WOOD PELLET NEWSLETTER
Gerald W brown * 7202 County Road U * Danbury, WI 54830 Phone 715-866-8535
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• RAIL AUTHORITY OF EAST MISSISSIPPI WATCHES $1 MILLION EARMARK FOR WAYNESBORO-LUCEDALE LINK
• “WE ARE TAKING STEPS TO TRANSFORM ONTARIO’S FOREST SECTOR…” MAURO
• LOSERS OF WOOD SUPPLY COMPETITION
• EXPLORING NEW KOREAN PELLET MARKETS
• PRINCE OF WALES BIOFUEL COOPERATIVE PLANS WOOD PELLET MILL
• ECOTRUST SUBSIDIARY FUNNELS $60M IN FEDERAL TAX CREDITS
• BCAP RECAP
• MILL PLANS ON HOLD
• DRUNSIC: NO ROOM FOR TWO MAN WITH PELLET PLANT PLAN SAYS BEAVER WOOD WOULD PUT HIM OUT OF BUSINESS
• UK FUEL PRICE TRENDS – FEBRUARY 2011
• WOOD PELLET PRODUCERS ARE INCREASINGLY COMPETING WITH PULP MANUFACTURERS FOR WOOD FIBER, REPORTS WRQ
• CANADIAN COMPANY GETS WOOD-CHIP CONTRACT
• ANGLO-DUTCH EXCHANGE TO LAUNCH BIOMASS BOURSE-INTERVIEW
• DELTAPOINT CAPITAL MANAGEMENT HAS ACQUIRED A WYOMING COUNTY MANUFACTURER OF BIOMASS WOOD PELLETS
• PELLET PRODUCTION HEATS UP AGAIN
• SPEAKER: NUMBERS AREN'T THERE FOR MORE BIOMASS
• TORONTO WOOD PELLET MAKER EYES FORMER PULP MILL
• WILL THE REAL CLEAN COAL PLEASE STAND UP?
• PALLET-MAKER PROPOSES CHEAP HEAT FOR CAMPBELLFORD
• CANADA CAN TAP INTO A $200 BILLION MARKET FOR WOOD BIO PRODUCTS
• OGLETHORPE SUSPENDS BIOMASS POWER PLANT PROJECTS
• GERMAN PELLETS AND WESTERVELT RENEWABLE ENERGY TO DEVELOP WOOD PELLET FACILITY
• ENVIVA ACQUIRES DEEP WATER PORT TERMINAL
• HOT TIME FOR BIOMASS FURNACE MAKER
• REPORT: CA UTILITIES SIGNING EXPENSIVE CLEAN POWER CONTRACTS
• WILL NATURAL GAS KILL AMERICAN RENEWABLES?
• AS OIL PRICES RISE, CONSUMERS SEEK ALTERNATIVES
RAIL AUTHORITY OF EAST MISSISSIPPI WATCHES $1 MILLION EARMARK FOR WAYNESBORO-LUCEDALE LINK
Published: Monday, January 31, 2011, 6:30 AM
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The Rail Authority of East Mississippi has $1 million in a congressional appropriation for the proposed rail link from Waynesboro to Lucedale, but there is a problem, according to the authority's executive director.
"This would be one of those nasty old 'earmarks' that everybody talks about that really aren't as bad as people think they are," said Geoffrey Clark, executive director of the authority.
The money through the Federal Highway Administration was requested by Sens. Thad Cochran and Roger Wicker, he said.
Chris Gallegos, a spokesman for Cochran, said in an e-mail, "Sen. Cochran is interested in working with state and local officials to try to determine whether the project can qualify for other federal discretionary funding in the future."
Clark said the project to lay about 50 miles of new track that will link east Mississippi to the ports in Pascagoula and Mobile will continue.
The authority is seeking $1 million from the state, and another $350,000 in federal grants.
The money, including the $1 million federal earmark, is for planning, design and environmental work.
"We definitely have the support of our two senators," Clark said. "They are just waiting to see what the new process or rules are going to be."
The authority operates off funding of about $330,000 annually from the member counties of Lauderdale, Clarke, Greene and George, he said.
"I don't think you can expect it to get done in one year," he said. "This is a big project. It is going to take a lot of work.
The authority was formed in September 2009, and unsuccessfully sought $225 million in federal transportation money through the stimulus program.
The north-south rail link would tap into the region's forest products, particularly the manufacture of wood pellets, Clark said.
"We are sitting in the middle of one of the largest wood baskets in the U.S., and it is not being used to its full potential," Clark said.
Rising fuel prices are helping the project, he said, because shippers realize that they are going to need rail transportation to hold fuel costs down.
"In this biomass field, the volumes are huge, " he said. "The volumes are so huge, you almost can't make it work with truck transportation. You can imagine if you unleashed all of that on these new four-lane highways, what kind of wear and tear that would be on them."
The plan is to tap into the region's ability to produce wood pellets, which Clark said is about to be in demand in Europe for power production.
"This is a great opportunity for timber owners," he said. "The timber industry is what put us here years ago."
“WE ARE TAKING STEPS TO TRANSFORM ONTARIO’S FOREST SECTOR…” MAURO
ATIKOKAN – Atikokan Renewable Fuels has accepted a wood supply offer of 179,400 cubic metres per year of poplar and birch fibre. This is in addition to an existing offer of 100,000 cubic metres per year. “The crisis in the North American forest industry has required new approaches to job creation in this industry. That’s why we are taking steps to transform Ontario’s forest sector, creating new jobs and attracting investment in a way that will ensure our forests continue to be managed sustainably. I am excited by today’s announcement and the jobs that will be created in Atikokan and Northwestern Ontario,” stated Bill Mauro, MPP Thunder Bay-Atikokan.
They will produce wood pellets for domestic and international customers, which can be used to create heating and electricity. This will create up to 95 jobs, help sustain other jobs in the forestry sector and support the local economy.
In addition, with support from the Northern Ontario Heritage Fund Corporation (NOHFC), the company plans to convert an industrial site into a mill that will produce the wood pellets.
The wood supply competition is about putting Ontario’s unused wood to work while the government takes steps to introduce a new forest tenure and licensing system. Helping build a stronger forest industry is an important part of the Open Ontario plan to create jobs and opportunities in Northern Ontario.
“Our government wants to support solid, innovative initiatives that will strengthen our forest industry. The allocations we’re announcing in this first round of successful proposals will play a significant role in re-energizing Ontario’s forest products sector,” enthused Michael Gravelle, the Minister of Northern Development, Mines and Forestry, and Chair of the NOHFC.
“This announcement is an important step towards creating new forestry-based jobs in Atikokan and surrounding areas. MPP Bill Mauro has worked hard on our behalf with the MNDMF to make sure that this was one of the first allocations awarded in Ontario. Bill’s support of this ARF project through the NOHFC has helped keep this project alive while we waited for the forest allocation process to be completed. Minister Gravelle has indeed taken bold steps in offering previously unavailable forest resources within acceptable haul distances from our production facility. ARF is proud to be working with the Rainy Lake Tribal Development Corporation on this project,” commented Ed Fukushima, Atikokan Renewable Fuels.
Ontario is investing $1 million in the plant conversion through the NOHFC’s Enterprises North Job Creation Program and $250,000 toward converting the plant’s existing natural gas heating system to wood fibre-based heat through the Northern Energy Program.
Ontario received 115 submissions in March under the provincial wood supply competition from existing and new forest companies interested in using provincially owned wood and investing in the province.
Ontario is converting the Atikokan Generating Station from coal to bio-mass.
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LOSERS OF WOOD SUPPLY COMPETITION
Officials with the province's wood supply competition have started making decisions on the 115 applications for wood harvesting rights.
Minister of Northern Development, Mines and Forestry Michael Gravelle said some of the successful applicants have been sent conditional offers. Meanwhile, at least one company in Ignace has learned that its proposal was rejected, effectively killing their project.
Officials with the Far North Bio-Mass had hoped to build a wood pellet production plant in Ignace. The company's plans depended on approval of wood rights to the English River Forest area.
Partner Brian Tardiff received a letter from the ministry on Tuesday informing him that Far North's proposal was rejected.
Tardiff said he is disappointed and added that no reasons were given for the rejection. Ignace Mayor Lee Kennard is also calling it a major disappointment, adding his community is in desperate need of economic development.
Minister Gravelle said several successful applicants have recently been notified, and have 30 days to respond to the province.
The provincial wood supply competition was first announced by the McGuinty government back in November of 2009.
It is the largest wood supply competition ever undertaken by the province and is designed to stimulate Ontario's forest industry.
EXPLORING NEW KOREAN PELLET MARKETS
Written by Gordon Murray | WPAC
This Korean pellet plant is integrated with other wood processing facilities.
Jan. 26, 2011 – Korea has a growing interest in wood pellets and renewable energy. So much so that Korean officials invited Gordon Murray, executive director of the Wood Pellet Association of Canada, to give a presentation on Canadian wood pellets at the International Biomass Energy Seminar. The seminar was part of the Korea Green Technology and Industry Exhibition hosted by Incheon Metropolitan City in late November 2010. While there, Murray also explored opportunities for Canada to export pellets to Korea. The conference involved visits to a greenhouse operation heated by pellet boilers, a residence heated by a pellet boiler and in-floor hot water heat, a sawmill/pellet operation, and a pellet boiler factory.
Approximately 200 delegates attended the seminar, representing government, universities, power companies, and large industrial energy consumers. The Korean television network Daejeon MBC covered the event for a one-hour program on biomass energy in February 2011. Seminar presenters included, among others: Kenichiro Kojima of Japan Pellet Club, who talked about the pellet situation in Japan; Dr. Larry Baxter of Brigham Young University in Utah, who talked about biomass co-firing in power plants; and Dr. August Raggam of KWB Boilers, who talked about biomass co-generation.
Key seminar messages
• South Korea can learn from Europe’s biomass experience. The European Commission recently implemented an Energy Program for Recovery to accelerate infrastructure investment, improve energy supply security, and accelerate implementation of the 20/20/20 objectives for 2020.
• In Europe, biomass provides 69% of renewable energy. As of 2007, biomass provided 98 million tonnes of oil equivalent (Mtoe) compared to 27 Mtoe for hydro, 9 Mtoe for wind, 6 Mtoe for geothermal, and 2 Mtoe for solar.
• Wood biomass is predominant, providing over 80% of European biomass energy.
