Energy biomass competitiveness—three different views on biomass price

The paper presents an economic model that provides a systemic approach to the evaluation of growing biomass for energy purposes. We argue that to correctly evaluate the potential of energy biomass, it is necessary to look at it from three different, but interconnected perspectives: (1) minimum price for growing biomass for energy purposes, (2) opportunity costs with respect to other uses of the arable land, namely production of conventional crops, and (3) the aspects of substitution of fossil fuels (e.g., coal) for biomass—the analysis of the demand. Our economic model incorporates the three above points of view. Furthermore, on the case study of the Czech Republic, we show the practical implications of the model on assessment of energy biomass in real conditions. The main findings are that to give the farmers the same rate of return as conventional crops, the price of intentionally grown biomass for energy purposes in the Czech Republic would have to be up to almost three times higher than is the adequate minimum price. On the other hand, in order to be competitive as a substitute for coal for local space heating, the price of biomass would have to be close to zero. WIREs Energy Environ 2017, 6:e261. doi: 10.1002/wene.261 This article is categorized under: Bioenergy > Economics and Policy