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A Model For The Economic Evaluation Of Plantation Biomass Production For Co-Firing With Coal In Electricity Production

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  • Nienow, Sara
  • McNamara, Kevin T.
  • Gillespie, Andrew R.
  • Preckel, Paul V.

Abstract

Public and private electric utilities are considering co-firing biomass with coal as a strategy to reduce the levels of CO2, SO2 and NO, in stack emissions, as well as a response to state legislative mandates requiring the use of renewable fuels. This analysis examines the conditions under which biomass co-firing is economically feasible for utilities and woody biomass producers and describes additional environmental and community benefits associated with biomass use. This paper presents a case study of woody biomass production and co-firing at the Northern Indiana Public Service Company (NIPSCO) Michigan City Unit No.12 power plant. A Salix (willow) production budget was created to assess the feasibility of plantation tree production to supply biomass to the utility for fuel lending. A GAMS model was developed to examine the optimal co-firing blend of coal and biomass while minimizing variable cost, including the cost of ash disposal and material procurement costs. The model is constrained by the levels of pollution produced. This model is used to examine situations where coal is the primary fuel and waste wood, willow trees, or both are available for fuel blending. Capital costs for co-firing were estimated outside of the model and are incorporated into the total cost of co-firing. The results indicate that under certain circumstances it is cost-effective for the power plant to co-fire biomass. Sensitivity analysis is used to test biomass price sensitivity and explores the effects of potential public policies on co-firing.

Suggested Citation

  • Nienow, Sara & McNamara, Kevin T. & Gillespie, Andrew R. & Preckel, Paul V., 1999. "A Model For The Economic Evaluation Of Plantation Biomass Production For Co-Firing With Coal In Electricity Production," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 28(1), pages 1-13, April.
    • Handle: RePEc:ags:arerjl:31498
    DOI: 10.22004/ag.econ.31498
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    Cited by:

    1. Hu, Ming-Che & Huang, An-Lei & Wen, Tzai-Hung, 2013. "GIS-based biomass resource utilization for rice straw cofiring in the Taiwanese power market," Energy, Elsevier, vol. 55(C), pages 354-360.
    2. Thorsell, Sara & Epplin, Francis M. & Huhnke, Raymond L., 2003. "Economies Of Size Of A Coordinated Biorefinery Feedstock Harvest System," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35059, Southern Agricultural Economics Association.
    3. Hu, Ming-Che & Lin, Chun-Hung & Chou, Chun-An & Hsu, Shao-Yiu & Wen, Tzai-Hung, 2011. "Analysis of biomass co-firing systems in Taiwan power markets using linear complementarity models," Energy Policy, Elsevier, vol. 39(8), pages 4594-4600, August.
    4. Bocquého, G. & Jacquet, F., 2010. "The adoption of switchgrass and miscanthus by farmers: Impact of liquidity constraints and risk preferences," Energy Policy, Elsevier, vol. 38(5), pages 2598-2607, May.

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    Keywords

    Resource /Energy Economics and Policy;

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