• South Korea is the world’s 10th largest energy consumer, fifth largest oil importer, and second largest coal importer. A whopping 64% of electricity of produced from fossil fuels.
• South Korean coal consumption, currently 122 million tons/year, is increasing.
• South Korea is committed to a 30% reduction in CO2 emissions from projected levels by 2020. The government has directed 374 of South Korea’s largest companies (including petrochemical producers, paper and wood manufacturers, power generators, steel manufacturers, and electronic chip manufacturers) to reduce CO2 emissions by 2020. Each company must submit a plan to government by mid-2011 and begin implementation in 2012.
• Renewable portfolio standards for power generators are being implemented in 2012. Power companies must produce at least 2% renewable energy in 2012, increasing by 0.5%/year to a minimum of 10% by 2020.
• Potential pellet competition for Canada will be from Southeast Asian countries (i.e., Vietnam, Cambodia, Laos, Malaysia, and Indonesia), New Zealand, and Australia. Pellets are considered by Korean companies to be one of the most cost-effective forms of energy for meeting CO2 reduction targets. It will be important for Canadian pellet producers to focus on the Korean market in 2011 so as to acquire market share in advance of the 2012 implementation of renewable portfolio standards.
• Japanese companies have already begun limited co-firing of wood pellets with coal for power generation. Japan has 51 pellet plants collectively producing about 36,000 tons/year, with a further 60,000 tons/year being imported. Power companies are becoming somewhat more interested in co-firing with pellets, but so far, insufficient policy incentives exist to create widespread adoption of the practice.
• Co-firing biomass with coal is the most affordable, efficient, and environmentally benign form of renewable power production and there is little technical risk to power generators.
A worker stacks bagged pellets on pallets.
Korean pellet interests
The Korean pellet market took root in 2007, when 150 domestic boilers were installed throughout the country. In Korea, domestic heating is provided by means of boilers heating hot water, which is then circulated through in-floor pipes to create radiant heat. In 2008, the Korea Forest Service began subsidizing the purchase of domestic pellet boilers by 60% to 70%. About 600 boilers were installed in 2008, 3,000 in 2009, and 4,000 in 2010. About 6,000 boilers are expected to be installed in 2011. In 2010, commercial greenhouse operators began using pellet boilers for heat. However, pellets are not yet used for power generation or for any other industrial purpose.
There are about 23 pellet plants in Korea. All are extremely small scale, mostly associated with woodworking operations.
A Korean pellet plant.
A small group of conference delegates visited the National Forestry Cooperatives Federation’s Wood Products Distribution Centre. The Centre, established in 1997, consists of a log yard, sawmill, value-added mill, dry kilns, a home construction operation, a landscape architecture operation, and a pellet plant. The pellet plant began with one pelletizer in 2009, with a second added in 2010. Pellets are made from sawdust supplied by the adjacent woodworking operation. The plant consists of a belt dryer, two small flat-type pelletizers, a pellet cooler, and an automatic bagging line. All pellets are packaged in 20-kg bags. The plant’s annual production is 18,000 tonnes, all of which is sold in South Korea.
PRINCE OF WALES BIOFUEL COOPERATIVE PLANS WOOD PELLET MILL
By Carla Pedersen | For the Capital City Weekly
THORNE BAY — Local mill operators in Thorne Bay, on Prince of Wales Island, have joined together in a venture to recycle wood scraps into high energy pellets, which could replace less efficient cord wood and fuel oil to heat homes and businesses.
Mel Cook, one of the six mill owners who have formed the Prince of Wales Biofuel Cooperative, along with University of Alaska Extension Program Assistant Karen Petersen, spoke about plans for the exciting new enterprise on Ketchikan’s KTKN First City Forum radio show in January.
Cook, who has 30 years of timber industry experience, said the main incentive to start a pellet operation came was to deal with the mountain of discarded log ends, chips and sawdust that inevitably accumulate at a log mill.
“You can’t just let it pile up,” he said.
The piles of slash take up valuable space in the mill yard. Even worse, they represent a serious fire hazard, too often proven over the years. When controlled burns are initiated, heat energy goes untapped and air pollution is increased.
The mill owners researched ways to turn this waste wood into a useful commodity. They consulted professionals at appropriate agencies and manufacturers of processing equipment to establish which options were feasible and best suited the needs of Southeast Alaska residents.
The concept to make practical use of mill residue makes sense, Petersen said, since unlike ethanol, which may be derived from sources like corn, the mounds of wood are not food.
For her master’s degree, Petersen researched the wood-fired heating system installed in Craig in 2008. Using wood chips delivered by Viking Lumber in nearby Klawock, the system heats two school buildings and the swimming pool.
As a specialist with the University of Alaska’s Forest Products Program, Petersen helped the mill operators consider and assess plans for the Thorne Bay venture. They crunched numbers to compare marketability of the pellets to energy sources currently used around Southeast Alaska. They also weighed the pros and cons of manufacturing bricks versus pellets (which resemble rabbit food).
Samples from different species of local trees were sent off to be compressed into bricks and pellets, then tested at the university’s research facility in Palmer to measure BTUs and ash residue. It was learned that bricks with similar energy potential can also be made from cardboard and other paper trash. All of these products provide a cleaner, more efficient burn than cord wood, and are not only greener but safer, having only 10-15 percent moisture content, thus reducing the danger of creosote problems that cause chimney fires.
Cook cited statistics from a 2008 Sitka study indicating that one ton of pellets contains 16,500 BTUs, equal to the BTUs of 120 gallons of fuel oil. Air-dried cord wood has 13,700 BTUs per ton. It has been shown that firewood burns 50 percent efficiently, with oil at 78 percent and pellets at 80 percent, making pellets the most environmentally sound. Pellets, with up to three times the density of unprocessed wood, contain more energy per unit volume than cord wood and when burned, release heat in a more uniform manner. Pellets burn very cleanly with minimal particulate emissions, even meeting EPA standards in Fairbanks where smoke is a concern.
Cook and Petersen described the process in which the woody biomass is turned into pellets. The dried raw material is chipped into small pieces, then ground to the consistency of cornmeal. It then falls through a screen that ensures a uniform size and is compressed through a flat die with small diameter holes. Heat and pressure melt the lignin, a natural binding material in wood, so that glues need not be added for the pellet to hold together.
To burn pellets, consumers would need a stove designed for that purpose, but there are compelling advantages to purchasing one. Rather than cutting and stacking large stores of firewood and constantly lobbing logs into the firebox, pellets could be delivered by truck and poured right into the hopper installed on an outside wall, eliminating the firewood mess inside as well as a lot of handling. A three-by-three-by-four-foot hopper would hold one ton of pellets. The average home use is estimated at one to two tons per year.
Shaped into bricks, the compressed wood can be burned in ordinary wood stoves. The cooperative plans to obtain equipment which can create both bricks and pellets.
Asked about availability of a wood supply for long-term production, Cook said that other sources besides the mill scraps could be used.
“We have approached the Tongass National Forest Service about cleaning up landing sites from old logging operations along with salvaging other low grade debris from timber harvests and trimming operations along logging roads, just mention a few,” he said.
The operation will need around 24,000 tons of wood waste to process 8,000 tons of pellets to meet their first year goal. At full production, the Prince of Wales Biofuel Cooperative plans to produce 30,000 tons a year and believes that the market is there to succeed. The additional commerce and employment opportunities would be a welcome factor for struggling islanders.
The mill operators are set to proceed as soon as more funding can be obtained through loans, grants or investments. The City of Thorne Bay has dedicated an eight-acre parcel for a long-term lease agreement and several investors are interested.
• Contact the Prince of Wales Biofuels Cooperative at P.O. Box 19167, Thorne Bay, AK 99919 or at firstname.lastname@example.org.
• Carla Petersen writes from Prince of Wales. She may be reached at email@example.com.
ECOTRUST SUBSIDIARY FUNNELS $60M IN FEDERAL TAX CREDITS
Ecotrust calculates that more than 300 jobs were created as a result of the investments enabled by tax credits
By: Christina Williams -- Sustainable Business Oregon
Ecotrust CDE LLC, a for-profit community development subsidiary of the Portland-based nonprofit Ecotrust, announced Wednesday that it allocated more than $60 million in New Markets Tax Credits in 2010 to Northwest businesses that are creating "green" jobs in rural areas.
Ecotrust calculates that more than 300 jobs were created as a result of the investments enabled by tax credits.
The New Market Tax Credit program was renewed by Congress as part of the tax cut deal struck by President Barack Obama and signed into law last week. The program, which has proved a valuable tool for renewable energy projects, will be extended at $3.5 billion per year for two years.
The program is administered by the Community Development Financial Institution Fund, a division of the U.S. Treasury.
Here's how it works: The tax credit aims to stimulate development in underserved communities by allowing taxpayers to receive a credit against federal income taxes for making equity investments in community development entities such as Ecotrust CDE. In turn, Ecotrust CDE makes investments in qualifying businesses.
In 2010, those investments included:
• NewWood Corp., which is reopening a manufacturing plant in Elma, Wash., for making a plastic-wood composite material. The plant will employ about 150 people.
• Ochoco Lumber Company, which used the proceeds to refinance debt, expand sawmill operations, and construct a new pellet mill at the Malheur Lumber Company site in John Day.
• ZeaChem Inc., which is building a $40 million pilot facility in Boardman, to convert wood waste into ethyl acetate to produce products such as ethanol.
• Garibaldi Forest Management, which used the proceeds to acquire Northwest forestland and initiate forest restoration activities including invasive species removal and habitat enhancement.
Ecotrust CDE was formed in 2005 expressly for the purpose of applying to be certified to accept New Market Tax Credits. The tax credits are allocated to for-profit organizations that are certified by the U.S. government to pursue a specific community development strategy.
Ecotrust CDE, which focuses on creating jobs with forest-related projects, was allocated $50 million in New Market Tax Credits in 2005 and $30 million in 2009. Ecotrust CDE has applied for an additional allocation and Bettina von Hagen, who runs the organization for Ecotrust, said staff may be added if an additional allocation is granted.
Von Hagen said she was relieved that the tax credit program was renewed last week.
"It was a concern, given the challenging financial times that we've been experiencing, that (the tax credit program) wouldn't be renewed," von Hagen said. "It's been hugely instrumental over the last two years given the limited debt and equity environment."
