business insights: the global biomass market outlook

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The Global Biomass Market Outlook Current status, key players, growth potential, and the future outlook Reference Code: BI00036-021

Publication Date: June 2011

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Table of Contents Disclaimer 2

Executive summary 14

Market development 14

The US 15

Germany 16

Brazil 17

The UK 18

Sweden 19

Finland 20

Italy 21

China 22

India 23

Australia 24

Future outlook 25

Chapter 1 Introduction to the report 26

Overview 26

Chapter 2 Market development 30

Summary 30

Overview of the world electricity market 31

World electricity generation 31

World installed electricity capacity 32

The role of renewables 34 World installed renewable electrical power capacity in 2010 35

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Scale of current biomass resource use 36

Drivers of the biomass power market 39

Regulatory framework supports biomass power development 39

Co-firing and cogeneration to grow in the EU 40

Growth of feedstock storage market 42

Resistors against biomass power market 42

High capital costs 42

Need for secure biomass feedstock supply 43

Significance of unconventional gas 43

Liquid biofuels for transport 46

Economics of biomass power technology 47

Chapter 3 The US 50

Summary 50

US biomass power market overview 51

Current scenario of the US 51

Key feedstock 52

Government policy framework for renewables in the US 53

Overview of government policies supporting the biomass power market in the US 54

Key players 56

Future outlook for the US 56

Government incentives to ensure growth in the biomass power market 56

Possible change in Clean Air Act regulation in the US 58

High costs 58

Integrated conversion technologies and co-firing to grow 58

Focus on converting biomass feedstock into fuel for transportation 59

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Chapter 4 Germany 61

Summary 61

Germany’s biomass power market overview 62

Current scenario of Germany 62

Key feedstock 63

Government policy framework for renewables in Germany 64

Overview of government policies supporting the biomass power market in Germany 65

Key players 66

Future outlook for Germany 66

Government incentives to foster growth 66

Technological developments 68

The role of Energy Concept 69

Chapter 5 Brazil 71

Summary 71

Brazil’s biomass power market overview 72

Current scenario of Brazil 72

Key feedstock 73

Government policy framework for renewables in Brazil 74

Overview of government policies supporting the biomass power market in Brazil 74

Key players 75

Future markets trends impacting the biomass power market in Brazil 75 Government support mechanisms to promote the growth of the biomass power market 75 Threat to future biomass feedstock availability 77 The dominance of large hydroelectric power 78 The role of bioethanol 78

Chapter 6 The UK 80

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Summary 80

The UK’s biomass power market overview 81

Current scenario in the UK 81

Key feedstock 82

Government policy framework for renewables in the UK 85

Overview of government policies supporting the biomass power market in the UK 86

Key players 88

Future outlook for the UK 88

Potential for biomass energy development 88

Focus on biofuels 90

Cautious outlook for growth in co-firing technology and anaerobic digestion 90

Chapter 7 Sweden 92

Summary 92

Sweden’s biomass power market overview 93

Current scenario of Sweden 93

Key feedstock 95

Government policy framework for renewables in Sweden 95

Overview of government policies supporting the biomass power market in Sweden 96

Key players 96

Future outlook for Sweden 97

Focus on biofuels and heating 97

Chapter 8 Finland 99

Summary 99

Finland’s biomass power market overview 100

Current scenario of Finland 100

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Key feedstock 102

Government policy framework for renewables in Finland 102

Key players 102

Future outlook for Finland 104

Finland to promote biomass and wind power for electricity generation 104

Solid biomass to lead growth of biomass power in Finland 105

Chapter 9 Italy 107

Summary 107

Italy’s biomass power market overview 108

Current scenario of Italy 108

Key feedstock 110

Government policy framework for renewables in Italy 111

Key players 111

Future outlook for Italy 112

Italian government may promote wind power over biomass power 112

More efficient biogas to reduce the share of solid biomass in power generation 115

Chapter 10 China 117

Summary 117

China’s biomass power market overview 118

Current scenario of China 118 Key feedstock 120

Government policy framework for renewables in China 121 Overview of government policies supporting the biomass power market in China 122

Key players 123

Future outlook for China 123 Abundant biomass resource availability 123

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The abundance of coal makes the installation of biomass power plants relatively expensive 126 The growing significance of biofuels 126

Chapter 11 India 127

Summary 127

India’s biomass power market overview 128

Current scenario of India 128 Key feedstock 129

Government policy framework for renewables in India 130 Overview of government policies supporting the biomass power market in India 131

Key players 132

Future outlook for India 132 Government programs to drive biomass power growth 132 High capital risk 134 The importance of cogeneration 135

Chapter 12 Australia 136

Summary 136

Australia’s biomass power market overview 137

Current scenario of Australia 137

Key feedstock 139

Government policy framework for renewables in Australia 139

Overview of government policies supporting the biomass power market in Australia 140

Key players 140

Future outlook for Australia 141

Co-firing to grow 141

Emerging interest in biofuels 143

Chapter 13 Future outlook 144

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Summary 144

Outlook for the global electricity sector 145

Outlook for the renewables market 146

Outlook for biomass power market 148 Traditional biomass energy technology causes environmental hazard 148 EU to drive demand for biofuels 149 Growth of additional biomass power capacity 149 Supply chain constraints of biomass feedstock to hinder the growth of biomass applications 151 High level of investment required 151

Global biomass resource potential 153

Biomass resource potential in major countries 156 Germany 156 Italy 158 The UK 159 Sweden 160 Finland 161

Appendix 162

What is the report about? 162

Who is the report for? 162

Definitions 163

Biomass feedstock 163

Technologies available for biomass power generation 163

Methodology 164

Glossary/Abbreviations 166

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Table of figures Figure 1: Share of biomass and waste in total electricity net generation (%) 27 Figure 2: Share of biomass and waste in total renewables electricity net generation (%), 2009 29 Figure 3: World electricity net generation (bn kWh), 2006–10 32 Figure 4: World cumulative installed electricity generation capacity (GW), 2006–10 33 Figure 5: World installed renewable power generation capacity rankings, 2009 35 Figure 6: World total installed renewable electrical power capacity (%), 2010 36 Figure 7: World number of people relying on the traditional use of biomass (m) 2009 39 Figure 8: EU share of cogeneration in total electricity (%), 2007 41 Figure 9: Comparison of cost electricity from CCS power plants and other low carbon generation for

entry into service in 2016 ($/MWh), 2010 46 Figure 10: World average generation costs of renewables based electricity generation by technology

type ($ per MWh), 2010–2035 49 Figure 11: US, net biomass and waste power generation (bn kWh), 2005–09 52 Figure 12: US, biomass resource map, 2009 53 Figure 13: US, cumulative installed biomass power generation capacity forecast (GW), 2009–35 57 Figure 14: Germany, net biomass and waste power generation (bn kWh), 2005–09 63 Figure 15: Germany, installed solid biomass capacity forecast (MW), 2010–20 68 Figure 16: Brazil, net biomass and waste power generation (bn kWh), 2005–09 73 Figure 17: Brazil, installed biomass power capacity forecast (MW), 2010–19 77 Figure 18: UK, net biomass and waste power generation (bn kWh), 2005–09 82 Figure 19: UK, biomass power plants, 2010 (part 1 of 2) 84 Figure 20: UK, biomass power plants, 2010 (part 2 of 2) 85 Figure 21: UK, installed solid biomass capacity forecast (MW), 2010–20 89 Figure 22: Sweden, net biomass and waste power generation (bn kWh), 2005–09 94 Figure 23: Sweden, installed solid biomass capacity forecast (MW), 2010–20 98 Figure 24: Finland, net biomass and waste power generation (bn kWh), 2005–09 101 Figure 25: Finland, renewable power generation (GWh), 2010−20 105 Figure 26: Finland, biomass power generation (GWh), 2010−20 106 Figure 27: Italy, net biomass and waste power generation (bn kWh), 2005–09 109 Figure 28: Italy, biomass energy potential by feedstock (%), 2009 110 Figure 29: Italy, power generation from renewables including hydropower forecast (GWh), 2010–20114 Figure 30: Italy, annual power generation from biomass forecast (GWh), 2010–20 116 Figure 31: China, net biomass and waste power generation (bn kWh), 2005–09 119 Figure 32: China, biomass power generation plants, 2009 121

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Figure 33: China, potential available biomass resources (%), 2030 125 Figure 34: India, net biomass and waste power generation (bn kWh), 2005–09 129 Figure 35: India, installed biomass and waste generation capacity forecast (GW), 2010–20 134 Figure 36: Australia ,net biomass and waste power generation (bn kWh), 2005–09 138 Figure 37: Australia, bioenergy electricity generation forecast (GWh), 2020 142 Figure 38: World net electricity generation (tn kWh), 2015–35 146 Figure 39: World primary energy demand by fuel under new scenario (Mtoe), 2020–35 148 Figure 40: Average investment in renewables based electricity generation by technology in the New

Policies Scenario ($m), 2010–35 153 Figure 41: World bionenergy potential estimate by feedstock (exajoules), 2050 154 Figure 42: World bioenergy potential by region (exajoules), 2050 156 Figure 43: Germany, biomass resource potential (%), 2030 157 Figure 44: Italy, biomass resource potential (%), 2030 158 Figure 45: The UK, biomass resource potential (%), 2030 159 Figure 46: Sweden, biomass resource potential (%), 2030 160 Figure 47: Finland, biomass resource potential (%), 2030 161

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Table of tables Table 1: Share of biomass and waste in total electricity net generation (%), 2009 26 Table 2: Share of biomass and waste in total renewables electricity net generation (%), 2009 28 Table 3: World electricity net generation (bn kWh), 2006–10 31 Table 4: World cumulative installed electricity generation capacity (GW), 2006–10 33 Table 5: World total installed renewable electrical power capacity (GW), 2010 36 Table 6: Global number of people without access to electricity and relying on the traditional use of

biomass (m), 2009 38 Table 7: Comparison of cost electricity from CCS power plants and other low carbon generation for

entry into service in 2016 ($/MWh), 2010 45 Table 8: World average generation costs of renewables based electricity generation by technology

type ($ per MWh), 2010–2035 48 Table 9: US, net biomass and waste power generation (bn kWh), 2005–09 52 Table 10: US, cumulative installed biomass power generation capacity forecast (GW), 2009–35 57 Table 11: Germany, net biomass and waste power generation (bn kWh), 2005–09 62 Table 12: Germany, installed solid biomass capacity forecast (MW), 2010–20 68 Table 13: Brazil, net biomass and waste power generation (bn kWh), 2005–09 72 Table 14: Brazil, installed biomass power capacity forecast (MW), 2010–19 76 Table 15: UK, net biomass and waste power generation (bn kWh), 2005–09 82 Table 16: UK, installed solid biomass capacity forecast (MW), 2010–20 89 Table 17: Sweden, net biomass and waste power generation (bn kWh), 2005–09 94 Table 18: Sweden, installed solid biomass capacity forecast (MW), 2010–20 98 Table 19: Finland, net biomass and waste generation (bn kWh), 2005–09 101 Table 20: Key players in biomass power generation in Finland, 2011 103 Table 21: Finland, renewable power generation (GWh), 2010−20 104 Table 22: Finland, biomass power generation (GWh), 2010−20 106 Table 23: Italy, net biomass and waste power generation (bn kWh), 2005–09 109 Table 24: Italy, biomass energy potential by feedstock (Mtoe), 2009 110 Table 25: Major players in biomass power generation in Italy, 2011 112 Table 26: Italy, power generation from renewables including hydropower forecast (GWh), 2010–20113 Table 27: Italy, annual power generation from biomass forecast (GWh), 2010–20 115 Table 28: China, net biomass and waste power generation (bn kWh), 2005–09 119 Table 29: China, potential available biomass resources (100m tce*), 2010–30 124 Table 30: India, net biomass and waste power generation (bn kWh), 2005–09 129

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Table 31: India, installed biomass and waste generation capacity forecast (GW), 2010–20 133 Table 32: Australia, net biomass and waste power generation (bn kWh), 2005–09 138 Table 33: Australia, bioenergy electricity generation forecast (GWh), 2020 142 Table 34: World net electricity generation (tn kWh), 2015–35 145 Table 35: World primary energy demand by fuel and scenario (Mtoe), 2008–35 147 Table 36: Average investment in renewables based electricity generation by technology in the New

Policies Scenario ($m), 2010–35 152 Table 37: World bionenergy potential by feedstock (exajoules), 2050 154 Table 38: World bioenergy potential by region (exajoules), 2050 155 Table 39: Germany, biomass resource potential (exajoules/year), 2030 157 Table 40: Italy, biomass resource potential (exajoules/year), 2030 158 Table 41: The UK, biomass resource potential (exajoules/year), 2030 159 Table 42: Sweden, biomass resource potential (exajoules/year), 2030 160 Table 43: Finland, biomass resource potential (exajoules/year), 2030 161

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Executive summary

Market development The challenge facing the global electricity market is managing the issue of carbon emissions with

growing nations needing power.

Despite the economic slowdown in 2008 and 2009, the global electricity market continued to add new

generation capacity to meet the anticipated rise in demand for electricity in the future. Global installed

electricity generation capacity has increased at a CAGR of 1.9% between 2006 and 2010.

Favorable conditions such as abundant volume of biomass feedstock availability have made US, Brazil,

Germany, China, and Sweden lead the global biomass power market in terms of installed capacity.

Wind power and hydroelectric power leads the global renewable power market in 2010, driven by

government support mechanisms. Solar power and biomass power continue to drive the global

additional annual installed renewable electrical power capacity in 2010, as governments globally

continued to allocate financial resources for clean energy efforts.

In many parts of the world, biomass is used for cooking and heating rather than for the purpose of

electricity generation, resulting in historically weak biomass generation growth as most biomass

feedstock is not used for electricity generation - due to high generation costs.

Many utilities plan on entering the biomass power market due to the government support mechanisms

which many countries provide.

Biomass power market suffers from the susceptibility of feedstock due to spoilage. Additionally, the

biomass market lacks methods and standards for monitoring feedstock quality, which adds to the costs

of collection, transportation, and storage of feedstock to the site of power plants.

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The US The US is trying to meet the challenge growing energy needs by promoting renewable energy

resources - extending incentives and mandates including the federal government’s Renewable Fuels

Standard, Production and Investment Tax Credits and state government’s Renewable Portfolio

Standards.

Currently the federal government in the US provides a Production Tax Credit of $0.02 per kWh for

biomass power, which is set to expire at the end of 2013. The availability of low cost biomass

feedstocks and state RPS programs may continue to aid the deployment of biomass power technology.

The net biomass and waste power generation in the US recorded a CAGR of -0.6% between 2005 and

2009, due to the increasing the role of other renewables including wind power and hydroelectric power

use in the generation mix, which have received government support, resulting in additions to installed

renewables capacity.

Growth in the biomass power market is driven by the US Environmental Protection Agency’s (EPA)

announcement on whether greenhouse gases released by biomass power plants should be regulated

under the Clean Air Act, resulting in plausible growth of renewable power capacity using biomass

power.

The need to meet the growing demand for transportation fuel could mean that the US government will

look at reducing the country’s dependence on oil as transportation fuel by growing biomass feedstock

for biofuels rather than developing biomass power.

The future of biomass for electricity generation heavily exists on state RPS and federal tax credits, with

electricity generation from dedicated biomass plants and co-firing in coal plants to gain momentum in

the US. According to the US EIA, biomass power generation will grow from 7GW in 2009 to reach

20.2GW in 2035 recording a CAGR of 4.1%.

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Germany The abundance of biomass feedstock availability is reflected in the strong biomass generation growth

in Germany, which recorded CAGR of 24.2% between 2005 and 2009.

Germany’s renewables market is driven by regulations and incentives, which create opportunities for

electricity generation from renewable resources in accordance with the EU’s Climate Action Plan

mandate.

Germany’s biomass power market is driven by Feed-in Tariff mechanism, which attracts companies to

be involved in adding to existing renewable power capacity across the country.

Germany’s geographical terrain offers abundant biomass feedstock in terms of agricultural byproducts,

forestry sectors, and dedicated energy crops resulting in implementation of specific type of

technologies.

By 2012, the federal government is planning on amending the EEG Act, which would help in changing

the existing Feed-in Tariff structure for electricity from biogas, driving the demand for biomass

feedstock for electricity generation.

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Brazil Hydroelectric power and natural gas dominate Brazil’s electricity supply mix. Brazil’s total installed

renewable power capacity was 14GW in 2010, with key renewable sectors being ethanol (36bn liters),

biomass (8GW), and small hydroelectric power (5GW) leading the country’s renewables supply mix.

In 2009, Brazil’s total renewable net power generation was 409.8bn kWh and total net power

generation was 461bn kWh, indicating the importance of renewables in the country’s electricity supply.

Brazil’s net biomass power generation recorded a CAGR of 10.8% between 2005 and 2009 led by

increase in the country’s economic growth.

Brazil’s most prominent biomass feedstock is sugarcane, which makes cogeneration the most viable

biomass technology for installation across the country. Other biomass feedstocks found in Brazil

include waste crops and other organic material.

Going forward, Brazil will accelerate the installation and the adoption of renewable power technology,

by restricting additional capacity installations using thermal resources between 2011 and 2019, led by

government initiatives including the Decennial Plan for Energy Expansion to 2019.

The availability of biomass feedstock in the future will face supply disruptions due to increase in

deforestation along the Amazon River area.

Brazil is currently the world’s leading producer and exporter of ethanol for fuel, led by the abundance of

bagasse, which is produced from sugarcane. Brazil’s government will continue to encourage

technologies for converting biomass feedstock into cost competitive fuels including ethanol for

transportation, which has historically remained very successful.

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The UK The UK’s electricity supply is dominated by non-renewable resources including natural gas and coal.

According to the UK’s Department of Energy and Climate Change (DECC), land fill gas and co-firing

with fossil fuels remained the most popular means of generating biomass power in the UK.

In the UK, the Feed-in Tariff mechanism works alongside the Renewables Obligation (RO), which is

currently the key mechanism for supporting the deployment of large-scale renewable electricity

generation.

The driving force behind co-firing of biomass (split between pellets, wood chips and waste biomass

from agriculture or industry) is the provision of Renewables Obligation (RO) certificates.

The UK’s biomass power market will see more interest in developing anaerobic digestion technology, in

a bid to deal with the country’s waste disposal problem and add to the existing electricity supply.

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Sweden Sweden’s electricity generation is essentially dependent on hydroelectric power and nuclear power.

The majority of Sweden’s energy supply is used for the purpose of electricity generation, district heating

and fuel transportation.

Sweden’s net electricity generation was 129.4bn kWh and total renewable electricity generation was

78.16bn kWh. Sweden’s net biomass and waste power generation recorded a CAGR of 9.3%, growing

from 7.9bn kWh in 2005 to 11.32bn kWh in 2009.

With regards to entering Sweden’s biomass power market, biomass power utilities will the existence of

Swedish Bioenergy Association (Svebio), a non-profit organization, which plays a major the role in

expansion of the biopower sector in Sweden.

According to Sweden’s National Forest Energy Technology program, the majority of Sweden’s biomass

power plants generate a combination of heat and electricity, with a very small segment of power plants

involved in small district heating plants. These indicate opportunities for CHP installation in Sweden’s

biomass power market.

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Finland Biomass accounted for 40% of total renewable power generated (including hydropower) in Finland in

2009.

Wood and wood-based products are the main feedstock for biomass production in Finland as the

country has abundant forestry.

Biomass power generation in Finland declined at a CAGR of 1.7% from 9.2bn kWh in 2005 to 8.6bn

kWh in 2009.

The growth of biomass power in Finland is driven by the country’s commitment to generate 38% of total

energy from renewables by 2020 in order to contribute to the EU’s target of generating 20% energy

from renewables by 2020.

Major biomass power generators in Finland include UPM Kymmene, Alholmens Kraft, Pohjolan Voima,

and Vattenfall, while Metso and Andritz are among the major suppliers of biomass power technologies

in the country.

The Finnish government will maintain the share of biomass in total renewable power generation

(including hydropower) during 2010−20, while investing increasingly in wind power due it being cleaner

power generation.

Currently Finland generates the majority of domestic biomass power from bioliquids; however, solid

biomass will overtake bioliquids in the future due to the lower cost of power generation offered by the

technology.

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Italy Biomass power plants operate across all regions in Italy with the Lombardy region leading in terms of

the number of biomass plants (90 plants) as well as installed power generation capacity (460.5MW), as

of 2009.

Power generation from biomass in Italy grew at a CAGR of 4.9% to reach 8.4bn kWh in 2009 from

6.9bn kWh in 2005.

According to the Italian Biomass Association (ITABIA), biomass energy potential in Italy was estimated

at close to 28m tons of oil equivalent (Mtoe) per year.

Italian government offers various incentives including the Feed-in Tariff, capital grants, tax incentives,

and investment grants to promote renewable power including biomass power.

Due to rich wind resources and cleaner power generation, the Italian government is expected to

promote wind power over biomass power in order to achieve the country’s target of generating 19% of

the country’s electricity from renewables by 2020.

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China China’s net biomass power generation recorded a CAGR of 2.5% between 2005 and 2009 due to high

generation costs. The reason for high biomass power generation costs is attributed to the lack of

commercial viability of the existing biomass power systems in China. Further, the abundance of coal in

China makes the generation costs from coal cheaper.

Some of the most significant feedstock available in China includes bagasse, which is processed from

agricultural processing systems, including grain processing facilities, food production, sugar making

and breweries.

Currently biomass energy resources in China are mainly used in conventional combustion

technologies.

The RE Law sets the goal for 2020 to produce energy from various waste-based sources, including

biogas from animal farms, crop residues, agro-processing, municipal waste, and sewage sludge.

China’s Medium and Long-Term Development Plan for Renewable Energy and the 11th Five Year

Renewable Energy Development Plan established a goal for biomass power capacity of 30GW by

2020. China’s government is expected to bring forth additional programs improving the feedstock

collection process.

Identification of additional biomass rich areas are to be centered on the east coast of Jiangsu, Jilin,

Henan, and Shandong. These provinces will drive grid-connected biomass power generation.

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India Despite the existence of national policies promoting renewables market, each state in India has a

unique policy and regulatory support mechanisms, making the total growth in India’s renewable power

market rather uncoordinated and fragmented.

In India, the key biomass feedstocks available include rice husks and straw, bagasse, sugarcane tops,

leaves and trash; groundnut shells and plants, cotton stalk, coconut residues, mustard stalk; and

wastes from a dozen other agricultural products.

