Bioenergy in Ukraine: overcoming the barriers

Georgiy Geletukha, PhD,Head of department at IET of NASU,

Director of SEC “Biomass”Anatoliy Dolinskiy,Academician NASU, Director IET NASU

Department of bioenergy at IET of NASU / SEC “Biomass”

Department of bioenergy at IET of NASU was established in 2003 SEC “Biomass” was established in 1998 Currently there are 24persons in the staff, including 7 PhDs.

• R&D • Feasibility studies

• Energy audits • Business planning, project management

• Assessment of biomass potentials• Conducting core conferences, seminars and

trainings

• Design and engineering works• Development of PINs, PDDs, JI project

portfolios, and GIS projects

• Consulting on biomass-to-energy technologies

• Management and monitoring of JI projects

Key types of services

General Bioenergy Issues

Kyoto Protocol

mechanisms

Energy efficiency, energy audits

Design works

Biogas technologies

Biomass combustion

Major areas of Bioenergy Department / SEC “Biomass” activity

Structure of primary energy consumption in Ukraine, % (2010)

2010 2030

Worldwide Ukraine EU-15 USA Ukraine 2030*

EU in 2030

Natural gas 20,9 42,6 25,1 23 27,0 24

Oil 32,9 10,0 35,1 38,9 13,9 33

Coal 27,1 27,9 15,9 23,7 29 7

Uranium 5,8 17,9 13,5 9,3 21,7 11

RES 13,1 1,6 9,8 5,1 4,6** 25

Unreasonably high share of natural gas in Ukraine’s energy balance – approximately 2 times higher than worldwide

Low share of RES - 5 times lower than in the EU

: Источники Renewables Information, 2011; EU Energy in Figures, 2011EU energy and transport in figures, 2010; www.ukrstat.gov.ua, Modernized Energy Strategy of Ukraine till 2030 (draft, June 2012)

* The balance does not provide 100% due to influence of the “other” energy sources** in electricity generation

Utilization of biomass as a fuel in Ukraine

Over 30 boilers combust straw

Boiler by company “UTEM”

Boiler by company “TH “Krieger”

About 1000 boilers for wood combustion

Over 1000 boilers were transformed from coal to wood combustion

Consume about

400 000 t/year of wood waste

Traditional stove

Rural population combusts about2 Mio dense m3/ year of fire-wood(500 000 t c.e.)

> 70 boilers combust sunflower husk

Consume about

500 000 t /year of sunflower

Boiler by company “Energomashproekt”

Use of biomass for energy generation in Ukraine (2010)

Biomass typeVolume consumed per

year*Thousand tce/year*

% of total

Straw 50 thous. t 24 1,9

Wood wastes 957 thous. t 261 20,2

Wood (population) 1972 thous. m3 377 29,2

Sunflower husk 884 thous. t 452 35,0

Peat 339 thous. t 156 12,1

Biogas (manure) 4516 thous. m3 3 0,2

Biogas of SMW landfills 26192 thous. m3 18 1,4

TOTAL 1291 100

Data by State Statistics Committee of Ukraine: biofuels and waste (1.31 Mio t c.e.) - 0,7% of total primary energy supply in 2010.

*Our own assessment 1.3 mln. of tce = 0,7% of total energy consumption of Ukraine

Energy potential of biomass in Ukraine, 2011

Type of biomass Total volume, Mio t

% share in total volume

Economic potential, mtce

Straw of grain crops 32 20 3,17

Straw of rape 2,9 70 0,96

Residues of production of corn for grain 34 52 8,59

Residues of sunflower production 17 67 5,55

Secondary agricultural residues 9,7 77* 0,99

Wood biomass 3,9 89* 1,87

Biodiesel - - 0,35

Bioethanol - - 2,36

Biogas from manure - - 0,35

Landfill gas - - 0,26

Sewage gas - - 0,09

Energy crops- poplar, miscanthus, acacia, alder, willow- rape (straw)- rape (biodiesel)- corn (biogas)

203,2

--

8570--

10,301,130,771,10

Peat - - 0,4

TOTAL - - 38,24

24,9mtce

13,3mtce

* On average

Energy potentials of biomass in Ukraine, 1990-2011m

tce

theoretical technical economic

forecast

Year

• “Green” tariff for electricity generated from solid biomass is in force in Ukraine (12.39 Eurocents/kWh).

