WOOD PELLET NEWSLETTER
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Global GDP Growth to Force Oil Prices Higher
The Demand Side: Next Stop $100
By Christian A. DeHaemer
Friday, April 9th, 2010
You wouldn't know it listening to Main Street media, but the last year has produced a phenomenal amount of good news.
The S&P 500 is up 76.34% from its fear-induced lows of March 2009. Corporate bonds have been in an upswing all year. Commodities like oil have broken out of their trends and are headed higher. Cooper prices more than doubled last year. Lead was up 145%.
The U.S. dollar has been bullish for six months — it's up more than ten percent in the last quarter.
Even housing prices have stopped plummeting and have ticked up in recent data.
According to the Washington Post, "Home prices in 20 cities tracked by the Standard & Poor's/Case-Shiller home price index rose 0.3 percent on a seasonally adjusted basis in January compared with December."
• USDA HIGHLIGHTS EARLY SUCCESSES IN BIOMASS CROP ASSISTANCE PROGRAM
• PELLET HEATING SYSTEMS EARN FAVORABLE REVIEWS
• NEW PRODUCT LINE
• INVESTMENT IN RENEWABLE ENERGY PROJECTS
• PELLET PLANT LEASE ADVANCES
• BCAP COMMENTS AMASS
• SENATE BILL INTRODUCED TO INCENTIVIZE USE OF BIOMASS FOR HEATING
• NEWFOUNDLAND, CA EXTENDS REBATE FOR PELLET USERS
• MORBARK LAUNCHES SAWDUST QUICK SWITCH
• LOAN TO HELP WOOD PELLET FIRM DOUBLE CAPACITY
• ENFIELD WOOD PELLET COMPANY TO PAY FULL REFUNDS, AG SAYS
• WOOD PELLET PLANT IN KREMMLING ON THE ROPES AFTER DWINDLING DEMAND
• BIOMASS REVOLUTION: HEATING ALTERNATIVES EXPLORED
• WOOD PELLETS CATCH FIRE AS RENEWABLE ENERGY SOURCE
WALL STREET JOURNAL
• FIRSTENERGY PRESSURED ABOUT BIOMASS PLANS
• RAPID EXPANSION OF WOOD PELLET CAPACITY IN NORTH AMERICA DRIVES SAWDUST AND WOOD CHIP PRICES UPWARD, REPORTS THE NORTH AMERICAN WOOD FIBER REVIEW
• BUSINESS IN THE WOOD PELLET SECTOR GETTING FIRED UP
• CO-FIRING BIOMASS WITH COAL
• TIME TO STOP BURNING WOOD PELLETS
• GOVERNMENT OF CANADA ALLOCATES $3,304,188 IN FUNDING FOR STARTUP OF GRANULES LG INTERNATIONAL INC.
• MORE BIOENERGY THAN OIL IN SWEDEN
USDA HIGHLIGHTS EARLY SUCCESSES IN BIOMASS CROP ASSISTANCE PROGRAM
Categories: Ag Products, Ag. Politics, Policy Comments: 0
USDA Release No. 0165.10 Contact: Andre Kok (202) 720-9733
Biomass Producers, Energy Facilities and Communities Benefit from Innovative USDA Program
Washington, DC, April 5, 2010 – USDA Farm Service Agency Administrator Jonathan Coppess said today that biomass producers, energy facilities and communities are benefitting from USDA’s innovative Biomass Crop Assistance Program (BCAP). Through April 2, 2010, USDA has approved 4,605 agreements for the delivery of more than 4.18 million tons of biomass and paid eligible biomass owners $165,274,695 in matching payments under BCAP’s first phase.
BCAP authorized USDA’s Farm Service Agency (FSA) to help those who own biomass by providing matching payments for the collection, harvest, storage and transportation of eligible biomass delivered to approved facilities to convert it to biofuels. FSA service centers across the country have issued payments of up to $45 per dry ton for eligible biomass deliveries. Biomass is any organic matter that is available on a renewable or recurring basis including: agricultural commodities, plants, trees, algae, and other animal, vegetative and wood waste materials.
“Congress directed USDA to establish a program to encourage farmers and forest landowners to help develop the biomass supply chain and accelerate energy independence, rural economic development and renewable sources of energy,” said Coppess. “Since we issued initial guidance last June, BCAP has gathered momentum and our efforts to expedite matching payments provided valuable, real-world information and experiences that will inform the crafting of the final regulation, as well as some much-needed economic stimulus in many rural areas.
“We’ve had dozens of reports from biomass producers, energy facilities and communities that are benefitting from BCAP payments right now, which shows the incredible potential of this innovative program,” said Coppess.
Show Me Energy Cooperative of Centerview, Mo., comprised of 600 Midwestern farmers-owners, was the first facility to see matching payments paid out for biomass material deliveries.
“The farmers who we once asked to feed America are now being asked to fuel America, too,” Steve Flick, chairman of the cooperative, said. “I’m very enthusiastic about what can happen next.”
In Guilford, Maine, Hardwood Products Company General Manager & Chief Operating Officer Terry Young said BCAP enabled his company to hire 62 employees in Maine’s poorest county where unemployment rates were the highest. BCAP payments gave the company a chance to lower prices and be competitive internationally.
“This beneficial program has created a snowball effect, which has provided other Maine businesses critical operating revenue to sustain their businesses,” Young said. Co-generation of lower cost electricity are among those benefits, Young said, along with reduced heating costs at an area textile plant that employs 400 people, and lower costs for an area wood pellet manufacturing company, which enabled them to remain competitive in selling pellets to thousands of Mainers for home heating.
Bamford Company, a small lumber operation, has been dealing with its scorched private forestlands in Butte County, Calif. BCAP funds made it economically feasible for Bamford to convert 15,500 dry tons of charred timber into clean energy. The company collected, chipped and delivered their partially-burned biomass to a nearby conversion facility, enabling Bamford to keep 37 employees on the payroll during tough economic times.
Bamford has additional damaged timber that it needs to remove from its land so that the forest can return to healthy production. The company is looking forward to a final BCAP rule. There are additional benefits to the state as well as to Bamford. Using the damaged timber for electrical generation helps California utilities meet mandates for renewable fuels and avoids the air pollution that would be caused by burning the charred material in the forest, which is the standard practice for disposal.
Armstrong, a well-established name in the flooring business, is the largest flooring company in the country. It produces hundreds of thousands of tons of sawdust each year. Because of BCAP, Armstrong can now transport its excess sawdust to qualified biomass conversion facilities in five states. This provides more feedstock needed for alternatives for energy facilities while helping Armstrong remove excessive waste through expanded distribution networks that previously were not economically feasible.
“Armstrong is very concerned about the environment and BCAP provides a way to minimize waste while providing an incentive to direct our sawdust towards biofuel uses,” said Armstrong World Industries Energy, Utilities & Disposal Procurement Manager David Wilcox.
These are just a few examples of BCAP’s potential, Coppess said. The final rule will provide funding for producers of renewable biomass who establish new biomass crops within select geographical areas and will continue to provide matching payments for deliveries of eligible materials.
“With this program, we are helping to build new opportunities in rural America,” said Coppess. “Already BCAP has spurred new capital investments among biomass producers, improved existing supply chains and spurred new uses among new consumers. With BCAP, biomass has helped to save money and create jobs, while reducing fossil fuels and improving air quality. The program has improved forest health by removing uneconomical, diseased or invasive growth.”
Established in the 2008 Farm Bill, BCAP was designed to spur new energy and economic developments in rural America by reducing the financial risk for farmers, ranchers and foresters who invest in the establishment, production, harvest and delivery of biomass crops to displace fossil feedstocks used for biofuels and renewable energy. BCAP matching payments began after a notice of funding availability was issued June 11, 2009, pursuant to President Obama’s May 2009 directive. The proposed rule to implement the full BCAP was announced in early February 2010, with a 60-day public comment period ending April 9, 2010. After reviewing the comments, FSA will issue a final rule for the BCAP program this year.
“The final rule will unleash the full potential of the BCAP program to encourage on-the-ground innovation through new crops and new economic development for farmers and rural communities,” Coppess said.
Charts showing BCAP Collection, Harvest, Storage & Transportation Component and Summary Reports are at www.fsa.usda.gov/bcap.
PELLET HEATING SYSTEMS EARN FAVORABLE REVIEWS
Long-term savings and reduced carbon footprint makes pellet heat attractive option
In every corner of the country, community-based wood pellet projects are replacing fossil fuel as a primary heat source for hospitals, schools and other local facilities. In some cases, the switch to pellets has created a few speed bumps; the projected savings, however, still has made wood pellets an attractive option.
