30/01/2009 (The Nation, Thailand) - The booming alternative energy business has convinced Thachana Palm Oil, a medium-sized palm-oil producer, to invest Bt200 million in biodiesel and power generation.
Of the total budget, Bt150 million will go to doubling the company's crushing capacity to 90 tonnes per day and the remainder to doubling its electricity output to two megawatts per year.

Oil-palm millers have to diversify into alternative energy or electricity generation to defray risks from fluctuating palm oil prices.

Managing director Krit Yangvanitset said recently the new ventures would help keep the company's total revenue unchanged from last year at Bt1.1 billion. The projection of zero growth was based on the fluctuating palm oil price.

However, the oil-palm industry shows a bright future as manufacturers can use all parts of the palm fruit - by-products, fibres, shells, kernels and wastewater from the crushing process - to generate income.

Despite the government's price pledging programme, palm oil and palm fruit have been subsidised through the intervention.

The government's guaranteed price for palm fruit is set at Bt3.6 per kilogram and for crude palm oil at Bt23.5 per kilogram.

Local prices rely mainly on world oil prices.

The government's policy of promoting the switch to biodiesel should be clear to boost palm-oil production, Krit said.

Out of overall palm-oil production of 1.65 million tonnes per year, domestic demand takes 70 per cent and the rest goes to alternative energy.

The company, through the very small power producer scheme, will sell about 3 megawatts to the Provincial Electricity Authority in the near future, Krit said. The power plant will also save the company money by running the crushing plant, which needs 1MW.

The 4.4MW of electricity are generated from two energy sources, steam and biogas. The steam boiler generates 2.4MW, of which 1MW is used in the palm-oil factory. The biogas-fired plant emits 2MW.

Krit urged the government to fix a reference price for palm oil as a standard for growers. A palm-oil board should also be set up to closely monitor the palm oil industry and draw up policies expressly for the industry.

For instance, Thailand should have a law against the growing and selling of low quality oil-palm seedlings.

"We should find a way to strengthen the country's competitiveness," he added.