Mandatory Ethanol Blending in India is a Dumb Idea pandering to Vested Interests (sugar industry)

1 Jun, 2011
Biofuels,Climate Change,Energy,Fossil Fuels

The Government on India is proposing to introduce mandatory blending of ethanol in transport fuels to the extend of 5%.This means that the major transport fuel providers like IOC,BPCL and other will have to ensure that 5% of the petrol they sell will be mixed with 5% ethanol.The US is the biggest user of mandatory blending which has recently come under harsh criticism.The reasons given for supporting blending is that it reduces the requirements of fossil fuels which leads to lower carbon emissions,improves energy security and reduces pollution.However none of these advantages are seen in real life.In fact it has the massively negative consequence of increasing food prices which leads to the starvation of the poor globally.The Corn Industry in the USA has become a major lobbying force which makes the US government persist with the policy resulting in sharp increase in corn prices to the detriment of consumers.

India’s Economic Advisory Council too has questioned the wisdom of ethanol blending saying the proposal would work only if there was adequate supply of ethanol.The sugar industry says there is enough ethanol while the advisory council says its not.The facts seem to suggest that the shortfall will be around 40-50% leading to huge windfall gains for the Sugar Industry.My view is that the government should wait for advancements in third generation biofuels before subsidizing and supporting blending of ethanol in transport fuels.Already algae based biofuel startups like Solazyme are making good progress in commercializing fuels from materials which do not endanger global food security.

Biofuels from Crops – Bad Solution to Climate Change

Biofuels from Crops can never be  a meaningful answer to the problems of Climate Change and Global Warming due to the fact that

  1. A large part of the world’s 6 billion population lives in hunger
  2. Water and Land needed for Crops are becoming a Scarce Resource as per capita consumption and population both rise
  3. Inevitable Increase in Crop Prices increases the Raw Material prices
  4. Growing Demand for Biofuels lead to deforestation perversely contributing to Global Warming

USA Renewable Fuels Standards (RFS)

The Energy Policy Act of 2005 (EPAct 2005, P.L. 110-58), established the first-ever Renewable Fuels Standard (RFS) in federal law, requiring increasing volumes of ethanol and biodiesel to be blended with the U.S. fuel supply between 2006 and 2012.The Energy Independence and Security Act of 2007 (P.L. 110-140, H.R. 6) amended and increased the RFS, requiring 9 billion gallons of renewable fuel use in 2008, stepping up to 36 billion gallons by 2022.The US (EPA) has approved the sale of 15% ethanol fuel blends (E-15), an action that US energy officials immediately criticized as a bad policy meant to curry favour with voters.

Note USA is a huge food surplus country with massive quantities of corn being produced every year which makes it feasible for it to implement a dumb policy,however India does not possess such agricultural riches to implement mandatory blending of biofuels.

C Rangarajan questions the rationale behind Ethanol Blending Plan

The Prime Minister’s Economic Advisory Council has questioned the rationale behind mandatory doping of 5% ethanol in petrol, saying there is “a mismatch” between the objectives cited for pushing the programme and the empirical evidence supporting them. The council, headed by former Reserve Bank of India governor C Rangarajan , has asked the government to reconsider the programme or at least not make it binding for now.

The ministry had argued that mixing of ethanol in petrol was an environment-friendly initiative, which would save the country foreign exchange, provide energy security and benefit the sugar industry. Experts, however, said the proposal would work only if there was adequate supply of ethanol, opinion on which is divided. The chemicals and alcohol industry says there is not enough ethanol for everyone and it would be forced to import if ethanol was diverted for blending. Tamil Nadu has already banned supply to the ethanol blending programme and Bihar is understood to have “unofficially” discouraged it.

A government constituted panel, headed by Planning Commission member Saumitra Chaudhuri, has also questioned ethanol availability. Chaudhuri is also a member of the Economic Advisory Council. However, five of the eight members of the Chaudhuri panel had opposed sectoral allocation of ethanol, including to the ethanol blending programme. The council has also opposed direct ethanol manufacture from sugarcane on account of food security concerns. Ethanol is currently produced as a byproduct of sugar manufacturing.

