WOOD PELLET NEWSLETTER
April 2011
Gerald W brown * 7202 County Road U * Danbury, WI 54830 Phone 715-866-8535
Gerald Brown is solely responsible for the content in this newsletter
Please consider using www.woodpelletsites.com for all your media package needs including hosting and website development at a very low cost. Media packages specifically designed for wood pellet dealers. The service also offers post card, flyer and labels for all your mail out advertising needs.
• WOOD-PELLET COMPANY TO OPEN PLANT NEAR ESPAÑOLA
• ENVIRONMENT GROUP EXAMINES HEAT PRODUCTION OF WOOD PELLETS
• ENERGY TASK FORCE EXPLORES WOOD PELLETS AS COAL ALTERNATIVE
• CONVERSION TO BIOMASS COULD SAVE TILBURY POWER STATION, SAYS RWE
• US EXPERT TALKS BIOMASS
• HEATING WITH WOOD
• WOOD PELLET ECONOMICS
• EUROPE HAS POTENTIAL FOR INCREASING FOREST CHIP AND AGROBIOMASS USE BY 50%
• GETTING UNC COAL-FREE: WHEN BIG PLANS ARE MADE, THEY SHOULD BE MADE WITH FORESIGHT AND DEMAND CONTINUED ATTENTION
• HEATING THE NORTHEAST CONFERENCE TO FOCUS ON BUILDING REGIONAL ECONOMY AND SAVING CONSUMERS MONEY
• APX-ENDEX TO OFFER WOOD-PELLET TRADING STARTING NEXT QUARTER
• BCAP FUNDING CUT IN FY2011 BUDGET BATTLE
• WHAT FEED-IN TARIFFS COULD DO FOR JAPAN'S ELECTRICITY SHORTAGE
• CANADIAN RENEWABLE ENERGY MARKET OVERVIEW
• WOOD PELLETS BEING SHUT OUT — INDUSTRY
• VIRIDIS ENERGY SECURES A MULTI-YEAR OFF-TAKE AGREEMENT TOTALING $15.5 MILLION OVER FOUR YEARS FOR PELLETS • • •
• PORT SURVIVES DESPITE CARGO DROP
• IEA REPORT: BIOFUELS CAN PROVIDE UP TO 27 PERCENT OF WORLD TRANSPORTATION FUELS BY 2050
• MASSIVE PELLET PRODUCTION WHERE’S THE GOVERNMENT?
• MCAULIFFE STUDYING WOOD PELLET INDUSTRY FOR PAPER MILL
• WOOD PELLET MANUFACTURER CONSIDERING FRANKLIN IP MILL
• SEALASKA PLAZA MODELS COMMERCIAL BIO-ENERGY CONVERSION
• SUNY ESF TO USE $963,000 STATE GRANT ON POWER SYSTEM
• REPORT ANALYZES EUROPEAN PELLET MARKETS
• NEW ASSOCIATION TO ADDRESS U.S. INDUSTRIAL PELLET EXPORT ISSUES
• WOOD-BURNING MAY BRING REPRIEVE FOR TILBURY POWER STATION
• EXTOLLING THE BENEFITS OF HEATING WITH PELLETS
• NEW ASSOCIATION TO ADDRESS U.S. INDUSTRIAL PELLET EXPORT ISSUES
• MASSIVE PELLET PRODUCTION
• DOE AND HUD LAUNCH PILOT HOME EFFICIENCY FINANCING PROGRAM
• PELLET MANUFACTURER POISED TO CAPITALIZE AS OIL PRICES SPIKE
• VERMONT TO IMPLEMENT WOOD PELLET HEATING INCENTIVE
• SUNY ESF TO INSTALL BIOMASS CHP SYSTEM
• STUDENTS, FACULTY URGING STATE TO STOP BURNING COAL ON CAMPUS HEATING PLANTS
• RAISING THE BAR
• THE PELLET MARKET FROM DIFFERENT PERSPECTIVES
• PELLET PITFALLS
WOOD-PELLET COMPANY TO OPEN PLANT NEAR ESPAÑOLA
Arizona firm will hire more than a dozen employees
Staci Matlock | The New Mexican
Posted: Wednesday, April 06, 2011 - 4/6/11
An Arizona company is planning to open a wood-pellet manufacturing plant at the site of an old sawmill north of Española.
Forest Energy Corp., based in Show Low, Ariz., announced this week that New Mexico Fuels will produce 40,000 tons of pellets a year using wood materials from nearby public and private forests. The company is leasing the location of the old Duke City Lumber Co. from Ohkay Owingeh.
Wood pellets are used as fuel in stoves and biomass boilers, which are providing a market for the small-diameter trees harvested in forest-thinning projects. Decades of commercial logging and forest-fire prevention have left behind forests full of tightly packed, narrow-trunk trees, which are ripe for catastrophic wildfires but previously had little commercial value.
Forest Energy Corp. began producing wood pellets and other forest biomass products in 1992. Its trade brands are Heat'rs (wood pellets) and TerrAmigo (animal bedding and fire logs made of Ponderosa pine). Their products are sold at stores such as Lowe's, Home Depot and Ace Hardware in six Western states.
The company also provides large biomass boiler systems for commercial and institutional buildings.
The company's current plant in Show Low is operating at capacity, processing trees thinned from the Apache-Sitgreaves National Forest under a 150,000-acre, 10-year stewardship contract to restore forest health. Forest Energy Corp.'s president, Rob Davis, said the company is working on similar contracts for the proposed Ohkay Owingeh plant. "Long-term supply of raw material is always a concern," he said.
The Ohkay Owingeh site will expand production and provide easier shipping to Colorado and New Mexico. "This looks like a good opportunity, and it is in a real good location to serve our markets," Davis said.
The Ohkay Owingeh site has the added benefit of close proximity to millions of acres of two national forests — Santa Fe and Carson — plus the Valles Caldera National Preserve, tribal and private land.
Davis said the company plans to finish a modular pellet-manufacturing plant at the site by late summer and will hire more than a dozen employees. The plant will be able to process tree trunks as thin as 1 inch in diameter.
Davis said the company attempted to open the Ohkay Owingeh pellet plant in 2007, but there was a sudden oversupply of pellets as new companies entered the market. Some of those companies have since dropped by the wayside. While the pellet market hasn't grown tremendously, in part because of the housing-market crisis, it has remained steady, and Davis said his company is well positioned in the industry.
The former Duke City sawmill was long a site of both economic promise for job-strapped Rio Arriba County and a symbol of showdowns between environmental groups and local loggers. It was a thriving business, cutting and milling millions of board feet of trees logged in nearby forests. Rio Grande Forest Products, owned by an Idaho company, bought the sawmill in 1996. The company retooled the sawmill to handle smaller-diameter trees and then shut it down in 2003 because of a slow economy and a lumber glut. The closure put almost 90 people out of work.
Contact Staci Matlock at 986-3055 or smatlock@sfnewmexican.com.
ENVIRONMENT GROUP EXAMINES HEAT PRODUCTION OF WOOD PELLETS
April 6, 2011
Yellowknife, N.W.T. - A local environment group has put wood pellets to the test to see if there's a difference in how much heat each kind generates.
A technical specialist with the Arctic Energy Alliance, John Carr, said they did a blind laboratory test on six brands of wood pellets available in the NWT.
They found there's only a 2% to 3% variation, with Pinnacle pellets having the highest heating value.
Carr pointed out an-18 kilogram bag of wood pellets costs anywhere between $5 and $8, comparing it to traditional heating fuel.
“Roughly two kilograms of wood pellets is equivalent to one litre of heating fuel,” he said. “You can do the math on the cost of wood pellets versus the cost of heating fuel and you realize that there's very substantial savings to be had between the heating fuel that most people are using to heat their homes now and wood pellets.”
The Arctic Energy Alliance, through a GNWT program, has given out nearly 50 rebates to Yellowknifers who bought wood pellet stoves in the last year, and 25 to Hay River residents.
Most of the pellets – a by-product of the forestry industry – come from northern B.C. and Alberta.
Regardless of whether people are using Le Crete, Westwood or Dragon Mountain, Carr said they're pleased residents are switching to the cleaner heating source.
“We're happy to see people using wood pellets which are made from a renewable source, from sawdust from saw mills and no there's chemicals or additives, it's just pure sawdust,” he said.
Results of the wood pellet laboratory tests are posted on the AEA website.
ENERGY TASK FORCE EXPLORES WOOD PELLETS AS COAL ALTERNATIVE
Biomass option raises questions about sustainability
Updated: 8 hours ago
In meetings last year, the Energy Task Force extolled the virtues of biomass as a coal alternative — but not without voicing concerns.
Some members of the task force worried that companies providing wood pellets would clear forests to produce them, nullifying any sustainable improvement.
It was for that reason that the bid for the first biomass experiment, wood pellets, recommended suppliers have sustainability certification from organizations like the Forest Stewardship Council, the Sustainable Forestry Initiative and the American Tree Farm System.
But none of the three companies that submitted offers had any kind of certification.
Carolina Wood Pellets was UNC’s original supplier and least expensive qualifying bid. It supplied pellets for a 20-ton test in September but later encountered difficulties securing proper railcars.
Lignetics, despite having the only bid cheaper than the price UNC pays for coal, failed to qualify for the same reason.
Steve Smith, former CEO and owner of Carolina Wood Pellets, filed for Chapter 7 bankruptcy Feb. 21 without notifying UNC. The University was then forced to change suppliers to WoodFuels Virginia, a move that increased costs by 7 percent.
Carolina Wood Pellets and Lignetics both said their use of recycled wood products from third parties for their pellets qualify as green practices. Neither company has been certified, and both were unable to verify the sustainability practices of their wood sources.
“Do I actually go out and research what they’re doing?” said John Utter, general manager for Lignetics. “No.”
WoodFuels Virginia sources its own wood. General Manager Jake Blondin said the company requires the loggers it hires be trained in the SHARP Logger program, a sustainability initiative developed by the Virginia Department of Forestry and other groups.
Blondin said WoodFuels Virginia is “aggressively pursuing” Sustainable Forestry Initiative certification, although he was unable to provide a definite timeline for when certification will be complete.
Stewart Boss, co-chairman of the Sierra Student Coalition, said it was a cause for concern that UNC had not found any certified suppliers. While acknowledging the difficulty of finding certification and the limited nature of the wood pellet market, he said these are not insurmountable obstacles.
“UNC is a top-tier university,” he said. “Surely there is a way to figure it out.”
Dennis Hazel, an N.C. State University professor who teaches forestry extension and made presentations on biomass to the Energy Task Force, said formal certification is difficult to come by because the market is currently so small.
He added that certification will become easier in the future as the industry grows and wood pellet producers attempt to comply with stricter sustainability regulations in European markets.
Ray DuBose, director of energy services, said the University is attempting to expand the market in North Carolina by purchasing large amounts of wood pellets.
After completing its first round of tests in March, the University is now looking to test torrefied wood, pellets that have been dried out to make them burn more efficiently. The torrefied pellets create energy outputs similar to coal.
DuBose acknowledged the University’s issues with lining up a reliable supplier for wood pellets.
“Something the University is going to have to address is whether the risk is acceptable,” DuBose said.
DuBose said UNC will issue a bid for torrefied wood this summer. In order to decrease chances that an unreliable supplier will disrupt tests, he said the University will take torrefied pellets from multiple sources simultaneously, a system similar to the one used for coal.
DuBose said he believes the University is still on track to wean itself off of coal, but it won’t be a simple process.
“We’ve got a long journey to get off coal by 2020,” he said.
Contact the University Editor at university@dailytarheel.com.
CONVERSION TO BIOMASS COULD SAVE TILBURY POWER STATION, SAYS RWE
Coal plant will run on wood pellets from later this year
By Will Nichols
11 Apr 2011
RWE npower says its plans to convert the 1,050MW coal-power station at Tilbury to run on wood pellets may extend the power station's life beyond 2015 when European law would have forced it to close.
Company spokesman Dan Meredith confirmed to BusinessGreen late last week that, following conversion work over the summer, the company would burn 2.3 million tonnes of biomass over the remainder of the plant's lifetime, making it the largest wood burning plant in the UK.
A European acid rain directive means that Tilbury and eight other UK plants have to cease production at the end of 2015 or once a set number of operational hours have been completed.
"What we're planning to do for the last few years of its life is see if we could convert it," Meredith said. "We want to see if the technology is feasible. Using this kind of fuel on this kind of scale hasn't been done before. It makes business sense."
The company is also unfazed by the experience of its rival, Drax power station in South Yorkshire, which has repeatedly delayed a £2bn investment plan to build three dedicated biomass plants.
Drax chief executive Dorothy Thompson has blamed a lack of government support and uncertainty in the market for the postponements, but Meredith said that trialling biomass at Tilbury would help the company work out any technical problems faced by emerging biomass technologies.
"Obviously the uncertainty is difficult and that's why this is a timely project for us," he said. "After [2016] we've got a few other strategic options."
This could mean re-licensing the plant if it proves profitable, or building a combined cycle gas turbine plant on the same site, Meredith added.
One source of funding for the biomass project would come from Renewable Obligation Certificates, which were extended to cover biomass in July last year.
Biomass power stations still emit carbon, but do not fall under the EU's emissions trading scheme because trees, their fuel, absorb carbon dioxide. As a result the technology is widely regarded as low carbon or 'carbon neutral'.
Other biomass projects such as the proposed Prenergy plant in Port Talbot have come under fire from air quality campaigners, but Meredith said the planned change to the RWE plant would improve the local environment.
"If you were standing outside it, you wouldn't notice the difference," he said. "It's not only a fantastic carbon saving, but we're also going to reduce [the output of] nitrous oxide and dust. It's good for everyone."
In order to ensure that the biomass fuel used by the facility comes from sustainable sources, Meredith said the company will use certified Green Gold Label wood pellets, a large amount of which would come across the Atlantic from RWE Innogy's wood-pellet plant in Georgia.
"RWE have quite a lot of biomass experience in the Netherlands. We're very confident we can make sure this is a sustainable project," he added.
US EXPERT TALKS BIOMASS
Posted Wed Apr 13, 2011 5:44am AEST
A forestry expert from the United States has travelled to south east New South Wales to advocate the production of wood pellets for energy use.
Dave Atkins works in the biomass department with the US Forest Service, and is touring Bombala and Eden for the next two days advocating the Fuels for Schools program.
The approach involves taking timber removed from forests for fire management purposes, and using it to provide energy for schools in the form of pellets.
Mr Atkins says it is an approach that has worked overseas.
"We started out providing heating systems in school systems," he said.
"We've expanded that beyond schools now, but we started out with the schools.
"It was a great opportunity to help kids understand the importance of thinning forest to reduce fire hazards."
He says it is a proven method.
"I'm sharing experiences that we've developed over the last ten years on using woody biomass for energy," he said.
"A lot of the time we're thinning out forest to reduce wildfire hazard, or to protect the forest from insects and diseases."
For more, go to the South East News blog.
