The Dilemma of Biomass Power Generation in China

1. Biomass power generation projects rely heavily on subsidies, and the current subsidy decline is serious

According to the current status of domestic new energy projects, they all rely on the support of financial subsidies to varying degrees. Among them, offshore wind power is the most dependent, followed by biomass power generation projects. Centralized photovoltaic projects and onshore wind power projects have basically achieved grid parity. The subsidies for new energy all come from the electricity price surcharge. Due to the single channel, the current subsidy gap for new energy is relatively large, and the gap is about 100 billion yuan. In order to solve this problem, the state is strengthening guidance and regulation in terms of policy guidance, index management, market competition, etc., and strives to promote the grid parity of new energy projects, which is also an inevitable trend for the long-term and stable development of new energy projects. The decline of subsidies is the policy direction in recent years, and it is also an important factor affecting project investment returns.

Judging from the situation of new energy operators, subsidy delinquency is a common problem in the industry. The difference is that central and local state-owned enterprises are far more resilient to subsidy arrears than private enterprises. At present, there are more and more project owners who sell new energy assets due to insufficient subsidies, and some companies even choose to apply for bankruptcy liquidation to ease the pressure on business operations. In the face of cash flow pressure, new energy companies hope to increase the subsidy payment rate and shorten the subsidy disbursement cycle, even if the kWh subsidy standard is lowered. Especially in the current economic environment, cash flow determines whether a business can continue to survive.

2. Environmental emission standards for agricultural and forestry biomass power generation are getting higher and higher

Based on the rich agricultural and forestry biomass resources in my country, it is also a kind of renewable energy, so it is regarded as an alternative energy for coal resources in the northern region. Therefore, the pollutant emission standards of various places also classify biomass boilers and coal-fired boilers as the same type of boilers, and the same standards apply. Although some biomass power generation projects have reached the standard of ultra-clean emission, biomass fuel is different from coal combustion after all. Strictly implement the standards for coal power projects and achieve ultra-clean emissions, which limits the development of the industry to a certain extent.

At present, the common standards for coal-fired power generation projects are that the soot is less than 10mg/m3, the SO2 is less than 35mg/m3, and the NOx is less than 50mg/m3. In terms of biomass fuel emissions, it is mainly nitrogen oxides that are difficult to meet the standards. There are many types of biomass fuels, and the components are also quite different. Therefore, the configuration of denitrification and desulfurization devices needs to be appropriately designed and configured according to the composition and working conditions of the fuel biomass. At present, the cost of ultra-clean emission transformation of a 30MW biomass power generation unit is expected to be around 10 million yuan, and the annual investment in consumables and maintenance is about 8 million yuan. The huge economic burden has also become a stumbling block for such projects. . Therefore, it is urgent to establish a special emission standard and monitoring system for biomass power generation projects, which is the basis for the healthy and stable development of the industry.

3. The core of biomass power generation project operation is fuel cost, and the market fluctuates greatly

Based on the sensitivity analysis of the financial model of the biomass direct combustion power generation project, the cost of fuel directly affects the economics of the project. After preliminary research, if the cost of biomass fuel increases by 15%, the net profit of the project operation will drop by about 40%, and the operating cash flow will also drop by about 50%. Due to the complexity of the biomass fuel market, the purchasing and storage mechanisms vary from region to region, and there are large seasonal changes. In addition, there are links such as acquisition, storage and transportation, and blending. In addition, they are all non-standardized operations, and prices fluctuate greatly. . Due to the high correlation between the cost of biomass fuel and operating cash flow, coupled with the prevailing status of subsidy arrears in the industry. Therefore, when making investment decisions for biomass power generation projects, it is necessary to fully consider comprehensive factors such as fuel price, subsidy amount and payment time, financial expenses, cash flow, etc., to deduce the cash flow of the entire project life cycle, and avoid operating risks. and risk of capital chain.