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(Wood) Biomass as a Renewable Energy in the World, Its Current Situation in Turkey, Investment Possibilities, Incentives, Processes , Installation Costs and Profitability Process

Wood is the first source of energy for human.  It is used as the means of heating, lighting and cooking until the industrial age. With the discovery of petroleum and coal; and then utilizing the natural gas, the sources that nourishes peoples source of energy have developed and changed.
Yet, the rising of environmental pollution as a threat to the future of manhood and with the understanding of the severity of the case, alternative energy sources have been started to be found out. One of the most significant of these sources, which we can entitle as ‘renewable sources’, is biomass.
Environmental problems’ surmounting national borders and its complicated solutions and interconnected structure of the environmental pressures necessitate international collaboration. As a result of the understanding of the costs of the environmental problems, awareness process beginning with the 1972 Stockholm Conference and 1992 Rio Summit-a highlighter to the importance of the issue, created a milestone for forestry.
As a result of environmental problems’ skyrocketing, Stockholm Conference, which took place in 1972, emphasized the importance of taking precautions on this issue. Yet, in this era, when the environmental problems turned into a global anxiety; it was 20 years later in the Rio Summit, the fact of deforesting’ was wholly presented.
As a part of 1983 decision of United Nations and working under the presidency of Prime Minister of Norway Gro Harlem Brundtland; World Comission on Environment and Development presented its first article to public in 1987. In Brundtland Report which is also known as ‘Our Common Future’, sustainable development is defined as ‘a process providing modern day needs without sacrificing the resources of the posterity’. So, for the first time, the concept of ‘sustainable development’ was put forward and the necessity of connection between economy and environment; and of development’s sustainability was emerged.
The sustainable development reports is first in including approval next generations as a part of environmental right, the impossibility of development without a fight for poverty and the fair sharing of the resources.
The most significant evaluation that was put forward in Rio Summit is ‘the annihilation of the forest as an outcome of agricultural and industrial expansionism which is also in the center of the problem of development’. So, the strain of development problem on the environment is first mentioned here with this conference. The definition of sustainable development which came forward was reinforced by emphasizing the significance of Rio Summit and forests. The decisions in United Nations Conference on Environment and Development’s final declaration in Rio Summit are:
  • Principles of forestry
  • Agenda 21
  • United Nations Convention to Combat Desertification
  • Convention on Biological Diversity
  • United Nations Framework Convention on Climate Change
The forests which constitute 1/3 of the earth are great importance for the continual of the life. By the year of 2000, the total forestland on earth 3,9 billion hectare and the ratio of forested land to earth is almost %29,6. And also it has been remarked that the most forested continents are South America (%50) and Europe (%47) in ratio to total forestland on earth.
Turkey is in area of Pan-European and North Africa which holds European Region and in process of Near Eastern Process which includes Middle Eastern and West Asian countries. The reason why Turkey is in Pan-European Process as well as Near Eastern Process is its having deforested lands with arid climates. In a region which extends from Morocco to Pakistan with arid or sub arid geography, there is no country except for Turkey and Sudan that has a forestry resource. In the Near Eastern processes forestation and fighting with deforestation come into prominence.
It has been recognized that %47 of the Europe is deforested and two EU countries – Finland and Sweden is the first in means of this rate. Yet, although the forested area of Europe extends, its quality deteriorates. One of the most significant reason this is the acid rains which is a resulted from the heavy emission of sulfur gases.  Another reason is giving forests to private corporates and their managing.
There is difference in Turkey in the management of forest when compared with Europe. Almost all forests are under state supervision and constitutional assurance. The protection and management of the forests are entitled to General Directorate of Forestry, which is directly connected to Ministry of Environment and Forestry.
As a requirement of the sustainable forest management perception, it has been seen that, making Turkey’s national forest aims complying with the world’s trends has a significant role in development plans and National Forestation Program. In the forestry sector of our country, there is no inconsistency between in national policy and aims; and National Forestry Principles. The decisions adopted in the 27. International Forestry Process, have took their places in the national documents in the management of sustainable forestry. These are 5 Year Plans, Forestry Specialty Commissions, National Forestry Program of 2004-2023 and 2010-2014 Strategic Plan of General Directorate of Forestry.