HEATING WITH WOOD
Workshop focuses on benefits, incentives of biomass
By JAIME CONE / Reformer Staff
Jason Cooper explains the circulators, left, that deliver the heat from the pellet boiler to each individual unit. (Zachary P. Stephens/Reformer)
Wednesday April 13, 2011
BRATTLEBORO -- Local landlord Jason Cooper wanted to cut down on the amount of fossil fuel he was using to heat his Brattleboro apartments and came up with a creative, money-saving solution.
With the cooperation of the town, he ran underground hot water pipes to five residential buildings he owns on Elliot Street and connected them to a wood pellet boiler.
He said the process went fairly smoothly, and he expects to earn back the cost of his $50,000 investment within five years.
Those interested in learning about how they can heat with biomass will have an opportunity to meet Cooper, ask him questions about his experience using wood pellets and tour his "mini-biomass district energy system" at the upcoming wood heat workshop and vendor fair May 14, hosted by Brattleboro Climate Protection, Brattleboro Thermal Utility, the Biomass Energy Resource Center and Brattleboro Savings & Loan.
Workshop attendees will learn the advantages of installing a wood-burning furnace, boiler or pellet stove in their home, business or rental property. Speakers will explain the different types of systems that are available and address the issues of fuel supply and financial incentives.
"I always like the questions, and I like to share what I've learned because this is all trial and error -- I made it up as I went along," said Cooper. "At this point it works well, so I like sharing the experience."
Local vendors of wood-heating products and services will also be on hand to answer questions about heating with wood.
Cooper went through a gradual process of switching his apartments from oil to wood pellet boilers about five years ago. He first installed a pellet boiler in his home.
"I started with a smaller boiler that I put in my house; I wanted to be right there (to oversee it) before I committed anyone else to putting up with it," he said. "I was very impressed and very quickly put one in my office building for a year, then the next year I tied in the building next to it, then the next year tied in the one next to that one."
He said he was surprised at how willing Brattleboro Public Works was to work with him on the project.
"I asked to put hot water lines under the street, and they said no problem as long as I submit a plan ... once I got the lines under the street I tied in 11 units," he said.
Cooper's pellet boiler now provides heat for 20 units in five buildings.
"I believe anything we can do to cut down energy costs, especially fossil fuel use, is a good thing," Cooper said. "The increase in (fossil fuel) prices is very destabilizing not only to our economy but to our country, and we need to do everything we can."
The workshop will take place May 14 from 9 a.m. to noon at the Marlboro College Graduate Center at 28 Vernon St. Lunch will be served.
The workshop is free and open to the general public, but it is limited to 50 participants and registration is required. To sign up, contact Paul Cameron by May 6 at 802-251-8135 or pcameron@brattleboro.org.
Jaime Cone can be reached at jcone@reformer.com or 802-254-2311, ext. 277.
Cooper holds a handful of pellets that fuel the pellet boiler that he had installed to heat five of his buildings, which contain 20 units, on Elliot Street in Brattleboro. (Zachary P. Stephens/Reformer)
WOOD PELLET ECONOMICS
April 10, 2011 - 0 Comments
By John Cruickshank – The Northfield News
Photo: Product-Category.com
When I was growing up, coal was burned by most homes in Vermont. I recall our house had a stoker that burned rice coal and my dad had to shovel the coal into the stoker from the coal bin which was next to it.
The bin was filled every summer all the way to the ceiling and it held about 10 tons of coal.
Gradually, mostly during the sixties, people changed over to heating their homes with fuel oil, at least in this part of Vermont.
My parents were in the coal and oil business in Northfield, beginning to sell fuel oil in 1934. The motto was “clean, comfortable Gulf fuel.” Prior to that, they had sold only coal.
Coal was dirty, had the problem of having to be hand fed into a furnace and was bulky to transport. All of the coal in Northfield came into town on railway cars and was dumped into coal sheds that used to be by the tracks off from Wall Street.
Now, Gov. Peter Shumlin has asked the state Department of Public Service and the statewide energy conservation program Efficiency Vermont to set up an incentive program to get people to switch from heating with fuel oil to wood pellets.
Presently, most wood pellets come in forty pound bags that are bought at a hardware store and are burned in stoves in people’s living room.
There is a big difference in the quality and wood pellets from one hardware store may work very well in a stove while pellets from another will smoke and clog up the machinery that makes the stove operate.
There is talk of imposing a standard on wood pellet manufacture that would make them all the same regardless of where you buy them but that hasn’t happened yet. It’s not like fuel oil that must, by law, be refined to certain standards.
There are a couple of companies that sell wood pellets in bulk, by the ton delivered into a bin in your cellar.
Karen Korrow of Gillespie’s Fuels said that her company began selling wood pellets in bulk back in the early 1970’s when the oil embargo was in full swing. At that time, they were still selling coal and could load the wood pellets in their coal trucks and deliver them to people’s houses.
There were two problems, she said. First, once oil prices began to fall after the embargo was over, people wanted to get back to fuel oil and took out their wood pellets furnaces. The second was there was no reliable supply of wood pellets. Niether of those concerns has changed much over the years.
She said that the only place to buy them at the time was in Canada and there was enough to supply the two small dealers who were buying them in Vermont.
However, if Governor Shumlin gets his way and everyone started using them, there just wouldn’t be enough to go around.
Ms. Korrow said that there was no way to guarantee that there would always be a supply. With fuel oil, that has never been a problem, she noted.
Matt Cota, Executive Director of the Vermont Fuel Dealers Association, said that there is more then the problem of a guaranteed supply with pellets. There is also the cost of gearing up to supply pellets in bulk.
He said that the cost of a fuel oil truck is about $100,000 whereas the cost of a wood pellet delivery truck capable of blowing pellets into your basement, is about $250,000.
Also, he said that the wood pellet truck can only carry about half of the fuel that a similar fuel oil truck can carry and still stay within the load limits set for most Vermont highways and roads.
One ton of wood pellets purchased in bulk would be equivalent of buying 118.26 gallons of fuel oil.
The bulk pellets are held in a silo or bin and you’d have to install one either in your cellar or outside your house so the wood pellets could be delivered into it. A bin that would hold enough fuel to get through the winter would be about 15 by 15 feet square, the size of a good sized room in your house. From the silo, the pellets would feed into your furnace automatically.
The cost of installing a wood pellet conversion to your present fuel oil boiler is somewhere between $5,000 to $10,000 including the cost of the bin and a screw drive to deliver the pellets to the boiler.
There is a down side, wood pellet boilers require cleaning after burning about 2 tons pellets according to Ms. Korrow at Gillespie’s. The average house would use about 8 tons of pellets a winter requiring cleaning of the burner about every one and a half months. Also, the ashes need to be taken out of the boiler so the equipment does not maintain itself and needs someone to watch over it. It’s not going to be a trouble-free system for older people, she added.
Gillespie’s gave up selling pellets in the mid- 1980’s but would consider selling them again if the market for pellets developed again, if the supply of pellets were assured and it was certain that the customer base was going to remain. Without those two caveats, the huge investment in equipment and storage would not be worthwhile.
Several people have heated with wood pellet stoves for some time. However, very few have wood pellet furnaces that heat an entire house.
Homeowners already are eligible for a $500 state incentive when they switch from older, less efficient stoves said Elizabeth Miller, commissioner of the Department of Public Service. The new program would provide the same incentive for people who want to switch out their oil burners for wood pellet systems.
Governor Shumlin has said that he’s trying to reduce reliance on foreign oil, promote job growth among Vermont foresters and wood pellet mill workers and get people to use a fuel that’s less damaging to the environment. He said he also wants to boost employment opportunities at firms that manufacture pellet burner components.
A company called Pellergy in Barre manufactures conversion equipment for switching oil burners to wood pellets.
There are companies that are in a start up mode in Vermont that intend to make wood pellets here from timber scrap but their production, if any, has been extremely limited.
Chris Brooks, CEO of the Vermont Pellet Co., which gets the wood he uses to make pellets from within a 30-mile radius of its mill in North Clarendon, said his company presently employs 15 people.
He said an additional 79 logging crews of two to four people each get a significant portion of their income from delivering treetops to his mill while the trunks go to a sawmill for lumber.
That would allow supply to a small number of customers. However, if a large number of people were to convert their fuel oil boilers to pellets, the supply would not be sufficient according to Mr. Cota.
Wood pellets are made from compacted saw dust which is compressed at very high temperatures to hold the pellets together without the use of glue.
Prices for bulk wood pellets vary from $249 to $289 per ton delivered to your house.
How does that compare to the purchase of fuel oil?
The answer is that it depends upon how high fuel oil prices are at a given time.
Up until the big oil crunch where prices began to shoot up because of the Libyan war, fuel oil was selling locally for about $3.61 a gallon. That means that the price of 118.26 gallons of fuel oil would have been $426.92. That would make wood pellets a good value.
Of course, presently, fuel oil prices are up even more, so wood pellets become more desirable as oil prices creep higher.
However, anyone considering changing over has to think about how long if will take to pay back the cost of converting.
Ms. Korrow pointed out that presently there are very efficient fuel oil boilers available that can reduce the effective cost of fuel oil to $1.40 per gallon because the number of gallons one will have to use in the winter is about 40 per cent less than with the ordinary oil boiler. Wood pellets just cannot compete with the efficiency of these new boilers and certainly are not as trouble free.
The fact is that the government does not have a very good track record when it comes to pushing particular kinds of fuel sources, Mr. Cota said, so before anyone jumps out and converts to wood pellets, make sure to conduct your own careful investigation.
In the 1970’s when the oil embargo was imposed on the United States, President Carter pushed for the development of alternative fuels. The Department of Energy was formed in 1977 to support this new development. Then, when oil prices fell, the entire program was abandoned. One wonders if that will happen again.
President Obama in a speech at Georgetown University just a few days ago, said that when he took office, the country was importing 11 million barrels a day and he pledge to cut that by one third in the next ten years. Of course, the use of oil has declined since Mr. Obama took office and today, only about 9 million barrels of imported oil are being used currently, so he’s already well on his way to meeting that goal. Had he said he would reduce foreign oil dependency by one third from today’s use, that would have been a braver pledge. However, even that goal could be met if were we to start seriously developing our own oil and natural gas. The more natural gas we use, the more oil would be available to uses that natural gas cannot service.
What Governor Shumlin really wants is natural gas to be piped to everyone in Vermont said Mr. Cota. But that is a near impossible goal considering the cost of running pipe lines.
I recall my mother fearing that natural gas would come here back in the 1950’s because it would have seriously impacted the fuel oil business. Of course, it never has been piped beyond Burlington and Chittenden County. It is doubtful that it ever will be considering the cost per mile of building and maintaining natural gas transmission pipelines.
The current cost of construction according to Rita Tubbs, Managing Editor of Pipeline News was about $2 million per mile for a twenty inch gas line.
Of course, you would need to add to that initial cost, about $10,000 per year for maintenance and upkeep of each mile of the pipeline according to the Texas Department of Public Administration.
Natural gas would also put out of work about 8,000 Vermonters who are employed in the delivery of fuel oil according to Mr. Cota and would seriously impact the more than 80 family owned business who have made substantial investments in their fuel oil delivery businesses.
Currently, the state of Vermont has only 53 miles of natural gas pipelines, the lowest of any state in the nation according to the Texas State Controller of Public Accounts who conducted a study in 2007.
With the state out of money, the high cost of gas line construction is entirely beyond the state’s ability to finance any part of such a system. The question then becomes whether it would be profitable for a private gas company to build the lines, maintain them and deliver gas. Without public help, that investment is doubtful at best.
If the federal government were to finance the job, estimates are that about $260 billion will have to be spent between now and 2030 to bring pipelines to the entire nation.
The fact is, we are going to be depending on fuel oil for a long time and if we want to reduce our dependence on foreign oil, we’d better start developing our own domestic sources right now and stop dithering around. Drill baby, drill, may be an old saw, but the fact is, we need to do it.
4/14/2011 4:59 AM EST
EUROPE HAS POTENTIAL FOR INCREASING FOREST CHIP AND AGROBIOMASS USE BY 50%
Agrobiomass and forest chips are the most underused bioenergy sources available today; there is potential for increasing their use by 50% from the present. Increasing biomass fuel use would help attain sustainable development goals.
Thanks to the EUBIONET III project coordinated by VTT Technical Research Centre of Finland, there is now more accurate information available than ever before on biomass reserves in the EU. The project involved estimating the biomass potential in 23 EU Member States and Norway. The annual potential for biomaterial gained from forests, fields and industry was eventually estimated at the equivalent of 157 million tonnes of oil.
“In this project, we focused on the technical and economic potential of biomass reserves and on solid biofuels. If we further assume that about half the waste generated in the EU is biodegradable, that would translate into the equivalent of about 37 million tonnes of oil, bringing the total available biomass up to some 200 million tonnes of oil,” says Senior Research Scientist Eija Alakangas from VTT Technical Research Centre of Finland, who was in charge of the project.
Since the publication of the report, the countries involved have estimated in their national renewable energy action plans that about 250 million tonnes of biomass reserves would be required to achieve the combined goals set. It has not yet been estimated at the EU level what the volume required for sustainable development might be. Moreover, some countries import their biomass fuel from other EU Member States or from outside the EU.
“Current use of bioenergy exploits less than half the bioenergy potential of the 24 EU Member States studied. The greatest potential for increase is in forest chips and agrobiomass. Finland aims to use forest chips to produce energy equivalent to the yield of 13.5 million cubic metres of solid fuel or 25 TWh[1],” says Alakangas.
The data on biomass reserves established during the project are publicly available, and best practices are being exchanged between countries. This is good for Finnish technology exports. Information on biomass fuel chains, for example, is useful for enterprises.
In addition to exploring the biofuel potential of the EU and its sufficiency, the project studied sustainable development criteria for solid biofuels, generated information for use in standardisation and monitored biofuel price development since 1999. The project yielded information useful for new quality standards for solid biofuels, and a price index for international trade was developed together with businesses.
Solid biofuel standards will make international trade in biomass fuels easier. FOEX Indexes Ltd, an enterprise specialising in monitoring indices, uses a standard as the basis for the index for industrial pellets. The project aimed to increase biomass fuel use in the EU by finding ways to remove existing obstacles to trade.
The EU will make use of the findings of the project in its preparatory work. EU criteria for sustainability of solid and gaseous biofuels will be drawn up in the future, and the country reports and summary produced in the project will provide valuable inputs.
Index for monitoring pellet price trends
Wood pellet trade was evaluated in the project using customs codes and by collecting price data on biomass fuels. FOEX publishes an industrial pellet index based on prices in the Baltic Sea region, and in the future this will be extended to include forest chips. The FOEX index is based on actual sales. Information has also been gathered in countries not covered by the price index.
Following the project, a new customs code will be introduced for wood pellets to monitor the pellet trade from 2012.
EU sustainability and energy policy will influence how biomass fuel use develops in the future. Major pellet users have proposed that greenhouse gas emissions should be calculated for solid biofuels and that industrial pellets should have a quality classification and certification system of their own. Transport emissions are also an issue in international trade. The necessity and possible content of an industrial pellet standard and certification system were explored in the project through questionnaires.
Major exporters of wood pellets to the EU include the USA, Canada and Russia. Most of the imported wood pellets are blended with coal and used at large power plants.