Biomass Disadvantages – Not Many and Easily Solved

10 Apr, 2011
Biofuels,Biomass Energy

Biomass Energy is the oldest source of Energy known to mankind and till the 19th century was the primary energy source.Even now Biomass Energy is used of Heating and Cooking by a large percentage of the Human Population.Biomass Energy with improving technology is being now used to construct large biomass power plants.Growing Concerns over Climate Change and soaring Coal Prices are making some Power Plants convert from Coal to Biomass as a Fuel Source.Biomass Energy has many advantages such as being Carbon Neutral,using Animal and Crop Wastes in a useful manner,being poor friendly etc.However Biomass Energy like other Renewable Energy forms of Geothermal Energy faces problems of resources.However Biomass Energy suffers from some unique drawbacks like the problem of regular feedstock which becomes tough to acquire in times of drought etc.Biomass Energy also if not used appropriately can result in terrible air pollution as is the case with a majority of the Biomass Energy being used in the backward areas of the world today.Here is a list of the Cons of Biomass.

Biomass Cons

1) Large Biomass Plants face  NIMBY Concerns- Large Biomass Plants like the one in Scotland have run into massive protests as people think it might lead to air pollution and health hazards if constructed near their homes.These protests by local people and the consequent problems in getting clearance from regulators leads to cost and time overruns.In some cases this has led to the ultimate cancellation of the project itself

2) Black Carbon Phenomenon – If Biomass is not completely combusted it leads to Air Pollution.lack carbon is a form of particulate air pollution, produced from incomplete combustion from biomass burning, cooking with solid fuels, and diesel exhaust.Over the last few years there has been a concerted effort to address the impact of black carbon emissions on global warming. However, the knowledge and understanding about black carbon is incomplete and uncertain.India and China account for 25-35% of global black carbon emissions.

2) Costs Still Quite High – One of the biggest drawbacks of biomass energy is the problem of feedstock.The plants are forced to run at lower utilization leading to higher costs if feedstock is not available due to some reason like a drought.Except in some case where Feedstock is easily and cheaply available,Biomass Energy is quite costly to generate.

3) Good Management Required – The operations of a biomass plant requires very good management otherwise it may run into losses or even in some cases have to shut down.It requires a skill of high order to run the plant optimally and make use of alternative feedstock in case the regular one is not available

4) Limited Potential - Biomass Energy has smaller potential than compared to other forms of energy like solar,hydro etc.Note Biomass Energy has said to have huge potential but the potential to economically generate biomass energy is still not that high.

5) Water Requirement,Harmful Gases,Area Required – Biomass Energy is generated by combustion and that leads to emission of some gases such as CO,NO2 etc.Note while the process of Biomass Energy is Carbon Neutral it still does lead to generation of some GHG emissions.Though supporters would argue that these gases would be released anyway with or without Biomass Energy,critics can say that Solar and Wind Energy don’t produce such gases.Biomass Plants require a larger area to store the feedstock which occupies a large space.Biomass Plants also require large amounts of water

Algae Biofuel Green Company Solazyme $100mm IPO (Financials,Partners,Costs,Pros and Cons) – Tempting though Risky

16 Mar, 2011
Biofuels,Green IPO,Oil

Algae Based Biofuels Introduction

Algae Based Biofuels have been hyped in the media as a potential panacea to our Crude Oil based Transportation problems. Algae Based Biofuels as a Green Investing Opportunity is still some years away as the technology is still quite nascent.Despite a lot of hoopla and a number of IPO’s with synthetic biofuels as business,large scale commercial production and profits are still some time away.However the promise of this technology to revolutionize the Fossil Fuel powered Transportation Sector is Huge.Large Oil and Gas is already positioning itself in a small way to take advantage of this opportunity.Shell has been the biggest investor in Biofuels with a $12 Billion tie up with Brazilian Sugar Giant Cosan.The advantages of Algae Biofuels are being propagated by strong backers like Bill Gates ,Rockefeller family and Exxon Mobil.The main advantages of algae based biofuels are Efficient Land Usage,Reduction in Global Warming affect and ability to be directly used in vehicles and aircraft.However Algae Biofuel Technology is still quite immature despite startups like Solazyme,Algenol,Sapphire Energy and Synthetic Genomics having made impressive strides.

