Market Conditions for Biomass-to-Energy Projects in Ukraine
2015
International Finance Corporation
The structure of the Ukrainian biomass-to-energy market is taking shape. The supply side of the market is represented by the forestry and wood processing companies and crop and animal farms that are sources of biomass. Pellet producers process available waste into pellets. Boilers for burning biomass are available in the market from either local producers or importers. Biomass-to-energy facilities produce electricity and/or heat for a variety of users (industrial, commercial, and residential). In some cases, users generate electricity and/or heat for their own use. In others, (private or municipal) electricity/heat producers sell to end-users directly or through the power grid. Biomass-to-energy facilities may use biomass only or in combination (co-fired) with other fuels (oil, gas, or coal). Demand for biomass-to-energy initiatives has been growing in Ukraine, being driven by the motivation of cost savings and increased efficiency. In the short term, the share of heat suppliers using biomass boilers could grow up to 63 of all the surveyed players. Despite the expanding share of municipal heat suppliers using biomass boilers in the total number of companies, the share of biomass in the overall volume of fuel consumed by the surveyed entities remains low (14 percent). The most common fuel is natural gas, with a share of 80 percent in the total volume of fuel used by municipal heat suppliers. Additionally, the shortage of biomass of required quality is considered the main risk when it comes to implementing biomass-to-energy projects. The shortage of biomass and the growing demand for it pushes prices up, which increases the cost of a project and the uncertainty regarding the investment payback period.
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