Biomass Potential Remains UntappedWed, 02/22/2017 - 16:21
Q: What is the state of biomass gasification in Mexico and how will competition in the sector develop?
A: So far, biomass gasification is in its infancy in Mexico. In 2011, biomass usage represented only 3 percent of the primary energy sources in the country but it has the potential to produce 96 percent of the total electricity needed. We are aware of existing academic initiatives in the country but none on a commercial scale. In the near future, we expect to see new biomass gasification projects, particularly considering the significant benefits that this technology can bring to different sectors. A biomass ton can generate 960kW of electricity and 1,400kW of thermal energy through biomass gasification, producing synthesis gas (syngas) or smaller amounts if the company prefers to produce biochar. Compared to solar or wind, biomass gasification can be slightly more expensive per megawatt-hour but it offers a higher net capacity factor, which makes it cost effective in the long term. In addition, the environmental impact of biomass gasification is far lower than for other technologies, particularly if biochar is produced as part of the process. We also do not see newcomers as competitors in a traditional way but rather as partners and when the time comes we look forward to meeting and collaborating with them.
Q: How must the landscape change to boost biomass usage and what impact will the Energy Reform have?
A: One of the main challenges that biomass gasification faces in Mexico is the lack of awareness. We are focusing heavily on educating the general public about the functionality and benefits of this technology because we want to ensure the market knows it is feasible and, in some cases, cost effective. In the current environment, we see stronger market potential for biomass gasification in thermal rather than in electricity applications, due to the low electricity tariffs that make competing in the market difficult. The only case in which we identify strong potential to use biomass gasification for electricity purposes is in grid-isolated regions. In the medium term we expect the Energy Reform to be beneficial but at the moment, it is actually slowing projects down because the market is not completely defined, which discourages companies from investing until the rules are clearly set. Without clear regulations, companies cannot estimate the potential ROI, which increases uncertainty and limits investment, but we are confident this situation is temporary and that once the regulatory and financial limbo is resolved, renewables will take off in the country.
Q: To what extent is the low price of natural gas a threat to G2E’s business?
A: Having exceptionally low natural gas prices is definitely a challenge we need to overcome but this situation will not last forever. The price will eventually stabilize at an expected US$3.5 per MBTUs. We are also targeting companies that produce biowaste as a byproduct of their current activities, which results in extra costs for disposal. In these cases, the economic balance of biomass gasification makes even more sense because companies can save money on waste-handling services while producing energy. This is the case of greenhouses, which use natural gas as their main input and spend considerable amounts of money on biowaste disposal to avoid contaminating production. By using a biomass gasifier they could save money by eliminating waste-handling expenses and reducing natural gas consumption. We also expect renewable-based fuels to gain more ground in comparison with fossil fuels as the world’s environmental consciousness grows stronger.
Q: For companies that own natural gas turbines, how difficult will it be to incorporate syngas?
A: It is quite easy to adapt existing equipment to syngas. We are not targeting large-scale companies with huge gas turbines but rather medium and small-scale businesses that only have burners or internal combustion engines. But in all cases it is relatively easy to convert the equipment from natural gas to syngas. We usually recommend companies install a hybrid system instead of completely converting the equipment. This increases the system’s reliability, reducing the risk of production stoppages.