According to India’s Ministry of New and Renewable Energy (MNRE), the renewables installed capacity

of biomass power and cogeneration plants (non-bagasse) is 238MW, with biomass gasifiers’ installed

capacity at 125MW at the end of June 2010.

States like Uttar Pradesh, Tamil Nadu, and Andhra Pradesh are prominent in biomass based power

generation.

In India, biomass technology installations include bagasse cogeneration and grid connected biomass

power projects. India encourages bagasse based and non-bagasse based power generation. The

potential to reach higher efficiencies in heat recovery and usage could make investors enter India’s

cogeneration market.

The MNRE has announced a target of creating 10GW (10,000MW) of installed biomass power capacity

by 2020.

India’s demand for biomass power technology capacity will likely be constrained by pressures of food

security and the issue of high biomass power generation cost, compared to the cheaper cost of

generating electricity from coal.

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Australia The existing coal-fired power plants are responsible for emitting around 50% of the current greenhouse

gas emissions in Australia.

Australia’s net biomass and waste power net generation contributed to less than 1% of Australia’s total

electricity supply in 2009.

Within Australia, only Victoria provides a Feed-in Tariff for installing biomass power technology for a

period of 15 years. Within Australia, state governments play an active the role in driving the growth of

the biomass power market by initiating Feed-in Tariff mechanism.

Though Australia’s biomass power market lacks a national level Feed-in Tariff mechanism, the

government provides a grant for biomass power installation technology.

According to a study published by the University of Newcastle, the most prominent feedstock resources

found in Australia include agricultural-related wastes, energy crops, landfill gas, sugarcane, and wood-

related wastes.

The abundance of coal suggests the attractive venue of using technologies including biomass gasifier

to convert the solid biomass into a fuel gas, which can be incinerated in the coal boiler furnace to

generate power in Australia.

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Future outlook An increasing population will drive demand for additional installed electricity capacity. Many parts of the

world remain still to be connected to the grid and lack access to electricity. These factors will drive

demand for electricity between 2015 and 2035.

Globally, the renewable power market will become increasingly competitive as fossil-fuel prices rise

and renewable technologies mature.

The scale of government support for additional renewable power capacity will grow backed by

government support. The possibility of water scarcity due to climatic variations and the relatively high

installation costs of large hydropower plants could moderate the pace of hydropower expansion

globally by 2035 making the global primary energy demand for biomass power leading among

renewables resources.

Due to a lack of finances, many countries including India and China are yet to develop efficient

biomass energy technologies which can reduce heat loss while improving combustion efficiency and

reducing the extent of pollution.

Countries including the US, Brazil, and China will continue to encourage the blending of transportation

fuel with first generation fuels, by having regulatory programs and incentives. These countries would

also export biofuels to the EU, due to the EU’s mandate calling for biofuels in the transportation fuel

mix.

Globally, countries will continue with the adoption of additional biomass power capacity. These include

growth of biomass power plant operators and co-firing plant operators in the US, cogeneration

technology in Brazil, conventional combustion technologies and biogas technologies in India and

China, anaerobic digestion technology and CHP in the UK.

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Chapter 1 Introduction to the report

Overview The report identifies the ten most promising countries in the biomass power market based upon the

respective countries’ biomass net electricity generation in 2009 based on latest data availability. Table 1

indicates the biomass power trends across the 10 geographic markets of the US, Brazil, Germany, China,

Sweden, Italy, Finland, the UK, India, and Australia, based on share of biomass and waste in total electricity

net generation. The report analyses regulatory framework and key players driving the biomass power market

across each the ten geographic markets. Further, the report also covers the future outlook of the biomass

power market in terms of planned additional installed capacity. The report also includes the investment

required in renewables based electricity generation by technology between 2010 and 2035.

Table 1: Share of biomass and waste in total electricity net generation (%), 2009

Details Biomass and waste

electricity net generation

(bn kWh)

Share of biomass in country’s total electricity

net generation(%)

Share in total world biomass power

generation(%)

US 65.41 1.7% 38.1%Germany 38.30 6.9% 22.3%Brazil 21.35 4.6% 12.4%The UK 12.02 3.5% 7.0%Sweden 11.32 8.8% 6.6%Finland 8.59 12.6% 5.0%Italy 8.36 3.1% 4.9%China 2.50 0.1% 1.5%India 2.00 0.2% 1.2%Australia 1.97 0.9% 1.1%

Source: US EIA BUSINESS INSIGHTS

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Figure 1: Share of biomass and waste in total electricity net generation (%)


Table 2 indicates how the US, Germany, Brazil, the UK, and Sweden lead the share of biomass and waste in

total renewables electricity net generation. Specifically, the EU countries of the UK, Finland, and Germany

lead the total biomass power market among renewables market globally.

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Table 2: Share of biomass and waste in total renewables electricity net generation (%), 2009

Details Biomass and waste

electricity net generation (bn kWh)

Share of biomass in country’s total renewable

electricity net generation (%)

Share in total world biomass power generation (%)

US 65.41 15.4% 38.1%Germany 38.30 39.3% 22.3%Brazil 21.35 5.2% 12.4%The UK 12.02 47.5% 7.0%Sweden 11.32 14.5% 6.6%Finland 8.59 40.0% 5.0%Italy 8.36 12.5% 4.9%China 2.50 0.4% 1.5%India 2.00 1.6% 1.2%Australia 1.97 11.5% 1.1%


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Figure 2: Share of biomass and waste in total renewables electricity net generation (%), 2009


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Chapter 2 Market development

Summary The challenge facing the global electricity market is tackling the existence of poverty and providing

electricity access across rural and urban areas, making the net global electricity generation record a

CAGR of 2.4% between 2006 and 2010.


generation capacity to meet the anticipated rise in demand for electricity in the future. Given the

consistently growing electricity demand, global installed electricity generation capacity has increased at

a CAGR of 1.9% between 2006 and 2010.

Favorable conditions including an abundant volume of biomass feedstock availability make the US,

Brazil, Germany, China, and Sweden lead the global biomass power market in terms of installed

capacity. Wind power leads the global renewable power market in 2010, driven by government support

mechanisms. Small hydro and biomass power continues to drive the global installed renewable

electrical power capacity in 2010 as governments globally continued to allocate financial resources for

clean energy efforts.

In many parts of the world, biomass is used for cooking and heating rather than for the purpose of

electricity generation, resulting in historically weak biomass generation growth as most biomass

feedstock is not used for electricity generation due to high generation costs.

Utilities can enter the biomass power market due to the government support mechanisms which many

countries globally provide.

Concerns for quality of biomass feedstock will remain the key to driving improvements in existing grid-

scale energy storage systems.

As biomass feedstock lacks durability, issues including storage and transportation add cost to the

biomass power generation, making biomass power generation expensive.

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Overview of the world electricity market

World electricity generation

The demand for electricity globally is expected to grow, driven by growing population and the presence of

large untapped markets, which remain to be connected to the power grid. The challenge facing the global

electricity market is managing the issue of carbon emissions with growing nations needing power and

providing electricity access across rural and urban areas. The world electricity net generation recorded a

CAGR of 2.4 % by growing from 18,021bn kWh in 2006 to 19,851bn kWh in 2010, as shown in Table 3.

Table 3: World electricity net generation (bn kWh), 2006–10

Details 2006 2007 2008 2009 *2010 CAGR

2006–10 (%)

Electricity net generation (bn kWh)

18,021 18,785 19,128 19,483 19,851

Growth (%) 4.2 1.8 1.9 1.9 2.4Note: This data is the latest available at the end of 2010

*Data for 2010 is Business Insights’ estimates

Source: US EIA and Business Insights BUSINESS INSIGHTS

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Figure 3: World electricity net generation (bn kWh), 2006–10


World installed electricity capacity


generation capacity to meet the anticipated rise in demand for electricity in the future. Given the consistently

growing electricity demand, the world installed electricity generation capacity has increased at a CAGR of

1.9% from 4,293GW in 2006 to 4,627GW in 2010, as shown in Table 4. The world installed electricity

capacity will record additional installed capacity, led by government regulations and support mechanisms.

33

Table 4: World cumulative installed electricity generation capacity (GW), 2006–10

Details 2006 2007 2008 2009 *2010 CAGR

2006–10 (%)

Installed electricity generation capacity (GW)

4,293 4,428 4,492 4,559 4,627

Growth (%) 3.1 1.45 1.48 1.51 1.9Note: This data is the latest available at the end of 2010

*Data for 2010 is Business Insights’ estimates


Figure 4: World cumulative installed electricity generation capacity (GW), 2006–10


34

The role of renewables

Favorable conditions including an abundant volume of biomass feedstock availability make the US, Brazil,

Germany, China, and Sweden lead the global biomass power market in terms of installed capacity in 2009.

According to the US DOE, global additional renewable electricity capacity (excluding hydropower) more than

tripled from 2000 to 2009, with China leading the world in installed renewable power generation capacity.

Figure 5 shows the top countries for installed renewable power generation capacity by technology type as of

2009. Renewables accounted for 60% of newly installed power capacity in Europe and more than 50% in the

US in 2009. According to the Renewable Energy Policy Network for the 21st Century (REN21), China

managed to add 37GW of renewable power capacity, more than any other country globally in 2009, to reach

226GW of total renewable. The REN21 report also observes that globally major economies had spent only

9% of the estimated $188bn in global "green stimulus" programs at the end of 2009. The delay has been

attributed to the time lag involved in getting the money from administrative processes.

35

Figure 5: World installed renewable power generation capacity rankings, 2009

Source: US DOE BUSINESS INSIGHTS

World installed renewable electrical power capacity in 2010

Wind power leads the global renewable power market in 2010, driven by government support mechanisms.

Small hydro and biomass power continues to drive the global installed renewable electrical power capacity in

2010, as shown in Table 5. Currently, governments globally continued to allocate financial resources for

clean energy efforts. According to the PEW Charitable Trust, the total worldwide clean energy generating

capacity has almost doubled in the past three years between 2007 and 2010 in response to strong regulatory

policies and incentives, as well as declining cost structures supporting the installed capacity of renewable

power technology.

36

Table 5: World total installed renewable electrical power capacity (GW), 2010

Source Installed electricity capacity (GW)Wind 193.0Small hydro 80.0Biomass and Waste-to-Energy 65.0Solar 43.0Geothermal 7.0Marine 0.3Total 388.0

Source: PEW Charitable Trust BUSINESS INSIGHTS

Figure 6: World total installed renewable electrical power capacity (%), 2010

Source: PEW Charitable Trust BUSINESS INSIGHTS

Scale of current biomass resource use

In many parts of the world, biomass is used for cooking and heating rather than for the purpose of electricity

generation, indicating historically weak biomass generation growth. The biomass power generation costs

37

remains high when compared to thermal power generation costs. Despite the rising demand for electricity,

many poor households globally still have little or no access to modern energy services. According to a recent

study by the International Energy Agency (IEA), currently 1.4bn (over 20% of the global population), lack

access to electricity and 2.7bn people (close to 40% of the global population) - rely on the traditional use of

biomass for cooking. Table 6 indicates how the majority of people living in sub-Saharan Africa, India and

other developing Asian countries lack access to electricity and continue using biomass for traditional

purposes including cooking and heating. The type of feedstock used for traditional purposes includes wood,

charcoal, tree leaves, crop residues, and animal dung used in inefficient technology, which indirectly

increases the traditional use of biomass feedstock in stoves, facilitating air pollution and health implications.

In this regard, the World Health Organization (WHO) estimates more than 1.45 million people die

prematurely each year from household air pollution due to inefficient biomass combustion (excluding

premature deaths from cooking with coal). Limited access to appropriate financing schemes makes it difficult

for the poor to overcome the high upfront costs of cleaner energy technology. In areas where there is a

substantial annual heating requirement, coal is often used, the combustion of which adds considerably to

urban air pollution.

38

Table 6: Global number of people without access to electricity and relying on the traditional use of biomass (m), 2009

Details Number of people

lacking access to electricity

Number of people relying on the

traditional use of biomass for cooking

Latin America 31 85China 8 423Sub-Saharan Africa 585 653Africa 587 657Other Asia 387 659India 404 855Developing Asia (excluding China and India) 799 1,937Developing countries* 1,438 2,679World 1,441 2,679

Note: *Includes Middle East countries and OECD and transition economies

Source: IEA's World Energy Outlook 2010 BUSINESS INSIGHTS

39

Figure 7: World number of people relying on the traditional use of biomass (m) 2009

Source: IEA's World Energy Outlook 2010 BUSINESS INSIGHTS

Drivers of the biomass power market

Regulatory framework supports biomass power development

Utilities can enter the biomass power market utilizing government support mechanisms which many

countries globally provide. For instance, the European Union’s (EU) Directive 2004/8/EC mandates the

creation of a framework to support high efficiency co-generation, leading the EU member nations like

Germany, Italy, and Sweden to offer varied support mechanisms including Feed-in Tariffs in support of high

efficiency co–generation. Having abundant biomass feedstock and forest reserve, many of the EU member

nations including Finland and the UK offer various incentives including subsidy programs, which attract

investment in the biomass power market.

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In the US, Production Tax Credit, the Investment Tax Credit and the Biomass Crop Assistance Program, as

well as a range of state-based incentives are extended toward biomass power developers. In the short-to-

medium term, the varied range of subsidies will likely promote the growth of the global biomass market, by

ensuring a steady and reliable feedstock production. Some countries including India and Australia will create

incentives like national level Feed-in Tariffs, encouraging investors to enter the respective country’s biomass

power market based on improvements in regulations governing the renewable power market.

Co-firing and cogeneration to grow in the EU

The EU is creating an incentive to reduce the use of coal for electricity generation, accelerating an interest

among utilities in entering the biomass power market. Utilities operating in the EU will no longer receive free

emissions credits through the EU Emissions Trading Scheme (ETS), which will last until December 2012.

Instead, the utilities will be required to purchase credits to be allowed to generate carbon emissions. The EU

will drive the need to reduce the use of coal and natural gas, by mixing coal and biomass or by investing in

technological advancements capable of generating power using biomass power alone. As a result, the

utilities to be involved in installing biomass power technologies based on cogeneration and co-firing will grow

in the EU. Further, this will likely create demand production of heat and generation of electricity across the

EU member countries, indicating opportunities for entering the combined heat and power (CHP) market.

Currently, the EU generates 11% of its electricity using co–generation, as shown in Figure 8. Significant

potential exists in member states particularly for refurbishment of district heating schemes to include modern

cogeneration technology, where previously only heat was distributed.

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Figure 8: EU share of cogeneration in total electricity (%), 2011

>20%10-20%

5-10%

<5%

>20%10-20%

5-10%

<5%

Source: COGEN Europe and Business Insights BUSINESS INSIGHTS

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Growth of feedstock storage market

Concerns over preserving biomass feedstock spoilage will drive improvements in existing grid-scale energy

storage systems. According to the US Department of Energy (DOE), the global biomass power market

suffers from the susceptibility of feedstock due to spoilage. Further, the biomass market lacks methods and

standards for monitoring feedstock quality, which adds to the costs of collection, transportation, and storage

of feedstock to the site of power plants. With renewable resources including biomass power gaining

significance in the global renewables market, feedstock rich countries will record opportunities for

establishing and improving grid-scale energy storage systems. Utilities will look at investing and developing

technologies including combustion gasification for processing and storing dry feedstock, and examining cost

effective means of handling wet storage technology. The wet storage technology would take into

consideration factors including microbial activity, moisture, air infiltration, water usage, and weather effects to

help reduce costs of collection, transportation, and storage.

Resistors against biomass power market

High capital costs

Biomass power plants are highly capital intensive, making adoption of biomass power technology for

electricity generation rather expensive when compared to thermal power generation. Unlike coal, biomass

products including wood pellets must be kept indoors to reduce moisture content. As biomass feedstock

lacks durability, issues including storage and transportation add cost to the biomass power generation,

making biomass power generation expensive. Currently, only a limited number of modern bioenergy

technologies are viable at market prices, which include Brazilian sugar-based ethanol and wood based

heating in Northern Europe, and industrial applications such as cogeneration technology based on residues

from production processes, including those in sugar factories and timber mills. As biomass power projects

are largely very capital-intensive, this remains a significant challenge for a number of utilities in entering

countries with abundant feedstock availability. Going forward, the Clean Development Mechanism (CDM)

program and availability of carbon credits for renewable energy projects will drive the growth of the biomass

power market.

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Further, variations in the quality and quantity of feedstock used in biomass power plants makes power

generation inconsistent throughout the year. Furthermore, low power output coupled with high investment

costs deter many utilities from investing in developing biomass power technologies.

Need for secure biomass feedstock supply

The growing mismatch in demand for electricity and supply of feedstock threatens the potential for the

growth of the global biomass power market. Across countries with abundant feedstock availability including

India, Germany, and the UK - biomass feedstock production is led by fertilizer price pressures, in addition to

competition for available land and water resources. As water is a limited resource, many parts of the world

experience water scarcities, complicated by a growing population. Water scarcity not only impacts humans

and food production, but also threatens biodiversity. Currently, the biomass crop production for bioenergy is

highly dependent on water. Additionally, weather variability including droughts and floods, can greatly impact

bioenergy availability, making the growth of the biomass power market dependent on creating a secure

biomass feedstock supply chain, capable of meeting needs of growing electricity demand. For the efficient

installation and functioning of any biomass power technology system, the supply of feedstock needs to be

regular and reliable, making biomass power generation dependent feedstock with steady quantity availability

and reliable quality characteristics. On the supply side, the focus will be on improving and increasing the

yield of energy crops which is used for biomass power generation. Further, countries with the potential for

producing wood pellets like some of the EU nations will likely concentrate on improving energy storage

capacity and reducing transportation costs by encouraging energy suppliers to invest in electrical equipment

and appliances capable of generating biomass power at the lowest generation costs.

Significance of unconventional gas

A possible shale gas boom in Europe, Latin America, and China like in the US may lead to increased use of

natural gas for power generation replacing demand for renewables including biomass. Currently, the

discovery of shale gas along the coast of the US has made the country reduce the imports of natural gas.

Going forward, newer discoveries of shale gas globally will create the increasing use of unconventional gas

in the electricity supply mix. As natural gas enjoys cheaper generation costs compared to renewables

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including biomass power, in addition to being the cleanest burning fossil fuel, utilities will be inclined toward

investing, exploring, and adding to the existing gas network.

The CO2 produced from burning fossil fuels is leading to addition of greenhouse gases and increased

pressure on climate change, driving demand for cleaner burning fuels including natural gas and encouraging

development of cleaner technology, which can make coal less polluting. One of the key arguments raised

against carbon dioxide capture by many environmentalists is that the alternatives are cheaper and than

funds invested in developing carbon capture technologies should instead be diverted towards renewable

technologies. Table 7 shows the range of levelized cost of electricity from a range of power plant

technologies for startup in 2016, with solar thermal being the most expensive in terms of comparison with the

cost electricity from other CCS power plants.

Consequently, limited private sector interest will likely make government enforce stricter mechanisms to

continue support ongoing renewable energy development and demand, driven by concern of growing

greenhouse gases. Going forward, the use of non-renewable resources including coal and natural gas, in

addition to nuclear power, will likely make governments globally favor different renewable energy sources

based on abundance of renewable resources and environmental protection.

45

Table 7: Comparison of cost electricity from CCS power plants and other low carbon generation for entry into service in 2016 ($/MWh), 2010

Plant type Levelized cost ($/MWh)Solar thermal 312Offshore wind 243Solar PV 211Advanced coal with CCS 136Advanced nuclear 114Biomass 113Onshore wind 97Advanced natural gas combined cycle with CCS

89

Hydropower 86


46

Figure 9: Comparison of cost electricity from CCS power plants and other low carbon generation for entry into service in 2016 ($/MWh), 2010


Liquid biofuels for transport

Liquid biofuels account for around 2% of road transport fuels globally but growth rates and future potential

will impact the availability of feedstock for power generation. Currently, the production and consumption of

liquid biofuels for transport is highly concentrated with the US and Brazil accounting for between 60% and

70% of world ethanol production. Germany and France account for nearly 60% of biodiesel production and

consumption. Further, the growing interest in developing second generation biofuels including ethanol and

biodiesel based on cellulosic feedstocks in countries including Brazil and the US will likely make more

feedstock suppliers enter the transport market for the sale of making profits; instead of selling the feedstock

for electricity generation market, leading to a potential shortage in feedstock for power generation.

Currently corn and sugarcane are the major crops used for ethanol production globally. The water

requirements for growing corn grain are much higher than what is needed to grow sugarcane for the sake of

producing biofuels. As new technologies for the cellulosic conversion of biomass and other second

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generation technology for ethanol production are demonstrated and improved and become viable, the

relative difference between the crop water requirements may be reduced. Furthermore, thermo-chemical

conversion utilizing a wider variety of feedstocks for bioenergy may emerge as a more sustainable option for

reducing the use of water for growing energy crops.

Economics of biomass power technology The biomass power market will gain from technological advances in manufacturing the associated

equipment, which could lead to fall in the average global generation costs between 2010 and 2035. Under

the present market conditions, the majority of available renewable power resources including biomass power

are yet to become cost competitive compared to non-renewable resources including coal and natural gas.

Going forward, benefits from national level programs, energy efficiency incentives, and financial incentives

targeting the expansion of the renewables market will create demand for additional biomass power capacity

globally between 2010 and 2035. The world average generating costs of biomass power will likely fall from

$131 per MWh between 2010 and 2020, as shown in Table 8, to reach $126 per MWh between 2021 and

2035, driving more countries to use biomass power in a bid to achieve low carbon electricity mix.

Going forward, countries interested in developing the biomass power should ensure a balance is struck

between sourcing biomass feedstock by ensuring adequate land availability, water availability, and

transportation costs, - while assuring food security for a growing population. A variety of tools will result in

driving down the global average biomass power generating costs by 2035 including:- investments in the

renewables market, offering subsidies for renewable energy technologies, the availability of Feed-in Tariffs

for biomass power electricity generation, the availability of finance for equipment installation, and local

awareness campaigns. However, the prolonged emission of greenhouse gases globally will likely create

climatic variations globally, leading to a plausible change in biomass feedstock availability beyond 2035. As a

result, the issue of climate change will likely be integrated into all decision making policies designed by the

governments globally to achieve a low carbon economy. With increased awareness of using green power,

consumers will drive demand for energy efficient products, resulting in more utilities increasing the

investment required in renewable energy technology advancements including in biomass power.

