The Global Biomass Market Outlook

Current status, key players, growth potential, and the future outlook

Reference Code: BI00036-021 Publication Date: June 2011

Disclaimer
Copyright 2011 Business Insights Ltd This report is published by Business Insights (the Publisher). This report contains information from reputable sources and although reasonable efforts have been made to publish accurate information, you assume sole responsibility for the selection, suitability and use of this report and acknowledge that the Publisher makes no warranties (either express or implied) as to, nor accepts liability for, the accuracy or fitness for a particular purpose of the information or advice contained herein. The Publisher wishes to make it clear that any views or opinions expressed in this report by individual authors or contributors are their personal views and opinions and do not necessarily reflect the views/opinions of the Publisher. 2

Table of Contents
Disclaimer 2

Executive summary
Market development The US Germany Brazil The UK Sweden Finland Italy China India Australia Future outlook

14
14 15 16 17 18 19 20 21 22 23 24 25

Chapter 1 Introduction to the report

Overview

26
26

Chapter 2 Market development

Summary Overview of the world electricity market
World electricity generation World installed electricity capacity The role of renewables World installed renewable electrical power capacity in 2010 3

30
30 31
31 32 34 35

Scale of current biomass resource use

36

Drivers of the biomass power market

Regulatory framework supports biomass power development Co-firing and cogeneration to grow in the EU Growth of feedstock storage market

39
39 40 42

Resistors against biomass power market

High capital costs Need for secure biomass feedstock supply Significance of unconventional gas Liquid biofuels for transport

42
42 43 43 46

Economics of biomass power technology

47

Chapter 3 The US
Summary US biomass power market overview Current scenario of the US
Key feedstock

50
50 51 51
52

Government policy framework for renewables in the US

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

53
54

Key players Future outlook for the US

Government incentives to ensure growth in the biomass power market Possible change in Clean Air Act regulation in the US High costs Integrated conversion technologies and co-firing to grow Focus on converting biomass feedstock into fuel for transportation

56 56
56 58 58 58 59

Chapter 4 Germany
Summary Germanys biomass power market overview Current scenario of Germany
Key feedstock

61
61 62 62
63

Government policy framework for renewables in Germany

Overview of government policies supporting the biomass power market in Germany

64
65

Key players Future outlook for Germany

Government incentives to foster growth Technological developments The role of Energy Concept

66 66
66 68 69

Chapter 5 Brazil
Summary Brazils biomass power market overview Current scenario of Brazil
Key feedstock

71
71 72 72
73

Government policy framework for renewables in Brazil

Overview of government policies supporting the biomass power market in Brazil Key players Future markets trends impacting the biomass power market in Brazil Government support mechanisms to promote the growth of the biomass power market Threat to future biomass feedstock availability The dominance of large hydroelectric power The role of bioethanol

74
74 75 75 75 77 78 78

Chapter 6 The UK
5

80

Summary The UKs biomass power market overview Current scenario in the UK
Key feedstock

80 81 81
82

Government policy framework for renewables in the UK

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

85
86

Key players Future outlook for the UK

Potential for biomass energy development Focus on biofuels Cautious outlook for growth in co-firing technology and anaerobic digestion

88 88
88 90 90

Chapter 7 Sweden
Summary Swedens biomass power market overview Current scenario of Sweden
Key feedstock

92
92 93 93
95

Government policy framework for renewables in Sweden

Overview of government policies supporting the biomass power market in Sweden

95
96

Key players Future outlook for Sweden

Focus on biofuels and heating

96 97
97

Chapter 8 Finland
Summary Finlands biomass power market overview Current scenario of Finland
6

99
99 100 100

Key feedstock

102

Government policy framework for renewables in Finland Key players Future outlook for Finland
Finland to promote biomass and wind power for electricity generation Solid biomass to lead growth of biomass power in Finland

102 102 104

104 105

Chapter 9 Italy
Summary Italys biomass power market overview Current scenario of Italy
Key feedstock

107
107 108 108
110

Government policy framework for renewables in Italy Key players Future outlook for Italy
Italian government may promote wind power over biomass power More efficient biogas to reduce the share of solid biomass in power generation

111 111 112

112 115

Chapter 10 China
Summary Chinas biomass power market overview Current scenario of China Key feedstock Government policy framework for renewables in China Overview of government policies supporting the biomass power market in China Key players Future outlook for China Abundant biomass resource availability 7

117
117 118 118 120 121 122 123 123 123

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

Chapter 11 India
Summary Indias biomass power market overview Current scenario of India
Key feedstock Government policy framework for renewables in India Overview of government policies supporting the biomass power market in India Key players Future outlook for India Government programs to drive biomass power growth High capital risk The importance of cogeneration

127
127 128 128
129 130 131 132 132 132 134 135

Chapter 12 Australia
Summary Australias biomass power market overview Current scenario of Australia
Key feedstock

136
136 137 137
139

Government policy framework for renewables in Australia

Overview of government policies supporting the biomass power market in Australia

139
140

Key players Future outlook for Australia

Co-firing to grow Emerging interest in biofuels

140 141
141 143

Chapter 13 Future outlook

8

144

Summary Outlook for the global electricity sector

Outlook for the renewables market Outlook for biomass power market Traditional biomass energy technology causes environmental hazard EU to drive demand for biofuels Growth of additional biomass power capacity High level of investment required

144 145
146 148 148 149 149 151

Supply chain constraints of biomass feedstock to hinder the growth of biomass applications 151

Global biomass resource potential

Biomass resource potential in major countries Germany Italy The UK Sweden Finland

153
156 156 158 159 160 161

Appendix
What is the report about? Who is the report for? Definitions
Biomass feedstock Technologies available for biomass power generation