Solazyme Introduction

Solazyme a Chevron backed small algae biofuel based startup has bagged big name investors for its Series D Funding Round.It has bagged Food Companies like Bunge,San-Ei Gen and Unilever as Investors besides Chevron as Fuel Distributor and Branson as an Airline consumer.The Food Companies as investors makes a lot sense  as Solazyme is thinking of tapping the Food Markets for its algae based products.Besides these wins,Solazyme has bagged a huge150,000 tons Fuel Follow-on Supply Contract.This order reflects the success in delivering the earlier 20,000 tons contract.Solazyme has also received a R&D and Supply Contract to develop biofuels for US Navy Jets.

Recent Algae Based Biofuel IPOs – Mixed Performance

Solazyme IPO follows on the footsteps numerous BioFuel Startups which have recently issued shares in  US IPOs like Codexis, Inc. (NASDAQ: CDXS), Amyris, Inc. (NASDAQ: AMRS), Gevo, Inc. (NASDAQ: GEVO).Solazyme has not revealed the Pricing yet for its IPO though it has filed a S-1 with the SEC .Amyris has been one of the most successful IPOs in the US market over the last year giving a 1 year return of over 90%.Gevo and Codexis too have outperformed the Nasdaq in the last 1 year giving a return of 10%,though Codexis is giving negative returns for its IPO investors while Gevo is just about in the black..With Oil and Coal prices shooting through the roof,Biofuels are again back in vogue even as Government mandated compulsory mixing of Biofuels in Transportation makes these companies somewhat immune to oil price volatility.

Solazyme Technology

Solazyme use standard industrial fermentation equipment to ferment  oil-producing microalgae plant sugars in dark fermentation tanks,  utilizing “indirect photosynthesis,” in contrast to common open-pond and photo bioreactor approaches followed by other algae biofuel companies.Note they save on effort of separating  the water from the produced oil . Solazye says it can utilize a wide variety of renewable plant-based sugars, such as sugarcane-based sucrose, corn-based dextrose, and sugar from other sustainable biomass sources including cellulosics.

Solazyme Cost and ASP

Solazyme says it will be able to produce algae oil for the fuels market at “below $1,000 per metric ton ($3.44 per gallon or $0.91 per liter).The company claims to have decreased its cost from almost $10,000 ton in 2007 which certainly seems quite impressive.The Company is projecting an ASP of around $2000 per ton from the Fuels Market,$10,000 from the Nutrition Market to $2 million from the Skincare Market (midpoint).IF the company is able to realize these kinds of selling prices,then it will be fabulously profitable,though it remains to be seen.

Solazyme Market

The company is targeting 3 markets with a total value of $3.1 Trillion.

  1. Fuels and Chemicals – Renewable oils can be refined and sold as drop-in replacements for marine, motor vehicle and jet fuels
  2. Nutrition – Microalgae-based food ingredients including oils and powders that enhance the nutritional profile
  3. Skin and Personal Care -Portfolio of innovative and branded microalgae-based products. Our first major ingredient is Alguronic Acid

Solazyme Production and Manufacturing

Fom January 2010 through February 2011, they produced well over 500,000 liters (455 metric tons) of oil which implies a run rate of around 3 million liters.In March 2011, they entered into an agreement to purchase a development and commercial production facility with multiple 128,000-liter fermenters, and an annual oil production capacity of over 2 million liters located in Peoria, Illinois (the Peoria Facility).The company has signed multiple non binding contracts with partners to producer and market biofuel.Aims to commence production of oils for the fuels and chemicals markets at one large commercial facility by 2013 and additional facilities in 2014 and 2015.

