**Abstract**

Biomass based power generation systems can play a significant role to alleviate energy crisis and reduce fossil fuel dependency in the countries that possess abundance of agricultural and forest biomass resources. Particularly the countries to go for biomass energy in a large scale must know power and energy potential for biomass based commercial production with proper economic assessment of the possibilities. In-depth knowledge is must to assess the profitability and sustainability of the projects. Profitability measures how the investment in the project can be secured to have an ensured surplus to be shared by the stake holders and sustainability ensures the long-term existence in the business with a positive trend of gaining market share day by day or simply to be in the business. This chapter will present the details of the economic assessment of biomass- based energy projects in terms of net present value (NPV), internal rate of return (IRR), discounted payback period (DPB), and cost of energy. The economic profitability measure is a must before advancing to a venture whether it is self-financed or loan financed. So, it is hoped that readers of the chapter should develop a proper evaluation capability and know how to analyze the biomassbased energy projects.

**Keywords:** economic assessment, discounted cashflow, life cycle cost, net present value, internal rate of return, payback period

### **1. Introduction**

Biomass based energy generation systems impart low environmental impact. To be specific, these systems produce a very low level of CO2 or other toxic gases or radioactive materials, unlike the ones that are produced by the fossil fuel energy systems. But we are very much reluctant to establish these traditional systems (i.e., coal, natural gas, oil -based power plants) for producing our final energy forms in power plants or vehicles [1, 2]. The estimated average price of 6.9 c/kWh from biomass-based power generation is not yet cost effective comparing to fossil fuel technologies can offer a price in the range of 4.2–4.8 c/kWh [3]. Investment cost for the biomass-based power generation technologies generally take a higher scale compared to other technologies due to diverse fuel characteristics, collection and pre-treatment of the fuel needed


#### **Table 1.**

*Comparison of bulk density with different processes [5].*

prior to introducing to the generation system [4]. The fuel handling requires extra installation and maneuvering cost involvement. **Table 1** shows some of the established fuel densification processes used in biomass- based power generation systems.

Thus, a detailed economic feasibility study must be done prior to jumping into a project.
