How to reduce industrial energy costs through bioenergy

An industry can reduce its energy costs through bioenergy by replacing fossil fuels with biofuels in its thermal processes. Economic viability depends on a comprehensive assessment of consumption volume, resource price stability, supply logistics, infrastructure investment, and continuous plant operating hours.

What you should know about cost reduction with bioenergy:

• It is not a cheaper universal solution; its viability depends on the plant’s consumption, operating hours, logistics, and the necessary investment.
• It allows for the closing of long-term local supply contracts, decoupling the bill from the stock market volatility of gas or oil.
• As a carbon-neutral renewable energy source, it reduces or eliminates payments for emission allowances and climate taxes.
• Real savings require calculating not only the price of fuel, but also CAPEX, transport and logistics, the civil works needed to house the silo, and the cost of operation and maintenance.
• Through the ESCO model, plants can renew their thermal infrastructure without contributing initial capital, paying only for the energy consumed.

Why are energy costs a challenge for industry?

Access to competitive energy directly impacts the survival and growth capacity of the manufacturing industry in global markets.

The impact of energy on production costs

In sectors that are intensive in process heat consumption, energy can represent between a 20% and 40% of total operating costs. Any increase in the energy bill puts immediate pressure on the unit cost of the final product, cutting profit margins or making the product more expensive compared to external competitors.

The volatility of energy prices

The constant fluctuations in natural gas and oil markets prevent finance directors from projecting stable budgets in the medium and long term. Sudden increases in fossil fuel costs generate unforeseen imbalances in factories’ profit and loss accounts.

Dependence on fossil fuels

Historical industrial dependence on piped fossil gas or diesel exposes power plants to geopolitical shocks and increasing environmental penalties. Diversifying the energy mix towards indigenous and renewable resources has become a strategic necessity to guarantee operational stability.

How can bioenergy reduce industrial energy costs?

Bioenergy acts as a mature alternative that allows the replacement of the use of hydrocarbons in industrial heat generation processes, adapting to the demands of steam, hot water or thermal oil.

Fossil fuel replacement

The use of solid biomass allows for the replacement of natural gas, fuel oil, or diesel combustion in the plant’s boilers. By substituting a fossil fuel with a renewable energy source that has a lower unit cost per megawatt-hour, the factory reduces the variable cost of its thermal production. To learn more about the technical aspects of this solution, you can read our article on industrial biomass.

Greater predictability of energy costs

Unlike imported hydrocarbons, biofuels of forestry, agricultural, or agro-industrial origin are managed at the local and regional levels. This allows for long-term supply contracts with stable price revision formulas linked to actual production costs, providing certainty regarding the plant’s future expenses.

Optimization of thermal generation

Bioenergy reaches its maximum efficiency when integrated into facilities with high and continuous thermal demand. Adapting the combustion technology to the exact consumption profile of the factory allows for adjusting energy delivery without incurring waste or pressure losses in the main manifolds.

Reduction of exposure to energy volatility

Diversifying energy sources by introducing bioenergy protects companies from unexpected spikes in fossil gas bills. It’s important to note that bioenergy isn’t automatically cheaper than gas or other fuels in all scenarios; its economic viability depends on an individualized analysis of the installation, regional availability of raw materials, and the factory’s energy demand, among other factors.

What factors determine the profitability of a bioenergy project?

The potential economic savings from a conversion to bioenergy do not depend solely on the fuel price differential. Financial viability requires a joint evaluation of the following factors:

• Energy consumption of the installation: Annual volume of thermal megawatt-hours (MWh) required by the plant.
• Current fuel cost: Price per MWh paid for natural gas, fuel oil or diesel, including tolls and fees.
• Thermal demand and operating hours: Load curve profile and work schedule (continuous 24/7 schemes versus discontinuous shifts).
• Cost and availability of biomass: Availability of approved suppliers in the area and cost of the biofuel delivered to the plant.
• Required investment (CAPEX): Engineering budget, boiler acquisition, civil works, silos and interconnection.
• Operation, maintenance and logistics (OPEX): Mechanical maintenance costs, ash management, auxiliary electrical consumption and transport.

Which industries can benefit from bioenergy to reduce costs?

Bioenergy solutions offer great potential in manufacturing sectors whose production lines require continuous inputs of process steam or high-temperature heat.

Bioenergy versus fossil fuels: what impact does it have on costs?

From a strictly economic perspective, comparing bioenergy with fossil fuels involves analyzing the cost structure and long-term predictability.

