Yu Kapital to invest €10 million in biomass power plants in 2011

The company Yu Kapital plans to start the production of electric energy at two biomass power plants in 2011. In an interview for eKapija, Yu Kapital CEO Marko Krajncic speaks about this and other plans of the company.

eKapija: What are your plans for the operations in Serbia, in the domain of the construction of biomass power plants?

We are optimistic about the commencement of such production of electric energy in Serbia. However, there are certain administrative obstacles. For example, one of the problems is the Law on Land Conversion because, according to that law, it can take us up to six months, in the best-case scenario, to finish the process of land conversion.

We plan to start the production of two power plants in 2011, while the construction of anothre three of four such facilities should commence in 2012. The power of all facilities we invest in will be either 500 kW or 1 MW. We also plan to build biogas plants for other investors.

eKapija: Is there an optimum power of the plant?

- It all depends on the input availability, market demands, terms of the purchase of energy, power supply, etc. According to our calculations, we should not invest in a plant whose power is smaller than 250 kW.

eKapija: In which locations do you plan to start the production?

- I would not like to name partners, but what I can say is that we plan to open three plants in Vojvodina – near Sombor, Padej, and maybe one in the vicinity of Belgrade, while one or two power plants will be located near Pirot. The reason why we are starting the construction of biogas plants for the production of electric energy in Vojvodina is an abundance of necessary raw materials in the province, while Pirot's advantage lies in an abundance of uncultivated land - which is why it is easier to find a partner for the delivery of raw materials - and investors in that town are interested in joining the implementation of our projects.

For an optimum functioning, we need a land of minimum 2 hectares to have a biogas plant built on it. The potential of this energy is huge – in addition to electric energy, it is also possible to generate heating energy of up to 90 degrees. Therefore, the best locations are those where both heating and electric energy can be utilized - in the vicinity of cities, industrial plants, swimming pools, hospitals, greenhouses...

(plant in Germany)

eKapija: What technologies do you plan to use?

- We will be using the latest technologies. We have already signed agreements with German partners who have so far built over 250 biogas plants and specialized in various types of organic waste (from the food production, slaughterhouses...).

eKapija: Which raw materials will be using?

- We will specialize in organic waste. We will also be using alternative raw materials such as millet, Sudan grass, Sorghum. These plants are perfect to use as input in the production of electric energy because they are resistant and can be grown on a dry land. Because of the volatility of the price of corn, the use of aforementioned plants in the production of energy at biomass power plants abroad is constantly growing.

eKapija: Have you made contacts with the suppliers of raw materials? Do you plan to enter into partnerships?

- We have established a contact with partner landowners. They will be growing industrial plants, millet, Sudan grass, Sorghum and corn on certain part of that land, while power plants will be built on the other part of that land.

eKapija: How big your investments will be?

- Our investments in 2011 will reach EUR 10 million. Both plants will directly employ 5 people each, while much larger number of people will be hired by the suppliers of raw materials.

eKapija: How do you plan to finance your investments?

- Our investments will be based on the model of project finance. We are currently negotiating with several banks in Serbia, but I cannot reveal any details now.

eKapija: In which way do you receive a support from the state?

- We are going to sign an agreement with the Electric Power Company of Serbia on the purchase of the electric energy we produce for the period of 12 years. Prices are fixed and amount to 14.2 eurocents per kWh. These prices will make it possible for our investments to pay off in 8 to 10 years, depending on the size of the plant.

However, I must stress that these subsidized prices are the lowest in the region and among the lowest in Europe. For example, the price of 1 kWh of energy in Germany amounts to 23 eurocents, the price in Italy is 28 eurocents, while the price in Slovenia amounts to about 17 eurocents. It is possible, however, to shorten the investment payoff period by producing raw materials together with partners. If we fail to create our own source of input, the costs of the provision of raw materials will amount to about EUR 400,000 on annual basis, which prolongs the investment payoff period.

eKapija: What are your regional experiences in the domain of construction of biomass power plants?

- It is an underdeveloped domain in Serbia. We still do not have any real biogas plants. There are already two or three biogas plants in operation in Croatia. Slovenia has 10 such plants, Austria has 450 plants of the kind, while Germany, the global leader in that domain, has about 6,000 biogas plants! Therefore, it is clear that this type of electric energy represents the future because of both renewable sources of energy and ecology.

eKapija: Do you plan to trade in the equipment for biogas plants?

- Certainly. We will also be offering "turn-key" biogas plants to all interested investors.

eKapija: Your company is organizing the forum Alternative Sources of Energy-Biogas in early May in Belgrade and Novi Sad. What will be the theme of this forum and can you reveal the names of some participants?

- We are organizing the most expert international forum ever - Biogas, Biomass, Organic Waste.

This forum will last for two days - May 5 in Novi Sad and May 6 in Belgrade - and it will be organized with the aim of presenting the capacities of this type of energy to the domestic public and investors. This event will be very significant since some of the participants will be Joseph Pelmeyer, president of the German Biogas Association and owner of a biogas plant, Bernhard Peks and Martin Schusler, representatives of the Bavarian government, and we hope to see numerous representatives of domestic companies, local self-governments and ministries at the meeting.

The forum we organize is one of our activities aimed at teaching people about biogas.

M.D.