The influence of a Renewable Energy Feed in Tariff on the decision to produce biomass crops in Ireland

Abstract

A target of 30 per cent substitution of biomass for peat in the three peat fired power stations from 2015 has been set by the Irish Government. However, a knowledge gap exists on the extent to which Irish farmers would actually choose to grow these crops. An extension of the Renewable Energy Feed in Tariff (REFIT) scheme to include the co-firing of biomass with peat in electricity generation would enable the power stations to enter into Power Purchase Agreements (PPAs). These offer a fixed price to farmers for biomass feedstock. The decision to adopt biomass is represented as a constrained problem under certainty with the objective of profit maximisation. The results showed that the price offered under a PPA has a large effect on the economic returns from biomass crops. The price that the power stations previously estimated they would be able to pay, at €46 and €48 per tonne for willow and miscanthus, respectively, was used as a starting point. At this price the number of farmers who would choose to adopt biomass production is insufficient to achieve the national co-firing target. The target could be achieved at €70 and €65 per tonne for willow and miscanthus, respectively.