Biomass Feasibility Project Final Report - Xcel Energy

Recent projects in Minnesota and neighboring states demonstrate that stand-alone biomass
power plants cost more than traditional plants. Public records show biomass power plants
ranging from $2,500 to $3,000 per kW of installed capacity (Burns & McDonnell, 2005; Trillium
Planning and Development, 2002; and “Poultry Litter”, 2005.) a lot more than the $1,800 per kW
of installed capacity that a 600 MW supercritical pulverized coal power plant (Burns &
McDonnell, 2005). They also entail costly handling facilities. The Laurentian Energy Authority in
Hibbing/Virginia had to build a wood processing and storage yard between the two cities.
Capital Cost Comparison
$3,500
$3,000
$2,500
$2,000
PC
w/ 5% Co-
Fire
Pulverized
Coal
13 MW
Local
Biomass
Poultry
Litter
On Farm
Plug Flow Wood
DigesterStoker
Boiler
$1,500
$1,000
Co-Firing
$500
$0
Responses to High Capital Costs
Figure IX-1: Power Plant Capital Costs ($/kW)
CHP. Steam sales (or internal uses of steam) over time might offset the high capital costs of
biomass power facilities. It is virtually impossible to find a steam host in Minnesota to serve a
canning plant or a paper mill.
Co-Firing. Adding biomass fuel to coal at an existing plant costs far less than building a new
biomass-only plant or CHP plant, even when including additional equipment costs to handle the
new fuel.
Research Toward Best Practices. As a matter of policy, support for research into co-firing could
lead to promulgation of best practices that could remove much of the technological risk.
Difficulties in Financing New Technologies
MnVAP, EPS/Beck, and Fibrominn all struggled to finance their projects, to a large degree,
because of technology risk. Combining technology risk with fuel resource risk, and you have a
hard case to present to investors and lenders.
Response; Laying the Groundwork
While firm financial commitments won’t be forthcoming until a PPA is signed, it helps to explore
financing terms with investors and lenders early in the process in order to avoiding unpleasant
surprises later after money has been spent in planning the project.
Identifying Effective Biomass Strategies: Page 143
Quantifying Minnesota’s Resources and Evaluating Future Opportunities