Costs and Potential for Cost Reductions

The additional cost of biomass co-firing with coal is between USD 50 and USD 250 per kW of biomass capacity, depending largely on the cost of biomass feedstock. It is the most attractive near-term option for the large-scale use of biomass for power only electricity generation. Very low generation costs (slightly above USD 0.02 per kWh) can be achieved with co-firing in situations where little additional investment is needed and biomass residues are available for free.

The cost of producing electricity from solid biomass depends on the technology, fuel cost and fuel quality. Solid biomass plants tend to be small, typically 20 MW or less, although there are some CHP plants in Finland and Sweden that are much

Table 5.3 Efficiencies and costs of European biomass plants (in operation and proposed) (Source: Novak-Zdravkovic and de Ruyck [5]; IEA data)

Efficiency (% LHV)

Investment (USD/kW)

Size (MWe)

Typical electricity cost (USD/kWh)

Co-fiiing

35

1,100-1,300

10-50

0.054

IGCC

30-40

3,000-5,500

10-30

0.112

Gasification

20-31

2,500-3,000

5-25

0.096

+ turbine

Large steam

30

3,000-5,000

5-25

0.110

cycle

Gasification

24-31

3,000-4,000

0.25-2

0.107

+ engine

(CHP)

Small steam

10

3,000-5,000

0.5-1

0.130

cycle (CHP)

Stirling engine

11-19

5,000-7,000

<0.1

0.132

(CHP)

Note: Based on a 10% discount rate

biomass price of USD3/GJ. Heat by-product valued at USD5/GJ. Based on a

larger. In Canada, the capital cost is about USD 2,000-USD 3,000 per kW installed for biomass-based capacity. Plants such as these are connected to district heating systems and are economic in cold climates.

Generation costs are expected to range from USD 0.10 to USD 0.15 per kWh in innovative gasification plants (Table 5.3). Biomass integrated gasifier/gas turbine plants have long-term potential in terms of both efficiency and cost reduction. Larger plants require that biomass is transported greater distances to the generating station, and long transport routes make biomass less attractive in both economic and environmental terms. For even lower capacities, gasification will probably be combined with gas engines or turbines in combined heat and power units, replacing current steam processes.

Table 5.3 provides an overview of European biomass plant efficiencies and cost characteristics. Co-combustion in coal-fired power plants is the least-cost option in the near term - USD 0.054 per kWh. All other systems need to see further cost reductions to be competitive. Costs are typically higher than USD 0.10 per kWh, or more than twice the cost for fossil-fuel power plants. The use of waster biomass will lower costs, but the potential is limited.

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