In Montana, the Townsend School District made the conversion to a wood pellet heating system in late 2005. The District serves more than 700 K-12 children, and initially, administrators had planned to only use wood pellets to replace the elementary and junior high diesel heating systems. Eventually, they expanded the project to help offset the high school’s propane-based heating system. The decision proved invaluable.
According to Mia Whitfield, an assistant to the District Superintendent, the first two years were filled with frustration as the industrial pellets they were using caused klinkers (wads of debris), which regularly caused the heating system’s auger to break down.
Laughed Whitfield, “Luckily we have a maintenance guy filled with fortitude and a good attitude.”
The issue forced the school to switch to residential pellets, which increased cost from $90 to $140 per ton. The potential savings of $1.2 million over 30 years the school had planned for was going to be compromised. But the increasing cost of propane has caused the school to use the pellet system more than originally planned for the high school, and Whitfield believes the school will realize even better savings over that 30-year period, even with the higher pellet cost.
“Now, there haven’t been any klinkers with the new pellets,” said Whitfield. “And, the plus side to the residential pellets is that they have a higher Btu.”
Townsend School District’s $425,000 investment to convert to wood pellets was made possible by a number of grants, including a Fuels for Schools grant that covered roughly half of the total cost; the Broadwater Conservation District helped to secure one of several other grants used for the project.
Said Whitfield, in addition to the savings, the District has used its new heating system as an educational tool. “Students learn about renewable energy, which we didn’t have with the diesel or propane, and we’ve reduced our school’s carbon footprint, which is nice to say.”
The wood pellet boiler system used by the Harney County Hospital in Oregon is contained to a small portion of the parking lot, yet manages to heat 55,000 square feet of the facility. Installing the boiler cost a total of $269,000 and the Hospital spends an average of $10,000 is spent on pellets each year (all of the pellets it uses come from two Oregon-based pellet manufacturers). Administrators expect the unit will pay for itself within three years from the install date.
Said Hospital CEO Jim Bishop, “Out here in Harney County, folks are just happy that we’re using wood and saving money.”
On the nation’s opposite coastal line, in New Hampshire, Franklin Pierce University has been able to use an entirely different model to make pellet heat work.
In 2007, International WoodFuels LLC approached the school about the possibility of contracting to provide wood heat. By September of 2009, the school was switching from its propane and oil systems to wood pellets. It pays International WoodFuels a monthly fee, based on Btus, which will help the University to realize its costs savings much faster than other facilities that have to account for the upfront heating systems and permit costs.
Doug Lear, the director of facilities at Franklin Pierce, “It helped to bring us new equipment to replace our already aging equipment. We expect to realize a 10-12% cost savings already this year.”
At present, the Swedish-made boilers heat three residence halls and the recreation center on campus. Over time, the school plans to add several other buildings each year, and expects to reach its goal of having 80 percent of the campus heated by New England-manufactured wood pellets within five years.
Said Lear, “The primary focus was to find something greener to replace our fossil fuels boilers, and this financial model was perfect for us. It didn’t touch our capital dollars at all. It’s just an added line in our operational budget for green energy.”
NEW PRODUCT LINE
Source: Inside Indiana
A new product line at Crate Creations, located in the Rose City Business Park in Richmond, Indiana, will help local companies reduce waste going to the landfill and improve their bottom line. Crate Creations currently manufactures wood decorator crates for the food and beverage industry. But with the addition of two new machines, the company will be able to branch out into the bio fuel and animal bedding industries. The new machines will allow the company to pelletize recycled wood waste from local companies into the animal bedding or bio fuel products. Not only does the wood waste get recycled into new usable products, but companies no longer have to pay the cost of disposing wood waste in the landfill.
Primex Plastics is among the companies partnering with Crate Creations. Primex used to send their waste end cuts from their pallet production to the landfill. Now that waste goes to Crate Creations. According to Ken Ponder, Plant Manager at Primex, "they've really helped us reduce our waste going to the landfill. We're always looking for anything we can do to help the environment and turn something from a negative into a positive."
Crate Creations will be investing $150,000 for the new machinery and adding one new job. The EDC of Wayne County has provided an EDIT grant of $5,000 from the consolidated EDIT fund to assist in the purchase, shipment and installation of the new machinery and/or for the training of employees. Once the EDC Board of Directors approves the application, the request goes before the Wayne County Board of Commissioners for their consideration.
"Crate Creations is another great example of the entrepreneurial spirit in Richmond and we thank them for their continued investment" says Richmond Mayor Sally Hutton. Hutton adds "I am so pleased they are manufacturing their new products here and providing a way for other local companies to reduce the amount of waste going to the landfill."
President of the Wayne County Board of Commissioners, Ken Paust says "Crate Creations is an excellent example of how Wayne County businesses can collaborate and benefit from one another."
Since January of 2009, the EDC of Wayne County, through its EDIT fund, has assisted existing businesses in the commitment to the retention and creation of over 148 jobs and provided training assistance funds to 12 companies. These projects have resulted in over $13.3 million in new investment in Wayne County. The county' consolidated EDIT fund comes from funding provided by partnering towns in Wayne County who have agreed to provide half of their EDIT proceeds yearly for county-wide economic development. Partners in county-wide economic development currently include the towns of Cambridge City, Centerville, East Germantown/Pershing, Milton, Mt. Auburn, Richmond, Whitewater and Wayne County.
Ontario Announces Landmark INVESTMENT IN RENEWABLE ENERGY PROJECTS
Toronto, Canada [HydroWorld.com]
Ontario's government announced that contract offers have been awarded for more than 180 renewable energy projects. Approved under the province's Feed-in Tariff (FIT), the projects are part of the largest green energy investment of its kind in Canadian history.
The 184 projects announced will generate enough energy to power 600,000 homes, the Ontario Power Authority reported. The projects represent almost 2,500 megawatts of renewable energy.
Seventy-six of the approved projects are ground-mounted solar photovoltaic, 47 are on-shore wind and 46 are hydropower projects, the OPA reported. There are also seven biogas, two biomass, four landfill gas, one roof top solar and one off-shore wind projects.
The renewable energy projects are in addition to the 510 renewable energy contract offers totaling 112 megawatts (MW) approved recently. The FIT Program was enabled by the Green Energy and Green Economy Act, 2009. The Ontario Power Authority is responsible for implementing the program.
“These projects are the latest accomplishments of the Green Energy Act, which is making Ontario a place of destination for green energy development, manufacturing and expertise," said Ontario’s Minister of Energy and Infrastructure, Brad Duguid.
The total 694 Feed-in Tariff (FIT) contract offers announced to date will create 20,000 direct and indirect green jobs and attract about $9 billion in private sector investment, as well as investment in new Ontario-based manufacturing, the OPA reported.
“In six short months the Feed-in Tariff program has delivered strong results and has more than exceeded our expectations,” said Ontario Power Authority CEO Colin Andersen.
PELLET PLANT LEASE ADVANCES
• TED GRIGGS
• Advocate business writer
• Published: Apr 16, 2010 - Page: 6B
A proposed $124 million wood pellet plant moved a step closer Thursday to a site at the Port of Greater Baton Rouge when port executive committee members recommended approving a 20-year lease for Point Bio Energy LLC.
The port’s full board of directors must give the final OK on the lease.
The lease also is conditioned on Point Bio’s financial closing, the date when investors and lenders are comfortable enough to sign on the bottom line, said port Executive Director Jay Hardman. The port hopes that will be soon, he said.
Under the proposed agreement, Point Bio will pay $1 per each ton of wood pellets shipped, with a minimum guarantee of $200,000 a year.
However, Point Bio chief executive William New has said the firm expects to ship 400,000 to 450,000 tons of pellets per year by 2012.
The lease also calls for Point Bio to pay:
• $310,000 to rent the 155,000-square-foot Transit Shed No. 1 for storage.
• $103,400 to lease 18.8 acres of land at $5,500 an acre.
• $12,000 to rent a small warehouse/office.
The project will bring the port an estimated $825,400 a year, Greg Johnson, the port’s director of business development, says in a memo dated Oct. 9 and revised April 9.
The plant will have 87 workers and an annual payroll of more than $6 million.
The Legislature’s Joint Transportation Committee approved using $5.6 million from the Port Construction and Development Priority Program to help build a conveyor system from the pellet plant to a dock, Hardman said. Total cost of the conveyor system is around $6.4 million, and Point Bio will be covering the remaining cost.
“Current market conditions suggest that we have a very depressed timber industry in Louisiana and a project of this nature will certainly benefit the Louisiana timber growers as well as the Port of Greater Baton Rouge and our local partners,” Johnson said
The plant will take in wood within a 150-mile radius, grind it into sawdust and press it into small pellets. Point Bio plans to ship the pellets to Europe, where they are burned in power generation plants. Point Bio has contracts in place for all of its production, New said.
“The public and landowners are excited,” Executive Committee member Larry Johnson said.
