Biomass as a source of renewable energy is used for a variety of applications including combined heat and power (CHP) or biofuels production. Many companies have already switched from fossil fuels to biomass, but there is more potential for growth. Among conditions to introducing biomass for heat and power generation is easy access to biomass resources (wood chips, waste of wood processing industry), as well the availability of a business plan for biomass collection and logistics.

Biomass is an interesting option for heat and power generation in regions where residues from agriculture or the forest products industry are abundant. Biomass-based energy generation technologies are considered a more sustainable alternative to fossil fuel and often encouraged through state support mechanisms. 

Biomass of different forms can be used to produce power and heat in small-scale distributed generation facilities. Where low-cost feedstocks are available and capitals costs are modest, biomass can be a very competitive power-generation option. Where low-cost agriculture or forestry residues and wastes are available, biomass can often compete with conventional power sources. Securing good quality feedstock at affordable prices over a plant’s lifetime is crucial for biomass power projects. A range of biomass pre-treatment and upgrading technologies, such as pelletisation, torrefaction, and pyrolysis, are available to businesses in order to improve biomass characteristics and make handling, transportation and conversion processes more efficient and cost-effective.

The main groups of biomass-based energy technologies include biomass combustion technologies, anaerobic digestion, and biomass gasification technologies. High-efficiency biomass applications, such as fluidised bed combustion, co-firing with fossil fuels, combined heat and power (CHP) co-generation and gasification are gaining more interest worldwide. The overall efficiency of biomass-based CHP plants for industry ranges from 70-90 % (IEA, 2012)

The capital and operating costs for heat-generating systems vary with scale. The investment cost of biomass-based power generation and CHP ranges from less than € 3 410 per kW (USD 4 000/kW) to € 5 970 per kW (USD 7 000/kW). The cost of anaerobic digestion power systems ranges from € 2 194-5 200 per kW (USD 2 574-6 100/kW). The cost for retrofitting coal power plants for the biomass co-firing ranges between € 119 and € 725 per kW (USD 140-850/kW). Considering that SMEs would mostly need solutions with a capacity of between 25 kW and 300 kW, the capital cost might range from € 75 000 to € 15-20 million.

The total annual operation and maintenance cost of biomass power plants is typically 3-5 % of the capital cost for large capacity, 5-6.5 % for small capacity and 2.5-3.5 % for co-firing power plants (IRENA, 2015).

Switching to biomass-based heating and power generation can bring a range of benefit for companies implementing this. Especially using more efficient, modern technologies can generate savings on fuel usage. Low-cost biomass feedstock can provide additional potential for reducing the company's energy costs, and even more so in the CHP case.