In the framework of national and international forestry policies of Turkey, it is necessary to evaluate the Forest Biomass and its share in energy:

  • Biomass is defined as the storage of green plants by converting solar energy into chemical energy by the use of photosynthesis.
  • The energy which is attained by biomass is called ‘biomass energy’.
  • Plants are continuous sources that can store solar energy.
  • %90 of these alive batteries that can store solar energy is comprised of suns.

The biomass energy which is still generated from:

  • % 64 of wood and wood wastes
  • Thin diameter materials which emerges during forest developments and maintenance
  • Rasping and chippings of forest industry
  • Unused woods
  • %24 of municipality wastes
  • %5 of agricultural wastes
  • Agricultural wastes and scraps
  • Rinds of fruit (olive seeds, nutshells)
  • %5 of landfill gases

General Directorate of Forests calculates the biomasses that extracted from our forests as 5-7 million tons.
According to 2008 data, Turkey imported 19 million different coal types and paid 4,3 million TRY.
If we were to only consider brown coal, imported coal costs approximately 145 TRY or 95 US Dollars. If 5 million tons woody biomass were used instead of coal, there should be no need to import 3 million ton. The money paid for 3 million tons of coal is roughly 485 million TRY. This means the saving of 285 million US dollars.
When it comes to environmental effects,
1 tons of anthracite emits 2,8 tons of CO2 when burnt. But when 1 tons of woody biomass is burnt, the CO2 emission is 0,73 tons. As it is environmental advantage in the decreasing of emissions, it is also provide a strong advantage in the purchase of carbon certificates through carbon certification. This will bring input cost compensation and return strong profits to investors.
When we use 5 million tons biomass instead of 3 million tons coal, we can reduce the CO2 emission by 4,750,000 tons. If we were to consider the aims of decreasing CO2 emissions of our country, this is a undeniable contribution to environmental negotiations.
In terms of General Directorate of Forestry,
There is 21,2 million hectares forest areas. In these areas, all management and maintenance are being fulfilled by General Directorate of Forestry. 
For frequency maintenance 10 million TL is spent on a 160.000 hectares of area every year. 350 million dollars are spent yearly for the prevention of forest fires.
According to 31 of the Law No. 6831 Article, approximately 4 million people who live in 12.431 villages are encouraged by the government for energy production from forest waste as well as opportunities for income increase and employment.
Most of the forest residues which are left behind by people play a fire-triggering role for the Mediterranean region.
In 2007 Ministerial Conference on the Protection of Forests in Europe has made the decision that dilution of forests and the use of extracted materials for energy production are necessary for the prevention of forest fires. On the other hand, these extraction materials are more than enough in the Black Sea region which limits the forests’ natural balance and rejuvenation.
According to the 2009 Energy Statistics which was published by the Ministry of Energy and Natural Resources, Turkey’s annual primary energy supply is 106,138 TOE (TEP). Energy that is created from biomass is 4.666 TOE (TEP) and %76 of it comes from wood energy. In Turkey, the total amount of energy production at the end of 2009 has turned out to be 194.813 GWh.  340 GWh of energy production has been obtained from biomass. In Turkey, biomass has such a small participation in energy production as % 0,174. If manufacturing residues of forest products industry and forest residues are used in energy production the percentage of energy production from biomass has the potential to reach %2.
The use of forest waste as woody biomass brings with it differences in cost and profitability for bioenergy production. If production and manufacturing costs of forest biomass which is acquired from renewable energy resources are to be talked about the samples below can help provide an idea for investors.
Example: Total annual expenses of a power plant with 100.000 capacity based on forest products industry wastes.