The EUBIONET III project ran from 2008 to 2011. Together with its earlier incarnations, the project has lasted altogether 12 years. The Ministry of Trade and Industry and its successor the Ministry of Employment and the Economy have provided partial funding for the project throughout its existence. The project forms part of the Intelligent Energy Europe programme.
Additional information
Eija Alakangas
Senior Research Scientist, VTT
Tel. +358 40 054 2454
eija.alakangas@vtt.fi
GETTING UNC COAL-FREE: WHEN BIG PLANS ARE MADE, THEY SHOULD BE MADE WITH FORESIGHT AND DEMAND CONTINUED ATTENTION
By Editorial Board | The Daily Tar Heel
UNC’s energy transition seems not to be going as smoothly as was hoped. A few bumps in the road are hardly worth despairing over. But the obstacles highlight a lack of foresight in the energy plan — and the student body is left unclear as to when the transition will happen, or whether it will actually be sustainable.
Whether UNC can create the market it needs with its own demand remains to be seen. At the very least, the University must diligently work to ensure the few suppliers it can use have the proper certification.
The Energy Task Force, which was formed more than a year ago and presented its recommendations to the University last October, suggested wood pellets as a more sustainable alternative to coal.
Many of the delays to the project were beyond the control of the parties involved. First, UNC couldn’t get enough wood pellets to its energy plant because it couldn’t secure proper railcars. By the time this was resolved, it was too far into the winter to test a new source of energy.
The initiative’s current problems surround the difficulty of verifying the sustainability of the distributor’s practices. After ruling out N.C. distributors, the University settled on a company in Virginia.
It’s not exactly what the Energy Task Force had in mind. The final recommendations explicitly stated preference for biomass taken from N.C. forests through certified sustainable practices.
UNC’s supplier, WoodFuels Virginia, says it is “aggressively pursuing” certification, but does source its own wood. In the meantime, it’s unclear whether or not using biomass would actually be degrading another natural resource.
The creation of the Energy Task Force was the culmination of admirable efforts by student environmental groups. They succeeded in bringing problems with coal to the forefront of the University’s attention.
For their part, administrators responded promptly and took the concerns seriously. When the 10-person task force was assembled, two students were included.
But implementing the plan seems to be harder than creating it. We understand the immense complexity of energy issues, especially with a budget that offers little wiggle room for expensive experimentation.
It’s all the more reason to aggressively ensure that we are not just meeting a time line, but making truly sustainable choices. We’d like to see the plan’s original advocates sustain their initial passion to see the plan through.
April 13, 2011 01:07 PM Eastern Daylight Time
HEATING THE NORTHEAST CONFERENCE TO FOCUS ON BUILDING REGIONAL ECONOMY AND SAVING CONSUMERS MONEY
MANCHESTER, N.H.--(BUSINESS WIRE)--The third annual Heating the Northeast with Renewable Biomass conference and vendor fair opens this Thursday, April 14, at the Radisson Hotel in Manchester, NH. The conference was created to stimulate local economies and improve environmental conditions in the six New England states and New York by making it easy for consumers to heat with sustainably harvested, domestically produced wood pellets and other biomass resources.
“We want to make it as easy as possible for consumers to use biomass thermal as their primary source of heat – to save money and to go green at the same time.”
According to Jon Strimling, president of conference sponsor American Biomass and WoodPellets.com, “there’s more to the biomass thermal story than simply saving consumers money on their annual heating bills – which heating with wood pellets will certainly do. At Heating the Northeast, we’re looking at the bigger picture, which includes tying together local communities, easing our consumption of fossil fuels, and reducing the negative impact of heating residuals on our planet, all while saving consumers money.”
At the Heating the Northeast conference last year, a coalition of industry experts unveiled A Bold Vision for 2025, a series of concrete resolutions and goals to pave the way toward a greener future for the Northeast. Developed by local business owners, environmental groups, and heating industry experts, the Vision aims to create 140,200 jobs in the region by 2025, while reducing oil consumption by 1.14 billion gallons in the regional economy.
The numbers themselves are compelling – from the broader vision down to the impact on an individual homeowner, who will save nearly $900 annually by replacing the majority of his oil consumption with high-efficiency wood pellet heat. But Strimling says the industry needs to make its voice heard in Washington. “We know that thermal biomass is good for the planet and good for consumers; the facts speak for themselves. At Heating the Northeast, we’ll be working to make sure consumers have the same opportunities and access to wood-burning and pellet stoves as to other alternative heating systems.”
Strimling says that this year’s conference will focus on putting these broader goals into action. “We want to make it as easy as possible for consumers to use biomass thermal as their primary source of heat – to save money and to go green at the same time.”
Contacts
WoodPellets.com
Audrey Brecknock Bourque, 603-263-2951
abourque@woodpellets.com
APX-ENDEX TO OFFER WOOD-PELLET TRADING STARTING NEXT QUARTER
By Lars Paulsson - Apr 15, 2011 3:55 AM CT
APX-Endex Holding BV, the Amsterdam-based energy-exchange company, plans to offer biomass trading starting next quarter as utilities seek alternatives to fossil fuels to burn at power stations.
APX-Endex, whose spot power and gas volumes were worth about 5 billion euros ($7 billion) last year, will offer wood pellets contracts, with physical settlement to be arranged between counterparties based on their existing trade agreements, Chief Operating Officer Pieter Schuurs said yesterday at a presentation in London.
“It’s a small product compared with power and gas, but it’s interesting enough,” he said.
Biomass is the cheapest way for the Netherlands to generate renewable electricity, APX-Enex and its partner Port of Rotterdam said in July when they signed a letter of intent for the project. Governments across the world are promoting and subsidizing renewable energy to reduce greenhouse gas emissions from power generation.
APX-Endex began a wood-pellets index in 2008 and 15 traders including German utilities E.ON AG (EOAN) and RWE AG (RWE) submit prices on a weekly basis. Year-ahead delivery of wood pellets exceeded 140 euros a metric ton in February 2009 and was valued at more than 130 euros in February, according to slides at the presentation.
The traders need to agree on standardized quality and specifications for the contracts before trading can begin and an accord may be reached by the middle of this year, Schuurs said.
Cleared biomass trading products, in which a central counterparty guarantees the settlement of trades, may be introduced in the first quarter of 2012, he said.
To contact the reporters on this story: Lars Paulsson in London at lpaulsson@bloomberg.net
To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net
BCAP FUNDING CUT IN FY2011 BUDGET BATTLE
April 19, 2011 - 0 Comments
Source: Forest2Market
Photo: Inhabitat.com
From the April 2011 Forest2Fuel newsletter.
As part of the compromise budget agreement between Congress and the White House, the federal government has reduced funding for the Biomass Crop Assistance Program (BCAP). By how much is still unclear. A list of cuts released by House Republicans puts the decrease at $134 million. The text of the bill, as we reported last issue, says the following:
None of the funds appropriated or made available by this division or any other Act may be used to pay the salaries and expenses of personnel to carry out the Biomass Crop Assistance Program in excess of $112,000,000.
Outside of Washington D.C., neither the grammar of this section nor the math makes sense. You don’t have to be an English teacher to find an easier way to say that funding for the program is limited to $112 million. And the math is even more obscure.
According to the final rule governing the program, published in October of last year, the total cost of the program for FY2011 was expected to be $199 million. $132 million of that was scheduled to go into the matching payments program, $61 million was earmarked for the biomass crop establishment cost share program, and $4 million was set aside for annual payments. The remaining $3 million was slated for technical assistance. Interestingly, the $65 million remaining after a supposed $134 million cut is the exact total reserved for Establishment and Annual Payments. But, and this is even more interesting, if you add the $134 million cut to the $112 million left in the budget for the program, you get $246 million, $47 million more than the program’s projected FY2011 cost.
This begs the question: was the reduction in BCAP funding a real spending cut, or was the USDA not likely to spend that money anyway? Many of the cuts in the new budget deal appear to be cuts in name only. For instance, the bill defunds four policy czar positions in the White House; none of these positions is currently filled, however, so the money would not have been spent in 2011 in the first place. Some provisions slice from the budget money earmarked for state-specific projects that have been discontinued, like the infamous bridge to nowhere. Others focus on money designated for specific projects that states have refused to accept, like grants for the construction of high-speed rail lines. The Congressional Budget Office estimates total savings in fiscal year 2011 will amount to just $352 million, not the $39.9 billion originally announced.
Details about how the USDA will adjust the budget for BCAP are not yet available. We don’t know at this point whether they will focus on one part of the program and spend the remaining money on establishing crops or whether they will divide cuts between the two parts of the program. Based on the focus of the final rule, which was heavily weighted toward encouraging crops and restricting matching payments, we suspect that once current contracts for matching payments are complete, this part of the program will take a back seat.
Who will be affected? The only facilities that have qualified as biomass conversion facilities since October are three POET plants, one in Iowa and two in South Dakota. As a result, the only biomass suppliers who will be immediately affected are those who supply corncobs to these POET facilities.
Beyond the immediate, however, the USDA was likely to qualify additional biomass conversion facilities before the end of the fiscal year. Some of these are wood consuming facilities scheduled to come online in the next few months. Aspen Power, a 50 MW facility nearing the end of construction in Texas, will start generating power in May, for instance. If the matching payments program is completely defunded, Austin Power’s s logging debris suppliers—one group the plan was designed to help—will not benefit from the incentive.
And this begs another question: does the fact that funding has been restricted at the same time that biomass power is coming online indicate the program was misconceived from the beginning? The intent of the matching payments program was to encourage the development of a biomass supply chain. Unfortunately, the supply preceded the demand. And now, in 2011, the first year in which wood-based biopower demand was scheduled to hit the market, no money will be available to help stabilize the supply chain.
Looking forward, 2012 is set to be a watershed year for biopower, as it is the year in which many of the projects announced in 2008 are scheduled to complete construction. The White House and Congress are scheduled to begin the 2012 budgeting process soon. With the size of the deficit, and with the precedent set in the 2011 budget, the $132 million that is scheduled to support matching payments in 2012 is likely to go away as well.
WHAT FEED-IN TARIFFS COULD DO FOR JAPAN'S ELECTRICITY SHORTAGE
By Paul Gipe, Contributor
April 18, 2011 | 5 Comments
What Japan could do if it followed Germany's lead on renewable energy.
California, USA -- If Japan adopted an aggressive renewable energy policy like that of Germany, it could, within ten years, generate more than four times the electricity lost at the Fukushima 1 nuclear power plant, cutting the country's reliance on nuclear power by one-half or more.
As Japan expands the evacuation zone around the damaged Fukushima 1 nuclear plant from 20 km to 30 km and Tokyo Electric Power (TEPCO) skirts the edge of bankruptcy, the country confronts a stark choice: undertake a massive construction program to replace the nuclear reactors with more of the same, or, instead, follow a new, less risky, and potentially more strategic path toward rapid renewable energy development. The stakes are high and the fight is already intense as Japanese elites debate the future of their electricity system, and literally, the future of their country.
However, it is clear now that if Japan were to follow the path blazed by Germany, it could more than replace the electricity generation lost by the damaged plants at Fukushima in less time than it would take to build new reactors.
Germany alone added as much new renewable generation in less than five years as Japan lost at Fukushima. Wind energy alone generates more electricity in Germany than the doomed Japanese reactors once did.
If Japan were to develop renewable energy at the same pace as Germany has over the past decade, it could add 120 TWh per year of new renewable generation. It could add significantly more, if it kept up with Germany's blistering pace of solar energy development over the past five years.
Using a system of Advanced Renewable Tariffs, the modern version of feed-in tariffs, Germany added 80 TWh of new generation from wind, solar, and biomass between 2000 and 2010.
The six damaged reactors at Fukushima 1 generated about 30 TWh in 2010, and Japan's fleet of aging nuclear reactors generate a total of about 260 TWh per year.
Japan and Germany
Japan and Germany are two of the world's economic powerhouses. Their economies rank third and fourth, respectively, behind the USA and China.
Though Japan and Germany occupy about the same land area, Japan has ~50% greater population density and its economy is 1.5 times larger than that of Germany.
Somewhat surprisingly for its technological sophistication, Japan consumes 70% more electricity than Germany, far more than would be expected by its greater population. This has not been lost on international observers of Japan's economy following the disaster at Fukushima. There's a lot of room in the Japanese economy for improvements in energy efficiency and conservation.
If Japan were to emulate the spectacular growth of renewable energy in Germany over the past decade by implementing similar policies, it's reasonable to expect that the amount of new generation to be added would reflect the greater size of the Japanese economy. Thus, it's reasonable to expect that Japan could install 1.5 times the new generation Germany added during the past decade over a similar period.
Japan has abundant wind, solar, biomass and geothermal resources, but has not been an international leader in any of these technologies except solar photovoltaics (solar PV). Instead, the country has been content to export what technology it does have, while relying on nuclear power and fossil fuel imports for its own electricity generation.
Renewable Energy in Japan
Japan generates only 1% of its 1,025 TWh of electricity consumption per year from new renewables. In contrast, Germany generates 14% of its supply from wind turbines, biomass plants, and solar panels, and another 3% from previously existing hydro plants.
Nuclear power provides one-quarter of Japan's electricity supply. The plants at Fukishima 1 alone provided nearly 3% of Japan's electricity.
Geothermal
Japan began developing its geothermal resource in the mid-1960s. Today, Japan operates nearly 540 MW of geothermal power and generates 3.5 TWh per year. This modest fleet puts Japan eighth in world geothermal rankings — behind Iceland and New Zealand, and well behind the developing countries of Mexico, Indonesia, and the Philippines in absolute capacity installed.
However, on a per capita basis, Japan falls even farther behind the small island nations of Iceland and New Zealand. Iceland operates more than 400 times more geothermal capacity per capita than Japan, and New Zealand operates more than 30 times more geothermal generation per capita than Japan.
Wind Energy
Japan does not rank in the top ten nations developing wind energy, even though it has a leading wind turbine manufacturer, Mitsubishi, that still builds its wind turbines domestically. Despite its industrial stature, its long coastline and its mountainous interior, Japan ranks 12th in development of wind energy, following Portugal.
France, where nuclear power provides more than 80% of generation, has installed twice the wind capacity of Japan.
On a per capita basis, Japan fares even worse. Denmark has more than 35 times the installed wind capacity per capita of Japan. Both Germany and Spain operate nearly ten times more wind generating capacity than Japan. Tiny Portugal has installed nearly 50% more wind capacity than Japan.
Only India, a developing country, has done worse for its size and population than Japan.
Even the USA, a relative laggard in developing most of its renewable resources, has installed seven times more wind generating capacity per capita than the Japanese.
Solar PV
After the U.S. faltered in the early 1980s, Japan took the lead in developing solar PV technology, and, from the mid 1980s through the 1990s, dominated the industry. Since the turn of the century, Japan's lead has quickly eroded with the rapid rise of European solar markets.
Today Japan is third in total installed solar PV capacity, but falls to fifth place on per capita installations. On a per capita basis, Japan is ahead of only the U.S. and nuclear France. Germany has installed seven times more solar PV per capita than Japan, and, as a result, German companies have become strong industrial competitors to Japanese manufacturers.
