Bio-SNG - CNG Services

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BIO-SNG FEASIBILITY STUDY – ESTABLISHMENT OF A REGIONAL PROJECTComparing these figures with a central case of 59p/therm gas (DECC 6 ‟) shows that with the proposedincentive regime, a large SRF fuelled facility has the potential to provide gas effectively, as could a facilityfuelled by a mix of SRF and biomass. At this scale, a mix of indigenously sourced woodchip and importedwoodchip might be competitive, but a facility fuelled by wood pellet is unlikely to be able to compete andwould need an increase of at least £15/MWh to the RHI to enable it to compete. At the smaller scale, Bio-SNG cannot be supplied competitively from any fuel. For a competitive demonstration facility at this scale,the RHI would need to be increased by a further ~£40/MWh, or else a capital grant of ~£40M would benecessary.For the large scale facility operating on woodchip, a sensitivity analysis indicates that a change in capitalcost of 30% equates to a change in outturn Bio-SNG price of 35%. A £1.5/GJ change in biomass price(30%) equates to nearly a 40% change in outturn Bio-SNG price. This implies for example that volatility ininternational biomass shipping costs alone could readily effect a change of £0.5/GJ (£6.5/te) on feedstockand therefore 13% on Bio-SNG price. This particular sensitivity to biomass price represents a major riskonwards for the life of the plant depending on the contracting basis. Conversely, whilst capital cost is animportant factor, the capital cost is fixed at financial close, so does not represent an ongoing risk to theproject.Looking to the future, gas prices will increase, but it is contended that biomass prices are likely toescalate broadly in line with raw energy costs due to both increased international demand for renewablefeedstocks, but also simply because of the displaced cost of energy (the only perturbation on this wouldbe a significant increase in the price of carbon, although natural gas is a relatively low carbon feedstock).In isolation this would result in a somewhat increased competitive position for Bio-SNG since the fuel costis only a component of the total levelised cost. However, the extent of this effect will be ameliorated byany increase in capital and operational costs over and above inflation due to both increases in energycosts per se, and also supply/demand pressure for renewable energy.A first of a kind, large scale Bio-SNG production facility from SRF is likely to be challenging to finance andrepresents a substantial quantum of investment, yet this analysis indicates that scale is necessary toprovide an acceptable cost base. Therefore an alternative pathway is likely to be necessary. One route isto find a more commercially attractive basis to develop a syngas platform, from which a slip stream of Bio-SNG production could be established.By comparison, a 50MWth gasification plant configured to produce 13MWe using an SRF feedstock andsupported by two ROCS under the RO is more likely to be viable. Because such a case is still predicatedon some of the fundamental technical principles necessary for Bio-SNG production, it does not provide aparticularly attractive return, but might be an alternative pathway to demonstrating Bio-SNG productionusing a slipstream from an otherwise commercially viable plant, therefore limiting the level of additional6 Energy and emissions projections, DECC (June 2010) Annex F8
BIO-SNG FEASIBILITY STUDY – ESTABLISHMENT OF A REGIONAL PROJECTsupport to demonstrate Bio-SNG production. At 300MWth, a gasification facility configured to generateelectricity is likely to be commercially preferable to one configured to produce Bio-SNG, unless theRenewable Heat Incentive is significantly higher than the £40/MWh proposed.Carbon savingsA full lifecycle analysis of Bio-SNG production undertaken by North Energy Associates 7 shows that formany types of feedstock, the lifecycle CO 2 e savings of Bio-SNG compared with fossil fuel alternatives aretypically ~90%. This saving is similar for both conventional heating and transport applications. The annualCO 2 e savings for three of the larger facilities operating on biomass is 1Mte of CO 2 e per annum if used todisplace natural gas heating, and slightly higher if it displaces conventional transport fuel. If Biogas wereto displace a third of the domestic natural gas consumption and bio-SNG represented two thirds of that,then the CO2e savings would be ~15Mte pa when fuelled by biomass.This analysis also demonstrates that the savings for the Bio-SNG production route are very similar tothose achieved using direct biomass heating. Given that the Bio-SNG solution has much lower demandsideconstraints and therefore could achieve greater market penetration, it is an attractive route.Cost of carbon abatedStrategically the UK needs to consider the most cost effective approach for decarbonising. An analysishas been undertaken which considers the cost of decarbonising, based on the current and proposedlevels of renewable support subsidy 8 considered to be adequate to achieve market penetration of theparticular technology.For heating applications using natural gas as a counterfactual, Bio-SNG offers a cost per tonne of CO 2 eabated of ~£175/te. This compares very favourably with direct biomass combustion for domesticapplications (£395/te), for small commercial applications (£285/te) but is somewhat more expensive thandirect biomass combustion for large scale commercial applications at ~£110/te. When using oil heating asthe counterfactual, the cost per tonne of CO 2 saved reduces significantly to £135/te for Bio-SNGcompared with £305, £220 and £85 for the three cases discussed above. However it must be noted thatthe appropriate counterfactual for Bio-SNG is natural gas, as the product can only be used where there isa gas grid and where oil use is unlikely.7 “Analysis of the Greenhouse Gas Emissions for Thermochemical BioSNG Production and Use in the UnitedKingdom” Project Code NNFCC 10-009 Study funded by DECC and managed by NNFCC, North Energy Associates(June 2010)8 In deriving the cost of the emissions savings, the Government’s Impact Assessments calculation is made on thebasis of dividing the NPV of the incentive by the total tonnes of CO 2 abated. The analysis here is viewed from thepoint of view of the direct cost to the consumer, ie the subsidy cost divided by the tonnes of CO 2 saved, and wherepossible uses the full lifecycle emissions of CO 2 e.9
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