McKinsey Touts Bioenergy as Coal Replacement

While coal goes kicking and screaming into a dark and pollution-filled goodnight, it is becoming more evident and economically plausible that biomass energy, or bioenergy —energy derived from organic matter —can replace it.

McKinsey & Co., a global management consulting firm, makes this point in a recent article -- “Can bioenergy replace coal?” -- that examines the situation in Europe.

The article notes that like all renewable energy options in the European Union, “bioenergy has struggled against low-priced coal imports, low carbon dioxide prices in the emissions-trading system, and an economic and regulatory backlash against renewable-energy policies, including substantial cuts in government support.” But McKinsey writers Marco Albani, Nicolas Denis and Anna Granskog assert that biomass-based energy should not be counted out just yet. “Although today it fails to compete on cost with other renewables such as wind and solar, we believe bioenergy not only has the potential to significantly improve but could even become cost competitive with coal.”

It is an important assertion because the EU has a goal to have 27 percent of its energy come from renewable sources by 2030. That’s not all that far away — vast portions of coastlines might still be above water by then. Bioenergy, along with wind and solar, has the potential to help Europe reach that goal.

The article was extracted from another recent article -- “Bioenergy in Europe: A new beginning—or the end of the road?” -- that appeared in the latest issue of McKinsey on Sustainability & Resource Productivity. McKinsey found that bioenergy “still offers one of the most capital-efficient transitions from coal to renewables, as well as a scalable opportunity for European utilities to take part in the second wave of renewable-energy-source growth.” That’s because with carbon capture and storage “still far from happening,” bioenergy is a way for big utilities “to comply with renewable targets while using their existing assets.”

How so? “We believe the levelized cost of bioenergy—its cost per kilowatt-hour—has the potential to be reduced by almost half by 2025, making bio-based electricity close to competitive with coal depending on the type of plant,” McKinsey says. There’s no denying this would require significant effort,” the article continues, but “it doesn’t require technological breakthroughs, but rather simply making better use of the opportunities already at hand.”

For example, boiler efficiency in biomass plants today is often as low as 30 percent. Increasing steam parameters such as pressure, temperature and energy efficiency would reduce the volume of feedstock required and lower costs. “Further gains could be made by standardizing plant designs, adopting boiler and plant modularization, and applying design to value. And fuel costs could be lowered by driving greater efficiency in the biomass supply chain, whether by applying lean techniques to remove stumbling blocks, moving to long-term contracts, or improving fuel-treatment technology.”

This is an emerging win-win-win opportunity for Europe’s coal plant owners and operators: a revival of the continent’s bioenergy industry, efficient use of existing plant assets, and a way for the bioenergy sector to step forward as a “fast and capital-efficient replacement for coal.”

But as McKinsey concludes, it requires a “renewed sense of urgency among industry participants to deliver improvements in both cost and performance, as well as government action to create EU-wide sustainability criteria.”

If that doesn’t happen, the opportunity could go by the wayside; there might be no place for bioenergy as a precedent-setting example in Europe’s future energy mix.

Image credit: Illustration from “Can bioenergy replace coal?” via McKinsey