3G of Biofuel - Algae Fuel and its implication on Thailand & Asean
On the outskirt of San Francisco Bay, a network of strangely colored shallow man-made pond can be seen from above. It may appear to be a useless piece of land. However, it belongs to a company called Aurora Oil. It was founded in 2007 in a vision of comme
What then makes Thailand different from others? What will make Thailand able to compete with other countries in this energy bid? The answer might be simple - cheap and well-developed renewable energy resources apart from energy conservation.
At the moment, almost all the algae leading algae oil companies are situated in the developed countries, in particular the United States. It is simply because they are an expert in the field with cutting edge research & development. The US government was, for example, engaged in extensive research in algae oil from 1978-1998. The program was called Aquatic Species Program. Twelve years later, the work was reviewed by researchers all over the world. In National University of Singapore, Professor Tong Yen Wah is heading the research in production of algae oil in the tropical region. The know-how is not only limited to the United States. Thailand, however, is a little slow in the movement, but we have started. This year, the Deparment of Alternative Energy funded Burapha University and Kasetsart University to research on algae oil. One conjectures that Thailand could be the next place to start the algae production in massive scale.
What Thailand has to offer to many entrepreneurs is relatively cheap labor force, particularly drawing from its neighbor countries. According to IMF, GDP per capita or the average income of a person in Thailand now stands at $8,643 a year as compared to $47,123 in the United States, $57,238 in Singapore and $14,865 in Malaysia. This is 5 times lesser than that in the United States and almost twice lesser than other possible candidate for investment, Malaysia. This offer a huge advantage in lowering the running cost of a start-up company.
The next aspect that makes Thailand more attractive than others is the cost of land and the water availability. Comparing to the United States, Thailand have much lesser land space, yet the cost of land in the outskirt of the towns still cost less here. For example, an empty land in Pra Bhutta Bat District, Saraburi, cost 22 thousand Baht per rai, whereas a plot of empty land at the outskirt of Minnesota cost around 33 thousand Baht per rai. Furthermore the water source that the algae industry heavily relies on can we easily found in Thailand, especially along Ao Thai area. With the humid condition, there is little to worry about insufficient water to supply the algae.
The fact that Thailand lies in the tropical area also makes it more attractive to algae entrepreneurs. Algae like any other plants need sunlight and optimal temperature. Sunlight is needed for photosynthesis which is important in the growth of algae. In this process, enzymes are used to break down raw materials and form the growing part of algae. In the Ao Thai area, where most energy industries are located, the range of temperature is favorable for growth of most algae strains. After all, Tropical region is where most species flourishes
In every industry, electricity is needed in the processing. Electricity Generation Authority of Thailand has done a very good job in providing cheap and accessible electricity to the whole country. In 2006, International Energy Agency estimate Thailand’s accessibility to electricity to be 99.0%, meaning electrical grid can be find almost anywhere in the country. The cost of setting up a start-up can then be minimized. Next, the price of electricity also comes into play. According to Power Engineering International, Thailand cost of electricity among medium industrial park is the least among the 4 Asean. Consider the large scale business with a huge power usage. This pricing will make a huge difference.
Not only the nature of the country is attractive to the investors, the government has also been providing aids and incentives for the start-up in renewable energies. According to BOI guide 2010, the alternative energy start-up will get import duty exemption on machinery, eight-year corporate income tax exemption, double deduction of transportation, electricity and water supply costs for ten year and 25% deduction of cost of installation or construction of facilities. With these incentives, the capital cost and running cost of the algae start-up could be minimized.
Moreover, last year the Energy Policy and Planning Office announced its new directions. It stresses the importance of diversification of power sources away from gas. At the same time the Power Development Plan indicates that gas fired-power plant should use renewable energy instead. The goal is to increase the New Renewables Energy from 0.5% to 8%, with at least 10% from biofuel. When the hydro projects as well as the nuclear power plant confront an immense of resistance from the local community, biofuel is an excellent alternative.
In addition to the policy, the competition is almost non-existent. As of 2010, EGAT showed that 7 major Independent Power Producers or (IPPs), including EGCO and GLOW, are still using gas and coal to produce electricity. Their renewable projects are focusing on overseas investment in the area of hydro power. The biofuel now capture less than 2 percent of the whole power market share with algae industry has yet to break into Thai market. This could be a next step that we can move into with increasing attention on algae seen from the fund put into the research. With government support and all the favorable resources, algae oil start-up would be a good investment.
With all these incentives, what can the algae industry do in Thailand?
Firstly, Thai government may embrace a carbon credit or tax credit. The normal algae pond could be set up near the heavy industrial parks, so that the CO2 in the air is higher than normal, the condition that is favorable for algae growth. Alternatively, the cultivating reservoir may be established elsewhere for CO2 or tax credit. This algae pond could be set up in the area where agriculture is not favorable like swampy area, so that it does not hinder the food production in the country. Amata industrial park where the steel and automobile industry is located, for example, may commence this environment friendly fuel project if sufficient incentives are given.
Secondly, algae can be employed to treat wastewater whether it is industrial waste water or sewage waste water. Algae have an ability to reabsorb almost 90% of heavy metal and nutrient in the wastewater. This would not only help to clean up the water and take back the useful nutrient, but also produce usable oil at the same time. A suggestion of this type of start-up is at Map Ta Put area where chemical industries are located. Alternative site may be the expansion of the preserved Krabi river – 213 square kilometers of the Ramsar wetland. Or with new innovations, perhaps Bueng Boraphet, the largest fresh water swamp and lake in central Thailand covering 224 square kilometers east of Nakhon Sawan may be another choice.
Next, the micro scale energy production could be considered. The fact that algae have an ability to grow in many harsh conditions makes it easy for different places around Thailand to employ this technology. The availability of electricity and water supply is favorable to start algae oil production. A research could be done to find the right strain to be grown on a given condition. A machine could be built to produce energy with more local knowledge and less technical knowhow. This may be the essence of local sustainable development.
Lastly, algae could be utilized in many other industries to provide a sustainable development. The leading algae oil company like Solazyme is engaged in researches of using algae in cosmetic, chemicals, nutraceutical and nutritional industries. The application is endless as long as we have the right technology. It is worth that on September 14, 2010, the Faculty of Engineering of Chulalongkorn University signed MoU on the research cooperation on producing energy from microscopic algae with PTT Plc along with other 5 organizations. If another departments or universities are to follow the application or commercial researches, this would propel the future of Thailand’s clean energy and environment conservation.
As we move from the fossil intensive world to a sustainable and renewable world, we should consider algae to be one of the top choices. Thailand, with its cheap and abanduant resources, could be the top in this energy bid. Tax and investment incentives have already been put into place though more can be done. With technological transfer from overseas and local knowledge, Thailand could join the bandwagon of algae oil.
