Biomass

1.0

Definition

The Oxford English Dictionary (2010) states biomass as a combination of two words namely:
bio which means comprising elements of biography and mass which means a dense
aggregation of objects having the appearance of a single continuous body. When combined,
the word biomass can mean the total quantity, usually expressed as weight, of specified
organisms (or organic material) in a given area or volume of habitat or organic material
regarded as a source of fuel; (potential) fuel derived directly from living matter (Biomass,
2010). In the context of this paper, biomass will be defined by the latter definition.
Branching out further, biomass is a general term which includes phytomass or plant
biomass and zoomass or animal biomass (Saidur et al., 2011). Phytomass is stored in the
plant when the solar energy is converted to chemical energy by way of photosynthesis. When
animals consume plants, the energy is released and absorbed to become zoomass in the
animal.

2.0

Biomass as a Renewable Energy Source

When biomass is converted into energy by means of combustion, carbon dioxide (CO2) is
released similar to the burning of fossil fuels. However, the amount of CO2 released from the
combustion of biomass is the same amount which the original plant absorbed from the
atmosphere during its growing stage. In contrast to the burning of fossil fuels which releases
CO2 which has been locked in the earth for millennia. Thus, no net addition of CO2 into the
atmosphere occurs (Ciubota-Rosie et al., 2008). Figure 2.1 shows the carbon cycles of
burning fossil fuels versus burning biomass.

Figure 2.1. Carbon cycle of burning fossil fuels versus burning biomass

3.0

Adoption of Biomass

The importance of biomass in generating energy differs across the world. Table 3.1 shows the
average use of biomass for different parts of the world. Europe is lagging behind other
regions in terms of biomass adoption with only 3.5% of the final energy consumption being
biomass (Demirbas, 2009).

Table 3.1. Use of biomass across different world regions (Demirbas, 2009).
Region
Africa
South Asia
East Asia
Latin America
Europe
North America
Middle East

Average share of biomass in final energy

consumption (%)
62.0
56.3
25.1
18.2
3.5
2.7
0.3

4.0

Sources of Biomass

Sources of biomass are divided into four main categories: wastes, forest products, energy
crops and aquatic plants (Ciubota-Rosie et al., 2008). Table 4.1 details some sources of
biomass belonging to each category.

Table 4.1. Sources of biomass.

Category

Wastes

Examples
Agricultural production and processing wastes
Mill and urban wood wastes
Urban organic wastes
Crop residues
Logging Residues
Sawdust

Forest Products

Shrubs
Wood
Trees
Bark
Short rotation woody crops
Herbaceous woody crops
Oilseed crops

Energy Crops

Forage crops
Starch crops
Sugar crops
Grasses
Water hyacinth
Water weeds

Aquatic Plants

Rushes
Algae
Reed

Additionally, the excreta from animals also contain stored energy which may be used
as fuel (Miller, 1984). However, there are many harmful by-products of burning animal
excreta which makes it unsuitable for energy generation.
5.0
5.1

Policies and Legislation

Renewable Heating Incentive

The Renewable Heat Incentive (RHI) is the worlds first long-term financial program aimed
at supporting renewable heat (Increasing the use of low carbon technologies, 2014).
Initially launched in November 2011 for the non-domestic sector, it is planned to be expanded
to include domestic residences in April 2014. Under the RHI, property owners who meet
specific criteria are entitled to receive payments of 2,135 to 3,390 a year for 20 years
(Wood fuelled heating, 2014).

5.2

Energy White Paper

Published in 2003, this paper set the UKs energy policy up to the year 2050. Four goals were
set by this paper (UK Department of Trade and Industry, 2003):
1.
2.
3.
4.

Reduce 60% of carbon dioxide (CO2) emissions by 2050.

Maintain reliability of energy supplies.
Promote competitive energy requirements in the UK and beyond.
Ensure every UK home is adequately and affordably heated.

The use of biomass can help achieve the goals set by this paper especially in terms of a
reliable energy supply.

