Feasibility study of a Biomass to electricity demonstration plant in Valdecaballeros

Project Information

FEBIOVAL

Grant agreement ID: JOR3980249

Project closed

Start date 1 July 1998

End date 31 December 2000

Funded under

• Specific programme for research and technological development, including demonstration in the field of non-nuclear energy, 1994-1998

Total cost € 0,00

EU contribution No data

Coordinated by

CENTRO DE INVESTIGACIONES ENERGETICAS, MEDIAMBIENTALES Y TECNOLOGICAS
Spain

Exploitable results

Feasibility study of a biomass to electricity demonstration plant in Valdecaballeros; FEBIOVAL

The project goals have been undertaken resulting in positive outputs in relation to biomass availability, management strategies, impact and combustion process. Thus, it can be inferred that such a project wild be feasible in the area of study from a technical point of view. Nevertheless, the results obtained in the economic analysis demonstrate that the project has certain difficulties with respect to its financial return. Under the initial basic conditions, an internal rate of return is obtained of 6.15%, meaning that project feasibility is difficult to justify. To achieve an economic profit in the project, the team envisages two possible solutions that will have different repercussions, depending on the adopted alternative. -Fuel subsidies: To ensure the economic viability of the project, the price of the biomass raw material should be about 0.72 euro/therm which results in a IRR (Internal Return Rate) of 10% that is considered to be attractive enough for any industrial promoter/investor. In the case of FEBIOVAL project (calculated price of raw material: 0.82 euro/therm) a subsidy of approximately 0.12 euro/therm (0.42 euro/Kg) should be paid by the local authorities, autonomous government, and indirectly by the Central Government. This subsidy is justified on the ground of the social and economic benefits that the biomass-based power plant will bring to the area concerned, and thus should not be considered as a serious obstacle. -Electricity subsidies: The other alternative to ensure the economic viability of 10% IRR in this type of projects will be to increase the current subsidies of electricity tariffs from 3.05 euro/kWh to 3.59 euro/kWh by the Central Government, according to the findings from the FEBIOVAL project. Any of these two alternatives will lead to the economic feasibility of the biomass-based power plants. Without such subsidies it will be difficult to attract the necessary investment from the private sector in the current climate, as it has been learned from the FEBIOVAL project, and more specifically from the industrial partner.