Biomass Derived Combined Heat and Power from Decentralized Small-Scale Gasification: Updated Cost Conditions for the Italian Mountain Context and Competitiveness in Future Energy Markets

Abstract International energy institutions project large shares of bioenergy as part of the decarbonization mix and small-scale generators in mountain regions can be interesting options in this space. In this study we assessed the techno-economics of small-scale (225 kW el ) biomass gasification-combined heat and power based on updated costs, under present and future energy market conditions. We found that, at 7,500 operating hours/year and a 70 €/t biomass cost, a 388 €/MWh levelized cost of energy is obtained, which is uncompetitive compared to alternative options like photovoltaic-storage or biogas. A loss in yearly operating hours and a reduction in unit capital cost have large impacts on unit cost, while heat valorization and remuneration, biomass cost and plant size represent secondary factors. An econometric forecast of consumer electricity prices in Italy to 2040 showed a subsidy requirement of 237 €/MWh and a total lifetime subsidy of 142 M€ with a carbon tax on conventional electricity growing by 11 €/t/y over twenty years, which represents a suboptimal generation infrastructure investment compared to the photovoltaic-storage or biogas alternatives. The results illustrate fundamental aspects of current bioenergy economics and deliver useful evidence for renewable energy planning in European mountain regions and beyond.