Even Italy, once the poor man of Europe, has installed 1.7 times more solar PV per capita than Japan.
Japan's Solar Resource
Solar PV already generates more electricity than geothermal power plants in Japan, though not by much.
While the solar resource at some locations in Japan is no better than that of Germany, there are sites where the solar yields are as much as 1,200-1,300 kWh/kWdc/yr. On average, Japan's solar resource is 14% greater than that in Germany's.
What Japan Could Do
What could Japan do if it were to implement an aggressive renewable energy program using, as in Germany, a system of feed-in tariffs to encourage rapid development of its indigenous resources?
Japan certainly has the industrial capacity, an educated and industrious people, and an immediate need for reconstruction that would make such an ambitious program both possible and necessary.
While Japan and Germany are decidedly different cultures, Germany has proven that a massive amount of new generation can be added quickly. Equally important, German policy spread the economic opportunity afforded by the program equitably across all sectors of society through its system of Advanced Renewable Tariffs. Under such a policy, all renewable generators, regardless of size, are guaranteed access to the grid. Everyone can participate in the program — from the humblest farmers and homeowners to multinational companies.
Germany's development of renewable energy contrasts markedly with the way nuclear power was developed in Japan. As in most other countries, the decisions to build nuclear plants in Japan were concentrated in the hands of a few industrial titans.
Unlike the development of nuclear power, the development of renewable energy, because it is so dispersed, can strengthen democratic society where feed-in tariffs are used to create equal opportunity for all players-big and small alike.
Assuming that Japan did make such a commitment, and did so this year, it could rapidly ramp up installations of wind, biomass, and solar PV capacity at a pace comparable to that of Germany between 2000 and 2010.
Because Japan's economy is 1.5 times larger than Germany's, wind energy and biomass could theoretically be scaled up at 1.5 times Germany's pace. Under this scenario, Japan would be generating more than 100 TWh from wind energy and biomass by 2022
Japan already has a jump on rapidly expanding solar PV. Several of the world's leading solar PV manufacturers are based in Japan and there is a sizeable existing home market.
It is rumored that Japan installed possibly as much as 1,000 MW of solar PV last year, bringing total installed capacity to 3,700 MW.
Germany didn't reach an equivalent stage of annual installations until 2005 and 2006. Thus, Japan's pace of solar PV development could replicate Germany's pace between 2005 and 2010, as well as its expected installations through 2015.
Thus, solar PV grows rapidly from a modest contribution in 2012 and begins to nearly double from one year to the next, beginning in 2015. By 2022, solar PV could be generating more than 50 TWh of renewable electricity — widely distributed across Japan — increasing the resiliency of the country's electricity network from large-scale disturbances, such as earthquakes and tsunamis.
Germany has only just begun to develop its geothermal resource. Consequently, there's no comparable decade of growth to pattern Japan's renewable policy after. However, wind energy in Germany has grown 20% per year, on average, during the past decade.
If Japan could add new geothermal generation at a 20% growth rate from its current contribution, geothermal generation could reach more than 20 TWh per year by 2022.
All together, if Japan followed Germany's pace of development, it could add more than 180 TWh of new generation within the next decade, or six times the generation lost at Fukushima 1 or more than two-thirds the generation from Japan's entire fleet of nuclear power plants.
Japan's Renewable Policy
What Japan must avoid is the piecemeal policy approach that has characterized its policy in the past, and bedeviled renewable policy in the U.S. for decades: One policy for wind, another for solar PV, and yet other policies for geothermal and biomass.
To emulate Germany's success, Japan must similarly implement a comprehensive policy that includes all renewables — not just solar, or not just wind. Feed-in tariffs are well suited for this task because of their reliance on tariffs differentiated by technology, project size, and other factors. This is one of the reasons why 23 of 27 European Union countries rely on feed-in tariffs as the principal mechanism for meeting their renewable energy targets.
The policy must also be long-term — at least a decade or more — to give Japanese industry and its people time to build the institutional capacity needed to locate sites, manufacture equipment, and install increasing number of solar panels, wind turbines, biomass and geothermal power plants. The policy must be in effect at least as long as it would take to build a new series of reactors.
Japan's policymakers might be well served by looking to the province of Ontario, Canada, as well as to Germany for a sophisticated system of feed-in tariffs. The policies in both jurisdictions have unique qualities. Ontario's program has elements that Germany's does not, such as, specific tariffs for community-owned renewables. For its part, Germany has differentiated tariffs for geothermal energy that Ontario does not. Japan could pick the best elements from both jurisdictions.
But Ontarians have done the one thing unthinkable in Germany; they have specified domestic-content requirements for participation in their feed-in tariff program. Ontario's objective was to create a domestic industry for the 21st century and to ensure that some of those future green jobs go to Ontarians.
The Unthinkable: Domestic Content Requirements
Japan may want to consider the unthinkable as well, and incorporate a domestic content requirement into a feed-in tariff program, in part to regain the technological edge it lost in the past decade.
This would indeed be ironic, since Japan filed a trade complaint against the province of Ontario for its domestic content requirement, arguing that this puts Japanese companies at a disadvantage.
In the short-term Japan will be importing more oil and liquefied natural gas to replace the lost nuclear generation at Fukushima. Such a controversial policy as a domestic-content requirement could make sense, since the astronomical costs of reconstruction and repowering of Japan's electricity infrastructure, and the necessity of limiting the nation's foreign exchange expenditures for imports of fuel and manufactured goods, could force the government's hand.
The concepts of trade protection and aid to domestic industry, of course, are not foreign to any nation, including Japan. This may be easier to implement quickly in the Japanese context, where major industries and the government itself form pacts and partnerships to further their own internal interests.
Japan could limit its expenditures to the internal economy as much as possible, using Japanese labor, materials, and industrial resources. This may appeal to Japanese industry and, perhaps, even some of what Rikkyo University's Andrew DeWitt calls its "power elite". Such a domestic content requirement could conceivably circumvent GATT, on the grounds of emergency reconstruction and environmental protection, as Japan tries to reduce its vulnerability to more nuclear disasters like that at Fukushima.
Japan's current ruling party came to power in part on a commitment to implement an aggressive renewable energy policy based on feed-in tariffs. It has failed to do so. But the opportunity remains and the need to implement an aggressive yet equitable policy is now greater than ever.
As Japan first and foremost grapples with the urgent need to care for those displaced by the earthquake, tsunami, and the subsequent nuclear disaster, it must also begin planning for the future. That future can include the rapid development of massive amounts of renewable energy by all sectors of Japanese society, if the "power elite" can adapt the German model to "Japan Inc."
CANADIAN RENEWABLE ENERGY MARKET OVERVIEW
By David Wagman, Chief Editor, Renewable Energy World North America magazine
April 19, 2011 |
Hydro made the country a 20th Century renewable energy powerhouse (chart, right). Efforts now focus on a broad range of technologies and policy innovations.
Canada -- Renewable energy's fortunes in Canada lean heavily on government support, making 2011 a particularly crucial year in places like British Columbia, Alberta, Saskatchewan and Ontario where political leadership changes are underway and elections are scheduled.
As in the United States, renewable energy in Canada depends largely on public policy goals set not at the federal level but at the provincial and territorial levels. And on that score there's a mixed bag of support and initiatives across Canada's 10 provinces and three territories.
"The federal government has an extremely limited role," said Robert Hornung, president of the Canadian Wind Energy Association.
Canada's dominant energy resource (renewable or otherwise) is hydroelectric power, much of it generated in the sparsely populated and water-rich north for transmission to the more urbanized south and, in the case of Quebec especially, exported to the U.S.
Playing a smaller but growing role in the country is wind, solar, biomass and geothermal. By the numbers, Canada's installed generating capacity in 2009 was 125,485 MW with 60 percent derived from renewable resources, most of it hydro. In British Columbia and Quebec, hydro generation meets around 90 percent of electricity demand. But BC is a net importer of electricity while Quebec is a net exporter. Alberta and Saskatchewan are rich in oil and natural gas resources while coal is an abundant natural resource in Manitoba and northern Ontario. Nationally, nuclear generation comprises 20 percent of installed capacity, coal 15 percent and natural gas 5 percent.
Wind and solar are gaining footholds in Ontario, Canada's most populous province, through what may be North America's most aggressive feed-in tariff (FIT). The tariff, enacted in October 2009, has propelled Ontario to trailing only California in North American solar energy market activity.
Investors favor feed-in tariffs because they are sure of the money that will be flowing upfront into a project, said Elizabeth McDonald, president of the Canadian Solar Industries Association. "It's an excellent program."
In 2005, the government said Ontario would stop using coal for electricity in 2007, but later said that target was unrealistic and that some units were needed for grid stability. In 2006, the province pushed back the deadline to close 6,400 MW of coal-fired capacity until 2014. Four units, representing 2,000 MW of capacity, were shut last October.
Across Canada, an estimated 19,000 MW of generating capacity is likely to retire by 2025. Another 45,000 MW of generating capacity is expected to be needed to meet current growth projections. The federal government committed to seeing 90 percent of Canada's electricity generated by non-emitting sources by 2020. It also committed to reducing greenhouse gas emissions to 17 percent below 2005 levels by 2025. That goal grows to 60 to 70 percent below 2006 levels by 2050.
Even so, an uncertain future remains, perhaps no more so than in Ontario where a provincial election is set for Oct. 6. The opposition Conservative Party has used rising electricity costs to campaign against the ruling Liberal Party. Recent polls show the Conservatives leading among likely voters with months remaining before the election. Political watchers note that as little as 35 to 40 percent of the popular vote can elect a majority government, which means renewables must enjoy broad-based popular support.
"Ontario is the largest province and it attracts a lot of attention," said Jon Worren, co-founder of ClearSky Advisors based in Toronto. The province's feed-in tariff aims to build popular support because it contains a local content requirement. For wind projects, 25 percent of total project content must originate in Ontario in 2011; that level rises to 50 percent in 2012. For solar, the domestic content requirement rose from 40 percent in 2010 to 50 percent in 2011 and is to reach 60 percent in 2012.
Designed to promote job creation in an area hard hit by declines in traditional manufacturing such as autos, the local content mandate has led dozens of manufacturers to set up shop in the province. The province now has 18 solar panel and 15 inverter manufacturers. Prior to the FIT the province counted one manufacturer each for solar panels and inverters.
"In terms of manufacturing, the domestic content requirement has been quite successful," Worren said.
Through the province's FIT program, the Ontario Power Authority (OPA) has approved 40 new large-scale renewable energy projects including solar, wind and water that will attract Can$3 billion (US$3.04 billion) in private sector investment, according to the Ontario Ministry of Energy.
These projects represent more than 872 MW of renewable power, including 35 solar projects totaling 357 MW, four wind projects totaling 615 MW and one 500 kW water project. The government said these projects will result in at least 240 more wind turbines and at least one million more solar panels in Ontario.
Canada's wind industry is expected to install 1 GW of generating capacity in 2011, CanWEA's Hornung said. Commitments suggest an additional 4,000 to 12,000 MW could be installed by 2015. What may happen after 2015 is "unclear" because, aside from Nova Scotia, no province has set a formal goal beyond that date. As a result, he said, few signals exist to encourage long-term planning, although developers need to be working now on projects that will sustain growth after mid-decade.
Ontario's photovoltaic market is expected to reach cumulative installations of 2,650 MW by 2015, according to a February report by ClearSky Advisors. In 2011, 455 MW of new PV installations are expected to be added. Delays during the permitting process will push most FIT utility-scale demand back into 2012 and 2013, the report said. An increasing number of suppliers along with reduced global costs and delayed demand have combined to drive down the expected cost of modules in Ontario. By the second half of 2011, module supply constraints likely will be eliminated.
With around 2,450 MW of existing solar contracts, Ontario's PV market will "experience strong growth from 2011-2012," the report said. After 2013, the market will "shrink significantly" in response to ratepayer concerns, transmission constraints and the limited size of Ontario's electricity market (the province's population of 13 million is less than one-third that of California).
Domestic content requirements restrict the amount of equipment available to developers in Ontario. Though there has been concern that development would be limited by supply shortages, sufficient supplies likely will be available to meet demand from 2011 to 2015.
The report said the foremost concerns of Ontario PV market participants are political and regulatory uncertainty due to three main factors: continual changes and delays in Ontario's FIT program, a FIT program review scheduled for 2011 and this autumn's provincial election.
"All of this uncertainty has combined to make Ontario a challenging market in which to operate," the report said. Long-term planning is "exceedingly difficult" for any business participating in Ontario's FIT program. A number of manufacturers have delayed investment in the province either by entering the market cautiously and waiting for more stability before expanding or by avoiding the market altogether.
"Uncertainty means risk," the report said. "This has made project financing more expensive and harder to come by."
As for wind power in the province, the Ontario government announced earlier this year it is not proceeding with proposed offshore wind projects to allow time for further scientific research to determine their impact on the environment. In a statement, the government said no renewable energy approvals for offshore have been issued and no offshore projects will proceed. Furthermore, applications for offshore wind projects in the FIT program will no longer be accepted and current applications will be suspended.
Onshore wind energy produced 1,056 MW of power during the 9:00 P.M. hour on Oct. 26, 2010, an all-time record, according to the Ontario Independent Electricity System Operator. Over the course of the day, wind supplied more than 5 percent of the province's electricity demand.
Canada ended 2010 with 754 MW of new wind energy capacity, representing $1.7 billion in new investment, according to CanWEA. This brings Canada's total installed wind energy capacity to 4,073 MW.
Canada currently has 3,549 MW of installed wind capacity. Ontario represents 1,248 MW, or one-third, of the country's total wind energy development. Another one-third comes from Quebec and Alberta with 663 MW and 656 MW, respectively. The remaining seven provinces account for the final one-third. CanWEA said wind energy has increased tenfold over the last six years.
One renewable technology that has yet to gain any foothold is geothermal energy. The country shares the same continental shelf and geology as the U.S., Mexico and Latin America and counts some 200 hot springs that have yet to be developed. But the federal government and the provinces both have so far failed to put in place policies and regulations to encourage geothermal development, said Alison Thompson, chair of the Canadian Geothermal Energy Association. She acknowledged the group's goal to have 5,000 MW of installed capacity by 2015 is unrealistic and said proponents hope instead that a similar amount of geothermal resource can be defined by that date. "We are quite comfortable with that number given production rates in the U.S. and Mexico," she said.
Educating policymakers remains a priority for Association members, she said. The Ontario FIT program includes every renewable energy resource available in the province but geothermal. And out of the C$1.3 billion allocated at the federal level as a production incentive, none was earmarked for geothermal. Efforts are underway to create permit and lease programs at the provincial levels and to have geothermal included in future feed-in tariff programs. One recent success came last December when the federal government offered tax breaks to resource exploration firms that drill for geothermal.
Unlike other renewable energy resources, Thompson said geothermal energy can be cost-competitive without extensive subsidies, especially in remote parts of the county where communities often rely on diesel for electric power generation. In portions of the Northwest Territories, communities can spend hundreds of dollars per megawatt-hour for electricity. "Geothermal comes in far below that," she said. In Alberta, which offers an incentive of $15 a tonne to reduce carbon dioxide emissions, geothermal could be competitive. And in hydro-rich British Columbia, which offers essentially no incentive, geothermal could be competitive on the grid, however, access to leases and permit remain major barriers.
