New bioenergy business concepts during emission trading in the Baltic Sea Region
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New bioenergy business concepts during emission trading in the Baltic Sea Region
Pirkko Vesterinen
VTT, Jyväskylä
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VTT TECHNICAL RESEARCH CENTRE OF FINLAND
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PROJECT PARTNERS:VTT Processes, FinlandUniversity of Jyväskylä, FinlandTallinn Technical University, EstoniaFNR, GermanyEC BREC/IBMER, PolandBIOP Institute, GermanyVapo Oy, FinlandAS Tootsi Turvas, Estonia
FINANCERS:INTERREG IIIBNational and local authorities in each country
BI PINSTITUT
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Background
• Countries within EU have challenging targets to increase the use of bioenergy
• Russia has ample biomass resources • Baltic Sea provides a natural market
area for biomass trade• Trade can be carried out by means of
fuels (wood chips, tall oil, pellets, sod peat…), electricity, emission allowances, JI, green certificates…
• Preconditions of investments in different countries vary
Denmark
Finland
Germany
Sweden Estonia
Latvia
Lithuania
Poland
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Share of bioenergy of the primary energy in the beginning of 2000’s
- varies from marginal to very relevant to the whole energy market
0
5
10
15
20
25
BSR
%
DenmarkEstonia
FinlandGermany
LatviaLithuania
PolandSweden EU-15
EU-250
5
10
15
20
25
BSR
%
DenmarkEstonia
FinlandGermany
LatviaLithuania
PolandSweden EU-15
EU-25
Marginal
Relevant to energy market and prices
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Share of RES-E from the total electricity consumption differs very significantly:
from marginal to dominating
Source: Eurostat
0
10
20
30
40
50
60
70
80
DenmarkEstonia
FinlandGermany
LatviaLithuania
PolandSweden
EU-15EU-25
%
1993199820032010 (target)
1993199820032010 (target)
Marginal
Significant to energy market and prices
-> differences in the share of hydro, typical capacities of plants, CHP/condensing plants, stand-alone/integration to industry
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EU has decided to use of 20 % renewable energy sources by 2020, now the share is under 7 % -
role of bioenergy in each country ?
Background report
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Total RES-E in 2001 and additional potential for bioelectricity according fo FORRES 2020
0
20
40
60
80
100
120
Denmark Finland Germany Sweden Estonia Latvia Lithunia Poland
TW
h
BiowasteSolid biomassBiogas2001
- Largest market volumes for new investments and additional fuel in Germany and Poland, the next largest in Sweden and Finland
- Structure of market (capacities of plants) differs considerably, as well as feasible promotion incentives
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Total RES-H using biomass in 2001 andadditional potential for 2020 according
to FORRES 2020
0
2
4
6
8
10
12
14
16
18
Denmark Finland Germany Sweden Estonia Latvia Lithuania Poland
Mto
e
Biomass2001
-Additional potential of bioenergy large in each country in the heating sector -Feasible for local and centralised (pellets, bio-oil…) fuel markets
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Examples on Prices on Electricity Generated by Wood Fuels: incentives differ significantly
0
20
40
60
80
100
120
Finland Sweden Lithunia Estonia Germany,5-20 MW
Poland Latvia Germany,5-20 MW
CHP
EU
R/M
Wh
Feed-in tariffCertificates/subsidyMarket price
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GHG Emissions and Kyoto TargetsOld EU-countries have challenging targets, and not sufficient national allocation of emission allowances
within the emission trade
Source: Eurostat
0
20
40
60
80
100
120
140
EUDenmarkEstonia
FinlandGermany
LatviaLithuania
PolandSweden
EU-15EU-25
Index (base year = 100)1993199820032010 (target)
1993199820032010 (target)
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Fuel prices during emission trading (5-20-40 €/ton CO2) in Finland in power production
0 5 10 15 20 25 30 35 40
Heavy fuel oil
Natural gas
Coal
Mill residues
Forest residues
Pulp wood
Peat
€/MWh
Price
5
20
40
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Calculation of production costs of heat and electricity in each country for chosen plants
• Investment estimations for similar plants in each country• Comparison of the heat and electricity production costs
• Case 1: District heating plant, 5 MW, peak load utilization 5000 h/a
• Case 2: CHP plant, 17 MWe / 40 MWth, peak load utilization 6000 h/a
• (Case 3: CHP plant, 3.5 MWe / 16 MWth, peak load utilization 6000 h/a)
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Large variations in heat production costs because of differences in investment and fuel costs
0
5
10
15
20
25
30
Estonia Finland Germany Poland
Variable costs
Fixed costs
EUR/MWh
Heat production costs, 5 MWth, 5000 h/a
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Peak load operation hours should be at 4000 – 5000 h/a, preferably even more. Additional peak load units with low specific investment
costs are needed. Overdimensioning is expensive!
0
5
10
15
20
25
30
35
40
3000 3500 4000 4500 5000 5500 6000 6500 7000 7500
Estonia
Finland
Germany
Poland
EUR/MWh
Peak load utilization, h/a
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Stability of fuel price is important because typical life times are 15 – 20 years. Solutions can be a well-developed fuel market and
technical possibilities for multi-fuel use – preferably both
Heat generation cost sensitivity on fuel price, 5000 h/a
0
5
10
15
20
25
30
Estonia Finland Germany Poland
-10 %
Basic price
+10%
EUR/MWh
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Long annual operation time is the key for good competitiveness!
Peak load utilization, h/a
0
10
20
30
40
50
60
70
3000 3500 4000 4500 5000 5500 6000 6500 7000 7500
Estonia
Finland
Germany
EUR/MWh
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0
5
10
15
20
25
30
35
40
45
50
Estonia Finland Germany
-10 %
Basic price
10 %
EUR/MWh
Local conditions have a great impact on the electricity production costs
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Existing pellet production capacity in Baltic Sea countries in 2005 and potential pellet capacity based on
the production of saw mills
0
500
1000
1500
2000
2500
3000
Denmark Estonia Finland Germany Latvia Lithuania Poland Sweden
1000
t/a
Capacity 2005
Capacity potential
• Total capacities 3,896,000 (prod.) and 9,065,000 (pot.) tonnes
• Also other sources of raw material
• Also other uses for saw mill by-products
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Conclusions
• Role of bioenergy varies in different countries significantly: from marginal to dominating in the energy market
• National incentives on bioenergy have significant variations
-> Increase of biomass trade, spot markets
-> Increase of volatility on prices of biomass-based fuels
-> Bioenergy is not anymore only local, but widely utilised source of energy
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THANK YOU FOR YOUR ATTENTION!
Pirkko Vesterinen
ET-Bioenergy project
New Bioenergy Business During Emission Trading
Co-financed by EU BSR INTERREG III B NP