Solazyme Partners

  1. Chevron Under the terms of the current agreement, Chevron is providing research funding through June 30, 2012.
  2. US Navy. In September 2010, we entered into a firm fixed price research and development contract with the DoD, through the Defense Logistics Agency, Fort Belvoir, VA (DLA), to provide marine diesel fuel. We agreed to produce up to 550,000 liters of Soladiesel HRF-76 marine diesel for the US Navy’s testing and certification program
  3. Dow.The agreement is mutually exclusive in the area of microbe-based oils for use in dielectric insulating fluids until January 1, 2013. In conjunction with the execution of the joint development agreement, we entered into a non-binding letter of intent whereby Dow could purchase up to 20 million gallons (76 million liters) of our oils in 2013 rising to up to 60 million gallons (227 million liters) of our oils by 2015, subject to certain conditions.
  4. Roquette. In November 2010, we entered into a joint venture agreement with Roquette.
  5. Sephora. In December 2010, we entered into an exclusive distribution contract with Sephora International to distribute our Algenist™ product line in Sephora International stores in Europe and select countries in the Middle East and Asia.

Solazyme Financials


Solazyme has generated $38 million in revenues in 2010 almost 300% increase over 2009.R&D program revenues represented 100% of our total revenues in 2008 and 2009 and 60% of our total revenues in 2010. Revenues from government grants and agreements represented 82%, 44% and 43% of total R&D program revenues in 2008, 2009 and 2010, respectively.The company is generating losses as it is still in the startup phase and has around $52 million in accumulated losses with around $80 million in cash and ST investments.Debt is currently negligible.The financials are quite good compared to similar algae biofuel companies.

Solazyme Advantages


1) Low Capex Requirements as it relies on partners for both manufacturing and marketing of products in different end markets.Uses standard fermentation equipment and has a customer centric approach to technology development
2) Customers and Contracts – The company has manged contracts with Big Customers like the US Navy and US Airforce 50/50 joint venture with Roquette, one of the largest global starch and starch-derivatives companies.

3) Largest Producer of Algae Based Biofuel to date.The company benefits from US government promotion of Biofuels through the Energy Independence and Security Act of 2007 set targets for alternative sourced liquid transportation fuels (approximately 14 billion gallons in 2011, increasing to 36 billion gallons by 2022). Of the 2022 target amount, a minimum of 21 billion gallons must be advanced biofuels

Solazyme Valuation

The Company valued itself at $85 million in 2009 to around $430 million in 2011 based on the stock options it gave to its management.Currently Amyris is the most expensive company with a market cap of around $1.3 billion.Note Solazymes ships more algae based fuel than Amyris.Also it is targeting the same markets as Amyris does,however Amyris has double the revenues generated by Solazyme.I think Solazyme will also look to target a market cap of around $750-1000 million.

Summary
Investment in Solazyme is more akin to a VC/PE investment rather rather than an equity investment.The company is probably not going to be profitable for the next few years.The risks are common to a high-tech startup such as technology risks,liquidity risks,management bungling etc.However Solazyme seems a tempting buy given its seductive technology and its contract and customer wins till date.Might be a interesting though risky buy if the valuations of the IPO are not too set too high.

Greenworldinvestor Articles expanding on this one
  1. Chinese Renewable Energy Company Ming Yang Wind Power to IPO in US – Should you Buy it
  2. First Wind Holdings Review and Analysis – Pure Play USA Green Utility IPO looks a risky leveraged bet
  3. Exxon to invest a Minuscule amount in Algae based Biofuels
  4. Valero Energy positions itself strongly for a Green Future by investing in Biofuels
  5. Is Algae Based Biofuel a Great Green Investment Opportunity

India’s Biomass Potential,Installed Biomass Capacity by States and CERC Biomass Electricity Subsidies

