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ESCO business models for biomass heating and CHP: Profitability of ESCO operations in Italy and key factors assessment


  • Pantaleo, Antonio
  • Candelise, Chiara
  • Bauen, Ausilio
  • Shah, Nilay


This paper describes ESCO approaches and business models for biomass heating and CHP generation. State of the art, policy measures and main barriers towards the implementation of such ESCO operations in Italy are discussed. Moreover, on the basis of the proposed framework, representative case studies in the Italian residential, tertiary and industrial market segments are compared. The case studies are referred to a 6MWt wood chips fired plant. The case study of the industrial sector is based on a constant heat demand of a dairy firm, while in the tertiary and residential sectors the options to serve a concentrated heat demand (hospital) and a community housing by a district heating network are explored. The further option of coupling an organic Rankine cycle (ORC) for CHP is explored. The relevance of the research relies on the assessment of the main key factors towards the development of biomass-ESCO operations. The results of the techno-economic assessment show that the agro-industrial case study for heat generation is extremely profitable, because of the high baseline energy cost, the high load rate, the availability of incentives for biomass heating. The cogeneration option is also profitable, even if the higher investment cost determines a longer pay back time. The tertiary sector case study is also a profitable, for the presence of a concentrated load with high heat load rate and high energy cost. Finally, the residential sector case study is the least profitable, for the high district heating cost and the lower heat load rate, not compensated by the higher heat selling price. The higher investment cost of CHP, even if attracting further income from electricity sale, does not present higher profitability than the only heat generation plant. In addition, the heat load rate results a more influencing factor than the thermal energy selling price.

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  • Pantaleo, Antonio & Candelise, Chiara & Bauen, Ausilio & Shah, Nilay, 2014. "ESCO business models for biomass heating and CHP: Profitability of ESCO operations in Italy and key factors assessment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 237-253.
  • Handle: RePEc:eee:rensus:v:30:y:2014:i:c:p:237-253
    DOI: 10.1016/j.rser.2013.10.001

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    1. Connor, Peter M. & Xie, Lei & Lowes, Richard & Britton, Jessica & Richardson, Thomas, 2015. "The development of renewable heating policy in the United Kingdom," Renewable Energy, Elsevier, vol. 75(C), pages 733-744.
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    3. Lizana, Jesús & Ortiz, Carlos & Soltero, Víctor M. & Chacartegui, Ricardo, 2017. "District heating systems based on low-carbon energy technologies in Mediterranean areas," Energy, Elsevier, vol. 120(C), pages 397-416.
    4. Chmielewski, Adrian & Gumiński, Robert & Mączak, Jędrzej & Radkowski, Stanisław & Szulim, Przemysław, 2016. "Aspects of balanced development of RES and distributed micro-cogeneration use in Poland: Case study of a µCHP with Stirling engine," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 930-952.
    5. repec:eee:rensus:v:93:y:2018:i:c:p:90-99 is not listed on IDEAS
    6. Tereshchenko, Tymofii & Nord, Natasa, 2016. "Energy planning of district heating for future building stock based on renewable energies and increasing supply flexibility," Energy, Elsevier, vol. 112(C), pages 1227-1244.
    7. Colmenar-Santos, Antonio & Rosales-Asensio, Enrique & Borge-Diez, David & Blanes-Peiró, Jorge-Juan, 2016. "District heating and cogeneration in the EU-28: Current situation, potential and proposed energy strategy for its generalisation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 621-639.
    8. repec:eee:enepol:v:121:y:2018:i:c:p:519-533 is not listed on IDEAS
    9. Testa, Riccardo & Foderà, Mario & Di Trapani, Anna Maria & Tudisca, Salvatore & Sgroi, Filippo, 2016. "Giant reed as energy crop for Southern Italy: An economic feasibility study," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 558-564.
    10. Alipour, Manijeh & Zare, Kazem & Mohammadi-Ivatloo, Behnam, 2016. "Optimal risk-constrained participation of industrial cogeneration systems in the day-ahead energy markets," Renewable and Sustainable Energy Reviews, Elsevier, vol. 60(C), pages 421-432.
    11. Trutnevyte, Evelina & Strachan, Neil & Dodds, Paul E. & Pudjianto, Danny & Strbac, Goran, 2015. "Synergies and trade-offs between governance and costs in electricity system transition," Energy Policy, Elsevier, vol. 85(C), pages 170-181.
    12. Caporale, Diana & De Lucia, Caterina, 2015. "Social acceptance of on-shore wind energy in Apulia Region (Southern Italy)," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1378-1390.
    13. repec:eee:enepol:v:107:y:2017:i:c:p:345-355 is not listed on IDEAS
    14. repec:eee:rensus:v:94:y:2018:i:c:p:1153-1178 is not listed on IDEAS


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