supply the raw material, which in turn creates an additional income stream without losing cash crops, and without the requirement of additional land.

Once supply has been secured, the next phase for the project is to build a pellet plant that can produce pellets for offtake to overseas markets. The sponsor is targeting the Japanese market, which has a significant demand for biomass due to the country’s sustainability objectives.

Project Overview
Company
Biomass Ventures Pte Ltd
Country
Sri Lanka
Region
Trincomalee in the North-East of Sri Lanka
Sector
Agri-infrastructure
Size
Expected production of 75,000 - 150,000 tons of pellets per year
Status
Under Active Development
Timeline
  • Project Approved in 2017
  • Financial close expected Q4 2018
Total Project Cost
$40M
Funding Committed
$2.44M as co-developer
IAI Investment
N/A
Other Shareholder(s)
Biomass Group Ltd
Suppliers

Germany

  • Detailed technical design of pellet plant

Netherlands

  • Design of logistics and supply chain

United Kingdom

  • Design of IT system
Development Impact
  • ~200,000 farmers with access to the supply-chain being created
  • 100 long-term jobs
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