14 Mar, 2011
Biofuels,Biomass Energy,Energy

India’s Biomass Potential

India’s Biomass Electricity Capacity at 2 GW (including cogeneration)  is around 4% of the world’s total Biomass Power Capacity of around 50 GW.US is the leader in Biomass Capacity with around 20% of the world’s biomass potential.India has set ambitious plans for expanding the biomass power capacity in the next 10 years.India’s Ministry of Renewable Energy has set a very high target of multiplying the power capacity by 10 times in the next 10 years.India’s Total Biomass Potential with existing Technology is around 25 GW of which around 8% has been realized till date.India produce s 500 million tonnes of biomass per year,  120-150 million tonnes is surplus

Biomass Potential 25 GW with installed capacity of 2 GW

  1. Co-generation Potential of 5 GW with installed capacity of 1.2 GW
  2. Agro-residue Capacity of 17 GW with 900 MW installed
  3. Waste to energy 3 GW with only around 70 MW installed

Biomass Power Capacity till 2009

State                            Installed Capacity (MW)
Uttar Pradesh                  372.5
Andhra Pradesh               343.3
3. Tamil Nadu                   333.7
4. Karnataka                       294.2
5. Maharashtra               185.5
6. Chhattisgarh                156.1
7. Rajasthan                        31.3
8. Punjab                               28.0
9. Haryana                            6.0
10. Madhya Pradesh         1.0
11. Gujarat                               .5

Source : MNRE

A large number of private companies have entered the biomass energy sector in order to capitalize on the potential of biomass growth.Most of India’s power plants are less than 50 MW in power capacity with a large number of biomass plant of 1-2 MW in size.No massive biomass plants of greater than 100 MW capacity is being planned in India unlike Europe where gigantic biomass plants are in the planning stage.

Note almost 30% of India’s Energy Needs are being met by Biomass Energy mainly in rural areas for cooking and heating.Most of this energy is inefficiently produced leading to air pollution and global warming.However most of the biomass plants being built in India are much more efficient.

CERC Feed in Tariff for Biomass Produced Electricity for Different States

Note India’s Electricity Regulator gives a number of Incentives for Biomass Generated Electricity namely

1) Depreciation

2) Feed In Tariffs for 13 Years out of a useful life of 20 Years

3) Sharing of Carbon Credits under the CDM Protocol

4) Preferential Loan and Interest Rates

5) Payment Rebates by Utilities

Some of the state Feed in Tariffs

India does not have a centralized rate of FIT for Biomass Electricity and it is different for different states depending on the assumptions.Here is the FIT for a few of the major Biomass States in India

State                          Feed in Tariff (Rs./kWh)
Andhra Pradesh                  Rs4.15
Gujarat Cogeneration       Rs 5.17
Madhya Pradesh                 Rs3.93
Maharashtra                          Rs4.76
Maharashtra Cogeneration RS4.80
Punjab                                        Rs5.49
Rajasthan                                  Rs4.73
Tamil Nadu                              Rs5.08
West Bengal                             Rs4.88

Summary

India’s Biomass Potential is around 25 GW of which only about 8% in total has been realized.The Sugar Industry have been the most proactive in generating power from sugar residue.Waste to Energy remains mostly unrealized while there is massive potential for generating biomass electricity from agri residue like rice husk etc.

Indian Biomass Energy reaches 1 GW in 2010 – List of Biomass Energy Companies (Rice,Sugar,Green Utilities) growing with 10 Times Growth in next 10 Years

10 Mar, 2011
Biofuels,Biomass Energy,Energy,Orient Green Power,Renewable Energy

Biomass Energy in India is growing at a fast pace due to the rapid advancements in Biomass Energy Technology,Incentives for generating Biomass Electricity by the Indian government and the huge requirements of Power in India.A number of Agricultural Companies and Green Utilities are focusing on setting up biomass plants in different places in India.Note Biomass Energy accounts for almost 20-30% of the Energy Requirements of the country and is the main source of energy for most of the rural communities for cooking and heating.Note the location of the Biomass Plant,the feedstock being used,the distance of the feedstock from the Biomass Plant and the management is extremely important for the success of a Biomass Plant.The profit on a Biomass Power Plant in India can vary widely depending on whether the monsoon season is good or not.In a drought year,the lack of Biomass makes running the Biomass Electricity Generators expensive leading to low profitability.