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Table 8: World average generation costs of renewables based electricity generation by technology type ($ per MWh), 2010–2035

Technology type Average generation costs

($ per MWh in 2010–20)Average generation costs

($ per MWh in 2021–35)Geothermal 52 46Wind (onshore) 85 65Hydro (large) 94 74Wind (offshore) 101 95Biomass 131 126Hydro (small) 143 143CSP 207 156Solar PV (large scale) 280 157Marine 281 187Solar PV (buildings) 406 217

Note: This data is the latest available at the end of 2010. Data is calculated based on $2009 per MWh.

Source: IEA BUSINESS INSIGHTS

49

Figure 10: World average generation costs of renewables based electricity generation by technology type ($ per MWh), 2010–2035


50

Chapter 3 The US

Summary The US is meeting the challenge of the ever increasing energy needs by promoting renewable energy

resources by extending incentives and mandates including the federal government’s Renewable Fuels

Standard, Production and Investment Tax Credits and state government’s Renewable Portfolio

Standards.

Currently the federal government in the US provides a Production Tax Credit of $0.02 per kWh for

biomass power, which is set to expire at the end of 2013. The availability of low cost biomass

feedstocks and state RPS programs may continue to aid the deployment of biomass power technology.

The net biomass and waste power generation in the US recorded a CAGR of -0.6% between 2005 and

2009 due to the increasing the role of other renewables including wind power and hydroelectric power

use in the generation mix; and falling levels of support at the federal level in using biomass feedstock

for electricity generation.

Growth in the biomass power market is driven by the US Environmental Protection Agency’s (EPA)

announcement to put off for another three years, a decision on whether greenhouse gases released by

biomass power plants should be regulated under the Clean Air Act.

The need to meet growing demand for transportation fuel could mean that the US government will look

at reducing the country’s dependence on oil as transportation fuel by growing biomass feedstock for

biofuels rather than developing biomass power.

The future of biomass for electricity generation heavily exists on state RPS and federal tax credits, with

electricity generation from dedicated biomass plants and co-firing in coal plants to gain momentum in

the US. According to the US EIA, biomass power generation will grow from 7GW in 2009 to reach

20.2GW in 2035 recording a CAGR of 4.1%.

51

US biomass power market overview The US government is interested in developing and expanding the biomass feedstock supply system in an

attempt to reduce the country’s dependence on non-renewable resources including oil and natural gas; while

addressing the issue of rising carbon emissions. Currently, the majority of the federal government regulations

support the use of available feedstock for producing transport fuel. In the US, if the federal government

decides to extend the existing policy on subsidy provision, demand will continue to rise for the adoption of

biomass power technology, subject to incentives provided by the government to adopt renewable power

technology.

Current scenario of the US The US electricity market is dominated by the use of coal, which is the most common fuel for generating

electricity in the country. In 2009, 45% of electricity generation depended on coal as its source of energy

within the US. In the US, renewable energy consumption increased by about 8% between 2008 and 2009,

contributing about 8% to total US energy demand, and 10% to total US electricity generation in 2009. The

US renewables market was lead by hydroelectric power (66%), followed by wind (17%), wood (9%), biomass

waste (4%), geothermal (4%), and solar (0.2%).

The net biomass and waste power generation in the US recorded a CAGR of -0.6% by falling from 67.1bn

kWh in 2005 to 65.4bn kWh in 2009, as shown in Table 9. The fall in the total biomass power generation in

the US is accounted to the increasing the role of other renewables including wind power and hydroelectric

power use in the generation mix; and falling levels of support at the federal level in using biomass feedstock

for electricity generation.

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Table 9: US, net biomass and waste power generation (bn kWh), 2005–09

Details 2005 2006 2007 2008 2009 CAGR

2005–09(%)

Net biomass power generation (bn kWh)

67.1 67.8 67.8 66.7 65.4

Growth (%) 1.1 -0.1 -1.5 -2.0 -0.6Note: 2Data for 2010 not available


Figure 11: US, net biomass and waste power generation (bn kWh), 2005–09


Key feedstock

The current US biomass feedstock consists of variety of forestry and agricultural resources, industrial

processing residues, and municipal solid waste, and urban wood residues. As shown in Figure 12, the US

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has abundance of feedstock spread across various states. In the US, close to 33% of land area is classified

as forest land, 26% as grassland pasture, 20% as cropland, 8% for public facilities, and 13% for

miscellaneous uses such as urban areas, swamps, and desserts. The land-base of the US is 2,263m acres,

including 369m acres of land in Alaska and Hawaii. According to the US Department of Agriculture, per year,

the US bioenergy power market utilizes 44m dry tons of forest products, 35m dry tons of urban wood and

food residues, 35m dry tons per of fuel-wood, 18m dry tons of biofuels, and 6m dry tons of bio- products.

Figure 12: US, biomass resource map, 2009

Source: NREL BUSINESS INSIGHTS

Government policy framework for renewables in the US The US government is interested in developing and expanding the biomass feedstock supply system in an

attempt to reduce the country’s dependence on non-renewable resources including oil and natural gas; while

54

addressing the issue of rising carbon emissions. The US is hedging against increasing energy needs by

promoting renewable energy resources - by extending incentives and mandates including the federal

government’s Renewable Fuels Standard, Production and Investment Tax Credits and state government’s

Renewable Portfolio Standards.

However, the renewables market in the US lacks a national level Renewable Portfolio Standard, making the

current renewables’ legislative landscape largely fragmented and driven by states. Consequently, 42 states

and the District of Columbia have introduced a Renewable Portfolio Standard (RPS) or the Advanced Energy

Resource Standard (AERS) or the Alternative Energy Portfolio Standard (AEPS) or alternative energy goal

encouraging the expansion of renewables market. In the US, these refer to a regulatory mechanism requiring

that the retail electricity suppliers procure a minimum quantity of eligible renewable energy by a specific date,

in percentage, megawatt hour, or megawatt terms. The mechanism allows the states in the US to set

mandates or voluntary goals for generating electricity using renewable resources, resulting in creating

investment and job creation as well as an increase in additional renewable energy capacity including

biomass power.

Overview of government policies supporting the biomass power market in the US

The biomass feedstock-rich US has a range of government programs which focus on creating opportunities

for the expansion of biomass power generation and for using biomass feedstock in cogeneration plants along

with coal. Some of the most prominent opportunities and challenges impacting the US the biomass power

market are as follows:-

In the US, if the federal government decides to extend the existing policy on subsidy provision, demand

will continue to rise for the adoption of biomass power technology. Currently, the federal government

provides a Production Tax Credit of $0.02 per kWh for biomass power, which is set to expire at the end

of 2013. However, there is uncertainty over the possible long term extension of the subsidy program

after 2013 for biomass power, making the regulatory environment for biomass power uncertain in the

US. At the federal level, the biggest risk is the lack of political will-power, which will create downward

55

pressure on the subsidy extensions for biomass power, leading biomass power utility firms to deal with

potential implementation setbacks and funding gaps in the US after 2013.

Despite the lack of federal policy directives on extending the Production Tax Credit in the US, the

availability of low cost biomass feedstocks and state RPS programs may continue to aid the

deployment of biomass power technology. In the US, this acts as a positive indicator for investors to be

involved in growing biomass feedstock in the states which support the geographic conditions to grow

biomass feedstock. The states in the US tend to encourage electricity generation from dedicated

biomass power plants and co-firing in coal plants by introducing specific regulations. For instance, the

US EIA notes Connecticut’s RPS plans to achieve 27% of electricity to be generated from renewables

by 2020, out of which 3% is to be met from by waste-to-energy and conventional biomass facilities.

Along similar lines, the Massachusetts’ RPS requires 15% of electricity to be generated from

renewables by 2020 and the state allows for biomass power installations with low-carbon life cycle

emission sources, which shows how some of the states in the US are interested in promoting biomass

power.

The US government advocates the adoption of biomass power technology applications and reduction

of carbon emissions by pursuing continuous investment. According to the US DOE, the federal

government has funded close to $3.7bn (including more than $900m in the American Recovery and

Reinvestment Act) in a variety of research and development programs targeting expansion of biomass

feedstock in the US since 1970. The federally funded Biomass Program focuses on developing

biomass feedstock for biofuels, bio-products, and biopower research efforts. With regards to electricity

generation, the Biomass Program encourages biomass co-firing by involving partnership with the

renewables industry and other key stakeholders in the biomass market. The Biomass Program calls for

developing, optimizing, and demonstrating pretreatment and conversion technologies enabling the

increased use of biomass power in a bid to reduce dependence on fossil fuels and reduce greenhouse

gas (GHG) emissions. The Biomass Program focuses on electricity generation primarily through co-

firing activities of up to 20%. There exists significant opportunities for biomass power utilities to enter

the co-firing biomass segment in the US.

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Key players According to the non-profit organization, Biomass Thermal Energy Council, some of the leading biomass

companies involved in using biomass energy for heat, thermal energy applications, and the provision of other

biomass supply solutions include BioHeatUSA, Energex Corporation, Bear Mountain Forest Products, Forest

Energy Corporation, International WoodFuels, and New England Wood Pellet. Further, the US has several

biomass power plant operators including North American Energy Services, Colmac Energy Inc, AES Corp,

Sierra Pacific Industries, Yanke Energy, Wheelabrator Technologies, NRG Energy, Minnesota Power, Avista

Corp, and Hawaiian Commercial & Sugar.

Future outlook for the US

Government incentives to ensure growth in the biomass power market

Favorable government incentives in the US could drive growth in the biomass market despite the

government’s possible indecisiveness on extending the Production Tax Credit, which could impact the

biomass power market for electricity generation beyond 2013.

The US has huge potential in cultivating and supplying biomass feedstock for transport (biofuels) and

for electricity generation (biomass power). However, biofuels and biomass power will compete for the

same biomass feedstock supply. The future of biomass for electricity generation heavily exists on state

RPS and federal tax credits, with electricity generation from dedicated biomass plants and co-firing in

coal plants to gain momentum in the US. According to the US EIA, biomass power generation will grow

from 7GW in 2009 to reach 20.2GW in 2035 recording a CAGR of 4.1%, as shown in Table 10,

indicating more than a triple fold jump in the use of biomass for electricity generation in the US between

2009 and 2035. The US EIA has suggested the future growth potential in biomass power capacity to be

taking place at biorefineries, indicating could the need to call for mandates in the federal RFS, which in

turn, require encourage the use of biofuels in the transportation sector in the US. The US EIA believes

no growth to be occurring in dedicated biomass generating capacity, because dedicated open-loop

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biomass plants remain too expensive to compete successfully with other renewable resources for

electricity generation.

Table 10: US, cumulative installed biomass power generation capacity forecast (GW), 2009–35

Details 2009 2015 2020 2025 2030 2035 CAGR

2009–35 (%)

Installed biomass power generation capacity (GW)

7.0 9.5 11.6 17.3 19.7 20.2

Growth %) 34.2 23.2 48.9 13.6 2.8 4.1Note: Biomass power includes wood and other biomass


Figure 13: US, cumulative installed biomass power generation capacity forecast (GW), 2009–35


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Possible change in Clean Air Act regulation in the US Growth in the biomass power market is driven by the US Environmental Protection Agency’s (EPA)

announcement on whether greenhouse gases released by biomass power plants should be regulated under

the Clean Air Act. Currently, emissions associated with the combustion of biomass power are not counted for

in the US, because the US EIA assumes the emissions to be balanced by carbon uptake when the biomass

feedstock is grown. In this regard, the US EPA plans to finalize a rule exempting carbon emissions from

biomass energy production from the new Clean Air Act regulation for three years starting July 2011. In the

US, this will lead the US EPA to propose a permanent policy on biomass power emissions. The deferral on

emissions released by biomass power plants will act as a relief for existing biomass power plant operators

and co-firing operators for the next three years. However, if uncertainty in environmental permitting process

prevails in the US beyond 2014, the biomass power plants will face challenges including delays in getting

finances and incentives from the federal government, arising from public resistance and fear of the potential

impact the biomass power plant facilities could have on local air quality and health of citizens.

High costs The generation costs associated with coal are less than for biomass power generation. Yet the US

renewables market will capitalize on the country’s land and water availability to promote the growth of

biomass feedstock for electricity generation. Further, the existing government incentives and programs in

support of advancements in the US biomass power’s supply chain requiring a whole range of activities

including handling, processing, and logistical steps - will encourage the adoption of additional biomass power

capacity.

Integrated conversion technologies and co-firing to grow The US government will encourage the designing of new and better renewable power technology systems

for biomass power by the provision of financial incentives, making biomass power plant operators and co-

firing plant operators improve available power conversion technology. In terms of technology, the federal

funded Biomass Program has a goal to develop and deploy cost effective and integrated conversion

technologies and co-firing for the production of biomass electricity, biofuels, and byproducts. Currently, the

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energy conversion technology for biomass feedstock in the US is based on biochemical conversion

(producing sugars from biomass and fermenting those sugars into ethanol or chemicals) and thermo-

chemical conversion (producing intermediates from biomass and organic biorefinery residues via

gasification, and pyrolysis. The Biomass Program highlights the potential for the pretreatment and

conversion process, which will result in improving the biomass power generation cycle efficiency. The US is

also interested in developing integrated biorefinery and biopower applications focused on building pilot scale

and commercial scale deployment, while supporting co-firing using biomass feedstock. Currently, the

Biomass Program’s targets for the US include:-

Developing specifications for improved feedstock quality for materials suitable for use in advanced

power generation approaches by 2011;

encouraging cogeneration by developing pre-treatment and conversion technologies capable of

increasing the share of biomass mixed with coal to at least 20% by 2014;

initiate the operation of 10MW of advanced pilot-scale biomass power generation capacity by 2015;

initiate the operation of an additional 20MW of advanced pilot-scale biomass power generation capacity

by 2016.

Focus on converting biomass feedstock into fuel for transportation The US government will encourage a host of technologies for converting biomass feedstock into cost

competitive fuels including ethanol, renewable gasoline, renewable jet fuel, renewable diesel, as well as bio-

products and biopower. In addition, the need to meet growing demand for transportation fuel could mean that

the US government will look at reducing the country’s dependence on oil as a transportation fuel by growing

biomass feedstock for biofuels rather than developing biomass power. For instance, the US government’s

commitment to develop biofuels, bio-products, and biomass through the Biomass Program serves as an

acknowledgement that the use of biomass feedstock is likely to undergo a major paradigm shift driven by

technology and regulatory advances. The shift will be attributed to the existing the Renewable Fuel Standard

(RFS), which requires the production of ethanol from biomass feedstock. These conditions make the

Biomass Program’s near term goals focus on converting biomass feedstock into liquid transportation like

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producing ethanol from biomass feedstock. Further, the USDA’s Biomass Crop Assistance Program

encourages the development of next generation biofuels with limited focus on electricity generation. In this

regard, the USDA has designated 39 counties spread over 50,000 acres in Missouri and Kansas for the

production of dedicated biofuels crops, native grasses and herbaceous plants for transportation fuels,

production, and electricity in 2011. Under the Biomass Crop Assistance Program, farmers will plant mixes of

perennial native plants, including switchgrass, for the manufacture of biomass pellet fuels and other biomass

products to be used for power production and production. The US federal regulation outlook indicates the

inclination on producing cellulosic ethanol as a second generation biofuel for transportation to lessen the

dependence on petroleum.

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Chapter 4 Germany

Summary The abundance of biomass feedstock availability is reflected in the strong biomass generation growth

in Germany, which recorded CAGR of 24.2% between 2005 and 2009.

Germany’s renewables market is driven by regulations and incentives, which create opportunities for

electricity generation from renewable resources in accordance with the EU’s Climate Action Plan

mandate.

Germany’s biomass power market is driven by Feed-in Tariff mechanism, which attracts companies to

be involved in adding to existing renewable power capacity across the country.

Germany’s geographical terrain offers abundant biomass feedstock in terms of agricultural byproducts,

forestry sectors, and dedicated energy crops resulting in implementation of specific type of

technologies.

By 2012, the federal government is planning on amending the EEG Act, which would help in changing

the existing Feed-in Tariff structure for electricity from biogas, driving the demand for biomass


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Germany’s biomass power market overview Germany continues to support the growth of renewable power generation in order to replace non-renewable

sources of power including oil, natural gas, and nuclear power. Contribution of fossil-fuel based generation to

the total electricity generation in Germany is more than 80% in 2009. Germany’s total net electricity

generation in 2009 was 97.31bn kWh, with biomass and waste contributing 38.3bn kWh, indicating a share

of 39% of the total electricity generation. Germany has a combination of biomass power-specific government

subsidies, programs, and Feed-in Tariffs, which encourage the biomass power market. Going forward, the

abundance of biomass feedstock such as the existing agricultural and forestry sector of 17m hectares of

agricultural land will likely make the government encourage the use of biomass feedstock for markets of

electricity generation, heat production, and transportation fuel.

Current scenario of Germany According to the US EIA, Germany’s net electricity generation using biomass and waste recorded a CAGR of

24.9% by growing from 15.8bn kWh in 2005 to 38.3bn kWh in 2009, as shown in Table 11, driven by

Germany’s electricity strategy which encourages renewable and clean energy technologies, backed by a

Feed-in Tariff mechanism. The abundance of biomass feedstock availability drives strong biomass

generation growth in Germany.

Table 11: Germany, net biomass and waste power generation (bn kWh), 2005–09

Details 2005 2006 2007 2008 2009 CAGR

2005–09(%)

Net biomass and waste power generation (bn kWh)

15.8 20.3 27.6 27.8 38.3

Growth (%) 28.6 36.3 0.5 38.0 24.9Note: 2010 data is not available


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Figure 14: Germany, net biomass and waste power generation (bn kWh), 2005–09


Key feedstock

In Germany, biomass is used in solid, liquid and gaseous form for the generation of electricity and production

of heat as well as for manufacturing biofuels. Germany offers immense biomass feedstock in terms of

agricultural byproducts, forestry sectors, and dedicated energy crops. According to Germany’s Federal

Ministry for the Environment, the agricultural and forestry sector forms part of the 17m hectares of

agricultural land, with approximately 12m hectares of arable land and approximately 5m hectares of

grassland. Further, 11m hectares of woodland are available for biomass feedstock production. As 25% of

Germany's wood production (lower quality line of production) is used for generating energy, making wood the

most prominent feedstock available in Germany.

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According to Germany’s Federal Ministry for the Environment, biomass mainly stems from agriculture,

energy crops, wood, liquid manure, organic residue. Waste wood, wood pellets, and residues remain the

most prominent source of energy production, used primarily for heat production and electricity generation.

Government policy framework for renewables in Germany Germany’s renewables market is driven by regulations and incentives, which create opportunities for

electricity generation from renewable resources in accordance with the EU’s Climate Action Plan mandate.

The EU’s mandate calls for sourcing 20% of total energy from renewable resources, a 10% share of

renewable energy specifically in the transportation sector, and to reduce the GHG emissions by 20% across

all member nations by 2020 when compared to 1990s level. To align the national goal with EU’s mandate,

Germany has set a target of producing 18% of the total national energy consumption from renewable energy

sources by 2020. Currently, Germany is actively engaging in an aggressive regulatory strategy promoting

renewable resources for electricity generation, heat production, and production of transportation fuel through

the following fiscal instruments:-

Germany’s Feed-in Tariff mechanism ensures a favorable investment climate, which draws companies

across all types of renewable power technology types into installing power plants capable of renewable

electricity generation. In Germany, renewable resources account for the largest share in Germany’s

future energy supply mix, as the electricity regulations encourage additional installed electricity

capacity. For example, Germany’s Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz or

EEG Act) for the electricity market guarantees each plant operator a fixed tariff based on the renewable

energy technology type for electricity generated from renewable resources, which is fed into the public

electricity grid. The amount of tariff is set by law and is usually paid over a period of 20 years. The

criteria for eligibility, the amount of tariff, and the grid operator's obligation period differs depending

upon the renewable source type. Currently, the EEG Act plans to increase the proportion of renewable

resources in Germany’s total energy supply to at least 30% by 2020 and to continuously increase this

proportion thereafter. Clearly, this indicates the existing regulatory framework for electricity generation

will create opportunities for additional renewable power technology capacity installation in Germany.

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The EEG Act specifies the renewable energies’ share of heat supply is to grow to 14% by 2020. In

addition, under Germany’s Biomass Action Plan, the biofuels’ share of fuel use is to be increased to a

level which yields a greenhouse gas emissions reduction of 7% by 2020.

The federal government’s Renewable Energy Heat Act, the Combined Heat and Power Act, and the

Gas Grid Access Ordinance support the use of renewable resources across Germany. These

regulations include obligations to use renewably-generated heat in the highly cost effective new

buildings sector, leading to promoting intensified CHP activities with the accompanying district heat

networks and overseeing integration of biogas plants into micro-gas grids. The existing electricity

regulations also encourage the processing of biogas to match natural gas quality, which could later be

supplied to the national grid and be subsequently used in vehicles in Germany.

Germany encourages the growth of biomass feedstock for producing transportation fuel. In this regard,

Germany’s Biofuel Quota Act sets minimum quotas for biodiesel and bioethanol in conventional motor

fuel. According to legislation in effect since the beginning of 2011, the only biofuels which can be sold

in Germany’s transportation market are those which can be demonstrated as coming from feedstock

which was grown in line with the principles of sustainability.

Overview of government policies supporting the biomass power market in Germany

Germany’s biomass power market is driven by government incentives and policies, which actively encourage

the use of biomass feedstock for electricity generation. Though total land and water availability limits the

growth of biomass feedstock, Germany continues to focus on promoting biomass feedstock for use in the

markets of electricity generation, production of heat and transportation fuel. The role played by Germany’s

federal government in developing the biomass power market can be assessed with the following key market

developments:-

Feed-in Tariff mechanisms promote the growth of Germany’s biomass power market leading to

additional biomass power capacity across the country. By way of the EEG Act, biomass power

operators can utilize the Feed-in Tariff for biomass power ranging between $0.08 per kWh and $0.16

per kWh according to the system size for a 20 year period. Additionally, the EEG Act provides a

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technology bonus for biomass power plant operators depending on the type of biomass feedstock used

and the level of energy efficiency achieved.

In terms of technology, Germany may encourage cogeneration technology (heat and power plants) in

the future due to higher energy efficiency compared to existing only heat plants, which operate at lower

efficiencies. Currently, Germany offers a cogeneration bonus for CHP plants capable of achieving

energy efficiency. In this regard, the EEG Act provides a bonus per kWh per CHP plant depending on

the power plant size. With regards to heat, Germany’s Market Incentive Programme provides

investment aid for buildings to increase the share of renewable energy in total heat supply.