162
162 162 163
163 163

Methodology Glossary/Abbreviations

164 166

Table of figures
Figure 1: Figure 2: Figure 3: Figure 4: Figure 5: Figure 6: Figure 7: Figure 8: Figure 9: Share of biomass and waste in total electricity net generation (%) Share of biomass and waste in total renewables electricity net generation (%), 2009 World electricity net generation (bn kWh), 200610 World cumulative installed electricity generation capacity (GW), 200610 World installed renewable power generation capacity rankings, 2009 World total installed renewable electrical power capacity (%), 2010 World number of people relying on the traditional use of biomass (m) 2009 EU share of cogeneration in total electricity (%), 2007 entry into service in 2016 ($/MWh), 2010 type ($ per MWh), 20102035 Figure 11: US, net biomass and waste power generation (bn kWh), 200509 Figure 12: US, biomass resource map, 2009 Figure 13: US, cumulative installed biomass power generation capacity forecast (GW), 200935 Figure 14: Germany, net biomass and waste power generation (bn kWh), 200509 Figure 15: Germany, installed solid biomass capacity forecast (MW), 201020 Figure 16: Brazil, net biomass and waste power generation (bn kWh), 200509 Figure 17: Brazil, installed biomass power capacity forecast (MW), 201019 Figure 18: UK, net biomass and waste power generation (bn kWh), 200509 Figure 19: UK, biomass power plants, 2010 (part 1 of 2) Figure 20: UK, biomass power plants, 2010 (part 2 of 2) Figure 21: UK, installed solid biomass capacity forecast (MW), 201020 Figure 22: Sweden, net biomass and waste power generation (bn kWh), 200509 Figure 23: Sweden, installed solid biomass capacity forecast (MW), 201020 Figure 24: Finland, net biomass and waste power generation (bn kWh), 200509 Figure 25: Finland, renewable power generation (GWh), 201020 Figure 26: Finland, biomass power generation (GWh), 201020 Figure 27: Italy, net biomass and waste power generation (bn kWh), 200509 Figure 28: Italy, biomass energy potential by feedstock (%), 2009 Figure 30: Italy, annual power generation from biomass forecast (GWh), 201020 Figure 31: China, net biomass and waste power generation (bn kWh), 200509 Figure 32: China, biomass power generation plants, 2009 10 27 29 32 33 35 36 39 41 46 49 52 53 57 63 68 73 77 82 84 85 89 94 98 101 105 106 109 110 116 119 121

Comparison of cost electricity from CCS power plants and other low carbon generation for

Figure 10: World average generation costs of renewables based electricity generation by technology

Figure 29: Italy, power generation from renewables including hydropower forecast (GWh), 201020114

Figure 33: China, potential available biomass resources (%), 2030 Figure 34: India, net biomass and waste power generation (bn kWh), 200509 Figure 35: India, installed biomass and waste generation capacity forecast (GW), 201020 Figure 36: Australia ,net biomass and waste power generation (bn kWh), 200509 Figure 37: Australia, bioenergy electricity generation forecast (GWh), 2020 Figure 38: World net electricity generation (tn kWh), 201535 Figure 39: World primary energy demand by fuel under new scenario (Mtoe), 202035 Policies Scenario ($m), 201035 Figure 41: World bionenergy potential estimate by feedstock (exajoules), 2050 Figure 42: World bioenergy potential by region (exajoules), 2050 Figure 43: Germany, biomass resource potential (%), 2030 Figure 44: Italy, biomass resource potential (%), 2030 Figure 45: The UK, biomass resource potential (%), 2030 Figure 46: Sweden, biomass resource potential (%), 2030 Figure 47: Finland, biomass resource potential (%), 2030

125 129 134 138 142 146 148 153 154 156 157 158 159 160 161

Figure 40: Average investment in renewables based electricity generation by technology in the New

11

Table of tables
Table 1: Table 2: Table 3: Table 4: Table 5: Table 6: Table 7: Table 8: Table 9: Table 10: Table 11: Table 12: Table 13: Table 14: Table 15: Table 16: Table 17: Table 18: Table 19: Table 20: Table 21: Table 22: Table 23: Table 24: Table 25: Table 26: Table 27: Table 28: Table 29: Table 30: Share of biomass and waste in total electricity net generation (%), 2009 Share of biomass and waste in total renewables electricity net generation (%), 2009 World electricity net generation (bn kWh), 200610 World cumulative installed electricity generation capacity (GW), 200610 World total installed renewable electrical power capacity (GW), 2010 biomass (m), 2009 entry into service in 2016 ($/MWh), 2010 type ($ per MWh), 20102035 US, net biomass and waste power generation (bn kWh), 200509 US, cumulative installed biomass power generation capacity forecast (GW), 200935 Germany, net biomass and waste power generation (bn kWh), 200509 Germany, installed solid biomass capacity forecast (MW), 201020 Brazil, net biomass and waste power generation (bn kWh), 200509 Brazil, installed biomass power capacity forecast (MW), 201019 UK, net biomass and waste power generation (bn kWh), 200509 UK, installed solid biomass capacity forecast (MW), 201020 Sweden, net biomass and waste power generation (bn kWh), 200509 Sweden, installed solid biomass capacity forecast (MW), 201020 Finland, net biomass and waste generation (bn kWh), 200509 Key players in biomass power generation in Finland, 2011 Finland, renewable power generation (GWh), 201020 Finland, biomass power generation (GWh), 201020 Italy, net biomass and waste power generation (bn kWh), 200509 Italy, biomass energy potential by feedstock (Mtoe), 2009 Major players in biomass power generation in Italy, 2011 Italy, annual power generation from biomass forecast (GWh), 201020 China, net biomass and waste power generation (bn kWh), 200509 China, potential available biomass resources (100m tce*), 201030 India, net biomass and waste power generation (bn kWh), 200509 12 26 28 31 33 36 38 45 48 52 57 62 68 72 76 82 89 94 98 101 103 104 106 109 110 112 115 119 124 129

Global number of people without access to electricity and relying on the traditional use of Comparison of cost electricity from CCS power plants and other low carbon generation for World average generation costs of renewables based electricity generation by technology

Italy, power generation from renewables including hydropower forecast (GWh), 201020113

Table 31: Table 32: Table 33: Table 34: Table 35: Table 36: Table 37: Table 38: Table 39: Table 40: Table 41: Table 42: Table 43:

India, installed biomass and waste generation capacity forecast (GW), 201020 Australia, net biomass and waste power generation (bn kWh), 200509 Australia, bioenergy electricity generation forecast (GWh), 2020 World net electricity generation (tn kWh), 201535 World primary energy demand by fuel and scenario (Mtoe), 200835 Policies Scenario ($m), 201035 World bionenergy potential by feedstock (exajoules), 2050 World bioenergy potential by region (exajoules), 2050 Germany, biomass resource potential (exajoules/year), 2030 Italy, biomass resource potential (exajoules/year), 2030 The UK, biomass resource potential (exajoules/year), 2030 Sweden, biomass resource potential (exajoules/year), 2030 Finland, biomass resource potential (exajoules/year), 2030

133 138 142 145 147 152 154 155 157 158 159 160 161

Average investment in renewables based electricity generation by technology in the New

13

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 governments Renewable Fuels Standard, Production and Investment Tax Credits and state governments 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 Agencys (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 countrys 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. Germanys renewables market is driven by regulations and incentives, which create opportunities for electricity generation from renewable resources in accordance with the EUs Climate Action Plan mandate. Germanys 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. Germanys 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 Brazils electricity supply mix. Brazils 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 countrys renewables supply mix. In 2009, Brazils total renewable net power generation was 409.8bn kWh and total net power generation was 461bn kWh, indicating the importance of renewables in the countrys electricity supply. Brazils net biomass power generation recorded a CAGR of 10.8% between 2005 and 2009 led by increase in the countrys economic growth. Brazils 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 worlds leading producer and exporter of ethanol for fuel, led by the abundance of bagasse, which is produced from sugarcane. Brazils government will continue to encourage technologies for converting biomass feedstock into cost competitive fuels including ethanol for transportation, which has historically remained very successful.

