Worldwide, there are over 3,500 operational biomass power plants. They generate electricity and heat from solid biomass, reaching an installed capacity of 52.8 GWel. Within a year, 200 biomass power plants with a capacity of almost 3 GWel were commissioned. Significant growth rates in Asia are compensating the less dynamic development in the European key markets. At the same time, consolidation and globalisation continued among the technology providers in 2017. These are two of the results of a current ecoprog market report, called Biomass to Power.
The market for biomass power plants is mainly stimulated by renewable energy subsidies, especially in Europe, where first support schemes for electricity generation from solid biomass were introduced in the 1990s already.
By contrast, fuel availability is the determining factor in North and South American as well as many Asian markets, as subsidisation levels are oftentimes lower than in Europe. North America and Europe mainly use wood to generate energy, while South American countries primarily incinerate bagasse, a residue of the sugarcane industry. Agricultural residues such as straw, rice husks and empty fruit bunches from the palm oil industry are the main fuels in Asia.
What all the plants have in common is their intense waste heat utilisation (combined heat and power, CHP). About 60% of the biomass power plants are located at industrial sites. Many of them are fuelled with local production residues (palm oil fruit bunches, bagasse, wood-processing residues) and in turn deliver heat to the production process. Around 30% of all facilities are connected to district heating grids; most of those are located in colder regions such as Central Europe and Scandinavia. About 10% of the biomass power plants generate power only and do not use their waste heat at all. Many of them are located in China, where waste heat utilisation is not a requirement for obtaining subsidies.
The market development depends on how profitable RE subsidies are, especially in Europe. Many markets are saturated after many years of subsidisation, which would make the construction of new capacities only worthwhile with granting further generous subsidies. Additionally, Europe has fewer agricultural residues that can be used for thermal recovery than other regions.
As the already existing plants run at high operating costs, many European countries are lowering RE subsidies. For instance, the UK decided to no longer organise allocation rounds for renewable energies after 2019. In September 2017, Poland postponed its much-anticipated biomass auction indefinitely. This auction was initially planned for October 2017. Romania does also not seem to consider reintroducing RE subsidies.
Other European countries, however, are strengthening RE support. The Netherlands decided an 8 billion EUR support scheme for 2018, which is as much as in 2017. Finland is to establish a new auctioning system in 2018/2019, which will also include biomass power plants.
Globally, subsidisation systems did not change significantly in the past year. Argentina has to be mentioned as a special case, however: In 2017, the country approved subsidies for 14 biomass power plants with a capacity of 117 MWel and also announced the next auction for 2018.
The worldwide market for BMPPs will continue to develop dynamically until 2026. Throughout the world, another 2,000 biomass power plants with an installed capacity of over 25 GWel will be constructed. About 50% of this increase will happen in Asia and especially in the Chinese and Indian key markets. North and South America are to remain attractive markets for solid biomass electricity generation as well, mainly Brazil, Canada and the USA. The overall subsidisation level in Europe, however, will continue to decrease in the light of high costs and ecological aspects (sustainability). Europe will therefore become a less dynamic market.
As a result of the trends described above, consolidation and globalisation among the technology providers continued in 2017. For instance, UK-based Amec Foster Wheeler Group (today Wood Group) sold its fluidised bed combustion business to Japanese technology provider Sumitomo. Danish technology provider Burmeister & Wain Scandinavian Contractor, part of Japanese Mitsui Group, took over financially troubled plant manufacturer Burmeister & Wain Energy. Danish technology provider Babcock & Wilcox Vølund was imposed a cost-cutting programme by US parent company Babcock & Wilcox, including the dismissal of 30% of staff.