Please keep this discussion focussed by following the guidelines at the bottom of this article. In particular, all comments comparing energy options like nuclear and renewables are off-topic.
What is meant by “internalized costs”?
Internalized costs are the costs which can be accurately accounted for in our current systems. In energy production, these costs typically consist of capital costs, financing costs, operation and maintenance costs, and exploration costs. Some energy options incur these costs in various stages such as extraction, transportation and refinement. Profits and taxes are excluded wherever possible in order to isolate the pure cost of production.
Internalized costs of bioenergy
In practical terms, bioenergy is the closest thing we have to a renewable alternative to fossil fuels. Similar to coal, oil and gas, bioenergy can be produced in energy-dense solid, liquid or gaseous forms, making it relatively simple to integrate in our current energy system. For this reason, internalized costs related to biomass can be presented in a similar way to previous posts on coal, oil and gas. Relevant numbers can be found in two recent reports from the IEA and BNEF.
When it comes to electricity generation, the IEA presents CAPEX ranging from $2400/kW to $4200/kW – similar to developed world coal plant costs. Co-firing is a much cheaper option, costing only 300-700 $/kW for the upgrade. Developing world costs are of course much cheaper at about $1000/kW for new plants in India.
Since such a wide range of biomass feedstocks are under consideration, fuel costs are hard to estimate. Wood is the most common feedstock in bioenergy for power applications. This report gives costs in the range of 3.5-10 $/GJ (equivalent to coal prices in the range of 84-240 $/ton).
For transportation fuels, the IEA report shows the following trends where biofuels are close to being competitive with previously high galoline prices. The current NYMEX spot price is $1.64/gal ($0.43/litre), painting a less promising picture.
The LCOE of biomass for power is given below as a function of the fuel cost for different plant capital costs. Other assumptions include a 30 year lifetime, 6% discount rate, 40% conversion efficiency, 75% capacity factor and O&M costs of $10/MWh. The Excel file from which these figures were compiled can be downloaded here.
The cost of using biomass for heat is given below. For some perspective, costs have also been expressed in terms of good quality firewood delivering 20 GJ/cord. As a reference, firewood normally costs upwards of $200/cord.
The relationship between biofuel costs in terms of $/litre (as in IEA graphs above), $/gallon and $/barrel is shown below.
In order to assist in finding the consensus view on the internalized costs of bioenergy, please follow these simple commenting guidelines:
Three types of comments are welcome, each introduced by a keyword:
- DATA: Please give your opinion on any of the numbers presented in the article. Of particular interest is the average global capital cost of biomass power plants ($/kW) and costs of biomass feedstocks and fuels. Each DATA comment will be weighted by the number of “likes” when the data is ultimately processed.
- REBUTTAL: If you strongly disagree with an existing DATA comment, please write a short rebuttal. The “likes” received by a REBUTTAL comment will subtract from the “likes” of the DATA comment. A REBUTTAL comment can once again be rebutted to reduce its weighting.
- CORRECTION: If you see a serious error in the numbers presented in the above analysis, please correct me so that I can correct the article.
- Make sure your comment gives only one piece of information (use multiple comments for multiple pieces of information).
- Keep things short.
- Please try to be as objective as at all possible. For this process to work, we all need to be in the mindset of dialectic instead of debate.
- Externalities, potential technological breakthroughs and other energy options are off-topic.
Many comments are welcome. More data = greater accuracy.