Determining appropriate feed-in tariff rates to promote biomass-to-electricity generation in Eastern Ontario, Canada

Steven Moore, Vincent Durant and Warren E. Mabee

Energy Policy, 2013, vol. 63, issue C, 607-613

Abstract: 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 15MW biomass-to-electricity facility. The analysis suggests that Ontario should consider a stronger incentive than the recently-offered CDN$ 0.13kW−1h−1 for biomass-to-electricity. If no customer for heat generated from the plant can be found, FIT rates between CDN$ 0.17–0.22kW−1h−1 are necessary to achieve a 15% internal rate of return and a simple payback of approximately 5yr; achieving a price of CDN$ 0.013kW−1 of thermal output still requires elevated FIT rates between CDN$ 0.15–0.21kW−1h−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.

Keywords: Biomass-to-electricity; Feed-in tariffs; Ontario (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:63:y:2013:i:c:p:607-613

DOI: 10.1016/j.enpol.2013.08.076

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