Why the new installed capacity of biomass power generation is declining

● The withdrawal of state subsidies is the main reason

"If you don't make money, of course you don't add anything. There are only a few new projects in a year, and everyone knows that the subsidies are gone and the business is not good." Some industry insiders bluntly say that the withdrawal of subsidies is the main reason for the sharp decline in the new installed capacity of biomass power generation in 2022.

According to the "Several Opinions on Promoting the Healthy Development of Non-Water Renewable Energy Power Generation" issued by the Ministry of Finance, the National Development and Reform Commission and the National Energy Administration in January 2020, biomass power generation projects, including agricultural and forestry biomass power generation, waste incineration power generation and biogas power generation projects, have a reasonable utilization of 82,500 hours in the whole life cycle. When the reasonable utilization hours of the whole life cycle of the project are not exceeded, subsidies will be given according to the actual generation capacity of the renewable energy power generation project in the year. The part of the power generation exceeding the full life cycle subsidy electricity will no longer enjoy the central financial subsidy funds, and the green certificate will be issued to allow participation in the green certificate transaction. In addition, after 15 years from the date of grid-connection, no matter whether the project reaches the full life cycle of subsidized electricity, it no longer enjoys the central financial subsidy funds, and the green certificate is issued to allow participation in the green certificate transaction.

"For example, in Shandong, although the province has given some transitional subsidies, the signal that the state will no longer subsidize has been very clear." Yang Mou, head of a biomass project in Shandong, admitted.

● Investment fell by nearly 60% year-on-year

The waning enthusiasm is reflected in the data. According to the report, in 2022, the total investment in biomass power generation in China will be 58 billion yuan, down 58.5% year-on-year.

Yi Yuechun, deputy secretary of the Party Committee and executive vice president of the General Institute of Hydropower and Water Conservancy Planning and Design, said in the sharing of the report that on the one hand, the decline in the scale of project construction directly leads to the reduction in the scale of investment; On the other hand, the prices of major industrial means of production such as steel, non-ferrous metals and cement have declined year-on-year, which has also objectively lowered the overall investment in biomass power generation. In addition, in recent years, enterprises have strengthened the awareness of project risk management, and the control of engineering cost is more strict.

"In terms of the operation of the past two years, the basic benefits of the old project are not good, and the pure power generation project of agricultural and forestry biomass is not so easy to transform cogeneration." There were some investors who were on the sidelines, and now maybe a large part of them don't feel the need to stay on the sidelines." Yang said that unlike wind power and photovoltaic power generation projects, biomass power generation projects need continuous input of raw materials after completion and operation, "market competition is becoming more and more fierce, projects are competing with each other, raw materials are not enough to raise the operating rate, starting and stopping, how can the benefit be good, investment is normal."

● Move to non-electrical areas

In fact, not only agricultural and forestry biomass projects, in the field of waste incineration power generation, the shortage of raw materials is also becoming more prominent.

The report pointed out that at present, waste incineration power generation is still the main engine for the growth of biomass power generation. The new installed capacity of household waste incineration power generation accounted for 76.9% of the total new installed capacity. However, according to the report, the average annual utilization hours of biomass power generation, including waste power generation, are declining. In 2022, the average annual utilization hours of biomass power generation in China will be 4,515 hours, 167 hours less than in 2021. In terms of waste power generation, Yi Yuechun said that in recent years, the rapid growth of waste incineration power generation has resulted in insufficient waste supply in some areas, resulting in projects unable to operate at full capacity.

"In recent years, waste power generation projects in the southeast of China have tended to be saturated, and it can be said that domestic waste in big cities has been almost digested." However, in the view of senior industry insiders, many cities in the central and western regions do not have the conditions to build large-scale waste-to-power projects, "the economy of projects with a daily processing capacity of less than 300 tons is very poor."

"Therefore, whether it is agricultural and forestry biomass power generation or waste incineration power generation, according to the current market judgment, the growth rate in the next few years will not be too fast." There may be a small increase in waste incineration power generation, but pure power generation projects of agricultural and forestry biomass may not have too big a market." The industry said that in the next step, China's biomass energy will focus on non-electric utilization areas such as biological natural gas and liquid fuels.