Partner:Coordinated by:

Project coordinationVolker Lenz (DBFZ)Phone: +49 (0) 341-2434-450Fax: +49 (0) 341-2434-133E-Mail: volker.lenz@dbfz.de

Thomas Zeng (DBFZ)Phone: +49 (0) 341-2434-542Fax: +49 (0) 341-2434-133E-Mail: thomas.zeng@dbfz.de

www.mixbiopells.eu

Market Implementation of extraordinary biomass pellets

The sole responsibility for the content of this webpage lies with the authors. It does not neces-sarily refl ect the opinion of the European Union. Neither the EACI nor the European Commission are responsible for any use that may be made of the information contained therein.

Report on Cost Analysis

“Economic aspects of the energetic utilisation of alter-native (mixed) biomass pellets and briquettes in seven

European countries”

Report on Cost Analysis

Authors:Christa Kristöfel, Austrain Bioenergy Centre (Bioenergy 2020+)Elisabeth Wopienka, Austrain Bioenergy Centre (Bioenergy 2020+)

Date of Publication: January 2012

The authors would like to acknowledge the support and input of the project partners:

• Comitato Termotecnico Italiano (CTI)• Danish Technological Institute (DTI)• Deutsches BiomasseForschungszentrum (DBFZ)• Energia y Medio Ambiente S.L. (Protecma)• Technical Research Institute of Sweden (SP)• Technical Research Centre of Finland (VTT)

This project was financed by the Intelligent Energy Europe programme. All data presented and opinions expressed remain the responsibility of the authors.

www.mixbiopells.eu

Participating countries

In most European countries, the market integration of alternative biomass pellets (e.g. made of straw, agricultural or food processing residues) is still hindered by various constraints. To over-come these constraints and to strengthen the drivers, promising market introduction concepts will be identified to enhance the relevance of alternative pellets in Europe. Thus, the MixBioPells project provides up-to-date market information for alternative and mixed biomass pellets based on a comprehensive data collection for representative European countries and regions (see above) which are available at

www.mixbiopells.eu

Background – Case studies

Within the MixBioPells project in each partner region two case studies,

which represent the whole value chain of alternative (mixed) biopellets,

were established (see Table 1).

Table 1: Used raw materials and customers of the case studies

Raw material Customers

Olive stones from the food industry Households, small district heating

systems (20 kW-300 kW)

Almond shells from the food

industry Industrial plant (>200 kW)

Reed canary grass mixed with wood

(20/80) Local farmers (100-500 kW)

Reed canary grass Local district heating plant

(200 - 2000 kW).

Shea waste, rape waste, potato and

beet pulp, grain screenings CHP plant (52 MWel.; 112 MJ/s)

Straw, grain screenings, peanut

shells and corn bobs

District heating plants, schools,

minor industries (50 kW-10 MW)

Miscanthus – poplar mix Power plant, district heating system

(>500 kW)

Vine pruning Households (20 kW-200 kW)

Straw Local Farmers (20 kW-200 kW)

Miscanthus Housholds, small district heating

systems (50 kW-500 kW)

Grape marc Small scale up to large scale plants

Digestate Combustion plants (about 300 kW)

Based on these case studies economic aspects of heat supply systems in

terms of alternative fuel costs and investment costs for combustion

technologies were analysed.

The entire report on the cost analysis can be found at the project website:

www.mixbiopells.eu

Heat supply costs

Comparison of alternative biomass and fossil fuel utilisation

Economic aspects are crucial for the establishment of alternative (mixed)

biomass pellet production and their use in combustion appliances. In

order to compare the different energy production chains of each case

study, the sum of discounted costs over service was calculated. The

discount rate per cent was assumed to be 5 %. For the calculation of the

fossil fuel price in the basis year data from 2011 was used. Figure 1

shows the cost comparison of Austrian energy production chains based on

Miscanthus and straw being used in 200 kW combustion units.