"The new markets tax credit program is an excellent tool for fostering economic growth in areas of the state that need it most," said Oregon Senator Jeff Merkley, D-Ore., in a press release. "By using this tool to provide Oregon companies with capital, Ecotrust has helped put hundreds of people to work in our forests and on construction sites."
By: Anna Austin -- Biomass Magazine
The Biomass Crop Assistance Program has taken some major hits over the past couple of months, but the USDA Farm Service Agency has continued to release documents necessary to get the program rolling again.
In mid-December, the federal omnibus spending bill proposed to cut all expenses to administer BCAP in 2011, which would have essentially ended the program. While the omnibus was withdrawn due to lack of support, BCAP's fate in the next spending bill is still up in the air.
Meanwhile, at the request of the FSA, a report was released by the USDA Office of Inspector General that evaluated the initial pilot program version of BCAP's collection, harvest, storage and transport (CHST) matching payments program, which was terminated in February after $243 million was spent.
OIG's review focuses on the efficacy of processes and controls FSA used in implementing the program. Based on a review of 12 county office operations in four states, and overall administration of the program at the national office, OIG found wide-ranging problems in how the CHST program was operated. These included inconsistent application of program provisions across state and county offices, varying methods for measuring biomass moisture levels, inconsistent use of program forms and data errors.
OIG determined that the problems occurred because FSA, in an effort to quickly implement the program to comply with a deadline established by presidential directive, didn't have adequate time to develop a handbook, specialized forms or a computer support system suited to the specific requirements of the CHST program. "Due to these problems, FSA implemented a program that encumbered the efforts of its field-level personnel and resulted in inequitable treatment of program participants, improper payments, and reduced scope for oversight and accountability," the report says.
To correct the problems, OIG recommends that FSA develop a program-specific handbook and forms, and a program-dedicated data system. OIG plans to provide a full report with greater scope and detail.
If the omnibus doesn't cut 2011 funding, the next hurdle BCAP will face is maintaining funding in the 2012 Farm Bill, and whether that will happen is unknown. Daniel Simon, partner in Ballard Spahr's business and finance department and an energy and project finance group member, says it is a matter of whether the new Congress will view the program as a worthwhile investment that helps both renewable energy and agriculture, or as a subsidy program that should be cut to address the budget deficit.
By: Craig Johnson -- Renewable Energy World
The Biomass Crop Assistance Program offers matching payments for producers of eligible biomass crops who sell to a qualified biomass conversion facility. When it began in June 2009, the idyllic vision of farmers from coast to coast converting their fields to a new energy future was quickly replaced with the reality of wood waste being redirected from secondary wood products.
The first version of BCAP was quickly halted when the effect of the matching payments on these related markets was realized. In its place, a revised BCAP was announced in October 2010 with additional restrictions and clarifications.
Although the matching payments component of BCAP has generated the controversy and revisions, in practice this component will likely have minimal impact on biomass markets because of the two-year limitation on matching payments for producers. Two years worth of payments is not enough incentive to get producers to commit to an uncertain market and invest resources in the harvesting restrictions imposed by BCAP.
However, just as important as the two-year limit is the fact that a producer must sell to a qualified biomass conversion facility not just any biomass facility, a qualified facility. This means the buyer of the eligible materials must also be enrolled in BCAP in order for the producer to receive matching payments.
Well, how hard is that? Actually, it's a fairly significant administrative burden involving thorough record-keeping and certifications as to the eligibility of the materials. While that may not sound unreasonable, there is little incentive for a biomass facility to take on this burden. Consider that most existing facilities already have an adequate supply of fuel and most of that fuel probably doesnt meet the definition of eligible materials under BCAP.
Qualified facilities won't see much benefit from BCAP matching payments in terms of fuel prices, either. As we already discussed, two years of matching payments probably won't be the incentive producers need to convert their crops, meaning there wont be a noticeable increase in supply leading to lower prices. Further, a cornerstone of BCAP is the prohibition on facilities paying different prices to BCAP sellers than those it pays to sellers not enrolled the same product must get the same price. In other words, a facility can't pay a BCAP producer $20 per dry ton, knowing that the producer will end up with a price of $40 after it gets its matching payment, but pay $30 to producers not enrolled in BCAP. Therefore, the supply costs to a qualified facility shouldnt differ much from any other facility.
All of this adds up to the fact that BCAP's impact will be felt not through its matching payments but through its less publicized component: BCAP project areas. If a geographic area is approved by USDA as a project area, producers will be eligible for establishment payments to get their biomass crops in the ground as well as annual payments for five to fifteen years. Producers who receive establishment and annual payments are still eligible for matching payments once they sell their eligible materials to a qualified facility.
This is how BCAP will accomplish its stated goal of creating sustainable biomass markets. How is this better than matching payments? To become a project area, the burden is on the application process for a facility and getting approved, thereby reducing the ongoing administrative burden on the facility compared to only enrolling for matching payments. The five to fifteen year payment plan is a much greater incentive for producers to commit to eligible crops and BCAP restrictions.
With committed producers, a facility now will have a stable fuel supply of eligible materials. With a stable fuel supply comes easier financing, and when combined with the one-year extension of the Section 1603 cash grants in lieu of investment tax credits, building or expanding a biomass conversion facility to serve a BCAP project area becomes a real possibility. The cost of such a project just went down when the EPA recently announced greenhouse gas permitting requirements for biomass-burning facilities would be pushed back until 2014.
BCAP gained a lot of negative attention when it first began for its matching payments distorting markets for raw timber and sawdust. All of this attention has left the more important project area component out of the spotlight. However, the focus on the revised BCAP should move past the matching payments and onto the project areas, where the true impact of BCAP will be felt.
MILL PLANS ON HOLD
Published 8:43am Wednesday, February 2, 2011
FRANKLIN—International Paper Co. does not plan to make a decision on the future of its shuttered Franklin mill until possibly the end of June.
The Memphis-based company, which has groups interested in using the mill for the production of wood pellets, lumber, fluff pulp, ethanol, biomass power generation and biodiesel, initially hoped to make an announcement during the fourth quarter of 2010. When that didn’t happen, IP planned on a first-quarter 2011 decision.
“These studies we have been engaging in are taking longer” than expected, Donna Wadsworth, manager of communications for IP’s mill in Ticonderoga, N.Y., said Tuesday. “It’s a very complex facility. We’re looking at the compatibility of the proposals.”
IP in October 2009 announced it would close its mill, eliminating 1,100 jobs. The last paper machine was shut down on April 15. Employees were laid off over the next seven to eight months.
Wadsworth said IP has narrowed proposals down to “a handful.”
When asked if any of these groups was interested in buying or leasing the plant, she said that’s also being discussed.
“Those kinds of decisions are what the study is looking at,” Wadsworth said. “What’s the best approach for repurposing.”
There are no plans for paper or paperboard to be produced at the site.
DRUNSIC: NO ROOM FOR TWO MAN WITH PELLET PLANT PLAN SAYS BEAVER WOOD WOULD PUT HIM OUT OF BUSINESS
KEITH WHITCOMB JR.
Posted: 02/02/2011 11:05:56 PM EST
Wednesday February 2, 2011
POWNAL -- The owner of the former Northeast Wood Products property says there likely isn’t room for two wood pellet operations in town.
Bill Drunsic, of Manchester, purchased NWP in March for $240,000 at a foreclosure auction. One week after the developers of a proposed biomass and wood pellet manufacturing facility made their pitch to the Select Board to build at the former Green Mountain Race Track site, Drunsic approached the Planning Commission with his plans to turn the former saw mill, which abuts the track, into a wood pellet facility.
Plans are currently before the Development Review Board for Drunsic’s proposed operation, which he said would purchase wood pellets from Vermont Wood Pellets in Clarendon, package them, and ship them to customers.
He said in the long-term, he hopes to manufacture pellets at the site -- about 30,000 tons per year -- a much smaller operation than Beaver Wood Energy, LLC’s proposed 130,000 tons.
"If the biomass [project] goes through, it will put us out of business," Drunsic said, adding that if his own permit hurdles are cleared, he would hope to open by the end of the year. He said the biomass facility would take up the entire wood market for the area.
Drunsic said the DRB has requested he get some kind of indication from Pan Am Railways that the railroad crossing near the NWP property could handle the traffic. The same is needed for a culvert on Route 7. He
Allan Benoit, of Vermont Renewable Fuels -- Drunsic’s company -- said the five buildings on-site have all had renovations, bringing them up to state codes and repairing damage to the roofs and electrical systems. One new building will include a 28-foot silo, which he said will store about 60 tons of wood pellets. He said the silo reserves will be built up for the summer months when demand is low.
The silo won’t be visible from the roads, he said, and will be a typical agriculture-style design.
Drunsic said that aside from the purchase price, about $50,000 has been spent on renovations and permit applications on the 8.7-acre site. He said if built, he expects to employ between 15 and 18 people.
The biomass planners are seeking a certificate of public good from the Public Service Board. Beaver Wood hopes to show the PSB that it also has jurisdiction of the wood pellet manufacturing side of the operation. Opponents of the project have argued that the Section 248 process should consider the biomass electric generation only, and have the company go through an Act 250 process for the wood pellet manufacturing side.
Beaver Wood has proposed a nearly identical plant in Fair Haven, where there has been less criticism of the project. In Pownal, local opposition groups as well as entities based in Williamstown, Mass., have expressed concerns over the project’s impacts.
In 2009, NWP was foreclosed on by the Berkshire Bank, which said the company owed half a million dollars. Robert Kobelia, who bought the saw mill in 1991, said his company employed around 24 people throughout the 1990s. NWP officially shut down in 2008.
The company was founded in 1946 by Siegfried Tolle and Vincent Pizzano. In its heyday, the company made high-end furniture and made use of the nearby railroad to ship goods.
UK FUEL PRICE TRENDS – FEBRUARY 2011
Posted on February 4, 2011 by robertkyriakides
UK energy prices continue to rise. EDF, a French owned company has just announced a 6.5% increase in gas and 7.5% increase in electricity prices with effect from 2nd March. Previously other energy companies have announced similar price rises within similar ranges.
As far as I can see there should be no more increases for a few months, although I do fear that the upward trend will continue as Europe returns to more positive economic growth and demand grows as living standards improves and population increases.
Prices for petrol and diesel fuel are now at their highest ever, virtually double from the 2002 price. Heating oil prices have been rising by far more than gas and electricity prices. 40pence a litre was common in August 2010 and by Christmas many people were paying around 75 pence a litre; since then the price seems to have settled at 55 pence a litre or thereabouts.