The Port of Greater Baton Rouge could soon become home to one of the country’s largest wood pellet plants, whose product will be sold in Europe and burned to generate electricity.
Point Bio Energy LLC expects to spend $124 million on the plant, which will be able to produce 400,000 to 450,000 tons of wood pellets a year, said William New, chairman and chief executive officer. Last year, the Wisconsin-based company announced a contract to supply 440 million tons of pellets over 10 years to a European bioenergy company (New said he could not disclose the company’s name).
“There is solid demand in Europe, solid growth,” New said. “And there’s a lot of activity driven by green energy requirements, mostly in northern Europe, and to a lesser extent in the UK (United Kingdom).”
European Union members plan to reduce greenhouse gas emissions by 80 percent by 2050. Wood pellets, unlike fossil fuels, are considered carbon-neutral because wood releases the same amount of carbon whether it’s burned or decays on its own.
The European Union pellet market is probably around 8 million tons a year, and it will double or triple that in the next decade, New said.
It would take about all of Point Bio’s production to fuel a 60-megawatt biomass-based energy plant, New said. There are a number of 300-megawatt biomass-based plants being built in Europe now, which shows the kind of growth taking place in the green energy sector, he said.
The Point Bio plant will take in timber from south Louisiana, grind it into sawdust and press it into small pellets with the same kind of machinery used to make dry dog food. New said the plant will employ 85 to 100 people and support 500 to 1,000 other jobs.
It takes about two tons of trees to produce one ton of pellets, New said. The pellets have about the same energy content as low-grade coal, and they can easily be burned in coal-fired power plants.
“So as long as there is a demand for alternatives to fossil fuels, we’re going to have a nice growing market,” New said. “It’s really nice to have a market rising to meet you for a change.”
Hakan Ekstrom, president of Seattle-based Wood Resources International, said the wood pellet business began picking up in the last three to five years.
In some cases, lumber mills decided to take the saw dust they produced as a byproduct and turn it into pellets, Ekstrom said. In others, independent companies in America and Europe invested in large facilities.
New said he could not discuss the details of Point Bio’s financing, other than to say the equity is coming from a non-institutional source while the debt financing is from institutional investors from New York and Boston. New said Point Bio also expects to get some tax credits through Louisiana’s economic development department and assistance through from the port through the state’s Port Priority Fund.
BCAP COMMENTS AMASS
By: Anna Austin - Biomass Magazine
The USDA's Biomass Crop Assistance Program proposed rule comment period expired April 9. Those anxious for the final rule release and/or the current freeze on the program to cease can now only wait for the USDA to sort through the 24,000-plus comment submissions in order to formulate a fair and consensus-driven rule.
When exactly that will be, however, remains unclear. Public Affairs Chief Kenneth Politsch said the USDA hadn't gone through enough comments to project when the rule would be out, though some industry-relevant groups have speculated that it will likely come out later this summer.
The proposed rule was released Feb. 8, and a 60-day time frame was allowed for individuals or groups to weigh in on BCAP by submitting feedback on numerous program elements. Some key provisions in the proposed rule included eliminating the dry tonnage measure and adapting to industry norms, scaling back matching collection, harvest, storage and transport (CHST) payments of certain qualifiers, and seemingly the most debated provision, a prohibition on wood materials that might otherwise be used for higher-value purposes.
The prohibition mainly stemmed from concerns expressed by the composite panel and fiberboard industries, alleging that the CHST payments for certain eligible materials such as saw dust and wood shavings were directly increasing prices and competition for a market that already was established, potentially causing devastating market distortion.
The wording in the proposed rule is as follows, "CCC proposes that vegetative wastes, such as wood waste and wood residues, collected or harvested from both public and private lands should be limited to only those that would not otherwise be used for a higher-value product. More specifically, for materials collected from both public and private lands, CCC is proposing to exclude from matching payment eligibility wood wastes and residues derived from mill residues (i.e. tailings, etc.) or other production processes that create residual byproducts that are typically used as inputs for higher value-added production (i.e. particle board [sic], fiberboard, plywood, or other wood product market."
Many groups have expressed varying opinions. Some strongly support the prohibition, some oppose it and others call for a much clearer explanation. Donna Harman, CEO of the American Forest and Paper Association said AF&PA supports USDA's stated goal of avoiding diversion of materials potentially eligible for the BCAP matching payments from existing value-added production processes already occurring in the marketplace. "Unfortunately, we have serious concerns with USDA's proposed approach to implementation," she said. "If USDA focuses the matching payments component on woody biomass materials without a viable market, it can avoid diversion of materials from existing value-added production processes "
The Biomass Thermal Energy Council commented that BCAP should preserve the program eligibility of vegetative waste materials such as wood wastes and residues, while the Biomass Power Association suggested that saw dust and wood shavings from saw mills be explicitly excluded from the eligible materials list, but that suppliers of the materials be allowed to petition USDA for eligibility where it can be demonstrated that no higher value use currently exists. "This safeguards biomass used by the composite panel facilities but only when there is a demonstration that such materials will actually be put to such use," said BPA President Bob Cleaves. "There are areas of the Pacific Northwest where saw dust and shavings are an important biomass-to-power fuel and where no competing higher-value use currently exists."
The Pellet Fuels Institute disagreed with the tapering of the eligible material definition, commenting that use of the materials in danger of being excluded, as a pellet feedstock, is the highest-value purpose in many areas and should not be excluded in this proposed rule.
Assuming that the USDA will move forward with the motion, the Composite Panel Association suggested a clearer definition of the prohibition proposal, commenting that the terms "wood waste" and "wood residue" are not defined in the proposed rule nor discussed in any legislative history. CPA recommended that it be clearly stated that eligible wood waste and wood residues do not include scraps, saw dust, chips and shavings from saw mills and other wood mill facilities, either in a standalone definition of those terms or in the definitions of renewable biomass.
SENATE BILL INTRODUCED TO INCENTIVIZE USE OF BIOMASS FOR HEATING
Source: Biomass Intel Biomass Intel
The American Renewable Biomass Heating Act of 2010 (S. 3188), would establish a corporate tax credit equal to 30 percent of the installed cost of biomass-fueled heating (or cooling) systems for commercial or industrial applications. The credit would have no maximum and would be available for biomass thermal systems placed in service on or before December 31, 2013.
Essentially, the legislation would allow federal tax credits to support the use of wood renewable biomass in high-efficiency heating systems in commercial and industrial buildings. The Bill would also bring economic benefits to the timber industry and rural communities.
Federal tax credits have been available for biomass heating systems since the beginning of 2010, but there is a cap in place limiting credits to $1,500 per project. The new legislation would allow tax credits for larger scale projects, supporting up to 30 percent of capital costs.
To qualify for the proposed tax credit, biomass boilers and furnaces would have to operate at a 75% efficiency level or greater while providing space heating, air conditioning, domestic hot water or industrial process heat.
EUROPEAN DEMAND TO DRIVE PRODUCTION OF WOOD PELLETS
• By TED GRIGGS
• Advocate business writer
• Published: Apr 23, 2010 - Page: 6B
European Union demand for wooden pellets will continue to drive U.S. production but will also limit the industry’s profitability, according to the head of a bioenergy, wood and forest products consulting firm.
“The pellet business is marginal,” said Pete Stewart, president and chief executive officer of Forest2Market, based in Charlotte, N.C. “The Europeans know how much it costs to produce pellets, and they’re not going to pay more.”
Stewart was the keynote speaker at the first day of the LSU AgCenter’s Louisiana Forest Products Development Center conference on wood-based biofuels, biomass and bioenergy. Around 80 people attended Thursday’s sessions.
Europe is about 15 years ahead of the United States in terms of legislation to limit carbon emissions, Stewart said. In the United Kingdom, 20 percent of the country’s energy must be produced by renewable resources by 2020; only six percent is green energy now.
To meet those goals, the United Kingdom will have to import about 12 million tons of pellets a year, Stewart said. If one-third of that production comes from the United States, then eight to 12 new pellet plants will be needed.
And that doesn’t include the demand that will be generated by northern Europe and France, he said.
Pellets are made from the less costly wood used by pulp and paper mills. The wood is ground into sawdust and pressed into small pellets, which are burned in power-generation plants. The pellets are considered carbon neutral because trees produce the same amount of greenhouse gases whether they’re burned or decay naturally.
Stewart said Europeans are generating “true green demand,” meaning they think green energy is a good idea and are willing to pay extra for it.
In the United States, people think green energy is a good idea but they aren’t willing to pay for it, Stewart said.
However, there are a number of factors that will limit the export of pellets, Stewart said. For one thing, there are only four or five ports in the South that can handle the enormous cargo ships needed for pellet shipments, and a handful of other ports that can be modified, at great expense, to do so.