Biomass Energy in India

India had set up around 500 MW of Biomass Capacity by 2007 and has increased it by almost 150 MW since then to reach around 1 GW capacity today.Most of Indias’ Biomass Electricity is being generated in Andhra Pradesh,Maharashtra,Tamil Nadu,Karnataka and Rajasthan.A lot of new capacity is being built in Punjab and Chattisgarh as well.India with a total biomass capacity of around 1 GW is planning to increase it by 10 times to 10 GW by 2020.Between 200-600 acres of land are required to support 1 Mw of Biomass Capacity .This is much more than what is required for even thin film solar energy which is around 10 acres.The large land requirements make Biomass Energy Scaling a difficult proposition,however it has a great use in niche applications where there is a large amount of crop and animal residue/waste

Biomass Electricity Producing Companies in India

  1. Orient Green Power (OGPL) - Orient Green Power is the biggest pure play renewable energy generating company in India.The company is owned by the Shriram Group and a couple of PE Players.The company has around 48 MW of Biomass Electricity Capacity which it plans to increase to 200 MW.The company plans to be the biggest Renewable IPP with a target of 1000 MW.
  2. Greenko is an AIM Listed,TPG backed Green Energy generating company in India.In a short time span it has emerged as one of the biggest green companies with great financials.It has seen its share price shoot up over the last year as it has executed well.Greenko currently has six biomass plants and plans a total of 1000 MW of renewable energy capacity by 2015 from hydro,wind and biomass sources.
  3. A2Z Maintenance & Engineering Services - This facilities management firm which recently came out with an IPO is planning to foray big time into biomass energy generation.The company is planning to set up 120 MW of Biomass Energy i n the next 2-3 years which would make it the biggest biomass electricity producing company in India.It plans to set up three 15 MW plants in Punjab and five 15 MW plants in Rajasthan mainly using crop residue like rice husk as feedstock.
  4. Lakshmi Energy and Foods is engaged in manufacturing and processing food grains and related products. The product includes rice, basmati rice (branded as Lakshmi Foods), parmal rice, rice bran edible oil, wheat flour, de-oiled cake, refined oils, and cattle feed (branded as Heera Moti). It also has 30MW biomass-based power generation business using rice husk as fuel.The company plans to expand this capacity to 105 MW.Note the company is trading at extremely low valuations and is traded on the Indian stock exchange.
  5. Clenergen India Private Limited -  The company is a subsidiary of Clenergen Corporation based in Florida,USA.The company has a 18 MW plant in Kancheepuram Tamil Nadu and is taking over operations of an existing 27MW/h biomass power plant (the “Plant”), which has the ability increase Clenergen’s operating capacity to 51.5MW/h by the end of 2011
  6. Auro Mira Energy is a Tamil Nadu based Green Utility backed by a clutch of PE investors like IFC etc.It has 2 biomass plants of 7.5 MW and 10 MW and plans to build around 100 MW of hydro and biomass capacity over the next 2-3 years.
  7. Husk Power Systems (HPS), a Patna-based company engaged in rural electrification and power generation started by Darden School of Business 2009 graduates Chip Ransler and Manoj Sinha.HPS is engaged in producing clean energy from rice husks using biomass gasification technology.It currently owns and operates mini power plants with a capacity to produce 35-100 KW electricity, and has about 25 plants spread across Bihar.
  8. Abellon CleanEnergy Ltd - This is an Indian Biomass Energy Company that is setting up a huge planation in Ghana to employ thousands of workers.The plantation will grow bamboo, palmarosa and sweet sorghum on 10,000 hectares of degraded land which will be used as biomass feedstock for a big power plant
  9. LT Foods - This is also a well known rice producer and refiner with well known brands.It is similar in profile to Lakshmi Energy and Foods and plans to set up a 5 MW plant in Punjab with more investment in further expansion.
  10. Dee Development provides services primarily to the oil & gas and  power sector .Dee Development has installed two bio-mass based power plants of 7.5 MW and 8 MW, both in the state of Punjab. It is also planning to set another biomass plant in Madhya Pradesh by 2011.
  11. AllGreen Energy – This Bangalore based startup has raised from Reliance Capital and GE.It is building a  6.4 MW biomass project in Perundurai,Tamil Nadu with a total installed capacity target of 100 MW.The company is using IGCC technology developed by IISC.

