Frost: Europe's Search for Secure, Eco-Friendly Energy Sources Boosts Biomass Market

July 21, 2008 // Published as a news service by IHS

Analysts said the main driver for the deployment of biomass in Europe is the need to reduce carbon dioxide (CO2) emissions and ensure a secure energy source.

Biomass is the largest renewable resource in use and offers cost-effective and sustainable opportunities that can meet the rising energy demand in Europe.

In fact, analysts said it forms almost two-thirds of all renewables in the fast-growing renewable sector, owing to its competitive prices.

It also meets requirements of reducing carbon emissions and provides power, heat and fuel, as well as alternative feedstocks.

Analysts said biomass accounts for approximately 5% of total energy consumption and, in countries such as Finland, Sweden and Austria, its contribution reaches about 15%-20%, as it is supported with specific policies.

Biomass is used primarily for production of electricity and heat in cogeneration plants and as a fuel in municipal district heating facilities. Analysts said the utilization offers a variety of energy services derived from biomass, resulting in clean and efficient use of bioenergy.

Soaring oil prices, combined with the lack of secure supplies of oil and natural gas, have heightened the benefit of producing power locally, analysts said. A balanced energy portfolio with renewable, distributed generation, coupled with the benefits of cogeneration, is essential for a healthy energy market in Europe. These trends will underline the case for biomass-based energy generation.

The high capital costs involved in establishing biomass power plants, however, are a major deterrent to investment, analysts said. Substantial outlays make project development complex for potential end-users, including both small and medium enterprises. This challenge is partly assuaged by incentives in some countries.

Cost-reduction is an important factor of production and transaction expenditures involved during the initial stages that require evaluation and appropriate modifications, analysts said. Transaction costs can be reduced, subject to technical and operation solutions, and will ensure higher productivity at more cost-effective rates.

Fuel quality is also a problem with biomass fuels as they are often bulky and have a high moisture content that leads to variable quality. Analysts said standardization techniques for fuel upgrading will ensure fuel quality.

Biomass is still referred to as a "fuel of the past," owing to its historically low efficiency and high emissions, analysts said. Proper installation of clean-burning combustors that meet modern air emission standards solves concerns related to health problems and levels of particulate emission. Ensuring acceptable cost, quality and adequate supply of biomass fuel will be critical to the successful implementation of bioenergy projects.

Source: Frost & Sullivan.