WOOD PELLETS BEING SHUT OUT — INDUSTRY
Utilities ignoring power source, energy conference told
By BILL POWER Business Reporter
Wed, Apr 20 - 4:54 AM
Nova Scotia Power and NB Power were put on the hot seat Tuesday for ignoring the region’s fledgling wood-pellet industry.
"We could be making greater use of wood pellets in Nova Scotia or New Brunswick but there has been no interest from those utilities," said Gordon Murray, executive director of the Wood Pellet Association of Canada.
He told participants at the Renewable Energy Conference 2011 in Halifax that the big power utilities in Atlantic Canada are ignoring the economic and environmental benefits of mixing biomass and coal.
Combining wood pellets and coal is one of the cheapest ways to reduce greenhouse emissions, said Murray.
"It can also support local economies and create jobs."
He said Canada is the second-biggest producer of wood pellets in the world after Sweden.
About 80 per cent of product made in this country is shipped, mostly from British Columbia ports, to Europe, he said. "It is interesting that . . . consumers and energy companies (in Europe) see benefits of bringing in product all the way from British Columbia."
Murray said there is a misconception in some circles that trees are felled for the wood-pellet industry. He said wood pellets are made up of scrap material and not logs.
"We are basically the scavengers of the industry."
Despite the proven benefits of using wood pellets to reduce greenhouse emissions, the industry remains a Canadian industry that generates about $280 million annually in revenues, compared to the estimated $100 billion in annual revenues generated by the fossil fuel industry, said Murray.
The conference was interrupted when an unidentified participant confronted Steve Marsden, an employee with Lockheed Martin Canada Inc., over his participation as moderator for a panel discussing biomass and bio-energy. The person questioned his presence at a renewable energy conference because the company does a lot of work for the military.
The person was escorted out and a security guard remained posted at the back of the room as the conference continued.
Marsden said Lockheed Martin is interested in the development of alternatives to fossil fuels. The two-day event concludes today.
VIRIDIS ENERGY SECURES A MULTI-YEAR OFF-TAKE AGREEMENT TOTALING $15.5 MILLION OVER FOUR YEARS
Viridis Energy Inc. ("Viridis" or the "Company") (TSX-V: VRD) (OTCQX: VRDSF), a "Cleantech" manufacturer and distributor of alternative energy providing biomass fuel to global residential and industrial markets, announced today that it has entered into an off-take agreement with a major British Columbia-based wood pellet producer through which Viridis' Kelowna, BC facility (Okanagan Pellet Company) will supply a minimum 166,000 tonnes of wood pellets through 2014 for export to Europe. The agreement is valued at approximately $15.5 million. Viridis has commenced shipping.
Terms of the agreement calls for a minimum of 22,000 tonnes of wood pellets in 2011 and 48,000 tonnes each in 2012-2014. The wood pellets are shipped in bulk to the port, and then the pellets are exported to Europe. Wood pellet exports from North America to Europe have doubled over the last two years totaling 1.6 million tons in 2010; Canada shipped 1.0 million tons of the total, reports the North American Wood Fiber Review. The European Union has stated that by 2020, at least 20 percent of total energy consumption should be supplied by renewable energy resources.
Commenting on the agreement, Chris Robertson, Viridis' chief executive officer, said, "The pace at which society is moving towards economical, renewable energy sources is gaining momentum, and as the most reliable of renewable biomass, the demand for wood pellets is growing. This off-take agreement will generate approximately $2 million of additional revenue for Viridis in the current year and $4.5 million per year from 2012 through 2014." Mr. Robertson added, "Viridis' focus on quality and dependable, sustainable access to raw material, such as beetle-kill pine wood, is firmly establishing the company's brand as a key source of premium renewable energy products."
About Viridis Energy Inc.
Viridis Energy Inc. (TSX-V: VRD) is a publicly traded, "Cleantech" alternative energy company specializing in the agricultural and wood waste biomass. Located in Vancouver, B.C., Viridis Energy operates Cypress Pacific Marketing and Okanagan Pellet Company, two acquisitions in the wood pellet sector, thus providing the company with vertical integration for distribution and manufacturing.
For more information on Viridis Energy Inc. please refer to the company website at www.viridisenergy.ca.
PORT SURVIVES DESPITE CARGO DROP
Disasters, slow U.S. recovery take their toll on Port of Halifax
By BRUCE ERSKINE Business Reporter
Wed, Apr 20 - 4:54 AM
The 2011 cruise season kicked off April 16, with the inaugural call of the Princess Danae. The Port of Halifax will welcome seven new cruise ships to the port over the next seven months.
It was steady as she goes for the Port of Halifax in the first quarter of this year.
The Halifax Port Authority reported Tuesday that the port handled 2.4 million metric tonnes of cargo during the quarter, the same as in the first quarter of 2010.
Authority spokeswoman Michele Peveril said the port had a "strong quarter," despite a 13.7 per cent drop in general cargo traffic, including machinery and forest products, compared with the same period last year.
Peveril attributed that decline to a fragile United States economic recovery, which has slowed exports of Canadian building materials, and natural disasters such as the Japanese earthquake and tsunami that have disrupted global supply chains.
But she said general cargo comprises only a small portion — three to five per cent — of the port’s total business.
Container traffic of retail and manufactured goods, which makes up 37 per cent of port business, grew by 3.6 per cent in the quarter compared with last year, that business segment’s sixth consecutive quarter of growth.
The port processed 103,079 TEUs (20-foot equivalent container units) during the quarter, compared with 99,450 TEUs in the first quarter of 2010.
Bulk cargo traffic in products such as oil, grain and wood pellets, which constitutes 58 per cent of port business, was down 1.2 per cent compared with the same period in 2010.
Peveril said bulk traffic was also affected by the slow American economic recovery and by the strong Canadian dollar.
"The high Canadian dollar impacts exports."
Bulk exports were off 3.6 per cent in the quarter due to a decline in wood pellet, refined oil and grain exports.
Bulk imports rose 1.3 per cent in the quarter, driven by increased crude and refined oil shipments.
The port’s 2010 cruise season began April 16 with the inaugural call of the Princess Danae cruise ship.
The port authority expects 230,000 to 240,000 cruise ship passengers will sail into Halifax aboard 126 vessels during the season, which runs until Oct. 27.
"Halifax and the Atlantic region have been a popular destination and are well ranked in the spring, summer and fall," Cathy McGrail, the authority’s cruise development manager, said in a news release.
"We are looking forward to another strong season locally."
Halifax was visited by a record 261,216 cruise ship passengers in 2010, up 14.7 per cent from 2009.
The port, which recently received an efficient service award from Dream World Cruise Destinations magazine, will welcome seven new cruise ships in 2011.
Cruise ships generate an estimated $50 million in local economic activity, said the port authority.
IEA REPORT: BIOFUELS CAN PROVIDE UP TO 27 PERCENT OF WORLD TRANSPORTATION FUELS BY 2050
April 20, 2011
Source: International Energy Agency (IEA)
A new report from the International Energy Agency (IEA) says that the widespread deployment of biofuels can play an important role in reducing CO2 emissions in the transport sector and enhancing energy security, when produced sustainably.
With the transportation sector growing considerably, and demand for transport fuels rising globally, the IEA assesses biofuels – liquid and gaseous fuels derived from biomass (organic material derived from plants and animals) – as one of the key technologies to reduce CO2 emissions and reduce dependency on liquid transport fuels. The report shows how global biofuel consumption can increase in a sustainable way – one in which production of biofuels brings significant life cycle environmental benefits and does not compromise food security – from 55 million tonnes of oil equivalent (Mtoe) today to 750 Mtoe in 2050; this would mean that the global share of biofuel in total transport fuel would grow from 2 percent today to 27 percent in 2050.
“While vehicle efficiency will be the most important and most cost-efficient way to reduce transport-emissions, biofuels will still be needed to provide low-carbon fuel alternatives for planes, marine vessels and other heavy transport modes, and will eventually provide one fifth (2.1 gigatonnes of CO2) of emission reductions in the transport sector,” Bo Diczfalusy, the IEA’s Director of Sustainable Energy Policy and Technology, said at the launch of the report today in Washington.
The IEA prepared the Technology Roadmap Biofuels for Transport in consultation with representatives of government, industry, academia and non-governmental organizations. The roadmap provides an overview of the current status of different conventional and advanced biofuel technologies and the latest research on sustainability issues related to biofuel production. It also charts a course for expanding the production and use of biofuels to 2050, in a sustainable way.
This report is the latest in the IEA's series of technology roadmaps, which aim to guide governments and industry on the actions and milestones needed to achieve the potential for a full range of clean energy technologies.
Efficient technologies needed
Biofuels can provide transport fuel with substantially lower CO2 emissions than conventional gasoline or diesel when comparing the entire “life cycle” of production – that is, from the field to the vehicle. But there are caveats: it is important to reduce the use of fossil energy during cultivation, transport and conversion of biomass to biofuel. It is also important to avoid direct or indirect land-use changes, such as converting forests to grow biofuel feedstocks, which release large amounts CO2 and could offset the CO2 reduction potential of biofuels.
Most conventional biofuels (produced mainly from starch, sugar and oilseed crops) must therefore be improved in terms of conversion- and land-use efficiency to achieve considerable greenhouse-gas reductions. In addition, advanced biofuel technologies currently at the demonstration stage (produced mainly from lignocellulosic biomass such as wood and straw), need to be commercially deployed within the next ten years and will provide the major share of biofuels in 2050.
“Further support for advanced biofuel research, development and demonstration is still needed to improve conversion efficiencies and reduce costs. In addition, investments in commercial-scale production units will be a key to enable advanced biofuels to reach full market maturity,” said Mr. Diczfalusy at the launch in Washington. “Government action is needed to provide a stable, long-term policy framework for biofuels that allows for sustained investments in biofuel expansion. Specific support measures that address the high investment risk currently associated with pre-commercial advanced biofuel technologies will be vital to trigger industry investments in first commercial plants.”
With these substantial investments in place, most biofuel technologies could get close to cost-competitiveness with fossil fuels, or even be produced at lower costs in the longer term. In total, the report assesses the expenditure on biofuels required to meet the roadmap targets between USD 11 trillion to USD 13 trillion over the next 40 years, depending on the actual production costs. “This figure may seem large, but in fact even in the worst case biofuels would only increase the total costs of transport fuels by around 1 percent over the next 40 years, and could in fact lead to cost reductions over the same period.”
Sustainability is key
“With world population growing by more than 30 percent to 9 billion people in 2050, and food demand increasing approximately 70 percent according to estimates by the Food and Agriculture Organization of the United Nations, competition of biofuel production for land with food, fodder, as well as fiber production needs to be carefully addressed to avoid negative impacts from biofuel expansion on food security,” said Mr. Diczfalusy.
There is a great potential for using low-risk sources that require limited land expansion, and should not compete with food production, to provide feedstock for the expanding biofuel industry. The report says the use of residues and high-yielding energy crops as feedstocks, and the efficient use of biomass, for instance through integrating biofuel and bio-material production (so-called biorefineries), will be vital to reduce land competition. In addition, sustainability certification of biofuels, following internationally agreed sustainability criteria, will be an important step towards ensuring that biofuel production and use have a positive environmental, social and economic impact.
Around 3 billion tonnes of biomass per year will be needed in 2050 to produce the amount of biofuels envisioned in the IEA roadmap. The report assesses that 1 billion tonnes of biomass residues and wastes would be needed, and this would need to be supplemented by production from around 100 million hectares of land - around 2 percent of total agricultural land. This would be a three-fold increase compared with today, but the yield of biofuels could increase by a factor of 10 through the use of wastes and residues and through the use of more productive crops and processes.
The report stresses that governments should adopt mandatory sustainability standards for biofuels, and ensure they are internationally aligned, to avoid acting as barriers to trade. Since many points of criticism on biofuels’ sustainability are in fact issues concerning the whole agricultural sector, the report concludes that biofuel policies should be aligned with those in agriculture, forestry and rural development. An overall sustainable land-use management strategy for all agricultural and forestry land will be the only way to avoid land-use changes with negative impacts on the environment and CO2 emissions, and to support the wide range of demands in different sectors.
International collaboration is vital
The report stresses that reducing tariffs and other trade barriers will be important to expanding the trade in biomass and biofuels to reach the levels necessary to meet emerging demand in different regions of the world. International co-operation will also be needed to further develop analyses of sustainable land and biomass potentials, and obtain detailed regional data on suitable feedstocks for biofuel production. To ensure developing countries can successfully adopt sustainable biofuel production, international collaboration on capacity building and technology transfer will be necessary, the report stresses. Developing countries interested in introducing biofuels can profit from the experience of other regions, including lessons learned and best practices for biofuel production, as well as the government policies that can help ensure that required investments are beneficial for local economies.
MASSIVE PELLET PRODUCTION
When I hear announcements of jumbo pellet plants in the works, I can’t help but wonder when the U.S. will jump on the industrial wood pellet bandwagon.
By Lisa Gibson | April 20, 2011
When I hear announcements of jumbo pellet plants in the works, I can’t help but wonder when the U.S. will jump on the industrial wood pellet bandwagon and not only begin producing large-scale power from biomass, but begin creating and refining a domestic market for those pellet companies.
Newly formed venture Franklin Pellets LLC is in the preliminary stages of developing a 500,000-ton-per-year pellet plant in Franklin, Va. I did ask George Lyons, vice president of business development for parent company MultiFuels L.P., if the plant will be exporting its products, but I knew the answer even before he said it. Of course.
It’s no secret that the domestic pellet market revolves around residential heating applications and massive plants like Franklin’s wouldn’t be satisfied with the pellet appetite the U.S. can offer. The plant will rank among the nation’s largest, tied with Green Circle Bio Energy Inc.’s Cottondale, Fla., plant and second to RWE Innogy’s 750,000 ton-per-year facility in Georgia. Both of those pellet plants are exporting their products to Europe and while Franklin Pellets declined to share with me its target market, it’s probably safe to assume most if not all of its pellets will be used there, too.
Export markets are indeed important and a number of programs and agencies are focused primarily on defining and enhancing them for U.S. manufacturers. I’ve heard the tired excuses that lean on policy shortcomings and now could even factor in widespread opposition to biomass, but it seems to me a complementary domestic market could boost production and create jobs, too. And in the midst of an economic recovery (or so we’re told), we can’t afford to let any opportunities slip through the cracks.
MCAULIFFE STUDYING WOOD PELLET INDUSTRY FOR PAPER MILL
If study pans out, company could be operational within 2 years
By Allison T. Williams, atwilliams@dailypress.com | 247-4535
11:04 a.m. EDT, April 20, 2011
ISLE OF WIGHT - Former Virginia gubernatorial candidate Terry McAuliffe is moving forward on his proposal to open a renewable energy facility at the shuttered International Paper Co. in southern Isle of Wight County.
