Tackling Energy Poverty

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Biomass provides an affordable energy solution to households and can cost less than half the price of heating oil. It also can contribute to lowering energy costs of the industry. Bioenergy markets are creating new opportunities for companies to invest in new energy products and services, benefiting from the recognition of being embedded in the green economy.

Biomass in households

Energy share in annual household expenditure represents about 7,3% of the total: this is about 36% more than the annual household’s combined expenses in health and education!

About 75% of the overall household energy expenses go to heat and the rest to electricity. These indicators show that, today, the energy bill for heating represents a non-negligible part of households’ budget. This burden is even more important for households with a low income. Biomass is a solution to reduce these costs both for individual heating and for district heating systems.

Taking the example of wood Pellets, this fuel is now one of the most common types of commodity used today in individual households, together with wood logs. The EU pellet consumption in heating is growing at an average rate of more than 1 million tons every year (from 2011).

The graphs below compare the prices of different energy sources (electricity, fossil fuels and pellets). Since 2007, the price of pellets has been on average 72% lower than the electricity price, 50.1% lower than the heating oil price and 40.3% lower than the gas price in 4 EU Member States that are key for the pellet consumption in Europe. These graphs also show that pellet prices are much less variable than fossil fuel prices, which provide more price security and reliability to consumers.

Pellet_vs_Central_Investment

The illustration to the leftshows the economic impact of installing a pellet stove in a typical family house. The upfront investment in a pellet stove can be recovered in less than 4 years. Afterwards, the family will start saving almost 400 €/year by partly replacing the purchase of oil with pellets.

In order to fight energy poverty and foster a faster market penetration of renewable sources of heating, a favorable access to financing or investment support would be needed to help the weakest consumers benefit from a readily available and cleaner heating solution.

To heat one room with the new pellet stove, the family will consume pellets mostly produced in Europe in contrast with fossil fuel on which we are more than 80% dependent. With pellets the family is not only saving money, but also supporting the EU economy and the creation of jobs in the bioenergy sector.

 

The Ulrich family- A relevant case of individual household’s switch to biomass (Germany)

famile ulrich

In 2006, Albrecht and Carmen Ulrich, living in Winterbach near Stuttgart, decided to switch from a fossil fuel heating system to a renewable one: “With the renovation of our house in view of improved energy efficiency, it was obvious for us that we would also switch from fossil fuel to renewables.”

Thus, for the past decade, Albrecht Ulrich, Carmen, and their two children Jaclyn and Mario have benefited from the cost-effective, green heating use of biomass and solar energy. In order to heat their 150 m²-semi-detached house, they decided to combine a pellet boiler of 9 kW installed capacity with a solar equipment of a surface of 12 m². This choice was also encouraged by specific German state aids for households. In fact, for a pellet boiler, the German export office provides a minimum financial aid of 2.400 euros, and additional bonuses are proposed if one opts for a combination with solar equipment. For the Ulrich family, the experience proved to have a very positive economic impact.

“We have had a very good experience with pellets. This system has been working for almost nine years without any interference, and we have managed to save money up to 60-70% annually, thanks to the attractive price of pellets, good insulation and our solar equipment. Our yearly consumption amounts to around 2 tons of pellets”

District heating

In district heating systems, the type of biomass mostly used in Europe is woodchips. The graph below compares woodchip prices with natural gas prices in Sweden and Latvia, which have a tradition of district heating and are encouraging the switch from fossil fuel to biomass in these systems. These graphs show that woodchip prices have been on average 72% lower than gas prices in these 2 countries in the last 7 years. In addition, these graphs show that woodchips prices are much less variable than gas prices, which provide more price security and reliability to the district heating companies and to consumers.

Comparison fuel prices: Natural gas and woodchips prices for industries/district heating in Latvia and Sweden*

graphics

*€/MWh, Excluding VAT and other recoverable taxes and levies

Source: Eurostat, LATBIO, Statistikansvarig myndighet.

The case of Kaunas district heating network (Lithuania)

ABKauno Energija AB is the second largest heat supplier company in Lithuania. The Company supplies approx. 20 % of Lithuanian heat through services to municipalities’ district heating networks. The total district heating sales in 2014 amounted to 1.11 TWh, with 90 % of the heat volume sold in Kaunas integrated district heating system which consists of three-boiler houses.

The district heating system of Kaunas provides heat to 117 874 people. Kaunas Energy started the operation of its three biomass boilers in January 2015 with a total investment of 14 million EUR, including 4.62 million EUR frompublic financial support. Other independent heat producers started to use biomass in Kaunas in 2013.

The total capacity of the Kaunas Energy’s three biomass-based boilers in Kaunas amounts to 70 MW, and around 134 MW are operated in Kaunas by other heat producers. Oil and gas are still used, as the total heat demand during winter time in Kaunas is in the range of 200-500 MW. The 70 MW capacity of three Kaunas Energy boilers corresponds to 218 000 tons of wood chips bought in the Lithuanian biofuel exchange “Baltpool“. Most of it consists of wood residues from industries using locally-sourced wood.

Success Factors

  • Biomass-based boilers of Kaunas Energy are expected to produce 480 GWh of thermal energy per year, thereby avoiding the use of a significant quantity of fossil natural gas and oil annually.
  • Recently, the average regulated price of bioheat is around 32 €/MWh, compared to a price of 45 EUR/MWh for heat based on natural gas.
  • Taking into account only the difference of regulated price between bioheat and heat from gas, heating bills will be reduced to 15-25 % in Kaunas due to the introduction of biomass. Some additional effect on heat price reduction is expected to be obtained due to gas price fluctuations.
  • Kaunas Energy’s biomass-based boilers will reduce emissions of CO2 to 91800 tonnes annually.

 

Biomass in businesses

The switch from fossil fuel to biomass is not only taking place in households but also in European companies that are willing to reduce their energy costs to gain competitiveness and reduce their greenhouse gas emissions at the same time. The use of biomass instead of fossil fuel for producing the heat/steam necessary for the process is a solution that has become increasingly popular among EU businesses.

The case of Spendrups (Sweden)

Spendrups has been a family company for over 100 years, with 800 employees and a wide family of products- beer, cider, water, soft-drinks, wine and spirits. Their strong brands are: Norrlands Guld, LOKA, Mariestads, Spendrups, Schweppes and Heineken (licensed production for the Swedish market).

The aim of the company is to reduce its environmental impacts (CO2 emissions) by reducing its dependency on oil and other fossil fuels. This contributes to reducing costs as well. It has been possible through the use of spent grains (process residue of the company) as a fuel source for the energy required for the industrial process. Together with the investment in a bioreactor, this initiative will make the company almost totally free of fossil fuel dependence.

tete“Through its investments, Spendrups will reduce its use of fossil oil and contribute to a significant reduction of CO2 emissions from the brewing process. This is completely in line with our strategic targets to become carbon neutral in our operations. Using spent grain, a waste from the brewing process as fuel for local energy production is new both in the Swedish and finternational brewing industry. We can see that the return on investment will be less than five years.” Claes Åkesson, Director of environmental & sustainability affairs, Spendrups Bryggeri AB.

Success Factors

  • Reduction in oil usage to of 3.5 million liters of oil each year.
  • 000 tons of CO2 saved each year, which is a reduction of more than 80% per liter of beverage.
  • Financial savings of 24 million SEK (€ 2.5m) per year.
  • Return on investment will be less than five years.
  • Increase of energy efficiency, with an improvement of more than 30% by 2016, compared with 2008.

 

Download the factsheet here.