<abstract xml:lang="en" xmlns="http://www.w3.org/1999/xhtml"><p>Utilisation of renewable energy sources is one of the key factors in a search for efficient ways of reducing the emissions of greenhouse gases and improving the energy supply security. So far, the district heating supply in Latvia has been based on natural gas, with the wood fuel playing a minor role; the same is true for decentralised combined heat-power (CHP) production. The paper describes a method for evaluation of the economic feasibility of heat and electricity production from wood biomass under the competition between different fuel types and taking into account the electricity market. For the simulation, a cost estimation model is applied. The results demonstrate that wood biomass can successfully be utilised for competitive heat production by boiler houses, while for electricity production by CHP utilities it cannot compete on the market (even despite the low prices on wood biomass fuel) unless particular financial support instruments are applied. The authors evaluate the necessary support level and the impact of two main support instruments - the investment subsidies and the feed-in tariff - on the economic viability of wood-fuelled CHP plants, and show that the feed-in tariff could be considered as an instrument strongly affecting the competitiveness of such type CHP. Regarding the feed-in tariff determination, a compromise should be found between the economy-dictated requirement to develop CHP projects concerning capacities above 5 MW<sub>el</sub> - on the one hand, and the relatively small heat loads in many Latvian towns - on the other.</p></abstract>

Utilisation of renewable energy sources is one of the key factors in a search for efficient ways of reducing the emissions of greenhouse gases and improving the energy supply security. So far, the district heating supply in Latvia has been based on natural gas, with the wood fuel playing a minor role; the same is true for decentralised combined heat-power (CHP) production. The paper describes a method for evaluation of the economic feasibility of heat and electricity production from wood biomass under the competition between different fuel types and taking into account the electricity market. For the simulation, a cost estimation model is applied. The results demonstrate that wood biomass can successfully be utilised for competitive heat production by boiler houses, while for electricity production by CHP utilities it cannot compete on the market (even despite the low prices on wood biomass fuel) unless particular financial support instruments are applied. The authors evaluate the necessary support level and the impact of two main support instruments - the investment subsidies and the feed-in tariff - on the economic viability of wood-fuelled CHP plants, and show that the feed-in tariff could be considered as an instrument strongly affecting the competitiveness of such type CHP. Regarding the feed-in tariff determination, a compromise should be found between the economy-dictated requirement to develop CHP projects concerning capacities above 5 MWel - on the one hand, and the relatively small heat loads in many Latvian towns - on the other.

Analysis of Competitiveness and Support Instruments for Heat and Electricity Production from Wood Biomass in Latvia

Laboratory of Energy System Analyses and Optimisation, Institute of Physical Energetics, 21 Aizkraukles Str., Riga, LV-1006, LATVIA

Latvian Journal of Physics and Technical Sciences

Utilisation of renewable energy sources is one of the key factors in a search for efficient ways of reducing the emissions of greenhouse gases and improving...

Analysis of Competitiveness and Support Instruments for Heat and Electricity Production from Wood Biomass in Latvia

Published Online: May 18, 2012

Page range: 3 - 13

DOI: https://doi.org/10.2478/v10047-012-0007-3

Keywords
energy production price, district heating system, wood biomass fuel, combined heat/ power production, investment subsidies, feed-in tariff

This content is open access.

Analysis of Competitiveness and Support Instruments for Heat and Electricity Production from Wood Biomass in Latvia

Published Online: May 18, 2012

Page range: 3 - 13

DOI: https://doi.org/10.2478/v10047-012-0007-3

Keywordsenergy production price, district heating system, wood biomass fuel, combined heat/ power production, investment subsidies, feed-in tariff

This content is open access.

Keywords
energy production price, district heating system, wood biomass fuel, combined heat/ power production, investment subsidies, feed-in tariff