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Vincent Bertrand
''Switching to biomass co-firing in European coal power plants: Estimating the biomass and CO2 breakeven prices''
( 2013, Vol. 33 No.2 )
This paper investigates the cost of biomass co-firing in European coal plants. We propose an original method to get expressions of biomass and CO2 breakeven points: carbon switching price and biomass switching price. They correspond to carbon and biomass prices that make coal plants equally attractive under co-firing or classical conditions. The carbon switching price is the carbon price from which it becomes profitable to include biomass in coal plants (i.e. if the actual carbon price is higher than the carbon switching price, co-firing is profitable). The biomass switching price is the biomass price beyond which including biomass in coal plants is no longer profitable (i.e. if the actual biomass price is lower than the biomass switching price, co-firing is profitable). We run sensitivity analyses to see the effect of varying quantity and quality of biomass in coal plants' boilers. Results show that the carbon switching price associated with using biomass in lignite plants is always cheaper than that of hard-coal, due to higher lignite price. We also find that the biomass switching price is higher with lignite. This reflects the greater benefit when including biomass in lignite plants, due to greater coal cost saving. Finally, results indicate that the carbon switching price increases, and the biomass switching price decreases, when the biomass quality falls, due to greater conversion efficiency losses. However, we observe no influence when the biomass quantity varies.
Keywords: Biomass, Electricity Production, Co-Firing, Switching Price, EU ETS
JEL: Q4 - Energy: General
Q5 - Environmental Economics: General
Manuscript Received : May 13 2013 Manuscript Accepted : Jun 18 2013

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