Wood pellet prices have remained stable at around £185 per tonne; what has probably happened is that as demand for wood pellets for biomass fuel has increased, so efficiency in the distribution chain has driven prices down, but the prices have been kept stable as the transportation costs have increased, making up for the basic commodity price reductions.
Whatever fossil fuel or dirty renewable energy you use it seems you can look forward to higher prices, with fuel of all kinds taking up an increasingly large share of your expenditure.
WOOD PELLET PRODUCERS ARE INCREASINGLY COMPETING WITH PULP MANUFACTURERS FOR WOOD FIBER, REPORTS WRQ
Global pellet production was close to 10 million tons in 2008, according to the Wood Resource Quarterly. It is estimated that production will double over the next 4-5 years and some industry experts forecast an annual growth of 25-30% globally over the next ten years. Europe is currently the major market for pellets, but the interest for non-fossil fuels in North America is growing. The new leadership in the US government is going to have a positive impact on alternative fuel usage and the expected change in energy policy could very well result in increased imports of pellets from Canada to the US, which will eventually diminish the flow of biomass from North America to Europe. As a result, European pellet consumers will have to search for alternative supply sources in Asia, Latin America, Africa and Russia.
The major raw-material used for pellet manufacturing has traditionally been sawdust and shavings from the sawmilling industry. As this supply source has started to tap out, there is now an increased interest in searching for alternative fiber. It can be expected that European pellet manufacturers will increasingly use forest residues, urban wood waste and fast-growing tree species. They will also begin to compete more aggressively with pulpmills and wood-panel mills for sawmill chips and pulplogs. Imports of wood chips from over-seas may also be an option for some pellet plants.
A surprisingly large share of the global pellet production is being shipped to markets outside the producing country, not only between countries but also intercontinentally. According to the Wood Resource Quarterly, an estimated 25% of world production was exported in 2008. Most of the overseas volume was shipped from British Columbia, Canada to Belgium, the Netherlands and Sweden, despite the seemingly prohibitively costly 15,000-kilometer journey from the Interior of BC to the European market. This situation can be explained by the currently low costs for raw material (shavings and sawdust) in Canada and the high prices for wood pellets in Europe.
The rapid expansion in global trade of biomass (both wood chips and pellets) is likely to continue over the next three to five years as more countries favour renewable energy and as local, relatively inexpensive supplies of biomass reach their limits. The question is how long expansion of the overseas water-borne transport will continue to grow, given the uncertainty of future costs of oil and the paradox of consuming large quantities of low-refined heavy fuel oils for the shipments of green energy to European customers.
Global wood fiber and sawlog market updates are included in the 50-page publication Wood Resource Quarterly. The report, established in 1988 and with readers in over 20 countries, tracks wood prices in most regions around the world and also includes regular updates of international timber, pulp, lumber and biomass markets.
Wood Resources International LLC
info (at) wri-ltd (dot) com
CANADIAN COMPANY GETS WOOD-CHIP CONTRACT
By Leslie H. Dixon, Staff Writer
OXFORD — The Oxford Hills School District has awarded the wood chip bid to General Biofuel of Toronto, Canada.
The company, which has locations in Porter, Maine, and North Conway, N.H., was the low bidder of four companies that put in bids to fuel the Oxford Hills Comprehensive High School biomass boiler. The boiler is currently on a ship to the United States and is expected to be fired up in early March, officials said.
General Biofuel was recommended by the Operations Committee as the low bidder for type-two chips at a price of $54 per ton for the first year, $54.50 for the second year, $55 for the third year, $55.50 for the fourth year and $56 for the fifth year, an average of $55 per ton.
The high bidder was New England Energy Solutions at $62 per ton. Two other companies bid only on type-one chips at $62.75 and $60 per ton.
The biomass furnace was shipped out from the manufacturing plant in Austria on Jan. 17 and officials say it will take four to six weeks to arrive. The furnace is expected to be shipped to Cote Crane in Auburn who has been contracted to install it at the Oxford Hills Comprehensive High School.
The proposed $2 million-plus conversion project from oil to wood chips at the high school was planned to address escalating fuel costs and to make the district more energy independent. The furnace will supplement about 90 percent of the consumption of No. 2 fuel oil.
Two of the three oil burners will remain in place to supplement heat in the shoulder seasons of fall and spring and in case the biomass furnace goes down during the winter, officials said.
According to information from Business Manager Cathy Fanjoy, bids were solicited from all known local suppliers of wood chips that can be used in the school's biomass furnace. The school solicited four different types of wood chips for a five-year period and four companies responded.
The award was based on a unanimous recommendation from the Operations Committee after consultation with the biomass furnace engineers at Siemens and Viesmann officials, the manufacturer of the biomass furnace. Officials felt the bid award would be least expensive without compromising the efficiency of the boiler.
In a memo to Superintendent Rick Colpitts, Fanjoy said the five-year bid award would provide stability in budgeting for heating fuel for the high school.
ANGLO-DUTCH EXCHANGE TO LAUNCH BIOMASS BOURSE-INTERVIEW
Saturday February 05, 2011 01:20:15 AM GMT
* Europe's first wood pellet exchange to start in H2
* Global market for wood pellets to grow sixfold by 2020
* Government subsidies crucial for market growth
By Ivana Sekularac
AMSTERDAM, Feb 3 (Reuters) - An Anglo-Dutch venture to trade wood pellets, a coal substitute which emits less carbon dioxide, will be ready in the second half of 2011, opening up a market set to grow sixfold by 2020, an executive said on Thursday.
The exchange, Europe's first such venture for wood pellets, would reinforce the Dutch port of Rotterdam's position as a leading centre for wood pellet shipments from the United States and Canada, which rank among the world's top four producers, the executive added.
The global market for wood pellets is forecast to hit 60-70 million tons by 2020, up from about 10 million tons currently, said Sipke Veer, product manager for the joint venture between APX ENDEX, the Anglo-Dutch exchange which operates power and gas exchanges, and Rotterdam port.
The Netherlands, Germany, Scandinavia, and Belgium are among the biggest consumers of wood pellets in Europe, with the bulk of the Dutch intake used in Essent's Amer coal-fired plant.
The pellets replace a portion of the coal in coal-fired plants, reducing CO2 emissions. The APX ENDEX-Rotterdam venture is one of several ways that the port plans to reduce its carbon emissions, given that Rotterdam accounts for about 16 percent of the Netherlands' greenhouse gas emissions.
"We are now working on details, such as deciding which trading platforms we are going to use," Veer said.
"We need to set up a system which contains dedicated storage facilities for the wood pellets and where there is quality control of wood pellets deliveries in place."
CENTRAL MARKET PLACE
About 15 percent of the wood pellets currently get shipped through Rotterdam port, Europe's biggest, and Veer said that could rise to 3-4 million tons in 2015 and 10 million by 2020.
"We see the same pattern in the global market with an increase to 25-30 million tons in 2015 and 60 to 70 million tons in 2020," he added.
APX ENDEX, which operates electricity and gas markets, decided in 2008 to expand its portfolio and began publishing wood pellet price index on a weekly basis.
"By creating an exchange you create a central market place," Veer said.
"That's a fully transparent model and it's a concentration of liquidity."
But growth won't take off without some form of government incentive such as subsidies to cover the higher price of renewable energy sources, Veer said.
"The companies' decisions to use wood pellets will depend on future legislation. Whether it will be economically viable it will also depend on the price of coal and CO2 emission rights," Veer said.
He said Rotterdam wood pellet exchange could expand in the future to include other biomass products including torrefied pellets which are heated to very high temperatures.
"Once this has proven to be successful it will then be "relatively" easy to expand into other biomass products and then you can think about wood chips, bio coal, torrefied pellets and other biomass products," Veer said.
DELTAPOINT CAPITAL MANAGEMENT HAS ACQUIRED A WYOMING COUNTY MANUFACTURER OF BIOMASS WOOD PELLETS
A Rochester financial firm has acquired a Wyoming County manufacturer of biomass wood pellets, marking the company's second such acquisition in the last seven months.
DeltaPoint Capital Management said its latest purchase, aided by a $3.2 million investment by the New York state pension fund, helps make its wood-chip operation one of the largest in the Northeast.
DeltaPoint said Friday it is buying Dry Creek Products in Arcade, Wyoming County. The full purchase price was not disclosed.
The private-equity firm, headquartered on East Avenue in downtown Rochester, acquired PA Pellets and several other wood-pellet firms in July and created BioMaxx Inc. as a holding company for its wood-pellet businesses.
Wood pellets, made from trees and scrap wood, are billed as a relatively inexpensive and environmentally friendly way to heat a home. They're burned in pellet stoves and are most common in rural areas where the alternatives are trucked-in home heating oil or propane.
"The Dry Creek acquisition helps further establish BioMaxx as a leader in one of the only true clean-tech industries," said George F.T. Yancey, BioMaxx president and an operating director of DeltaPoint. "We are producing a product that is environmentally friendly and competes directly with fossil fuels."
The BioMaxx components should do $20 million a year in business, said Christopher J. Brodhead, DeltaPoint's vice president of business development.
The four companies that initially formed BioMaxx were the first acquisitions by DeltaPoint's fourth and largest private equity fund, which was launched in late 2009. DeltaPoint said it intended to raise $100 million to $125 million for that fund from individual and institutional investors, and to invest in as many as 15 companies. The financial firm targets small companies in underserved markets in the Northeast.
DeltaPoint is one of several private equity firms that take part in an investment program run by the state Comptroller's Office, which oversees the state's pension funds. The program, which seeks to bolster capital available for business growth in New York while earning returns for the pension fund, has placed $524 million in 173 companies since 2000.
Comptroller Thomas DiNapoli said the $3.2 million for Dry Creek "is a great investment for the pension fund and a good step toward making New York and the country less dependent on fossil fuels."
As part of the deal, BioMaxx's headquarters staff of about 10 employees has moved to Wellsville, Allegany County, from Pennsylvania. Dry Creek will be based there as well.
All told, BioMaxx components employ about 40 people in Pennsylvania and 25 in New York, Brodhead said.
The company will be able to produce 120,000 to 150,000 tons of wood pellets a year at the plant in Arcade and another in Ulysses, Pa.
Brodhead said about 1.5 million tons of pellets are burned in North America each year. A typical residential user burns two to three tons a year. The website WoodPelletPrice.com on Friday listed an average price per ton of $225 for the PA Pellets brand and $233 for Dry Creek pellets.