The federal government in Germany is working towards promoting a stable biomass feedstock supply

chain in a bid to promote electricity generation using biomass power. In this regard, Germany’s National

Biomass Action Plan identifies the potential for the use of biomass power in Germany, detects available

reserves, and illustrates how Germany’s government is working toward promoting biomass feedstock

for electricity, heat, and fuel sectors.

Germany’s market incentive program promotes the construction of power systems such as CHP using

biomass feedstock, making the heat production sector compete with electricity generation sector for the

supply of biomass feedstock in Germany.

Key players The prominent companies operating in Germany’s biomass power market include RWE Power, AE E Lentjes

GmbH, BMP Biomasse Projekt GmbH, Interargem, BPRe Biopower Renewable Energy, ENRO AG,

PROKON Nord Energiesysteme, GEE Energy GmbH Co KG, and EnBW Energie Baden-Wurttemberg.

Future outlook for Germany

Government incentives to foster growth

Aggressive government support mechanisms will create opportunities for electricity generation using

biomass feedstock in Germany. Germany’s ambition to substitute non-renewable resources including oil,

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natural gas, and phase out nuclear power will likely make the federal government promote renewable

resources especially biomass power, due to availability of feedstock and commercial viability of biomass

power plant operations. Hence, depending upon planned additional installed electricity capacity, the

cultivation of energy crops and supply of biomass feedstock will be realigned across sectors of electricity

generation, heat production and transportation fuel production depending on emerging demand for electricity.

According to Agra Net F.O.Lichts, Germany’s installed solid biomass power capacity would likely record a

CAGR of 7% by growing from 2GW (2,427MW) in 2010 to 5GW (4,792MW) in 2019, as shown in Table 12.

By 2012, the federal government is planning on amending the EEG Act, which could likely help in changing

the existing Feed-in Tariff structure for electricity from biogas. Currently, the revised provision is yet to be

announced and is likely expected in the middle of 2011.

The aim of encouraging growth of biomass feedstock is to meet demand across the markets for electricity,

heat, and transport in Germany, leading Germany’s government to certify the exact source of feedstock to

prove whether the energy generated is sustainable. Similar to the regulations imposed on Germany’s Biofuel

Quota Act, this would enable the federal government to check if biomass power is truly renewable in terms of

helping in GHG reduction, resulting in rewarding Feed-in Tariff under the EEG Act in Germany.

In certain regions within Germany, the significant rise in demand for maize as a raw material for biogas

installations has led to excessive cultivation of maize - resulting in agricultural land prices rising drastically.

The federal government is keen to reduce such competition over land use, while investigating on

unwarranted negative impacts on landscapes and biological diversity - caused by excessive maize

cultivation. Germany’s government will introduce regulations to the EEG Act and related Feed-in Tariff

provisions to curb the drastic impact of cultivating energy crops on land prices.

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Table 12: Germany, installed solid biomass capacity forecast (MW), 2010–20

Details 2010 2020 CAGR 2010–20 (%)Installed solid biomass capacity projection (MW)

2,427 4,792 7.0

Notes: Data excludes biogas projections;

Germany’s installed biogas capacity to grow from 693MW in 2010 to 3,796MW in 2020.

Source: Estimates by Agra Net F.O.Lichts BUSINESS INSIGHTS

Figure 15: Germany, installed solid biomass capacity forecast (MW), 2010–20


Technological developments

Germany’s biomass power market indicates opportunities for electricity generation due to potential

developments in biomass power generation technology installation. At present, Germany offers abundant

biomass feedstock in terms of agricultural byproducts, forestry sectors, and dedicated energy crops resulting

in implementation of specific type of technologies. Currently, the most prominent types of biomass energy

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technologies used in Germany include using wood for production of heat, production of biogas through CHP,

and cultivating oil seed to producing biofuel to power stationary and mobile engines. Further, combustion

technology including circulating fluidized bed combustion is used in Germany, where coal and biomass

feedstock can be used simultaneously to generate power. Germany’s federal government will explore the

potential to increase renewable power generation and development of second generation biofuels. In

Germany, there could emerge additional research and development to make biomass power technologies

more energy efficient capable of restricting combustion related air pollution when converting feedstock into

power in Germany. Currently, Germany’s government is encouraging the development of biomass yields on

existing arable land depending on the region and adapted models for energy crop production. The federal

government has noted some of these technologies still need to be developed (e.g. biomass condensing

boilers, electricity-generating technologies for small-scale facilities, biomass to gas converters to provide

biomethane for electricity generation, heat production, and second generation biofuels).

Across renewables, Germany’s plan to phase out nuclear energy will result in technological developments in

terms of the country having to invest heavily in generation, smart grid projects, and storage technology,

capable of providing base-load capacity.

The role of Energy Concept

Germany’s federal government plans on attaining the security of energy supply using only renewable

resources by 2050. In this regard, the federal government’s Energy Concept points out how renewable

resources will and gradually replace conventional energy sources, leading to the overhaul of the existing

energy supply mix and power grid in Germany. The Energy Concept not only sets out a long-term strategy

until the year 2050, but also contains the federal government's short and medium term legislative programs

in the field of energy. Germany’s aim is to reach a 35% share of renewable energy in the gross energy mix

by 2020, and 80% by 2050. These instances indicate the growth potential for rapid installation and expansion

of renewable power technology across Germany aided by probable introduction of various government

incentives and policies between 2011 and 2050.

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Going forward, the Energy Concept will likely make Germany move towards creating sustainable and

efficient use of available biomass feedstock by 2050 by focusing on the following issues:-

Improving the domestic biomass feedstock potential while avoiding conflicts of use through wider use

of organic residues and wastes, agricultural co products, material from landscape management and

wood from short-rotation plantations;

increasing the energy efficiency and land use through improved management forms, greater recovery

of biomass in combined heat and power plants;

improving electricity generation from biomass power to promote the integration of renewable energies

into energy supply;

greater use of biomethane through the establishment of options for feeding into the gas network for the

purpose of energy provision;

supplementing biomass power through imports of sustainably produced biomass

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Chapter 5 Brazil

Summary Hydroelectric power and natural gas dominate Brazil’s electricity supply mix. Brazil’s total installed

renewable power capacity was 14GW in 2010, with key renewable sectors being ethanol (36bn liters),

biomass (8GW), and small hydroelectric power (5GW) leading the country’s renewables supply mix.

In 2009, Brazil’s total renewable net power generation was 409.8bn kWh and total net power

generation was 461bn kWh, indicating the importance of renewables in the country’s electricity supply.

Brazil’s net biomass power generation recorded a CAGR of 10.8% between 2005 and 2009 led by

increase in the country’s economic growth.

Brazil’s most prominent biomass feedstock is sugarcane, which makes cogeneration the most viable

biomass technology for installation across the country. Other biomass feedstocks found in Brazil

include waste crops and other organic material.

Going forward, Brazil will accelerate the installation and the adoption of renewable power technology,

by restricting additional capacity installations using thermal resources between 2011 and 2019, led by


The availability of biomass feedstock in the future will face supply disruptions due to increase in

deforestation along the Amazon River area.

Brazil is currently the world’s leading producer and exporter of ethanol for fuel, led by the abundance of

bagasse, which is produced from sugarcane. Brazil’s government will continue to encourage

technologies for converting biomass feedstock into cost competitive fuels including ethanol for

transportation, which has historically remained very successful.

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Brazil’s biomass power market overview Brazil has abundant biomass feedstock resources and has recorded a net biomass and waste power

generation of 21.4bn kWh in 2009. Currently, Brazil has around 6.3m hectares of reforestation land (1.8m of

pine and 4.5m of eucalyptus indicating the potential volume of biomass feedstock. Going forward, Brazil’s

biomass power market will be promoted by national level government policies including tax incentives for

sugar mills, driving cogeneration.

Current scenario of Brazil Hydroelectric power and natural gas dominate Brazil’s electricity generation capacity. Brazil’s total installed

renewable power capacity was 14GW in 2010, including the key renewable sectors being ethanol (36bn

liters), biomass (8GW), and small hydroelectric power (5GW) leading the country’s renewable power supply.

Historically, hydroelectric power has dominated Brazil’s electricity supply, with more than 80% of electricity

being fed into the grid.

In 2009, Brazil’s total renewable net power generation was 409.8bn kWh and total net power generation was

461bn kWh, indicating the importance of renewables in the country’s electricity supply. According to the US

EIA, Brazil’s net biomass power generation recorded a CAGR of 10.8% by growing from 14.2bn kWh in 2005

to 21.4bn kWh in 2009, as shown in Table 13. The growth in net biomass and waste generation is attributed

to increase in the country’s economic growth.

Table 13: Brazil, net biomass and waste power generation (bn kWh), 2005–09

Details 2005 2006 2007 2008 2009 CAGR

2005–09(%)


14.2 14.6 17.0 18.8 21.4



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Figure 16: Brazil, net biomass and waste power generation (bn kWh), 2005–09


Key feedstock

Brazil’s most abundant biomass feedstock is sugarcane, which makes cogeneration the most viable biomass

technology for installation across the country. Currently, Brazil has around 6.3m hectares of reforestation

land (1.8m of pine and 4.5m of eucalyptus). Brazil has abundant forest residues, which can be used as a

source for electricity generation in Brazil.

Currently, the majority of Brazil’s sugarcane is grown in the north east region around Sao Paulo. The surplus

electricity generated from the existing sugar factories in Brazil is fed to the power grid. Though nearly 450

factories in Brazil are self-sufficient in electricity and export the excess power generated to the grid, only 100

sugar mills supply the excess to the power grid. The example suggests the existing power generating units

are low on efficiency, indicating opportunities for installing modern efficient boilers.

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Government policy framework for renewables in Brazil Brazil’s government promotes biomass power, wind power, and small hydroelectric power ranging between

1MW and 30MW, in a bid to increase the role of renewables in the country’s electricity supply mix. In this

regard, the Decennial Plan for Energy Expansion to 2019 is devised to ensure no new fossil-fuel power

plants are built in Brazil after 2014. Instead, the Plan identifies wind power, sugar cane biomass (a residual

from the sugar and ethanol refining industry), and small hydroelectric power to be used for electricity

generation. Across Brazil, the total investments in additional installed generation capacity are estimated to

reach $103.8bn by 2019, including 25% to be set aside for investment in new renewable energy projects

across Brazil.

However Brazil’s renewables market suffers from inadequate finances, making the adoption of renewable

power technology installations slow. For instance, Brazil was expected to aggressively drive renewable

power generation through the long-running incentives program PROINFA (Programade Incentivoàs Fontes

Alternativasde Energia Elétrica). The PROINFA aimed at adding 3.3GW of renewable energy capacity, split

equally among wind, biomass and small hydroelectric capacity. The target to add 3.3GW renewable energy

capacity by December 2007 was not achieved due to a lack of adequate finances and equipment shortages.

Going forward, Brazil will accelerate the installation and the adoption of renewable power technology, by

restricting additional capacity installations using thermal resources between 2011 and 2019, led by


Overview of government policies supporting the biomass power market in Brazil

Brazil’s biomass power market is an attractive prospect for investors, due to government support

mechanisms including tax incentives, which drive electricity generation. To enter Brazil’s renewables market,

operators of biomass power plants should deliberate on the following:-

Biopower is a beneficiary of Brazil’s government policy, in the form of the PROINFA program. The

PROINFA program calls for installing 48 projects totaling 1GW (1,100MW) of biomass power plants.

These biomass power projects are spread across the states of Sao Paulo, Parana, Goias,

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Pernambuco, and Espirito Santo, with the majority of existing biomass power projects using sugarcane

bagasse as feedstock.

The state of Sao Paulo plans on introducing incentives for generating electricity using biomass power,

driven by rich feedstock availability and the need to overhaul existing power plants. Currently, Sao

Paulo produces 60% of Brazil’s sugar cane, indicating the state’s geographic advantage in terms of

bagasse availability. The Sao Paulo’s state government provides tax breaks for biomass power

generation, in addition to encouraging partnerships with utilities to build the substations and

transmission lines necessary to connect new biomass power plants to the grid. Sao Paulo’s state

government ensures the provision of tax breaks for equipment to upgrade the existing sugar mills’

cogeneration plants. On approval of these tax incentives, Sao Paulo’s biomass power generation will

likely grow from 2.6GW (2,600MW) in 2010 to reach 5GW (5,000MW) by 2014. According to the

Brazilian Sugarcane Industry Association (UNICA), out of the 182 cogeneration plants in the state, only

54 generate electricity for the grid, indicating opportunities for future biomass power installation. The

proposed implementation of incentives in Sao Paulo will make the existing biomass power plant

companies buy equipment needed to overhaul old electricity cogeneration plants fueled with bagasse

and to build new ones, resulting in an increase in electricity generation.

Key players

PTZ BioEnergy, AREVA, Cosan S.A. Industria e Comercio, and ETH Bioenergia are some of the most

prominent power players involved in using biomass feedstock for generating electricity in Brazil.

Future markets trends impacting the biomass power market in Brazil

Government support mechanisms to promote the growth of the biomass power market

Brazil’s government may continue to promote market for biomass feedstock, driven by the prospect of

reducing the dependence on fossil fuels for electricity generation. Currently, Brazil’s government does not

have in place a Feed-in Tariff to promote biomass power generation - due to a lack of finances. Going

forward, Brazil will likely continue to depend on government support mechanisms including incentives and

subsidies to encourage the use of renewable resources including biomass power, driving installed biomass

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power capacity. According to Agra Net F.O.Lichts, Brazil’s installed biomass power capacity will likely record

a CAGR of 5.2% by growing from 5GW (5,380MW) in 2010 to 8GW (8,521MW) in 2019, as shown in Table

14. A new national 10-year plan from Brazil shows the country will triple the use of renewable energy by

2020, and intends on using a combination of wind power, small hydroelectric, and biomass power.

Table 14: Brazil, installed biomass power capacity forecast (MW), 2010–19

Details 2010 2015 2016 2017 2018 2019 CAGR

2010–19(%)

Installed biomass power capacity forecast (MW)

5,380 7,421 7,621 7,771 8,121 8,521

Growth (%) 4.9 6.6 4.6 4.2 4.0 5.2


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Figure 17: Brazil, installed biomass power capacity forecast (MW), 2010–19


Threat to future biomass feedstock availability

The availability of biomass feedstock in the future will face supply disruptions due to increase in deforestation

along the Amazon River area, with dense tropical forests. In Brazil, the Amazon area provides the ideal spot

for biomass power projects, as numerous saw mills generate waste, which is used to generate power. Yet

Brazil faces international pressure to reduce the greenhouse gas emissions from deforestation, an issue

which makes Brazil the third highest emitter globally after China and the US. Although Brazil is a leader in

using biomass feedstock for electricity generation, a recent government report indicates the Amazon River

area, with tropical forests has been experiencing deforestation. Directly, the continuous need for land to

support growing population and cultivate crops for food and biofuels will likely make Brazil’s government

address the issue of deforestation with stricter regulations in the future.

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In the near term, Brazil has abundant biomass feedstock including wood and bagasse, which is used to

generate electricity and increase the renewable energy share in Brazil’s electricity supply. However, biomass

power contributes less than 10% to Brazil’s renewable power supply because the majority of the available

biomass feedstock including bagasse and wood are used to produce biofuels, instead of generating

electricity. Currently, Brazil’s government is seeking to improve renewable power generation through

programs including the Clean Development Mechanism, which handles sales of certified emission-reduction

credits, and PROINFA. The potential for biomass power generation remains limited in Brazil because

biomass power is not as competitive as other non-renewable resources including oil and natural gas.

Further, a significant amount of feedstock including wood is used in rural parts of Brazil for traditional needs

including cooking and lighting.

The dominance of large hydroelectric power

Brazil’s electricity sector is dominated by hydroelectric power generation, due to the presence of Amazon

River and the Tocantins Araguaia basins in the north of Brazil. According to Bloomberg, Brazil receives more

than 80% of its energy from hydroelectricity. Brazil’s growing electricity market will likely continue depending

on hydroelectric power due to the abundance of water basins, low electricity generation costs, and zero

emissions. However, long term environmental impact of building hydroelectric power plants will disrupt the

existing flora and fauna in Brazil, potentially forcing the national government to introduce additional

regulations, which favor bagasse-based cogeneration instead of being dependent on large hydroelectric

power for future electricity supply.

The role of bioethanol

Brazil is currently, the world’s leading producer and exporter of ethanol for fuel, led by the abundance of

bagasse, which is produced from sugarcane. According to a recent press release by Reuters, Brazil’s

ethanol production is growing on average between 50,000 barrels per day and 520,000 barrels per day in

2010 and 2011. Brazil’s government will likely continue to encourage technologies for converting biomass

feedstock into cost competitive fuels including ethanol for transportation. Brazil’s 30-year-old ethanol fuel

program encourages the use of efficient agricultural technology for sugarcane cultivation and use of modern

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equipment and cheap sugar cane as feedstock, to process heat and electricity. In addition, Brazil’s

bioethanol market has grown enormously in the past three decades due to strong governmental incentives

and pro-ethanol legislation, making biofuels a more attractive option for investment than the biomass power

generation market.

Going forward, the focus of Brazil’s government may remain on developing and expanding a steady supply

of biomass feedstock. For instance, the state-run Brazilian Development Bank (BNDES) announced the bank

would provide between $19bn and $22bn to finance expansion in the sugar cane sector through to 2014.

Given the high prices for the biofuel and a massive expansion in the Brazilian vehicle volume in Brazil, the

government will focus on creating a steady feedstock to meet transport-fuel needs rather than use the entire

feedstock for the purpose of electricity generation. According to recent press releases, vehicles in Brazil can

likely run on any mixture of gasoline or on ethanol by 2020 and the total vehicle fleet is expected to rise to

86% by 2020 from its current level of 45% according to UNICA.

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Chapter 6 The UK

Summary The UK’s electricity supply is dominated by non-renewable resources including natural gas and coal.

According to the UK’s Department of Energy and Climate Change (DECC), land fill gas and co-firing

with fossil fuels remained the most popular means of generating biomass power in the UK.

In the UK, the Feed-in Tariff mechanism works alongside the Renewables Obligation (RO), which is

currently the key mechanism for supporting the deployment of large-scale renewable electricity

generation.

The driving force behind co-firing of biomass (split between pellets, wood chips and waste biomass

from agriculture or industry) is the provision of Renewables Obligation (RO) certificates.

The UK’s biomass power market will see more interest in developing anaerobic digestion technology, in

a bid to deal with the country’s waste disposal problem and add to the existing electricity supply.

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The UK’s biomass power market overview Being a signatory of the European Union’s Renewable Energy Directive, the UK needs to generate 15% of

the country’s energy supply (inclusive of electricity, heat and transport) from renewable sources by 2020. To

meet this target the UK government promotes the growth of renewable energy including biomass power

through various incentives and mandates. Going forward, the United Kingdom will use larger volumes of

biomass feedstock for the purpose of meeting the demand of the transportation sector and heat sector.

Current scenario in the UK Historically, the UK’s electricity supply has been dominated by non-renewable resources including natural

gas and coal. In 2010, the UK’s total installed renewable power capacity was 7.5GW, with wind power

(5.2GW) and biomass power (2GW) being the prominent renewables resources used for making additions to

the existing installed electricity generation capacity, driven by strong regulatory mechanisms.

The UK’s total renewable net power generation was 25.31bn kWh, while the total net power generation was

346.03bn kWh in 2009, indicating the limited the role of renewables in the country’s electricity supply.

According to the US EIA, the UK’s net biomass and waste power generation recorded a CAGR of 2.0% by

growing from 11.1bn kWh in 2005 to 12.0bn kWh in 2009, as shown in Table 15. Between 2007 and 2008, a

slow economic recovery moderated the UK biomass market growth. However, the growth between 2008 and

2009 was attributed to the aggressive policies adopted by the government, aimed at substituting renewables

for fossil fuels.

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Table 15: UK, net biomass and waste power generation (bn kWh), 2005–09

Details 2005 2006 2007 2008 2009 CAGR

2005–09(%)


11.1 11.0 10.5 10.4 12.0

Growth (%) -1.0 -3.9 -1.2 15.4 2.0Note: 2010 data is not available


Figure 18: UK, net biomass and waste power generation (bn kWh), 2005–09


Key feedstock

According to the UK’s Department of Energy and Climate Change (DECC), in terms of technology, land fill

gas and co-firing with fossil fuels remained the most popular means of generating biomass power in the UK.

Figure 19 and Figure 20 show some of the biomass power plants currently in operation in the UK (burning

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approximately 1m tons of biomass). In the UK, solid biomass is used for domestic heating and large-scale

power generation where the majority of the feedstock is used for co-firing with coal. The driving force behind

the co-firing of biomass (split between pellets, wood chips and waste biomass from agriculture or industry) is

the provision of Renewables Obligation (RO) certificate.

Currently the DECC notes the following feedstock to be available in the UK:-

Virgin wood including thinning, felling and coppicing of sustainably managed forests, parks and urban

trees ;

wood residues from sawmills and other wood processing industries;

agricultural energy crops including short rotation coppice, or miscanthus (a tall, woody grass) which

may be grown on land unsuitable for food crops;

agricultural residues including straw, husks and kernels;

wet waste including sewage sludge, animal manure and food waste, which would otherwise be

disposed of in landfill;

organic biodegradable proportion of municipal solid waste, commercial and industrial waste, and

construction and demolition waste.