Stewart said there are other limiting factors for pellet plants, in Louisiana and elsewhere, including a limit on the supply of wood, Stewart said. A pellet mill comes in that needs 500,000 tons to 1 million tons of wood a year generates a price shock, driving up prices for everyone.
Both those factors appear to favor Point Bio Energy LLC’s just-announced plant at the Port of Greater Baton Rouge. Point Bio officials say the deepwater port and the supply of wood were the major reasons to build the plant here.
However, Stewart said competition for the feedstock to make the pellets from existing industries, such as pulp and paper mills, will also limit the growth of pellet plants.
The economic impact of a pulp or paper mill is just much greater than a pellet plant, Stewart said. Politicians don’t want to be seen as supporting a pellet plant that employs 100 people over a paper mill that employs 1,000.
NEWFOUNDLAND, CA EXTENDS REBATE FOR PELLET USERS
NL extends pellet heating rebate
Apr. 23, 2010, St. John’s, NL – The province of Newfoundland and Labrador is extending a rebate that helps homeowners switch to wood pellet heating. The provincial government’s 2010 budget is providing $500,000 to continue the Residential Wood Pellet Appliance Rebate Program, which provides a 25% rebate to homeowners purchasing a wood pellet appliance. Homeowners interested in purchasing and installing a wood pellet appliance have until March 18, 2011, to apply for a rebate under the 2010 program. Since the program was first introduced in late 2008, 405 rebates at an average of $580 each have been issued to qualifying homeowners.
“The rebate program was introduced to help create a demand for locally produced wood pellets, and we are very pleased to see that homeowners are responding to the program,” says the Honourable Kathy Dunderdale, minister of natural resources and minister responsible for the Forestry and Agrifoods Agency. “We are building our local wood pellet production capacity to meet the growing demand, which is good for the environment and for our forest industry. Retailers and consumers are supporting our suppliers and are buying local products.”
Two local companies – Exploits Pelletizing Inc., a division of Blanchard’s Cabinet Doors in Bishop’s Falls, and Cottles Island Lumber Co. in Summerford – are currently manufacturing pellets. A third pellet plant under construction in Roddickton by Holson Forest Products anticipates having pellets available by the next heating season.
A May 2009 survey sent to homeowners who have purchased a pellet appliance in this province indicated that 88% of respondents would recommend a pellet appliance.
“That response indicates that homeowners are pleased with their decision to switch to a pellet appliance and that the program is achieving its goal of establishing a wood pellet manufacturing industry in this province,” says Minister Dunderdale. “We are pleased to be able to extend the program to assist homeowners with their purchase and to support this forest sector diversification initiative.”
The Residential Wood Pellet Appliance Rebate Program is an initiative under the Forest Industry Diversification Program to help diversify the industry and identify new markets. Details on the rebate, program requirements, and application forms can be obtained from the Newfoundland and Labrador Department of Natural Resources website, from wood pellet appliance vendors in the province, or by calling 709-637-2349.
MORBARK LAUNCHES SAWDUST QUICK SWITCH
Apr. 22, 2010, Winn, MI – Morbark Inc. now offers a second Quick Switch conversion kit, allowing grinder owners to further diversify their product offerings by modifying the hammermill of their Morbark horizontal grinder. The original conversion kit, introduced in 2009, gave Morbark grinder owners the ability to make high-quality standard size wood chips. Now, the new Sawdust Quick Switch conversion kit allows grinder owners to supply the large-volume sawdust market. This gives Morbark grinder owners the capability to produce mulch, high-quality chips, or sawdust with just one machine.
Markets for sawdust include animal bedding, wood pellet production, cellulosic ethanol, and co-firing with coal. Sawdust is the preferred material for wood fuel pellet production and co-firing with coal. The basic difference between the two Quick Switch conversion kits is the number of knives and their configuration. The Sawdust kit uses up to 16 knives, whereas the original kit has up to 12 knives.
Ed Dodak, assistant sales manager for the Morbark Great Lakes Region, says, “In a recent demo, our Morbark 4600XL horizontal grinder equipped with a 16-knife Quick Switch conversion kit and a 1050 horsepower CAT diesel engine produced approximately 40 tons/hour of fine hardwood sawdust from fresh cut whole trees. The resulting material was completely suitable as direct input for pellet mills or for co-firing with coal and was analyzed at a local university to be 95% below one-quarter inch.”
The Morbark Quick Switch conversion kit does not require removing the hammermill from the unit or replacing the hammers with small knife bits. The Quick Switch converts the hammermill into a drum with full-sized knives so it acts just like a chipper. Conversion is possible in the field, without a crane, and can be done quickly.
The Quick Switch conversion kit is available on Morbark horizontal grinder models 3800, 4600, 4600XL, and 6600 from any model year, wheeled or track versions. For more detailed specs or to watch a video, go to www.morbark.com/quickswitch.
LOAN TO HELP WOOD PELLET FIRM DOUBLE CAPACITY
A North Clarendon wood pellet mill is expanding its capacity with the help of a loan from the Vermont Economic Development Authority
Vermont Wood Pellet Company will purchase a drum dryer that will give the company the ability to nearly double capacity from 10,000 tons up to 18,000 to 20,000 tons a year. VEDA approved a $100,000 loan toward the $200,000 equipment purchase.
The loan to Vermont Wood Pellet was one of several projects around the state that recently received $6.1 million in VEDA financing.
Katie Adams and partner Chris Brooks started Vermont Wood Pellet Company last August, taking over space in the Airport Business Park.
Brooks said Wednesday that pellet orders the first season met expectations and that pre-buy orders convinced him and Adams that there was a need to increase capacity.
"We're still operating three shifts, five days a week," Brooks said. "So, 24 hours a day we're operating."
Brooks said pre-buy orders for next season are rolling in at a good clip. He said the pre-buy price is $229 a ton.
The super premium wood pellets are sold at area stores including Mike's Country Store, Resort Spa Services and E.C. Crosby & Sons in Danby. Bourdeau Brothers in Middlebury is the local distributor. The company also sells pellets direct from its North Clarendon mill. Pellets are sold in 40-pound bags, by the half ton and by the ton.
He said purchase of the new drum dryer will ensure the company can meet demand, especially if the price of oil jumps next heating season.
"That's why the need for larger drying capacity, so we can fulfill contracts that we have, plus take care of folks so there isn't a shortage like what we ran into two years ago," Brooks said.
VEDA also approved:
Franklin County Industrial Development Corp., St. Albans – Financing of $1.76 million to support infrastructure improvements to a 93-acre industrial park expansion. The $2.3 million project will extend road and services from the existing park to the new site, creating a number of new lots for sale.
Sugarbush Resort, Warren — A two-part, $8.86 million project with $1.3 million in VEDA financing.
Phase I includes construction of two skier services buildings at the Lincoln Peak base area; a new 14,000-square-foot building for adult ski school, ski rental operations, coffee shop, ticketing, and other retail space; and a 13,000-square-foot building for the resort's children's ski school programs. Phase II includes the replacement of two snowmaking pipelines.
Brattleboro Development Credit Corp., Brattleboro – VEDA approved $230,000 in financing as part of a $1.45 million project to purchase 36.5 acres in the Exit One Industrial Park. The project also extends a water line to the Delta Business Campus on Paul's Road. Commonwealth Yogurt will locate at the Delta Park, which currently lacks town water for process use and fire protection.
Mike and Julie-Lynn Wood, Cavendish – The Woods will receive $202,500 in VEDA financing as part of a package to purchase The Golden Stage Inn in Proctorsville. The inn is a long-established 10 -room bed and breakfast, located near Okemo Mountain Resort.
Farmers around the state received a total of $1.67 million in financing through the Vermont Agricultural Credit Corp.; small businesses received $550,000 through the Small Business Loan Program; and $311,508 was earmarked to repair or improve existing privately owned drinking water systems through VEDA's Drinking Water State Revolving Loan Fund.
Enfield wood pellet company to pay full refunds, AG says
By Alex Wood
Published: Saturday, May 1, 2010 1:12 AM EDT
A bankrupt Enfield company that distributed wood pellets for use in home furnaces has agreed to pay at least $55,000 in refunds to people who paid for pellets they never received, Attorney General Richard Blumenthal announced Friday.
The attorney general said he expects all Connecticut consumers with verified claims against the company, New England Pellet LLC, to receive full refunds. He estimated that about 250 Connecticut consumers qualify.
The company, which was based at 1654 King St. in Enfield, refunded about $116,000 to consumers in the initial months of a 2008 pellet shortage, before Blumenthal became involved in the matter, according to one of its lawyers, James W. Oliver of Hartford.
WOOD PELLET PLANT IN KREMMLING ON THE ROPES AFTER DWINDLING DEMAND
Confluence Energy tries to rebound after tough winter for biomass industry
Photo by Matt Stensland
Logs sit in the yard at Confluence Energy on Wednesday in Kremmling. Confluence Energy owner Mark Mathis hopes to start production again this month.
