Techno-economic Evaluations of Various Biomass CHP Technologies and Policy Measures Under Norwegian Conditions

AbstractThis work deals with evaluations of different possible cost-effective small-scale combined heat and power (CHP) solutions based on biomass for the Norwegian market. Many CHP technologies and systems exist and can easily be proposed as candidates for introduction and/or widespread use in the Norwegian market. However, today they may be far from cost-effective given the current energy market and framework situation. These constraints can, however, change relatively fast. Hence, it is important to evaluate the feasibility of small-scale CHP technologies and systems in this perspective. What will the most promising small-scale CHP technologies based on biomass be in the near to medium term future? What are the limiting factors? What can be done to speed up the introduction of small-scale CHP solutions based on biomass in the Norwegian market? This work evaluates techno-economics of various CHP solutions based on biomass in the Norwegian market. Traditional financial indicators such as financial internal rate of return and net present value are used to assess the solutions. The methodology includes the following sequential steps: estimation of the economic production costs of various options for biomass CHP for power and heat generation and sorting these options in ascending order of costs to present the supply curve to meet the national target. Finally, the analysis includes various incentive schemes, feed-in tariffs/green certificates, investment based tax exemptions (8 years for each technology), prolonged tax exemption (+5 years for each technology), investment subsidies (in % for each technology) and low-interest loans (decided for each technology). Based on the evaluations, MSW backpressure turbine, biogas engine and industrial backpressure turbine are profitable without any subsidy under Norwegian framework conditions. With additional subsidy from grid deduction fee and green certificates, district heat ORC, district heat backpressure turbine and gasification with micro gas turbine are feasible with profitability of internal rate of return above 11%. Other gasification technologies are feasible under prevailing market conditions. In addition, a cost supply curve is generated for 10 years framework conditions based on the planned CHP installations