20/04/2009 (The Jakarta Post) - The state-owned electricity company PT PLN has welcomed the International Finance Croporation (IFC)-initiated biomass power plant projects using palm oil wastes and rice husks, an official says.

PT Perusahaan Listrik Negara vice president Rudiantara said that PLN was ready to buy the electricity generated from such power plant projects, as it was in line with the company's objective to boost the use of renewable energy.

"We've always been encouraging the use of such renewable energy. We're ready to deal with them on the purchase of their electricity," Rudiantara told The Jakarta Post over the weekend.

The first phase of the IFC program is targeting the waste from palm oil and rice milling to be used as fuel to generate power.

According to the IFC, by implementing these projects these industries are not only able to reduce their production costs by up to 30 percent, but also to help preserve the environment by substituting for the use of oil and diesel.

Rudiantara noted that the business deals would be under the electricity excess supply provisions, by which PLN can buy available excess power generated from these plants, under the independent power producer scheme.

"Our deals will be based on the prices they offer, while the nearness to our electricity grid will also be taken into consideration," he added.

Indonesia last year produced about 19 million tons of crude palm oil and about 60 million tons of rice. Amid the rising demand for electricity but slow growth of supply using mostly fuel oil, diesel fuel and coal, this huge amount of agricultural wastes has great potential for generating electricity and to help to re-green the environment.

Electricity analyst Fabby Tumiwa noted that based on a study conducted in 2006, when palm oil production reached 15 million tons, the biomass produced (of roughly the same amount) could be used to generate a total of 4.2 million megawatt hours of (MW) electricity.

"With such abundant palm oil wastes currently, I think we could produce electricity from such wastes up to about 5 percent of the total PLN's production capacity of 120 terawatt hours (TWH)," he said.

He said that there were about 371 palm oil mills in Indonesia with most of them operating in Sumatra. Also there are thousands of rice mills operating in the country, mostly in remote areas in Java and Sumatra. Palm oil factories often need between 3 to 10 MW electricity on average to support their production activities while rice mills are often smaller in Indonesia, and need smaller power units.