Brodhead said wood pellets are "much more reasonably priced than oil, and we're renewable." BioMaxx makes pellets from trees, and will cull unwanted species from a landowner's property while leaving other trees intact. Brodhead said he expected the company will make use of the millions of ash trees that will be dying off due to infestation by emerald ash borers.
Tightly packed premium pellets have a low moisture content and burn efficiently, producing little smoke and ash, he said.
They're considered "carbon-neutral," meaning burning releases the carbon dioxide taken up by the living trees — the same amount of the greenhouse gas that would be released if the trees died naturally and rotted where they fell.
Brodhead said DeltaPoint remains interested in acquiring other wood-pellet companies.
Posted: February 13
Updated: Today at 9:01 PM
PELLET PRODUCTION HEATS UP AGAIN
Maine’s plants gear up – as do job prospects –as climbing oil prices revive interest in alternative energy.
By Tux Turkel firstname.lastname@example.org
STRONG - In the wood yard, a crane feeds tree-length birch and maple into a machine that strips away bark. The logs pass through a chipper, which sprays streams of wood particles into a mound.
click image to enlarge
A crane loads logs into a debarker at the Geneva Wood Fuels pellet plant in Strong, formerly the “toothpick capital of the world.”
Tim Greenway/Staff Photographer
click image to enlarge
Plant manager Jeff Allen shows the finished product.
Tim Greenway/Staff Photographer
Additional Photos Below
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Maine Today Photo Store
In the factory, chips are dried and hammered into fiber, then formed into pellets that fill 40-pound bags. By day's end, 22 tons of hardwood pellets are in a truck headed for a Lowe's Home Improvement store in North Attleboro, Mass.
This is the pace of production now at Geneva Wood Fuels: A maple tree growing in Franklin County on Monday can be heating a house in Massachusetts by Friday.
Despite appearances, Geneva is running at less than half capacity. Other pellet plants are, too. But for the first time in two years, there's optimism.
Rising oil prices and a recovering economy have New Englanders thinking again about alternative heat. The prospect that oil will stay high this year has Maine's wood pellet plants gearing up. Geneva has a dozen people on the job, four of them hired in the past month. It also brought on a regional sales manager to expand sales. Any job matters in this rural village, up the Sandy River from Farmington.
Less obvious, but welcome, are the 100 or so jobs tied to the plant's operation, including up to 50 loggers in Franklin and Oxford counties. Making pellets here contributes $1.5 million a year to the economy, according to an estimate by the Finance Authority of Maine.
That could vanish, in an instant.
Three years ago, manufacturers at Maine's four pellet plants couldn't churn out enough fuel. It seemed everyone wanted a pellet stove, after oil hit record-high prices. Then oil collapsed during the recession. Stove sales plummeted, and oil heat got a reprieve. Pellet makers suddenly had too much capacity and too few customers.
As the industry recovers, plant owners are hoping that early signs of measured growth can be sustained.
"We're seeing a renewed interest in the market," said George Soffron, president of the Maine Pellet Fuels Association. "A lot of people are thinking about next heating season."
Soffron, chief executive officer at Corinth Wood Pellets, said his company has started an advertising campaign to promote pellet heat. He's also thinking about diversifying, to sell stoves and boilers.
Corinth has 27 employees working two shifts. The plant could make 75,000 tons per year, but it's running at half capacity. Soffron will get a better sense of the potential for growth this summer. That's when pellet plants typically ramp up production, to supply retailers for the next heating season.
Inquiries are up from people who want to buy pellet boilers, according to Dutch Dresser, managing director at Maine Energy Systems in Bethel. The company sells a European-designed boiler and delivers pellets by the truckload.
The up-front price of a pellet boiler -- roughly $6,000 more than a modern oil unit -- remains an obstacle, Dresser said. But buyers are banking that oil remains high. The company delivers pellets in bulk for $235 a ton. That translates to a heat equivalent of oil at $1.96 a gallon. By comparison, the average statewide price of heating oil last week in Maine was $3.35 a gallon.
"We're planning for what we expect to be a burgeoning need," Dresser said. "I'm quite optimistic about this year."
That's good news in Strong, where sawdust is a sign of prosperity.
Maine entrepreneur Charles Forster created an industry around here during the late 19th century, using the area's white birch to make the wooden toothpicks he invented. Strong became known as the "toothpick capital of the world," a slogan emblazoned on its fire truck. Hundreds of people -- often local friends and family -- labored to make 3 million toothpicks a day in Forster's factory, as well as ice cream sticks and clothes pins.
Imports eventually killed western Maine's toothpick factories. The Forster Manufacturing Co. plant -- the last holdout -- closed in 2003.
So there was great excitement in 2007, when Jonathan Kahn, a Bowdoin College graduate and Chicago-based investor, announced plans to turn the shuttered factory into a pellet manufacturing facility. It went online in 2009.
Five months later, another blow. A dryer explosion rocked the $17 million plant, making its future uncertain. But Kahn and the other investors chose to rebuild, and operations resumed last spring.
The plant has three pellet mills capable of making 100,000 tons per year.
The process is simple, but the trick is creating a pellet that's consistently high in heat and low in ash and dust.
Wood chips are dumped into a bark-fueled dryer that bakes the moisture content to 10 percent. Hammer mills pulverize the chips into a fiber meal, which is blown into the pellet mills. Heat and pressure extrude the fiber into slim, dowel-shaped rods that are cut into pellets.
Roughly 80 percent of the output is sold in bags, which are filled on a conveyor. Fifty bags are piled onto a pallet, then covered and wrapped in plastic to stay dry. Forklift drivers scoot back and forth to load the one-ton pallets.
In stores, consumers notice the green and tan bags of Maine's Choice premium wood pellets. The bags feature a whimsical image of ma and pa moose, sitting around a pellet stove on a winter day.
But filling bags with pellets is costly and cumbersome. Maine's manufacturers want to sell pellets in bulk by the truckload, as European plants do.
American consumers have been slow to embrace bulk delivery, but there are some encouraging signs. Phillips-based School Administrative District 58, for instance, buys 600 tons of pellets a year from Geneva Wood Fuels to heat its school buildings. A giant pellet boiler being installed at the Jackson Laboratory in Bar Harbor will burn 60 tons a day, some of it from here.
Outside, a new metal silo that can hold 300 tons of pellets stands next to the plant. That's the future, Maine pellet makers hope.
But for now, workers here are happy to fill bags, roughly 40,000 in a week. Off they go, to retailers across New England, from the Maine town once known for toothpicks and someday, perhaps, from the wood pellet capital of the world.
Staff Writer Tux Turkel can be contacted at 791-6462 or at:
SPEAKER: NUMBERS AREN'T THERE FOR MORE BIOMASS
Meghan Foley, North Adams Transcript
Posted: 02/12/2011 11:09:54 AM EST
WILLIAMSTOWN, Mass. -- The numbers need to be right before more wood-burning biomass power plants are built anywhere, environmental expert William Moomaw told a packed house at Williams College's Paresky Student Center on Thursday.
As this region copes with the proposal for a 29.5 megawatt biomass plant and adjacent wood-pellet manufacturing plant in neighboring Pownal, Vt., more questions are being raised about the efficiency of burning trees to produce energy and whether that energy can be considered "green," said Moomaw, who serves on the Intergovernmental Panel on Climate Change and is director of the Center for International Environmental and Resource Policy at Tufts University.
He and Mary Booth, co-founder of the Massachusetts Environmental Energy Alliance, said biomass has been touted as green energy, but it actually releases more carbon dioxide into the atmosphere than burning coal.
"It's all in the numbers," Moomaw said. "If biomass is a good thing, then it will show up in the numbers. If it's not a good thing, then it will show up in the numbers." The problem is, the numbers -- particularly relating to carbon dioxide production -- haven't been recorded correctly for decades, he said. "There is this assumption that burning trees is carbon neutral," he said. "Trees suck up carbon dioxide when they grow and release it when they burn. Then they grow and take back the carbon dioxide."
The problem, he said, is that trees take a long time to grow, and they
cannot grow at a rate fast enough to replace the carbon dioxide released by burning them.
Booth said if a biomass plant operated for only one year, it would take 32 years to get back the carbon dioxide released into the atmosphere, based on a study by the Manomet Center for Conservation Sciences,
In addition, she said, the "carbon debt" grows each year the facility operates. "After a plant closes, it may be 20 years before that carbon debt is paid back," she said.
Because of the large number of biomass power plants being proposed for New England and the Northeast, questions have arisen not only from individuals in the communities where they could be built, but also from officials from existing biomass power plants about the availability of fuel from timber operations and low-grade wood, Booth said.
Both products are what biomass power plants rely on to produce electricity. "They're saying it may create too much competition for resources," Booth said. "Some of these plants are already using whole trees for fuel." The supply limits the extent to which biomass can be used to replace the use of coal nationwide, she said. If every scrap of waste wood in the United States were used to produce energy, she said, "It would be able to replace about 3.8 percent of our national coal use."
The discussion was the second in a series of presentations hosted by Williams College about using biomass as an energy source. It is unclear whether there will be further presentations.
Although Williams has been granted "intervenor" status as an interested party in the permit hearings by the Vermont Public Service Board for Beaver Wood Energy's Pownal plant, the forums have been designed to present information rather than to present stances for or against biomass, according to the college.
TORONTO WOOD PELLET MAKER EYES FORMER PULP MILL
By: Ian Ross
Protocol Biomass, a Toronto green energy developer, wants the former Marathon Pulp mill and access to wood fibre to manufacture and ship wood pellets to European and North American power producers.
A Toronto biofuel company has innovative plans to use Northern Ontario woody biomass to make a specialty pellet that European power producers may be eager to snap up.
Protocol Biomass wants to set up shop at the former Marathon Pulp mill site and install a roasting process to make torrefied wood pellets that are growing in global popularity as a coal substitute.
“We believe we are creating a bonafide coal replacement,” said Tom Logan, president of Protocol Energy, a privately held parent company with a regional subsidiary aimed at establishing the so-called ‘black’ pellet plant on the north shore of Lake Superior.
His business plan for the $100-million project has been making the rounds in the Toronto capital market.
But the company and the Town of Marathon kept it under wraps for a year.
They only decided to go public this winter in an attempt to prod Queen’s Park into speeding up the government’s competitive wood supply competition.
