Interest in peat as a fuel is growing in Asian markets
By Tim Hennagir, Contributing Editor
There is significant potential for the use of peat to supply Indonesia`s energy needs. The country has the world`s fourth largest such reserves; the total area of peatland extends to 26 million hectares. Of this area, almost 1.3 million hectares are suitable in terms of economic cultivation and use as an energy fuel. Experts calculate that at an average depth of 6 meters, an area of this size can produce about 15,000 MWh per hectare. Additionally, tropical peat has a better calorific value when compared with currently developed northern hemisphere boglands. In order to develop and further its peat production interests in Indonesia, Vapo Oy, Finland`s largest supplier of domestic biofuels, recently created a new horticultural business subsidiary entitled P.T. Garudatama Sumber Makmur. As parent, Jyvaskyla-based Vapo has a 70 percent holding stake in the Indonesian company and has created similar ventures in Estonia and Russian Karelia.
“Our overall business activities in Indonesia go back about 10 years,” said Esko Muhonen, Vapo Oy president and CEO. In 1998, Vapo started to provide consulting services and research assistance when the local pulp company in northern Sumatra began producing peat for energy purposes. At the time, the company sold harvesting equipment and participated in a transfer of peat production technology. “The latest information we have from recent Indonesian scientific and economic trade commissions visiting Finland is that the government appears willing to discuss continued possibilities for increasing the use of peat in energy production,” Muhonen said.
Vapo`s first Indonesian peat customer will be pulp producer Indi Indorayon Utama Co. Industrials such as Indorayon seek to use local fuels whenever possible. In the past, the company has used wood waste, rice husks and straw, in addition to coal; but often, these fuels are not available in sufficient quantities. Since it is difficult to import coal from the coast to the interior, Indonesian companies once again are considering larger-scale peat harvesting for power generation. Vapo Oy`s subsidiary will supply a total of 600,000 MWh of peat per year to the Indorayon mill in Porsea, in the northern part of Sumatra near Lake Toba. The boiler unit in the pulp mill`s power plant was supplied by Outokumpu Co. of Finland and can be fired with biofuels without modification.
The bogland to be cultivated is 65 km from the mill; its peat has a calorific value of 22 MJ/kg, which is higher than most Finnish biofuels. Site-specific fuel production and transportation challenges include a high wood content of 10 to 12 percent, as well as poor roadway conditions. Environmental protection is being implemented in accordance with Finnish guidelines; for example, treatment systems for dewatering have been compared with Finnish production sites. Harvesting machinery manufactured by Vapo has been imported, along with 20 agricultural tractors supplied by a subsidiary of Helsinki-based Valmet Corp. “From start-up to production, eight years is typical for a peat project. You have to be patient,” said Timo Nyronen, Vapo`s research & development director. “Keep in mind that with this type of fuel, not many countries outside of Ireland, Finland and Sweden are familiar with peat.” For example, Java`s farming-based population often burns off the peatlands` surface as a clearing measure; the resulting heavy smoke has occasionally closed nearby Singapore airport.
While plentiful resources make biomass and peat in particular a viable choice for power projects in the Asian region, this potential does not alleviate basic power project development obstacles, Muhonen said. The main problem in China, as it is in Malaysia and Indonesia, is how to finance these projects,” he said. Vapo Oy played a key role in assisting the first commercial peat project in Southeast Asia, the Pontianak, build-operate-own power plant, which was initially developed as a 100 MW facility.