5.3

Climate Change Levy

The Climate Change Levy (CCL) is a tax that applies to the industrial, commercial,
agricultural and public services sectors on the use of electricity, gas and solid fuels (Green
taxes, 2014). One important point of information regarding the CCL is that energy generated
from renewable sources will be exempt from the tax. Since biomass is a renewable source of
energy, then this form of energy will see more use as a cheaper alternative.

5.4

Renewables Obligation

The Renewables Obligation (RO) came into effect for England, Scotland and Wales in 2002
with Northern Ireland joining in 2005. Under the RO, any supplier of electricity must source
a proportion of the energy they produce from renewables which includes biomass. For each
MWh of renewable energy produced, the supplier receives any number of Renewable
Obligation Certificates (ROC) depending on the type of renewable energy (Renewables
Obligation, 2014). If the supplier fails to meet the quota of ROCs, then the supplier must
pay an equivalent amount into a buy-out fund (UK Statutory Instrument, 2002). Therefore,
the ROCs provide added value to renewable energy. The banding levels of biomass, which
show how many ROCs per MWh for the period of 2013 to 2017, are shown in Table 2.1.

Table 4.1. Banding levels of biomass (Renewables Obligation banding levels, 2013).
Band
Dedicated biomass
Dedicated biomass with

2013/14

2014/15

2015/16

2016/17

(ROC/MWh)
1.5

(ROC/MWh)
1.5

(ROC/MWh)
1.5

(ROC/MWh)
1.4

1.9

1.8

1.9

1.8

CHP
Dedicated energy crops

5.5

BS EN 303 Part 5:2012

This document is the British implementation of European standard for solid fuel heating
boilers up to 500kW and replaces the previous BS EN 303-5:1999. It sets requirements,
including for performance, efficiency and emissions, and testing and marking of biomass
burners or related equipment (British Standards Institute, 2012).

6.0

Investment Appraisal

Investment appraisal (IA) techniques are tools used by an organisations management to

make decisions on capital investments. There are 3 IA techniques which will be used to carry
out this evaluation namely the payback method, the net present value method and the internal
rate of return method. Results of this investment appraisal are shown in Table 6.1 and detailed
calculations are shown in Appendix A.

Table 6.1. Summary of results.

IA Technique
Payback
NPV
IRR

Result
Payback period is 4 years 9 months
NPV at 4% is negative
IRR is 2.14%

Comment
Fails payback criterion
Fails NPV criterion
Very risky project

Based on the techniques used in the IA, implementing biomass boilers is very risky
and fails all of the financial criteria that were set. However, due to the worsening condition of
global warming and the increasing need to reduce carbon footprints, it is important that this
initiative must be carried out. The environmental benefits associated with utilising biomass
boilers outweigh its financial costs.

7.0

References

Biomass. (2010). In Oxford English Dictionary Online (3rd ed.). Retrieved from
http://www.oed.com/view/Entry/273676?redirectedFrom=biomass&
British Standards Institute. (2012). BS EN 303-5:2012: Heating boilers for solid fuels,
manually and automatically stoked, nominal heat output of up to 500 kW
Terminology, requirements, testing and marking. London: BSI.
Calculating Renewable Obligation Certificates. (2013). Retrieved May, 28, 2014, from
https://www.gov.uk/calculating-renewable-obligation-certificates-rocs.
Ciubota-Rosie, C., Gavrilescu, M. & Macoveanu, M. (2008). Biomass an important
renewable source of energy in Romania. Environmental Engineering and
Management Journal, 7(5), 559-568.
Demirbas, A. (2009). Biofuels from agricultural biomass. Energy Sources Part A, 31, 15731582.
Green taxes, relief and schemes for businesses. (2014). Retrieved May, 28, 2014, from
https://www.gov.uk/green-taxes-and-reliefs/climate-change-levy.
Increasing the use of low-carbon technologies: Renewable Heat Incentive. (2014). Retrieved
March 14, 2014, from https://www.gov.uk/government/policies/increasing-the-use-oflow-carbon-technologies/supporting-pages/renewable-heat-incentive-rhi
Miller, N. F. (1984). The use of dung as fuel: An ethnographic example and an archaeological
application. Palorient,10(2), 71-79.