17

The UK
The UKs electricity supply is dominated by non-renewable resources including natural gas and coal. According to the UKs 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 UKs biomass power market will see more interest in developing anaerobic digestion technology, in a bid to deal with the countrys waste disposal problem and add to the existing electricity supply.

18

Sweden
Swedens electricity generation is essentially dependent on hydroelectric power and nuclear power. The majority of Swedens energy supply is used for the purpose of electricity generation, district heating and fuel transportation. Swedens net electricity generation was 129.4bn kWh and total renewable electricity generation was 78.16bn kWh. Swedens 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 Swedens 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 Swedens National Forest Energy Technology program, the majority of Swedens 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 Swedens biomass power market.

19

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 countrys commitment to generate 38% of total energy from renewables by 2020 in order to contribute to the EUs 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 201020, 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.

20

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 countrys target of generating 19% of the countrys electricity from renewables by 2020.

21

China
Chinas 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. Chinas 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. Chinas 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.

22

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 Indias 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 Indias 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 Indias cogeneration market. The MNRE has announced a target of creating 10GW (10,000MW) of installed biomass power capacity by 2020. Indias 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. Australias net biomass and waste power net generation contributed to less than 1% of Australias 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 Australias 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 woodrelated 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 EUs 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) 65.41 38.30 21.35 12.02 11.32 8.59 8.36 2.50 2.00 1.97

Share of biomass in countrys total electricity net generation (%) 1.7% 6.9% 4.6% 3.5% 8.8% 12.6% 3.1% 0.1% 0.2% 0.9%

Share in total world biomass power generation (%) 38.1% 22.3% 12.4% 7.0% 6.6% 5.0% 4.9% 1.5% 1.2% 1.1%
BUSINESS INSIGHTS

US Germany Brazil The UK Sweden Finland Italy China India Australia

Source: US EIA

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Figure 1:

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

Source: US EIA

BUSINESS INSIGHTS

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) 65.41 38.30 21.35 12.02 11.32 8.59 8.36 2.50 2.00 1.97

Share of biomass in countrys total renewable electricity net generation (%) 15.4% 39.3% 5.2% 47.5% 14.5% 40.0% 12.5% 0.4% 1.6% 11.5%

Share in total world biomass power generation (%) 38.1% 22.3% 12.4% 7.0% 6.6% 5.0% 4.9% 1.5% 1.2% 1.1%
BUSINESS INSIGHTS

US Germany Brazil The UK Sweden Finland Italy China India Australia

Source: US EIA

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Figure 2: (%), 2009

Share of biomass and waste in total renewables electricity net generation

Source: US EIA

BUSINESS INSIGHTS

29

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. 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. 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 gridscale 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. 30

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), 200610

Details

2006

2007

2008

2009

*2010

CAGR 200610 (%)

Electricity net generation (bn kWh) Growth (%)

18,021

18,785 4.2

19,128 1.8

19,483 1.9

19,851 1.9 2.4

Note: 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), 200610

Source: US EIA and Business Insights

BUSINESS INSIGHTS

World installed electricity capacity

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. 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.

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Table 4: World cumulative installed electricity generation capacity (GW), 200610

Details

2006

2007

2008

2009

*2010

CAGR 2006 10 (%)

Installed electricity generation capacity (GW) Growth (%)

4,293

4,428 3.1

4,492 1.45

4,559 1.48

4,627 1.51 1.9

Note: 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

Figure 4:

World cumulative installed electricity generation capacity (GW), 200610

Source: US EIA and Business Insights

BUSINESS INSIGHTS

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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.

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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.

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

Source Wind Small hydro Biomass and Waste-to-Energy Solar Geothermal Marine Total
Source: PEW Charitable Trust

Installed electricity capacity (GW) 193.0 80.0 65.0 43.0 7.0 0.3 388.0
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 36

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.

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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 31 8 585 587 387 404 799 1,438 1,441

Number of people relying on the traditional use of biomass for cooking 85 423 653 657 659 855 1,937 2,679 2,679

Latin America China Sub-Saharan Africa Africa Other Asia India Developing Asia (excluding China and India) Developing countries* World
Note: *Includes Middle East countries and OECD and transition economies Source: IEA's World Energy Outlook 2010

BUSINESS INSIGHTS

38

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 Unions (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 cogeneration. 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-tomedium 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 countrys 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 cogeneration, 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%

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. 42

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 43

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.

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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 Solar thermal Offshore wind Solar PV Advanced coal with CCS Advanced nuclear Biomass Onshore wind Advanced natural gas combined cycle with CCS Hydropower
Source: US EIA

Levelized cost ($/MWh) 312 243 211 136 114 113 97 89 86

BUSINESS INSIGHTS

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

Source: US EIA

BUSINESS INSIGHTS

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 46

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. 47

Table 8: World average generation costs of renewables based electricity generation by technology type ($ per MWh), 20102035

Technology type Geothermal Wind (onshore) Hydro (large) Wind (offshore) Biomass Hydro (small) CSP Solar PV (large scale) Marine Solar PV (buildings)
Source: IEA

Average generation costs ($ per MWh in 201020) 52 85 94 101 131 143 207 280 281 406

Average generation costs ($ per MWh in 202135) 46 65 74 95 126 143 156 157 187 217

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

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Figure 10: World average generation costs of renewables based electricity generation by technology type ($ per MWh), 20102035

Source: IEA

BUSINESS INSIGHTS

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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 governments Renewable Fuels Standard, Production and Investment Tax Credits and state governments 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 Agencys (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 countrys 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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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 countrys 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), 200509

Details

2005

2006

2007

2008

2009

CAGR 2005 09(%)

Net biomass power generation (bn kWh) Growth (%)

Note: 2Data for 2010 not available Source: US EIA

67.1

67.8 1.1

67.8 -0.1

66.7 -1.5

65.4 -2.0 -0.6

BUSINESS INSIGHTS

Figure 11:

US, net biomass and waste power generation (bn kWh), 200509

Source: US EIA

BUSINESS INSIGHTS

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 countrys dependence on non-renewable resources including oil and natural gas; while

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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 governments Renewable Fuels Standard, Production and Investment Tax Credits and state governments 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

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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 Connecticuts 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 cofiring activities of up to 20%. There exists significant opportunities for biomass power utilities to enter the co-firing biomass segment in the US. 55

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 governments 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), 200935

Details

2009

2015

2020

2025

2030

2035

CAGR 2009 35 (%)

Installed biomass power generation capacity (GW) Growth %)

Source: US EIA

7.0

9.5 34.2

11.6 23.2

17.3 48.9

19.7 13.6

20.2 2.8 4.1

Note: Biomass power includes wood and other biomass

BUSINESS INSIGHTS

Figure 13: US, cumulative installed biomass power generation capacity forecast (GW), 200935

Source: US EIA

BUSINESS INSIGHTS

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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 Agencys (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 countrys 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 powers 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 cofiring 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 thermochemical 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 Programs 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 bioproducts and biopower. In addition, the need to meet growing demand for transportation fuel could mean that the US government will look at reducing the countrys dependence on oil as a transportation fuel by growing biomass feedstock for biofuels rather than developing biomass power. For instance, the US governments 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 Programs near term goals focus on converting biomass feedstock into liquid transportation like 59

producing ethanol from biomass feedstock. Further, the USDAs 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. Germanys renewables market is driven by regulations and incentives, which create opportunities for electricity generation from renewable resources in accordance with the EUs Climate Action Plan mandate. Germanys 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. Germanys 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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Germanys 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. Germanys 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, Germanys 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 Germanys 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), 200509

Details

2005

2006

2007

2008

2009

CAGR 2005 09(%)

Net biomass and waste power generation (bn kWh) Growth (%)
Note: 2010 data is not available Source: US EIA

15.8

20.3 28.6

27.6 36.3

27.8 0.5

38.3 38.0 24.9

BUSINESS INSIGHTS

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Figure 14:

Germany, net biomass and waste power generation (bn kWh), 200509

Source: US EIA

BUSINESS INSIGHTS

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 Germanys 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 Germanys 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

Germanys renewables market is driven by regulations and incentives, which create opportunities for electricity generation from renewable resources in accordance with the EUs Climate Action Plan mandate. The EUs 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 EUs 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: Germanys 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 Germanys future energy supply mix, as the electricity regulations encourage additional installed electricity capacity. For example, Germanys 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 Germanys 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. 64

The EEG Act specifies the renewable energies share of heat supply is to grow to 14% by 2020. In addition, under Germanys 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 governments 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, Germanys 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 Germanys 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

Germanys 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 Germanys 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 Germanys 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 65

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, Germanys 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, Germanys National Biomass Action Plan identifies the potential for the use of biomass power in Germany, detects available reserves, and illustrates how Germanys government is working toward promoting biomass feedstock for electricity, heat, and fuel sectors. Germanys 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 Germanys 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. Germanys ambition to substitute non-renewable resources including oil, 66

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, Germanys 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 Germanys government to certify the exact source of feedstock to prove whether the energy generated is sustainable. Similar to the regulations imposed on Germanys 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. Germanys 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), 201020

Details Installed solid biomass capacity projection (MW)

Notes: Data excludes biogas projections;

2010 2,427

2020 4,792

CAGR 201020 (%) 7.0

Germanys 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), 201020

Source: Estimates by Agra Net F.O.Lichts

BUSINESS INSIGHTS

Technological developments
Germanys 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 68

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. Germanys 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, Germanys 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, Germanys 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

Germanys federal government plans on attaining the security of energy supply using only renewable resources by 2050. In this regard, the federal governments 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. Germanys 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 Brazils electricity supply mix. Brazils 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 countrys renewables supply mix. In 2009, Brazils total renewable net power generation was 409.8bn kWh and total net power generation was 461bn kWh, indicating the importance of renewables in the countrys electricity supply. Brazils net biomass power generation recorded a CAGR of 10.8% between 2005 and 2009 led by increase in the countrys economic growth. Brazils 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 worlds leading producer and exporter of ethanol for fuel, led by the abundance of bagasse, which is produced from sugarcane. Brazils 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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Brazils 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, Brazils 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 Brazils electricity generation capacity. Brazils 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 countrys renewable power supply. Historically, hydroelectric power has dominated Brazils electricity supply, with more than 80% of electricity being fed into the grid. In 2009, Brazils total renewable net power generation was 409.8bn kWh and total net power generation was 461bn kWh, indicating the importance of renewables in the countrys electricity supply. According to the US EIA, Brazils 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 countrys economic growth. Table 13: Brazil, net biomass and waste power generation (bn kWh), 200509

Details

2005

2006

2007

2008

2009

CAGR 2005 09(%)

Net biomass and waste power generation (bn kWh) Growth (%)
Note: 2010 data is not available Source: US EIA

14.2

14.6 3.1

17.0 16.2

18.8 11.1

21.4 13.4 10.8

BUSINESS INSIGHTS

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Figure 16:

Brazil, net biomass and waste power generation (bn kWh), 200509

Source: US EIA

BUSINESS INSIGHTS

Key feedstock
Brazils 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 Brazils 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

Brazils 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 countrys 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 Brazils 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 Incentivos Fontes Alternativasde Energia Eltrica). 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 government initiatives including the Decennial Plan for Energy Expansion to 2019.

Overview of government policies supporting the biomass power market in Brazil

Brazils biomass power market is an attractive prospect for investors, due to government support mechanisms including tax incentives, which drive electricity generation. To enter Brazils renewables market, operators of biomass power plants should deliberate on the following: Biopower is a beneficiary of Brazils 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 Brazils sugar cane, indicating the states geographic advantage in terms of bagasse availability. The Sao Paulos 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 Paulos 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 Paulos 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 Brazils government may continue to promote market for biomass feedstock, driven by the prospect of reducing the dependence on fossil fuels for electricity generation. Currently, Brazils 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 75

power capacity. According to Agra Net F.O.Lichts, Brazils 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), 201019

Details

2010

2015

2016

2017

2018

2019

CAGR 2010 19(%)

Installed biomass power capacity forecast (MW) Growth (%)

5,380

7,421 4.9

7,621 6.6

7,771 4.6

8,121 4.2

8,521 4.0 5.2

Source: Estimates by Agra Net F.O.Lichts

BUSINESS INSIGHTS

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Figure 17:

Brazil, installed biomass power capacity forecast (MW), 201019

Source: Estimates by Agra Net F.O.Lichts

BUSINESS INSIGHTS

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 Brazils 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 Brazils electricity supply. However, biomass power contributes less than 10% to Brazils 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, Brazils 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 Brazils 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. Brazils 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 worlds 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, Brazils ethanol production is growing on average between 50,000 barrels per day and 520,000 barrels per day in 2010 and 2011. Brazils government will likely continue to encourage technologies for converting biomass feedstock into cost competitive fuels including ethanol for transportation. Brazils 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, Brazils 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 Brazils 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 UKs electricity supply is dominated by non-renewable resources including natural gas and coal. According to the UKs 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 UKs biomass power market will see more interest in developing anaerobic digestion technology, in a bid to deal with the countrys waste disposal problem and add to the existing electricity supply.