• Continuation of natural gas price at the Ukrainian border. Forecasted price for 2012 - is the highest in Ukrainian history - 425 $/1000 m3.

• Establishment of «Biomass Energy» project under National project «Energy of Nature».

• Establishment of «Biogas Energy» project under National project «Energy of Nature».

Tendencies positive for bioenergy development(during previous year)

• President’s veto on the Law of Ukraine, introducing “green" tariff for electricity generated from biogas.

• Negligibly small share of bioenergy in modernized Energy Strategy of Ukraine till 2030.

• Continuation of subsidizing domestic natural gas prices for population and housing-and-communal sector, which makes heat generation form biomass not feasible in these sectors.

• Negative information campaign towards bioenergy. Creation of positive image only for solar and wind energy.

Example 1 from the Strategy: “Wind energy will become the basis for RES development in Ukraine during the forecasted period”.

Example 2: in Jan 2012 proposals of State Agency for Energy Efficiency were published on making amendments in terms of RES in the Energy Strategy of Ukraine till 2030. Development of bioenergy is not foreseen at all.

Tendencies negative for bioenergy development(during previous year)

Barriers for bioenergy development in Ukraine (1)

Price Calorific value

Cost of energy in

fuel

Ratio of energy price of natural gas to price of biofuel

NG for industry and public sectors

NG for housing and communal sector

UAH/t MJ/kg UAH/GJ 4687 UAH/1000 m3 = 133,9 UAH/GJ

1309 UAH/1000 m3 = 37,4 UAH/GJ

Wood fuel (chips) 400 11 36,4 3,7 1,0

Wood pellets 800 17 47,1 2,8 0,8

Wood briquettes 700 15 46,1 2,9 0,8

Straw bales 300 13 23,1 5,8 1,6

Price Calorific value

Cost of energy in

fuel

Ratio of energy price of natural gas to price of biofuel

NG for population<6000 m3/y

NG for population <2500 m3/y

UAH/t MJ/kg UAH/GJ 1098 UAH/1000 m3 = 31,4 UAH/GJ

725 UAH/1000 m3 = 20,7 UAH/GJ

Wood (with delivery) 300 11 27,3 1,2 0,8

Wood pellets 800 17 47,1 0,7 0,4

Wood briquettes 700 15 46,1 0,7 0,4

Subsidizing of domestic natural gas prices for population and housing sector makes biomass not competitive in these sectors.

Comparison of natural gas and solid biofuels prices

* Numbering in order of maximal value decrease

http://www.res-legal.de/en/search-for-support-scheme.html

Green tariff in the EU countries and Ukraine (biogas and biomass), Eurocents/kWh

Barriers for bioenergy development in Ukraine (2)In the Law “On electricity generation” green tariff is absent for electricity generated from biogas, municipal wastes, via co-combustion of biomass with traditional fuels (coal, peat, gas).

Green tariff on power from biomass in Ukraine and some EU countries,

Eurocents/kW·h

0 5 10 15 20 25 30

ItalyGermanCheck R.

