Bio-SNG - CNG Services

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Net cost of Bio-SNG (p/therm) & Electricity (£/MWh)BIO-SNG FEASIBILITY STUDY – ESTABLISHMENT OF A REGIONAL PROJECTprobably still marginally preferable. However this would require a further level of analysis and costingbased around a specific project to confirm where the relative advantage lay in this case. It must also benoted that there is more international activity based on gasification for power generation, the regulatoryregime and practice for connection is more established, and the RO support mechanism has a longertrack record with investors.LCof Bio-SNG (RHI at £40/MWh) & electricity with 2 ROCs ( £50/MWh200180Small Large160140120100806040TypicalNatural Gas prices range (p/therm) andelectricty price (£/MWh)200Bio-SNG (p/therm)Electricity (£/MWh)Figure 6.9 Levelised cost of Bio-SNG supported by the RHI at £40/MWh and renewableelectricity supported by 2 ROCS as Advanced Gasification based on SRF with 60% biogeniccontent6.4 FINANCIAL CONCLUSIONSFrom this analysis, the following conclusions can be drawnA support mechanism such as the RHI is critical for Bio-SNG – without it, conversion of biomassinto Bio-SNG for the purpose of Grid injection will not happen at any scale using any fuel.With the current assumed support level under the RHI of £40/MWh, a Bio-SNG Project at50MWth will not be viable (on any of the fuels assessed). Either some form of capital grant orsubsidy enhancement is necessary for a small Bio-SNG Project to operate.However at 300MWth the current support level is sufficient to enable competitively costed bio-SNG project, particularly if fuelled fully or partially by a waste derived fuel. This indicates thatthere could be a long term role for Bio-SNG commercially.58
BIO-SNG FEASIBILITY STUDY – ESTABLISHMENT OF A REGIONAL PROJECTThe issue is how to get from the current position to this scale of project in light of the technicaland commercial risks. This is particularly the case if the RHI does not transpire at the currentlyproposed level.Projects configured to generate electricity under the current banded RO regime are commerciallyfavourable at both scales, and particularly attractive at larger scale. A small project generatingelectricity from SRF under the RO regime may offer a development route for Bio-SNG. Byleveraging the mature and favourable electricity support regime a syngas platform could beestablished from which a Bio-SNG project could be developed.In this case, the project may just be acceptable using waste fuels, although it is unlikely that aprivate investor could countenance the risk for this level of reward without a longer termperspective or desire to operate in the sector – and ultimately develop a facility at larger scale.In all cases it is clear that the use of virgin material can only have a limited role, and that the useof waste is vital to maintain the projects commercial integrity. This financial analysis presumesthat the technical issues relating to Bio-SNG production, particularly from waste, can beovercome. The international Bio-SNG projects currently being developed are predicated onbiomass. However, there are a number of international waste-to-syngas projects underdevelopment for both GT/ICE power applications as well as bioliquids. If these succeed, then thetransition to Bio-SNG production presents no obviously insurmountable technical hurdles.The use of waste wood may provide a shorter term development route; the enhanced level ofsupport due the high biogenic fraction offsets the reduced cost of the fuel, and may be slightlyless technically challenging. However, in a market increasingly seeking low cost biomassfeedstock, waste wood is likely to become increasingly valued, particularly for larger projects, andless material is likely to be available.The quantum of investment is significant – even for the development project. In the currentfinancing climate this presents a challenge.59
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