Renewable Energy in a Nutshell: Biomass Co-firing

The Science

Biomass co-firing consists of burning biomass along with fossil fuels in coal- and gas–fired power plants. Co-firing can play an important role in increasing the share of biomass and renewable sources in the global energy mix and in reducing GHG emissions. Biomass feedstock includes forestry and agriculture residues, animal manure, wastes, such as sawdust or bark from the timber industry, waste wood and dedicated energy crops. Co-firing technologies include:

• Direct co-firing is the simplest, cheapest and most common option. Biomass can either be milled jointly with the coal (i.e. typically less than 5% in terms of energy content) or pre-milled and then fed separately into the same boiler.

• Indirect co-firing is a less common process in which a gasifier converts the solid biomass into a fuel gas that is then burned with coal in the same boiler.

• Parallel co-firing requires a separate biomass boiler that supplies steam to the same steam cycle.

The Economics

At present, co-firing in state-of-the-art combined heat and power (CHP) plants is considered the most cost-effective option of producing electricity from biomass.
 
The investment cost depends on the plant capacity and service (i.e. power generation only or CHP), as well as the type of the biomass fuel to be used, and the quality of the existing boiler (if any). The costs of retrofitting an existing coal-fired power plant to enable biomass co-firing are typically in the range of USD 300-700/kW for co-feed plant, and USD 760-900//kW for separate feed plants. These low investment costs compared to dedicated biomass power plants are the consequence of pre-existing large coal-fired power plants and related infrastructure. Investment costs for indirect co-firing are around USD 3,000-4,000/kW, which is about ten times higher than direct co-firing. However, this method allows for the use of cheaper waste fuels with impurities.
 
The operation and maintenance (O&M) costs are likely to be similar to coal-fired power plants (USD 5-10/MWh) since co-firing increases fuel handling costs but reduces de-sulphurisation and ash disposal costs. Typical O&M costs average around 2.5-3.5% of capital costs for direct co-firing and around 5% for indirect co-firing.
 
The biomass fuel cost consists of two components: the cost of the feedstock and the cost of transportation, preparation and handling. A recent IRENA study provides feedstock cost data for a range of locally available biomass resources in the United States, Europe, Brazil and India (IRENA, 2012). These costs range from USD 0-11/MWh for bagasse in Brazil and India to USD 6-22/MWh for agricultural residues in the United States and Europe.
 
Taking into account the above-mentioned cost components and their variabilities, the range for the levelised cost of electricity (LCOE) from biomass co-firing is wide. The IPCC suggests a range from USD 22-67/MWhe at a discount rate of 7%, where the actual price will depend strongly on the fuel cost (assumed range between USD 0-18/MWh), the investment costs (USD 430-900/kW) and the plant capacity factor (70-80%), among other factors (IPCC, 2012). The IEA suggests a range of LCOE between USD 80-120/MWh based on feedstock costs between USD 29-43/MWh (IEA 2012), while IRENA suggests a range between USD 44-130/MWh (IRENA 2012).
 

Policy Making Implications

Considering current prices for coal and biomass, co-firing is generally more expensive than solely coal-based power generation or CHP. The competitiveness of biomass co-firing can be improved through measures to make coal-based energy more expensive, particularly carbon pricing through emission cap-and-trade schemes or carbon taxation. Based on current carbon prices, the incremental cost of co-firing cannot be fully recovered by selling emission permits. Other measures to increase the profitability of biomass co-firing include the removal of specific fossil-fuel subsidies, incentives for the conversion of power plants into CHP plants, government support to biomass supply infrastructure and dedicated R&D funding for co-firing.
 
Governments can also establish mandatory use of biomass co-firing by quota obligation schemes. For example, the European Union has established a mandatory renewable energy share for Member States to be achieved by 2020. In the United States, Renewable Energy Portfolio Standards exist in several states and co-firing is increasingly attractive to utilities. In Australia, the lack of specific incentives is seen as the main reason behind what is perceived as a delay in implementing co-firing technology in comparison with Europe. In China, in spite of massive coal power deployment and large biomass resources, co-firing is not widespread because of the limited experience with biomass power generation and the exclusion of co-firing from the incentives (e.g. generation allowances) granted to other biomass-based power options.
 

Canadian Insight