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The UKs biomass power market overview

Being a signatory of the European Unions Renewable Energy Directive, the UK needs to generate 15% of the countrys 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 UKs electricity supply has been dominated by non-renewable resources including natural gas and coal. In 2010, the UKs 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 UKs 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 countrys electricity supply. According to the US EIA, the UKs 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), 200509

Details

2005

2006

2007

2008

2009

CAGR 2005 09(%)

Net biomass and waste power generation (bn kWh) Growth (%)
Note: 2010 data is not available Source: US EIA

11.1

11.0 -1.0

10.5 -3.9

10.4 -1.2

12.0 15.4 2.0

BUSINESS INSIGHTS

Figure 18:

UK, net biomass and waste power generation (bn kWh), 200509

Source: US EIA

BUSINESS INSIGHTS

Key feedstock
According to the UKs 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 82

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)

Development Construction

RWE, Markinch, 50MW Scottish Power, Longannet, 25MW

Dalkia, Chilton, 18MW

Gaja Power, Billingham, 50MW

Eon, Sheffield, 25MW

RWE, Stallingborough, 65MW ECO2, Brigg, 40MW EO2, Seaford, 40MW

Western Log, Margam, 35MW

EO2, Mendleshem, 40MW Express Energy, 60MW Evonik, Medway, 25MW

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)

Development Construction Forth Energy, Rosyth, Dundee, Grangemouth 3 x 100MW

Forth Energy, Leith, 200MW RES, Blyth, 100MW MGT, Tyne, 300MW MGT, Teesside, 300MW

Drax, Selby, 300MW SSE Ferrybridge, 108MW Anglesey Aluminium, 108MW Dong, Hull, 300MW Drax, Immingham, 300MW

Prenergy, Port Talbot, 350MW Eon, Avonmouth, 150MW Helius, Avonmouth, 100MW

Source: Bonsall and International Institute for Environment and Development

BUSINESS INSIGHTS

Government policy framework for renewables in the UK

The UKs 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 EUs 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 UKs renewable energy policy plans to increase the share of solar, wind, hydropower along with biomass power in the countrys 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 EUs Renewable Energy Directive, the UK plans on generating 15% of the countrys 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 UKs 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 governments 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 UKs 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 UKs 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 UKs 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 UKs 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 UKs 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 UKs 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 UKs 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 UKs 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 87

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 UKs 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 UKs 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, UKs 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), 201020

Details Installed solid biomass capacity projection (MW)

Notes: Data excludes biogas projections;

2010 580

2020 3,140

CAGR 201020 (%) 18.4

UKs installed biogas capacity to grow from 1,340MW in 2010 to 1,10MW in 2020. Source: Estimates by Agra Net F.O.Lichts
BUSINESS INSIGHTS

Figure 21:

UK, installed solid biomass capacity forecast (MW), 201020

Source: Estimates by Agra Net F.O.Lichts

BUSINESS INSIGHTS

89

Focus on biofuels
The UK governments 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 UKs 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 governments 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 UKs 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 UKs 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

90

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 UKs biomass power market. Further, utilities will cater to the market for anaerobic digestion technology, driven by the Renewable Heat Incentive. Presently, the UKs 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 UKs market will see more interest in developing anaerobic digestion technology, in a bid to deal with the countrys waste disposal problem and add to the existing electricity supply.

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Chapter 7 Sweden
Summary
Swedens electricity generation is essentially dependent on hydroelectric power and nuclear power. The majority of Swedens energy supply is used for the purpose of electricity generation, district heating and fuel transportation. Swedens net electricity generation was 129.4bn kWh and total renewable electricity generation was 78.16bn kWh. Swedens 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 Swedens 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 Swedens National Forest Energy Technology program, the majority of Swedens 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 Swedens biomass power market.

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Swedens biomass power market overview

Swedens 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 Swedens installed solid biomass power capacity to record a CAGR of 1% between 2010 and 2020.

Current scenario of Sweden

The majority of Swedens 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 Swedens electricity supply as of 2010. Historically, Swedens 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, Swedens government has always been interested in increasing the installed capacity of renewable power technology. According to the US EIA, Swedens net electricity generation was 129.4bn kWh and total renewable electricity generation was 78.16bn kWh making Swedens 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 countrys 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), 200509

Details

2005

2006

2007

2008

2009

CAGR 2005 09(%)

Biomass and waste power generation (bn kWh) Growth (%)

Note: 2010 data is not available Source: US EIA

7.9

8.9 11.9

10.1 13.9

10.7 5.3

11.3 6.2 9.3

BUSINESS INSIGHTS

Figure 22:

Sweden, net biomass and waste power generation (bn kWh), 200509

Source: US EIA

BUSINESS INSIGHTS

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Key feedstock
Swedens abundant feedstocks include wood fuels, peat, crops and waste, along with a well developed forestry industry, which act as the key driver of countrys bioenergy sector. Swedens 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 Swedens 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 Svebios 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 countrys biomass power market.