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Figure 19: UK, biomass power plants, 2010 (part 1 of 2)

DevelopmentConstruction

Scottish Power, Longannet, 25MWRWE, Markinch, 50MW

Gaja Power, Billingham, 50MWDalkia, Chilton, 18MW

RWE, Stallingborough, 65MWECO2, Brigg, 40MW

EO2, Seaford, 40MW

EO2, Mendleshem, 40MWExpress Energy, 60MW

Evonik, Medway, 25MW

Eon, Sheffield, 25MW

Western Log, Margam, 35MW


Scottish Power, Longannet, 25MWRWE, Markinch, 50MW

Gaja Power, Billingham, 50MWDalkia, Chilton, 18MW

RWE, Stallingborough, 65MWECO2, Brigg, 40MW

EO2, Seaford, 40MW

EO2, Mendleshem, 40MWExpress Energy, 60MW

Evonik, Medway, 25MW

Eon, Sheffield, 25MW

Western Log, Margam, 35MW

Source: Bonsall and International Institute for Environment and Development

and Business Insights

BUSINESS INSIGHTS

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Figure 20: UK, biomass power plants, 2010 (part 2 of 2)


Forth Energy, Rosyth, Dundee, Grangemouth 3 x 100MW

SSE Ferrybridge, 108MW

Prenergy, Port Talbot, 350MW

Forth Energy, Leith, 200MWRES, Blyth, 100MWMGT, Tyne, 300MW

MGT, Teesside, 300MW

Drax, Selby, 300MW

Dong, Hull, 300MWDrax, Immingham, 300MW

Anglesey Aluminium, 108MW

Eon, Avonmouth, 150MWHelius, Avonmouth, 100MW


Forth Energy, Rosyth, Dundee, Grangemouth 3 x 100MW

SSE Ferrybridge, 108MW

Prenergy, Port Talbot, 350MW

Forth Energy, Leith, 200MWRES, Blyth, 100MWMGT, Tyne, 300MW

MGT, Teesside, 300MW

Drax, Selby, 300MW

Dong, Hull, 300MWDrax, Immingham, 300MW

Anglesey Aluminium, 108MW

Eon, Avonmouth, 150MWHelius, Avonmouth, 100MW

Source: Bonsall and International Institute for Environment and Development BUSINESS INSIGHTS

Government policy framework for renewables in the UK The UK’s renewable power market is largely driven by government incentives and mandates, which aim to

increase the role of renewable resources in order to meet the emission reduction targets laid down by the

European Commission. The EU’s Renewable Energy Directive plans to generate 20% of its energy supply

(inclusive of electricity, heat and transport) from renewable sources by 2020 when compared to 1990s level.

Being an EU member state, the UK’s renewable energy policy plans to increase the share of solar, wind,

hydropower along with biomass power in the country’s electricity supply. Currently, a combination of

Renewables Obligation Certificates (ROCs) and Feed-in Tariff mechanism encourage renewable power

generation including biomass power generation across the UK.

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The UK wants to capitalize on the available renewables resources in meeting the demands of markets

across electricity generation, heat production, and production of transport fuel. Being a signatory of the EU’s

Renewable Energy Directive, the UK plans on generating 15% of the country’s energy supply (inclusive of

electricity, heat and transport) from renewable sources by 2020. Further, the UK is committed to reducing the

greenhouse gas emissions by at least 80% by 2050, relative to 1990 levels. In this regard, the UK’s

government has introduced the Green Deal, in a bid to revolutionize the energy efficiency of properties in the

UK. The Green Deal will allow 14m households in the UK to pay for energy efficiency improvements in their

homes including provision for insulation, double glazing and energy-efficient boilers. The money will be

provided initially by the private sector and paid back in energy savings by homes over a 20-year period. The

first Green Deals are expected to appear 2012 after consultation and review.

Overview of government policies supporting the biomass power market in the UK

In the UK, the Feed-in Tariff mechanism works alongside the Renewables Obligation (RO), which is currently

the key mechanism for supporting the deployment of large-scale renewable electricity generation, and the

Renewable Heat Incentive (RHI) which, when implemented, will support generation of heat from renewable

resources to encourage the installation and adoption of low-carbon heating systems. The following are brief

descriptions of the government’s support schemes:-

The Renewables Obligation (RO) program requires electricity providers to source a certain percentage

of their electricity from renewable sources. Previously, one ROC was issued for each megawatt hour

(MWh) of eligible generation, regardless of technology. Since 2009, ROCs have been given by the UK

government based on the type of technology. Going forward, a proposed update to the RO program in

2012 would make the certificates banded, with different categories of renewables generation receiving

a different number of ROCs per MWh generated, depending upon the renewable energy source. Under

this proposal the co-firing of non-energy crop biomass would receive only 0.25 ROCs per MWh, while

the co-firing of energy crops will likely receive 1 ROC per MWh, dedicated regular biomass generation

would receive 1.5 ROCs per MWh, while "advanced conversion technologies" (gasification, pyrolysis

and anaerobic digestion), dedicated biomass burning energy crops, and dedicated biomass with CHP

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would all receive 2 ROCs per MWh. For co-firing purposes, the UK’s government encourages the

growth of crops such as miscanthus giganteus, short rotation coppice willow, and short rotation coppice

poplar. The RO places a legal obligation on all licensed electricity suppliers and electricity suppliers

have to produce evidence of supplying a specified proportion of electricity generated from renewable

energy sources to customers, or to other electricity suppliers. The UK’s ROCs are given for a host of

renewable energy sources such as hydroelectric, onshore wind, offshore wind, wave, tidal energy, solar

PV, geothermal, landfill gas, sewage gas, in addition to biomass energy.

The UK’s Feed-in Tariff mechanism extends financial support for small scale renewable energy

generation, including biomass power. Producers of renewable electricity get a generation tariff (paid by

an electricity company) for the amount of electricity they generate, in addition to an export tariff for

everything they feed back into the grid. Biomass power utilities would find the UK’s biomass power

market attractive to enter due to the Feed-in Tariff available for anaerobic digestion technology. The UK

is aiming at growing energy crops by providing a Feed-in Tariff for smaller-scale biomass electricity

generation, which will support installations under 5MW.

The UK’s government is interested in increasing the installation of low carbon heating systems, by

using biomass feedstock and other renewables to produce heat in buildings. The UK’s government is

looking at reducing carbon emissions by 80% by 2050. In this regard, the proposed Renewable Heat

Incentive (RHI) plans installing heating systems, which use renewable energy resources and produce

fewer emissions, instead of incinerating fossil fuels and hot water for generating heat. Similar to the

Feed-in Tariff mechanism, the UK’s RHI provides a similar set of incentives for heating. The first phase

of the RHI focuses on large-scale systems suitable for municipal and commercial buildings. According

to an article in The Guardian, the RHI is not clear on exactly when the first payments will be made, or

how they will be administered, but the UK’s government has promised to backdate the benefits to cover

all technologies installed since July 2009. Further, the domestic version of the RHI will be launched in

full in October 2012, to coincide with the Green Deal, a government policy supporting energy efficiency

in homes. Until then, $24m will be made available in grants – called Renewable Heat Premium

Payments, in a bid to subsidize the cost of installing a domestic-scale renewable heating system. With

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regards to the use of biomass feedstock, the Renewable Heat Premium Payments encourage

renewable power technologies including biomass boilers and biomethane - in addition to ground-source

heat pumps and solar thermal collectors. In terms of payment, the UK government ensures large scale

systems receive specific tariffs for each kilowatt hour of heat produced. Under the Renewable Heat

Premium Payments scheme, a payment per kWh is given for heat generated by the size of biomass

boilers also. The tariffs for the domestic version will be put to consultation in October 2011 and

announced in due course.

Key players The UK’s biomass market is largely dominated by Drax Power Limited (a subsidiary of Drax Group plc). Drax

is also the largest co-firing fleet owner globally, where biomass is incinerated alongside coal to produce

electricity. Drax has entered into ventures with Siemens Project Ventures, and Alstom among others and

plans to advance further within the UK’s biomass energy market. Other key players involved in the

development of biomass include Wartsila Corporation, E.ON UK, Scottish and Southern Energy, EDF

Energy, Energy Power Resources (EPR), Bronzeoak Company, Purepower Holdings Limited, and Welsh

Power Group Limited.

Future outlook for the UK

Potential for biomass energy development

Biomass power has received much more support in the UK than heat or CHP, despite the higher conversion

efficiencies of the latter. Heat production and CHP have an uneven level of support from government

policies. Biomass power plant operators are increasingly building generation plants closer to areas with

abundant feedstock availability. According to estimates by Agra Net F.O.Lichts, UK’s installed solid biomass

power capacity will likely record a CAGR of 18.4% by growing from 580MW in 2010 to 3GW (3,140MW) in

2020, as shown in Table 16. Further, the growth of biogas will overtake the use of solid biomass, driven by

varying feedstock availability and government support mechanisms.

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Table 16: UK, installed solid biomass capacity forecast (MW), 2010–20

Details 2010 2020 CAGR 2010–20 (%)Installed solid biomass capacity projection (MW)

580 3,140 18.4

Notes: Data excludes biogas projections;

UK’s installed biogas capacity to grow from 1,340MW in 2010 to 1,10MW in 2020.


Figure 21: UK, installed solid biomass capacity forecast (MW), 2010–20


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Focus on biofuels

The UK government’s intention to produce biofuel from feedstock, using second generation technology will

result in the development of viable feedstocks including whole-crops, algae, wood, straw and waste for

biofuel production. Currently, the Renewable Transport Fuels Obligation (RTFO) places an obligation on the

owners of liquid fossil fuel - intended for road transport use in order to ensure a certain volume of biofuel is

blended with transportation fuel. The UK’s government wants the use of biofuels to deliver a greenhouse gas

emission saving of at least 35% compared to ordinary fuel. According to the UK government’s estimates,

using biofuels would enable the minimum greenhouse gas savings rise to at least 50% in 2017, and 60% in

2018, resulting in reducing the use of carbon emitting fossil fuels in transportation sector. Clearly, this

indicates the opportunities for developing “second generation” technology for transportation purpose,

impacting the availability of land for growing food crops.

Cautious outlook for growth in co-firing technology and anaerobic digestion

Historically, co-firing has been successful in stimulating the biomass power market in the UK. The existence

of the RO scheme has made biomass co-firing at existing plants economically viable, despite operational

difficulties and with a fuel price being more than twice that of coal. Going forward, co-firing installations will

be impacted if the UK’s government reduces the available ROC for coal-fired generation. For instance, in the

UK, co-firing for coal power stations was a viable proposition until 2009 when the rules for RO changed after

2009. With a change in the RO program, utilities using coal-fired technology capacity will likely adopt a

cautious outlook, as the new RO program favors giving more certificates for dedicated biomass power

generation systems, gasification, pyrolysis and anaerobic digestion, and using non-energy crops with CHP.

However, many of the UK’s coal-fired plants are expected to close by 2016 because of the Large

Combustion Plant Directive, which regulates air quality emissions from coal plants, including sulphates,

nitrates and dust. If these power plants decide not to reduce emissions, they will have to close down. In order

to avoid this situation Drax has fitted Fuel Gas Desulphurisation (FGD), removing 90% of sulphur dioxide

(SO2) from emissions, allowing Drax to continue generating power unhindered. In the long term, the UK

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government could likely change the RO program, by awarding more certificates for co-firing technology,

based on the current levels of contribution of co-firing technology to the UK’s biomass power market.

Further, utilities will cater to the market for anaerobic digestion technology, driven by the Renewable Heat

Incentive. Presently, the UK’s stock of unrecyclable waste wood is dumped into landfill sites. In the UK, the

biomass resource availability is subject to pressures of the varying composition of the biomass feedstock,

high logistics costs, and the burgeoning issue of treating waste disposals. Currently, the UK possesses a

stock of unrecyclable waste wood, which goes into landfills ranging between volumes of 4m and 5m tons

each year. The UK’s market will see more interest in developing anaerobic digestion technology, in a bid to

deal with the country’s waste disposal problem and add to the existing electricity supply.

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Chapter 7 Sweden

Summary Sweden’s electricity generation is essentially dependent on hydroelectric power and nuclear power.

The majority of Sweden’s energy supply is used for the purpose of electricity generation, district heating

and fuel transportation.

Sweden’s net electricity generation was 129.4bn kWh and total renewable electricity generation was

78.16bn kWh. Sweden’s net biomass and waste power generation recorded a CAGR of 9.3%, growing

from 7.9bn kWh in 2005 to 11.32bn kWh in 2009.

With regards to entering Sweden’s biomass power market, biomass power utilities will the existence of

Swedish Bioenergy Association (Svebio), a non-profit organization, which plays a major the role in

expansion of the biopower sector in Sweden.



involved in small district heating plants. These indicate opportunities for CHP installation in Sweden’s


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Sweden’s biomass power market overview Sweden’s abundant forest resources make biomass feedstock the largest renewable energy source as 60%

of Sweden is covered in forests, and woody biomass including timber residual feedstock. Going forward, this

will drive Sweden’s installed solid biomass power capacity to record a CAGR of 1% between 2010 and 2020.

Current scenario of Sweden The majority of Sweden’s energy supply is for the purpose of electricity generation, district heating and fuel

transportation. Cogeneration, or combined heat and power (CHP), plants account for a further 12% of the

electricity output in Sweden. Renewable resources contributed more than 10% of Sweden’s electricity supply

as of 2010.

Historically, Sweden’s political landscape made the national government reduce dependence on oil with

emphasis on using coal, nuclear power, and available renewable energy resources such as hydroelectric

and biomass power. With the EU mandate calling for a reduction in greenhouse gases, Sweden’s

government has always been interested in increasing the installed capacity of renewable power technology.

According to the US EIA, Sweden’s net electricity generation was 129.4bn kWh and total renewable

electricity generation was 78.16bn kWh making Sweden’s net biomass and waste power generation

recorded a CAGR of 9.3% by growing from 7.9bn kWh in 2005 to 11.3bn kWh in 2009, as shown in Table 17.

The reason for the strong CAGR growth of net biomass and waste power generation is likely attributable to

the country’s existing forestry reserves and well developed paper and pulp industry, which provide ready

feedstock for the purpose of the generation of heat and electricity.

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Table 17: Sweden, net biomass and waste power generation (bn kWh), 2005–09

Details 2005 2006 2007 2008 2009 CAGR

2005–09(%)

Biomass and waste power generation (bn kWh)

7.9 8.9 10.1 10.7 11.3



Figure 22: Sweden, net biomass and waste power generation (bn kWh), 2005–09


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Key feedstock

Sweden’s abundant feedstocks include wood fuels, peat, crops and waste, along with a well developed

forestry industry, which act as the key driver of country’s bioenergy sector. Sweden’s abundant forest

resources make biomass the largest renewable energy source because 60% of Sweden is covered in

forests, and woody biomass including timber residual feedstock.

Biomass power utilities entering Sweden’s biomass power market will likely utilize the Swedish Bioenergy

Association (Svebio), a non-profit organization, which plays a major the role in expansion of the biopower

sector in Sweden. Currently, the majority of Svebio’s members include manufacturers and providers of

incineration equipment, machinery for the collection and processing of biofuels, consultants, scientists,

politicians and private members, who encourage and guide the participants in the country’s biomass power

market.

Government policy framework for renewables in Sweden Sweden’s government pursues a regulatory strategy calling for nuclear power and renewable resources

including wind power, solar power, biomass power, and hydroelectric power for electricity generation, to help

the country make the transition to a low-carbon economy. Going forward, the EU’s directive on renewable

sources will likely make Sweden’s government call for stricter policy measures, resulting in a rapid expansion

of renewable power generation within the country’s total electricity supply mix.

Historically, Sweden’s political landscape made the national government reduce the dependence on oil with

emphasis on using coal, nuclear power, and available energy resources. With the EU mandate in 2004

calling for a reduction in greenhouse gases, Sweden’s government is interested in increasing the installed

capacity of renewable power technology.

Currently the national government is promoting the renewables market, led by the Swedish climate strategy,

which contains national level legislation. In Sweden, electricity generated from wind power, solar power,

wave power, geothermal power, certain biofuels, hydroelectric power, and cogeneration qualifies for green

electricity certificates. The utilities operating in Sweden’s electricity market would find all electricity suppliers

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and users must buy electricity certificates, proving the supply or sale of renewable power. In Sweden, the

electricity certificate system is a marked based system, supporting the expansion of electricity production in

Sweden from renewable energy sources and peat. Currently, renewable power accounts for more than 40%

of the country’s electricity supply, making Sweden the country with highest proportion of renewable

resources used for electricity generation within the EU. These indicate the strong renewables market, which

the national government is keen to promote in Sweden. Going forward, Sweden’s energy policy plans to

reduce dependence on non-renewable resources by 2050 by targeting the following objectives:-

Ensure 50% Sweden's energy use is met by renewable energy sources by 2020;

all vehicle fleets n Sweden to be independent of fossil energy by 2030;

net greenhouse gas emissions are to reach zero by 2050;

energy is to be 20% more efficient in 2020;

the proportion of renewable energy in the transport sector in 2020 is to be 10%.

Overview of government policies supporting the biomass power market in Sweden

Sweden’s biomass power market benefits from a host of incentives including green certificates, which make

the market attractive for biomass power companies. Further, tax exemptions for biofuels in transport,

mandatory legislation for filling stations to maintain certain level of biofuel in total sales volume, and tax

rebates for consumers using bioenergy sources - attract power utilities to offer energy services in Sweden’s


Sweden’s biomass power market offers opportunities for the installation of CHP technology. For utilities,

Sweden encourages the use of biomass feedstock for the purpose of space heating, with more than 50% of

all space heating in Sweden coming from district heating.

Key players In Sweden, companies using biomass for electricity generation and heating include Chemrec, Skelleftea

Kraft, E.ON Sverige, MW Power Oy, and Vattenfall.

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Future outlook for Sweden

Focus on biofuels and heating

The abundance of forest reserves and well developed pulp, paper, and sawmill industries makes the

development of bioenergy of significant importance in Sweden. Currently Sweden uses tax breaks and other

financial incentives, including exemption from tolls and parking fees, to encourage citizens to drive cars

which utilize renewable fuels. The utilities industry in Sweden is characterized by a limited choice for

consumers, as the utilities are often state or regional monopolies. In Sweden, limited choice for consumers

becomes a major challenge for potential biomass operators to enter Sweden’s biomass power market.

Although liberalization has allowed the entrance of an increasing number of smaller electricity resellers, the

Swedish market is still composed of several large-scale companies.

Going forward, the use of biomass feedstock will continue in produce heat and generate electricity.



involved in small district heating plants, indicating opportunities for CHP installation in Sweden’s biomass

power market. According to Agra Net F.O.Lichts, Sweden’s installed solid biomass power capacity will likely

record a CAGR of 1% by growing from 2.6GW (2,641MW) in 2010 to 2.9GW (2,872MW) in 2019, as shown

in Table 18.

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Table 18: Sweden, installed solid biomass capacity forecast (MW), 2010–20

Details 2010 2020 CAGR 2010–20 (%)Installed solid biomass capacity forecast (MW)

2,641 2,872 1

Note: By 2020, biogas is to grow to 42MW


Figure 23: Sweden, installed solid biomass capacity forecast (MW), 2010–20


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Chapter 8 Finland

Summary Biomass accounted for 40% of total renewable power generated (including hydropower) in Finland in

2009.

Wood and wood-based products are the main feedstock for biomass production in Finland as the

country has abundant forestry.

Biomass power generation in Finland declined at a CAGR of 1.7% from 9.2bn kWh in 2005 to 8.6bn

kWh in 2009.

The growth of biomass power in Finland is driven by the country’s commitment to generate 38% of total

energy from renewables by 2020 in order to contribute to the EU’s target of generating 20% energy

from renewables by 2020.

Major biomass power generators in Finland include UPM Kymmene, Alholmens Kraft, Pohjolan Voima,

and Vattenfall, while Metso and Andritz are among the major suppliers of biomass power technologies

in the country.

The Finnish government will maintain the share of biomass in total renewable power generation

(including hydropower) during 2010−20, while investing increasingly in wind power due it being cleaner

power generation.

Currently Finland generates the majority of domestic biomass power from bioliquids; however, solid

biomass will overtake bioliquids in the future due to the lower cost of power generation offered by the

technology.

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Finland’s biomass power market overview Biomass accounted for 40% of total renewable power generated (including hydropower) in Finland in 2009.

Wood and wood-based products are the main feedstock for biomass production in Finland as the country

has abundant forestry. While bioliquids form the largest share in biomass power generation in Finland,

currently solid biomass is expected to surpass bioliquids to become the largest biomass power generation

source by the end of 2020 due to the lower cost of power generation offered by the technology. Forestry land

covers as much as 87% of Finland’s total land area, making wood and wood-based biomass feedstock

abundant in the country.

Current scenario of Finland Biomass power generation in Finland declined at a CAGR of 1.7% from 9.2bn kWh in 2005 to 8.6bn kWh in

2009, as shown in Table 19. Finland’s power generation declined in 2007 due to mild and rainy weather,

which reduced the demand for electric heating and therefore power generation in 2007. Finland, in general,

records one of the lowest temperatures in the EU during winters, making the country the largest market for

electric heating in the EU. Further, during 2008 and 2009 a slowdown in industrial activities as a result of the

recession has reduced the demand for electricity and therefore power generation in Finland.

Biomass is the largest renewable power source (excluding hydropower) in Finland, accounting for 97.6% of

total power generated from renewables in 2009, while wind power accounted for the remaining share. Rich

forestry in Finland provides a robust supply of wood-based feedstock for biomass power generation.

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Table 19: Finland, net biomass and waste generation (bn kWh), 2005–09

Details 2005 2006 2007 2008 2009 CAGR

2005–09 (%)


9.2 10.5 10.2 10.2 8.6 -

Growth (%) n/a 14.8% -2.9% -0.1% -16.0% -1.7%Note: n/a = not applicable

Data for 2010 not available


Figure 24: Finland, net biomass and waste power generation (bn kWh), 2005–09


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Key feedstock

According to the IEA, wood is the largest feedstock for biomass production in Finland, accounting for over

70% of total biomass production every year. Forestry land covers as much as 87% of Finland’s total land

area, making wood and wood-based biomass feedstock abundant in the country. Major wood-based

feedstock used in Finland for biomass energy generation includes black liquor, solid wood residues,

firewood, forest chips, and wood pallet.

Government policy framework for renewables in Finland Biomass is abundant in Finland; therefore the country provides various incentives promoting biomass in

power, heat, and transport sectors. The growth of biomass power in Finland is driven by the country’s

commitment to generate 38% of total energy from renewables by 2020 in order to contribute to the EU’s

overall target of generating 20% energy from renewables by 2020. Further, Finland offers following

incentives to promote biomass power:-

Investment grants are available for biomass power plants.

A reduced rate of Value Added Tax (VAT) is imposed on small-scale biomass power plants with

installed capacity less than 1MW.

The Finnish government imposes tax on each kWh of power generated in the country, which is passed

onto the end consumers of electricity by power generators. The Finnish government refunds this tax to

the users of renewable power including biomass.

Power generation from peat is promoted through a price regulation mechanism, which pays an amount

decided by the government to the peat power generators for every MWh of peat power generated.

Key players Key players in the biomass power market in Finland can be classified into two groups – biomass power

generators and biomass power technology suppliers. Major biomass power generators in Finland include

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UPM Kymmene, Alholmens Kraft, Pohjolan Voima, and Vattenfall, while Metso and Andritz are among the

major suppliers of biomass power technologies in the country, as shown in Table 20.

Table 20: Key players in biomass power generation in Finland, 2011

Type of company Company name Details Biomass power generator

UPM Kymmene UPM Kymmene generates biomass power using wood residues obtain from the company's forestry product manufacturing units. In May 2010, UPM Kymmene, along with Pohjolan Voima and Lappeenrannan Energia developed Finland's largest biomass power plant with 385MW of thermal and 125MW of power generation capacity.

