Boom in US biomass fired projects, but clouds lie ahead

In the U.S., biomass fired power generation projects are on the rise with a combination of utilities, municipalities, and independent power producers developing over 90 biomass-fired units totalling more than 4 GW of potential power generation.

Industrial Info reports that it’s not all good news, with challenges now appearing on the horizon.

Low natural gas prices, EPA's regulatory uncertainty, the low risk-tolerance of the investment community, and NIMBY opposition are all conspiring to dampen expectation.

Projects starting construction in the near term will be limited to those with proven fuel supplies and strong local support, only moving forward after years of development.

Keep in mind that the weak economy, lack of demand for power, and plummeting natural gas prices will make it difficult for even operational biomass plants to continue operating, especially for those without long-term power purchase agreements.

Beyond 2012, construction prospects for 2013 are in doubt because of the expiration of the federal production tax credit (PTC) in December.

The uncertainty surrounding the PTC renewal has halted announcements of any new projects.

Also, competition for U.S. feedstock is on the rise due to pellet demand from Europe, which complicates convincing any potential investors that they will be able to secure biomass feedstock for the life of the project.

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