Ending months of speculation, the newly formed Franklin Pellets LLC announced plans late Tuesday to study the feasibility of opening a wood pellet manufacturing plant capable up producing up to 500,000 ton of pellets per year at the former paper mill. Franklin Pellets is a joint venture between McAuliffe's investment firm, CMI L.P., and the Texas-based energy company, MultiFuels L.P.
"If all goes well, we will be up and running in about 18 to 24 months," said Peter O'Keefe, McAuliffe's partner in CMI. Franklin Pellets has signed a letter of intent to do a due diligence evaluation and feasibility analysis of the site over the next six months, O'Keefe said.
O'Keefe declined to say how much of the massive 1,200-arce International Paper site his business would be using or how much investment or employees the new company would be hiring.
"The investment would be significant," he said, referring all other questions to International Paper. "We're very excited. It's a fantastic location in one of the most vibrant wood baskets in the country with easy access to the port."
Franklin Pellet's target market for the wood pellets would likely be Europe, where 20 percent of all power has to come from renewable energy sources, O'Keefe said. The European market is expected to be using 100 million tons of wood pellets by 2020, up from the current 11 million tons, he said.
That increased usage by Europe is already reflecting in United States' exporting of wood pellets, O'Keefe said. In 2008, the country exported 85,000 tons of pellets; the number increased to 600,000 tons in 2010, he said.
Get breaking Isle of Wight news at twitter.com/DP_IsleofWight.
WOOD PELLET MANUFACTURER CONSIDERING IP MILL
Published 9:24am Wednesday, April 20, 2011
Email Comments
FRANKLIN—A wood pellet manufacturer is eyeing the possibility of bringing new life to the site of International Paper Co.’s former Franklin mill.
Franklin Pellets, a newly formed partnership between Multifuels L.P. and CMI L.P., said in a press release Tuesday that it proposes to build its plant in Franklin. Peter O’Keefe, a principal at CMI, would not say whether the company hopes to occupy the former mill site.
John Smolak, president and chief executive officer of Franklin Southampton Economic Development Inc., said Franklin Pellets has signed a letter of intent to use the mill.
O’Keefe’s business partner is former Virginia gubernatorial candidate Terry McAuliffe.
No one from International Paper could be reached Tuesday.
Mayor Jim Councill said the company had talked to IP about using part of the existing property, but that plans had not been finalized.
“I’m real excited about it,” Councill said. “It’s something we’ve all been hoping for.”
O’Keefe said the plant would help create new jobs in forestry, manufacturing and transportation and could begin operating in 18 to 24 months. He could not say how many jobs would be created or how much they would pay.
Smolak also said he didn’t know how many jobs might be created.
O’Keefe said Franklin’s location and talent pool makes it ideal for manufacturing wood pellets.
“Franklin is inside of a great wood basket, and one of the country’s busiest ports is less than 40 miles away,” he said.
There is a great potential for growth in the wood pellet industry because the European Commission has mandated that 20 percent of all power in European Union countries be produced from renewable sources. This means that coal plants in Europe will need to co-fire with wood pellets to stay open, he said.
O’Keefe said Europe has restricted resources and is focusing on production from the Southeastern United States.
“European countries currently use 11 million tons of wood pellets per year,” O’Keefe said. “We expect that market to grow to 100 million tons by 2020.”
O’Keefe also said he expects to see a growth in the domestic market, given the current market in Europe.
“We think Franklin is situated to participate in both markets,” O’Keefe said. “It’s an exciting business and it’s a growing business.”
SEALASKA PLAZA MODELS COMMERCIAL BIO-ENERGY CONVERSION
By Katie Spielberger | Capital City Weekly
JUNEAU — In the immaculate boiler room of Sealaska Corporation’s headquarters, Nathan Soboleff lifts up the lid of a household-sized trash can, which is not yet full of ash. A couple of five-gallon buckets sit next to it. This is all the ash that’s been generated by building’s wood pellet boiler all winter, he says, adding that he is going to put some of it in his garden — it’s completely compostable.
Soboleff, the renewable energy coordinator for Sealaska Corporation, has been working on a project that’s been attracting attention across the state. The corporation’s headquarters in downtown Juneau is the first commercial building in Alaska to be powered completely by renewable bio-energy.
Juneau residents are used to seeing fuel trucks driving around town, delivering heating oil to homes and businesses. Soboleff hopes we will soon be seeing more wood pellet delivery trucks in their place.
The new wood pellet-burning boiler system was installed in the Sealaska Plaza last fall, and the corporation has been powering their building all winter entirely with renewable energy, for about 25 percent less than an oil burning system would cost.
Sealaska hopes their conversion will be a model that can be replicated through Southeast Alaska and the rest of the state, while at the same time promoting an industry that could benefit local economies.
A couple years ago, Sealaska began talking with Viking Lumber Inc., a family-owned sawmill near Klawock on Prince of Wales Island, about partnering to provide wood biomass energy for Southeast businesses and homes. It seemed like a win-win plan. Wood pellets would provide less expensive, clean energy to Southeast communities and also provide a use for a waste product from mill operations.
There was one problem: The demand wasn’t yet there. At the time, residents in Southeast were only using about 150 tons of wood pellets a year. The Sealaska Plaza building alone has doubled the demand, Sobeleff said, and he hopes that soon enough other buildings will increase the demand enough for it to be profitable for pellets to be manufactured in Southeast (Sealaska Plaza is currently using pellets from Washington).
“This is so new for people, there’s not that existing infrastructure,” Soboleff said.
Until recently, when people asked him about pellet boiler supplies and services he had to direct them to out-of-state business. Now he can happily direct them to local ones, such as Behrends Mechanical and The Plumbing and Heating Company.
In villages, Soboleff said the hope is that larger buildings such as schools or community centers will take the lead with the conversions, creating an economy of scale so that residents can then follow suit.
Burning wood pellets for energy is new in Alaska and the rest of the U.S., but it’s been used for years in Europe, Soboleff said. The Viessman boiler in Sealaska Plaza is Europe’s best-selling brand, and there are at least 15,000 similar boilers already being used around the rest of the world.
Sobeleff spends 10 minutes a week on simple maintenance for the boiler, and smaller systems wouldn’t even require that. The system can be remotely monitored and adjusted (he receives any error messages on his iPhone).
“We’ve just brought this existing technology to Alaska,” Soboleff said. “(The conversion) has been really seamless, because the system is tried and true. … The hard thing is convincing people that pellets really do work.”
Alaskans are quickly being convinced, and there are plans in the works for several conversions in the state, such as Ketchikan’s federal building. The project has attracted interest from the state of Alaska, the federal government, the Coast Guard, the City & Borough of Juneau, and school districts through the state.
It’s no accident that the building chosen to showcase the technology is located just a few blocks from the capitol.
“Sealaska Plaza is front stage to Alaska’s government,” Soboleff said, and “heating the state’s public and private buildings is a big part of our state’s budget.” He has showed off the system to quite a few legislators and commissioners.
And when the cruise ships start arriving in downtown Juneau and coloring the skies with gray plumes from their smoke stacks, take a look towards town for a contrast.
“You will never see anything coming out of the Sealaska chimney,” Soboleff said.
SUNY ESF TO USE $963,000 STATE GRANT ON POWER SYSTEM
Published: Thursday, April 21, 2011, 5:09 PM Updated: Friday, April 22, 2011, 7:19 AM
By Mike McAndrew / The Post-Standard
Lauren Long/The Post-StandardThe $28 million Gateway Building being constructed on this site on the SUNY College of Environmental Science & Forestry campus will contain a high-tech heating and electric generating system. The system will be capable of producing two-thirds of the heat and 20 percent of the electricity that the campus needs. It will use wood pellets and natural gas as fuels. New York announced April 21, 2011 that it was giving ESF a $963,000 grant to help pay for the heating/electric generating system.
Syracuse, N.Y. -- The State University College of Environmental Science & Forestry will produce two-thirds of the heat and 20 percent of the electricity that its campus needs thanks in part to a $963,000 state grant announced today.
In the basement of the $28 million Gateway Building — which is being constructed next to the Carrier Dome — will be a gasification boiler the size of a car, said Michael Kelleher, ESF’s director of renewable energy systems. The system will heat willow wood pellets to generate electricity and to produce steam heat.
The basement will also contain three microturbines that burn natural gas to generate electricity and heat.
Waste steam from the units will heat the Gateway Building and four other buildings on the ESF campus, Kelleher said.
The combination heating/electric generating system will cost about $2.4 million, but will save ESF $350,000 to $400,000 per year in heating and power costs, Kelleher predicted.
ESF is using a $963,000 grant from the New York Energy Research & Development Authority to help pay for it.
The grant to ESF was among $20 million in grants NYSERDA announced for combined heat and power projects at 19 hospitals, paper mills, supermarkets, apartment complexes and other facilities in New York City and Upstate.
The $20 million will come from a mandated “system benefit charge” — generally a few dollars per month per household — on electric bills paid by customers of National Grid and other utilities.
The ESF project was the only one in Central New York to win the NYSERDA funds.
ESF’s new heating and power system will significantly reduce the emissions created to heat and power its campus, Kelleher said. ESF currently purchases electricity produced by coal, gas, nuclear and hydro-powered stations. It purchases steam for heating from an old plant owned by Syracuse University.
Construction of the 52,000 square foot Gateway Building is expected to be completed in June 2012. The three-story building will include conference facilities, a snack bar and gathering place for students, and outreach and admissions departments.
Contact Mike McAndrew at mmcandrew@syracuse.com or 470-3016.
REPORT ANALYZES EUROPEAN PELLET MARKETS
By Lisa Gibson | April 21, 2011
•
•
•
This chart shows the demand and supply situation in the major European pellet markets in 2009. Only markets larger than 500,000 tonnes are illustrated.
PHOTO: Biofuels, Bioproducts & Biorefining
In 2009, Europe consumed a total of 9.8 million metric tons of wood pellets, with 9.2 million going to the 27 European Union member states, according to the 2011 report European Wood Pellet Markets: Current Status and Prospects for 2020.
Six European authors representing universities, pellet organizations and renewable firms collaborated on the work with three main goals in mind: map current European national wood pellet demand and supplies; provide a comprehensive overview of major market types and prices; and discuss the future outlook in light of raw material supply. The work was published in the peer-reviewed journal Biofuels, Bioproducts & Biorefining (Biofpr).
In 2009, approximately 670 pellet plants in Europe produced more than 10 million metric tons of pellets, making the continent the largest producer in the world. At the time of the report, Sweden and Germany were the largest pellet producers in Europe, both producing about 1.5 million metric tons. In light of that fact, it might not be surprising that Sweden is also the largest consumer of wood pellets at about 2 million metric tons. Germany with a consumption of just below 1 million metric tons, exports more than 500,000 metric tons, according to the report. An illustrative chart within the analysis maps out consumption, production, import and export figures for the 15 largest European pellet markets including Sweden, Germany, Denmark, Austria, France, Italy and others.
After Europe, North America has the largest pellet production capacity, which grew from 1.1 million metric tons in 2003 to 6.2 million in 2009, the report says. Canada exports 80 percent of its pellets and the U.S. exports only 20 percent, due largely to the fact that the majority of U.S. pellets are used in residential applications.
The report also studies residential and industrial pellet pricing, as well as transport costs and pellet trends. “The pellet market is quite dynamic due to economic developments and recently released government biomass support plans,” the report reads. “Public support is needed to cover the additional costs of capital investment, operation and maintenance of renewable energy equipment, and pellet fuel feedstock, in comparison with their fossil fuel alternatives.”
In addition, the report considers current and future supplies for pellet production and analyzes future demand for pellets. It lists the EU member states with the most potential for additional wood and wood waste use for heating and electricity production as: Germany (43 million metric tons), France (19 million), the U.K. (14 million), Spain (13 million), Poland (7 million), Belgium (7 million), Greece (6 million) and Italy (6 million). “It is uncertain to what extent the demand for woody biomass will be covered by wood pellets,” according to the report, which concludes by saying that pellets and other woody biomass sources could play a significant role in meeting the EU’s renewable energy goal of 20 percent by 2020.
NEW ASSOCIATION TO ADDRESS U.S. INDUSTRIAL PELLET EXPORT ISSUES
By Anna Austin | April 22, 2011
•
A new trade group has formed to address specific industry issues faced by U.S. manufacturers of industrial grade wood pellets that are being exported to Europe.
According to Executive Director Seth Ginther, the U.S. Industrial Pellet Association will focus on three main issues: certification standards for industrial wood pellets, sustainability and uniformity of contracts. There are other pellet trade groups in the U.S., he said, but none that address those specific issues.
The group was officially formed in February by Enviva Biomass, Fram Renewable Fuels, Green Circle Bio Energy Inc. and the Westervelt Company, according to Ginther, and interest has been extremely high. “We’re looking for other producers to become members, or anybody who is involved in the value chain or supply chain of industrial wood grade pellets. That includes landowners, transporters, equipment manufacturers, ports, European utilities and trading groups.”
On U.S. pellet export activity right now, Ginther said it’s not just talk. “It’s happening, and during the next five years, pellet demand in Europe will continue to rise dramatically. There’s an enormous demand for this product and that will continue.”
Though in the future the largely residential-based U.S. pellet market may begin to expand more to industrial-scale use, Ginther said the domestic wood pellet market as a whole is very small right now compared to Europe’s.
The USIPA plans to work with Canada on policy issues, he added, as Canada currently exports the vast majority of wood pellets imported to Europe.
WOOD-BURNING MAY BRING REPRIEVE FOR TILBURY POWER STATION
Tilbury Power Station on the banks of the Thames may no longer have to close after RWE npower approved a plan to convert it into the world's largest biomass plant.
RWE hopes to have completed the conversion by the end of the year Photo: Alamy
By Rowena Mason 9:00PM BST 23 Apr 2011
Follow Rowena Mason on Twitter
1 Comment
RWE believes it will be just as cheap for the plant to burn wood pellets as coal, as there are Government subsidies for renewables and a raft of taxes on fossil-fuel plants.
This potentially paves the way for more of Britain's coal-fired power stations to convert their furnaces to burn wood pellets or other biomass material. A third of the UK's power stations are due to close by 2015 under European laws, including the 1,000 megawatt station at Tilbury.
While burning biomass does not automatically save Tilbury from scheduled closure, RWE is expected to apply to Europe for an exemption if this year's trials at the station are successful.
Converting more older coal stations to biomass could help to solve a headache for the Government, which is facing the prospect of an energy gap after 2015 when the coal stations shut but no new nuclear plants and few wind farms are yet on stream.
Burning biomass on such a scale has never been attempted before. The majority of fuel will be transported from RWE's wood pellet plant in Georgia in the US.
EXTOLLING THE BENEFITS OF HEATING WITH PELLETS
The switch from oil makes sense on many levels, but it won’t occur without government help.
By Tux Turkel tturkel@mainetoday.com
Staff Writer
What's the quickest way to burn 25 percent less heating oil in the Northeast?
click image to enlarge
Select images available for purchase in the
Maine Today Photo Store
Burnham's pellet plant plans put on back burner
Plans to build a $20 million wood pellet manufacturing plant in Burnham this year have been put off, a victim of tight financing and lower demand.
It's an example of the challenges facing an industry that couldn't make pellets fast enough two years ago, when oil prices spiked, but now is more cautious.
