Business avenues are driven by the 'Power Availability that is based on the Biomass Availability'. It is necessary to remember that the model developed by EPPI involves lands for forestation, but the lands in large (or small) acreages need not be owned by people or organizations. Biomass forestation can be done even in small patches by private individuals based on the Buy-Back arrangements (with the power producers) in their own lands. Majority of EPPI's power generation is planned on this outsourcing of biomass generation.
Enormity of the positive fall out of EPPI model is being realized gradually by one and all. EPPI model is no more a mere enabler of Power Generation capabilities in India. "Power of the Power" from High Density Man-Made Regenerative Forests manifests itself in a number of ways.
EPPI's Business Development can be categorized into two major activity zones:
For Own Power Stations
For Third Party Power Stations
1. For Own Power Stations:Contract Farming
Objective of Contract Farming
- To increase the capability of producing power for each of EPPI's power stations using Localized Resources.
The mantra of the Contract Farming team is:
More area under plantation = More trees = More Biomass = More Raw material = More Electrical Power.
While conducting experiments at EPPI's captive plantations, company realized that purchasing and developing large tracts of land for captive plantations is indeed a humongous task. This business model can exponentially scale up only when the society takes it forward. Therefore, EPPI during the year 2009-10 did a small pilot project by selling tree saplings to farmers on buy back agreement. The pilot project was successful since growing trees was fairly simple for the farmers. The company and the farming community together realized that they could use lands which were wasted and uncultivated for the purpose of growing trees.
The company very consciously discouraged growing of trees in wet lands to ensure that there was no threat to the cultivation of food crops. Subsequently, EPPI encouraged such farmers who were planting trees in waste lands to grow short term cash crops in between the trees. Farmers who were growing banana, sugar cane, groundnuts and others started planting these trees around the periphery of their farms.
EPPI Contract Farming program comprises of two approaches. They are;
- Farm Extension
- Captive Plantations
The major activities carried out in this program are motivating the farmers on tree planting and facilitating them to raise the biomass plantations. In this program, dry land farmers and farmers with irrigated lands which are unused are encouraged to cultivate trees for biomass.
Some of the multi fold features of the contract farming program are:
- EPPI provides high quality seedlings at a nominal cost to the farmers.
- EPPI and the farmer enter into an agreement where EPPI agrees to buy the biomass at the prevailing market price at the point of sale.
- EPPI provides assistance to the eligible farmers in obtaining bank finance, as per the rules and regulations of financial institutions.
- EPPI constantly monitors, on a monthly basis the growth rate, availability of resources, presence of pests or other factors that affect the biomass output.
- Based on these observations, EPPI provides technical assistance for planting and advisory services after planting of seedlings on a monthly basis to the farmers until the time of harvest.
- Farmers are encouraged to grow short rotation crops as inter-crops.
- EPPI has organized marketing tie-ups for the produced from the farmers
- EPPI arranges harvesting and transport of biomass from the farmers' fields to the gates of the power plant at a cost.
EPPI has a two model approach to Captive Plantation:
- Revenue Sharing Model
- Flat Lease Model
Revenue Sharing Model
- In the revenue sharing model, EPPI enters into an agreement with large land holding individuals or organizations.
- Land development, plantation and maintenance of trees will be in the scope of EPPI. The land owner need not bear any expenses.
- At the end of the first harvest, the net revenue generated due to the harvest in the land will be shared between EPPI and the land owners. The percentage of sharing will depend on the quantity of biomass / firewood harvested.
- The period of agreement for this model is a minimum of 15 years.
Flat Lease Model
- In the lease rent model, EPPI takes land from large land holding individuals or organizations in the form of a lease for a minimum period of 15 years.
- Planting and maintenance of tress will be in the scope of EPPI.
- EPPI will pay a lease rental amount per acre per annum to the land owner. The value of the lease rental amount will be decided after a detailed survey of the land and the available resources on the lands.
- The entire produce raised from the lands shall be taken by EPPI.
- Sustainability in Rural Income.
- Reduction in Carbon emissions by Carbon Sequestration.
- Generation of rural employment opportunities and reduction in migration of youth to cities.
- Afforestation of vast empty and fallow lands across the country.
- Improves the local Trade and Commerce.
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EPPI in its endeavor to achieve its mission of establishing a chain of BEEPS has started working in various new locations nationally and internationally.
