The key to developing a commercially viable distributed biomass power system lies in understanding the market characteristics, designing a power system that overcomes many market barriers and maximizes the benefits. The key barriers of the biomass market are the following:
- The biomass resource is typically highly distributed and has low energy density. This makes transportation costs uneconomical beyond approximately 50 miles.
- The physical and chemical characteristics of biomass vary significantly from source to source. No turnkey system currently exists that can utilize a wide variety of biomass types.
- Biomass producers are not energy companies and do not want to become one. In addition, the ratio of operating and maintenance costs (O&M) to power production is high relative to much larger centralized power systems. Power systems require specialized training. The prospect of hiring additional engineers and technicians specifically for that system can eliminate any return on investment for the producers.
- Current gasification or combustion systems may produce other types of emissions and wastes, such as SO2 and tars, which require additional costs to mitigate or dispose of.
These barriers are daunting and have stifled utilization of these biomass resources. However, there are unique characteristics of this market that can—given the right technology—make it profitable. These includes:
- The economics of renewable energy are becoming increasingly more favorable with emerging markets in renewable energy credits, carbon offsets, production tax credits and methane avoidance credits.
- Power systems co-located near a source of biomass residue production may obtain the fuel at minimal cost and, in some cases, for a slight profit if the biomass producer is currently paying to dispose of the fuel.