Report on Cost Analysis

Transcription

1 Report on Cost Analysis Economic aspects of the energetic utilisation of alternative (mixed) biomass pellets and briquettes in seven European countries Project coordination Volker Lenz (DBFZ) Phone: +49 (0) Fax: +49 (0) Thomas Zeng (DBFZ) Phone: +49 (0) Fax: +49 (0) Coordinated by: Partner: The sole responsibility for the content of this webpage lies with the authors. It does not necessarily refl ect the opinion of the European Union. Neither the EACI nor the European Commission are responsible for any use that may be made of the information contained therein. Market Implementation of extraordinary biomass pellets

2 Report on Cost Analysis Participating countries Authors: Christa Kristöfel, Austrain Bioenergy Centre (Bioenergy 2020+) Elisabeth Wopienka, Austrain Bioenergy Centre (Bioenergy 2020+) Date of Publication: January 2012 The authors would like to acknowledge the support and input of the project partners: Comitato Termotecnico Italiano (CTI) Danish Technological Institute (DTI) Deutsches BiomasseForschungszentrum (DBFZ) Energia y Medio Ambiente S.L. (Protecma) Technical Research Institute of Sweden (SP) Technical Research Centre of Finland (VTT) This project was financed by the Intelligent Energy Europe programme. All data presented and opinions expressed remain the responsibility of the authors. In most European countries, the market integration of alternative biomass pellets (e.g. made of straw, agricultural or food processing residues) is still hindered by various constraints. To overcome these constraints and to strengthen the drivers, promising market introduction concepts will be identified to enhance the relevance of alternative pellets in Europe. Thus, the MixBioPells project provides up-to-date market information for alternative and mixed biomass pellets based on a comprehensive data collection for representative European countries and regions (see above) which are available at

3 Background Case studies Within the MixBioPells project in each partner region two case studies, which represent the whole value chain of alternative (mixed) biopellets, were established (see Table 1). Table 1: Used raw materials and customers of the case studies Raw material Olive stones from the food industry Almond shells from the food industry Reed canary grass mixed with wood (20/80) Reed canary grass Shea waste, rape waste, potato and beet pulp, grain screenings Straw, grain screenings, peanut shells and corn bobs Miscanthus poplar mix Vine pruning Customers Households, small district heating systems (20 kw-300 kw) Industrial plant (>200 kw) Local farmers ( kw) Local district heating plant ( kw). CHP plant (52 MWel.; 112 MJ/s) District heating plants, schools, minor industries (50 kw-10 MW) Power plant, district heating system (>500 kw) Households (20 kw-200 kw) Straw Miscanthus Grape marc Digestate Local Farmers (20 kw-200 kw) Housholds, small district heating systems (50 kw-500 kw) Small scale up to large scale plants Combustion plants (about 300 kw) Based on these case studies economic aspects of heat supply systems in terms of alternative fuel costs and investment costs for combustion technologies were analysed. The entire report on the cost analysis can be found at the project website:

4 Heat supply costs Comparison of alternative biomass and fossil fuel utilisation Economic aspects are crucial for the establishment of alternative (mixed) biomass pellet production and their use in combustion appliances. In order to compare the different energy production chains of each case study, the sum of discounted costs over service was calculated. The discount rate per cent was assumed to be 5 %. For the calculation of the fossil fuel price in the basis year data from 2011 was used. Figure 1 shows the cost comparison of Austrian energy production chains based on Miscanthus and straw being used in 200 kw combustion units. EUR Heat supply costs kw system (AUT) Year Heating oil Miscanthus briquettes Straw pellets Figure 1: Cost comparison of Austrian case studies kw The investment costs of heating systems for alternative biomass are twice as high as for the oil boiler. Due to the high fossil fuel costs the heating systems operated with Miscanthus briquettes as well as straw pellets are getting favourable after three and a half years. The production costs of straw pellets are lower than the one for Miscanthus briquettes.

5 Relevance of investment- and fuel costs The investment costs for alternative heating systems are higher than for fossil fuels. However, fuel costs as a major part of the annual running costs have a wide influence on the economy of heating systems. Due to the increased impact of fuel costs, medium to large scale heating systems which are operated with alternative pellets are more likely to be profitable than fossil fuel systems. Figure 2 and 3 show the heat supply costs for the utilisation of (mixed) biopellets in a 30 kw and a 200 kw system assuming a gas price of 1 / kwh. EUR Heat supply costs - 30 kw system (ITA) Year Vine pruning pellets Miscanthus+poplar pellets Gas fuel Figure 2: Cost comparison of Italian case studies - 30 kw EUR Heat supply costs kw system (ITA) Year Gas fuel Vine pruning pellets Miscanthus/poplar pellets Figure 3: Cost comparison of Italian case studies kw The 30 kw system operated with Miscanthus-poplar pellets is more expensive than the comparable gas heating system. Using a 200 kw heating system, the biomass systems are getting favourable after two and a half years. Similar trends are observed for vine pruning pellets.

