Comparing biomass-based and conventional heating systems with costly CO2 emissions: Cost estimations and CO2 breakeven prices for large scale district heating schemes

This paper investigates the competitiveness of biomass for large district heating schemes with costly CO2 emissions. We estimate the levelised lifetime cost of heat for different technologies, and we explore their cost structures. Furthermore, we compute Biomass-Switching Price (BSP) and Carbon-Switching Price (CSP) that make profitable investments in biomass compared with competing technologies. Results indicate that cost structures and switching prices depend greatly on load factor. Biomass is highly capital intensive compared with fossils, so that the CSP (BSP, respectively) decreases (increases, respectively) when the load factor increases. Gas has low fixed costs, which makes it the best technology for low load factors. Without CO2 price, biomass [heat-only and Combined Heat and Power (CHPs)] are never competitive. With CO2 price, fossils become less competitive. The switching prices analysis shows that in most cases, heat-only biomass facilities need a 40-60 Euros CO2 price to be profitable against heat-only fossils. The biomass CHPs need higher carbon prices.