In a farm shed in the West Australian Wheatbelt, a grain farmer and an engineer have invented a waste-fuelled power plant, which they say could be the solution to power generation and reliability problems in regional Australia.

After 11 years of research, the Rainbow Bee Eater (RBE) group has designed and built a power plant that uses biomass to create clean burning fuel gas or electricity in a single step, and its developers say it does not need government subsidies or grants to be cost effective.

The Wheatbelt pilot plant burns biomass waste and creates energy. ( ABC: Chris Lewis )

Bioenergy is the production of energy using biomass materials, which are the by-products of agricultural, food and forestry industries.

According to the CSIRO, bioenergy currently accounts for just 0.9 per cent of Australia's electricity output — much lower than the Organisation for Economic Cooperation and Development (OECD) country average of 2.4 per cent.

Australia is the only OECD country that has not implemented a large-scale waste-to-energy scheme to manage its waste.

One of the biggest barriers to the sector's growth is the cost of energy production.

Ian Stanley, Mike Walter, Peter Burgess and Dan Wildy work together to oversee a eucalyptus oil distillery and a biomass waste fuelled power plant. ( ABC Rural: Jo Prendergast )

Building waste powers herb production

Last year RBE made its first commercial sale: a $3-million fully automated plant for South Australian herb grower Holla Fresh.

RBE managing director Peter Burgess said the plant, called ECHO2, used building wood waste trucked in from capital cities to create hot water, electricity and carbon dioxide, along with creating biochar, which was then on-sold.

"That wood waste will come into the system, it will create syngas [synthetic gas]. The syngas will go into an engine that drives a generator to make electricity," he said.

"Some of the syngas will go into a boiler to make hot water. The exhaust from that boiler is very clean — it's a rich source of CO2, carbon dioxide.

"That will go into the glasshouse to enrich the CO2 levels in the glasshouse, which is a way that glasshouse operators lift the yield of their plants."

Waste material from a eucalyptus oil distillery has inspired the invention of a power plant which uses biomass to create clean-burning gas and biochar. ( ABC Rural: Jo Prendergast )

Mr Burgess said the plant could be established anywhere in Australia with access to suitable biomass fuel such as woodchips, baled straw, or poultry litter, making it an option for small regional communities struggling with power reliability issues.

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"We started this so that it didn't require government subsidies, so that it would actually stand alone," he said.

"The value of the biochar, the value of the gas and the electricity would pay for all of this and give someone a profit."

Trees to power a small town

Farmer and RBE operations director Ian Stanley is determined to increase the amount of bioenergy in Australia.

His passion for utilising biomass and creating renewable electricity began in a paddock of trees, which he has grown over his lifetime to produce native Kochii eucalyptus oil from oil mallee trees.

Surrounded by piles of trees which had been mulched and pressed for their oil, Mr Stanley began thinking and experimenting with a power plant prototype.

"This bioeconomy is very possible, and it all starts with this humble little tree," he said.

Ian Stanley with his grandchildren Charlotte, Lachie and Tarquin. ( ABC Rural: Jo Prendergast )

Mr Stanley has been lobbying government to support building an ECHO2 power plant in his local farming community of Kalannie.

He said the plant could be fuelled by the pressed eucalyptus tree biomass, and it would solve end-of-the-line power supply issues in the town, which is home to approximately 150 people.

"If we could have government support to build a pilot plant in Kalannie — which it makes sense now because we have the fuel — then there's no reason why that couldn't be expanded, or cookie cut, or put in lots of small regional communities around the Wheatbelt," Mr Stanley said.

Eucalyptus trees pressed for their oil create a biomass, which can fuel a power plant. ( ABC Rural: Jo Prendergast )

Rising demand for Australian oil

Mr Stanley said creating a power plant would complement the Kalannie eucalyptus oil business finally thriving after 30 years of development.

Creating a eucalyptus oil business in the Wheatbelt was the dream of his late father, Don, who saw a need to plant eucalyptus trees to abate a rising water table.

"In his lifetime he saw the damage that the amount of clearing we'd done had done to the landscape and started planting trees back into it," he said.

"On our farm in particular we've planted roughly 500 hectares, or just over 1 million, oil mallee trees. Something like 2,000ha of mallees have been planted throughout the Wheatbelt."

The Kochii tree, or oil mallee, is a mallee species native to the WA Wheatbelt. The oil can be seen as white flecks in the leaves. ( ABC Rural: Jo Prendergast )

Over the past two years the price paid for Australian eucalyptus oil has more than doubled, driven by a demand for the very high cineol content in the Kochii — oil mallee — tree.

This has allowed the previously mothballed Kalannie Distillery to be reinstated and upgraded.

It produces 50 tonnes of oil each year and cannot keep up with demand from the pharmaceutical and cleaning industries.

"It's bioenergy, but it's more than that, it's actually a bioeconomy," Mr Stanley said.

"We're employing people, we're creating energy, we're creating oil, and we're creating a new industry in the town."