 

Labor for collection and chipping of forest waste(TL)
 
Labor for collection and chipping of forest waste (TL)
Central labor cost (TL)
Transportation Fuel Expense (TL)
Transportation Management Expense (TL)
Transportation Labor Expense (TL)
Total Transportation Management + Labor (TL)
5.000.000 1.527.990 290.325 960.000 96.000 174.195 8.048.510
6.000.000 1.527.990 290.325 960.000 96.000 174.195 9.048.510
7.000.000 1.527.990 290.325 960.000 96.000 174.195 10.048.510
8.000.000 1.527.990 290.325 960.000 96.000 174.195 11.048.510
9.000.000 1.527.990 290.325 960.000 96.000 174.195 12.048.510
10.000.000 1.527.990 290.325 960.000 96.000 174.195 13.048.510


Annual earnings of a power a power plant which consumes 100.000 tones of wood per year based on wastes of forest manufacturing

Labor for
collection and chipping of forest waste (TL)
Amount of annual biomass fuel taxes included (TL) Annual Operating Expenses (TL) Annual Fuel-Operating Expenses (TL) Total Annual Electric Revenues (TL) Annual Net Earnings (TL)
TL/ton TL TL TL TL TL
50 3.062.500 8.048.510 11.111.010 15.279.903 4.168.893
60 3.062.500 9.048.510 12.111.010 15.279.903 3.168.893
70 3.062.500 10.048.510 13.111.010 15.279.903 2.168.893
80 3.062.500 11.048.510 14.111.010 15.279.903 1.168.893
90 3.062.500 12.048.510 15.111.010 15.279.903 168.893
100 3.062.500 13.048.510 16.111.010 15.279.903 -831.107


BIOMASS POWER PLANT INITIAL INVESTMENT COSTS
Since there  aren’t any wood plants in Turkey which would generate electricity for commercial purposes, there are no examples for calculating the initial investment costs of power generation facilities that are based on wood energy. When initial investment costs of biomass power plants around the world are studied the approximate investment cost per installed power seems to vary between 1.200.000 $/MW-1.500.000 $/MW.
While biomass power plant initial investment costs are being determined, the table for amount of the total volume of investment on web site of Market Regulatory Authority (EMRA) is taken into consideration. For biomass facilities, the cost which is given  per megawatt installed power 1.900.000 TL/MWistaken as basis.
Biomass plant total amount of unit investment = 1.900.000 TL/MW
In these calculations, installed powers of direct incineration plants are regarded as 9 and 22,5 MW while those of gasification plants are regarded as 10 and 25 MW.
The investment cost of a gasification plant of 9 MW installed power approximately equals to 9×1.900.000 and 17.100.000 TL.

Installed Power (MW)
Investment Cost (TL)
Cost ofcollection and chipping of forest waste (TL)
Annual Net Earnings of the Facility (TL)
Time to cover the cost of investment (year) 
2 3.800.000 50 789.970 5
5 9.500.000 50 2.236.219 4
9 17.100.000 60 3.126.903 5
10 19.000.000 77 4.449.122 4
22,5 42.750.000 60 6.709.024 6
25 47.500.000 77 9.620.174 5
These numbers are all valued according to Turkish standards.  Depending on the technological, manufacturing, engineering or financial expenses of overseas investors later additions or extractions will be made.
Moreover, regarding the potential profits that would result from carbon certificate sales, the time to cover up initial investment costs could be %50 less than expected.
If the power plant facility is a total domestic production then government promotion would be as high as 18,6 dolarcent/kWh. Therefore it is understood that energy production from biomass would be a quite profitable investment.
Surely much more detailed information could be given on the issue however those which we would like to provide is limited to these.
All those important issues that we have pointed out are to demonstrate the ecological and economical reasons for investing in Turkey which is a fast-growing country with far more renewable energy resources than the rest of the world. It aims to show that if economic and technological deficiencies of domestic investors are supported by finances and technologies of European companies a very profitable and ecological investment partnership would come out in the end.
Turkey has come to be the new finance and investment area of Europe. For those countries and companies who have the vision to see this potential there are great opportunities ahead. Acknowledge the advantage of being in Turkey and in the same region with Turkey.