14/08/2012 (Waste Management World) - Renewable energy developer, Camco International (AIM: CAO) is to build its first waste to biogas facility in Malaysia that will waste from the palm oil industry.

The company said that the 2 MW biogas facility will be located at a palm oil mill in Palong, Pahang state, and will use anaerobic digestion to recover biogas containing methane from palm oil mill effluent (POME).

Camco claimed that the project will be amongst the largest of its type to date to generate electricity for supply to the Malaysian national grid.

Malaysia is the world's largest exporter of palm oil products and has approximately 4 million hectares of land under oil palm plantation.

Waste, including POME, from the region's 1000 plus Palm oil plantations is a significant issue for plantation owners, local communities and the region in general and contributes significantly to total emissions.

As a result, the Malaysian government recently introduced a renewable energy feed-in tariff to incentivise the conversion of waste into energy, and according to Camco it is expected that Palm oil producers will come under increasing pressure to reduce waste from their production processes.

The project is being developed under a 13 year build own operate transfer (BOOT) agreement with the mill owner commencing upon the plant's completion.

The developer said that under this agreement, the mill owner will provide sufficient POME feedstock free of charge covering the full contract period.

Once operational, the plant will generate revenue from the sale of electricity to the grid and from the sale of carbon credits generated under the UN clean development mechanism.

Camco added that the mill owner will receive a portion of the power and carbon sales under a revenue share agreement.

The electricity will be sold to the grid through a renewable energy power purchase agreement to be entered into with one of the Malaysia utilities, under the renewable energy feed-in tariff which, which the company said sets a guaranteed off-take price for the duration of the project.

The project will be financed directly from existing cash resources within Camco Southeast Asia, which acquired the rights to develop the project through the acquisition of Biopower Climate Care Holding - a fully owned subsidiary of French chemical company Rhodia Energy.

The company said that it anticipates the total cost of the project, including the above acquisition, to be approximately $4 million and completion to be in early 2013.