Biomass conversion of Dutch MPP3 power plant not economically viable in 2030

Biomass conversion of Dutch MPP3 power plant not economically viable in 2030

The Dutch Senate is currently discussing the option of prohibiting the use of coal for electricity generation from 2030 onward.

Existing coal fired power plants would then need to convert to alternative fuels to continue operation. On behalf of Uniper Benelux, Frontier Economics has analysed the economic viability of converting Uniper’s MPP3 coal power plant in the Netherlands into a biomass plant in 2030. The analysis is based on the same power market scenario and assumptions which were used in earlier studies [1] (2018) by Frontier Economics on the effects of a CO2 price floor in the Netherlands.

The report for Uniper Benelux concludes, that the conversion of the power plant to biomass in 2030 is not a profitable investment. In the analysed scenario, the investment shows a negative return on investment of ca. 123. mn. EUR. The converted power plant will not generate a positive EBITDA before 2042 and is therefore not able to recover the investment costs. For the analysis we have applied our detailed power plant dispatch model for the MPP3 plant.

Frontier Economics regularly advises clients on climate policy, the economics of fuel conversion and valuation of energy assets and investments.

For more information please contact [email protected], or call +44 (0)20 7031 7000.

[1] Frontier Economics (2018), Research on the effects of the minimum CO2 price – a report for the Ministry of Economic Affairs and Climate Policy, available at: https://www.frontier-economics.com/media/2239/reasearch-effects-minimum-co2-price.pdf

Frontier Economics (2018), Research on the effects of a carbon price floor – a report for Energie-Nederland, available at: https://www.frontier-economics.com/media/2240/reasearch-effects-carbon-price-floor.pdf

Profitability and Dispatch of MPP3 Power Plant