Last July, International Wood Fuels announced plans to build a 100,000-ton-per-year plant next to Pride Manufacturing Co., the world's largest wooden golf tee maker. The company, which does business globally, had moved to Portland from California to be near growing markets. The project was announced in Portland with great fanfare. State officials praised it as a way to save existing jobs, create new ones and help wean the region from oil.
But construction never began and Steven Mueller, the company's president, now says the project is set for the fall of 2011. He blames the delay on difficulty in getting debt and equity financing, as well as current market conditions. Maine, he said, will be a net exporter of pellets by 2012, and International will continue to invest in the state.
"Maine remains our headquarters and Burnham remains a facility we will construct," he said.
Maine has four pellet plants. Two of them -- Northeast Pellets in Ashland and Geneva Wood Fuels -- are coming back on line following fires. Corinth Wood Pellets in Corinth is operating at roughly half capacity; Maine Woods Pellets in Athens also remains in production.
-- Tux Turkel
Wind energy won't do it. Conservation and efficiency will make a big difference, but how about switching 1.4 million homes in seven states from oil heat to clean-burning, biomass boilers that are popular in Europe.
The conversion -- done over the next 15 years -- would cut annual oil use by 1.14 billion gallons, create 140,200 jobs and keep $4.5 billion in the regional economy.
These are among the conclusions of a recent study that outlines the benefits of a large-scale switch of central heating systems in the region from oil to wood pellets and other forms of renewable biomass. Called "A Bold Vision for 2025," it was prepared by five trade groups that include the Maine Pellet Fuels Association and the newly formed Biomass Thermal Energy Council.
Using sustainable harvest figures, the study calculated how much biomass is available each year in New England and New York. There's enough to meet three-quarters of the industry's annual heating goal, the study found. The balance could be satisfied with solar and geothermal energy.
But like other bold, alternative-energy strategies, this one faces obstacles. It needs favorable government policies and a higher degree of consumer awareness. Most of all, it needs oil prices to stay high enough, long enough, for people and businesses to make alternative investments.
The study was prepared before the oil spill in the Gulf of Mexico, which has refocused public attention on cleaner energy and renewable resources.
"The timing is right," said George Soffron, chairman of the Maine Pellet Fuels Association and chief executive officer at Corinth Wood Pellets. "People are looking for a reason (to switch from oil heat)."
The study was introduced at a recent wood energy conference in New Hampshire. It has received little public attention so far, but advocates are preparing to send press releases, contact officials and create marketing campaigns.
Much of the national debate over energy policy centers on electricity and gasoline. Less is said about thermal energy. But heat is a big concern in Northern states such as Maine, where eight of 10 homes burn oil and the state has ambitious goals to cut oil dependence.
Two years ago, when heating oil hit record prices, it seemed possible that many Maine homes would convert to wood fuels. Mainers were waiting in line to buy stoves and boilers, as well as cordwood and pellets.
But the recession, collapsed oil prices and last year's warm winter threw the pellet industry for a loop. Sales are way down and existing pellet plants are operating at half capacity. A new mill that had planned to open this year near Pittsfield has been put off until late 2011.
In Europe, modern wood pellet boilers heat schools and businesses, not just homes. Fuel is delivered in bulk by truck and automatically fed into the boilers. The higher cost of the equipment is subsidized, reflecting policies to cut petroleum dependence and fight climate change.
A European-style distribution system is slowly being set up in the Northeast, but it lacks a similar level of government support.
Maine Energy Systems in Bethel distributes an Austrian-made boiler that costs more than $10,000. Sales have been slow and the company isn't profitable.
A federal tax credit of $1,500 lowers the cost, but Dutch Dresser, the managing director, said a 30 percent incentive common in western Europe is needed here. Some proposals in Congress, including bills co-sponsored by U.S. Rep. Olympia Snowe, R-Maine, and Sen. Jeanne Shaheen, D-N.H., would help, Dresser said. Supporters hope these provisions could be included in a federal energy bill.
Wood pellets don't have a high profile in Washington, D.C. They tend to get lumped in with biomass, the broad definition for plant material used as fuel.
Forest biomass got a bad rap this month. A state report in Massachusetts concluded that cutting trees to feed wood-fired electric plants would contribute to climate change. The same report had favorable findings for burning biomass for heat, but that conclusion got little mention.
"We feel like the stepchild of the renewable energy world," Soffron said. "All you ever hear about is wind and solar."
Soffron and Dresser met briefly this month with Energy Secretary Steven Chu, when he was at the University of Maine to visit an offshore wind research lab. Chu seemed supportive of wood pellets, Soffron said, but offered no commitment.
Consumer awareness also is critical. Dresser said he'd like to install a network of demonstration boilers in homes, so people could visit and see the systems work.
"When people think of wood pellets, they think of stoves and 40-pound bags," he said.
That's because New Englanders know about cordwood, and the chores of hauling logs and cleaning ash from stoves. They're less familiar with high-efficiency pellet boilers, which produce little ash and operate automatically.
"Burning wood is considered old technology," said Charles Niebling, chair of the Biomass Thermal Energy Council. "Our job is to persuade people that we're not talking about your grandfather's boiler in the basement."
The industry also has to convince people that pellet heat will cost less than oil. A ton of pellets has the heat energy of 120 gallons of oil, Niebling said. With heating oil now at $2.50 a gallon or so, the break-even for a ton of pellets is $300. Niebling, the general manager of New England Wood Pellet in Jaffrey, N.H., said pellets bought in bulk are selling for roughly $240, not including delivery, so heating with a pellet boiler today still makes economic sense.
"Ninety percent of consumers are simply looking to save money," he said.
In the months ahead, the industry will try to convince Northeast politicians to support the 2025 biomass vision. And it will try to persuade consumers to switch to pellets. Members of the Maine pellet group met recently to discuss an advertising campaign, to counter the seasonal pitches made by oil dealers. That would be a first for a young industry with little money to spend on promotion.
Rising oil prices would make their task easier. But Bill Bell, a spokesman for the Maine pellet association, said his group's challenge is to increase demand for the fuel before the next petroleum price spike.
"We can't just be at the mercy of oil prices," he said.
Staff Writer Tux Turkel can be contacted at 791-6462 or at:
tturkel@pressherald.com
NEW ASSOCIATION TO ADDRESS U.S. INDUSTRIAL PELLET EXPORT ISSUES
April 24, 2011 - 0 Comments
By Anna Austin – Biomass Magazine
A new trade group has formed to address specific industry issues faced by U.S. manufacturers of industrial grade wood pellets that are being exported to Europe.
According to Executive Director Seth Ginther, the U.S. Industrial Pellet Association will focus on three main issues: certification standards for industrial wood pellets, sustainability and uniformity of contracts. There are other pellet trade groups in the U.S., he said, but none that address those specific issues.
The group was officially formed in February by Enviva Biomass, Fram Renewable Fuels, Green Circle Bio Energy Inc. and the Westervelt Company, according to Ginther, and interest has been extremely high. “We’re looking for other producers to become members, or anybody who is involved in the value chain or supply chain of industrial wood grade pellets. That includes landowners, transporters, equipment manufacturers, ports, European utilities and trading groups.”
On U.S. pellet export activity right now, Ginther said it’s not just talk. “It’s happening, and during the next five years, pellet demand in Europe will continue to rise dramatically. There’s an enormous demand for this product and that will continue.”
Though in the future the largely residential-based U.S. pellet market may begin to expand more to industrial-scale use, Ginther said the domestic wood pellet market as a whole is very small right now compared to Europe’s.
The USIPA plans to work with Canada on policy issues, he added, as Canada currently exports the vast majority of wood pellets imported to Europe.
MASSIVE PELLET PRODUCTION
April 26, 2011 - 0 Comments
When I hear announcements of jumbo pellet plants in the works, I can’t help but wonder when the U.S. will jump on the industrial wood pellet bandwagon and not only begin producing large-scale power from biomass, but begin creating and refining a domestic market for those pellet companies.
Newly formed venture Franklin Pellets LLC is in the preliminary stages of developing a 500,000-ton-per-year pellet plant in Franklin, Va. I did ask George Lyons, vice president of business development for parent company MultiFuels L.P., if the plant will be exporting its products, but I knew the answer even before he said it. Of course.
It’s no secret that the domestic pellet market revolves around residential heating applications and massive plants like Franklin’s wouldn’t be satisfied with the pellet appetite the U.S. can offer. The plant will rank among the nation’s largest, tied with Green Circle Bio Energy Inc.’s Cottondale, Fla., plant and second to RWE Innogy’s 750,000 ton-per-year facility in Georgia. Both of those pellet plants are exporting their products to Europe and while Franklin Pellets declined to share with me its target market, it’s probably safe to assume most if not all of its pellets will be used there, too.
Export markets are indeed important and a number of programs and agencies are focused primarily on defining and enhancing them for U.S. manufacturers. I’ve heard the tired excuses that lean on policy shortcomings and now could even factor in widespread opposition to biomass, but it seems to me a complementary domestic market could boost production and create jobs, too. And in the midst of an economic recovery (or so we’re told), we can’t afford to let any opportunities slip through the cracks.
DOE AND HUD LAUNCH PILOT HOME EFFICIENCY FINANCING PROGRAM
DOE and U.S. Department of Housing and Urban Development (HUD) unveiled on April 21 a list of 18 lenders that will participate in a new two-year pilot program offering homeowners low-cost loans to make energy-saving improvements to their homes. These new "PowerSaver" loans, backed by the Federal Housing Administration, will offer homeowners up to $25,000 to make energy efficient improvements of their choice. Applicants can use the loans for the installation of insulation, duct sealing, replacement doors and windows, HVAC systems, water heaters, solar panels, and geothermal systems.
Initially, the PowerSaver pilot program will assist approximately 30,000 homeowners in their financing of energy efficient upgrades. According to HUD projections, more than 3,000 jobs will be created through this pilot program and the impact could be larger if market demand for the loan program increases over time. Loans will be offered to areas across the United States, including regions participating in DOE's BetterBuildings program. Loans are only available to borrowers with good credit, manageable debt, and at least some home equity. See the DOE press release, a PowerSaver fact sheet , and the BetterBuildings program website.
PELLET MANUFACTURER POISED TO CAPITALIZE AS OIL PRICES SPIKE
Wed, April 27, 2011
Posted in Alaska News
Dan Bross, KUAC – Fairbanks
A Fairbanks wood pellet manufacturer, is positioned to capitalize on the spike in oil prices. Superior Pellet Fuels opened a plant off the Richardson Highway south of Fairbanks last fall. Company General Manager Chad Shumacher says the new mill has been running at less than 50 percent capacity as it works out kinks in the operation.
The pellet mill is turning waste wood from tree clearing into 300 tons of pellets per week. The pellets fuel specialized stoves and boilers, but have been slow to attract interest due to moderate oil prices in recent years. Schumacher anticipates more demand for pellets due to oil’s recent spike.
Pellet appliances burn cleaner than traditional wood stoves, and Shumacher says the local fine particulate pollution problem is also expected to drive demand for pellets. He says wood pellets are also being considered as an alternative fuel for coal fired power plants at the University of Alaska Fairbanks and local military bases.
VERMONT TO IMPLEMENT WOOD PELLET HEATING INCENTIVE
By Lisa Gibson | April 27, 2011
Out of concern for energy independence and a desire to boost the use of locally sourced fuel and equipment, the governor of Vermont has called on Efficiency Vermont and the state Department of Public Service to create a program that will incentivize a switch to wood pellet heat.
The request from the office of Gov. Peter Shumlin specified that the incentives become part of the state’s comprehensive energy plan due out this fall. “This makes sense for Vermont’s economy; it makes sense for Vermont’s environment; and it makes sense for Vermonters’ pocketbooks,” he said. “This would be a great use of wood and pellets, and a strong integration of our energy goals with our economic interests.”
No firm timeline is in place for rolling out the new incentives program, but Efficiency Vermont hopes to launch it this summer, according to George Twigg, the group’s deputy policy director. The state already provides direct financial incentives to consumers for fossil fuels, he said, and this program will be similar, although the specific amount has yet to be determined. The incentives will essentially be a rebate for purchasing wood pellet-burning equipment and will apply to residential, as well as commercial applications.
Efficiency Vermont and the Department of Public Service are currently working with equipment manufacturers and suppliers in Vermont to hash out the details of the program, Twigg said. “The governor wants to send a signal about making sure this is a priority and now we have some work to do,” he added.
SUNY ESF TO INSTALL BIOMASS CHP SYSTEM
By Anna Austin | April 27, 2011
•
SUNY ESF's CHP system will be powered by wood chips from local manufacturers.
PHOTO: SUNY ESF
The State University College of Environmental Science & Forestry will use a $963,000 state grant to install a biomass combined-heat-and-power (CHP) system.
The system will include a Chiptech gasification boiler that will generate 8,000 pounds of steam per hour at 125 pounds per square inch. It will run on wood pellets, according to SUNY ESF Director of Renewable Energy Systems Michael Kelleher, which will be purchased from nearby pellet manufacturers New England Wood Pellet LLC and Curran Renewable Energy.
“We chose wood pellets because we will have the system in a LEED (Leadership in Energy and Environmental Design) Platinum certified building that is under construction, and we wanted an energy dense, clean fuel that would fit in with the character of the building,” Kelleher said.
The CHP system will provide five campus buildings with heat and electricity. “We’ll run the [high-pressure] steam through a Carrier microsteam turbine to generate electricity, and the low-pressure steam coming out of the other end of the turbine will heat our buildings,” he said. There is also a set of natural gas microtubines in the same building, he added. “It’s a balance of two side-by-side systems. Most of the heat will come from the biomass system, but the majority of the electricity will come from the natural gas microturbines. We wanted to go with as much biomass as we could, but that system is thermal-rich compared to electricity it produces.”
In the summer, the biomass system probably won’t be run in order to avoid wasting heat. The electricity needed during that time will be provided by the natural gas microturbines.
SUNY estimates the system will save the university $350,000-$400,000 a year in heating costs. Currently, SUNY purchases its steam from neighbor Syracuse University, and also purchases its electricity.
The $2.4 million system is expected to pay for itself in five or six years, and SUNY will make use of more than $1.4 million in grants and incentives to help cover the cost. Kelleher said the building that the system will be housed in is currently under construction and should be completed in June 2012. The CHP system will be installed in the fall of 2012 or early in the spring of 2013.
The project is part of SUNY’s goal to be carbon neutral by 2015.
Posted: 4:56 PM Apr 26, 2011
STUDENTS, FACULTY URGING STATE TO STOP BURNING COAL ON CAMPUS HEATING PLANTS
Some students at UW-La Crosse want the state-run heating plant, that’s been on campus for decades, to stop burning coal. The No Coal Coalition wants the state to consider other fuel options.
Reporter: Martha Boehm
Email Address: martha.boehm@weau.com
LA CROSSE, WI (WEAU)--Some students at UW-La Crosse want the state-run heating plant, that’s been on campus for decades, to stop burning coal. The No Coal Coalition wants the state to consider other fuel options.
