Finnfund

The Thai Biogas Energy Company (TBEC) began building its first biogas recovery plants around the middle of the last decade.

The first plants in central Thailand captured biogas that was given off by the waste water of local starch mills. The gas was then used to power the same mills.

Of TBEC’s four production plants, three operate alongside cassava mills. The fourth utilises waste water from palm oil and natural rubber mills.

Power that protects

Exploitation of biogas is good for the environment and also profitable for all parties. The methane gas given off by the waste water used to escape into the atmosphere. Now TBEC recovers the biogas and supplies it to customer companies.

Starch mills require a great amount of energy to dry cassava pulp. Their boilers have now been converted to be able to burn biogas instead of heavy fuel oil. The gas can be used not only for heating but also to generate electricity. TBEC sells power to customer companies and the Thai electrical grid.

“Instead of burning heavy fuel oil, which causes pollution, the plants now use a domestic and renewable energy source,” says TBEC’s managing director, Gustaf Godenhielm. “Biogas recovery also reduces the environmental risks from effluent because the process is controlled and monitored.”

TBEC has invested in waste water basins, gas recovery systems and gas lines for the production plants. Customers´ burners have also been modernised so that they can use either biogas or oil. TBEC’s investments have also included generators that produce electricity for use by the production plants.

Acclaim for TBEC principles

The biogas plants operate on the BOOT (Build, Own, Operate and Transfer) principle. TBEC finances and constructs a biogas plant for the customer and handles operations for an agreed period. It recovers its investment from the sales of biogas, electricity and CERS (Certified Emission Reduction). When the contract expires, ownership of the plant passes to the customer.

TBEC projects have aroused much favourable attention in Thailand. So far, the country’s starch producers have made little use of biogas. Biogas plants operating on the BOOT principle are even rarer.

Another attractive feature is that TBEC is a participant in the clean development mechanism. The CDM lets industrial countries and investors obtain credits by investing in greenhouse gas emission projects in developing countries.

“The emission reductions sold by TBEC total about 140,000 tonnes of CO₂ annually. This is the amount of carbon dioxide emitted by 40,000 new cars. Thanks to the new projects, emission reductions will more-than-double in three years,” says TBEC’s Gustaf Godenhielm.

In December 2009 Thailand’s Greenhouse Gas Management Organisation granted TBEC its “Crown Standard”. The award not only reflects the quality of TBEC’s operations and greenhouse gas reductions but also the favourable effects of its projects on the environment and local communities.

“TBEC is the only biogas company that has been recognised in this way,” Godenhielm points out.

Financial participation by Finnfund

TBEC’s majority shareholder, with a 70% holding, is Private Energy Market Fund (PEMF), a Finnish private equity fund that invests in energy sector projects. The other shareholders are Al Tayyar Energy Ltd of the United Arab Emirates and the Clean Energy Development Company of Thailand (CleanThai).

Finnfund is a shareholder in PEMF and has also financed TBEC directly with a loan.

“Many others in Thailand tried and failed to do what TBEC has now proved to be possible and profitable. TBEC was a risky investment for Finnfund and PEMF but at the same time it was a great opportunity. Putting the lessons learnt into practice elsewhere will generate major development benefits,” says Finnfund investment manager Tuomas Suurpää.

Operations expand to Laos

Future prospects look good, Godenhielm says. The decision has been taken to invest in a new biogas plant in Thailand and, in the years ahead, operations will expand beyond starch mills into other sectors. “Palm oil production, above all, has a lot of potential that is not being utilised.”

TBEC is also planning to expand operations to Thailand’s neighbours. The most interesting target at present is Laos.

“The decision has been taken to invest in a biogas plant in Laos. Project preparations and permit applications are ongoing.”

Laos has recently begun to produce starch so there is plenty of potential in the country. Biogas utilisation, on the other hand, is a completely new matter.

“The transfer of clean technology to a poor country like Lagos is an important matter. The TBEC biogas project is the first of its type in Laos,” Godenhielm notes.

TBEC’s vision is to be a significant regional player in Southeast Asia. It is also open to possibilities in the direction of Vietnam and Cambodia.

For more information please contact Mr Tuomas Suurpää, tel. +358 9 3484 3307, firstname.lastname@finnfund.fi