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Biomass power continues global growth trajectory amid support policy changes

The support for electricity generated from solid biomass is the most important stimulation for the development of the biomass power plant market. Whereas biomass subsidisation schemes have recently also experienced positive amendments in Europe, Asian countries are currently reducing this kind of support for the first time. This is one of the results of a new market study from Germany-based consultancy ecoprog GmbH.

Biomass stockpiles at a Japanese power plant with PKS in the foreground. Imports of PKS has almost doubled year-on-year to just over 539 000 tonnes in the 2015-2016 fiscal year.

Biomass stockpiles at a Japanese biomass power plant with PKS in the foreground.

According to the ecoprog study “Biomass to Power 2018/2019“, the number of biomass power plants (BMPPs) commissioned in 2018 increased by about 300 facilities. Today, there are about 3 800 BMPPs worldwide with an installed power capacity of around 60 GW.

Subsidy-driven

Subsidies for renewable energies (RE) are the most important factor driving the BMPP market, especially in Europe. The markets in South and North America as well as in many Asian countries are rather stimulated by fuel availability; however, RE subsidies are an important factor for the development of new capacities in these countries as well.

Some of the European biomass support schemes are more than 20 years old. Therefore, many such systems have been reduced and rather geared towards competitive mechanisms in the past years. In the last year, this trend slowed down to some extent.

Move toward market auctions

Poland, for instance, organised BMPP auctions for the first time in 2018, after the introduction had been awaited for many years. However, these auctions showed very limited success – only one project was approved for subsidies. This is because only a few project developers participated, one reason for which is a wait-and-see attitude by many investors.

In late 2018, Finland also introduced an auctioning system that could benefit electricity generation from biomass. Ireland passed an auctioning scheme, which should increase the establishment of renewable energies, including biomass, until 2025.

Outside of Europe, the number of countries cutting biomass subsidies increased for the first time in 2018. Thailand, for instance, drastically reduced the feed-in tariff (FIT) for biomass electricity, from about 14.20 €ct/kWh to 6.30 €ct/kWh.

A 9.9 MW biomass power plant in Thailand. Using rice husk and woodchips, the plant was originally commissioned as a co-generation plant in 2004 supplying steam to a rice mill and power to the grid.

Also, Japan lowered the subsidisation for biomass power projects with capacities of over 10 MWe and introduced a cap of 200 MWe per year for additional constructions. Argentina reduced the tendering volume for RE in the annual auctions from 1.2 GWe in 2017 to 400 MWe in 2018.

Asia to lead growth

Attractive subsidisation terms remain in place in China and India, the countries with the strongest growth potentials. In 2018, India additionally introduced a nationwide support scheme for building biomass combined heat and power (CHP) plants based on grants for plant construction.

From a global perspective, biomass electricity subsidisation continues to promote market development for the construction of BMPPs. Until 2027, the worldwide market for BMPPs will thus remain on its dynamic development path. Ecoprog expects the construction of about 1 900 additional biomass power plants with an installed power capacity of around 25 GW over the period.

About 50 percent of this growth is anticipated to be realised in Asia, especially in the two lead markets China and India.

Also, North and South America will remain attractive markets for electricity generation from solid biomass, and particularly their lead markets Brazil, Canada and the United States (US). In Europe, the overall level of support will continue to decline, in order to reduce high costs and improve ecological aspects.

The positive changes of the subsidisation schemes, which were observed in 2018, will not be able to completely compensate for this development. In sum, the European market will, therefore, lose some of its drive ecoprog concludes.

A view of the wood pellet storage silos at Drax Power.

A view of the wood pellet storage silos at Drax Power, Europe’s largest coal-to-biomass power conversion project.

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