Besides creating a pellet-making operation, the company proposes converting biomass into energy by firing a 17-megawatt co-generation unit at the mill site to provide heat and power to the plant and the town centre with a district heating grid connecting the hospital, municipal offices, a shopping mall and
other commercial users.
“While we make dog food, we’re going to eat it ourselves,” said Logan.
Besides the abundance of wood fibre in the area, a major drawing card is the closed pulp mill, which shut down in 2009 with the loss of 200 jobs.
The brownfield site has since undergone considerable environmental cleanup.
While forestry giant Tembec and the Ministry of Environment negotiate a settlement agreement, a court-appointed receiver is working with the town’s economic development department to find a new buyer for the property.
Logan wants to have the land and the mill assets in his possession by March. He likes the deep water dock and nearby rail access.
“From an outbound logistics perspective, it’s a very excellent location.”
He’s eyeballing potential customers at Ontario Power Generation, power producers in the U.S. Midwest, and especially Europe, where pellets are co-fired at dedicated biomass and coal plants.
“We would like to think we can build a product that they would want.”
It’s always been tricky economics to ship pellets overseas, but torrefied pellets can be sold at a higher price than conventional ‘white’ pellets.
The Marathon operation’s size would be scalable depending on the amount of fibre available.
It would start out producing 100,000 tonnes of pellets a year, creating 75 plant jobs. Later on, it could ramp up to more than 500,000 tonnes and employ as many as 125.
Logan also intends to create a “biomass campus” to research next-generation biofuels in partnership with an undisclosed “major Canadian university.”
Torrefied pellets look and burn like coal Pellet company waits for wood Wood residue is roasted through an oxygenfree, pyrolysis process that creates a charcoal similar to coking coal used in the steel industry.
It can be pulverized and made into pellets.
Logan said it has the same energy value as coal and is hydrophobic, meaning it can be stored outside for long periods without sucking up any moisture.
Since the pellet can be shipped, stored, pulverized and burned like coal, Logan said there’s no need for massive fuel handling refurbishments at power plants.
“I’ve never seen the product before but it looks pretty interesting,” said Marathon mayor Rick Dumas. “It’s biomass, so it’s green.”
Protocol intends to work hand-in-hand with a community joint venture of Marathon, Manitouwadge and Pic River First Nation who are angling to manage the Big Pic forest unit and sell Crown wood to Protocol.
But the whole project hinges on the outcome of the provincial wood supply competition process which would release 11 million cubic metres of unused or underutilized wood across Ontario to interested companies and community groups.
Logan said they can’t go to financiers or secure customers without a long-term guarantee of wood supply.
“The credit worthiness of anybody in this marketplace is demarked by a long-term fibre contract.”
The government sent out its first batch of six offers in late November for prospective proponents to accept within 30 days.
Northern Development, Mines and Forestry Minister Michael Gravelle is hopeful of making announcements shortly.
“I will be signing more conditional offers very soon so we need to give the companies provided with the offers (some) time to accept them, but the process is going to move forward far more quickly very soon.”
Protocol is one of two frontrunners interested in the mill property and the access to wood.
The other is California fertilizer maker Rentech, which wants to convert biomass into aviation fuel.
Dumas said both companies are a good fit for Marathon.
“At one time, we had five sawmills working in our region, and now we have one sawmill running.
There’s enough fibre out there for both of these facilities to be set up here and offer economic benefits for the whole region.”
WILL THE REAL CLEAN COAL PLEASE STAND UP?
By 3p Guest Author | February 16th, 2011 0 Comments
Boyd Cohen, CO2 IMPACT
Do you believe what the coal industry has spent millions on to convince Americans that the industry is cleaning itself up? They argue that carbon sequestration and storage is right around the corner and that soon enough coal will be almost as clean as renewables.
I suspect 99% of Triple Pundit’s readership saw the greenwashing within 5 seconds had they watched the commercials that have aired over the past 10 years or so. Here is one of their 30 second spots.
There are definitely opportunities to clean up the coal industry, and since coal is not disappearing any time soon, cleaning it up is a good thing. In fact, my company, CO2 IMPACT, is working on coal mine methane projects in Latin America seeking to reduce the methane emissions from the sector, while reducing the risk of coal mine explosions and also providing a source “cleaner energy.” Even the U.S. EPA is a major player in promoting coal mine methane capture around the globe. Perhaps I’ll save that for another column.
To me, the most interesting opportunity for clean coal is to replace it altogether over time with more renewable sources of energy. Virtually no one, and definitely not me, would argue against the need to have a diverse renewable energy mix in the wedge.
There is no doubt that the time is near when renewable energy standards will begin to mandate a minimum amount of renewable energy in all energy plants in North America. And in some cases, as is the case in Ontario, governmental regulations will require the phasing out of coal burning altogether.
However, when considering that 50% of U.S. energy comes from coal-fired power plants that cost billions to run and operate around the country there is a significant amount of inertia to keep the status quo. Thus, the clean coal campaign.
Coal-powered plants could invest in retrofits to allow them to burn biomass such as wood pellets, or a lot more in brand new renewable energy facilities (insert your regionally appropriate source such as solar, wind, hydro, etc.). And carbon capture and storage could some day help to reduce the emissions from the sector but it is still a long way away from becoming a reality.
What if there was a more renewable source of energy (close to zero emissions) that allowed coal-fired power plants to phase out coal and eventually eliminate it without any investment in plant and equipment?
With so much sunk costs in the existing coal-fired power plant infrastructure, if such a thing existed, there would be a whole lot of happy utility executives and shareholders.
What if I told you that there was a bio-based coal replacement, commonly referred to as bio-coal or green coal, that truly is a clean coal alternative?
What if that alternative had the following benefits:
1.) High net calorific value similar to coal (i.e. packs a lot of energy in a small amount of product)
2.) Very dense energy form making it easy to transport
3.) Hydrophobic (i.e. doesn’t absorb water and therefore can be stored outside like coal can)
4.) Virtually carbon neutral
5.) Highly grindable into a dust like coal
6.) Can be co-fired/blended with coal in existing coal-powered boilers
There are more but I feel if I listed all of the features and benefits, you wouldn’t believe me. The solution I am referring to is called torrefied wood. Torrefaction is a technology that roasts wood, similar to coffee roasting, although with torrefaction the process is completed anaerobic (i.e. without oxygen). While this process does require some energy, the energy can actually be sourced from the torrefied wood itself in a closed loop solution. Of course, torrefying wood requires fibre, such as woody biomass and naturally, that should be sourced from wood waste or from sustainably harvested biomass.
I believe that torrefied wood has the potential to become a major climate capitalism opportunity this decade. So much so that my company is building a business plan and meeting with investors to build one of the first small-scale commercial facilities in North America in British Columbia.
Stay tuned for more on the real clean coal solution for America.
Boyd Cohen is the CEO of CO2 IMPACT, a carbon origination company based in Vancouver, Canada and Bogota, Colombia. Boyd is also the co-author of the forthcoming book, Climate Capitalism: Capitalism in the Age of Climate Change.
PALLET-MAKER PROPOSES CHEAP HEAT FOR CAMPBELLFORD
JOHN CAMPBELL / THE INDEPENDENT
Pallet maker sits atop 'gold mine'
CAMPBELLFORD -- Doug Runions and his wife Lori own and operate Precision Wood Products in Tanner Industrial Park at the west edge of Campbellford. Mr. Runions said wood waste created in the manufacture of pallets could be burned to generate electricity and thermal energy. Feb. 3, 2011
Feb 07, 2011 - 04:23 PM
CAMPBELLFORD - A local businessman says he could provide the town with cheap heat by burning waste wood to produce electricity at a cogeneration plant he wants to build near his factory in Tanner Industrial Park.
Doug Runions, the owner of Precision Wood Products, says the plant could generate as much as 10 megawatts of green energy for sale to the Ontario Power Authority.
"What we're hoping to do here is produce more electrical power than both Healey Falls and Ranney Falls (generating stations) combined," Mr. Runions said.
The energy would be produced by burning biomass such as waste wood from Precision Wood's manufacture of pallets and heating water drawn from a huge reservoir beneath the industrial park to turn the turbines. The excess hot water would be piped into town to heat municipal buildings, institutions and businesses, he said.
"The heat is free," he said, so the price charged customers would be well below what they're paying now. "It's much cheaper than natural gas."
Customers would need to invest in on-site equipment and piping but they'd probably save anywhere from 30 to 50 per cent on their heating bill, Mr. Runions said.
"The savings would be tremendous, let alone the energy conservation."
Precision Wood made the same sort of investment several years ago to install a heating system that burns its waste material and uses the water beneath the property. Mr. Runions recovered his cost in one winter from no longer having to pay for propane, he said.
"Now we pay absolutely nothing," he said.
Precision Wood doesn't have the money to build and operate a cogeneration plant and district heating system, Mr. Runions said. He estimated the cost around $25 million. Corporations and equipment vendors have expressed an interest in the project but he said he would like to see the municipality get involved in setting up a community-run power company so the water in this ground is not wasted.
"We sit on a huge glacial deposit in this gravel pit," Mr. Runions said. "It's enough water to feed the city of Belleville on a daily basis, about three million gallons a day, for 150 years ... it's a gold mine."
If Trent Hills were to get to get involved, it could use the thermal energy to heat its municipal buildings in Campbellford for free, he pointed out.
Mr. Runions said he and customers for his pallets could provide enough waste wood to generate two to three megawatts but he's certain the production of electricity could easily be increased to 10 MW as there is considerably more biomass going to waste that can be collected in Northumberland and Hastings counties. Materials include old hay, residue from cornfields, brush and grass.
Mr. Runions estimated the plant could create between seven and 12 full-time jobs.
He is being helped by forestry and management consultant Jeff Butler who has worked on similar projects.
In their submission to the municipality, Mr. Runions and Mr. Butler said district heating systems elsewhere in Ontario show good economic returns, attract investment and reduce greenhouse emissions. Such a system locally would provide long-term price stability and reduced energy costs, and make Trent Hills a desirable location, they said.
A feasibility study will need to be done to determine if their proposal has merit. Its cost has been estimated at $250,000
Council directed staff at its Feb. 1 meeting to work with Precision Wood in beginning the process of applying for grant money to help pay for the study. Potential sources include the Federation of Canadian Municipalities Green Municipal Fund and the Gas Tax Fund's Green Infrastructure Fund.