SpainAustria

BulgariaUkraine

France

N Biomass power min max

1 Italy 28

2 Germany 7,79 22,67

3 Check republic 11 19

4 Spain 7,02 17,16

5 Austria 10 14,98

6 Bulgaria 9,51 13,04

7 Ukraine 12,39

8 France 4,5 11,9

Possibilities of the sector are basically ignored during approval of new edition

of Energy Strategy of Ukraine till 2030

Barriers for bioenergy development in Ukraine(3)Place of biomass in modernized Energy Strategy of Ukraine till 2030

Results of search of key words in the document:

“Biomass” – 0 “Biogas” – 0 “Biofuel” (solid) – 2 (in descriptive context, w/o numbers)«Biofuel» (liquid) – > 10

Very small share of BM in power generation from RES, TWh:

Place of biomass in modernized Energy Strategy till 2030 (2)

Power generation form RES in Ukraine, TWh 2010 2015 2020 2025 2030

Wind 0,1 0,6 1,9 3,8 7,4

Solar <0,1 0,3 0,8 1,4 2,6

Small hydro 0,2 0,4 0,7 1,3 2,1

“Biogeneration” <0,1 <0,1 0,2 0,2 0,3

Generation from other RES <0,1 <0,1 <0,1 0,1 0,2

TOTAL, power from RES in Ukraine <0,4 <1,4 3,6 6,8 12,6Power generation from BM comprises only 2,4% in power generation from RES, or 0,1% in total power generation in Ukraine in 2030.

2010 2015 2020 2025 2030

Electricity from RES in Ukraine, % from total electricity

<0,2 <0,7 1,5 2,6 4,5

Electricity from RES in EU, % from total electricity

21 27 34 50 66

Electricity from BM in Ukraine, % from total electricity

<0,05 <0,04 0,08 0,07 0,1

Electricity from BM in EU, % from total electricity

3,7 5,5 7,3 7,6 8,0

Place of biomass in modernized Energy Strategy till 2030 (3)

Year 2011 2015 2020 2025 2030Share of BM in total energy consumption in Ukraine (Energy Strategy 2006)

1,3% - 2,6% - 3,0%

Share of BM in total energy consumption in Ukraine (Energy Strategy 2012)

0,7% - - - 2,3%*

Share of BM in total energy consumption in Ukraine (vision of IET and SEC “Biomass”)

0,7% 1,5% 4% 7% 10%

Share of BM in total energy consumption in EU 6,7% 10% 14% 16% 19%

* Estimation according data of the Strategy, it is assumed that installed thermal capacity on biomass in 2030 will comprise 12.5 GW.

Share of BM is not presented in heat generation in total energy balance.“According to different estimations, potential installed capacity in bioenergy sector may constitute 10-15 GW of heat and 1-1.5 GW of electricity”

Place of biomass in modernized Energy Strategy till 2030 (4)

2010 2015 2020 2025 2030

Bioethanol, Mio t <0,1 0,3 0,6 0,8 1,1

Biodiesel, Mio t ~0 ~0 <0,1 0,3 0,8

TOTAL, total biofuels, Mio t <0,1 0,3 0,6 1,1 1,9

Share of biofuels in all motor fuels in Ukraine, % <1 2,5 4,5 7,2 10,9

Share of biofuels in all motor fuels in the EU, % 4,4 7,0 10,0 20,0 31,0

Baseline scenario of development foresees transfer to use of petroleum containing 10% of bioethanol till 2020 and 15% - till 2030.

In baseline scenario spreading of biodiesel will take place after 2020, and transfer to use of diesel fuel containing 7% of biodiesel will occur till 2030.

Dynamics of production and consumption of liquid biofuels in 2010 – 2030

Place of biomass in modernized Energy Strategy till 2030 (5) Extremely low decrease of natural gas consumption is planned for Ukraine (in

general and for thermal energy generation in particular)

19

13 14 15 15 16

19

18 17 15 13 12

29

21 2018 18 18

49

-14%

2030

325

50

320

51

315

55

4

10

57

5

2005

75

7

Динаміка споживання газу для основних секторів споживання1

Млрд. м3Сектори споживання

Населення

Тепло и е/е

Технічні втрати та інше

Промисловість

1 Результуючі значення можуть відрізнятися від арифметичної суми доданків за рахунок округлення

