Expert: China's biomass power plants to be profitable in three years

China has recently overtaken the U.S. as the largest emittor of greenhouse gases, mainly because of its intensive reliance on coal. The country is however investing in the renewables sector, but the appeal of cheap and abundant coal remains strong. One sector that might begin to compete rather soon is made up of the many biomass power plants that are beginning to appear in the energy landscape. These plants are expected to record profits in three year's time, though currently they are striking a balance in cost and economic return, according to an official with the country's leading state-owned biomass-based power producer.

With core technologies sourced from Europe, China's largest producer of electricity powered from biomass - the National Bio Energy Corp. (NBE) a subsidiary of China's State Grid - was assigned by the State Council to carry out pioneer work in the field. Now, the company has not less than 30 such projects under construction with six of them already producing electricity, according to Zhang Yanru, project manager of the company's science and technology department.

We earlier presented a short overview of these biomass plants and the feedstocks they utilize, here. The NBE's largest competitor is Dragon Power, a Beijing-based company which plans to raise as much as 15 billion yuan (€1.45/US$2bn) from an initial public offering in Hong Kong to build not less than 100 biomass power plants across the People's Republic (previous post). Another important bioenergy producer is China Enersave, which retrofits existing coal plants and turns them into facilities that generate power from biomass (more here).

The NBE aims to have around 2,050 megawatts or 2.05 gigawatts (GW) of installed capacity of biomass power projects under construction and in operation by 2010, Zhang says. According to China's newest renewable energy development targets, biomass power will become the second largest sector after hydropower and grow almost three-fold to reach 5.5 GW in 2010 from 2 GW in 2005, and 15 times as much by 2020, to 30 GW (table, click to enlarge, and seeearlier post on China's new $265 billion Renewables Program).

As the raw materials of the projects are mostly forms of straw, the cost of power production varies according to the quality of straws in different regions and seasons, but on average, it costs around RMB 0.5 (€0.046/$0.067) to produce a kilowatt hour of electricity. But even with the RMB 0.25 (€0.023/$0.033) subsidy from the government, the on-grid tariff such power plants get from the grid operators can still hardly cover the costs. As biomass power generation technologies progress and rising awareness of farmers to keep such straws in good quality, Zhang said she is positive that the biomass power plants will be able turn a profit in three years.

China produces 600 million tons of rural straw annually, around 300 million tons of which can be used as energy, which is equivalent to about 150 million tons of standard coal, whereas dedicated energy crops can replace another 400 million tons per annum. China's current coal consumption stands at roughly 2.5 billion tonnes per annum:
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However, the country is still lacking an efficient system to collect the biomass material from dispersed farmers. In the meanwhile, farmers are still lacking awareness that straws should be kept in good quality, have a value and can be turned in to the power plants.

The NBE started three pilot biomass power projects in Shan county of Shandong Province, Suqian in Jiangsu Province and the Wei county in Hebei Province from 2003 and signed an agreement with the Danish Ministry of Foreign Affairs to sell the emission reduction credits from the projects from 2007 to 2012.

Further, the company recently started cooperating with bioenergy companies in Sweden to build integrated green power plants there with the aim to achieve tech transfers and share experiences (earlier post).

In addition to NBE, the country's power producers such as Guodian Group, are all actively constructing biomass-based power plants, mostly in the provinces of Shandong, Jilin, Jiangsu, Henan, Heilongjiang and Liaoning.

Other particularly interesting bioenergy initiatives in China an EU-China project focused on biomass co-firing (more here). The €590,000 China-EU Bioenergy Project, funded by the European Commission, is a two-year initiative that will evaluate commercial possibilities of co-firing biomass in China’s coal-fired power stations to help cut the country’s dependence on fossil fuel and reduce its greenhouse gas emissions. Australia recently announced that it is going to cooperate with the People's Republic on developing carbon capture technologies (earlier post).

When carbon capture and storage (CCS) systems are applied to biomass power plants, they can yield carbon-negative energy - a feat that no other form of renewable energy nor nuclear power can achieve.


References:
Interfax: China's national biomass power projects to profit in three years - leading developer - October 29, 2007.

Biopact: A closer look at China's biomass power plants - April 19, 2007

Biopact: China unveils $265 billion renewable energy plan, aims for 15% renewables by 2020 - September 06, 2007

Biopact: China's Dragon Power to raise US$2 billion for 100 biomass power plants - August 07, 2007

Biopact: China EnerSave retrofits coal plants to burn biomass - June 18, 2007

Biopact: EU project to help China use biomass in coal plants - November 23, 2006

Biopact: Australia and China partner to develop carbon capture and storage technologies - September 07, 2007