Figure 1: Cost comparison of Austrian case studies - 200 kW

The investment costs of heating systems for alternative biomass are twice

as high as for the oil boiler. Due to the high fossil fuel costs the heating

systems operated with Miscanthus briquettes as well as straw pellets are

getting favourable after three and a half years. The production costs of

straw pellets are lower than the one for Miscanthus briquettes.

0

40000

80000

120000

160000

200000

240000

280000

320000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

EUR

Year

Heat supply costs - 200 kW system (AUT)

Heating oil Miscanthus briquettes Straw pellets

Relevance of investment- and fuel costs

The investment costs for alternative heating systems are higher than for

fossil fuels. However, fuel costs as a major part of the annual running

costs have a wide influence on the economy of heating systems. Due to

the increased impact of fuel costs, medium to large scale heating systems

which are operated with alternative pellets are more likely to be profitable

than fossil fuel systems. Figure 2 and 3 show the heat supply costs for the

utilisation of (mixed) biopellets in a 30 kW and a 200 kW system assuming

a gas price of 1 €/ kWh.

Figure 2: Cost comparison of Italian case studies - 30 kW

Figure 3: Cost comparison of Italian case studies - 200 kW

The 30 kW system operated with Miscanthus-poplar pellets is more

expensive than the comparable gas heating system. Using a 200 kW

heating system, the biomass systems are getting favourable after two and

a half years. Similar trends are observed for vine pruning pellets.

0

5000

10000

15000

20000

25000

30000

35000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

EUR

Year

Heat supply costs - 30 kW system(ITA)

Vine pruning pellets Miscanthus+poplar pellets Gas fuel

0

50000

100000

150000

200000

250000

300000

350000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

EUR

Year

Heat supply costs - 200 kW system (ITA)

Gas fuel Vine pruning pellets Miscanthus/poplar pellets

Aspects of plant size

The heat supply costs for the energy production chains of the different

case studies are compared in Figure 4. One can see the trend that the

heat supply costs of small plants are higher than those of large systems,

despite consideration of different conditions in the partner regions.

An exception is the system which is operated with vine pruning pellets,

which can be explained by the low raw material costs for vine pruning. The

heat supply costs of the 200 kW system operated with reed canary grass/

wood briquettes are higher due to the high wood proportion of the

briquettes which make them more expensive. The 3 MW system is a power

plant and therefore not comparable.

Figure 4: Comparison of heat supply costs of the alternative combustion systems of

the case studies in €/MWh per year

0 20 40 60 80 100

Miscanthus/Poplar pellets (1:1) [3000kW]

Hemp briquettes [500 kW]

Digestate pellets [250 kW]

Reed canary grass briquettes [200 kW]

Miscanthus briquettes [200 kW]

Straw pellets [200 kW]

Reed canary grass/wood briquettes (20/80) [200 kW]

Reed canary grass pellets [200 kW]

Vine pruning pellets [30 kW]

Grapemarc pellets [30 kW]

Almond shell briquettes [30 kW]

Olive stone pellets [25 kW]

Straw/grain screening pellets [20kW]

Shea waste/grain screening pellets [20kW]

Heat supply costs

in €/MWh per year

Fuel costs

Fuel costs are determined by costs for crop growing, harvesting, transport

(up to 50 km), drying and pelletizing/briquetting. As a major part of the

annual running costs they have a wide influence on the economy of a

heating system. Figure 5 presents the fuel costs identified in the different

case studies in € / MWh considering these aspects. Furthermore the

fluctuations of fossil fuel prices in the different partner countries are

illustrated.

The fuel costs amount to 18-56 € / MWh, depending on the used raw

material and the pelletizing plant. Necessary pre-treatments of the raw

material have a major impact on the pellet prices. Therefore raw materials

which do not require intensive drying should be used.

Low drying and storage costs are essential to ensure a profitable fuel.

