Katerina Swanson
Biomass fuel is an increasingly popular energy source, particularly in the United States, where it is used for both residential heating and electricity generation. The cost of biomass fuel varies depending on the type and source of the fuel, with prices influenced by factors such as feedstock availability and production capacity. As of October 2023, saw mill residue was the most expensive biomass feedstock in the United States, averaging nearly $39.71 per metric ton, while roundwood/pulpwood had an average price of $28.37 per ton. The cost of implementing biomass power solutions, such as BECCS, can also vary, with power costs ranging from 20-30c/kWh, including energy penalties and gas cleanup. Small-scale biomass electric plants have installed costs of $3,000 to $4,000 per kW, and a levelized cost of energy of $0.8 to $0.15 per kilowatt-hour (kWh).
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What You'll Learn
Biomass fuel manufacturing costs
The manufacturing costs of biomass fuel can vary depending on several factors, including the type of feedstock used, the scale of production, and the technology employed. Here is a detailed breakdown of the costs associated with biomass fuel manufacturing:
Feedstock Costs: Feedstock, or raw material, is a significant expense in biomass fuel production. The cost of feedstock depends on its source and type. For example, as of October 2023, saw mill residue was the most expensive biomass feedstock in the United States, averaging nearly $39.71 per metric ton. In contrast, roundwood/pulpwood was relatively cheaper, with an average price of $28.37 per ton. Other feedstocks may include wood chips, sawdust, or wood pellets, with prices varying based on quality and availability.
Production Costs: The cost of manufacturing biomass fuel also includes expenses related to the production process itself. This covers the price of acquiring or producing the feedstock, as well as the operational costs of the manufacturing facility. Larger-scale operations may benefit from economies of scale, reducing the per-unit cost of production. Additionally, the level of automation in the production process can impact costs, with manual equipment requiring significant labour and maintenance expenses.
Transportation and Storage Costs: Biomass fuel manufacturing also incurs costs associated with transporting feedstock to the facility and storing it on-site. These costs can vary depending on the distance from feedstock suppliers and the type of storage infrastructure required. For example, wood chips and pellets typically require bunkers or silos for short-term storage and an additional outdoor fuel yard for larger storage needs.
Equipment Costs: The type and scale of equipment used in biomass fuel manufacturing can significantly impact costs. This includes the initial investment in equipment, as well as maintenance and replacement expenses over time. More advanced or automated equipment may carry higher upfront costs but could potentially reduce labour costs and improve production efficiency.
Labour Costs: The labour required to operate and maintain the manufacturing facility contributes to the overall cost of biomass fuel production. These labour costs can vary based on factors such as the level of automation, the size of the facility, and the local labour market.
It's important to note that the cost of biomass fuel manufacturing can be influenced by various factors beyond feedstock and operational expenses. For example, the regulatory environment, subsidies, and market demand can also impact the economics of biomass fuel production. Additionally, the levelized cost of electricity generation from biomass, including capital expenses and fuel costs, is an essential consideration for biomass power plants.
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Biomass feedstock prices
The cost of biomass feedstock is influenced by several factors, including availability, demand, and the type of biomass. The price of biomass feedstock increases when demand approaches or exceeds the maximum supply level. This is due to the implementation of a price adder, which can be adjusted linearly or exponentially based on the deviation from the target supply level.
The cost of biomass feedstock also varies depending on the specific type and source. For example, in February 2025, the average cost of densified biomass fuel, which includes wood pellets, briquettes, and logs, was $238.85 per ton for domestic sales and $202.25 per ton for exports in the United States. This price can be influenced by factors such as the availability of raw materials and the cost of production.
In the context of aviation biofuels, the cost differential of Renewable Jet Fuel (RJF) relative to fossil jet fuel is expected to decrease due to advanced biofuel technologies, technological advancements, increased fossil jet fuel prices, and reduced feedstock costs. By 2030, the cost differential is projected to be €7-13 per GJ, or €280-540 per ton, which will impact the use of non-food biofuels in road transport.
Additionally, projects like S2Biom aim to support the sustainable delivery of non-food biomass feedstock at local, regional, and pan-European levels. They focus on assessing the availability and potential of various biomass feedstocks, such as straw/stubble, energy grasses, manure, and forestry residues, to develop strategies for their utilization.
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Biomass fuel installation costs
The installation costs of biomass fuel systems vary depending on the specific technology and scale of the project. Here is an overview of the costs associated with installing biomass fuel systems:
Small-scale biomass electric plants
Small-scale biomass electric plants have installed costs ranging from $3,000 to $4,000 per kilowatt. This translates to a levelized cost of energy between $0.80 and $0.15 per kilowatt-hour. These plants typically have outputs ranging from 2 kilowatts to several megawatts. The two main types of chip-fired direct combustion systems used in small-scale plants are stationary and travelling grate combustors, also known as fixed-bed stokers and atmospheric fluidized-bed combustors, respectively.
Average installation costs
The average installation cost for biomass fuel systems is estimated to be $3,386 per kilowatt, with a learning rate of 7.6%. This cost is expected to decrease to $2,928 per kilowatt in 2030 and $2,723 per kilowatt in 2050. Operation and maintenance costs for biomass fuel systems are estimated to be $0.012 per kilowatt-hour, while fixed costs are approximately $91.39 per kilowatt.
