May 28, 2020  
 
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Business Opportunities - Biomass Energy

Written by Gautam Patil for Gaebler Ventures

Biomass has the highest potential for small scale business development and mass employment. Characterized by low cost technologies and freely available raw material it is still one of the leading sources of primary energy for most countries. With better technology transfer and adaptation to local needs biomass is not only environmentally benign but also an economically sound choice.

From utility companies to small farmers, biomass has something for everybody.
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For entrepreneurs, biomass offers entrepreneurial opportunity…and lots of it.

Depending on the capital outlay at the disposal of the individual or the organization it is possible to enter the supply chain of the biomass energy at one point or another.

Given the variety of processes and raw materials, biomass energy generation provides scope for involvement for larger number of individuals and organizations.

Research has helped develop crops which can be grown in arid areas and can be harvested for over a decade without ever replanting. Many small farmers have already started planting such crops for wood fuel so as to earn extra income.

Making Money from Biomass Energy

Commercialization of biomass technologies is helping create markets for such commodities and the increasing cost of alternate energy sources has proved beneficial for the suppliers of these commodities.

Development of such wood fuel plantations at a commercial scale and a tie up with established local users could provide lucrative returns especially because of the lower opportunity cost of using arid lands.

An interesting characteristic of biomass is local production and local consumption. This reduces fuel transportation costs and cuts power transmission losses and also makes biomass more amenable to process heat related applications. This use is specifically beneficial to industries which produce agri-waste like rice husk, coconut and cashew shells which can be processed appropriately and fed as biomass fuel to captive power plants.

Such plants provide massive savings and despite high capital costs they usually have attractive pay back periods of 2-3 years. There are interesting business opportunities for enterprising individuals who can identify such biomass sources – which are usually discarded as waste – and help industries procure appropriate technologies to use them. Such plants do not need high end manufacturing and can be built with many industrial off-the-shelf components.

In the context of solid waste management in urban cities, biomass presents opportunities for mass employment.

Local entrepreneurs in small cities have organized and trained an army of rag pickers to collect and segregate waste which is then processed to produce briquettes of biomass fuel and recyclable plastic waste.

This arrangement generates employment, requires very low capital investment, keeps cities clean, reduces strain on natural resources for fuel and stimulates the local economy in general. This arrangement works well even for urban cities if areas are appropriately segregated and the biomass fuel can find institutional buyers.

Steady supply of biomass is cited as one of the biggest hindrances for biomass energy development. Grass root innovations like organization of tribal communities to tap forest waste – one of the largest sources of biomass – could help set up reliable supply chains. Farmer co-operatives equipped with adequate know-how of biomass could help divert agricultural waste unfit for use as cattle fodder. Such initiatives can reap rich returns as there is a premium on a steady supply of biomass.

The recently launched smokeless stove, loosely based on gasification, is an excellent example of a business based on low cost technology and involving low capital outlays as well. Apart from the health benefits it also yields higher thermal efficiencies resulting in huge savings for institutional users. It has also encouraged setting up of local biomass fuel supply chains and stimulated many allied industries.

Gautam Patil is a recent MBA graduate from the Indian Institute of Management, Bangalore. In addition to serving as a contributing writer for Gaebler.com, he will join the consulting firm Oliver Wyman at their London office.

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