However, although biomass and biogas installed capacity will widen as a new wave of coal-to-biomass power plant conversions gains momentum, year-on-year revenue growth is likely to decrease, says the report, Opportunities in the Biomass and Biogas Power Market in Europe, published by Frost and Sullivan.
The market earned revenues of €3.33 billion in 2012 and estimates this to reach €3.77 billion in 2017.
“Biopower plants are increasingly preferred as a source for large-scale power generation owing to their low capital requirements,” said Frost & Sullivan energy and environmental research analyst Ashay Abbhi. “Their efficiency, longer operational times, and reliability further boost their popularity over other sources of renewable power generation.”
However, while advances in biomass and biogas power generation will be vital to Europe achieving its ambitious 2020 target, deteriorating economic conditions in the continent have limited market expansion. Countries have cut down or even stopped subsidies for power generation from biomass and biogas, jeopardisingthe prospects of plant owners.
The lack of steady raw material supply in the region poses another challenge. High-demand customers are willing to pay more to keep their power plants running, which triggers a rise in feedstock and equipment prices, affecting profitability. The withdrawal of government incentive schemes further dampens revenues.
“Government support is necessary for technology development, especially as constant innovation will enable a reduction in capital expenditure,” reported Abbhi. “For now, the conversion of coal power plants to biomass plants will be the strongest market trend as it requires far less investment than setting up a greenfield biopower plant.”
Going forward, the Western European biopower market, which is dominated by countries such as Germany and the United Kingdom, will slowly give way to opportunities in the developing Central and Eastern Europe markets. Poland is expected to be a hotspot in this region.