Economics of Biomass Co-Firing in New Hard Coal Power Plants in Germany
FCN Working Paper No. 23/2010
34 Pages Posted: 27 Jul 2012
Date Written: July 2012
Biomass cofiring in coal power plants (with shares of typically 5-20%th) is an interesting option to mitigate CO2 emissions, since the additional costs are relatively minor and a secondary benefit is provided by the increased fuel flexibility. Worldwide, about 150 cofiring plants are in operation. In Germany, the potential for biomass cofiring in coal plants is about 28 TWhel per annum, assuming a 10% replacement of coal combustion by biomass. In this paper, we study the economic potential of biomass cofiring in hard coal power plants in Germany. To this end, we identify suitable biomass input fuels, investment and operating costs, and profitability of cofiring investments. In a sensitivity analysis, we check for the robustness of the results gained, and in a Monte Carlo simulation (MCS) uncertainties are explicitly taken into account. We find that both regional and international biomass supplies are relevant, and that the cost effectiveness of cofiring is strongly affected by prices for biomass, coal and CO2 permits, while investment and operating costs only have a modest influence. According to our calculations, power generation costs attributable to biomass combustion for a plant put into operation in 2020 are between 70-75 € MWhel-1, while the average costs of biomass fuel from various sources and markets are calculated to be around 4.1 € GJ-1.
Keywords: Co-combustion, Hard coal, CO2 mitigation, Fuel flexibility, Monte Carlo simulation
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