Biomass power generator

Alholmens Kraft The company is one of the major biomass-based CHP generators in Finland. The prominent CHP plants of Alholmens Kraft include a 240MW CHP plant in Ostrobothnia, which generates power and heat using wood, peat, and coal.


Pohjolan Voima Pohjolan Voima is also a leading biomass-based CHP generator in Finland. The company’s total co-firing power generation capacity using biomass, coal, and oil is 641MW.


Vattefall The company is among one of the oldest biomass power plant operators in Finland. The most prominent biomass power plant of Vattenfall in Finland is Vanaja power plant (54MW), commissioned in 1939.

Biomass power technology supplier

Metso Metso is a leading biomass boiler and biomass gasification technology supplier in Finland. The company has serviced many of the leading biomass power generators in Finland including UPM Kymmene and Vattenfall.

Biomass power technology supplier

Andritz The company is key provider of biomass handling, pretreatment, gasification, and sludge treatment solutions in Finland.

Source: UPM, Alholmens Kraft, Pohjolan Voima, Vattenfall, Metso, and

Andritz

BUSINESS INSIGHTS

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Future outlook for Finland

Finland to promote biomass and wind power for electricity generation

The Finnish government will maintain the share of biomass in total renewable power generation (including

hydropower) ranging from 35–39% during 2010−20, while investing increasingly in wind power due it having

cleaner power generation. According to the European Commission, power generation from biomass in

Finland is expected to grow at a CAGR of 4.8% from 8,090GWh in 2010 to reach 12,910GWh in 2020, as

shown in Table 21. The share of biomass power in annual renewable power generation is expected to

increase marginally from 35.7% in 2010 to 38.6% in 2020 - as the Finnish government plans to source the

majority of additional renewable power generation capacity from wind. The share of wind power is expected

to grow from 1.6% of total renewable power generation in 2010 to 18.2% in 2020 - by exploiting the untapped

offshore wind power resources of Finland. According to PriceWaterhouseCoopers, an audit, tax, and

advisory firm, Finland plans to increase offshore wind power generation capacity from 30MW in 2010 to as

much as 3,736MW (3.7GW) in the future. Cleaner power generation due to zero CO2 emissions, and

technological advancements making offshore wind farms economically viable in deeper waters - will increase

investments in offshore wind power in Finland in the future.

Table 21: Finland, renewable power generation (GWh), 2010−20

Details 2010 2012 2014 2016 2018 2020 CAGR

2010−20 (%)

Hydro 14,210 14,210 14,210 14,250 14,330 14,410 0.1%Biomass 8,090 9,200 9,650 10,370 11,550 12,910 4.8%Wind 360 820 1,290 2,440 4,260 6,090 32.7%Total 22,660 24,230 25,150 27,060 30,140 33,410 4.0%

Source: European Commission BUSINESS INSIGHTS

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Figure 25: Finland, renewable power generation (GWh), 2010−20


Solid biomass to lead growth of biomass power in Finland

Currently, Finland generates the majority of domestic biomass power from bioliquids; however solid biomass

will overtake bioliquids in the future due to the lower cost of power generation offered by the technology. In

Finland, bioliquids are available in the form of virgin or used vegetable and seed oils including palm and soya

oil.

In 2010, bioliquids accounted for the largest share (50.9%) in biomass power generation, followed by solid

biomass (48.6%). However, in the future, according to the European Commission, solid biomass is expected

to drive growth in biomass power generation, reaching 7,860GWh in 2020 from 3,930GWh in 2010, as

shown in Table 22.

Power generation from both bioliquids and solid biomass offer similar power generation efficiencies as both

the fuels are commonly used to run steam turbines for power generation in Finland. However, using solid

biomass for power generation costs less compared to bioliquids, as using solid biomass evades the

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conversion process required for producing bioliquids from biomass. Evasion of the conversion process

results in better cost efficiencies making solid biomass a better investment option over bioliquids for the

Finnish government.

Table 22: Finland, biomass power generation (GWh), 2010−20

Details 2010 2012 2014 2016 2018 2020 CAGR

2010−20 (%)

Solid biomass 3,930 4,760 5,120 5,730 6,810 7,860 7.2%Bioliquids 4,120 4,390 4,480 4,580 4,680 4,780 1.5%Biogas 40 40 50 60 70 270 21.0%Total 8,090 9,190 9,650 10,370 11,560 12,910 4.8%


Figure 26: Finland, biomass power generation (GWh), 2010−20


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Chapter 9 Italy

Summary Biomass power plants operate across all regions in Italy with the Lombardy region leading in terms of

the number of biomass plants (90 plants) as well as installed power generation capacity (460.5MW), as

of 2009.

Power generation from biomass in Italy grew at a CAGR of 4.9% to reach 8.4bn kWh in 2009 from

6.9bn kWh in 2005.

According to the Italian Biomass Association (ITABIA), biomass energy potential in Italy was estimated

at close to 28m tons of oil equivalent (Mtoe) per year.

Italian government offers various incentives including the Feed-in Tariff, capital grants, tax incentives,

and investment grants to promote renewable power including biomass power.

Due to rich wind resources and cleaner power generation, the Italian government is expected to

promote wind power over biomass power in order to achieve the country’s target of generating 19% of

the country’s electricity from renewables by 2020.

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Italy’s biomass power market overview Biomass accounted for the majority share (41.9%) of the renewable power mix in Italy in 2009. Italy has

abundant biomass feedstock in the form of livestock manure and forestry, which the country utilizes

extensively for heat production and electricity generation. However, from 2005 onwards, Italy has been

promoting wind power over biomass mainly due to the country’s rich wind resources and relatively cleaner

power generation from wind compared with biomass. In addition to solid biomass, Italy uses bioliquids

including virgin or used soy oil or vegetable oil for power generation. Currently, biomass energy potential in

Italy is estimated close to 28m tons of oil equivalent (Mtoe) per year inclusive of livestock manure dominating

biomass feedstock.

Current scenario of Italy Power generation from biomass in Italy grew at a CAGR of 4.9% to reach 8.4bn kWh in 2009 from 6.9bn

kWh in 2005, as shown in Table 23. While biomass continues to be the largest renewable source of power

generation (excluding large hydropower, which accounted for 17.5% of total net electricity generation in

2009) in Italy, accounting for 41.9% of the total renewable power generated in 2009, the share of biomass in

total renewable power generation declined during 2005–09 due to the country’s increasing volume of

investments in wind power.

Biomass power plants operate across all regions in Italy with the Lombardy region leading in terms of the

number of biomass plants (90 plants) as well as installed power generation capacity (460.5MW), as of 2009.

According to Enel, a European power utility, municipal solid waste and solid biomass power plants

accounted for the highest share (62%) of total biomass power generation capacity in Italy in 2009, as the

country has a rich domestic supply of biomass feedstock from forestry and agriculture.

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Table 23: Italy, net biomass and waste power generation (bn kWh), 2005–09

Details 2005 2006 2007 2008 2009 CAGR

2005–09 (%)

Biomass power generation (bn kWh)

6.9 7.4 7.6 8.2 8.4

Growth (%) NA 6.9% 2.6% 7.6% 2.5% 4.9%Note: 2010 data not available


Figure 27: Italy, net biomass and waste power generation (bn kWh), 2005–09


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Key feedstock

According to the Italian Biomass Association (ITABIA), biomass energy potential in Italy was estimated at

close to 28m tons of oil equivalent (Mtoe) per year in 2009 with livestock manure dominating biomass

feedstock, as shown in Table 24.

Table 24: Italy, biomass energy potential by feedstock (Mtoe), 2009

Details Potential

(Mtoe/year)Share of total (%)

Livestock manure 11.0 39.9%Residues from agricultural and agro-industrial 5.0 18.1%Residues from forestry and wood industry 4.3 15.6%Energy crop 4.0 14.5%Firewood 3.0 10.9%Municipal solid waste 0.3 1.1%

Total 27.6 100.0%

Source: Italian Biomass Association (ITABIA) BUSINESS INSIGHTS

Figure 28: Italy, biomass energy potential by feedstock (%), 2009

Source: Italian Biomass Association (ITABIA) BUSINESS INSIGHTS

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Government policy framework for renewables in Italy The Italian government offers various incentives including the Feed-in Tariff, capital grants, tax incentives,

and investment grants to promote renewable power including biomass power in order to achieve energy

security, while curbing CO2 emissions and contributing to the EU target of generating 20% of total energy

from renewables by 2020. The Italian government perceives biomass as an important primary energy source

for heating, power generation, and transportation sectors and therefore offers incentives promoting biomass

in each sector. Prominent incentives promoting the use of biomass in power generation include:-

The allocation of €1.6bn ($2.1bn) under the ‘Interregional operational plan for renewable energy

sources and energy saving’, which plans to develop renewable energy including biomass in southern

Italian regions. The plan will invest in the development of more efficient biomass power generation

technologies during by 2013.

A Feed-in Tariff of $0.30 per kWh is available for power generated using waste biomass.

100% excise duty exemption is available for locally manufactured boilers using solid biomass.

Investment grants of up to 40% of the total cost are available for power plants using local biomass.

Key players Major Italian players in biomass power generation can be broadly divided into two groups – biomass power

plant developers and biomass power generators. While major companies in biomass plant development

include Foster and Wheeler and BIOS Bioenergiesysteme, major biomass power generators in Italy include

Enel, Hera Group, Bio Energie, and Euroenergy, as shown in Table 25.

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Table 25: Major players in biomass power generation in Italy, 2011

Type of company Company name Details Biomass power generator

Enel The company generates biomass power through both co-firing and virgin biomass. Enel’s largest biomass power plants of power include: Mercure - Laino Borgo plant (41MW power generation capacity using virgin biomass) Sulcis - Portoscuso plant (600MW power generation capacity using coal, oil, and biomass co-firing)


Hera Group The company generates biomass power using waste-to-energy power plants. Hera Group’s total waste-to-energy power generation capacity is 96MW.


Bio Energie The company has 80MW of virgin solid biomass power generation capacity.


Euroenergy Group

The company mainly generates biomass power using wood biomass obtained from forestry, agricultural waste, energy crops, and sawmill residues.

Biomass power plant developer

Foster and Wheeler

The company provides turnkey solutions in biomass power and waste-to-energy power.

Biomass power plant developer

BIOS Bioenergiesysteme GmbH

The company provides turnkey solutions in biomass power, biomass gasification, and biomass CHP.

Source: Enel, Hera Group, Bio Energie, Euroenergy Group, Foster and Wheeler,

and BIOS Bioenergiesysteme

BUSINESS INSIGHTS

Future outlook for Italy

Italian government may promote wind power over biomass power Due to rich wind resources and cleaner power generation, the Italian government is expected to promote

wind power over biomass power in order to achieve the country’s target of generating 19% of the country’s

total electricity from renewables by 2020. According to Italy’s National Renewable Energy Action Plan, by the

end of 2020, Italy is planning to promote wind power as the largest renewable power generation source,

accounting for 35.2% of the total renewable power generated (excluding hydropower) in 2020, as shown in

Table 26. Wind power is cleaner compared with biomass power as power generation from biomass results in

CO2 emissions, although cultivating biomass feedstock reduces carbon emitted into the atmosphere to some

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extent. Further, according to the European Environment Agency (EEA), Italy possesses the technical

potential to generate a total of 1,250TWh of onshore wind power by 2030, which creates robust growth

potential for wind power in the country.

Table 26: Italy, power generation from renewables including hydropower forecast (GWh), 2010–20

Details 2010 2012 2014 2016 2018 2020 CAGR

2010–20 (%)

Hydro 42,141 42,113 42,085 42,056 42,028 42,000 0.0%Wind 8,398 10,318 12,575 14,769 17,184 20,000 9.1%Biomass* 8,645 10,672 12,699 14,726 16,753 18,780 8.1%Solar 1,976 4,048 5,524 7,097 8,916 11,350 19.1%Geothermal 5,632 5,856 6,079 6,303 6,526 6,750 1.8%Total 66,792 73,007 78,962 84,951 91,407 98,880 4.0%

Note: *Power generation from biomass include solid, gas, and liquid biomass.


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Figure 29: Italy, power generation from renewables including hydropower forecast (GWh), 2010–20


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More efficient biogas to reduce the share of solid biomass in power generation

While Italy is currently generating the majority of its renewable power from solid biomass, more efficient

power generation from biomass gasification (also known as Syngas) will increase the share of biogas power

in the future, thereby reducing the role of solid biomass power in Italy’s total renewable power generation.

According to the European Commission, solid biomass – mainly obtained from forestry – dominated the

biomass power market in Italy by accounting for 55% of total biomass power in 2010. However, the share of

solid biomass in Italy’s total biomass power generation is expected to reduce during 2010–20 as biomass

gasification facilities will gain impetus due to a relatively more efficient power generation compared to solid

biomass power generation. According to the IEA, power generation from biomass is up to 34% efficient;

whereas, biogas power generation may be over 40% efficient due to the use of highly efficient combined

cycle gas turbine systems.

The Italian government plans to invest increasingly in establishing biomass gasification facilities and

integrating the biogas generated from gasification facilities into the country’s natural gas network during

2010–20. According to Italy’s National Renewable Energy Action Plan, the share of solid biomass in total

biomass power generation will decline from 55% in 2010 to 42% in 2020, as shown in Table 27, mainly due

to the increasing share of biogas power, which is expected to reach 35% of total biomass power generation

in 2020 from 25% in 2010. Further, Italy plans to increase the share of bioliquids mainly comprising virgin or

used soy oil or vegetable oil in power generation from 1,758GWh in 2010 to 4,860GWh by the end of 2020.

Table 27: Italy, annual power generation from biomass forecast (GWh), 2010–20

Details 2010 2012 2014 2016 2018 2020 CAGR

2010–20 (%)Solid 4,758 5,386 6,015 6,643 7,272 7,900 5.2%Biogas 2,129 2,907 3,685 4,463 5,242 6,020 11.0%Bioliquids 1,758 2,378 2,999 3,619 4,240 4,860 10.7%Total 8,645 10,671 12,699 14,725 16,754 18,780 8.1%


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Figure 30: Italy, annual power generation from biomass forecast (GWh), 2010–20


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Chapter 10 China Summary China’s net biomass power generation recorded a CAGR of 2.5% between 2005 and 2009 due to high

generation costs. The reason for high biomass power generation costs is attributed to the lack of

commercial viability of the existing biomass power systems in China. Further, the abundance of coal in

China makes the generation costs from coal cheaper.

Some of the most significant feedstock available in China includes bagasse, which is processed from

agricultural processing systems, including grain processing facilities, food production, sugar making

and breweries.

Currently biomass energy resources in China are mainly used in conventional combustion

technologies.

The RE Law sets the goal for 2020 to produce energy from various waste-based sources, including

biogas from animal farms, crop residues, agro-processing, municipal waste, and sewage sludge.

China’s Medium and Long-Term Development Plan for Renewable Energy and the 11th Five Year

Renewable Energy Development Plan established a goal for biomass power capacity of 30GW by

2020. China’s government is expected to bring forth additional programs improving the feedstock

collection process.

Identification of additional biomass rich areas are to be centered on the east coast of Jiangsu, Jilin,

Henan, and Shandong. These provinces will drive grid-connected biomass power generation.

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China’s biomass power market overview

China’s biomass generation capabilities are currently in the nascent stage of development and are supported

by a Feed-in Tariff mechanism. China’s net biomass power generation recorded a CAGR of 2.5% between

2005 and 2009 due to high generation costs. Going forward, abundance of biomass feedstock will create a

market for the rapid installation of biomass power technology in parts of eastern China. Concerns over rising

electricity demand and environmental pollution will emerge as key drivers of growth in the biomass power

market in China.

Current scenario of China

China's total installed power generation capacity increased by 10% to 962GW in 2010, with coal contributing

more than 80GW to the total installed power generation capacity. Currently, natural gas contributes 5GW to

China’s total installed power generation capacity. According to the PEW Group, China’s total renewable

power capacity was 103GW in 2010, with wind (43GW), small hydroelectric (56GW), and solar PV (less than

1GW) driving the renewables market. As China targets emission cuts, the authorities closed small coal-

fueled power plants with a total generation capacity of 26.17m kWh in 2009.

China’s net biomass and waste power generation recorded a CAGR of 2.5% by marginally increasing from

2.27bn kWh in 2005 to 2.50bn kWh in 2009, as shown in Table 28. Though China has a substantial volume

of biomass feedstock available, the high biomass power generation cost results in slowing down the growth

of biomass power market. The reason for high biomass power generation costs is attributable to the lack of

commercial viability of the existing systems. Further, the abundance of coal in China makes the generation

costs from coal cheaper relatively. China is expected to enhance biomass power generation using stand

alone technology systems especially in rural areas due to the easy access to biomass resources including

agricultural residues and animal dung.

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Table 28: China, net biomass and waste power generation (bn kWh), 2005–09

Details 2005 2006 2007 2008 2009 CAGR

2005–09(%)


2.27 2.26 2.25 2.24 2.50

Growth (%) -0.4 -0.4 -0.3 11.6 2.5Note: 2010 data is not available


Figure 31: China, net biomass and waste power generation (bn kWh), 2005–09


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Key feedstock

Abundance of biomass feedstock will create a market for the rapid installation of biomass power technology

in parts of eastern China. According to the Asia Biomass Energy Corporation Promotion Office, the majority

of existing and planned biomass power plants are found along China’s east coast spread across the

provinces of Jiangsu, Jilin, Henan, and Shandong, as shown in Figure 32. The availability and easy access

to biomass feedstock in eastern part of China may be the reason behind the majority of biomass power

plants being located in eastern China. Some of the most significant feedstock available in China includes

bagasse, which is processed from agricultural processing systems, including grain processing facilities, food

production, sugar making and breweries. Currently, the feedstock available in China is mainly used in

conventional combustion technologies. The major technologies for liquid biofuels are ethanol fuel technology

and bio-oil technology. However, newer biomass power technologies, including gasification and biomass

liquefaction, are being developed rapidly.

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Figure 32: China, biomass power generation plants, 2009

Source: Asia Biomass Energy Corporation Promotion Office BUSINESS INSIGHTS

Government policy framework for renewables in China

China’s government encourages the use of renewable power resources for generating electricity, in a bid to

reduce greenhouse gas emissions. Currently, China’s Renewable Energy (RE) law encourages entry into the

renewable energy market for electricity generation by making it mandatory for power grid operators to buy all

electricity produced by renewable energy generators.

The environmental issues of pollution and greenhouse gases are driving China’s government to focus on

renewable energy sources to provide a larger part of the existing electricity mix. Historically, China has

always used coal for electricity generation due to abundance of coal and cheaper generation costs compared

to renewable sources of energy. Currently, China’s government has a combination of laws, the Feed-in Tariff

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mechanism, programs and policies encouraging the development and utilization of renewables for power

generation.

Overview of government policies supporting the biomass power market in China

Concerns over rising electricity demand and environmental pollution will emerge as the key drivers promoting

growth in the biomass power market in China. Currently, China’s government has in place preferential

policies to support the biomass power market in the following ways: -

China’s biomass power market is bound to attract significant investor attention due to the diverse the

role played by the national government in encouraging renewables for electricity generation. China’s

biomass power market is significantly supported through government support mechanisms including

Feed-in Tariffs and National Development and Reform Commission (NDRC) targets. Currently, China’s

RE Law calls for the exploration and use of bioenergy in rural areas and for local government

authorities to devise renewable energy development plans and provide financial support to rural

projects. The RE Law sets the goal for 2020 to produce energy from various waste-based sources,

including biogas from animal farms, crop residues, agro-processing, municipal waste, and sewage

sludge. China’s Medium and Long-Term Development Plan for Renewable Energy and the 11th Five

Year Renewable Energy Development Plan established a goal for biomass power capacity of 5.5GW

by 2010 and 30GW by 2020. China has already achieved the 2010 target in 2010 supported by

government programs. Going forward, China’s biomass power market will achieve the target set for

2020, driven by factors including changes to existing regulations, capable of fostering rapid biomass

power development.

China encourages utilities to make use of biomass feedstock for electricity generation; by having in

place a centrally fixed price mechanism for power generated using biomass feedstock. In this regard,

the RE Law facilitates a national level Feed-in Tariff for electricity generated from biomass projects.

Under this mechanism, a subsidy of US $0.11 per kWh is made available for utilities using biomass


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China’s biomass power market will record demand for direct-fired biomass power generation

technology application, driven by biomass feedstock availability and connection to the grid. Almost all of

these plants in rural areas use straw and other agricultural waste as input. Further, bagasse and waste

incineration constitute the majority of China’s biomass feedstock, which is used for electricity

generation. Currently, the use of biomass through co-firing is encouraged in China. The biomass

technologies most popular for electricity generation in China include the direct combustion of biomass

(bagasse) system, cogeneration, biomass gasification (includes rice husk gasification at rice mills),

biogas, waste incineration, and landfill gas technologies. Investment in biomass gasification power

generation projects is lower when compared to direct-fired combustion power projects - as the level of

technology is not very advanced and may not necessarily be connected to the grid. China’s government

is expected to encourage more advanced direct-fired biomass power generation technology, which

would be connected to the grid - enabling easy and ready transmission and distribution of electricity

across rural China.

Key players

Some of the prominent companies operating in China’s biomass power market include GCL-Poly Energy

Holdings, China Holdings, Dragon Power, China Enersave, China Everbright Limited, and National Bio

Energy. Much of China’s biomass power activities are controlled through the National Bio Energy, which is a

joint venture between the State Grid Corporation of China and Dragon Power.

Future outlook for China

Abundant biomass resource availability

The potential for biomass power generation will grow, especially driven by agricultural and forestry residues.

China will develop more of agricultural and forestry lands for growing biomass feedstock, as shown in Table

29. China is expecting to achieve the NDRC set target of 30GW of installed biomass capacity by 2020.

China’s government is expected to bring forth programs improving the feedstock collection process.

Identification of additional biomass rich areas are to be focused on the east coast of Jiangsu, Jilin, Henan,

and Shandong. These provinces will drive grid-connected biomass power generation.

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According to the NDRC, China will produce an estimated 800m tons coal equivalent of biomass resources

per year in China by 2030. Currently, crop residues from rice, wheat and corn currently account for well over

half of all biomass resources in China. Unlike coal, oil, and natural gas, investors will likely find biomass

feedstock to be widely distributed in the eastern parts of China, indicating opportunities for equipment

suppliers to provide additional biomass power capacity of varying capacities, depending on biomass

feedstock availability within the eastern parts of China.

