Determining appropriate feed-in tariff rates to promote biomass-to-electricity generation in Eastern Ontario, Canada

On-site data collection, interviews, and financial models were used to determine the feed-in tariff (FIT) rate required to encourage investment in the generation of electricity from currently unused biomass from the Eastern Ontario forest industry. A financial model was adapted and run to determine the net present value, internal rate of return, and payback period associated with a 15 MW biomass-to-electricity facility. The analysis suggests that Ontario should consider a stronger incentive than the recently-offered CDN$ 0.13 kW−1 h−1 for biomass-to-electricity. If no customer for heat generated from the plant can be found, FIT rates between CDN$ 0.17-0.22 kW−1 h−1 are necessary to achieve a 15% internal rate of return and a simple payback of approximately 5 yr; achieving a price of CDN$ 0.013 kW−1 of thermal output still requires elevated FIT rates between CDN$ 0.15-0.21 kW−1 h−1 to meet economic performance criteria. Other barriers, particularly regulations regarding the use of operating engineers in steam plants, should also be addressed to facilitate development of biomass-to-electricity. Without these changes, it is likely that biomass will be significantly under-used and will not contribute to the renewable energy goals of Ontario.