ENERGY POLICIES AFFECTING BIOMASS GASIFICATION APPLICATIONS IN DISTRICT HEATING SYSTEMS

Biomass gasification is considered a key technology in reaching targets for renewable energy and CO2 emissions reduction. This study evaluates policy instruments affecting the profitability of biomass gasification applications integrated in a Swedish district heating (DH) system for the medium-term future (around year 2025). Two gasification applications are included: co-production of SNG (synthetic natural gas) for use as transportation fuel and DH heat in a biorefinery, and BIGCC CHP (biomass integrated gasification combined cycle, combined heat and power). Using an optimisation model the level of policy support necessary to make biofuel production competitive to electricity generation, and the level of tradable green electricity certificates necessary to make gasification based electricity generation competitive to conventional steam cycle technology, are identified. The results show that in order for investment in SNG production to be competitive to investment in electricity production in the DH system, support policies promoting biofuels in the range of 16-22 EUR/MWh are needed. For investment in BIGCC CHP to be competitive to investment in conventional steam cycle CHP tradable green electricity certificates in the range of 4-15 EUR/MWh are necessary. The necessary policy support levels are very sensitive to variations in investment costs. It is concluded that the large capital commitment and strong dependency on policy tools makes it necessary that DH suppliers believe in the long-sightedness of future policy tools, in order for investments in large-scale biomass gasification in DH systems to be realised