Government policy framework for renewables in Sweden

Swedens 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 EUs directive on renewable sources will likely make Swedens government call for stricter policy measures, resulting in a rapid expansion of renewable power generation within the countrys total electricity supply mix. Historically, Swedens 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, Swedens 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 Swedens electricity market would find all electricity suppliers 95

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 countrys 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, Swedens 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

Swedens 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 Swedens biomass power market. Swedens 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. 96

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 Swedens 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. According to Swedens National Forest Energy Technology program, the majority of Swedens biomass power plants generate a combination of heat and electricity, with a very small segment of power plants involved in small district heating plants, indicating opportunities for CHP installation in Swedens biomass power market. According to Agra Net F.O.Lichts, Swedens 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), 201020

Details Installed solid biomass capacity forecast (MW)

Note: By 2020, biogas is to grow to 42MW Source: Estimates by Agra Net F.O.Lichts

2010 2,641

2020 2,872

CAGR 201020 (%) 1

BUSINESS INSIGHTS

Figure 23:

Sweden, installed solid biomass capacity forecast (MW), 201020

Source: Estimates by Agra Net F.O.Lichts

BUSINESS INSIGHTS

98

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 countrys commitment to generate 38% of total energy from renewables by 2020 in order to contribute to the EUs 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 201020, 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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Finlands 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 Finlands 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. Finlands 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), 200509

Details

2005

2006

2007

2008

2009

CAGR 2005 09 (%) -1.7%

Net biomass and waste power generation (bn kWh) Growth (%)
Note: n/a = not applicable Data for 2010 not available Source: US EIA

9.2 n/a

10.5 14.8%

10.2 -2.9%

10.2 -0.1%

8.6 -16.0%

BUSINESS INSIGHTS

Figure 24:

Finland, net biomass and waste power generation (bn kWh), 200509

Source: US EIA

BUSINESS INSIGHTS

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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 Finlands 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 countrys commitment to generate 38% of total energy from renewables by 2020 in order to contribute to the EUs 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 Biomass power generator

Company name UPM Kymmene

Details 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. 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 is also a leading biomass-based CHP generator in Finland. The companys total co-firing power generation capacity using biomass, coal, and oil is 641MW. 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. 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. The company is key provider of biomass handling, pretreatment, gasification, and sludge treatment solutions in Finland.
BUSINESS INSIGHTS

Biomass power generator

Alholmens Kraft

Biomass power generator

Pohjolan Voima

Biomass power generator

Vattefall

Biomass power technology supplier

Metso

Biomass power technology supplier

Andritz

Source: UPM, Alholmens Kraft, Pohjolan Voima, Vattenfall, Metso, and Andritz

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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 3539% during 201020, 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), 201020

Details

2010

2012

2014

2016

2018

2020

CAGR 201020 (%) 0.1% 4.8% 32.7% 4.0%

Hydro Biomass Wind Total

14,210 8,090 360 22,660

14,210 9,200 820 24,230

14,210 9,650 1,290 25,150

14,250 10,370 2,440 27,060

14,330 11,550 4,260 30,140

14,410 12,910 6,090 33,410

Source: European Commission

BUSINESS INSIGHTS

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Figure 25:

Finland, renewable power generation (GWh), 201020

Source: European Commission

BUSINESS INSIGHTS

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 105

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), 201020

Details

2010

2012

2014

2016

2018

2020

CAGR 201020 (%) 7.2% 1.5% 21.0% 4.8%

Solid biomass Bioliquids Biogas Total

3,930 4,120 40 8,090

4,760 4,390 40 9,190

5,120 4,480 50 9,650

5,730 4,580 60 10,370

6,810 4,680 70 11,560

7,860 4,780 270 12,910

Source: European Commission

BUSINESS INSIGHTS

Figure 26:

Finland, biomass power generation (GWh), 201020

Source: European Commission

BUSINESS INSIGHTS

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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 countrys target of generating 19% of the countrys electricity from renewables by 2020.

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Italys 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 countrys 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 200509 due to the countrys 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), 200509

Details

2005

2006

2007

2008

2009

CAGR 2005 09 (%)

Biomass power generation (bn kWh) Growth (%)

Note: 2010 data not available Source: US EIA

6.9 NA

7.4 6.9%

7.6 2.6%

8.2 7.6%

8.4 2.5% 4.9%

BUSINESS INSIGHTS

Figure 27:

Italy, net biomass and waste power generation (bn kWh), 200509

Source: US EIA

BUSINESS INSIGHTS

109

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 Livestock manure Residues from agricultural and agro-industrial Residues from forestry and wood industry Energy crop Firewood Municipal solid waste Total
Source: Italian Biomass Association (ITABIA)

Potential (Mtoe/year) 11.0 5.0 4.3 4.0 3.0 0.3 27.6

Share of total (%) 39.9% 18.1% 15.6% 14.5% 10.9% 1.1% 100.0%
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 Biomass power generator

Company name Enel

Details The company generates biomass power through both co-firing and virgin biomass. Enels 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)

Biomass power generator Biomass power generator Biomass power generator Biomass power plant developer Biomass power plant developer

Hera Group

The company generates biomass power using wasteto-energy power plants. Hera Groups total waste-toenergy power generation capacity is 96MW. The company has 80MW of virgin solid biomass power generation capacity. The company mainly generates biomass power using wood biomass obtained from forestry, agricultural waste, energy crops, and sawmill residues. The company provides turnkey solutions in biomass power and waste-to-energy power. The company provides turnkey solutions in biomass power, biomass gasification, and biomass CHP.

Bio Energie Euroenergy Group Foster and Wheeler BIOS Bioenergiesyste me GmbH

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 countrys target of generating 19% of the countrys total electricity from renewables by 2020. According to Italys 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 112

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), 201020

Details

2010

2012

2014

2016

2018

2020

CAGR 201020 (%) 0.0% 9.1% 8.1% 19.1% 1.8% 4.0%

Hydro Wind Biomass* Solar Geothermal Total

42,141 8,398 8,645 1,976 5,632 66,792

42,113 10,318 10,672 4,048 5,856 73,007

42,085 12,575 12,699 5,524 6,079 78,962

42,056 14,769 14,726 7,097 6,303 84,951

42,028 17,184 16,753 8,916 6,526 91,407

42,000 20,000 18,780 11,350 6,750 98,880

Note: *Power generation from biomass include solid, gas, and liquid biomass. Source: European Commission
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Figure 29: Italy, power generation from renewables including hydropower forecast (GWh), 201020

Source: European Commission

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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 Italys 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 Italys total biomass power generation is expected to reduce during 201020 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 countrys natural gas network during 201020. According to Italys 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), 201020

Details Solid Biogas Bioliquids Total

2010 4,758 2,129 1,758 8,645

2012 5,386 2,907 2,378 10,671

2014 6,015 3,685 2,999 12,699

2016 6,643 4,463 3,619 14,725

2018 7,272 5,242 4,240 16,754

2020 7,900 6,020 4,860 18,780

CAGR 201020 (%) 5.2% 11.0% 10.7% 8.1%

Source: European Commission

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Figure 30:

Italy, annual power generation from biomass forecast (GWh), 201020

Source: European Commission

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Chapter 10 China
Summary
Chinas 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. Chinas 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. Chinas 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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Chinas biomass power market overview

