Power plant’s use of sugarcane bagasse raises farmers’ incomes

10:19 | 24/04/2019 Industry

More than 10,000 sugarcane–farm households in the central province of Phu Yen are earning higher profits thanks to the use of bagasse from a sugar factory to produce electricity.

A power plant uses bagasse from a sugar factory to produce electricity in Phu Yen Province - Photo: tuoitre.vn

The factory owned by KCP Vietnam Industries Limited (KCP VIL) has bought sugarcane from farmers in the province at a price 100,000 VND (4.3 USD) per tonne higher than the market rate.

Many sugarcane farmers in the country have turned to grow cassava because of the low price of sugarcane.

Gia Lai and Phu Yen provinces are among the localities with the largest areas of sugarcane in the country, with more than 60,000ha.

In mid-March, the market price of raw sugarcane was 720,000 VND to 760,000 VND (31-33 USD) per tonne. However, sugarcane farmers in Phu Hoa, Son Hoa and Dong Xuan districts in Phu Yen province are selling their product for 820,000-860,000 VND (35.3-37 USD) per tonne.

The company is also offering 3.5 million VND (150 USD) each to farming households that do not currently grow sugarcane if they switch to the crop.

K.V.S.R. Subbaiah, general director of KCP VIL, told Tuoi Tre newspaper that his company produces both sugar and biomass electricity.

Built in 2016 with a total investment of 23 million USD, the 30MW biomass power plant needs about 300,000 tonnes of bagasse a crop (around four months worth). In 2017, it supplied more than 49 million Kwh of electricity and reached 108 million Kwh of electricity last year, generating power for the national power grid.

“With revenue from selling electricity to Electricity of Vietnam (EVN), the company shares its profit with farmers to help them plant sugarcane,” he said.

The renewable energy supply from the KCP VIL biomass power plant contributes to 10 percent of the province’s energy use, according to Thai Minh Chau, director of the provincial power company. “This power source is very important to ensure energy security, and to meet increased power demand as well as insufficient power in the dry season,” he said.

“While many sugar producers are facing difficulties with low prices and farmers in other localities have left sugarcane farming to switch to cassava, farmers in Phu Yen province are growing lots of sugarcane thanks to purchasing contracts with KCP VIL,” he said, adding that the model is expected to help develop the country’s sugarcane industry and compete with rivals such as Thailand

In Thailand, biomass electricity produced from bagasse at sugar mills sells for around 13 US cents per kWh, while the EVN buys it at 1,220 VND (5.8 US cents) per kWh from KCP VIL, he said.

“We have repeatedly petitioned the Government to increase the purchasing price of biomass electricity to encourage businesses to invest in biomass power plants. This would help the domestic sugar industry.”

Vietnam’s energy demand and biomass electricity prices are expected to increase, so the company plans to build one more biomass power plant with a designed capacity of 30MW.

However, the construction of a new biomass power plant will depend on preferential policies.