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Closing the Biomass Power Cost-Price Gap. B.R. Bock 3/5/04 Southern Bio-Products Conference Green Power Track Biloxi, MS. Why Biomass Power?. General Renewable (replenishable) Cleaner than from fossil fuels—NO x , SO x , Hg, CO 2 Rural economic development

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closing the biomass power cost price gap

Closing the Biomass Power Cost-Price Gap

B.R. Bock

3/5/04

Southern Bio-Products Conference

Green Power Track

Biloxi, MS

why biomass power
Why Biomass Power?
  • General
    • Renewable (replenishable)
    • Cleaner than from fossil fuels—NOx, SOx, Hg, CO2
    • Rural economic development
    • Solve biomass by-product and waste management problems
    • Other environmental benefits (e.g., energy crops vs. row crops)
  • Utility Perspective
    • Possible renewable portfolio standards (RPS)
      • Limited wind and solar resources in SE US
      • Biomass—primary large-volume option in SE US
    • Other renewable mandates (e.g., Federal Executive Order 13123)
    • Demand for green power (i.e., willingness to pay premium)
options for closing the gap
Options for Closing the Gap
  • Renewable energy incentives
  • Mandated use of renewable power(renewables competing with renewables)
  • Lower feedstock costs (technical, market, policy)
  • Energy conversion improvements
  • Increased revenue from co-products
  • Systems optimization
  • Environmental credits
renewable energy incentives
Renewable Energy Incentives
  • Production tax credits (e.g., Section 45~1.8¢/kWh)
    • Closed loop
    • Open loop
  • Renewable energy production tax credit (REPI)
  • Tradable renewable energy credits
  • Green power premiums*
  • Green power tags*
  • Above generally are mutually exclusive
  • Other (e.g., accelerated depreciation)
mandated use of renewable power renewables competing with renewables
Mandated Use of Renewable Power(renewables competing with renewables)
  • Federal or state renewable portfolio standards (RPS)*
    • Proposed levels generally in the 2 to 10% range
  • Federal Executive Order 13123
    • 2.5% of Federal facility electricity consumption from renewables by 2005
lower feedstock costs
Lower Feedstock Costs
  • Environmental pressures on wastes and by-products
    • Poultry litter
    • Swine manure*
    • Wood waste piles
  • Commodity surpluses (e.g., small diameter wood)
  • Higher energy crop yields (lower unit costs of production)
  • Agricultural policy options for improving energy crop economics*
energy conversion improvements
Energy Conversion Improvements
  • Higher efficiency (e.g., gasification combined cycle)
  • Lower capital and O&M costs (e.g., lower cost gas clean-up)
  • Refining biomass co-firing with coal*
increased revenue from co products and by products
Increased Revenue from Co-products and By-products
  • Combined heat and power
  • Bio-refinery concept (power + fuels and chemicals)
  • Fertilizers and feed supplements from poultry litter ash
  • Other
systems optimization
Systems Optimization
  • Economies of scale
  • Continuous operation
  • Combined heat and power
  • Systems integration
slide15

Integrated Poultry and Ethanol Production

SE U.S.

Markets

Carbon Dioxide

Corn

Ethanol

DDGS

Poultry

Litter

Combined

Heat & Power

Poultry

Feed

Meat

Ash

Fertilizer

energy economics
Energy Economics
  • Ash value offsets poultry litter feedstock costs
  • 5 MW electricity @ 3.5¢/kWh
  • 100,000 lb steam/hr @ $3.50/MBtu NG eq.
  • 65 MBtu hot air/hr @ $3.50/MBtu NG eq.
  • 18% internal rate of return (before tax)
summary biomass power
Summary: Biomass Power
  • Wind resources very limited in SE US
  • Solar very expensive
  • Biomass is primary large-volume renewable option, but currently has a significant cost-price gap
  • Gap is smallest for co-firing and combined heat and power
  • Also relatively small gaps associated with some waste- management and systems-integration opportunities
  • Emerging incentives, premiums, policies, and environmental credits have good potential for closing the cost-price gap in short- to mid-term
  • Technological advances can help bridge the gap in the longer term
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