Economic Issues of Biomass Energy Conversion - Biomass Gasification, Pyrolysis and Torrefaction - page 29

Chapter 2

Economic Issues of Biomass
Energy Conversion

2.1 INTRODUCTION
Biomass conversion is proving to be an important option for several appli-
cations including energy and chemical production. For a project to be self-
sustained, it must be economically viable and environmentally acceptable. In
the short term, government subsidies, carbon tax, grants, and regional policies
may help a project develop and continue for sometime, but for a technological
option to be sustainable, it must be economically viable and sustainable on its
own. Therefore, it is important to carry out a comprehensive analysis of a bio-
mass conversion plant even at its conceptual stage. To do this, four important
elements are to be known:

1. Availability of biomass over the projected lifespan of the plant and
market for the biomass derived products.
2. Financial structure including cost of money, government subsidy if any,
and loan guarantee.
3. Capital and operating costs of the plant.
4. Environmental impact and applicable regulations and the approval

process.

Three potential sources of revenue for a biomass conversion plant are as
follows:

1. Energy production through heat or electricity.
2. Production of chemical or metallurgical feedstock.
3. Production of solid fuel for cofiring or transport fuel as an alternative to
diesel or gasoline.

Commercial viability of any of these options depends on the total cost of
operation of the plant and the revenue generated from it. If the net return
turns out to be negative over the lifetime of the plant, the process would not
be commercially viable. It will then require some form of subsidy for suste-
nance of the plant.
Life-cycle assessment (LCA) is another analysis that is often considered
by governments and regulating bodies in approving a new project. The LCA