"Everybody is going to want to go green. It just seems to be the way of the world. Wood is good so go green with us, it's sustainable," Mr. Runions said. "I do know electricity is not going to get any cheaper and that oil is going to rise beyond our means one day."
Precision Woods employs 30 people and has a payroll of more than $1 million.
CANADA CAN TAP INTO A $200 BILLION MARKET FOR WOOD BIO PRODUCTS
By: Ross Marowits -- The Canadian Press
Canada has a prime opportunity to gain a competitive global advantage and tap into what is potentially a $200-billion market for bioproducts made from wood fibre, says an industry-financed study released Thursday.
The best way to harness the benefits of Canada's vast forests and sustain thousands of jobs is by integrating new technologies with existing forest production, says the report sponsored by the Forest Products Association of Canada and FPInnovations.
"Combining the old and the new is the way forward for the next generation forest industry," the study says.
The Canadian forest products industry is a $54-billion a year business that represents almost two per cent of the country's GDP and directly and indirectly employs 600,000 Canadians.
But the recession and the digital revolution have resulted in thousands of jobs being lost over the past few years.
Markets for traditional forest products such as wood and pulp will remain. But integrated plants that develop bio-alternatives to chemicals, oil and pharmaceuticals could produce up to five times as many jobs as a stand-alone bioenergy plants, the study found.
Canada is already producing a range of bioproducts, but it is not maximizing their contribution to the industry's bottom line, says the study's second phase.
A first phase study released last year examined how a biotechnologies focus could strengthen Canada's economy and rural communities.
It suggested the federal government should provide $1.5 billion to encourage diversification to new eco-friendly uses such as biochemicals and bioenergy.
Ottawa has already invested money through its green transformation program, but more must be done, according to the new study.
Other countries, including several in Europe, as well as the United States and China are head of Canada by retooling their policies and making the necessary short-term investments.
Canada accounted for just two per cent of the global investment in biomass-derived energy between 2005 and 2009, compared with 75 per cent by the three largest economic areas.
The study said Canadian industry needs policies that facilitate the transportation and transmission of green energy and encourage early adoption of promising technologies.
Industry must also seek new partnerships outside the forest sector to bring bio-products to market more quickly.
Potential partners include the oil and gas, chemical, auto, aerospace and agricultural sectors, as well as academia.
"Just as the industrial age gave way to the information age, the bio-age is being heralded as the next revolution to transform the globe economically, environmentally and socially."
The Organization for Economic Co-operation and Development found that the bio-economy will contribute 10 to 14 new drugs annually by 2015 and be responsible for 10 per cent of chemical production by 2030.
The forests will also be used to replace fossil fuels in the development of products such as tires, clothing fibres, lighter aircraft and biodegradable plastics.
OGLETHORPE SUSPENDS BIOMASS POWER PLANT PROJECTS
Source: Asia Biomass Office
Co-firing of biomass with coal, using wood pellets and wood chips, are becoming popular in some places over Japan. Coal power generation emits relatively large amount of CO2 for producing 1 kWh of electricity. In terms of cost of power generation, however, coal power is the cheapest. Coal is very cheap and exists in abundance on earth, and it will last more than 100 years from now at today's consumption rate. This is the strong point of coal.
Woody biomass/coal co-firing will make it possible to reduce coal consumption, and reduce CO2 emission. At the same time it will also make so-far-unused woody biomass into useful energy. It is known that Japan has been the biggest importer and consumer of coal in the world. Japan depends 99 % of coal from abroad. Only for power-generation purpose, Japan's annual import of coal amounts to 100 million ton, and for steel making another 80 million ton of coal is required annually. Co-firing of unused domestic woody biomass would possibly reduce consumption of coal by a few million ton.
Here are a few instances of woody biomass utilization for power generation in Japan:
1. Nippon Steel Corporation: (NSC) started an experimental biomass/coal co-firing by making use of forestry residue in November 2010. The proportion of woody biomass to coal is 2 %. NSC estimated annually 5,000 ton of woody biomass would be consumed, and 7,000 ton of CO2 emission would be cut down.
2. Hitachi Kyodo Karyoku Co.,LTD: (HKK Co.Ltd) announced that it would begin coal/biomass co-firing power generation at Nakoso power station in Iwaki city from March 2011. The power station, reportedly, would consume annually 90,000 ton of woody pellets, at 3 % of co-firing ratio. Also it would reduce 150,000 ton of CO2 emission annually. The introduction of commercial co-firing power generation is the first case in Tohoku region.
3. Hokkaido Electric Power Co.,Inc: (HEPCO Inc) announced last year that it would begin a range of proof co-firing experiment at Sunakawa power station from December 2010. Wood chips produced in Hokkaido would be burnt with coal at a mixing ratio of 1 ~ 3 %.
4. Ube Industries LTD.: Last year Ube announced that it would start full-fledged co-firing experiments from December 2010, where imported palm kernel shells to be burnt together with coal. Reportedly, Ube plans to foster a business system for biomass fuel supply and expects annually one million ton of biomass fuel to be supplied by the business in 2013.
GERMAN PELLETS AND WESTERVELT RENEWABLE ENERGY TO DEVELOP WOOD PELLET FACILITY
The joint venture would fund and operate a commercial-scale wood fuel pellet production facility in West Alabama
Source: The Westervelt Company
Advanced discussions are underway to form a joint venture between German Pellets USA and Westervelt Renewable Energy, LLC, which would fund and operate a commercial-scale wood fuel pellet production facility in West Alabama. The pellets will be produced from Southern Yellow Pine material for export and domestic markets.
Construction is expected to begin in 2011 with product deliveries scheduled for early 2012. The companies estimate the plant will initially produce 250,000 metric tons of wood pellets per year, expandable to 500,000 metric tons per year.
"The availability of renewable Southern Yellow Pine in West Alabama, where our landholdings are significant, makes this an attractive location for our initial production facility. With our history of success in manufacturing, we are eager to enter this business and intend to become a dominant player in this market sector," said Alicia Cramer, Vice President of Business Development for The Westervelt Company.
"This opportunity affords us access to additional wood resources, expands our international supply chain, and supplements our existing sources of supply. The complementary skills and resources of the partners will make us a formidable competitor in international markets," said Peter H. Leibold, Chief Executive Officer of German Pellets GmbH.
ENVIVA ACQUIRES DEEP WATER PORT TERMINAL
Purchase facilitates export of approximately three million tons of biomass fuel to European customers
Source: Business Wire
Enviva LP ("Enviva"), a leading manufacturer of processed biomass, today announced it has acquired a Chesapeake, Va. port terminal to satisfy growing overseas demand for renewable biomass. Previously owned by the Giant Cement Company ("Giant"), Enviva's investment in the terminal will create the capacity to receive, store, and load in excess of three million tons of sustainably generated woody biomass for export each year.
Worldwide demand for biomass has surged in recent years, particularly in Europe, among utilities attracted to fossil fuel alternatives that reduce carbon dioxide emissions. The Chesapeake port terminal will enhance Enviva's ability to meet this demand. One of the few on the Eastern Seaboard suitable for the export of wood pellets, the terminal will serve as the shipment point for biomass manufactured at Enviva's just-announced wood pellet plant in nearby Ahoskie, N.C., as well as several additional production sites under development by Enviva in the resource-rich Mid-Atlantic region. Enviva will continue to ship wood pellets manufactured in the Gulf region, including its Mississippi plants, from Mobile, Ala.
"The Chesapeake region has for a long time been a key nexus of international trade in the United States," said Enviva CEO John Keppler. "We are particularly excited to be one of the first green economy manufacturers to rebalance the flow of trade in favor of exports from this port in Virginia."
The purchase of the terminal is a reflection of the company's commitment to ensuring the safety, reliability, sustainability, and quality of its product. "We can now closely monitor our product from forest to plant to port, maintaining facilities that meet our high standards for product excellence and safety," said Keppler. "Plus the terminals strategic location will decrease transportation time and costs through our entire supply chain, greatly benefitting our customers and improving the environmental footprint of our logistics."
Enviva's plans for investment in and expansion of the terminal will require 40 to 60 skilled tradesmen and contractors during the initial phase of construction, and the terminal's permanent staff of 12 is expected to double by the third year of operation under Enviva, which will use local maintenance contracts and other vendors whenever possible. The terminal upgrades are expected to be complete in November 2011, to coincide with pellet production at Enviva's Ahoskie, N.C. facility. Giant will continue to use a portion of the terminal for cement sales.
Envivas port terminal can accommodate a wide range of ships and loading options required for the export of more than 40,000 metric tons of Envivas wood pellets per vessel. "The port has handled our cement volumes for 11 years and has been an important asset for our company," said Duncan Gage, President and CEO of Giant. "It is one of the only assets of its type on the Eastern Seaboard, and we believe that Enviva is well-positioned to capitalize on the potential of this terminal and increase its importance to the region."
HOT TIME FOR BIOMASS FURNACE MAKER
By CHRISTOPHER BJORKE, Bismarck Tribune | Posted: Saturday, February 19, 2011
TOM STROMME/Tribune Mike Robb is the chief engineer and CEO of King Coal Furnace Corp. that has operated in Bismarck for more than 30 years.
If it burns, they will build a furnace to burn it.
“Can you burn it? That’s the question we get,” said Jon Dockter, an engineer and vice president for Bismarck’s King Coal Furnace Corp. “We’ve burned everything you can think of.”
Dockter is not a pyromaniac, but a developer of combustion systems that run on alternative fuels — often the waste products of companies looking to cut energy costs by harnessing stuff that would otherwise be thrown out.
King Coal is a 31-year-old company that, despite its name, is fueling its growth by burning everything but coal. Its custom-designed and built biomass furnaces have been purchased by agricultural and lumber companies and brewers and are stoked by grains, wood shavings and sunflower hulls.
Company founder Mike Robb said that many of his clients are companies that have been spending money to dispose of waste that could actually be valuable fuel sources.
“You’d be absolutely astonished at what people do because they don’t realize what they can do,” he said.
For example, King Coal designed a prototype unit for the Alaskan Brewing Co. of Juneau, Alaska, to burn its spent grain malt. The brewing byproduct, called dried distillers grains, is usually sold to feedlots as food for cattle. But in Juneau, where there is no nearby livestock production, or even roads to connect the city to the rest of the world, the beer makers pay to ship the grains to Seattle to be marketed in the lower 48.