6 Aspects of plant size The heat supply costs for the energy production chains of the different case studies are compared in Figure 4. One can see the trend that the heat supply costs of small plants are higher than those of large systems, despite consideration of different conditions in the partner regions. An exception is the system which is operated with vine pruning pellets, which can be explained by the low raw material costs for vine pruning. The heat supply costs of the 200 kw system operated with reed canary grass/ wood briquettes are higher due to the high wood proportion of the briquettes which make them more expensive. The 3 MW system is a power plant and therefore not comparable. Shea waste/grain screening pellets [20kW] Straw/grain screening pellets [20kW] Olive stone pellets [25 kw] Almond shell briquettes [30 kw] Grapemarc pellets [30 kw] Vine pruning pellets [30 kw] Reed canary grass pellets [200 kw] Reed canary grass/wood briquettes (20/80) [200 kw] Straw pellets [200 kw] Miscanthus briquettes [200 kw] Reed canary grass briquettes [200 kw] Digestate pellets [250 kw] Hemp briquettes [500 kw] Miscanthus/Poplar pellets (1:1) [3000kW] Heat supply costs in /MWh per year Figure 4: Comparison of heat supply costs of the alternative combustion systems of the case studies in /MWh per year

7 Fuel costs Fuel costs are determined by costs for crop growing, harvesting, transport (up to 50 km), drying and pelletizing/briquetting. As a major part of the annual running costs they have a wide influence on the economy of a heating system. Figure 5 presents the fuel costs identified in the different case studies in / MWh considering these aspects. Furthermore the fluctuations of fossil fuel prices in the different partner countries are illustrated. The fuel costs amount to / MWh, depending on the used raw material and the pelletizing plant. Necessary pre-treatments of the raw material have a major impact on the pellet prices. Therefore raw materials which do not require intensive drying should be used. Low drying and storage costs are essential to ensure a profitable fuel. The costs for pelletizing and briquetting amount to % of the whole fuel costs. Certainly, these costs strongly depend on the pelletizing/briquetting plant, but also on production parameters and fuel properties. Optimising the pelletising process in terms of suitable production parameters and raw material mixtures is a large cost advantage. The briquetting costs of Reed canary grass and wood mixes are very low, but the high proportion of wood makes the fuel expensive. The grape marc pellets are more expensive than the others due to the high drying costs of the raw material. The price for heating oil is much higher than the one for alternative pellets. Gas as fuel can keep up with alternative pellets in regard to the price in some, especially Southern, countries.

8 Fuel costs in /MWh Pelletizing/briquetting costs Raw material costs (incl. harvesting, drying, transport) Hemp briquettes Reed canary grass briquettes Grapemarc pellets Digestate pellets Straw/grain screening pellets Shea waste/grain screening pellets Almond shell briquettes Olive stone pellets Miscanthus briquettes Straw pellets Reed canary grass/wood briquettes (20/80) Reed canary grass pellets Miscanthus/Poplar pellets (1:1) Vine pruning pellets Wood chips Wood pellets Gas Heating oil Figure 5: Fuel costs incl. costs of pelletizing and briquetting in /MWh as well as fluctuations of wood and fossil fuel prices in the various partner countries Due to the increasing prices of heating oil, the use of agricultural biomass fuels is getting more and more attractive from an economic point of view. Especially in the Nordic countries, the use of alternative biomass fuels is much cheaper than using fossil fuels. Even medium to large scale alternative heating appliances with flue gas treatment systems are more profitable over service life despite higher investment costs.

9 Comparison of wood and alternative fuels Figure 6 shows the average costs for wood pellets, alternative pellets and wood chips over all partner countries. On average wood pellets are 25 % more expensive than alternative pellets and alternative pellets are 14 % more expensive than wood chips. 60 Average fuel costs ( /MWh) wood pellets alternative pellets wood chips Figure 6: Average fuel costs for wood pellets, alternative pellets and wood chips in seven different European countries in /MWh The cost comparison of 200 kw heating systems operated with heating oil, wood chips, wood pellets and alternative pellets shows that the costs for heating systems operated with alternative pellets are below the costs of the wood pellet systems (Figure 7). EUR Heat supply costs kw system Year Heating oil Wood chips [35% mc] Wood pellets Alternative pellets Figure 7: Heat supply costs for a 200 kw system comparing fossil, wood and alternative biomass fuels

10 Recommendations for dealing with alternative pellets It is recommended to catch up on the legal framework before investing in alternative biomass production and combustion systems. Necessary pre-treatments of the raw material have a major impact on the pellet price. Therefore raw materials, which cause low drying and storage costs, are more likely to be a profitable fuel. Investigations and reports from operators show that, apart from the choice of technology, the selection of production parameters (particle size, moisture content, measures of the die, residence time/flow rate) is a crucial issue. Moreover considerable differences are observed dependent to the raw material used. An optimal operation of the pelletising/briquettiong plant is a large cost advantage. In this regard mixing of raw materials can play a major role. Often, a long optimisation process of adjustments is necessary, before a plant is running properly. For small scale combustion systems, regional available raw materials should be used. Long transport distances only pay off for large scale appliances (<1MW). Moving grate systems and an active ash removal concept are the basis in order to ensure stable operation with high-ash fuels with increased tendency for slag formation. One important factor for building-up a successful supply chain is the commitment of regional stakeholders. Furthermore, a well-defined legal framework is essential to provide security to potential investors.