Bio-SNG - CNG Services

BIO-SNG FEASIBILITY STUDY – ESTABLISHMENT OF A REGIONAL PROJECT100,000 households or 25,000-150,000 passenger vehicles. Three of the larger facilities would supply 1%of the UK domestic gas market.The levelised cost of Bio-SNG in 2010 prices has been shown to range between £67-£103/MWh for thesmall scale facility and £32-£73/MWh for the large scale facility dependent on the type feedstock used,with the waste based fuel being the cheapest. Assuming the RHI at £40/MWh of biogenic fraction thisequates to out turn gas prices of 123-185p/therm at small scale and at large scale 24-96p/therm for SRF,Woodchip and pellet feedstock respectively. With the proposed incentive regime, a large SRF fuelledfacility has the potential to provide gas effectively. At this scale, a mix of indigenously sourced woodchipand imported woodchip might be competitive, but a facility fuelled by wood pellet is unlikely to be able tocompete. At the smaller scale, Bio-SNG cannot be supplied competitively from any fuel. A gasificationfacility configured to generate electricity is likely to be commercially preferable to one configured toproduce Bio-SNG, unless the Renewable Heat Incentive is significantly higher than the £40/MWhproposedFull lifecycle analysis of Bio-SNG production shows that for many types of feedstock, the lifecycle CO 2 esavings of Bio-SNG compared with fossil fuel alternatives are typically ~90%. This saving is similar forboth conventional heating and transport applications. This analysis also demonstrates that the savings forthe Bio-SNG production route are very similar to those achieved using direct biomass heating. Given thatthe Bio-SNG solution has much lower demand-side constraints and therefore could achieve greatermarket penetration, it is an attractive route.Strategically the UK needs to consider the most cost effective approach for decarbonising. For heatingapplications using natural gas as a counterfactual, Bio-SNG offers a cost per tonne of CO 2 e abated of~£175/te. This compares very favourably with direct biomass combustion for domestic applications(£395/te) and for small commercial applications (£285/te), as well as with Ground source heat pumps(£5500/te). If the adoption of electrical based solutions demands more grid reinforcement than would berequired to the gas network by Bio-SNG solutions, then the differential in cost per tonne of carbon abatedis likely to be even greater. For transport applications, Bio-SNG is also significantly more cost effectivethan electrical solutions, however, this analysis does suggest that on a cost per tonne abated, the heatingsector is a preferable end market.The envisaged Bio-SNG facilities are in most respects conventional process engineering projects,exhibiting the general risk profile that such developments entail. These can in the main be addressedwith a conventional contracting approach to risk management; however there are technology, fuel supplyand financing risks that need to be addressed. Government incentive schemes offer the prospect ofcommercial viability with a plant that would not in other circumstances be commercially viable; to thatextent they are beneficial to non-fossil energy developments including Bio-SNG. The economic analysisshows that they do not constitute an exceptional upside return on investment. What influences theattitude of investors however is that current support mechanisms offer no protection on the downside of85