“It seemed like there’s got to be a better way,” said Ashley Johnston, communications manager for Alaskan Brewing, a 117,000-barrel-per-year company that sells beer in Alaska and several western states.
King Coal designed a prototype system that will burn the grain and produce heat used in the company’s brewing process, saving it the cost of shipping the grain out of state and lowering its energy costs. The Bismarck company is still building the system, but once it is installed, Alaskan Brewing will be the first brewer in the country to use such a system, according to Johnston.
“The other added benefit is that we’re saving a huge amount of oil,” Johnston said. “Beyond just shipping we’re excited to close that energy loop.”
King Coal’s engineers built the prototype for the brewer this past summer and it is sparking other business possibilities for the company. It is being used to test the suitability of other materials as energy sources that the company can design new furnace systems around. The unit shares a building with giant sacks of sunflower screenings and wood particles, ready to be fed to the furnace.
Among its other clients are a Minnesota peat producer that uses waste acquired from the logging industry to fuel a drying system for its peat. Another is a sunflower company that burns screenings to dry the sunflowers it sells as birdseed and snack food.
“We realized the system we built could handle all kinds of different fuels,” said Dockter, a mechanical engineer who went from a career in the airline industry to work for Robb, his father-in-law, who calls Dockter a “gearhead” and his “ace in the hole.”
The company has one patent from the 1980s, and it has applications pending for about 12 more on products it is developing, Robb said. The research and development that goes into its systems all happen in the company, in part to protect its proprietary work. For similar reasons, Robb does not take any government funding for projects.
“Anything we do, we want to do on our own,” Robb said.
The family-owned company employs 13 or 14 workers, depending on projects, and has annual sales of above $1 million, according to Robb.
Robb started the company in 1980 as a home furnace company but later spun off its residential work and focused on industrial work. Robb said about half its work is with coal-fired systems and half is designed for alternate fuel sources. One of its recent local projects was the biomass heating system used by the Bismarck Aquatic and Fitness Center. It also is building a coal-fired thermal system for a new hospital in Crosby.
But apart from a few area projects, King Coal is not a well-known local business.
“Ninety percent of our work is outside of North Dakota,” Robb said. “We do stuff from Alaska all the way to South America.”
Robb has plans to increase that business over the next year. He and Dockter are developing more standardized systems that will be simpler to produce than the customized projects that they design from scratch. They also are planning moving to a larger facility this year.
“I anticipate this is going to be our biggest year in our history,” Robb said.
(Reach reporter Christopher Bjorke at 250-8261 or email@example.com.)
REPORT: CA UTILITIES SIGNING EXPENSIVE CLEAN POWER CONTRACTS
It's no secret that renewable electricity in general is more expensive than power from fossil fuels. But how much more expensive? A California report shows that the state's utilities have signed contracts that will cost them over $6 billion more than they would otherwise pay for electricity from natural gas power plants.
The report, released by the Division of Ratepayer Advocates (DRA) last Friday, says 59 percent of the contracts signed by the state’s three largest utilities are priced above the market price referent (MPR), which is a yardstick used by the California Public Utilities Commission (CPUC) in reviewing the contracts. The MPR takes into account the costs of building, operating and maintaining a 500-megawatt combined cycle natural power plant. The more expensive contracts have prices that on average are 15 percent higher than the MPR.
The report looks at the contracts signed by the utilities from 2002 to 2010 in order to meet the state’s 2010 mandate called renewables portfolio standard (RPS) to get 20 percent of their electricity from renewable sources. The portion needs to climb to 33 percent by 2020. The contracts analyzed by the DRA include ones with power plants already in operation as well as projects that haven’t yet been constructed.
California has set aside funds to allow utilities to sign contracts above the MPR because regulators understand that renewable electricity is more expensive. It’s a price that the public will have to pay to use clean power that is better for the environment. The CPUC publishes the MPR and notes whether each contract it’s approved is below or above the MPR. But it doesn’t divulge the actual pricing for each contract.
The DRA contends in its report that the CPUC hasn’t done a good job scrutinizing contracts to make sure they aren’t unreasonably high and won’t saddle consumers with hefty bills. It notes that the CPUC has rejected only two out of the 184 it has reviewed. Many of these contracts are for power plants that haven’t yet been built, so the actual impact on consumers isn’t known.
The CPUC “has approved nearly every renewable contract filed by the utilities, even when contracts rate poorly on least-cost, best fit criteria,” the report says.
The report goes on to say that utilities and the CPUC give too much weight on whether developers can complete and deliver their projects and not enough on the projects’ costs to the public. It notes that the utilities have signed enough contracts to meet the state goals, so there is no good reason to accept super expensive contracts to ensure that the goals are met.
Not all proposed projects get built, of course, and the expensive contracts reflect the early stages of clean energy development. The California Energy Commission has found that 14 percent of the contracts have failed to deliver while 15 percent have been delayed, the report said. The 14 percent failure rate isn’t so high, the DRA notes in the report. The number could climb because of some of the proposed projects are so large that lining up permits and financing will be difficult.
The three utilities, Pacific Gas and Electric, Southern California Edison, and San Diego Gas & Electric, have been signing lots of power purchase agreements. Some of the contracts involved mega projects of hundreds of megawatts each, and those projects have stirred up controversy for their impact on the environment and local communities. A few of them already have attracted lawsuits or threats of legal challenges.
PG&E has signed more contracts that are priced above the MPR than other utilities. Of the ones PG&E has signed, 77 percent of them are above the MPR. Edison and SDG&E’s shares are less than 50 percent. A PG&E spokesman told the San Francisco Chronicle the utility is committed to pay more because many of the contracts are for solar electricity, which can be expensive than some other sources.
The DRA wants the CPUC to be more selective in approving contracts. Its recommendations include setting a pricing limit annually and requiring utilities that submit especially expensive contracts -- those that are $100 million more than the MPR-based prices -- to go through a lengthier review process.
DRA adds that the public also should be given easier access to information on how much these renewable electricity contracts are costing so far and will likely cost for the next 10 years, and the progress the utilities are making to meet the state mandates. The CPUC should require the utilities to report that information, DRA says.
“DRA supports the RPS program and cost-effective renewables. However, DRA is concerned that the perceived urgency to comply with the RPS and continuing CPUC approval of high-priced contracts has created an inelastic demand and subsequently driven the renewable market to yield very high prices,” the report says.
Thanks for clear coverage of the study Ucilia.
It isn't surprising that the IOU's are signing contracts that reflect solar is more expensive than natural gas, especially since natural gas still doesn't pay for major environmental externalities like carbon emissions, water table pollution, or removal of wetlands.
The term "perceived rush" to describe our RPS goals discounts the rational urgency needed to reduce GHG emissions. The irrational thing is to delay and repeat 'business as usual' which is what the MPR is all about.
Arguing for least cost is fine when all the costs are on the table, but the legacy utility grid was built without internalizing its full costs. Paying a premium for clean renewable power is a 'rational cost' to meet an urgent objective.
WILL NATURAL GAS KILL AMERICAN RENEWABLES?
Fossil industry leaders such as T. Boone Pickens like to tout America's abundant supplies of natural gas. And of course, they're right. Due to such robust supply, current prices for the stuff are very, very low.
As the Department of Energy's Natural Gas Weekly notes, there is an enormous price gap right now between natural gas and oil. For 1 million BTUs, you would pay $14 for oil (before Libya exploded), and just $4 for natural gas.
Notice, too, that while the price of “Brent North Sea” crude today jumped to $106/barrel, according to Bloomberg, the price of NYMEX oil futures was just $91.25. Most natural gas prices had barely budged.
Over the past two years, this has been a huge story for renewable energy, American competitiveness, and the environment.
• For renewable energy, it means the price we have to meet in order to compete head-to-head with fossil fuels goes down, and may stay down. If you can't compete on the market, you need subsidies, which are increasingly hard to come by.
• The low price of natural gas is mainly a North American phenomenon, and a North American advantage. Our industry has an advantage against the rest of the world from low natural gas prices. Supporters of natural gas say this boosts the general economy.
• Few people are asking how we are getting all this cheap natural gas. Mainly we're getting it through fracturing, drilling wells and exploding the area around them so the gas comes up the pipe. This can destroy water tables.
(A point of personal disclosure is required here. Relatives in Texas own land once used for oil and gas, and are actively considering offers for new leases, based on fracturing. It's possible I could make some money off this. I thought you ought to know.)
At the same time as the Department of Energy is boosting fracturing for natural gas, of course, the Department of the Interior is raising environmental objections to wind energy, objections that are getting a lot of support in Canada, where the government of Ontario has just imposed a moratorium on new offshore wind farms. Opponents like Wind Concerns Ontario want to take the moratorium onshore, saying wind turbines are noisy, that they can hurt birds, and that they spoil the view.
Notice something strange here? Destroying the water table is fine, the government says, and boosts American competitiveness, but upsetting a bird is absolutely horrible and must be stopped at all costs?
Place this kind of environmental “politics” on top of the lower price for natural gas produced by fracturing, and you start to see what we're up against here. Natural gas is cheap because it's increasingly destructive to the environment, and its low price (plus grassroots pressure against renewables) is holding off the search for alternatives.
While the objections to wind, or solar, or biofuels, that are increasing in their intensity are a problem, they're not the heart of the problem. The heart of the problem is that we are destroying our water tables and using the short-term pricing advantage of natural gas to give Chinese and German competitors an advantage in the race toward dominance in harvesting the future of energy.
AS OIL PRICES RISE, CONSUMERS SEEK ALTERNATIVES
• By Curt Nickisch (@CurtNickisch)
• Feb 25, 2011, 11:26 AM UPDATED 1:40 PM
BOSTON — As the price of oil rises, business is picking up for Massachusetts sellers of alternative home heating fuels.
Wood pellets are back in demand. (WBUR)
Northeast Nursery in Peabody sells firewood, wood pellets and even coal. Thanks to all the storms, business has been good this winter. Now, it’s getting even better, says manager Chris Barboza.
“There was a woman yesterday in the nursery who would have purchased additional heating oil to top off her tank, but she decided not to, [she decided] to waive off that delivery,” Barboza said.
She bought wood pellets instead.
Some area retailers say they’re already running low on some wood supplies. Barboza says it’s a nice boost at a time when business normally starts winding down.
But, Barboza says, the more people who shift their consumption away from home heating oil, the more prices for alternative fuels will go up, too.