Photo by Matt Stensland
Confluence Energy owner Mark Mathis describes the challenges the wood pellet industry is facing.
Steamboat Springs — About 2,000 tons of wood pellets are bagged and stacked in Confluence Energy’s yard in Kremmling, but the only thing moving the material last week was the wind.
A shipping truck was nowhere to be seen.
“We have more capacity than we have utilization of the product,” plant owner Mark Mathis said diplomatically. “We’ve got a little bit of inventory that we’re still moving through.”
The winter was a tough one for Mathis and, he said, for the pellet industry across the country. When he began production at the Kremmling plant in September 2008, less than two years ago, the market for biomass and alternative energy sources such as wood pellets seemed boundless. Prospects were so good, Mathis said, that he and John Frink, of Rocky Mountain Pellet Co. in Walden, dismissed the idea of consolidating their efforts into one plant. Instead, they each opened for production and business.
Then, regional pellet markets became saturated, heating oil prices dipped — causing consumers to look less for alternative fuel sources — the economic recession struck and a mild winter dropped demand for pellets even further, creating what Mathis called “the worst year (the pellet industry) has ever had.”
“I think a lot of people woefully misjudged the strength of the market,” he said. “Of the 70 or 80 wood pellet plants (nationwide) that I’m aware of, there’s only one that’s running right now.”
In January, MaineBusiness.com reported that Maine Energy Systems, a wood pellet startup, was unprofitable while facing the recession and relatively low oil prices. Partner Dutch Dresser recalled better times.
“A couple of years ago, we couldn’t answer the phone fast enough,” the website quoted Dresser as saying.
Mathis said the exact same thing last week. Confluence Energy employed 34 workers at its peak, in jobs that Mathis said started well above Grand County’s average income.
But the market’s changes have been crippling.
Mathis laid off some workers in December and nearly all the rest in February. His former bank ended his line of credit. Mathis owes money to “six or seven” logging entities, he said, including two in Steamboat Springs. The total amount he owes loggers is in the tens of thousands of dollars, he said.
“I’ve called every one of those loggers and apologized … and explained to them exactly where we’re at financially,” Mathis said.
He intends to pay them back.
“We have great orders this year,” Mathis said, citing a pickup in business that should allow him to ramp up production and sales, and bring back some workers, as soon as this month. “We’ll be up 25 to 30 percent this year in sales.”
But even that increase would allow Mathis to operate at only about 50 percent of the plant’s 125,000-ton annual capacity. That means a decreased ability to take logs from loggers and continued ripple effects across the industry.
“The whole fiber industry … in this region has been on the verge of financial difficulty for a long time,” Mathis said.
John Twitchell, district forester for the Colorado State Forest Service, said this past winter was “the most uncertain economically” he’s seen in his 30-year career.
“A lot of people got laid off right before Christmas,” Twitchell said, referring to regional loggers. “The pellet mills had been our only outlet — many guys ended up putting all their eggs in that basket, but they were forced to.”
Twitchell said in the face of regional sawmill struggles amid the recession, state and federal grants have been one of few job sources in recent months.
“The state was able to, in a number of situations there, step in and immediately apply some grant dollars we had available and keep those operations going,” he said.
Steamboat’s Rogue Resources was able to add the equivalent of more than 10 full-time jobs early this year, via a $1 million grant given to the city of Steamboat Springs through the American Recovery and Reinvestment Act and the Colorado State Forest Service. The funding is for removal of trees that present a wildfire risk in the Steamboat area.
Mathis said he is working hard to promote other uses of wood pellets. He’s in conversations with Union Pacific to increase rail capacity for shipping and with Xcel Energy to explore mixing pellets into burners at coal-fired power plants.
“We need to find some big appetite for the product out there,” Mathis said. “We’ll survive; it’s just very thin. This is making us all dig down … to create any markets we can to make it sustainable.”
Mathis said he’s lined up two test fires next month with coal facilities.
On Wednesday morning, one truck did pull up to Confluence Energy. But it wasn’t there to ship a load. The pickup carried three people, including Mike Villalon, of Kremmling.
Villalon, a former forklift driver at the plant, said he heard a rumor that the plant was hiring again. He said he had been laid off from the building industry, as well.
Mathis told him to check back soon and stay in touch.
“This has been a great job,” Villalon said about the pellet plant. “I sure would like to go back to work.”
Biomass revolution: Heating alternatives explored
By DAVID BROOKS
Staff photo by Don Himsel The biggest biomass-related company in the region is New England Wood Pellet in Jaffrey, which produces 250 tons of pellets an hour. Shown here are two trailer trucks full of raw material; wood chips on the left, sawdust on the right. The sawdust is blown into the trailer at the factory where it is created, and is packed so tightly that it turns into a spongy solid mass.
Many homes in New Hampshire and the country were heated by wood before World War II, but it has been largely displaced by other fuels – particularly heating oil in New Hampshire, where owners of 58 percent of homes in 2000 told the Census Bureau that they used oil to heat. Replacing cordwood with pellet stoves is expected to reverse this trend.
Region 1940 1960 1980 2000
NH 36 14 12 4
US 23 4 3 1.7
Source: U.S. Census Bureau, from decennial census
To read the entire report “Vision for 2025,” visit www.heatNE.com
When talking about the oldest of all energy technologies as it evolves for the modern world, it’s OK to use terms such as “biomass” and “thermal inertia” or even “return on investment” – but please, its proponents beg, don’t say “tree-hugger.”
“That image is still out there – we need to lose that image,” said Steven Walker, CEO of New England Wood Pellet in Jaffrey, the region’s highest-profile biomass firm. “This is about business, generating wealth and building an economy around energy – not just saving the world.”
From the other side of the Atlantic Ocean, Christiane Egger, a government official from Austria who champions wood burning as a part of the alternative energy picture, agrees.
“This is an industry. This is not for people in strange clothes doing funny things,” she told several hundred people crowded into an industry conference Tuesday in Manchester.
The crowd, full of people in suits and business casual attire, as well as the blue-jeans-and-boots uniform of the logging industry, laughed.
Even in the midst of a recession, the biomass industry has reason to laugh, thanks largely to a decades-long move from burning cordwood to burning fuels made out of pressed, dried sawdust or other types of processed wood.
“You don’t take oil or gas and throw it into a random box – you refine it,” Walker said. “We refine wood into pellets and use an appliance.”
Such “biomass” fuel doesn’t have to be made from wood; corncobs, grass or any type of grown matter will do. But in New Hampshire, the second most heavily forested state behind only Maine, wood is the obvious choice.
The uniform size, shape and quality pellets mean their use can be automated, with augers to feed boilers from hoppers of fuel filled by delivery trucks, echoing the way homes and businesses buy and use oil, natural gas or coal.
This has led to the convenience of pellet stoves, which have made wood heat a viable option again in homes, and large pellet-fed or wood-chip-fed boilers, which make wood a possible heating fuel for commercial and industrial plants.
That, in turn, has provided incentive to develop systems that avoid most of the pollution that older wood-burning systems emitted.
Even power production has gotten into the act: Far more electricity is produced in New Hampshire by wood-burning power plants than by hilltop wind turbines.
Cost is an issue
This doesn’t mean wood is going to leap back into its 19th-century role as the leading fuel for heating homes and businesses; oil and natural gas are likely to remain dominant. But a series of technical improvements, pushed by environmental desire to wean the U.S. from fossil fuels and particularly imported oil, have given it new life.
The big issue, as is so often the case, is money. New burner and boiler technologies for efficient wood burning are expensive, partly because they’re still being developed and partly because relatively few are being made and sold.
“It’s cost, pure cost; that’s what drives the decision” whether to switch, said Mark Froling, president of Froling Construction and Industrial Services, a Peterborough-based consultant who has been dealing with construction projects for 23 years and in renewables for a decade.
“It’s incentive driven.”
These incentives, mostly federal but also some state money funneled through programs such as the Regional Greenhouse Gas Initiative, are designed to help companies and residents switch from fossil fuels.
There are other concerns, including the ability of New England’s forests, which have rebounded from being mostly clear-cut, to provide fuel and remain healthy.
Wood-burning power also has a long legacy of air pollution, particularly involving soot and other small particles; officials said modern pollution controls have solved this issue, but not everybody is convinced.
The fact that incentives are required demonstrates that the transformation of biomass energy still has a way to go. But the second annual “Heating the Northeast With Renewable Biomass” conference, held at the Radisson Hotel Manchester on Tuesday and Wednesday, reflected how far it has come.
The two-day event, targeted at players within the industry rather than retail customers, was twice the size of last year’s conference.