Sectors of consumption

Industry

Population

Heat and electricity

Technical losses and others

Dynamics of natural gas consumption for major consumers, bill.m31

SEC Biomass view on the reduction of natural gas consumption under heat generation in Ukraine

Natural gas consumption for heat supply, bln. m3/year

2010 2015 2020 2030

NG NG Savings Biomass

DH utilities 8 4,0 2,0 2,0

Population 17 4,0 6,5 6,5State-financed institutions 1 0,4 0,3 0,3

CHPPs 1 0,6 0,2 0,2Total 27 9 9 9

Out of 27 bln. m3 NG/year used for heat supply, till 2030:

- Substitute with biofuels ……………………...................…...... 1/3 (9 bln. m3 NG/year )

- Save via thermal insulation of buildings, energy saving during generation, transportation, and distribution of thermal energy …..... 1/3 (9 bln. m3 NG/year )

- Continue using NG ……………………..………………………… ....1/3 (9 bln. m3 NG/year )

EUR/kWe % Total cost

Ukr.production, % total cost

1. Construction works 215-320 10-8% 8% - Fuel storage facility 35-50 2-1% 1%

- Building of CHP plant 100-150 4% 4%- Others 80-120 4-3% 3%

2. Technological equipment 1060-1845 46% 8%- Fuel storage 30-45 1% 1%

- Boilers 350-650 15-16% -- Ash removal and scrubbing 80-200 4-5% 3%

- Steam turbine with equipment 500-800 22-20% -- Assembly of equipment 100-150 4% 4%

3. Boiler house equipment 400-650 18-16% 10% - Equipment 250-400 11-10% 4%

- Assembly of equipment 150-250 7-6% 6%4. Electric equipment of 0,4kV and 10 кV, automatic control systems 400-750 18-19% 7%

5. Adjustment, testing, training 80-200 4-5% 3%6. Design works, expertise 120-180 5% 5%

TOTAL 2275-3945 - 41%*

* Boiler and turbine are imported. Specific capital costs 2775 Euro/kWe

Barriers for bioenergy development in Ukraine (4)Extremely strict requirements for local component of equipment, materials, and services in total project cost: >30% after 01.2013; >50% after 01.2014.

Capital cost for construction of typical biomass-fires CHP plant

Maximal practically possible share of Ukrainian components:

40%

Barriers for bioenergy development in Ukraine (5)

Overstated environmental requirements for biomass-fired boilers established by Decree of Ministry of Environment of Ukraine #309 from 27.06.2006 «On approval of standards of marginal permissible emissions of pollutants from stationery sources» (requirements are stricter than in numerous EU countries).

Marginal permissible emissions of particulate matters due to biomass combustion, mg/nm3 under (О2 - 6%)

Capacity Ukraine Denmark Austria Germany

0,1-0,7 150 300 150 150

1,0-50

50

40 150-100 100

50-100 50 (30*, 20**)

100-300 30 (20*)

>300 30 (20*)

* after 2013 ** after 2016

DIRECTIVE 2010/75/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 24 November 2010 on industrial emissions (integrated pollution prevention and control)Decree #309 from 27.06.2006 «On approval of standards of marginal permissible emissions of pollutants from stationery sources»

Mission of UABio – To create a common platform for cooperation on bioenergy market of Ukraine in order to ensure the most favorable business environment and accelerated development of bioenergy market.

Priority tasks: • Increasing share of bioenergy in the energy balance of Ukraine to level of the EU.• Creation (harmonization) of favorable legislation, norms, and standards in Ukraine, according to the best international practices for bioenergy development.• Improvement of business conditions in bioenergy sector.• Efficient use of biomass, biogas, liquid and solid biofuels.• Development of the internal market of biomass as a fuel.• Development and implementation of the best international standards for design, construction, and operation of bioenergy plants.• Creation and support of projects in bioenergy field.• Establishment and maintenance of bioenergy projects database.• Analytical, statistical, and research work in the field of bioenergy.