Biomass feedstock costs
The cost of biomass feedstock varies depending on the type of feedstock used. For example, as of October 2023, saw mill residue averaged nearly $39.71 per metric ton, while roundwood/pulpwood had an average price of $28.37 per ton. The cost of wood pellets, a common fuel source for biomass power plants, can range from $120 to $210 per ton.
Large-scale biomass plants
For larger-scale biomass plants, the capital expenditures (capex) costs can reach $1,700 per kilowatt, with fuel costs of $150 per ton of wood pellets. To achieve a 10% internal rate of return (IRR), a new 100-megawatt plant would need a levelized cost of 13 cents per kilowatt-hour. The cash operating costs for such a plant are estimated to be around 8 cents per kilowatt-hour.
Biomass fuel systems offer a "bridge" solution towards a renewable energy future, complementing wind and solar power. While there are costs associated with implementing biomass power, there are also potential lifetime savings and carbon emission reduction benefits to consider.
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Biomass fuel carbon costs
Biomass fuel is a lower-carbon alternative to traditional fossil fuels. The carbon dioxide (CO2) released when burning wood is equivalent to the amount of CO2 absorbed by the tree during its growth. This makes the process carbon neutral, provided that new trees continue to grow in place of those burned as fuel. However, there are additional CO2 emissions associated with the cultivation, manufacture, and transportation of biomass fuel, which can be minimised by choosing sustainably produced options.
In recognition of the carbon benefits of biomass fuel, governments are offering incentives to encourage its use. For example, the UK's Boiler Upgrade Scheme (BUS) provides a grant of £5,000 for biomass boilers in England and Wales, while Scotland's Home Energy Scotland Grant and Loan offer up to £15,000 (£7,500 grant plus up to £7,500 loan). These grants and loans are available to those who can demonstrate that zero-emission heating systems are not suitable for their properties.
While biomass fuel has the potential to reduce carbon emissions, the specific carbon costs and benefits depend on various factors, including the type of biomass and the region of production. A study on France's biomass energy production targets found that using residues for energy resulted in 76-85% lower emissions compared to a reference scenario. However, the same study projected that increased harvest rates in boreal forests in Finland would lead to a loss of carbon sequestration, indicating that the carbon balance of biomass fuel can vary significantly depending on forest management strategies and the specific context.
To optimise the carbon benefits of biomass fuel, it is crucial to consider the source and sustainability of the biomass feedstock. For example, utilising sustainably managed forests and industrial wood waste as feedstock for wood pellet production can help ensure a renewable and low-emission source of biomass fuel. Additionally, pre-processing techniques, such as drying biomass before combustion or gasification, can improve overall process efficiency, although this may not always be economically feasible.
Overall, biomass fuel offers a promising lower-carbon alternative to fossil fuels, particularly when coupled with sustainable feedstock sources and efficient processing technologies. However, it is important to carefully consider the specific carbon costs and benefits in the context of different regions and forest management practices to ensure that biomass fuel contributes to global carbon emission reduction goals.
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Biomass fuel compared to conventional fuel costs
The cost of biomass fuel varies depending on the type of feedstock and the scale of production. Small-scale biomass electric plants in the United States have installed costs of $3,000 to $4,000 per kW, with a levelized cost of energy of $0.8 to $0.15 per kilowatt-hour (kWh). This is higher than the cost of conventional fuels like coal, natural gas, and oil, which have a weighted average cost of $1,786 per kilowatt and $0.049 per kWh.
Biomass feedstock prices also vary depending on the type of feedstock used. For example, as of October 2023, saw mill residue averaged nearly $39.71 per metric ton, while roundwood/pulpwood had an average price of $28.37 per ton. The cost of wood pellets, a common form of densified biomass fuel, can range from $120 to $210 per ton.
Biomass power plants also incur additional costs in handling and pre-processing the fuel, as well as in emission controls to meet regulations. Drying the biomass before combustion or gasification can improve efficiency but may not be economically viable.
Overall, biomass fuel costs are generally higher than conventional fuels like coal, natural gas, and oil. However, biomass energy is considered a "bridge" solution that can complement wind and solar power until energy storage technologies become more flexible and widely available. In the long run, biomass power can avoid significant carbon dioxide emissions, with associated marginal first costs of $56.48-$69.24 billion by 2050.
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Frequently asked questions
Biomass feedstock prices vary depending on the product. As of October 2023, saw mill residue was the most expensive biomass feedstock in the US, averaging nearly $39.71 per metric ton. By comparison, roundwood/pulpwood had an average price of $28.37 per ton.
Small-scale biomass electric plants in the US have installed costs of $3,000 to $4,000 per kW, with a levelized cost of energy of $0.8 to $0.15 per kilowatt-hour (kWh).
A levelized cost of 13c/kWh is necessary for a new 100MW plant, with capex costs of $1,700/kW and burning $150/ton wood pellets to earn a 10% IRR while generating electricity.
Biomass has a higher average fuel cost compared to conventional fuels, at $0.0143 per kilowatt-hour versus $0.049 for conventional fuels. Biomass also has higher fixed costs, at $91.39 per kilowatt compared to $34.7 for conventional fuels.
