Biodiesel Bonanza

The present power situation is crazy. So crazy that it is driving facility managers to manage problems like safeguarding diesel storage, which has nothing to do with their core IT business. But not to worry, a solution is at hand.

Everyone knew it was inevitable, but nobody believed it would be so soon. The oil shock that happened post-Iraq war seems to have jolted the business world. Despite the OPEC nations increasing their production to a 25-year high to meet global demand, crude oil prices are still hovering around 40-45 dollars per barrel. The only consolation is that prices of crude oil will not reach the record high of $55.67 set in October 2004, as the war clouds have moved away.

It hasn’t at all been good for the ordinary Indian consumer. Adding to rising oil prices is the surcharges and taxes imposed by state governments on captive power generation using diesel or gas. Recently CII-Karnataka representatives had debated about additional levies on captive power generation. You might be wondering why this article is emphasizing these well known realities.

Solution in sight

There is an alternative to the energy crisis, which needs to be highlighted in the public domain. It is a true miracle fuel which was untapped all these days. With the ever increasing need for energy in both household and industrial sectors, we had been relying upon huge petroleum imports. Various alternatives like ethanol, electric fuel cells, hydrogen, CNG and LPG had been tried out. But these fuels are capital intensive and need a critical mass of buyers before they ca be economically feasible.

But Biodiesel is an innovative fuel made from vegetable oil which can be used for standard diesel engines without any alteration in the machine. This is nature’s gift for an oil starved India. Even farmers can make oil in their village and run their diesel gensets or tractors.

The renowned inventor Rudolf Diesel himself had indicated in 1912 that the diesel engine can be fed with vegetable oils and would help considerably in the development of agriculture of the countries which use it. However the abundance of petroleum overshadowed the utility of vegetable oil for diesel engine. Now that the world is facing an impeding danger of petroleum scarcity, there is a concentrated effort to identify alternative fuels. So the focus is back on Biodiesel, which is technically called ‘Esterified Vegetable Oil.’

Availability of Biodiesel

Making Biodiesel is no rocket science. Many innovators have made it at home through a process called ‘Transesterification,’ which removes unwanted components from vegetable oil and renders it a ‘methyl ester’. Unlike hi-tech ideas like hydrogen fuel cells and solar energy, the capital investment required for Biodiesel is minimal.

There are about 20 plant species like soya, rapeseed, sunflower, castor whose seeds yield acceptable Biodiesel. Of these, Pongamia [Honge] and Jatropha [Ratanjyot in Hindi] are emerging as a popular Biodiesel oils. Neem oil too will do well but it is more valuable as a pesticide and medicine. Normally eco-friendly products are more expensive than conventional ones and are labour intensive. Scalability is a crucial factor which affects all organic and hand crafted products. But here is a unique product which is not only inexpensive, easy to produce, but also requires minimal technical know-how.

Scientists of the Indian Institute of Science (IISc) have already made a pilot project which has successfully made a village self-sufficient. The economics are simple: Honge seeds cost Rs 5 per kg; 4 kg seeds produce 1 kg oil; oil extraction costs Rs 2 per kg; processed oil is priced at Rs 20 per kg. Byproducts oilcake and glycerol can be sold separately, adding to the revenues. With a simple extraction unit costing just Rs 500,000, the return on investment is fast.

Apart from rural needs, the urban sector has huge potential for Biodiesel. With no hope of improvement in the power situation, diesel genset backup is not only mandatory, but also there is a need for backup for a backup DG. Most IT/BPO companies need uninterrupted and consistent power supply and are struggling to store huge amounts of diesel for their DG.

The price of Biodiesel at Rs 24 per kg compares competitively with the present diesel price of Rs 30 per litre. If we just calculate the number of captive power generators in our city, we can understand the huge market potential of Biodiesel. But it will take some time before private and public sector companies realise its potential. If 10 million hectares of India’s vast wastelands were to be used for Biodiesel production, with a modest estimate of 1.5 ton seeds per hectare, 4 million ton of Biodiesel will be produced—which is one tenth of the country’s annual oil requirement.

Prof. U Srinivasa of IISc has done much to popularize Biodiesel among farmers and corporate firms. They have also managed to convince a cost-conscious SME firm Dandeli Ferro Alloys to use Biodiesel for its 1MW genset, which has now run about 1,000 hours and has generated a lakh unit of electricity. Their NGO initiative SUTRA has convinced BMTC to run some city buses on 20:80 blend of Biodiesel and Petrodiesel. Former Madhya Pradesh Chief Minister Uma Bharati ordered a test ride of a Biodiesel-run bus and implement the idea in her state. But as fate would have it, she was arrested the next day and the idea remained on paper!

Daimler Chrysler has launched a public-private partnership for the production of Biodiesel. They have also successfully test run a Mercedes Benz car across the country demonstrating the feasibility of Biodiesel. Among other developments, IIT-Delhi and Escorts Corporate Research Development Centre have entered into a joint venture to conduct performance evaluation and emission studies of tractor engines using Biodiesel as fuel.

Tree Oils India, a firm run by two agri-entrepreneurs G Sreenivas and A Yasodhara has already done extensive plantation of Jatropha and Pongamia trees in the vast wastelands of Andhra Pradesh. This company is setting up collection centres for oil seeds available in the wild through landless labourers and has tied up with farmers through contract farming to execute plantation projects on turnkey basis. A day will soon come in India when this idea will catch on and small rural businesses will begin offering technically true ‘biodiesels’ for highway trucks.

M Sathyanarayana of Malnad Extraction Industries has already begun manufacturing commercial Biodiesel production plants and has found customers in Karnataka and Maharashtra.

For a detailed report on biodiesel feasibility, email: biodiesel@businessgyan.com

Issue BG46 Jan05