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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


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)

Coe biomass co firing vs coal
ΔCOE: Biomass Co-firingvs. Coal

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

Closing the biomass power cost price gap

Integrated Poultry and Ethanol Production



Carbon Dioxide







Heat & Power






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)

Value of co 2 credits
Value of CO2 Credits

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