Creation of biomass to energy market to reduce fossil fuel consumption and value forestry production, forest management waste and invasive species control.
Madeira Biomass Energy is a pioneer project that create the biomass to energy market in Madeira and challenged the resistance of potential clients to change to new technologies and energy sources. The promoter, as an Energy Service Company (ESCO), invested in the installation of biomass boilers in 3 hotels, through energy performance contracts (EPC), that were firstly fuelled by wood ships and pellets imported from the mainland.
After ensuring 3 clients, the promoter applied to EMPREENDER 2020, a financial incentive under the “Priority Axis 3 - Enhancing the Competitiveness of Small and Medium Sized Enterprises”, in order to construct the first regional biomass plant, with drying and calibration processes, that increases the calorific value, making the product more competitive.
After the plant construction, the promoter signed EPCs with an hotel, a public swimming pool and an industrial laundry, ensuring the flow of production.
Aside the promoter and the clients, that have an investment return period of 4 to 5 years, the main stakeholders and beneficiaries are the wood producers, the entities responsible for public forest protection and the companies that collect biomass. The energy valorisation of biomass contributes to reduce the forest fire risk, reduce the cost with energy for companies, enhancing their competitiveness and reduce the island’s fossil fuel dependency.
The EPCs for boilers installation involved an investment of 1.5M€ and the biomass plant construction around 1M€, with 0.36M€ from the incentive scheme EMPREENDEDOR 2020. MBE has 5 employees and buys wood from local lumberjacks and forest management authorities, contributing to the local economy.
Evidence of success
As an ESCO, MBE was responsible for the creation of the biomass to energy market in Madeira, through EPCs, firstly with imported pellets and later with the construction of a factory that processes local raw material. In 2019, the factory processed 4500 ton/year (9000 MWh/year), a fourth of its installed capacity and maintains 5 qualified jobs, contributing also to job market of biomass collection. Its clients have reduced the energy costs with an investment return period of 4 to 5 years.
The main challenge was the acquisition of clients. They were sceptic about the new technology and energy source. The EPCs were also unknown and the potential clients had resistance to accept an external investor. The dependence on one supplier was not accepted by some potential clients.
Potential for learning or transfer
The innovative approach of creating a new market based on EPCs and imported product, before the construction of the first biomass plant, can have a replication potential in other regions, namely islands. Considering the clients energy savings, with an investment return period of 4 to 5 years, the business model proved to be economically feasible and is more profitable in regions with high dependence on fossil fuels.
This initiative also has indirect benefits in local economies, namely for wood producers and biomass collection companies, having an important contribution to prevent forest fires and control invasive species.
Madeira Biomass Energy hosts technical visits. Two cooperation project consortiums that involve insular regions in the scope of sustainable development, tourism and sustainable energy, the RESOR project co-financed by Interreg Europe and the YENESIS project co-financed by EEA and Norway Grants for Youth Employment, had the opportunity to visit the plant in 2019.