Renewables Obligation. (2014). Retrieved May, 28, 2014, from

https://www.ofgem.gov.uk/environmental-programmes/renewables-obligation-ro.
Saidur, R., Abdelaziz, E. A., Demirbas, A., Hossain, M. S. & Mekhilaf, S. (2011). A review
on biomass as fuel for boilers. Renewable and Sustainable Energy Reviews, 15, 22622289.
United Kingdom. Department of Trade and Industry. (2003). Energy white paper: Our energy
future creating a low carbon economy. London: HMSO.
United Kingdom. Statutory Instrument. (2002). The Renewables Obligation Order. London:
HMSO. (S.I. No. 914).
Wood fuelled heating. (2014). Retrieved March 14, 2014, from
http://www.energysavingtrust.org.uk/Generating-energy/Choosing-a-renewabletechnology/Wood-fuelled-heating#costs

Appendix A: Detailed Calculations

Payback
The payback criterion is 4 year 6 months.
Initial Investment = 15,000
Annual Savings = 650 + 3,400 = 4,050 increasing by 3% each year
Maintenance and Consumables = 100 + 1000 = 1,100 a year (assuming wood pellet prices
are stable)
Table A1. Data for payback calculations.
Year

1
2
3
4
5

Annual Savings

Maintenance and

Overall Annual

Cumulative Overall

()

Consumables

Savings ()

Annual Savings ()

4,050
4,172
4,297
4,426
4,558

()
1,100
1,100
1,100
1,100
1,100

2,950
3,072
3,197
3,326
3,458

2,950
6,022
9,218
12,544
16,002

Payback occurs in 4 years X months

X=

( Initial investmentCumulative savingsyear before payback occurs)

12
Savings year when payback occurs

X=

( 15,00012,544 )
12
3,458

X=

2,456
12
3,458

X =0.7102 12

X =8.5 9 months
Payback occurs in 4 years 9 months

Since payback occurs after 4 years and 6 months, then the payback criterion is not satisfied.

Appendix A: Detailed Calculations (continued)

Net Present Value (NPV)
Table A2. Data for NPV calculation.
Year
1
2
3
4
5
Total

Future Value of Savings

Discount Factor at 4%

Present Value of Savings ()

()
2,950
3,072
3,197
3,326
3,458

0.962
0.925
0.889
0.855
0.822

2,836
2,840
2,842
2,843
2,842
14,203

NPV at 4 = 14,203 15,000= 797>0

Since NPV at 4% is negative, then the NPV criterion is not satisfied.

Appendix A: Detailed Calculations (continued)

Internal Rate of Return (IRR)
Table A3. Data for IRR calculation (2% discount factor).
Year
1
2
3
4
5
Total

Future Value of Savings

Discount Factor at 2%

Present Value of Savings ()

()
2,950
3,072
3,197
3,326
3,458

0.980
0.961
0.942
0.924
0.906

2,891
2,952
3,011
3,073
3,133
15,060

NPV at 2 = 15,060 15,000= 60>0

Table A4. Data for IRR calculation (5% discount factor).

Year
1
2
3
4
5
Total

Future Value of Savings

Discount Factor at 5%

Present Value of Savings ()

()
2,950
3,072
3,197
3,326
3,458

0.952
0.907
0.864
0.823
0.784

2,808
2,786
2,762
2,737
2,711
13,804

NPV at 1 = 13,804 15,000= 1196> 0

Using the formula

IRR=

NPV 1
( B A ) + A
NPV 1NPV 2

Where:
NPV 1= 60
NPV 2= 1196

A=2
B=5

Appendix A: Detailed Calculations (continued)

IRR=

NPV 1
( B A ) + A
NPV 1NPV 2

IRR=

60
( 5 2 ) +2
60( 1196)

IRR=

60
3 +2
1256

IRR= [ 0.0478 3 ] +2
IRR=0.1433 +2

IRR=2.14
Interest rates in the UK are currently at this level and are projected to increase beyond this
level. Therefore, this is a high risk project.