Table 29: China, potential available biomass resources (100m tce*), 2010–30

Available biomass resources 2010 2020 2030Agricultural residues 0.88 1.43 2.34Forestry residues 0.71 0.91 1.16Animal Dung 1.21 1.55 1.98Industrial organic wastes 0.44 0.57 0.73Municipal solid waste 0.03 0.07 0.15Energy crops 0.04 0.25 0.34Energy forest 0.05 0.82 1.32Total 3.40 5.60 8.00

Note:*tce stands for ton of coal equivalent

The data are estimates by NDRC

Source: RC, Energy Bureau, Energy Research Institute, China Renewable

Energy Development Overview – 2008

BUSINESS INSIGHTS

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Figure 33: China, potential available biomass resources (%), 2030

Source: RC, Energy Bureau, Energy Research Institute, China Renewable

Energy Development Overview – 2008

BUSINESS INSIGHTS

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The abundance of coal makes the installation of biomass power plants relatively expensive

The easy availability of coal and cheap generation costs associated with coal in China represent a significant

threat to the biomass power market in limiting biomass power installation capacity. China’s rural areas will

restrict the installation of biomass power technology as the renewable power technology remains expensive

compared to conventional power generation technology using coal. Most rural households continue to rely on

directly burning coal or biomass, including crop stalks and firewood, which are typically incinerated in low

efficiency stoves for cooking, water heating, and space heating. Further, China’s regional grids are relatively

independent with little or no simultaneous connections, restricting large scale renewable energy electricity

development. Unless government subsidies and regulation promote renewables for electricity generation,

households in China would not benefit from the advantages of biomass power.

The growing significance of biofuels

In China, the provision of subsidies, tax exemptions, and soft loans for biofuels production - will compete with

the electricity generation market for feedstock availability. Currently, the NDRC strictly regulates both the

biofuel supply and demand, and only state-owned enterprises are involved in the production of biofuels.

China’s Medium and Long-Term Development Plan for renewable energy targets 2m tons of non-grain fuel

ethanol use by 2010 and 10m tons non-grain fuel ethanol use by 2020 for non-grain fuel ethanol use. A

target for biodiesel use has been set at 200,000 tons by 2010 and 2m tons by 2020. China has already

achieved the target for ethanol in 2010. Going forward, China's biofuel market is likely to be focused on

production from non-food feedstocks including waste oil, vegetable oil and jatropha. The NDRC has

identified southwest China as a key area for the production of jatropha curcas as a biodiesel feedstock, while

the provincial governments have set ambitious acreage targets for the establishment of jatropha plantations.

However, growing population and the lack of available land on which feedstock crops can be produced is the

most significant constraint to the expansion of China’s biofuels production. The development of non-grain

bioenergy crops and the productive use of marginal lands are therefore crucial for food and feedstock

security in China.

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Chapter 11 India

Summary Despite the existence of national policies promoting renewables market, each state in India has a

unique policy and regulatory support mechanisms, making the total growth in India’s renewable power

market rather uncoordinated and fragmented.

In India, the key biomass feedstocks available include rice husks and straw, bagasse, sugarcane tops,

leaves and trash; groundnut shells and plants, cotton stalk, coconut residues, mustard stalk; and

wastes from a dozen other agricultural products.

According to India’s Ministry of New and Renewable Energy (MNRE), the renewables installed capacity

of biomass power and cogeneration plants (non-bagasse) is 238MW, with biomass gasifiers’ installed

capacity at 125MW at the end of June 2010.

States like Uttar Pradesh, Tamil Nadu, and Andhra Pradesh are prominent in biomass based power

generation.

In India, biomass technology installations include bagasse cogeneration and grid connected biomass

power projects. India encourages bagasse based and non-bagasse based power generation. The

potential to reach higher efficiencies in heat recovery and usage could make investors enter India’s

cogeneration market.

The MNRE has announced a target of creating 10GW (10,000MW) of installed biomass power capacity

by 2020.

India’s demand for biomass power technology capacity will likely be constrained by pressures of food

security and the issue of high biomass power generation cost, compared to the cheaper cost of

generating electricity from coal.

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India’s biomass power market overview Rapid growth of India’s economy will lead the government towards developing the available biomass

feedstock for electricity generation. The installed capacity of India’s biomass-based power was about 1GW at

the end of 2010. According to India’s 11th Five Year Plan (2007-12), biomass power systems are currently

only at demonstrational phase, and are yet to attain commercial maturity due to the high costs of deployment

and generation costs in India., The availability of biomass in India is estimated at about 540m tons per year,

covering residues from agriculture, forestry, and plantations. India’s net biomass and waste power

generation recorded a CAGR of 2.5% between 2005 and 2009. Going forward, India’s government will

continue promoting the use of biomass feedstock, to take advantage of potential technological breakthroughs

during the plan period.

Current scenario of India India's total installed generation capacity was 167GW in 2010, with 2.3GW of installed biomass power

capacity of 2.3GW. States like Uttar Pradesh, Tamil Nadu, and Andhra Pradesh are prominent in biomass

based power generation. According to India’s Ministry of New and Renewable Energy (MNRE), the

cumulative installed capacity of biomass power and cogeneration plants (non-bagasse) is 238MW, with

biomass gasifiers’ installed capacity at 125MW (June 2010). Further, there are 4.3 million families using

biogas plants all over India, which are used primarily for heating applications and not for power generation.

In India, renewable power resources including wind, solar, biomass feedstock, and small hydroelectric

contribute to nearly 10% of the total electricity supply as of 2010. Currently, India is largely coal dominated,

driven by cheaper generation costs. According to the US EIA, India’s net biomass and waste power

generation recorded a CAGR of 2.5% by growing from 1.81bn kWh in 2005 to 2.00bn kWh in 2009, as

shown in Table 30.

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Table 30: India, net biomass and waste power generation (bn kWh), 2005–09

Details 2005 2006 2007 2008 2009 CAGR

2005–09(%)


1.81 1.83 1.85 1.87 2.00

Growth (%) 1.2 1.1 1.1 6.7 2.5Note: 2010 data not available


Figure 34: India, net biomass and waste power generation (bn kWh), 2005–09


Key feedstock

In India, the key biomass feedstocks available include rice husks and straw; bagasse; sugarcane tops,

leaves and trash; groundnut shells and plants; cotton stalk; coconut residues; mustard stalk; and wastes

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generated from agricultural products. As per MNRE’s recent annual report, the availability of biomass in India

is estimated at about 540m tons per year, covering residues from agriculture, forestry, and plantations. By

using surplus agricultural residues, more than 10GW (10,000MW) of grid quality power can be generated

with the available technologies at present. Despite these resources, the sector is the least developed in

India, with only about 1GW (less than 5 percent) of the potential realized to date, due to a limited biomass

feedstock supply chain and grid-connectivity issues.

In India, biomass power technology installed includes bagasse cogeneration and grid connected biomass

power projects. Further, the most commonly used biomass power technology is combustion technology,

which accounts for almost 95% of the capacity installed, as the type of combustion technology employs

conventional Rankine cycle, where the biomass is incinerated in a high pressure boiler to generate steam,

which is then used to spin a turbine to generate electricity. According to the MNRE, India’s biomass power

market has become a prominent renewable market, which attracts an annual investment of over $10bn,

generated more than 10m units of electricity and created employment opportunities of more than 10m man

days between 1976 and 2009.

Government policy framework for renewables in India

India’s government will continue programs supporting ongoing developments in the renewables markets for

electricity generation, driven by concerns of carbon emissions mitigation and reducing dependence on non-

renewable resources. Currently, the Indian government provides cheap loans to companies building

renewable power plants, in addition to providing tax breaks and tariff subsidies to encourage the installed

capacity of renewable power technology. India’s national government offers numerous incentives including

subsidies, Feed-in Tariffs, generation-based incentives, Renewable Purchase Obligations (RPOs),

depreciation, and tax incentives for the installation and adoption of renewable power technology. Each state

offers varying support mechanisms facilitating investment, based on the type of renewable energy available

for electricity generation. The state level support includes certain state-level renewable energy policies,

specific feed-in tariff and RPO programs offered by respective State Energy Regulatory Commissions

(SERCs).

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Nonetheless, the demand for using renewables for electricity generation in India is constrained by the

pressures of varying levels of public policy intervention. India’s renewable power market lags in development

due to a lack of integration and coordination between the national government and state governments on

policies concerning renewables for electricity generation. Despite the existence of national policies promoting

the renewables market, each state in India has a unique policy and regulatory support mechanisms, making

the total growth in India’s renewable power market rather uncoordinated and fragmented. Regardless of the

source type of renewable resource available for electricity generation, utilities need to overcome the

challenge in respect of choosing which state to invest in. Further, utilities are also susceptible to the bearing

of costs arising due to potential delays caused by gaining clearance and acquiring access to infrastructure.

Additionally, the lack of clear policy for private sector participation in some states, and issues associated with

land acquisition leads to investment in renewable energy in India rather complex and challenging.

Overview of government policies supporting the biomass power market in India

India’s public policy will support ongoing interest in developing India’s biomass power market. The provision

of incentives and Feed-in Tariff by state governments for developing biomass power will drive capacity

expansion of renewables in India. To meet growing electricity demand and utilize the available biomass

feedstock potential, India’s government encourages biomass power generation in the following ways:-

Utilities will enter India’s biomass power market due to attractive fiscal incentives encouraging efficient

carbon neutral additional biomass power capacity. In this regard, India’s MNRE ensures fiscal

incentives including 80% accelerated depreciation, concessional import duty, excise duty, and a tax

holiday for 10 years made available for biomass power projects. Further, the benefit of concessional

custom duty and excise duty exemption are also available on equipment required for the initial setting

up of biomass projects, based on certification given by the MNRE. Furthermore, utilities can take

assistance from the Indian Renewable Energy Development Agency (IREDA), which is the main

financial institution involved in lending for biomass power and cogeneration projects in India.

State government support will likely play a key role in developing India’s biomass power market for

electricity generation. Currently, various state governments in India provide preferential tariffs for

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biomass power generation. For instance, the SERCs have specific policies for purchasing power

generated from biomass plants or cogeneration plants in certain states. The SERCs also offer

preferential tariffs and Renewable Portfolio Standards (RPS) for utilities using biomass feedstock for

electricity generation.

Biomass feedstock suppliers will likely find India’s 11th Five Year Plan (2007-12) provide a subsidy for

growing non-fuel wood biomass feedstock, due to the national government’s bid to reduce the diversion

of all available wood fuel for generating power. In India, many of the rural households depend on

feedstock for cooking and heating purposes, making the government step in to provide a subsidy for

growing only non-fuel wood biomass feedstock. The subsidy is proposed only for non-fuel wood

biomass power unless projects can demonstrate at least 50% of fuel-wood requirement would come

from dedicated plantations, especially raised for the purpose of generating bioenergy. Further, the

MNRE promotes programs for installing biogas plants, in addition to installing solar thermal systems,

photovoltaic technology, and biomass gasifiers in the Integrated Rural Energy Program.

Key players

In India, some of the well known active biomass power players include Clenergen Corporation, Orient Green

Power, Waste to Power, AllGreen Energy India, Astonfield-Areva Power, and the Indian Renewable Energy

Development Agency.

Future outlook for India

Government programs to drive biomass power growth

India’s government will continue to encourage the growth of the biomass power market, driven by the

abundance of available feedstock including fire-wood, agricultural and animal wastes, which account for a

large proportion of energy in rural areas. The MNRE has announced a target of creating 10GW (10,000MW)

of biomass power generation by 2020. According to the MNRE and US EIA, India’s installed biomass and

waste generation capacity could record a CAGR of 16.1% by growing from 1GW in 2010 to 10GW in 2020,

as shown in Table 31. The MNRE proposes the encouragement of small biomass power plants ranging

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between the installed capacity size of 1MW and 2MW, indicating opportunities for investors to enter India’s

renewables market.

Historically, government programs concerning biomass power undergo revisions in India, based on various

technologies and operating conditions - under which electricity is generated. Going forward, India’s

government will play an increasingly important role in biomass power development as India’s population

largely suffers from limited access to appropriate financing schemes to overcome the high upfront costs of

cleaner energy technology. Government programs including the Remote Village Electrification program, the

Biomass Gasification Program, the Biogas Power Generation Program, and the Village Energy Security

Program were introduced during the 10th Five Year Plan (2002–2007), in a bid to increase to the use of

biomass feedstock for meeting rising energy needs. Under the 11th Five Year Plan (2007–2012), bagasse

cogeneration and grid connected biomass power projects earn incentives in the form of capital subsidies.

Table 31: India, installed biomass and waste generation capacity forecast (GW), 2010–20

Details 2010 2020* CAGR 2010–20(%)Installed biomass and waste generation capacity forecast (GW)

1 10 16.8

Note: *Estimates by MNRE

Source: US EIA, Factiva, and MNRE BUSINESS INSIGHTS

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Figure 35: India, installed biomass and waste generation capacity forecast (GW), 2010–20

Source: US EIA, Factiva, and MNRE BUSINESS INSIGHTS

High capital risk

India’s demand for biomass power technology capacity will be constrained by pressures of food security and

the issue of high biomass power generation costs, compared to the cheaper costs of generating electricity

from coal. Being largely agriculture based, close to 100m households in India use biomass feedstock to meet

cooking, heating, and lighting needs, impacting biomass feedstock availability for the purpose of electricity

generation. Further, the majority of the rural population does not have access to grid-connected electricity.

Moreover, the available biomass power technologies, both for combustion and gasification technologies are

yet to achieve commercial viability in India - due to infrastructural bottlenecks in the biomass feedstock

supply chain. Essentially, each biomass operator could draw feedstock from sugar mills and rice mills as

opposed to a distributed source (cotton stalks, mustard or rape seed stalks). The majority of the biomass

power projects depend on captive feedstock supply chain, creating risks which revolve mostly around the

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question of physical availability. As biomass feedstock supply is dependent on factors including rainfall,

harvesting effectiveness, and productivity, which make the existing feedstock supplies chain insufficient and

unreliable in India. Additionally, the lack of national level policy on a uniform Feed-in Tariff for biomass

power, uncertainty in power purchase rates, and insufficient financing mechanisms may continue to hinder

the growth of India’s biomass power market.

The importance of cogeneration

India’s renewable power market will support cogeneration due to the cost effectiveness of the technology. In

a report published by the World Bank in 2010 called Unleashing the Potential of Renewable Energy in India,

the availability of low-cost and feedstock supply will likely make the levelized cost of biomass power lower

than those of even small hydropower in India. Currently, India is one of the world’s leading growers of

sugarcane, and has in place a Biomass Cogeneration Program. The Program encourages bagasse based

and non-bagasse based power generation. These include feedstock such as rice husk, straw, cotton stalk,

coconut shells, soya husk, de-oiled cakes, coffee waste, jute wastes, groundnut shells, and saw dust. The

potential to reach higher efficiencies in heat recovery could make investors enter India’s cogeneration

market. Currently, India has about 5GW of estimated cogeneration potential from sugarcane, paper making,

and other agri-processing industries, of which only about 0.2GW had been realized as of December 2009,

indicating opportunities for cogeneration companies to enter India’s biomass power market for electricity

generation.

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Chapter 12 Australia

Summary The existing coal-fired power plants are responsible for emitting around 50% of the current greenhouse

gas emissions in Australia.

Australia’s net biomass and waste power net generation contributed to less than 1% of Australia’s total

electricity supply in 2009.

Within Australia, only Victoria provides a Feed-in Tariff for installing biomass power technology for a

period of 15 years. Within Australia, state governments play an active the role in driving the growth of

the biomass power market by initiating Feed-in Tariff mechanism.

Though Australia’s biomass power market lacks a national level Feed-in Tariff mechanism, the

government provides a grant for biomass power installation technology.

According to a study published by the University of Newcastle, the most prominent feedstock resources

found in Australia include agricultural-related wastes, energy crops, landfill gas, sugarcane, and wood-

related wastes.

The abundance of coal suggests the attractive venue of using technologies including biomass gasifier

to convert the solid biomass into a fuel gas, which can be incinerated in the coal boiler furnace to

generate power in Australia.

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Australia’s biomass power market overview Australia’s net biomass and waste power net generation contributed to less than 1% of Australia’s total

electricity supply in 2009. Australia’s electricity supply has traditionally been inexpensive due to plentiful

supplies of generally high-quality low-cost coal. There has been little commercial incentive to date to look

seriously at alternatives offered by biomass feedstock. However, concerns over climate change will likely

make biomass power play a prominent the role in Australia’s future electricity supply mix.

Current scenario of Australia Coal is likely to continue dominating Australia’s electricity generation mix, but a shift to low carbon fuels is

expected as a result of the national government’s ambition of reducing greenhouse gas emissions. The

existing coal-fired power plants are responsible for emitting around 50% of existing greenhouse gas

emissions in country. Currently, Australia’s government has a commitment to reduce Australia’s greenhouse

gas emissions by 60% of 2000 levels by 2050. In the future, Australia’s abundance of biomass feedstock will

be utilized to generate power, in a bid to meet rising electricity demand and curb greenhouse gas emissions.

According to the PEW Environment Group, Australia’s total installed renewables generation capacity

contributes to less than 10% of the total installed electrical capacity. In 2010, the wind and biomass power

led Australia’s electricity supply mix.

Australia’s total net power generation was 232.01bn kWh and total renewable net generation was 17.18bn

kWh in 2009, the lowest ratio of renewable resources in the country’s electricity mix among the countries

profiled in this report. The negative growth rate between 2008 and 2009 is likely attributable to the impact of

the economic recession, which lowered investor interest in entering Australia’s biomass power market.

Australia’s net biomass power generation recorded a CAGR of 2.6% by growing from 1.78bn kWh in 2005 to

1.97bn kWh in 2009, as shown in Table 32.

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Table 32: Australia, net biomass and waste power generation (bn kWh), 2005–09

Details 2005 2006 2007 2008 2009 CAGR

2005–09(%)

Biomass and waste power generation (bn kWh)

1.78 1.87 1.91 2.09 1.97

Growth (%) 4.9 2.2 9.6 -5.8 2.6Note: 2010 data is not available


Figure 36: Australia ,net biomass and waste power generation (bn kWh), 2005–09


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Key feedstock

Australia has considerable biomass feedstock available for energy production. According to a study

published by the University of Newcastle, the most prominent feedstock resources found in Australia include

agricultural-related wastes, energy crops, landfill gas, sugarcane, and wood-related wastes. According to

Australia’s Clean Energy Council, Australia has an abundance of sustainable biomass resources, which are

currently underutilized due to a lack of government incentives. Currently, prospects exist for installing

cogeneration technology due to Australia’s sugar industry, which has historically produced heat and

generated electricity.

Government policy framework for renewables in Australia Australia’s market for renewables is supported by national level government incentives, driving additional

installed capacity. Currently, Australia’s government has set a target, where 20% of Australia’s electricity will

be sourced from renewable energy by 2020. The energy retailers and large energy users have to purchase a

proportion of their energy requirements from renewable energy sources through the acquisition of

Renewable Energy Certificates (RECs) indicating opportunities for renewables electricity generation in

Australia. In this regard, Australia’s renewables market provides one REC - equivalent to 1MWh of

generation from a renewable energy source, indicating opportunities for renewable power technology

installations to grow in Australia.

Between 2000 and 2007, Australia’s government and private sector invested close to $600m in support of

R&D activities in the renewable power market. For the five period 2008–12, the following funding has been

allocated for renewable energy R&D:-

$500m for the Renewable Energy Fund to support the development and demonstration of renewable

energy technologies;

$150m for the Energy Innovation Fund, which will provide $100m for solar research, and $50m for

general clean energy research;

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$75m for Climate Ready program toward research and development, proof of concept and early-stage

commercialization activities in clean energy and renewables;

an estimated $150m support for renewables through the Australian Research Council and other

funding schemes;

matching support from industry and investment by private sector is expected to be around $500m

total R&D support (government & industry) for Clean Coal Technologies program over the same period

will be in excess of $3bn.

Overview of government policies supporting the biomass power market in Australia

Australia’s market for biomass power still remains to be developed, as many of the existing initiatives are in

pilot stage and have not been widely deployed across the country. Though Australia’s biomass power market

lacks a national level Feed-in Tariff mechanism, the government provides a grant for biomass power

installation technology (in addition to solar, wind, geothermal, marine, and combination technologies). Within

Australia, only Victoria provides a Feed-in Tariff for installing biomass power technology for a period of 15

years between 2009 and 2024. Within Australia, state governments play an active the role in driving the

growth of the biomass power market by initiating Feed-in Tariff mechanisms.

Further, Australia promotes biomass renewables technology installations at national level though the

Enterprise Connect Initiative. The Initiative provides grants and free business reviews, creating investor

interest in cogeneration, the development and supply of equipment and technology used to reduce energy

demand or increase energy efficiency across the country. Furthermore Australia’s Clean Energy Trade and

Investment Strategy sets aside $14.9m for attracting renewable utility companies including biomass power

plant operators - indicating opportunities for setting up clean energy companies in country.

Key players Delta Energy, Western Australia Biomass, The Paran, Gasification Australia are a few of the key players in

Australia’s biomass power market.

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Future outlook for Australia

Co-firing to grow

The abundance of coal in the country leads towards using biomass gasifiers to convert the solid biomass into

a fuel gas, which can be incinerated in the coal boiler furnace to generate power. Currently, Australia’s Delta

Electricity is utilizing co-firing technology to generate electricity in Australia. Australia’s Clean Energy Council

records Australia’s total installed bioenergy capacity to be 210MW. The growth of Australia’s biomass power

market is subject to the willingness of state governments to provide incentives to generate electricity, and the

availability and access to biomass feedstock, - factors allowing biomass power generation costs to be

economical to the end users of electricity. According to the Australia's Clean Energy Council, Australia’s

bioenergy electricity generation forecast could record 10,624GWh led by growth in sugarcane and wood-

related wastes, as shown in Table 33.

Yet in Australia, biomass power technology applications still have to compete with coal and gas on a price

basis, indicating potential opportunities for utilities to introduce cost effective additional biomass power

capacity. Australia’s vast geographic expanse makes full national electricity interconnectivity from coast to

coast challenging, as there are limited number of High Voltage Direct Current solutions available. The lack of

transmission lines delays the provision of reliable power to remote areas. Off-grid additional biomass power

capacity will compete with existing power plants for electricity supply in Australia.