The costs for pelletizing and briquetting amount to 11-32 % of the whole

fuel costs. Certainly, these costs strongly depend on the

pelletizing/briquetting plant, but also on production parameters and fuel

properties.

Optimising the pelletising process in terms of suitable production

parameters and raw material mixtures is a large cost advantage.

The briquetting costs of Reed canary grass and wood mixes are very low,

but the high proportion of wood makes the fuel expensive. The grape marc

pellets are more expensive than the others due to the high drying costs of

the raw material.

The price for heating oil is much higher than the one for alternative pellets.

Gas as fuel can keep up with alternative pellets in regard to the price in

some, especially Southern, countries.

Figure 5: Fuel costs incl. costs of pelletizing and briquetting in €/MWh as well as

fluctuations of wood and fossil fuel prices in the various partner countries

Due to the increasing prices of heating oil, the use of agricultural biomass

fuels is getting more and more attractive from an economic point of view.

Especially in the Nordic countries, the use of alternative biomass fuels is

much cheaper than using fossil fuels.

Even medium to large scale alternative heating appliances with flue gas

treatment systems are more profitable over service life despite higher

investment costs.

0 20 40 60 80 100 120

Heating oil

Gas

Wood pellets

Wood chips

Vine pruning pellets

Miscanthus/Poplar pellets (1:1)

Reed canary grass pellets

Reed canary grass/wood briquettes (20/80)

Straw pellets

Miscanthus briquettes

Olive stone pellets

Almond shell briquettes

Shea waste/grain screening pellets

Straw/grain screening pellets

Digestate pellets

Grapemarc pellets

Reed canary grass briquettes

Hemp briquettes

Fuel costs in €/MWh

Pelletizing/briquetting costs Raw material costs (incl. harvesting, drying, transport)

Comparison of wood and alternative fuels

Figure 6 shows the average costs for wood pellets, alternative pellets and

wood chips over all partner countries. On average wood pellets are 25 %

more expensive than alternative pellets and alternative pellets are 14 %

more expensive than wood chips.

Figure 6: Average fuel costs for wood pellets, alternative pellets and wood chips in

seven different European countries in €/MWh

The cost comparison of 200 kW heating systems operated with heating oil,

wood chips, wood pellets and alternative pellets shows that the costs for

heating systems operated with alternative pellets are below the costs of

the wood pellet systems (Figure 7).

Figure 7: Heat supply costs for a 200 kW system comparing fossil, wood and

alternative biomass fuels

0

10

20

30

40

50

60

wood pellets alternative pellets wood chips

Average fuel costs (€/MWh)

0

40000

80000

120000

160000

200000

240000

280000

320000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

EUR

Year

Heat supply costs - 200 kW system

Heating oil Wood pellets

Wood chips [35% mc] Alternative pellets

Recommendations for dealing with alternative

pellets

It is recommended to catch up on the legal framework before

investing in alternative biomass production and combustion systems.

Necessary pre-treatments of the raw material have a major impact on

the pellet price. Therefore raw materials, which cause low drying and

storage costs, are more likely to be a profitable fuel.

Investigations and reports from operators show that, apart from the

choice of technology, the selection of production parameters (particle

size, moisture content, measures of the die, residence time/flow rate)

is a crucial issue. Moreover considerable differences are observed

dependent to the raw material used.

An optimal operation of the pelletising/briquettiong plant is a large

cost advantage. In this regard mixing of raw materials can play a

major role. Often, a long optimisation process of adjustments is

necessary, before a plant is running properly.

For small scale combustion systems, regional available raw materials

should be used. Long transport distances only pay off for large scale

appliances (<1MW).

Moving grate systems and an active ash removal concept are the

basis in order to ensure stable operation with high-ash fuels with

increased tendency for slag formation.

One important factor for building-up a successful supply chain is the

commitment of regional stakeholders. Furthermore, a well-defined

legal framework is essential to provide security to potential investors.