Consumers of Power are the drivers of the 'Production and Distribution of the Power'. Consumers of Power have a tremendous choice of deciding upon the scale of power involved and the methods of distribution once they adopt EPPI's model of feedstock security.
Government buying the power from Biomass Power Stations will continue for a long time to come. Purchase price fixed by the governments are under constant revision benefiting the power producers as well as the governments.
State governments are now allowing the sale of power to third parties using the government's transmission infrastructure. Evacuation costs are coming down constantly and will benefit power consumers far from the sources of power production
Captive Power Stations with the forests grown nearby (limited only by transportation costs) is a sure to catch up more and more both as an economic necessity and as part of the C S R programmes.
EPPI sees an asymptotic growth of forests and establishment of local power stations once the Distributed Power Production and Distribution is encouraged and authorized by various state governments in India.
Central Power Grid and the concerned authorities in India will do well to encourage the Distributed Power Production and Distribution in the national interest and in the interest of optimal distribution of power.
EPPI is approached already by a few Corporate bodies as well as local industries for sale of power to them 'as and when' EPPI's power stations stream out power. Economic tie-ups are likely to take place soon.
Most singular benefit of adopting EPPI's model is the possibility of establishing new industries across India in rural areas. Availability of assured and quality power will encourage many small and medium industries in rural areas. Industrial organizations, trade bodies, government and the environmental authorities need to come together and form imaginative policies to locate and operate such industries.
If this happens, India will have the benefit of creating centers of economic growth all across the country.
EPPI is approached by a few non-polluting industries already. They are prepared to set up industries locally if EPPI assures them with quality and predictable power. EPPI will consider this route of expansion once their generating capacity is augmented further.
EPPI is excited at the prospect of growth of forests producing Megawatts of energy and enabling setting up a number of industries all over the country.
2. For Third Party Power Stations
EPPI, by being one of the first organizations in the country to create Man made High Density Regenerative Forests has created a niche for itself in the business of creating raw material security for Biomass Based Power Stations. What makes EPPI different from conventional Raw Material suppliers is that EPPI helps Existing power stations as well as new power stations to be set up, to produce their own raw material, thus helping Many Biomass Based Power Stations save huge amounts and increase their Profit Margins tremendously. This helps Power Stations and other fire wood consumers to achieve two things:
- Total control over the price of raw material
- Continuous and assured supply of raw material in a predictable manner
To make biomass security feasible for power stations, the company first established a 300 acre manmade high density regenerative forest with fast growing trees with intensive applied R&D right from the year 2002. With the help from Universities and other Research Stations, EPPI identified eight different varieties of trees that grow fast and tall. They grow to a height of about 25 feet in three years. All of the eight species can grow well under moderate irrigated conditions.
Services Offered to Third Party Power Stations and Other Fire-wood consumers:
Eight Years of Intensive Applied R&D has now put EPPI in a niche segment. EPPI has also seen that the market for raising Energy Plantations both in India and around the World is tremendously high. The requirement for setting up Energy Plantations prior to setting up the actual power station is the need of the hour. Hence, EPPI offers its services to Existing Power Stations, New Power Stations as well as to individuals and organizations who wish to enter into the biomass raw material supply business. The services offered are:
Operation and Management Services:
An O&M contract will be signed between the Client and EPPI for a pre decided period of time. EPPI will deploy its team at the project site to operate and manage the lands for the contract period. The client will bring in the required funds for capital expenses and operating expenses for the whole period. EPPI will assure a minimum output of biomass per acre (based on a detailed site survey) on an average, per harvest.
A consultation deal will be signed between the client and EPPI. EPPI will deploy one or two personnel at the site to hand hold the client's team in implementing the project. In the first phase EPPI's team will advise the client from the stage of Pre-project planning. We will advise the client on the type of species to be grown, plan the infrastructure for the plantation and advise them on all fronts of Energy plantation project execution. In the second phase, EPPI will hand hold the client's team in the actual implementation of the project. In the third phase, EPPI will guide the client's team in setting up post planting activities like plantation maintenance. During this phase EPPI will impart training on Plantation Management systems to the client.
Supply of Quality Planting Material:
EPPI initially developed a nursery for internal consumption of tree saplings. This Nursery has evolved into a unique applied R&D centre. We have developed a capability of producing lacs of saplings every year. We supply saplings to all sectors throughout the year.