Establishment of Ukrainian Bioenergy Association (1)

Establishment of Ukrainian Bioenergy Association (2)№ Name Position Corresponding sector in

the UBA 1 Chairman of

the Board Geletukha G.G. .

Director of Scientific-Engineering Centre «Biomass» Ltd., PhD

General coordination, foreign relations, legislation

2 Board Members

Maraykin R.V. Director of SE «GreenEnergo», manager of national project «Energy from biomass», manager of national project «Energy from biogas»

Planning of the Association’s work, control of plans implementation, biomass-fired CHP

3 Daviy V.A. Director of «Renewable Energy Center» Ltd.

Market of solid and liquid biofuels

4 Matveev Yu.B. Deputy head of public organization «Renewable Energy Agency», PhD

Market of biogas

5 Oliynyk Е.M. Head of heat and power division in SEC «Biomass» Ltd.

Market of heat and power generation from biomass

Constituent Assembly of UABio is to take place on 25th September 2012, 16.30 – 18.00, in Small Hall, Vladimirskaya Str., 55, Kiev.

Draft Law of Ukraine N 10183. Авторы: Romanyuk N.P., Liovochkina Yu.V., Miroshnichenko Yu.R. Approved in 1st reading on 3.06.2012

Categories of objects to which green tariff is applied

Coefficient of GT for commissioned objects

GT, UAH/

kWh, w/o VAT

GT, Eurocents/ kWh, w/o

VATtill 01.01.2013 after

01.01.2013

For electricity generated from biomass

2,3 2,3 1,34 12,39

For electricity generated from biogas of vegetable or animal origin

- 2,7 1,58 14,54

For electricity generated from municipal wastes

- 3,0 1,75 16,16Proper definition of term “biomass” is applied, which corresponds to EU Directive.

Share of local component for power generation objects, which generate electricity from biomass and biogas, commissioned after 1.01.2015, is established on the level not less than 50%. Suspension for 1 year comparing to current legislation into force.

Conclusions: proposals on overcoming the barriers (1)

To gradually eliminate existing scheme of natural gas cost subsidizing from State Budget of Ukraine for population and communal and housing services sector.

To establish on the state level adequate goals on bioenergy development, in particular in modernized Energy strategy of Ukraine till 2030. We recommend to include the following goals on biomass contribution into total energy consumption:

To simplify procedure of tax relief obtainment for import energy efficient equipment to Ukraine. To establish “green” tariff for electricity, generated from biogas, MSW and via co-combustion of

biomass with fossil fuels. Coefficient of «green» tariff is recommended as follows: К=3,0 – for electricity, generated from biogas, produced from agriwaste and biomass; К=2,7 – for other types of biogas (biogas from SMW landfills, organic part of SMW, waste water and its sediments). К=3,0 – for electricity generated from SMW, К=2,1 – for electricity generated via co-combustion of biomass and fossil fuels.

Year 2011 2015 2020 2025 2030

Biomass share in total energy consumption of Ukraine

0,7% 1,5% 4% 7% 10%

Biomass share in total energy consumption of EU

6,7% 10% 14% 16% 19%

Conclusions: proposals on overcoming the barriers (2)

To cancel or significantly shift in terms of administration, requirement on 50% of the local component for equipment, materials and services for projects receiving GT from biomass and biogas.

To simplify the procedure of land allocation for bioenergy facilities. To simplify the procedure for comprehensive assessment of projects for the construction

of biomass-fired boiler houses and CHP, biogas units, and other biomass energy facilities.

To establish Ukrainian Bioenergy Association. To organize at the state level, the process of bioenergy equipment purchase subsidies of

20-30% of its value (depending on the equipment).

Thank you for your attention!

Georgiy Geletukha, PhD

tel: +380 44 332 9140geletukha@biomass.kiev.ua

www.biomass.kiev.ua

We are greening the future!