Impact of pelleting cost on competitiveness of intentionally grown biomass for local space heating: case example of the Czech Republic

Biomass plays a dominant role in the EU RES portfolio, especially in CE countries. Pellets from locally produced biomass can serve as a substitute of coal still widely used for local heating to date in the Czech Republic and other Central and Eastern European countries. Wood chips from short rotation coppice plantations (SRC) is suitable source of biomass for the production of pellets for local space heating. Cost of pellets production from biomass from SRC plantations is modeled using cash flow simulation related with all parts of pellets production chain. Article presents results of modeling of biomass cost from SRC plantations and its processing into wood pellets in the conditions of the Czech Republic. The cost of pellets, respecting the whole production cycle from biomass cultivation to pelleting, ranges from 7.85-8.55 EUR/GJ for typical yields of SRC plantations 8-10 t(DM)/ha,year. To achieve competitiveness with domestic (Czech) brown coal (6.5-7.3 EUR/GJ) for local space heating, it would be necessary either to increase the ecological tax on coal 10 x (to about 3.3 EUR/GJ) or to subsidize the establishment of the SRC plantation (1300 EUR/ha) or to double the area subsidy per year (to 390 EUR/ha,year).