Abundant wood fuel at relatively low cost is the primary source of savings in biomass energy. Savings are highest when available wood fuel is a byproduct of wood processing (lumber mill, wood product manufacturing) as in the case of wood chip boilers. The cost of wood increases and savings decrease where wood fuel is from round wood and forest residue.
Installation and operation costs of biomass energy systems may be higher than diesel or natural gas systems. Operation and maintenance (O&M), insurance, permitting, design, and environmental monitoring costs may be substantial for the earliest biomass installations. The application of lessons learned will reduce costs on subsequent installations.
Biomass heating systems are predicted to offset heating costs in many communities where they are not already in use. Biomass CHP systems could result in long-term reductions in electrical generation costs in communities with appropriate biomass resources, heat and power demand, and escalating diesel fuel costs.
A 2007 study suggests that at $2.25-3.00/gal diesel fuel prices and current technology costs, only larger communities are likely candidates for CHP systems. That list includes Aniak, Dillingham, Fort Yukon, Galena, Hoonah, Tok, and Yakutat. If fossil fuel costs escalate and CHP technology evolves, more small communities may also be come viable candidates. The same study also concludes that woody biomass resources are adequate for fuel requirements in most of the forested communities being considered for biomass systems.
In addition to providing savings over diesel, harvest and utilization of biomass can benefit communities in other ways:
- Properly designed forest land use can lessen risks of wildfire and improve wildlife habitat.
- Higher quality logs can be used for house logs or milled into lumber; lower quality material can be used for energy.
- Wood harvest and marketing for energy provides jobs and keeps money in the community.