An economic assessment of lignocellulosic biomass power plants

Abstract

In 2016, electricity generation from solid biomass increased by 0.7 Mtoe in EU, compared with 2015, to 10.3 Mtoe (119.78 TWh), a 7.6% growth rate. Solid biomass may be used for: i) heating & cooling and hot water for domestic uses, ii) heating for industrial processes and iii) power generation. Unlike other renewable energy sources (RES), such as wind and solar photovoltaic (intermittent energy sources), solid biomass power plants provide dispatchable energy when needed. Therefore, the security of supply could also be increased. In addition, the use of solid biomass has significant advantages, such as the creation of jobs related to the power plant and collection of raw material used to produce energy. In this paper, an economic assessment of forest biomass power plants is carried out in the Iberian electricity system. According to current Spanish electrical regulation, in which three economic parameters are considered as income (day-ahead market, operation and investment), an economic model has been developed for the regulatory useful life (25 years). Investment costs for biomass power plants of 15, 30 and 50 MWe have been estimated. Operation & Maintenance and fuel costs, considering different prices of wet biomass (50-60 € t-1) with a moisture content of 40% and a lower calorific value of 2.8 MWh t-1 on average, have also been considered in the economic model. Net Present Value (NPV), Internal Rate of Return (IRR) and payback period have been obtained in all scenarios. The results obtained show that a biomass power plant with a power of 50 MWe may produce 337.5 GWh year-1of net electrical energy using 446.43 kt year-1 of wet biomass. Considering a price of electrical energy of 145 € MWh-1 and a woody biomass cost of 0.0178 € kWh-1, the NPV and IRR reach 165.6 M€ and 17.63%, respectively.