Why do we need large, coal-power based, energy grids? Can’t a local, Green solution of Solar Panels and Biomass replace this antiquated system?

I work in Renewables and am proud to do so.   

In particular, I work in the costing of new, energy plant.  I have always had a hunch that biomass generation was a no go with respect to being a self-sufficient, profitable, investment opportunity.  I was happy with this perhaps, unfounded preconception until challenged recently…

A few weeks ago, a local politician friend of mine asked, “why haven’t we given up ‘dirty’ coal yet?”  Why generate centralised, CO2 intensive electricity and then waste resources on a very sizeable and expensive transmission grid that spans great distances.  “Transmission” and local “distribution” usually accounts for about a third of the end-user, retail, electricity cost.  In addition, high voltage, transmission has an inherent loss factor and thus this is surely wasteful also?  Wouldn’t it be much better to generate electricity locally, save on transmission costs, and preferably do it renewably?  Ideally, couldn’t we replace large networks of principally, coal-fired generation with solar panels on houses and use decentralised, biomass generators to bridge any supply gaps?  A worthy suggestion on his part.  Well, I have some experience in power plant evaluations and said, “Err, no, unfortunately this is a no go.”  Of course, he asked me, “how so?”  Well, I confidently replied as follows.  Coal supplies the bulk of our electricity in Australia (and globally).  It costs us only $45/MWh.  If we were to go down the Green route of local, Renewables generation we would need to install a lot of solar panels.  However, at a very pricey $450/MWh, that would be a total non-starter.  Alternatively, couldn’t we use winds farms?  Well, wind farms need to be cited in extremely windy areas to make them even slightly viable.  So, residential areas would mostly rule that one out.  However, assuming every town was constantly, super windy, they could only generate at $110/MWh.  So, how about my friend’s original suggestion, what about biomass?  Well, I replied, this technology is also relatively expensive at $140/MWh, and thus sadly not suitable.

Before we go any further, let’s ask the question, “Where did I get these numbers from?”:

What’s the relative cost of energy?

(The Long Run Marginal Cost (LRMC) of power generation technologies)

Detailed evidence here.
Considering these comparative pricings, can biomass compete and, if so, in which market niche?  Sadly, it is not cheap enough to be a Baseload, energy provider (i.e. run the plant 24/7), like coal and OCGT.  Nor can it even compete against Peaking plant (i.e. run the plant only in  high price periods) such as OCGT.  As it happens, biomass, and all the Renewables technologies, are uncompetitive without substantial tax-payer subsidies.
There are exceptions to the rule, every development is different, and synergies within particular, corporate structures could make biomass a lot more financially attractive.  However, these numbers are a reasonable rule of thumb.


However, needless to say, my friend wasn’t convinced with just a few stats.  We all know that 95% of them are made up and are questionable, to say the least.   Agreed, this spiel of the relative costs of energy production was not a particularly satisfactory answer.  To him, biomass still seemed like the perfect solution.  Recycle organic and household waste, reduce its quantity and create Green electricity locally at the same, “Brilliant!”  There’s plenty of synergies in this concept; a few birds are killed with the same stone.

Well, as I don’t personally partake in biomass, plant evaluations (a poor excuse admittedly), I couldn’t give him much more details at the time.  Why should it cost as much as x3 that of burning coal?  So, I decided to delve further.  I decided to flesh out the fruit and give some reasoning to my “unreasonable” response.  Where to go?  Well talk to the experts…

So, I found myself a chief engineer of a “biomass plant”.

