Published in The National newspaper on Thursday 19 April 2018, Business Section, Page 39 and online at The National’s business page.
Q: What is your background?
MITIR: I have over 19 years’ experience working in forestry and agricultural research specialising in the area of technical and non-technical writing, editing and publishing, farmer learning, managing and delivering donor funded community development projects.
I joined PNG Biomass in Oct 2016. I lead the stakeholder engagement team that focuses on social impact and performance, land access, government affairs, business development, community relationships, and environment and safety.
Q: Who is PNG Biomass?
MITIR: PNG Biomass is a wholly-owned subsidiary of Oil Search that began in 2010 as a joint-venture between Oil Search and Aligned Energy. In mid-2016 Oil Search acquired full ownership of PNG Biomass and positioned it within its power business, Oil Search Power Holdings, which pursues viable and scalable power initiatives for PNG communities and businesses.
PNG Biomass’ renewable energy project is in the Markham Valley in Morobe. It will use wood chips from trees sustainably grown in its plantations to fuel a biomass power plant to provide 30 Megawatt (MW) into the Ramu grid.
The project is supported by a 25-year Power Purchasing Agreement (PPA) that was signed with PNG Power Ltd (PPL) in December 2015. This means PNG Biomass will be supplying power to PPL and then PPL retails it to users on the Ramu grid.
PNG Biomass is one of only two Independent Power Producers selected through an open international transparent and competitive tender process. We are part of PNG Power’s ‘Least Cost Development Plan’ for the Ramu Grid. We are endorsed by the NEC (National Executive Council) and price-approved by ICCC (Independent Consumer and Competition Commission). The project is ready for a final investment decision.
Q: How will energy from woodchips be converted to electricity?
MITIR: The project involves the development of 16,000 hectares of tree plantations.
The plantation establishment will require the planting of more than 20 million trees and will be managed in an internationally sustainable manner.
The plantations will provide a dedicated fibre source for the power plant, which will require the annual supply and harvesting of 160,000 – 180,000 bone dry metric tonnes of wood to support the 30MW power project. The trees will be harvested every five to seven years.
The selected tree species is Eucalyptus Pellita, which is an indigenous PNG tree. It will be the principal feed stock for the project.
The trees will be harvested in the plantation and then transported in large trucks to storage facilities at the power plant where they are dried and turned into wood chips for fuel.
The chips will then be burned in the power plant to generate high-pressure steam that drives a turbine.
When the wood chips are burnt they release carbon dioxide (CO2) into the atmosphere. This CO2 is in turn consumed again by the trees in the surrounding plantations.
This is the photosynthesis process, the by-product of which is oxygen.
The electricity generated from the turbines will then be transferred directly into the nearby Erap substation near Lae to provide power into the Ramu Grid.
Q: How will the project benefit the local people and PNG?
MITIR: PNG Biomass will provide landowners with three direct income streams and additional opportunities to generate further income. Income streams include:
(1) Annual land payments for leasing land: Landowners will receive a payment rate per hectare each year for leased land.
This is land rental. The rental payments are adjusted annually against the Consumer Price Index (CPI) so that landowners earn a sustainable income over the 25-year life span of the project;
(2) Crop share payments for harvested trees: Crop share payments are harvest-based on green metric tonnes (GMT). Green metric tonnes are the net weight of cut-down trees without bark.
Trees will be weighed on a truck over a weigh bridge. Any bark sold will also be weighed. Landowners get a payment rate for every green metric tonne of trees (and bark) at the end of rotation. This will also be adjusted annually against CPI; and,
(3) A one-off carbon credit payment for afforestation and reforestation.
At this stage we have not set the payment rates as we are still negotiating the land lease contracts with the landowners.
The project is forecast to generate 400 jobs during construction. Ongoing operation of the power plant and tendering of plantations will create 500 direct jobs and 2000 indirect jobs over the 25 years project life. PNG nationals will constitute more than 90 per cent of the total workforce.
A local productive economy will originate from the PNG Biomass project. We build and maintain roads, offer communities agricultural cash crop opportunities, actively help landowners register their land under Incorporated Land Groups (ILGs).
In addition, the 30MW biomass power project will contribute to the electrification of PNG, which the government aims to increase to 70 per cent by 2030.
We contribute to our country’s transition to renewable energy with the Government targeting 100 per cent renewable energy by 2030, a commitment it made under the Paris Agreement.
We are going to supply the Ramu grid because it is the largest grid in PNG. It serves almost 5 million people who live within 20 kilometres of the grid. That is more than half of the total PNG population.
There is an existing core customer base of residential, commercial, government and small industry. These core customers will benefit from small (15-30MW) low-carbon incremental additions in generation capacity. This is where PNG Biomass fits in: 30MW is enough to power 200,000 households, or about a million people.
Moreover, biomass power has a number of key benefits over other energy fuels. It is renewable, sustainable, and reliable. It is an adaptable, scalable, clean, local fuel.
It is affordable; as the energy cost of biomass power is cheaper than diesel, heavy fuel oil, and most fossil fuels. Biomass power is therefore price competitive for PNG.
The renewable energy produced by PNG Biomass is priced mostly in kina with a fixed real price over 25 years. Unlike fossil fuels, the biomass power price does not change with the oil price or dollar/kina exchange rate.
Q: Obtaining land for business is an issue in PNG. For such a large-scale operation how is PNG Biomass acquiring land?
MITIR: Access to land is a crucial part of the project. 16,000 hectares will be required to plant trees. Plantations on customary land will be under voluntary customary lease agreements with ILGs while state land will be leased under a State lease or land occupancy agreement.
A further 53 hectares is required for the power plant site and central nursery which will be leased for 99 years. PNG Biomass will only gain access to land through voluntary lease agreements. We are committed to avoid land acquisition through purchase.
We only lease land not in use for farming or where grazing is no longer required. Our negotiations with landowners for long-term land access are under the principle of free, prior and informed consent. Landowners are free to use their right to negotiate, or right to say “no”.
Q: When will the power plant be constructed?
MITIR: The construction of the power plant is due to commence in July this year and completed in 2020. The first power dispatch of 15MW into the Ramu Grid will be in early 2020. The power plant will be located in the Markham Valley near the Erap switch. The construction cost is projected to be K500 million. We are currently investigating partnership opportunities to construct the plant.
There will be two 15MW power plant units comprised of two stoker grate boilers and two steam turbines. These are standard power technology units widely used around the world. Each boiler will consume about 20 tonnes of wet wood per hour or two truckloads to provide 75,000 tonnes of steam per hour at a high pressure of 1300psig and temperature of 500deg Celsius.
Q: How much has Oil Search invested in the project so far?
MITIR: Since 2010, over K100 million has been invested into PNG Biomass across engineering, project development, environment and social impact assessments, feasibility studies, plantation trials, pilots, and establishment, landowner payments, and the involvement of world experts on sustainable biomass developments.
As with all power projects, there will be lower secure returns from the biomass project compared to Oil Search’s core business in Papua New Guinea. However, PNG Biomass is part of Oil Search’s strategic approach to support PNG develop and grow.