Bioenergy vs. natural gas

While piped natural gas does not require on-site storage space, and exposes the factory to sharp stock market fluctuations and climate taxes, bioenergy, however, requires logistical management and storage infrastructure in exchange for offering a generally more predictable and contract-fixed energy cost.

Bioenergy vs. diesel

Replacing petroleum derivatives (diesel C or fuel oil) usually offers faster payback periods due to the high unit cost per megawatt-hour of imported liquid fuels and their high tax burden.

Which option offers greater cost predictability?

Bioenergy allows for multi-year contractual frameworks to be agreed upon, independent of international geopolitical crises, thus stabilizing the thermal costs item in the operating budget.

How to calculate the energy savings of an industry when using bioenergy?

The calculation of the economic savings potential of a plant is carried out through an ordered sequence of quantitative analysis:

1. Analyze current energy consumption: Quantify the thermal MWh consumed in the last year of production.
2. Calculate the current cost of fuel: Determine the total expenditure on fossil fuels, including tolls and costs derived from emission allowances.
3. Estimate the cost of bioenergy: Calculate the projected expenditure considering the price of the solid biofuel delivered to the plant.
4. Calculate the necessary investment: Define the CAPEX figure required for engineering, boilers, civil works and connection.
5. Estimate the payback period: Divide the total investment by the expected net operating savings.
6. Compare accumulated savings: Project the net cash flows over the useful life of the equipment (15-20 years).

What other costs need to be considered in a bioenergy project?

To determine the true profitability of a bioenergy plant, it is not enough to simply compare the price per megawatt-hour of fuel in isolation. It is essential to account for the costs associated with the infrastructure:

• Biomass supply and logistics: The collection, crushing, and drying, as well as the transport of raw materials, influence the final cost. Ensuring efficient supply requires specialized management of the biomass supply.
• Storage: Adaptation of the storage silo (surface or civil works) to ensure several days of autonomy.
• Adaptation of the facilities: Electrical, hydraulic and steam interconnection work with the factory’s main collectors.
• Operation and maintenance: Preventive inspection plans for mechanical elements, cleaning of flue passages and management of the ash produced.

Reduce energy costs and emissions at the same time

Replacing fossil fuels with bioenergy allows the company to align financial optimization with its environmental strategy.

Less dependence on fossil fuels

The transition to renewable resources reduces the factory’s direct exposure to hydrocarbon stock markets, improving the business’s resilience to potential energy stresses.

Contribution to decarbonization goals

As a carbon-neutral source, the use of bioenergy directly reduces the plant’s Scope 1 emissions. This facilitates progress within the corporate plan of industrial decarbonizationimproving the ESG rating with customers and investors.

How can ENSO help reduce an industry’s energy costs?

In ENSO We support industries throughout the entire project lifecycle to evaluate and deploy efficient and cost-effective bioenergy solutions:

• • Energy profile study: We objectively analyze the material and energy balances of your plant to determine if bioenergy represents a viable option.
  • Solution design: We design custom engineering tailored to the real pressures and demands of your production lines.
  • ESCO model without investment: Through the ESCO modelWe assume 100% of the initial CAPEX for the installation. The factory does not lose capital and only pays for the useful energy consumed at a predictable cost.
  • Biomass supply: We manage the supply logistics, guaranteeing the quality and traceability of the local biomass supply.
  • Operation and maintenance: We handle the technical management and maintenance of the plant to ensure its constant performance.

• Permits, authorizations and licenses necessary to be able to implement the projects according to the different administrations.

• Management of grants and subsidies European, national and local which projects can benefit from.

Frequently Asked Questions

Does bioenergy always allow for a reduction in industrial energy costs?

Not always. Economic viability depends on factors such as consumption volume, operating hours, distance to the biomass supply center, and the cost of the fossil fuel being replaced. A prior technical audit is required.

What energy consumption level makes a bioenergy project profitable?

As a general rule, this type of installation offers its maximum profitability in plants with thermal consumptions exceeding 30 or 40 GWh per year and operating schemes of more than 4,000 hours/year.

How does the distance to the biomass supply affect the cost?

Transportation is a key component in the cost of biofuel. It is recommended that the raw material come from a logistical radius preferably no greater than 100-150 km to maintain economic competitiveness.

How long does it take to recoup the investment?

The payback period for projects financed directly by the client is usually between 3 and 6 years. Under an ESCO model, the company does not contribute initial capital and obtains net operating savings from the first year.

Can ENSO analyze the potential savings of an industrial facility?

Yes. Our engineering team performs a plant diagnosis, analyzes the technical feasibility, and presents a customized technical-economic study with no obligation.