Biomass for Electricity • An Optimal Ontario FIT Rate
QIEEP researchers suggest increased feed-in tariff rates for biomass in Ontario.
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Determining appropriate feed-in tariff rates to promote biomass-to-electricity generation in Eastern Ontario, Canada
Steven Moore, School of Business/School of Environmental Studies, Queen’s University, Canada Vincent Durant, School of Business, St.Lawrence College/Laurentian University, Canada
Warren E. Mabee, School of Policy Studies/Department of Geography, Queen’s University, Canada
Economic performance of biomass-to-electricity generation in Ontario is assessed.
Feed-in tariffs needed to meet industrial payback and IRR targets are determined.
Existing feed-in tariff rates for biomass must be raised to meet industrial targets.
Incentives that adjust feedstock price might be explored to increase biomass use
On-site data collection, interviews, and ﬁnancial models were used to determine the feed-in tariff (FIT) rate required to encourage investment in the generation of electricity from currently unused biomass from the Eastern Ontario forest industry. A ﬁnancial model was adapted and run to determine the net present value, internal rate of return, and payback period associated with a 15 MW biomass-to-electricity facility. The analysis suggests that Ontario should consider a stronger incentive than the recently-offered CDN $0.13 kW-1 h-1 for biomass-to-electricity. If no customer for heat generated from the plant can be found, FIT rates between CDN $0.17–0.22 kW-1 h-1 are necessary to achieve a 15% internal rate of return and a simple payback of approximately 5 yr; achieving a price of CDN $0.013 kW-1 of thermal output still requires elevated FIT rates between CDN $0.15–0.21 kW-1 h-1 to meet economic performance criteria. Other barriers, particularly regulations regarding the use of operating engineers in steam plants, should also be addressed to facilitate development of biomass-to-electricity. Without these changes, it is likely that biomass will be signiﬁcantly under-used and will not contribute to the renewable energy goals of Ontario.
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