| Affiliation: | 1. Department of Energy and Environment, Division Environmental Systems Analysis, Chalmers University of Technology, SE-41296 Göteborg, Sweden;2. State Key Lab of Urban and Regional Ecology, Research Center for Eco-Environmental Sciences, Chinese Academy of Sciences, Beijing 100085, China;3. Section for Systems Analysis, SP Technical Research Institute of Sweden, SE-40022 Göteborg, Sweden;1. Department of Biosystems Engineering, Kangwon National University, Hyoja 2 Dong, 192-1, Chuncheon, Republic of Korea;2. Forest Practice Research Center, Korea Forest Research Institute, Jikdong-Ri 51, Soheul-Eup, Pocheon-Si, Gyeonggi-Do 487-821, Republic of Korea;1. School of Environmental Sciences, Jawaharlal Nehru University, New Delhi 110 067, India;2. Department of Surgery, Montreal General Hospital, Montreal, Canada;1. Consiglio per la Ricerca e la sperimentazione in Agricoltura, Unità di ricerca per l''ingegneria agraria, Via della Pascolare 16, 00015 Monterotondo Scalo, Rome, Italy;2. Università degli Studi della Tuscia, Dipartimento di Scienze e Tecnologie per l''Agricoltura le Foreste la Natura e l''Energia, Via S. C. de Lellis s.n.c., 01100 Viterbo, Italy |
| Abstract: | This paper reviews developments in the direct-fired biomass power sector and provides an up to date investment outlook by calculating the Net Present Value of new investments, and the appropriate level of Feed-in-Tariff needed to stimulate future investment. An overview is provided of support policies, historical growth in installations, and main market players. A number of data sources is combined to build a database with detailed information of individual biopower projects. This data is used to describe technological and market trends, which are used in a cash flow model to calculate the NPV of a typical project. The NPV for new projects is estimated to be negative, and investment should be expected to stall without proper policy intervention. Increasing fuel prices, local competition over biomass fuel resources, lower than expected operational performance and a downturn in carbon markets have deteriorated the investment outlook. In order to ensure reasonable profitability, the Feed-In-Tariff should be increased, from the current level of 90.9 € MWh?1, to between 97 and 105 € MWh?1. Where possible, government organizations should help organize demand for the supply of heat. Local rural energy bureaus may help organize supply networks for biomass fuels throughout the country, in order to reduce seasonal and local fuel scarcity and price fluctuations. |
