Title: Comparing biomass-based and conventional heating systems with costly CO2 emissions: cost estimations and breakeven prices for large-scale district heating schemes

Authors: Lilian Carpenè; Vincent Bertrand; Timothée Ollivier

Addresses: French Environment and Energy Management Agency (ADEME), Paris, France ' CRESE, University of Franche-Comté, Besançon, France; Climate Economics Chair, Paris-Dauphine University, Paris, France ' Corporate Strategy and Prospective Department, EDF, Paris, France

Abstract: This paper investigates the competitiveness of biomass for large district heating schemes with costly CO2 emissions. We estimate the levelised lifetime cost of heat for different technologies, and we explore their cost structures. Furthermore, we compute Biomass-Switching Price (BSP) and Carbon-Switching Price (CSP) that make profitable investments in biomass compared with competing technologies. Results indicate that cost structures and switching prices depend greatly on load factor. Biomass is highly capital intensive compared with fossils, so that the CSP (BSP, respectively) decreases (increases, respectively) when the load factor increases. Gas has low fixed costs, which makes it the best technology for low load factors. Without CO2 price, biomass [heat-only and Combined Heat and Power (CHPs)] are never competitive. With CO2 price, fossils become less competitive. The switching prices analysis shows that in most cases, heat-only biomass facilities need a 40-60 Euros CO2 price to be profitable against heat-only fossils. The biomass CHPs need higher carbon prices.

Keywords: biomass heating; district heating; LLCOHs; levelised lifetime cost of heat; heating costs; investment costs; long-term carbon switching prices; long-term biomass switching prices; CO2; carbon dioxide; carbon emissions; cost estimation; breakeven prices; biomass investment; carbon prices; combined heat and power; CHP.

DOI: 10.1504/IJGEI.2017.080765

International Journal of Global Energy Issues, 2017 Vol.40 No.1/2, pp.20 - 42

Accepted: 24 May 2016
Published online: 09 Nov 2016 *

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