Chinas biomass generation capabilities are currently in the nascent stage of development and are supported by a Feed-in Tariff mechanism. Chinas 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 Chinas total installed power generation capacity. According to the PEW Group, Chinas 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 coalfueled power plants with a total generation capacity of 26.17m kWh in 2009. Chinas 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), 200509

Details

2005

2006

2007

2008

2009

CAGR 2005 09(%)

Net biomass and waste power generation (bn kWh) Growth (%)
Note: 2010 data is not available Source: US EIA

2.27

2.26 -0.4

2.25 -0.4

2.24 -0.3

2.50 11.6 2.5

BUSINESS INSIGHTS

Figure 31:

China, net biomass and waste power generation (bn kWh), 200509

Source: US EIA

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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 Chinas 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

Chinas government encourages the use of renewable power resources for generating electricity, in a bid to reduce greenhouse gas emissions. Currently, Chinas 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 Chinas 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, Chinas 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, Chinas government has in place preferential policies to support the biomass power market in the following ways: Chinas 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. Chinas biomass power market is significantly supported through government support mechanisms including Feed-in Tariffs and National Development and Reform Commission (NDRC) targets. Currently, Chinas 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. Chinas 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, Chinas 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 feedstock for electricity generation.

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Chinas 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 Chinas 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. Chinas 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 Chinas biomass power market include GCL-Poly Energy Holdings, China Holdings, Dragon Power, China Enersave, China Everbright Limited, and National Bio Energy. Much of Chinas 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. Chinas 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*), 201030

Available biomass resources Agricultural residues Forestry residues Animal Dung Industrial organic wastes Municipal solid waste Energy crops Energy forest Total
Note:*tce stands for ton of coal equivalent The data are estimates by NDRC

2010 0.88 0.71 1.21 0.44 0.03 0.04 0.05 3.40

2020 1.43 0.91 1.55 0.57 0.07 0.25 0.82 5.60

2030 2.34 1.16 1.98 0.73 0.15 0.34 1.32 8.00

Source: RC, Energy Bureau, Energy Research Institute, China Renewable Energy Development Overview 2008

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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. Chinas 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, Chinas 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. Chinas 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 Chinas 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 Indias 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 Indias 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 Indias cogeneration market. The MNRE has announced a target of creating 10GW (10,000MW) of installed biomass power capacity by 2020. Indias 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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Indias biomass power market overview

Rapid growth of Indias economy will lead the government towards developing the available biomass feedstock for electricity generation. The installed capacity of Indias biomass-based power was about 1GW at the end of 2010. According to Indias 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. Indias net biomass and waste power generation recorded a CAGR of 2.5% between 2005 and 2009. Going forward, Indias 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 Indias 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, Indias 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), 200509

Details

2005

2006

2007

2008

2009

CAGR 2005 09(%)

Net biomass and waste power generation (bn kWh) Growth (%)
Note: 2010 data not available Source: US EIA

1.81

1.83 1.2

1.85 1.1

1.87 1.1

2.00 6.7 2.5

BUSINESS INSIGHTS

Figure 34:

India, net biomass and waste power generation (bn kWh), 200509

Source: US EIA

BUSINESS INSIGHTS

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 129

generated from agricultural products. As per MNREs 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, Indias 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

Indias 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 nonrenewable 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. Indias 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). 130

Nonetheless, the demand for using renewables for electricity generation in India is constrained by the pressures of varying levels of public policy intervention. Indias 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 Indias 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 Indias public policy will support ongoing interest in developing Indias 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, Indias government encourages biomass power generation in the following ways: Utilities will enter Indias biomass power market due to attractive fiscal incentives encouraging efficient carbon neutral additional biomass power capacity. In this regard, Indias 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 Indias biomass power market for electricity generation. Currently, various state governments in India provide preferential tariffs for 131

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 Indias 11th Five Year Plan (2007-12) provide a subsidy for growing non-fuel wood biomass feedstock, due to the national governments 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 Indias 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, Indias 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 Indias 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, Indias government will play an increasingly important role in biomass power development as Indias 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 (20022007), in a bid to increase to the use of biomass feedstock for meeting rising energy needs. Under the 11th Five Year Plan (20072012), 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), 201020

Details Installed biomass and waste generation capacity forecast (GW)

Note: *Estimates by MNRE Source: US EIA, Factiva, and MNRE

2010 1

2020* 10

CAGR 201020(%) 16.8

BUSINESS INSIGHTS

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Figure 35: 201020

India, installed biomass and waste generation capacity forecast (GW),

Source: US EIA, Factiva, and MNRE

BUSINESS INSIGHTS

High capital risk Indias 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 134

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 Indias biomass power market. The importance of cogeneration Indias 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 worlds 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 Indias 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 Indias 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. Australias net biomass and waste power net generation contributed to less than 1% of Australias 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 Australias 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 woodrelated 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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Australias biomass power market overview

Australias net biomass and waste power net generation contributed to less than 1% of Australias total electricity supply in 2009. Australias 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 Australias future electricity supply mix.

Current scenario of Australia

Coal is likely to continue dominating Australias electricity generation mix, but a shift to low carbon fuels is expected as a result of the national governments 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, Australias government has a commitment to reduce Australias greenhouse gas emissions by 60% of 2000 levels by 2050. In the future, Australias 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, Australias total installed renewables generation capacity contributes to less than 10% of the total installed electrical capacity. In 2010, the wind and biomass power led Australias electricity supply mix. Australias 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 countrys 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 Australias biomass power market. Australias 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), 200509

Details

2005

2006

2007

2008

2009

CAGR 2005 09(%)

Biomass and waste power generation (bn kWh) Growth (%)

Note: 2010 data is not available Source: US EIA

1.78

1.87

1.91

2.09

1.97

4.9

2.2

9.6

-5.8

2.6

BUSINESS INSIGHTS

Figure 36:

Australia ,net biomass and waste power generation (bn kWh), 200509

Source: US EIA

BUSINESS INSIGHTS

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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 Australias 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 Australias sugar industry, which has historically produced heat and generated electricity.