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Table 33: Australia, bioenergy electricity generation forecast (GWh), 2020

Feedstock 2020 Target (GWh)Sugarcane 3,165Wood-related wastes 2948Landfill gas 1880Sewage gas 901Agricultural-related wastes 791Urban biomass 721Energy crops 218Total 10,624

Source: Australia's Clean Energy Council BUSINESS INSIGHTS

Figure 37: Australia, bioenergy electricity generation forecast (GWh), 2020

Source: Australia's Clean Energy Council BUSINESS INSIGHTS

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Emerging interest in biofuels

With regards to using biomass feedstock for the production of biofuels, Australia’s government is taking a

multi-pronged approach in encouraging the transport sector and electricity generation sector. As a part of the

Clean Energy Initiative ($5.1bn), Australia’s government is encouraging a R&D effort in the development and

demonstration of new biofuel technologies and feedstock, indicating that the national government is targeting

the use of feedstock for the purpose of producing biofuels, instead of aggressively promoting generation of

electricity from available feedstock.

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Chapter 13 Future outlook

Summary An increasing population will drive demand for additional installed electricity capacity. Further, many

parts of the world are yet to be connected to the grid and lack access to electricity. These factors will

demand for electricity between 2015 and 2035.

Globally, the renewable power market will become increasingly competitive as fossil-fuel prices rise

and renewable technologies mature.

The scale of government support for additional renewable power capacity will grow backed by

government support. The possibility of water scarcity due to climatic variations and the relatively high

installation costs of hydropower plants could moderate the pace of hydropower expansion globally by

2035 leading the global primary energy demand for biomass power lead among renewables resources.

Due to a lack of finances, many countries including India and China are yet to develop efficient

biomass energy technologies, which can reduce heat loss while improving combustion efficiency and

reducing the extent of pollution.

Countries including the US, Brazil, and China will continue to encourage the blending of transportation

fuel with first generation fuels, by having regulatory programs and incentives. These markets would

also export biofuels to the EU, due to the EU’s mandate calling for biofuels in the transportation fuel

mix.

Globally, countries will continue with the adoption of additional biomass power capacity. These include

growth of biomass power plant operators and co-firing plant operators in the US, cogeneration

technology in Brazil, conventional combustion technologies and biogas technologies in India and

China, anaerobic digestion technology and CHP in the UK.

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Outlook for the global electricity sector The global renewables market is poised to grow driven by government programs and incentives in the US

and the EU, despite widespread challenges including high poverty levels in India and China. Currently, many

countries have delayed assessments of their renewable energy potential due to the fluctuating prices of oil

and gas and the global economic slowdown in 2008 and 2009 – reducing investment in renewable energy

market. Going forward, the global electricity sector is in need of reform to encourage and promote the use of

renewables in the electricity supply, calling for varying actions globally, including the introduction of national

level initiatives pertaining to Feed-in Tariffs, reducing the stake of government ownership of transmission

systems, and improved third-party access to the electricity grid.

An increasing population will drive demand for additional installed electricity capacity. Further, many parts of

the world are yet to be connected to the grid, driving demand for electricity between 2015 and 2035. World

net electricity generation can be expected to grow at a CAGR of 2.4% by growing from 21.93tn kWh in 2015

to reach 35.21tn kWh in 2035, as shown in Table 34.

Table 34: World net electricity generation (tn kWh), 2015–35

Details 2015 2025 2035 CAGR 2015–35(%)Net electricity generation (tn kWh)

21.93 28.31 35.21 2.4


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Figure 38: World net electricity generation (tn kWh), 2015–35


Outlook for the renewables market

Globally the renewable power market will become increasingly competitive as fossil-fuel prices rise and

renewable technologies mature. The scale of government support for additional renewable power capacity

will grow. The possibility of water scarcity due to climatic variations and the relatively high installation costs of

hydropower plants could moderate the pace of hydropower expansion globally by 2035. Additionally, the

intermittent nature of wind power and the high generation costs of solar PV could likely make developers opt

for other sources of electricity. Among renewables, this could lead to the global primary energy demand for

biomass power lead among renewables resources.

The market for electricity generation will enter a period of transformation as investment shifts to low-carbon

technologies — the result of higher fossil-fuel prices and government policies to enhance energy security

and to curb emissions of greenhouse gases. Irrespective of whether governments globally introduce new

energy policies or continue with the existing policy framework for energy, coal and natural gas will lead in

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supplying the global primary demand for energy, as shown in Table 35. However, as more governments take

to curbing carbon emissions by introducing new renewables policies, demand for biomass power is likely to

grow, indicating strong growth potential for the biomass power market in the period between 2020 and 2035.

Table 35: World primary energy demand by fuel and scenario (Mtoe), 2008–35

Actual

scenario Current policies scenario*** New policies scenario***Details

2008 (Mtoe)

2020(Mtoe)

2035(Mtoe)

CAGR 2020–35 (%)

2020(Mtoe)

2035 (Mtoe)

CAGR 2020–35 (%)

Coal 3,315 4,307 5,281 1.4 3,966 3,934 -0.1Oil 4,059 4,443 5,026 0.8 4,346 4,662 0.5Gas 2,596 3,166 4,039 1.6 3,132 3,748 1.2Biomass* 1,225 1,461 1,715 1.1 1,501 1,957 1.8Nuclear 712 915 1,081 1.1 968 1,273 1.8Other renewables**

89 239 468 4.6 268 699 6.6

Hydroelectric 276 364 439 1.3 376 476 1.6Total 12,271 14,896 18,048 1.3 14,556 16,748 0.9

Note: *Includes traditional and modern uses

** Other renewables includes biomass, solar, wind, geothermal and marine power

***IEA’s forecast refers to a New Policies Scenario, taking into account broad policy commitments and plans, which

have been announced by countries globally. This includes pledges to reduce greenhouse gas emissions and plans to

phase out fossil-energy subsidies even where the measures to implement these commitments have yet to be identified

or announced by countries.

Current Policies Scenario assumes no change in policies as of mid-2010.


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Figure 39: World primary energy demand by fuel under new scenario (Mtoe), 2020–35


Outlook for biomass power market

Traditional biomass energy technology causes environmental hazard

In parts of Asia, Africa, and Latin America, the existing biomass market is dependent on more traditional

biomass technologies, consisting mainly of the traditional open-fire cook stoves used by most rural

households. In traditional biomass stoves, the range of biomass feedstock used include woody biomass,

leaves, twigs, agricultural residues, animal manure, and biomass wastes. The use of traditional biomass

energy technology in these countries would continue generating indoor pollution and emitting greenhouse

gases. Due to a lack of finances, many countries including India and China are yet to develop efficient

biomass energy technologies which can reduce heat loss while improving combustion efficiency and

reducing the extent of pollution. Moreover, the conversion of animal wastes and manure to methane or

biogas is used in various countries, particularly in China and India. Biogas in these countries has contributed

to energy provision for rural populations, the abatement of negative environmental impacts of livestock

production and the production of organic fertilizer. However, this creates a diversion of feedstock from a

country’s potential power generation.

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EU to drive demand for biofuels

Biomass feedstock will continue to be used for producing biofuels, as countries try to address the growing

concern of greenhouse gas emissions and energy security. The use of biofuels for transport fuels produced

from biomass feedstock will continue to increase rapidly between 2011 and 2035, due to rising oil prices and

government support. Currently, the majority of the available renewables incentives encourage the growth of

arable crops which can be used for the production of biofuels.

For instance, the US, Brazil, Germany, Sweden, Italy, and the UK have regulatory mechanisms which

include a combination of incentives and subsidies, encouraging the production of biofuels. These countries

will continue to encourage the blending of transportation fuel with first generation fuels, by having in place

regulatory programs and incentives. Currently, the EU’s mandate calls for a 10% renewable content in

transportation fuels as a part of the 2020 plan, which also calls for a 20% cut in greenhouse gas emissions

for primary energy compared with 1990 levels, a 20% increase in the use of renewable energy (compared

with 1990 levels) and a 20% cut in energy consumption through improved energy efficiency (compared with

1990 levels). Not all of the countries within the EU is not capable of growing feedstock for the purpose of

meeting EU targets, countries like the US and Brazil are also encouraging the growth of biofuels in order that

they may benefit from exports made to the EU. Of course, growth in internal combustion engine based

vehicles will lead to growth in the volume of biofuels required.

In the future, the US, Brazil and the EU will be expected to remain the largest producers and consumers of

biofuels globally. Despite the fact that the current cost of producing biofuels is higher than oil, the future

introduction of government incentives for growing energy crops for the purpose of producing biofuels will

create competition for supply of feedstock for the purpose of heat production and electricity generation

Growth of additional biomass power capacity

Globally countries will continue with the adoption of additional biomass power capacity. Some of the viable

biomass technology implementation options globally would be:-

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The US will continue to encourage designing new and better fuel feed systems for biomass power by

provision of financial incentives; making biomass power plant operators and co-firing plant operators

improve available power conversion technology.

The Amazon River area in Brazil provides the ideal spot for biomass power projects, as numerous saw

mills generate waste and can be used to generate power. With the abundance of sugarcane,

cogeneration will remain the prominent biomass technology type for generation of power. The potential

for growth of biomass feedstock for the purpose of only power generation remains less in Brazil, driven

by limited policy support.

Germany’s ambition to replace non-renewable sources of power including oil, natural gas, and nuclear

power with renewable resources will likely make the government encourage the use of biomass

feedstock for electricity generation and heat production as well as for producing biofuels.

Currently biomass energy resources in China and India are mainly used in conventional combustion

technologies, which use coal in methods such as fluidized bed combustion boilers, coal liquefaction, in

addition to using and biogas technologies. China and India’s growing electricity demand will likely make

the respective national governments’ explore the rural parts for feedstock supply to generate electricity.

The abundance of forest reserves across Sweden, Italy, and Finland will encourage the installation of

biomass power technology capable of generating heat and electricity.

With a change in the RO program in the UK, utilities using coal-fired technology capacity will likely

adopt a cautious outlook, as the new RO program favors giving more certificates for dedicated biomass

power generation systems, gasification, pyrolysis and anaerobic digestion, and using non-energy crops

with CHP.

As Australia’s government is interested in reducing carbon emissions, there will emerge investor

interest in promoting the growth of dedicated energy crops due to an increase in the demand for

electricity and the rising price of electricity.

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Supply chain constraints of biomass feedstock to hinder the growth of biomass applications

Biomass feedstock supply constraints will effect the overall development of the biomass power market. The

demand for additional biomass power capacity based on combustion, conversion to transportation fuels in

the US, biogas production in India and China, CHP, co-firing, and anaerobic digestion across the EU will

remain - as more countries with abundant renewable resources introduce incentives attracting utilities to

enter the country. Further, coal-and-biomass-to-liquids (CBTL) with CCS, with its smaller carbon footprint

could also emerge as a technological area for investor interest.

However, the cost of biomass power generation remains expensive currently. Further, utilities are likely to

face challenges while entering newer geographic markets including with gaining information on feedstock

quality, and the availability of transportation and storage infrastructure. This is in addition to issues including

a lack of storage systems, which add to utilities risk when entering newer geographical markets for biomass

power generation.

High level of investment required

According to the IEA, globally the investment in renewables based electricity generation will account for

$5.7tn over the period 2010–35. Table 36 indicates the largest average investment amount is for hydro

power and onshore wind power installation technology.

Globally the biomass power market could record investments of $688m by 2035, driven by growing electricity

demand. Specifically, countries with an abundance of biomass feedstock will use feedstock for electricity

generation, driven by improvements in technology and additional government support programs. Further,

biomass feedstock will remain the main source of renewables based heat, both in industry (where the pulp

and paper industry is the largest user) and in buildings.

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Table 36: Average investment in renewables based electricity generation by technology in the New Policies Scenario ($m), 2010–35

Renewable resources $mHydro (large) 1,492Wind (onshore) 1,464Biomass 688Solar (Buildings) 653Wind (offshore) 376Solar PV (large scale) 366CSP 347Hydro (small) 176Geothermal 75Marine 67Total 5,704


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Figure 40: Average investment in renewables based electricity generation by technology in the New Policies Scenario ($m), 2010–35


Global biomass resource potential According to a research paper submitted by Doornbosch and Steenblik (2008) in the University of

Copenhagen, world bioenergy potential is expected to range from 100–600 exajoules by 2050 with

agriculture, forest residues, and waste accounting for the majority share (28.3% of total potential), as shown

in Table 37. According to another research paper by Schubert et al., (2009), agriculture, forest, and waste

are expected to generate a bioenergy potential of 80–170 exajoules by 2050.

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Table 37: World bionenergy potential by feedstock (exajoules), 2050

Feedstock type Bioenergy potential (exajoules)Agriculture + forest residues + waste 40–170Agriculture intensification 140Surplus agriculture 120Surplus forest 60–100Degraded land 70Total 100–600

Note: 1 exajoules = 277.78TWh

Source: University of Copenhagen (Doornbosch and Steenblik, 2008) BUSINESS INSIGHTS

Figure 41: World bionenergy potential estimate by feedstock (exajoules), 2050

Source: University of Copenhagen (Doornbosch and Steenblik, 2008) BUSINESS INSIGHTS

Geographically, according to a research paper by Smeets et al., (2007), Sub-Saharan Africa is expected to

offer the highest potential for bioenergy (dedicated energy crops, agricultural and forest residues, and

surplus forest increment), accounting for 22.5% of total potential by 2050, as shown in Table 38. Further,

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according to an estimate by the University of Copenhagen (Fischer et al., 2010), the EU-15 countries are

expected to have a bioenergy potential of 1.2 exajoules by 2030 from agricultural residues.

Table 38: World bioenergy potential by region (exajoules), 2050

Region Bioenergy potential (exajoules)Sub-Saharan Africa 49–347Latin America (including Caribbean) 89–281CIS and Baltic countries 83–269North America 39–204East Asia (including Japan) 24–194Oceania 40–114Middle East and North Africa 2–39South Asia 23–37Western Europe 13–30Eastern Europe 5–29

Note: 1 exajoules = 277.78TWh

Source: University of Copenhagen (Smeets et al, 2007) BUSINESS INSIGHTS

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Figure 42: World bioenergy potential by region (exajoules), 2050

Source: University of Copenhagen (Smeets et al, 2007) BUSINESS INSIGHTS

Biomass resource potential in major countries

Germany

According to Refuel, an online publisher of biomass and bioenergy information, the total biomass resource

potential in Germany is expected to reach 1.58 exajoules per year by 2030; with dedicated bio-energy crops

(including arable and pasture) accounting for the majority share (65.8% of total potential), as shown in Table

39.

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Table 39: Germany, biomass resource potential (exajoules/year), 2030

Feedstock type Biomass resource potential (exajoules/year)Dedicated bio-energy crops - arable 0.73 Dedicated bio-energy crops - pasture 0.31 Wood 0.15 Agricultural residues 0.39 Total 1.58

Source: Refuel BUSINESS INSIGHTS

Figure 43: Germany, biomass resource potential (%), 2030


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Italy

According to Refuel, the total biomass resource potential in Italy is expected to reach 0.45 exajoules per year

by 2030 with agricultural residues accounting for the majority share (57.6% of total potential), as shown in

Table 40.

Table 40: Italy, biomass resource potential (exajoules/year), 2030

Feedstock type Biomass resource potential

(exajoules/year)Agricultural residues 0.26 Dedicated bio-energy crops - arable 0.16 Wood 0.03 Total 0.45


Figure 44: Italy, biomass resource potential (%), 2030


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The UK

According to Refuel, the total biomass resource potential in the UK is expected to reach 0.41 exajoules per

year by 2030 with dedicated bio-energy crops (including arable and pasture) accounting for the majority

share (56.7% of total potential) as shown in Table 41.

Table 41: The UK, biomass resource potential (exajoules/year), 2030


(exajoules/year)Agricultural residues 0.16 Dedicated bio-energy crops - arable 0.15 Dedicated bio-energy crops - pasture 0.08 Wood 0.01 Total 0.41


Figure 45: The UK, biomass resource potential (%), 2030


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Sweden

According to Refuel, the total biomass resource potential in Sweden is expected to reach 0.28 exajoules per

year by 2030 with wood accounting for the majority share (42.9% of total potential), as shown in Table 42.

Table 42: Sweden, biomass resource potential (exajoules/year), 2030


(exajoules/year)Wood 0.12 Dedicated bio-energy crops - arable 0.08 Agricultural residues 0.08 Total 0.28


Figure 46: Sweden, biomass resource potential (%), 2030


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Finland

According to Refuel, the total biomass resource potential in Sweden is expected to reach 0.41 exajoules per

year by 2030 with wood accounting for the majority share (47.1% of total potential), as shown in Table 43.

Table 43: Finland, biomass resource potential (exajoules/year), 2030


(exajoules/year)Agricultural residues 0.07 Dedicated bio-energy crops - arable 0.05 Wood 0.11 Total 0.23


Figure 47: Finland, biomass resource potential (%), 2030


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Appendix

What is the report about? This report by Business Insights examines the emerging factors driving the growth of the biomass power

market, as the use of biomass for electricity generation slowly becomes widespread globally, led by

government support. This study found approximately 1.4bn people globally lack access to electricity. From

the point of view of electricity supply, the pressures of a rapidly increasing population, rising concern of

global warming, and the need to achieve national energy security is driving an unprecedented interest in

exploring renewable power resources including wind, solar, hydroelectric, geothermal, marine power as well

as biomass for achieving a low carbon electricity mix by both the governments and electricity utilities.

The report highlights how parts of North America, Europe, and Asia Pacific are using biomass feedstock, in a

bid to increase the total electricity supply. Similar to any renewable resource, the demand for biomass for

electricity generation is driven by government legislation and regulations, encouraging the growth of biomass

feedstock for electricity generation. Further, the report examines how biomass feedstock suppliers and

utilities in the biomass market are learning to combat rising transportation costs associated with gathering

feedstocks and transporting the feedstock to the electricity generation sites, through development of cost

effective biomass power technologies.

Who is the report for? Interested parties will include all renewable energy companies, sellers, and distributors of biomass feedstock

as well as utilities seeking to operate in the global biomass market. As the analysis provides the emerging

economic, political, and environmental information impacting the growth of biomass feedstock for electricity

generation, the report will also benefit readers across governments, academic institutions, environmental

groups, and consumer groups. The report would prove to be useful for anyone with an interest in biomass

market worldwide especially project developers and finance providers looking at potential markets and

opportunities.

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Definitions Globally the term bioenergy is used to describe biomass, biogas, and biofuels. Bioenergy is used to generate

electricity, produce heat, and power vehicles. This report focuses on the emerging trends in the biomass

market for electricity generation only. The term biomass can refer to any material derived from recently living

organisms, which includes plants, animals and their byproducts.

Based on the findings of the International Energy Agency (IEA) and Business Insights, the report considers

renewable energy to include all renewable energy sources other than traditional biomass. The term

traditional biomass refers to the level of biomass consumption in the residential sector in developing

countries and refers to the use of wood, charcoal, agricultural residues, and animal dung for cooking and

heating.

Biomass feedstock

Residues, wastes, and bagasse are primarily used for heat production and electricity generation. Within this

report, the term biomass feedstock or biomass resources includes agriculture residues, animal manure,

wood wastes from forests, municipal green wastes, sewage, and sludge. Further, the term biomass

feedstock includes dedicated energy crops grown for the purpose of creating an energy resource. Some

examples of energy crops grown include coppice (eucalyptus, poplar, and willow), grasses (miscanthus),

sugar crops (sugar cane, beet, and sorghum), starch crops (corn, wheat) and oil crops (soy, sunflower,

oilseed rape, jatropha, palm oil).

Technologies available for biomass power generation

Globally the prominent biomass power technologies used by utilities are as follows:-

anaerobic fermentation of biomass

biomass digesters

co-firing

direct firing fuel considerations

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direct firing of biomass

fixed bed gasifiers

fluidized bed combustors

fluidized bed gasifiers

fuel handling

gasification

modular systems

power production using biomass gasification

steam cycle improvements

stoker combustors

suspension combustion

Methodology The report identifies the ten most promising countries in the biomass power market based upon the

respective countries’ biomass net electricity generation in 2009 based on latest data availability. The study

included recording the biomass power trends across the 10 geographic markets of the US, Brazil, Germany,

China, Sweden, Italy, Finland, the UK, India, and Australia. The report analyses regulatory framework and

key players driving the biomass power market across each of the ten geographic markets. Further, the report

also covers the future outlook of the biomass power market in terms of planned additional installed capacity.

The report also includes the investment required in renewables based electricity generation by technology

between 2010 and 2035.

The report draws from a wide range of government and private sector data, as well as proprietary Business

Insights information. Forecasts are carried out utilizing data from various secondary sources including

independent organizations, industry associations, trade bodies, government bodies like the US EIA, and

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research groups including RE21. Bioenergy forecast data has been sourced from Informa Agranet

F.O.Lichts, a partner of Business Insights. The report also includes information obtained from press releases

and news articles in Factiva. Company-specific information has been sourced from annual reports, websites,

and press releases.

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Glossary/Abbreviations AERS Advanced Energy Resource Standard

AEPS Alternative Energy Portfolio Standard

BNDES Brazilian Development Bank

UNICA Brazilian Sugarcane Industry Association

CDM Clean Development Mechanism

CHP Combined heat and power

DOE Department of Energy

DECC Department of Energy and Climate Change

EEG Act Erneuerbare-Energien-Gesetz

ETS Emissions Trading Scheme

EPA Environmental Protection Agency

EEA European Environment Agency

EU European Union

FGD Fuel gas desulphurisation

GW Gigawatt

GHG Greenhouse gas

MNRE India’s Ministry of New and Renewable Energy

IEA International Energy Agency

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IREDA Indian Renewable Energy Development Agency

ITABIA Italian Biomass Association

kWh Kilowatt hours

MW Megawatt

Mtoe Million Tonnes of Oil Equivalent

NDRC National Development and Reform Commission

RE Renewable Energy

RECs Renewable Energy Certificates

REN21 Renewable Energy Poilcy Network for the 21st Century

RFS Renewable Fuel Standard

RHI Renewable Heat Incentive

RPS Renewable Portfolio Standard

RPS Renewable Portfolio Standards

RPO Renewable Purchase Obligations

RTFO Renewable Transport Fuels Obligation

RO Renewables Obligation

SERC State Energy Regulatory Commissions

SO2 sulphur dioxide

Svebio Swedish Bioenergy Association

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tce Ton of coal equivalent

VAT Value Added Tax

WHO World Health Organization

business insights: the global biomass market outlook

Documents

biomass power development

market development

world electricity market

key feedstock

key players

government policy framework

government incentives

current scenario of