Major Problems Associated with Biomass Energy Projects

The issues enumerated below are not geography-specific and are usually a matter of concern for most of the biomass energy projects:

  1. Large Project Costs: In India, a 1 MW gasification plant usually costs about USD 1-1.5 million. A combustion-based 1 MW plant would need a little more expenditure, to the tune of USD 1-2 million. An anaerobic digestion-based plant of the same capacity, on the other hand, could range anywhere upwards USD 3 million. Such high capital costs prove to be a big hurdle for any entrepreneur or clean-tech enthusiast to come forward and invest into these technologies.
  2. Low Conversion Efficiencies: In general, efficiencies of combustion-based systems are in the range of 20-25% and gasification-based systems are considered even poorer, with their efficiencies being in the range of a measly10-15%. The biomass resources themselves are low in energy density, and such poor system efficiencies could add a double blow to the entire project.
  3. Dearth of Mature Technologies: Poor efficiencies call for a larger quantum of resources needed to generate a unit amount of energy. Owing to this reason, investors and project developers find it hard to go for such plants on a larger scale. Moreover, the availability of only a few reliable technology and operation & maintenance service providers makes these technologies further undesirable. Gasification technology is still limited to scales lesser than 1 MW in most parts of the world. Combustion-based systems have although gone upwards of 1 MW, a lot many are now facing hurdles because of factors like unreliable resource chain, grid availability, and many others.
  4. Lack of Funding Options: Financing agencies usually give a tough time to biomass project developers as compared to what it takes to invest in other renewable energy technologies.
  5. Non-Transparent Trade Markets: Usually, the biomass energy resources are obtained through forests, farms, industries, animal farms etc. There is no standard pricing mechanism for such resources and these usually vary from vendor to vendor, even with the same resource in consideration.
  6. High Risks / Low Pay-Backs: Biomass energy projects are not much sought-after owing to high project risks which could entail from failed crops, natural disasters, local disturbances, etc.
  7. Resource Price Escalation: Unrealistic fuel price escalation too is a major cause of worry for the plant owners. Usually, an escalation of 3-5% is considered while carrying out the project’s financial modelling. However, it has been observed that in some cases, the rise has been as staggering as 15 to 20% per annum, forcing the plants to shut down.

Contributed by Setu Goyal, TERI University (New Delhi) who can be reached at setu.goyal@gmail.com)

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3 thoughts on “Major Problems Associated with Biomass Energy Projects

  1. Salman

    Interesting comments that I broadly agree with. The climate is slightly better in the UK, especially with the upcoming launch of Renewable Heat Incentive which looks like it will recognise the value of heat in the same terms as electricity. This should lower capex and opex, reduce technology risk and perhaps open up the funding market therefore. The main UK barriers to roling out sustainable scale (1 to 5MWe) biomass projects remains the lack of credible operating data for most technologies, the size of projects (big banks don’t get out of bed for a project smaller than £20m) and the bankability of fuel suppliers.

    We don’t expect the picture to change much in the next 12 months although we do expect to see the heat market develop fairly quickly after that.

    • Victor
      Thanks for sharing your views. Biomass energy is a ‘poor cousin’ of solar and wind energies, and lots of activity will be required on the technology, finance and policy-making fronts to improve the scenario.

      Best wishes
      Salman

  2. I think your conversions depend on what products are used for combustion. Green or wet wood chips do have extremely poor conversion rates, but when dried they are much more efficient. It just takes some different processing.
    As for ag-products, the efficiency is greater due to the fact that the sun dries the material while in the field.
    Solar and Wind are extremely inefficient. Last I knew solar was around 30% and wind was around 35-40% efficient. That is why they are government funded. Otherwise, the pay backs on the would be so long, no one would invest.
    As for combustion of ag-residues or wood, new units should never be just for electric. They should be combined heat and power units that will provide electricity to the grid, heat and even cooling to local buildings or residences. That will great improve the efficiencies of the unit overall.
    And, secondly, no unit should ever be confined to one type of product for combustion or gasificiation. The units should be multi-fuel and be able to handle a wide range of fuel sources.

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