Biomass combined heat and power for renewable power provision in mountain environments: techno-economic assessment of cost factors and competitiveness under current and projected energy market conditions

Abstract

Bioenergy is seen as a renewable energy source expected to deliver a major contribution to decarbonization of power and heat by major institutions, although its affordability in specific contexts has not been assessed in detail by the available literature. In this study, we develop a techno-economic model of a small-scale decentralized biomass gasification-combined heat and power plant based on real operating data and costs. The results obtained indicate that in the Italian mountain context, the proposed solution would deliver very limited competitiveness compared to natural gas fired generation or grid electricity in Europe, with a levelized cost of energy of 359 €/MWh for a 225-kW plant. Sensitivity analyses show that the average yearly operating hours is by far the greatest cost factor affecting plant economics, while a forecast of natural gas prices allowed estimating the subsidization requirements of the system over its full project life, indicating total subsidy of €149.4M even under a 120 €/t carbon emission allowance cost placed on natural gas. The methodology and results proposed represent an important further step in the direction of sound regional bioenergy planning and support policy development.