Summary

Biomass Energy is clearly seeing a massive investment of private capital by a number of Green Energy companies.A number of these companies are backed by Private Equity Players.Almost all Sugar Companies in the country co-generate biomass power at their sugar plants.The size of the segment is quite large and has not been listed here.In India 3 types of companies are focused on biomass electricity – Sugar Companies,Rice Companies and Green Energy Utilities.The first 2 categories will be successful as their cost of feedstock is essentially zero while the the success of the third kind will depend on the management and execution.

Greenworldinvestor Articles that expand on this article

  1. List of Top Renewable Energy/Green/CleanTech Companies in India which are Publicly listed
  2. A2Z Maintenance and Engineering Services IPO Review – Good Quality EPC,Facilities,Waste Management Company entering Biomass Energy Fairly Valued
  3. Renewable Energy in India – Past,Present and Future
  4. “Renewable Energy Certificate” Policy Starts in India – What you need to Know and Who will Benefit
  5. List of Wind Energy Companies in India – Pretenders or World Beaters
  6. How to make Green Investments in India – Renewable Energy Focused Power Utilities

Costs of Biomass Energy and Biomass Plant Invesment – Wide Range

9 Mar, 2011
Biofuels,Biomass Energy,Coal,Renewable Energy

The Costs of Biomass Energy Production fall in a very wide range because of the wide variety of feedstock it uses.The costs of biomass energy also depend on the distance of the feedstock from the biomass power plant.Great distances lead to the biomass plant being unfeasible.Also some forms of Biomass are more expensive than others.Urban Waste and Waste Wood are some of the cheapest forms of biomass available.Similarly,Biomass plants also can be built over a wide range of investments.Co-generation plants or CHP plants are the cheapest biomass plants while standalone biomass plants which can use a variety of feedstock are quite expensive in nature.Note unlike solar and wind power,the investments in power plants based on biomass are not fixed.Some of the technology like boilers and turbines for generating biomass energy are common industrial equipment.The costs of a biomass energy can also depend greatly on how the feedstock is procured,managed and used up by a biomass plant.A good manager of a biomass plant is very important to lower running costs of a biomass plant.

Costs of Biomass Energy

Biomass Energy in general costs around 10-13c/KwH depending on the feedstock used and the type of technology used in energy conversion.It is possible to have costs of 5c/KwH for cofiring plants which use existing equipment.Cogeneration is a cheaper option for agri industry owners.Sawmill and paper plants owners can generate at very low cost of under 5c/Kwh as their feedstock is virtually free and would be entirely wasted if not used to generate electricity.Sugar plants these days have ethanol production and electricity generation as very important revenue streams.

Cost of a Biomass Power Plant

A Biomass Power Plant like Biomass Energy has a very wide range of costs.Small plants generally have higher costs while larger plants can be built at a lower cost per Megawatt.

Small plants can cost between $1.5-4/watt for building.While co-firing plants can cost as little as 25c/Watt.Note some of the larger biomass plants being built are between  $2-3/watt.Note the important thing to consider when investing in a biomass power plant is to look into the LCOE being generated by biomass electricity.The investment in the biomass plant is only a part of the total costs of bioelectricity.

Summary

Biomass Energy Costs fall in a very wide range unlike solar and wind power equipment which is quite standardized and easily available.While wind and solar power costs don’t depend on fuel costs,biomass energy is heavily dependent on biomass as feedstock.The costs of fuel is a major determinant of biomass  energy.Biomass Energy can be quite costeffective in some situations where feedstock is cheaply and easily available.

Related Links

List of Major Biomass Power Plants in the World – Scale Increasing

Ten Advantages of Biomass Energy – Oldest Alternative Energy Form gets back in vogue

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