It featured not just the expected business such as stove manufacturers and New England Wood Pellet, poster child for the biomass industry in New Hampshire, but also ancillary businesses, showing that there’s enough money in the industry to attract indirect players.
They include Hews Co., of Maine, a truck body firm selling a sleek forklift that could be carried around on the back of a flatbed truck, to help firms deliver bagged pellets by the ton to customers’ basements.
“It used to be people would buy a few bags (of pellets) at the hardware store – now it’s delivered by the pallet load,” Charles Hews said. “They’re still working out the best way to deliver product to customers.”
Also displaying their wares were Firefly North America, which sell fire protection systems – wood dust is so easily ignited that it can literally explode, producing the biggest safety hazard of the forest products industry – and Primary Packaging, which hopes pellet manufacturers will sell their product in its polyethylene bags or use its plastic wrap to encase their pallet loads.
Even wood could be found in various forms, such as Biobricks, 8-inch parallelepipeds of compressed sawdust, like pellets the size of small bricks, which can be burned in traditional wood stoves in place of cordwood, creating a longer-lasting fire with less ash.
And for those who still want to use cordwood, there was also the Garn Wood Heating System, which burns traditional logs within a gasification chamber in specialized boilers to create large-scale commercial heating systems, creating a much more efficient system if you have a good supply of logs that you want to use.
Perhaps not surprisingly, the biomass industry thinks all these options could be better used. At the end of the Manchester conference, five groups representing various aspects of the biomass industry in the Northeast issued a “A Vision for 2025.”
It noted that heating and hot water used 39 percent of all energy consumed in New England and New York in 2007, and that 96 percent of this energy was provided by “non-renewable and high-carbon fossil fuels.”
It urged a goal of providing 25 percent of the region’s heating and hot water with “forest and farm resources transformed into heat” by 2025, replacing what it says are 1.14 billion gallons of heating oil annually with biomass. Among other things, it would involve converting 1.38 million houses to pellet boilers and other thermal biomass.
The report details the amount of “biofeedstock” available in New England forests and claims there is more than enough to do with without harming lumber mills, paper mills and other users of what is sometimes called the “wood basket.”
This effort should go “hand in hand with aggressive efforts to improve building energy efficiency, thus reducing overall energy consumption,” it said, and could not only reduce the amount of oil that we have to buy, but create more logging and wood-industry jobs and related jobs in servicing and installing biomass installations.
It proposes the creation of a six-state working group, involving industry, government and nonprofits, to urge state and regional support for this idea through tax incentives, loan programs, reference in climate action plans and a “public education campaign” to overcome wood’s tree-hugger imagine.
It’s a lot to expect, but the conference got a boost of encouragement from Egger, a director of the energy division for the state of Upper Austria, an industrial state in Austria that has, she noted happily, almost exactly the same population as New Hampshire.
More than a decade of government and industry push has led that state, which has much less forest cover than northern New England, to generate a third of its total energy use from alternative sources, half of which are wood. Among other things, she said, virtually all new homes are being heated by wood, generally pellet boilers.
“Why did this small state in a small country put such a burden on itself? … Purely economic reasons are sufficient to justify the transition,” she said. “Price fluctuation (of oil) alone is a very good reason to get out of oil dependency.”
What this means, she said, is that if New Hampshire and its neighbors want to use more biomass, they eventually can.
“What you’re doing is not an isolated … initiative, but is part of something bigger,” she said. “You have to make a commitment and you have to stick to it.”
David Brooks can be reached at 594-5831 or email@example.com.
WOOD PELLETS CATCH FIRE AS RENEWABLE ENERGY SOURCE
WALL STREET JOURNAL
By RUSSELL GOLD
Some of the fastest growing sources of renewable energy in the world are the wind, the sun -- and the lowly wood pellet.
European utilities are snapping up the small combustible pellets to burn alongside coal in existing power plants. As a global marketplace emerges to feed their growing appetite for pellets, the Southeastern U.S. is becoming a major exporter, with pellet factories sprouting in Florida, Alabama and Arkansas.
Jason Henry for The Wall Street Journal
A hydraulic lift thrusts a tractor-trailer into the sky to dump a load of sawdust that will be used for production of wood pellets at Green Circle.
Wood pellets -- cylinders of dried shredded wood that resemble large vitamins -- are the least expensive way to meet European renewable-energy mandates, utility executives and industry consultants say.
Made from fast-growing trees or sawdust, pellets are a pricier fuel than coal, but burning them is a less-expensive way to generate electricity than using windmills or solar panels. Burning pellets releases the carbon that the trees would emit anyway when they die and decompose, so the process is widely regarded as largely carbon neutral. In contrast, carbon is locked away in coal and is only released once the coal is dug out of the earth and burned.
The wood-pellet market is booming because the European Union has rules requiring member countries to generate 20% of their electricity from renewable sources by 2020. Europe imported €66.2 million (about $92.6 million) of pellets and other wood-based fuels in the first three months of 2009, up 62% from the same period a year earlier, according to the EU's statistical arm.
Government mandates are essential to the increasing use of pellets in power generation, and the growing global pellet trade, experts say.
"You are looking at a totally artificial market," said Christian Rakos, chief executive of Propellets, an Austria-based trade group of pellet producers. "No power plant would consider using pellets for one minute if they didn't have to do it."
Still, Europe's eagerness for more pellets has turned the U.S. into an energy exporter. Until recently, there were only about 40 pellet factories in the U.S., which produced about 900,000 tons a year, mostly for heating homes.
But in May 2008, Green Circle Bio Energy Inc. opened a pellet plant in Cottondale, Fla., that produces 500,000 tons of pellets a year; it ships them by rail to the coast and then on to Rotterdam, Netherlands. The company, owned by Swedish concern JCE Group AB, wants to build another big plant in the U.S., said Olaf Roed, chief executive of Green Circle.
Another 500,000-ton facility in Selma, Ala., owned by Dixie Pellet LLC, also opened last year. And Phoenix Renewable Energy LLC plans to break ground next month on a 250,000-ton-a-year pellet plant in Camden, Ark., along with a 20-megawatt power plant run off tree scraps that will feed heat to the pellet plant. The $100 million facility's output for five years has been contracted to go to Europe, and Phoenix is working on another five facilities.
Pellets can either be made out of sawdust left over from lumber production or from soft-wood trees such as pine. These aren't growing in wild forests, but in industrial plantations where they can be harvested easily and often.
Jason Henry for The Wall Street Journal
Green Circle employees race to repair one of the pellet mill's dies that give the pellets their compacted cylindrical shape at the plant in Cottondale, Fla., July 1.
At Green Circle's Florida facility, bark is stripped off the tree and burned to generate steam used in making the pellets. The tree itself is cut up in a wood chipper, dried and hammered into a powder, which is formed into pellets under very high pressure.
It is easy for these pellet plants to find raw material. The pulp and paper industry is declining, and the housing slump has sapped the need for hardwood. Forest owners are ecstatic that pellet plants are stepping in.
"We are irrationally exuberant," said Lee Laechelt, executive vice president of the Alabama Forest Owners Association.
Australia, New Zealand, Argentina and Vietnam are also shipping pellets to Europe, as are Canada and South Africa, said Helmer Schukken, CEO of GF Energy BV, a Rotterdam-based trader.
Wood pellets are becoming the newest global commodity, with prices posted on an Amsterdam energy exchange, Mr. Schukken said. "It is becoming like trading coal."
That will make it easier for England's Drax Group PLC, which is installing equipment at its giant 4,000-megawatt coal-fired power plant in North Yorkshire to use pellets in place of coal for up to 10% of the fuel. Pellet makers say Drax is lining up contracts in the U.S. Other big buyers include Dutch power company Essent NV, which is being acquired by Germany's RWE AG, and French GDF Suez SA's Electrabel unit.
Of course, U.S. utilities may soon be as interested as their European counterparts in burning pellets instead of coal. California, which has a goal of producing 33% of its electricity from renewable sources by 2020, is looking at using wood products in coal plants.
If a federal renewable energy standard is approved, "we won't be shipping pellets overseas," said Phoenix Renewable Energy's development director, Steve Walker. "We'll be shipping them domestically.
FIRSTENERGY PRESSURED ABOUT BIOMASS PLANS
Sunday, May 9, 2010 2:57 AM
By Spencer Hunt
THE COLUMBUS DISPATCH
When FirstEnergy announced plans a year ago to burn biomass instead of coal at its R.E. Burger power plant along the Ohio River, environmental groups praised the Akron-based company.
Now, environmental and consumer-advocacy groups want to know where FirstEnergy will get all the wood or plant waste to burn at its Belmont County plant.
"The answer back to us has essentially been: 'Somewhere in North America,'" said Trent Dougherty, a lawyer with the Ohio Environmental Council.
