Vasteras, Sweden (Platts)--19Jun2007

Swedish utility Malar Energi has practically eliminated its use of oil
for electricity and district heating in favor of biomass, while cutting its
coal consumption, vice president Anders Ericsson told a renewable
energy conference in Vasteras, Sweden late Monday.

     The utility, which provides electricity, heating and water services to
99,000 customers in Vasteras, about 100 km (62 miles) northwest of Stockholm,
and surrounding areas, suffered a big drop in profits in the mid to late
1990s, Ericsson said at the 3rd International Green Energy Conference. "It was
expensive to use oil and coal," he said. "Since 1995, the focus has been on
conversion to biomass."

     Malar Energi opened a large biomass boiler in 2000, and its CO2 emissions
fell from 2 million mt/year in the mid-1990s to 250,000 mt today. The
utility's goal is to eliminate fossil fuel use, he said. Its current fuel mix
comprises 36% biomass, 31% coal, 28% peat, 4% bio oil and 1% petroleum.

     The switch to biomass has proved formidable. Coal and oil are largely
homogeneous fuels, Ericsson said, making it easy to set up long-term
contracts. By contrast, biomass encompasses very different types of fuels
including energy crops, forest residues and pellets. "It's a different
structure in how I buy my fuels and set up my contracts," he said.

     In addition, biomass requires 10 times the volume of coal and cannot be
stored in large volumes because of fire hazards, requiring more frequent
deliveries. The utility has to closely track operations at different times
during the year; during a cold week in winter, for instance, the utility might
require 20 truck deliveries every hour. The switch to biomass is primarily not
a technology challenge, but a logistics challenge, he said.