Biomass Feasibility Project Final Report - Xcel Energy

Carbon Emissions Policy .....................................................................................................120
Other State Policies.............................................................................................................120
CHAPTER VIII: ECONOMIC EVALUATIONS ................................................................................122
Bio-Power Evaluation Tool (BioPET).......................................................................................122
Overall Structure..................................................................................................................123
Algorithms .............................................................................................................................125
Levelized Annual Costs (LACs)..........................................................................................126
Simple Sensitivity Analysis ...................................................................................................127
Multiple Variable Sensitivity Analysis (Monte Carlo).........................................................128
Power Plant Assumptions ...................................................................................................128
Feedstock Assumptions......................................................................................................131
Probability Distributions.......................................................................................................133
Results....................................................................................................................................134
CHAPTER IX : OVERCOMING BARRIERS.....................................................................................137
Biomass Power’s Challenges and Responses ....................................................................138
Business Development Challenges......................................................................................138
High Cost of Biomass Fuels.................................................................................................138
Competition for Fuels..........................................................................................................140
Problems in Securing Long-Term Biomass Fuel Supplies ...............................................141
Information Gaps ................................................................................................................141
High Capital Costs...............................................................................................................142
Difficulties in Financing New Technologies.....................................................................143
Difficulties in Permitting.......................................................................................................144
High Transaction Costs .......................................................................................................144
An Inability to Monetize Benefits.......................................................................................145
Marketing of Waste Streams from Co-Firing ...................................................................145
Legislative and Regulatory Challenges...............................................................................146
Lessons Learned from the Biomass Mandate.................................................................146
The Challenge of Picking Winners in Evolving Technologies .......................................148
Broad and Narrow Policy Measures.................................................................................149
Facilitating Regulatory/Project Development Process.................................................152
Questions of Sustainability .....................................................................................................154
CHAPTER X : SEEKING OPPORTUNITIES ......................................................................................155
Opportunity 1: Co-Firing Coal with Biomass .......................................................................155
Opportunity 2: Biomass Combined Heat and Power ........................................................156
Opportunity 3: Substituting Biomass for Coal......................................................................156
Opportunity 4: Retrofitting Existing Biomass Facilities........................................................157
Opportunity 5: Biomass Power at Ethanol Facilities...........................................................157
Opportunity 6: Biodiesel in Generator Sets .........................................................................158
Opportunity 7: Anaerobic Digesters.....................................................................................159
Opportunity 8: Electric-Only Power Plants ..........................................................................160
Other CHP Opportunities........................................................................................................160
Summary...................................................................................................................................161
CHAPTER XI: BIOMASS POWER PROJECT DEVELOPMENT HANDBOOK .................................162
Introduction ..............................................................................................................................162
Conditions Precedent.............................................................................................................162
Other Considerations..............................................................................................................164
Ownership and Financial Structure..................................................................................164