proposa l

S t e a m O u t s o u r c i n g

v i a

B i o - M a s s F u e l e d S y s t e m s

What is O u t s o u r c i n g ?

Outsourcing means a client relinquishes the managementand control of non-core activities to a supplier, and buys backthe product of the non-core activity at an agreed price.Outsourcing requires a contractual agreement between theparties, detailing the extent of the outsourcing.

In B r i e f

We take over boiler operation, install a metering system,run the entire plant and sell steam to the client.

Why O u t s o u r c e S t e a m ?

Apart from power generation, steam raising is a non-core activity.

As an output, steam can be measured accurately, both in terms of quality andquantity. A number of component activities are already outsourced, eg. watertreatment, major repairs.

Role of T h e r m a l E n e r g y S u p p l i e r

•Experience in operation and management of a steam raising plant.

•Employs a Certificated Engineer in a full time capacity.

•Maintains a close relationship with the fuel supplier, particularly when using palm fiber briquettes/biomass based fuels.

•Operates the steam raising plant within a comprehensive framework of procedures.

The client user pays the provider for the services by paying for the steamsupplied from the ESCO’s boiler. In fact, with the structure of somearrangements, the steam costs can be lower then what the user was incurringbefore the ESCO arrived.

B e n e f i t s to Clients

•It received an up-front capital payment for its powerhouse assets.

•The overall utility cost has been reduced at this facility.

•No capital from the company was required to produce savings.

•The ESCO will aggressively pursue utility and project savings opportunities throughout the term of this agreement.

•Operations and maintenance risk have been transferred to the ESCO.

•The company is billed for all utility services on a variable basis correlated to product produced.

Proposed C o r p o r a t e S t r u c t u r e

It is envisioned that a Special Purpose company (SPV) is set-up by bothPeninsular Energy S/B and Orix for the purpose of the following:-

•Business Development direct to clients

•Contracts preparation

•Technical design and Commercial solutions

•Specializing in Steam Outsourcing business

• Project management and Contract management for implementations

•Maintenance of Plants

•Financing of Plant set-up and maintenance

•Provision of Bio-Fuels in forms of Bio-Briquettes and Pellets

•Continuous sourcing of Biomass based fuels to reduce cost of generation

Proposed C o r p o r a t e S t r u c t u r e

ORIX

PESB

SPV for STEAM OUTSOURCING

CONTRACTS

Industrial Clients

-Oleo-Chemicals-Ceramics

-Electronics-Rubber Glove

-Hotels-Oil & Gas Utilities

-CUFs

Types of C o n t r a c t s / P r o j e c t s

1. New Installation of Boilers i.e. new plants or expansions

2. Retrofit of Existing Boilers to use bio-mass as fuel

3. Acquisition of Existing Steam generation facility

4. Supply of bio-mass fuel

Feasibility of Proposal: F o r e i g n C a s e S t u d yat Fresenius Kabi India Private Limited, Ranjangaon (M.S.), India

Boiler Fuel Conversion from RFO to Biomass Based Briquettes

Units: 2 Residual Furnace Oil (RFO) fired Boilers. Out of two boilers one was 10 TPH (smoke tube boiler) & another was of 8 TPH (water tube boiler).

Initially 8 TPH boiler was acting as standby to the 10 TPH RFO fired boiler.

Fuel conversion (from RFO to biomass based briquettes) was carried out in the 8 TPH water tube boiler for steam generation.

The boiler produces saturated steam at a pressure of 10 Kg/cm2 with saturation temperature of 183.3 Deg C.

The project clearly demonstrates the feasibility of the conversion to biomass. The project activity does not have any significant negative environmental impact.

C a s e S t u d y | d a t a : F o r e i g n C a s e S t u d y

Feasibility of Proposal

In order for this proposal to be a success in Malaysia, the following are our proposal:-

1. Study of Bio-Mass /Palm Fiber Briquettes supply market1. Calorific value study2. Price per metric ton3. Supply distance4. Supply stability5. Ease of storage and use

2. Analysis of Industries utilizing steam to prioritize on the following1. Steam amount utilized2. Fuel type used3. Cost of current generation4. Type of installation i.e. new/expansion/crossover of fuel/acquisition5. Priority list of type of clients6. Location and ease of transport

Feasibility of Proposal

3. Direct engagement with Existing Client in order to:-- Understand requirements of usage- Supply cost- Preparation of Steam Supply Agreement- Financial Consideration inclusive of:-

- Investment cost- Fuel Cost- Management and maintenance cost- Insurance- Project management/Contract management cost- Revenue Stream analysis- Return on Investment (ROI)- Savings for client- Other benefits to be considered includes:-

- CDM benefits- Advertising and publicity benefits for client and us

Next Stage

Our role as per above is envisioned. The next stage of this proposal requires the following to be in order:

1. MOU between Orix and PESB specifically for the titled purpose2. Division of work3. Identifying suitable clients for engagement4. Market development works5. Technical analysis and cost of generation6. Revenue stream and financial consideration7. Listing of Project management requirements8. Cash Flow preparation for test case9. KPI and targets for 2011

p e n i n s u l a r | e n e r g y

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