Government policy framework for renewables in Australia

Australias market for renewables is supported by national level government incentives, driving additional installed capacity. Currently, Australias government has set a target, where 20% of Australias 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, Australias 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, Australias government and private sector invested close to $600m in support of R&D activities in the renewable power market. For the five period 200812, 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

Australias 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 Australias 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 Australias 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 Australias 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, Australias Delta Electricity is utilizing co-firing technology to generate electricity in Australia. Australias Clean Energy Council records Australias total installed bioenergy capacity to be 210MW. The growth of Australias 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, Australias bioenergy electricity generation forecast could record 10,624GWh led by growth in sugarcane and woodrelated 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. Australias 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 Sugarcane Wood-related wastes Landfill gas Sewage gas Agricultural-related wastes Urban biomass Energy crops Total
Source: Australia's Clean Energy Council

2020 Target (GWh) 3,165 2948 1880 901 791 721 218 10,624
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Figure 37:

Australia, bioenergy electricity generation forecast (GWh), 2020

Source: Australia's Clean Energy Council

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Emerging interest in biofuels

With regards to using biomass feedstock for the production of biofuels, Australias 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), Australias 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 EUs 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), 201535

Details Net electricity generation (tn kWh)

Source: US EIA

2015 21.93

2025 28.31

2035 35.21

CAGR 201535(%) 2.4

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Figure 38:

World net electricity generation (tn kWh), 201535

Source: US EIA

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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 146

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), 200835

Details

Actual scenario 2008 (Mtoe)

Current policies scenario*** 2020 (Mtoe) 4,307 4,443 3,166 1,461 915 239 364 14,896 2035 (Mtoe) 5,281 5,026 4,039 1,715 1,081 468 439 18,048 CAGR 2020 35 (%) 1.4 0.8 1.6 1.1 1.1 4.6 1.3 1.3

New policies scenario*** 2020 (Mtoe) 3,966 4,346 3,132 1,501 968 268 376 14,556 2035 (Mtoe) 3,934 4,662 3,748 1,957 1,273 699 476 16,748 CAGR 2020 35 (%) -0.1 0.5 1.2 1.8 1.8 6.6 1.6 0.9

Coal Oil Gas Biomass* Nuclear Other renewables** Hydroelectric Total

3,315 4,059 2,596 1,225 712 89 276 12,271

Note: *Includes traditional and modern uses ** Other renewables includes biomass, solar, wind, geothermal and marine power ***IEAs 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. Source: IEA
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Figure 39:

World primary energy demand by fuel under new scenario (Mtoe), 202035

Source: IEA

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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 countrys potential power generation. 148

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 EUs 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.

Germanys 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 Indias 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 Australias 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 201035. 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), 201035

Renewable resources Hydro (large) Wind (onshore) Biomass Solar (Buildings) Wind (offshore) Solar PV (large scale) CSP Hydro (small) Geothermal Marine Total
Source: IEA

$m 1,492 1,464 688 653 376 366 347 176 75 67 5,704

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Figure 40: Average investment in renewables based electricity generation by technology in the New Policies Scenario ($m), 201035

Source: IEA

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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 100600 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 80170 exajoules by 2050.

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Table 37: World bionenergy potential by feedstock (exajoules), 2050

Feedstock type Agriculture + forest residues + waste Agriculture intensification Surplus agriculture Surplus forest Degraded land Total
Note: 1 exajoules = 277.78TWh Source: University of Copenhagen (Doornbosch and Steenblik, 2008)

Bioenergy potential (exajoules) 40170 140 120 60100 70 100600

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Figure 41:

World bionenergy potential estimate by feedstock (exajoules), 2050

Source: University of Copenhagen (Doornbosch and Steenblik, 2008)

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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 Sub-Saharan Africa Latin America (including Caribbean) CIS and Baltic countries North America East Asia (including Japan) Oceania Middle East and North Africa South Asia Western Europe Eastern Europe
Note: 1 exajoules = 277.78TWh Source: University of Copenhagen (Smeets et al, 2007)

Bioenergy potential (exajoules) 49347 89281 83269 39204 24194 40114 239 2337 1330 529

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Figure 42:

World bioenergy potential by region (exajoules), 2050

Source: University of Copenhagen (Smeets et al, 2007)

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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 Dedicated bio-energy crops - arable Dedicated bio-energy crops - pasture Wood Agricultural residues Total
Source: Refuel

Biomass resource potential (exajoules/year) 0.73 0.31 0.15 0.39 1.58

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Figure 43:

Germany, biomass resource potential (%), 2030

Source: Refuel

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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 Agricultural residues Dedicated bio-energy crops - arable Wood Total
Source: Refuel

Biomass resource potential (exajoules/year) 0.26 0.16 0.03 0.45

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Figure 44:

Italy, biomass resource potential (%), 2030

Source: Refuel

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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

Feedstock type Agricultural residues Dedicated bio-energy crops - arable Dedicated bio-energy crops - pasture Wood Total
Source: Refuel

Biomass resource potential (exajoules/year) 0.16 0.15 0.08 0.01 0.41

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Figure 45:

The UK, biomass resource potential (%), 2030

Source: Refuel

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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

Feedstock type Wood Dedicated bio-energy crops - arable Agricultural residues Total
Source: Refuel

Biomass resource potential (exajoules/year) 0.12 0.08 0.08 0.28

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Figure 46:

Sweden, biomass resource potential (%), 2030

Source: Refuel

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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

Feedstock type Agricultural residues Dedicated bio-energy crops - arable Wood Total
Source: Refuel

Biomass resource potential (exajoules/year) 0.07 0.05 0.11 0.23

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Figure 47:

Finland, biomass resource potential (%), 2030

Source: Refuel

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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. 162

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 163



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 164

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 AEPS BNDES UNICA CDM CHP DOE DECC EEG Act ETS EPA EEA EU FGD GW GHG MNRE IEA Advanced Energy Resource Standard Alternative Energy Portfolio Standard Brazilian Development Bank Brazilian Sugarcane Industry Association Clean Development Mechanism Combined heat and power Department of Energy Department of Energy and Climate Change Erneuerbare-Energien-Gesetz Emissions Trading Scheme Environmental Protection Agency European Environment Agency European Union Fuel gas desulphurisation Gigawatt Greenhouse gas Indias Ministry of New and Renewable Energy International Energy Agency 166

IREDA ITABIA kWh MW Mtoe NDRC RE RECs REN21 RFS RHI RPS RPS RPO RTFO RO SERC SO2 Svebio

Indian Renewable Energy Development Agency Italian Biomass Association Kilowatt hours Megawatt Million Tonnes of Oil Equivalent National Development and Reform Commission Renewable Energy Renewable Energy Certificates Renewable Energy Poilcy Network for the 21st Century Renewable Fuel Standard Renewable Heat Incentive Renewable Portfolio Standard Renewable Portfolio Standards Renewable Purchase Obligations Renewable Transport Fuels Obligation Renewables Obligation State Energy Regulatory Commissions sulphur dioxide Swedish Bioenergy Association

167

tce VAT WHO

Ton of coal equivalent Value Added Tax World Health Organization

168