While economies around the world slow and credit options dwindle, the biomass-to energy industries keep churning forward. If you strip away all the technology hypes, forward looking scenarios and compare apples to apples, say IRRs, required capital outlay, project execution time, risk factors and such, biomass and more specifically, cogeneration or cofiring comes out on top.
While biomass energy is in itself a very diverse field, it in general comprises in the conversion of excess or readily available organic material into thermal energy, electrical energy, and liquid fuels using a variety of processes such as combustion, gasification, pyrolysis, and anaerobic digestion. On occasion the biomass is used in a cogeneration or co-firing scheme that generates both heat and electricity and depending on the particular technology can even produce byproducts that can be sold to other industries as raw material.
These applications, typically limited in size to approximately 5 to 50 megawatts, create many opportunities for small and medium sized power producers. In heavy agricultural regions or in countries with national biomass policies, the availability of biomass fuel sources and the promise of independent power producer policy creates the ideal climate for investing in biomass-to-energy projects.
Source: Internal research
Leading renewable energy countries and governments are gaining experience and therefore adjusting their FITs schemes downward to set capacity goals, create push pressure on costs of some technologies and specific adjustments to stimulate diversity among the different renewable energy technologies. Biomass in Europe however is stable and is currently ranging from 8 to 18 €c/KWh depending on size and country. This, together with other benefits recognized by authorities of biomass such as carbon neutrality and waste treatment and management are pushing biomass to the top of the list. The higher IRRs’ can also be understood by the fact that this renewable energy does not require expensive high tech installations, can usually generate energy 24 hours a day, is independent of whether it is sunny or windy and can be universally deployed as it is also not so dependent on the particular latitude of the plants location.
In fact, the investors’ or lenders’ ability to easily conduct thorough due diligence and credit analysis with the assistance of expert consultants in biomass makes project finance transactions, equity investment or senior loans, in one of the safest asset classes of today with biomass becoming more and more the favorite.
Many renewable energy developers are now leaning towards biomass projects as a means of diversifying their portfolio of holdings and services and at the same time raising their return and capital investment profile. There is a growing number of green field projects and companies (interested parties can contact me) taking advantage of this growth scenario.
According to the Eurostat for the EU-27, enlargement, liberalization of energy markets, energy import dependency, the environmental concerns and the push for expanded renewable energy have been major driving forces in the changing energy structure of the EU in recent years. Non-hydro renewable sources for electricity and biomass for heat and power have expanded significantly. At the same time, natural gas consumption has increased significantly for both electricity production and other uses, while coal consumption and oil use outside the transport sector has decreased. The unabated increases in oil for transport along with the increasing popularity of natural gas in recent years are the major contributors to the continuing high energy import dependence of the EU and therefore stimulating demand for biomass related energy or fuel production.
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Posted by: Cynthiasophia | October 08, 2010 at 02:22 PM