The fuel type and source are important because Burger will need a lot of it. If it burned only wood, Dougherty and another group, the Office of the Ohio Consumers' Counsel, estimate that Burger would consume more than 3million tons a year.
That's nearly twice the 1.7 million tons the U.S. Forest Service estimates logging companies cut down annually in Ohio's forests. If the biomass fuel has to come from out of state, transport costs would increase and that might be passed along to consumers, Dougherty said.
"Biomass isn't like other types of renewable energy most people think of, like solar and wind power," said Anthony Rodriguez, spokesman for the Ohio Consumers' Counsel, which represents the state's power consumers. "You have to buy this fuel."
That's why both groups have asked the Public Utilities Commission of Ohio to reject FirstEnergy's request to officially name the Burger plant a "renewable energy" facility until FirstEnergy identifies the type, source and cost of its new fuel.
Mark Durbin, a FirstEnergy spokesman, said the company won't answer these questions while it negotiates a contract, or contracts, to supply Burger with its new fuel. It plans to burn biomass by 2012.
"We're talking to various suppliers. It's a very competitive process," Durbin said.
Biomass is a general term that refers to wood and plant waste burned to generate electricity. It can include wood chips, sawdust, lawn waste and cornstalks. The Sauder Co. furniture plant in Archbold has burned wood chips in two boilers since 1993 to generate 7 megawatts of electricity.
There are at least 100 biomass plants in 22 other states - most are in California - according to the U.S. Department of Energy's Oak Ridge National Laboratory.
Switching from coal to biomass would significantly cut pollutants linked to smog, acid rain and global warming. The Burger plant burns about 800,000 tons of coal a year. In 2008, it emitted 13,585 tons of sulfur dioxide and nitrogen oxides and 1.3 million tons of carbon dioxide.
FirstEnergy faced a court-ordered April 2009 deadline to cut pollution at Burger. Converting the 624-megawatt plant to biomass would cost $200 million, compared with $330 million for new scrubbers and filters.
The switch also would help FirstEnergy meet a state mandate to generate 12.5 percent of its power from "renewable sources" by 2025. That's why the company asked the state to designate Burger a renewable plant.
Other utilities, including Columbus-based American Electric Power, are looking into biomass. AEP delayed a test-burn of wood pellets at a 165-megawatt unit at its 1,745-megawatt Conesville plant in Coshocton County.
AEP spokeswoman Melissa McHenry said the cost to transport the pellets to Conesville made the fuel too expensive to burn. The company is looking for a cheaper supply.
Durbin said the PUCO doesn't need specific information about its choice of biomass to declare Burger a renewable-energy plant. Its application form lists the fuel type as "wood pellet/briquette/chips and/or agricultural biomass fuels in pellets, briquettes or bales." The form doesn't specifically ask for the source of the biomass or its cost.
"We believe we met all of the (state's) requirements," Durbin said.
The commission will have to decide whether that's the case. Kim Bojko, of the PUCO's legal department, said there's no deadline to make a decision on the designation.
Dougherty said he'll support biomass at Burger if FirstEnergy shows it will work.
"It sounds like a good idea," he said. But "There's nothing that shows us that (FirstEnergy) has the fuel and that they are able to do this."
RAPID EXPANSION OF WOOD PELLET CAPACITY IN NORTH AMERICA DRIVES SAWDUST AND WOOD CHIP PRICES UPWARD, REPORTS THE NORTH AMERICAN WOOD FIBER REVIEW
Seattle, USA. There has been a rapid expansion in wood pellet capacity in North America the past five years, from just over one million tons in 2004 to over six million tons in 2009, according to a recent report from the USDA Forest Service. British Columbia was the first region to take advantage of inexpensive sawmill residues and to produce wood pellets for the fast growing European market.
Capacity in the western province of Canada has not grown much the past few years, so in 2009, it is likely that the US South will take over as the leading pellet-producing region in North America, according to the North American Wood Fiber Review. Much of the investment in pellet capacity in the US South has been driven by the export market in Europe. On the other hand, the second largest producing region in North America, the Western US, has so far only sold pellets into the domestic market.
In 2004, the pellet industry was practically non-existent in the US South and this sector has now grown and will reach a capacity of almost two million tons in 2009. These capacity numbers may sound impressive, the actual operating rates have been surprisingly low in both the US and Canada. In 2008, production was about 66% of capacity in the US and 81% of capacity in Canada, estimates USDA-FS. Major reasons for the low rates include start-up problems for newly built plants, financial difficulties for some companies and a lack of affordable wood fiber supply.
With increased demand for wood fiber, pellet manufacturers have increasingly had to accept higher-cost wood fiber sources than the commonly used sawdust from local sawmills. More pellet companies are now using wood chips that traditionally have been used by the pulp industry. Partly as a result of the expansion of the biomass sector, wood chip prices, sawdust prices and woody biomass prices have moved up in the US this fall.
In the US Northwest, sawdust prices have gone up substantially the past five years. In 2004, average sawdust prices were US$28/odmt as reported by the North American Wood Fiber Review. These prices reached a peak of US$74/odmt in late 2008 and have since fallen, averaging US$64/odmt in the 3Q/09. The price increases that have occurred in Western US are likely to be seen in other regions experiencing rapid expansion of their pellet industries.
Pulpwood and wood chip market updates are included in the 24-page publication North American Wood Fiber Review. The report, established in 1982 and with readers in most of the large forest companies in North America, tracks wood chip and pulpwood prices in 15 key markets of the US and Canada.
Wood Resources International LLC
www. woodprices. com
BUSINESS IN THE WOOD PELLET SECTOR GETTING FIRED UP
Wood pellets are fast emerging as a must have commodity in the biomass industry.
That is the conclusion of a new report by industry expert Poyry Forest Industry Consulting, which found that the global demand for wood pellets reached nearly 12 million tonnes in 2008, New Energy Focus reports.
In an interview with the news provider, Marek Guizot, UK head of Forest and Wood Supply Strategies, offered his thanks to Poyry for providing the industry with some much-needed research about the growth of the wood biomass market.
"Wood pellets have been identified as one of the fastest growing bioenergy feedstock markets, and also one where it is challenging to obtain reliable information," he revealed.
Most notably, the Poyry study predicts that global pellet demand will double by 2015, to reach approximately 24 million tonnes.
This could be good news to UK wood pelleting firms as it signals that business will well and truly be getting fired up.
CO-FIRING BIOMASS WITH COAL
Co-firing makes use of existing power generation assets and infrastructure with the lowest cost of generation for renewable energy.
by Kevin Sullivan & Ronald Meijer, KEMA
Published: May 19, 2010
Oklahoma, United States -- As nations focus on controlling carbon, global demand for and production of coal-based electricity continues to increase. According to the International Energy Agency, the world's power demands are expected to rise 60 percent by 2030, with fossil fuels, including coal, accounting for 85 percent of the energy market. Ultimately, building towards a sustainable generation future, means balancing carbon objectives, energy demand and affordability. Biomass co-firing technology can provide a path to addressing climate change while mitigating costs to the world's coal-generation base and the customers served.
About half of the electricity in the United States is generated from coal. At the same time, the increasing focus on energy and climate change policy in the U.S. has introduced significant regulatory uncertainty in generation planning and operations. This uncertainty around where U.S. carbon policy is headed and when-along with the nature of modern utilities' complex planning-requires a long-term, forward-looking strategy, one that fully integrates generation portfolio management with changes in demand behavior.
An integrated asset and fuel optimization approach can help the energy industry create a robust strategy set that will stand the tests imposed by constantly changing regulatory requirements, market dynamics, evolving environmental policies and uncertainties regarding timing, funding levels and rate recovery mechanisms.
Co-firing may indeed make sense, from cost and environmental perspectives, for many coal-based electricity producers. Co-firing makes use of existing power generation assets and infrastructure with the lowest cost of generation for renewable energy, while providing a means to mitigate the future cost of carbon. It offers renewable energy generation with low capital costs and takes advantage of the latest technologies and the high efficiencies of today's coal power plants.
Many national governments provide tax and financial incentives to encourage electric producers to adopt co-firing. In the U.S., where biomass is recognized as a renewable fuel, replacing coal fuel with biomass results in a substantial credit reduction in coal-based carbon dioxide emissions.
Biomass co-firing has been used in Europe for over a decade. Full-scale commercial co-firing of at least 10 percent biomass-based on heat input-is common practice, with a wide variety of bio-fuels and co-firing configurations. The European biomass co-firing market has advanced to the point where the EU is implementing a new certification process for sustainably produced biomass for energy generation purposes. KEMA is assisting in establishing this biomass certification based on the chain of custody-from producer to processors to end-user.