He, quite rightfully, was proud of his work there.  But, at the same time, he is now happy to be rid of it all, after many long years of service.  For him, it was like one, big, R&D, engineering project; on the one hand, full of technical problems, and thus frustrating, on the other hand, full of cutting edge solutions, and thus thrilling.  The technology required to make the wood and plastics combustion process work is necessarily very complex.   Thus, the business model became highly risky, and risky means costly.  Healthy cashflows were achieved, lamentably, solely on substantial subsidies from tax payers.  The project was, and still is, a success.  However, that’s only from massive Green subsidies.  It’s worth noting that there are a number of types of “biomass” plant, landfill methane is another prominent example, however, my expert’s plant burnt wood chips and plastics.  However, I would consider his case study as relatively indicative of the biomass industry as a whole.  His story is not the only one along the same lines.  His plant is not only new, but also well funded, managed and planned.  If it can succeed then, surely, others can as well?


So, why should biomass cost so much?

Dirty” Coal is “dirt” cheap, so why can’t biomass be the same? What are the “hidden costs”?

Well, here are some of the real issues which make this type of cutting edge biomass project “frustrating”, but also “thrilling”, because of the need for innovative, engineering solutions:

  • The plant is remarkably expensive to maintain; US$30 million / year for a sub-150MW plant.  In comparison, a “hydro scheme”, which rates itself at 4000MW capacity, can cost only US$70 million / year to maintain.  That’s much better value for money now.
  • It takes around 100 companies, from a radius of up to 150km, to provide enough wood chips and plastic waste to supply the plant’s fuel.  This large distribution network is unfortunately expensive.
  • Biomass is about 5x less calorific than coal.  This means 5x the mass is required by biomass fuel to equal the same energy output as coal.  This translates into 5x the transport trucks required to supply the biomass plant’s needs.  These trucks, as it happens, are ironically burning dirty diesel in the process.
  • Biomass requires a complex pre-processing of waste to standardise it for its boilers narrow requirements (a particular problem occurred with painted, wood pallets that contained toxic lead).
  • The fumes from burning plastics (especially) are toxic and need complex filters.
  • It takes 4 whole days to cool the system down, as large amounts of sand are used in the combustion system.  This means a repair outage is slow and costly.
  • The fuel sources can be scarce, unreliable and disparate; for example, wood chips are often from seasonal, logging offcuts.  This large constraint lead the managers to even consider water-logged, wood chips from abroad as a fuel; hardly optimal.
  • The biomass business model, in this case at least and ubiquitously most likely, is only viable with massive subsidies.  The problem with this situation is that they could be withdrawn suddenly and unexpectedly if the government’s sentiment changes .  This large sovereign risk has to be accounted and price for.
  • The plant is, at best, only 75% reliable => to fulfill its energy supply obligations, it needs backing from other sources.   The backing must come via the grid, which is thus indispensable, and will be in the from of reliable coal / gas plant.
  • In comparison to biomass, coal-fired generation is very reliable, cheap and simple.  In addition, the fuel is abundant; we have 1000s of years of coal still readily available in the ground.  All of these factors are encapsulated in a relatively low, coal cost of only $45/MWh.  That’s hard to beat.




I agree, in principle, with the concept of recycling.  We can recycle organic matter, such as wood chips, and local, inorganic, household waste, such as plastics.  These processes are, on the face of it, beneficial and sensible.  If we could achieve this economically, then I’d be the first to support it.  However, the biomass generation process is, as we’ve seen, prohibitively expensive.  The nitty gritty of running the complex generator and problems with the supply chain make biomass a tricky proposition.  In addition, the cost of maintaining the electrical, distribution networks can not be fully circumvented by this local energy solution.  To maintain a stable supply of electricity to homes and businesses a full, complex grid is required.  So, we can not avoid the cost of maintaining them.

Sadly, all-in-all, under our current technology constraints, the idea of significant, biomass investment is just a pipe dream.



Further Reading

For an alternative case study, by a well-recognised source, check this AGL energy paper (p.6).  In addition, this paper examines a biomass plant that feeds off a different fuel source: sugar mill offcuts (i.e. bagasse).  To simplify matters, to cut a long story short, the final sentence of the study states:

“Biomass is, therefore, unlikely to feature prominently in future investment patterns”

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