Often electricity producers opt to conduct trials first, to prove the viability, reliability, sustainability and cost-effectiveness of biomass co-firing in their plants. KEMA has been actively engaged in supporting biomass co-firing initiatives already underway in Europe for over a decade, and this technology has been demonstrated in many boiler types. The U.S. can leverage the experience gained in Europe to fast-track implementing biomass co-firing. Complete conversion to 100 percent biomass in a specific unit at multi-unit stations has already proven to be viable and sustainable in certain circumstances. The challenges in the U.S. are around reliable fuel supply and quality, a lack of incentives and a general reluctance by plant operations to introduce new fuels into existing boilers.
We are seeing biomass co-firing on the rise in North America. KEMA has performed feasibility studies on co-firing for a number of large North American utilities looking to assess and quantify the risks, review fuel supply surety and obtain a detailed techno-economic assessment and conceptual design for co-firing of biomass in coal-fired plants. Utilities planning on co-firing between 5 and 10 percent biomass (by heat input) initially have also been interested in knowing what it takes to move towards a 100 percent fuel switch to biomass.
In considering the full fuel switch, utilities are looking to ensure a mix of interrelated considerations, including minimal unit de-rating, no severe adverse operating conditions, no degradation of ash quality, no increase in emissions, compliance with regulation and legislation, broad initial fuel scope and competitive economics/favorable internal rate of return. By using proprietary co-firing control model software, we have been able to facilitate efficient and effective assessment process-providing utilities immediate quantitative insight into the risks associated with firing a mix of fossil and/or biomass fuels in existing coal-fired power plants along with specific guidance to optimize combustion.
As co-firing biomass has become a recognized option in the U.S. electric generation market, biomass co-firing can be a real option in a utility's portfolio-based approach to climate planning. We have worked with a number of U.S. and European utilities in defining their long-term carbon strategies, the majority of whom are asking to include biomass co-firing as a portfolio option within our sustainable integrated energy modeling tools being employed. This portfolio-based carbon planning process offers another avenue for utilities to assess the impact of biomass co-firing on profit and loss and on the balance sheet along with risk-based scenarios.
Kevin Sullivan is senior vice president with KEMA Inc. and Ronald Meijer is managing principal Clean Fossil Power with KEMA Nederland B.V.
Selasa, 25 Mei 2010
TIME TO STOP BURNING WOOD PELLETS
I recently updated the Fuel Cost Comparison Chart at Alternative-Heating-Info.com and the results were surprising. As of 3/20/06 it was actually cheaper in Metro Boston to heat with natural gas than with wood pellets!
During these times of fuel price volatility, it’s important to keep a close eye on the relationship between fuel prices. Any homeowner who uses a wood pellet stove to supplement their gas furnace could be losing money and not even know it..
If you can use a calculator, you’re only minutes away from figuring out which fuel is the cheapest to burn at any given time.
When you compare fuel heating costs make sure it’s apples to apples. The standard quantity used for comparing residential fuel costs is 1,000,000 BTUs of fuel heat content.
Cost To Burn Wood Pellets
Since a wood pellet stove needs only 125 lbs (1/16 of a ton) of pellets to generate 1,000,000 BTUs, divide the cost per ton by 16. At $198 a ton for wood pellets it costs $12.38 to produce 1,000,000 BTUs.
Cost To Burn Natural Gas
The price per therm (look at your gas bill) of natural gas in Boston is $1.1813. When you multiply that by 10.30 (10.30 cubic feet) it costs $12.17 to produce 1,000,000 BTUs.
It’s easy to see that natural gas heat now costs about $0.21 less per 1,000,000 BTUs than wood pellets.
Here are the quick fuel cost comparison formulas for wood pellets and natural gas:
Price per ton of wood pellets divided by 16 = Cost to produce 1,000,000 BTUs.
Price per therm of natural gas x 10.30 = Cost to produce 1,000,000 BTUs.
The quick formulas are useful only for comparing natural gas to wood pellets since their fuel efficiencies are similar.
If you are comparing fuels with different efficiencies, all you have to do is find the coefficient of the fuel efficiency percentage rating. Please don’t run screaming out the door because I said coefficient. Just divide 1 by the percentage’s decimal equivalent to obtain the coefficient.
For example: The fuel efficiency rating for natural gas and wood pellets is 85%. If you divide 1 by .85 you get a coefficient of 1.18. Now plug this into the quick formula to obtain the effective, or true cost, of the fuel you are burning.
Wood Pellets: $198 divided by 16 x 1.18 = $14.60
Natural Gas: $1.1813 x 10.30 x 1.18 = $14.36
By expanding the quick formula to include the effective cost calculation, the spread between the two fuels has now widened to $0.24.
Assuming fuel prices don’t go crazy, you could save as much as $75 during the remainder of this heating season by switching from wood pellets back to natural gas.
When prices do change, you have armed yourself with two simple, yet powerful tools to help you quickly and confidently determine when one fuel is more cost effective than the other.
These are the coefficients of commonly used percentages: 60% = 1.67, 65% = 1.54, 70% = 1.43, 75% = 1.33, 80% = 1.25, 85% = 1.18, 90% = 1.11, 95% = 1.05, 100% = 1.
May 28, 2010 10:00 ET
GOVERNMENT OF CANADA ALLOCATES $3,304,188 IN FUNDING FOR STARTUP OF GRANULES LG INTERNATIONAL INC.
MASHTEUIATSH, QUEBEC--(Marketwire - May 28, 2010) - The Honourable Denis Lebel, Minister of State for Canada Economic Development, today announced the awarding of $2,560,000 in repayable funding for the startup of Granules LG international Inc., a wood pellet pilot plant in Mashteuiatsh. Indian and Northern Affairs Canada is also supporting this innovative project with a $744,188 financial contribution.
Granules LG international Inc. will specialize in the manufacture of wood pellets from forest waste. This energy combustion product will be produced mainly for export. The pilot plant will operate at an annual production capacity of 80,000 tonnes. If the results prove conclusive, the facility will proceed from the pilot stage to the industrial stage, producing some 400,000 tonnes of pellets per year.
"The Granules LG international project will translate into the creation of 25 permanent jobs in Mashteuiatsh and another 50 local indirect jobs as well as the investment of $8.1 million in the community. It goes without saying that this is good news for the Innu community, which has also been hit by the forest crisis and plant closings in neighbouring RCMs. Moreover, the new plant will specialize in the wood processing sector, an area identified by Canada Economic Development's Saguenay–Lac-Saint-Jean business office as a priority for the region's economy. That is why we have decided to lend our financial support to the establishment of this industrial facility which, we are convinced, will open up highly-promising opportunities for development," explained Minister of State Lebel.
"I am pleased to announce this first-ever direct contribution from the Government of Canada to a First Nation for a major renewable energy project in Eastern Canada. In acquiring this wood pellet pilot plant, the Innu community of Mashteuiatsh is clearly showing both its determination to stimulate the local economy and its capacity to forge effective and prosperous partnerships. This investment will help further the region's economic and social growth by creating numerous jobs, developing new knowledge in the tough and competitive forest industry and generating significant economic spinoffs," commented Chuck Strahl, Minister of Indian and Northern Affairs Canada.
The funding from Canada Economic Development has been awarded through the Business and Regional Growth program, an initiative designed to strengthen the conditions conducive to the sustainable growth of Quebec's regions and small and medium-sized businesses. The program's aim is to help enterprises improve their performance, become more competitive, engage more heavily in innovation and develop new markets.
For more on Canada's Economic Action Plan, visit www.actionplan.gc.ca.
Canada Economic Development is online at www.dec-ced.gc.ca. Subscribe to the Agency's press releases at
http://www.dec-ced.gc.ca/eng/media-room/mailing-list/list.html to keep up with the latest new
MORE BIOENERGY THAN OIL IN SWEDEN
17 May 2010
Bioenergy passed oil as the biggest energy source in Sweden in 2009 in final energy use.
Bioenergy represented 31.7% of the final energy use, compared to 30.8% oil, according to preliminary Swedish Energy Agency statistics presented by the Swedish Bioenergy Association (Svebio).
Svebios says the total share of renewable energy, using the definition in EU:s renewable energy directive (RED), was 46.3% in 2009 – well ahead of the EU target trajectory, and only 3.7% short of the EU target of 49% in 2020.
The major renewable energy source beside bioenergy in Sweden is hydropower. Wind power is still a relatively small contributor to the energy supply.
The main reason for the fast increase of renewable energy in recent years is the steady growth of bioenergy use, Svebio says.
Biomass is the primary energy source in the district heating sector, which supplies more than half of the total heat demand in the residential sector. The use of by-products and residues in the forest industry is another major component.
Bioelectricity has expanded both with combined heat and power plants in district heating and in the forest industry. Pellets and fuelwood play a major role in heating of single homes.
Finally, over 5% of transport fuels are biofuels – ethanol, biodiesel and biogas.
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