“It may take a while, but what we really want is a definitive statement from them for a day and a year that they will be able to transfer our campuses off of coal," said UW-La Crosse senior Jennifer Dausey.
Dausey has been working with the No Coal Coalition and Environmental Council for about a year. About a dozen students and faculty members want the Wisconsin Department of Administration, which owns the heating plant at UW-L, to stop burning coal to heat campus buildings.
"We always say that we should have been off coal yesterday," Dausey said. "There’s no reason we need to keep burning this dirty energy. It’s not only destroying families in the mining process, but it’s also destroying our health and our lungs. It causes so much asthma it’s ridiculous.”
Dausey says the coalition not only wants the plant to stop using coal, but to cut back on its natural gas emission, which is the second way it produces energy.
“It’d be easiest to switch to burning biomass, which is like wood pellets and it’s going to become a bigger economy here in Wisconsin with our natural resources," Dausey said.
UW-L Chancellor Joe Gow says, "I’m not a scientist, but I’ve talked to lots of people who are and they tell me that whatever way you pick there are downsides and so it’s a question of what’s the least harmful.”
Gow says all of the UW-schools that burn coal, burn less than one-percent of it in the state.
“There’s actually some debate among the regulators is our plant really a problem or not and frankly, I’ve heard things on both sides of that," Gow said.
But students like Dausey say they will continue to work to promote renewable energy.
RAISING THE BAR
The Pellet Fuels Institute is rolling out new pellet standards to not only define and level the playing field for producers in North America, but also to protect consumers.
By Lisa Gibson | April 28, 2011
•
•
•
SOURCE: PELLET FUELS INSTITUTE
The difference between 0.5 percent ash content and 1.5 percent ash content in wood pellet fuel means manually cleaning out the ashes three times more often in appliances without automatic ash removal. Given the fact that the majority of the U.S. pellet market is residential or small scale, that factor is important to customers.
And the customer is exactly what the Pellet Fuels Institute has in mind while drafting its new standards for North American pellets. The label featured on the bags of fuel will promise specific properties and quality parameters for optimal use and performance. And perhaps most important, the program will include third-party verification, crucial for producers who want to ensure their competition is honest in quality claims.
That consistent and verified quality allows the competitive free market to function and gives appliance manufacturers a clear picture of what types of fuel will be used in their products. “The long-term value for the industry is pretty obvious,” says John Crouch, PFI’s director of public affairs.
By the Numbers
Although still a draft and subject to change, PFI’s standards are divided into three fuel grades: premium, standard and utility. They specify parameters for a number of properties including ash content, diameter, durability, fines, moisture and chloride content, among others.
In the all-important ash content category, PFI’s premium fuels require 1 percentor less, standard requires 2 percent or less, and utility grade requires 6 percent or less. Utility grade is seldom used in residential appliances, Crouch says. “When you’re up around 6 percent, you really need an automatic ash removal system.”
For moisture content, premium fuels require 8 percent or less, while both standard and utility must be equal to or less than 10 percent. Bulk density is an important factor in industrial applications as it heavily impacts storage capacity. PFI’s standards set premium-grade bulk density at between 40 and 46 pounds per cubic foot; and both standard and utility at between 38 and 46 pounds per cubic foot.
Another important category is percentage of fines from the fuel at the mill gate. PFI specifies less than or equal to 0.5 percent for premium fuel, and less than or equal to 1 percent for both standard and utility grades.
But the bag label touting the fuel grade means almost nothing without a third-party audit of those quality parameters, so PFI has included a three-level verification system beginning with the pellet mill itself. The second verification comes from on-site visits once a month by inspectors who are well-versed in the timber industry, doing other forest product inspections such as lumber grading, Crouch explains. Finally, the inspectors’ assessments will be audited by a certification body, which had not yet been confirmed at press time.
In addition, PFI is hopeful that the U.S. EPA will adopt the standards as a framework for the revision of its New Source Performance Standard for Residential Wood Heaters. It looks promising, Crouch says, as EPA’s project lead for the revision is supportive of the drafted standards, despite some lingering questions. That would mean appliance manufacturers will be required to rely on the standards in the production process and dictate use of a specific grade to maintain warranties.
PFI hopes the new labels will be attached to bags of pellet fuels in North America beginning this fall, Crouch says. A number of pellet producers have pledged to support and comply with the standards, but cost is a big factor. “One of the key questions is how much it’s going to cost per bag of pellets,” he says. “I suspect in any new standards process, the same questions arise.” Cost will depend on the extent of current quality control measures at individual mills, Crouch explains. “The producers vary as to how sophisticated their in-house QA/QC (quality assurance/quality control) procedures are.”
But Crouch is clear about one thing. “The standards process is not designed to replace the internal QA/QC process, but to audit and support it.”
Exporting Advantages
Although the standards will bring numerous benefits to the U.S. pellet industry and its customers, they will also encourage more use of American pellets in Europe. The continent has a 9.5 million ton-per-year pellet market, split almost evenly between heat and power. But currently, export markets to Europe are dominated by multiyear bilateral contracts and are not spot market friendly, according to Crouch. “One of the things you need before you can have a spot market is standards,” he insists. “Otherwise, you really have to do bilateral contracts where you establish a relationship with one mill and you sign a multiyear contract.” And given the fact that the industry is manufacturing a product that is used more extensively during the winter months and will experience peaks and valleys, the spot market is important, he adds. The PFI standards will guarantee a quality product for European spot markets, along the lines of their own specifications. “We’ve been very careful to make sure that there’s no white space between us and the European major, major areas,” Crouch says.
The European Committee for Standardization (CEN) is currently implementing its EN standards system under the authority of the European Pellet Council, intended to replace country-by-country standards and also featuring third-party verification. CEN Technical Committee 335 began developing the standards around the year 2000, and while it’s anticipated that all 27 European Union countries will use them, only Germany, Spain and Austria have committed to it so far, according to Gordon Murray, executive director of the Wood Pellet Association of Canada. EN standards include three categories: A1, A2, and B. A1 and A2 are intended for residential use and B is for nonresidential, or bulk, all certified through an individual initiative dubbed EN Plus. In implementation, individual participating countries will register a specific organization with the European Pellet Council to administer the EN Plus handbook in that country, according to Chris Wiberg, chief operating officer of Twin Ports Testing and co-chair of the PFI standards committee.
In fact, PFI used the EN Plus handbook as a reference in the development of its standards, Wiberg explains. In comparison, proposed ash content parameters for EN’s A1 is 0.7 percent. A2 specifies 1.5 percent, and B’s standard is 3 percent, all a bit lower than PFI’s standards for similar grades. EN’s moisture control standard, however, is 10 percent across the board, while PFI’s premium specifies 8 percent.
Although most of the numerical parameters are similar, the PFI standards vary from Europe’s because of regulatory agencies and their rules. “There are significant differences between the European EN Plus and the U.S. PFI standards, and mainly because of the EPA,” Wiberg says. The key contrast is the fact that EN standards cover the entire supply chain and the U.S. draft does not. And in addition to the different fuel grade categories between the two standards systems, the testing methodologies used are also dissimilar.
Possible Alterations
While EN covers a wider array of pellet aspects, what it lacks is standards for industrial-grade pellet fuel, crucial in Europe because of its numerous pellet-fueled commercial power plants. Instead, individual power companies each have their own standards, Murray says, adding that Canada does not have its own national standards and instead follows those of the power companies, as the majority of Canadian pellets are exported to them, mainly in the U.K., Belgium and the Netherlands. While the standards of different power companies are not vastly different in most aspects, a unified set of standards would simplify the production process for suppliers. “Really, they should have a common standard,” Murray says.
And it’s on its way. The largest eight power companies in the EU are working together to develop standards for industrial pellet grades one and two. Discussion with the European Committee for Standardization surrounding whether to include those standards in EN is ongoing, but no decisions have been made.
In addition, Sweden proposed through the International Organization for Standardization (ISO) in 2007 that the EN standards become global, according to Wiberg, who is also a member of six out of seven working groups dedicated to developing those global ISO standards. “In other words, seven years later down the line, now they’re converting into ISO standards,” Wiberg says of EN specifications. “Under the ISO umbrella, they can open up the discussion to non-European countries.”
Wiberg says specifics of ISO proposed standards are not published and therefore not available to the general public, although they are essentially the CEN methods developed under ISO.
But even if ISO implements a set of common standards for global pellet production, there’s no guarantee they will be adopted in lieu of CEN or PFI’s systems, Murray cautions. “Why would they adopt ISO if they’re happy with their own standards?”
Still, it seems the more unified and encompassing the standards, the better. Both Crouch and Murray compare pellet standards to gasoline standards, saying premium gasoline at one pump will have the same quality parameters as the next. In contrast, pellet producers are not required to adhere to pellet fuel standards, but doing so will enhance the products they sell. “All the standards are voluntary, but it’s a market access issue,” Murray says. “The whole point is to make sure the pellets are a high standard.” The fear is low-quality producers can give all pellet fuels a bad reputation, discouraging their use. “We want to avoid that,” he says.
And those quality-assurance standards are subject to change as the customers’ needs change. “Standards are designed to evolve,” Crouch says, adding that if any end-user factors arise, North American pellet producers will evaluate possible changes. “Right now, the key is to get a good consistent product across all of North America.”
THE PELLET MARKET FROM DIFFERENT PERSPECTIVES
Feeding the residential pellet market requires suppliers to strike the right balance between feedstock supply, transportation costs and customer demand, and sometimes to look to others for inspiration.
By Rona Johnson | April 28, 2011
•
•
•
•
U.S. Pellet Plant Distribution by Capacity in 2009
Source: USDA
South Dakota’s Spearfish Pellet Co. LLC was built to add value to the byproducts—wood chips, sawdust and shavings—produced at the Spearfish sawmill.
The plant was originally owned by Pope & Talbot Inc. and was purchased in 2008 by Neiman Enterprises Inc., which also owns three sawmills in the area.
At full capacity, the Spearfish plant can produce 50,000 tons of pellets, which makes it an average-sized plant in the U.S. According to USDA’s “North America’s Wood Pellet Sector” report, the majority of pellet plants in the U.S. produced between 30,000 and 70,000 metric tons (33,000 and 77,000 tons) in 2009.
Unlike some of the new industrial pellet mills being proposed in the U.S. that are being built to supply European biomass power and heating customers, the Spearfish plant, like other plants its size, sells most of its product to residential customers within a 300- to 400-mile radius of the facility, says Todd Carlson, plant manager for Spearfish Pellet Co. “For us to get to the East or West Coast and put pellets on a barge to go to Europe, that’s a long ways,” he says. Carlson says they do move pellets by rail to a few customers on the East Coast, but it takes a while to get the pellets to their destination.
Supply and Demand
Because of byproduct commitments at its sawmill, high diesel prices and other forces impacting the wood products industry, the Spearfish Pellet plant is not currently looking to add many new customers.
“We’ve nearly sold out the last several years, so for us to take in more market share, we would have to increase our production No. 1, and No. 2 somehow figure out how to get these diesel prices back down,” says Everett Follette, sales and marketing for Spearfish Pellet. “The diesel is having a huge effect on how far out I can ship right now.”
Spearfish Pellet shares its feedstock supply with a particle board plant and a pulp mill. “The other two plants have increased their production immensely and want more product than we have,” Follette says. “So right now we’re not able to expand because of contracts with these other two companies. Currently, we are producing at the same rate we did this past season so all our customers should be fine for next season if they don’t wait too long.”
Business is up about 35 percent from a year and a half ago at the particle board plant, Follette says, and the pulp mill has more business because so many other mills have shut down or cut production. “I don’t know if their demand has necessarily gone up, but their supply of wood chips has gone down and maybe that’s why they have been asking us to supply even more.”
If they were able to increase their feedstock supply and increase pellet production, Follette says they would probably look at supplying pellets to big box stores such as Lowes and Home Depot. Pellets from the Spearfish plant mainly go to lumber yards or wood stove shops. “At the time when [big box stores] got into the pellet business we were sold out so we don’t work with very many of the big box chains,” Follette says.
Currently, Spearfish Pellet is holding its own against the big box stores because they provide quality pellets with a higher Btu per pound. “We might not have the cheapest pellets, but our quality will help you get more Btu from the pellets,” he says. Spearfish Pellet uses Ponderosa pine, producing pellets with an average of 8,631 Btu per pound, Carlson says.
Quality and Consistency
Spearfish Pellet satisfies its customer base by providing a high-quality consistent product. When Carlson was looking to add a third pellet mill, he checked out several equipment manufacturers but in the end went with Amandus Kahl, the company that had supplied its other mills.
Carlson says he had two major concerns when he was shopping for another mill: not having to spend a lot of extra money to double his parts inventory and making sure that the quality of the pellets produced was consistent. “Consistency is the name of the game for anything,” he says. “If something isn’t broke you don’t fix it.”
Amandus Kahl uses a flat die pellet mill because it’s an efficient, quiet system and the cost to keep the machine operating is low, says Patrick Clark, vice president of sales and marketing.
“Our die is flat and stationary in comparison to a ring die machine where the die obviously is a ring and it rotates and with their ring die machine the rolls are fixed and in our Amandus Kahl flat die pellet mills our rolls rotate,” Clark says. “So it’s basically 180 degrees opposite of the other technologies. That allows it to grind even though our revolutions per minute (the shaft speed) are at approximately 62 revolutions per minute, what happens is the inside feet per minute or rate of travel is different than the feet of or rate traveling on the outside of that roll shell and as that goes across the die, it gives us the grinding action.”
Clark says one of the many benefits of using their equipment is that he can take an inexperienced person, who has never been around their machines and teach them to change the roll head and die in less than 50 minutes. “A lot of our experienced guys are doing it in 20 to 30 minutes,” he says, adding that reduced down time, especially for plants that run 24 hours, seven days a week is important.
Building the Pellet Market
While Spearfish Pellet’s mission is to add value to forest residue, Maine Energy Systems LLC (MESys) is working to increase the market share for pellet producers in the U.S. Northeast and it’s doing it European style.
MESys has long-term contracts with premium-grade wood pellet producers and distributes the pellets in bulk to homes and businesses in Maine and New Hampshire. The trick is to make pellet heating as simple and seamless as heating with propane or fuel oil, with which people are already familiar.
According to the “2011 State of the Hearth Industry Report,” only about 5 percent of the 1 million hearth appliances shipped out in the U.S. in 2010 were pellet-fueled, 70 percent were gas-fueled and the remaining 25 percent used cordwood. The study, which was conducted by the Hearth, Patio & Barbecue Association also pointed out that 34 percent of wood or pellet stove owners viewed their stove as a major heat source, 50 percent considered it a secondary source of heat.
MESys aims to increase the percent of pellet fueled heating appliances and to show residents and businesses how they can make pellets their primary heat source. The company has modeled its business after the pellet industry in Europe, and over a year ago partnered with an Austrian pellet boiler manufacturer ÖkoFEN, says William Strauss, who co-founded MESys with Les Otten and Harry “Dutch” Dresser.
MESys chose to work with ÖkoFEN because the company is considered a pioneer in the pellet boiler industry and manufactures one of the leading models in Europe. “It’s the most modern, cleanest, trouble-free, efficient pellet boiler in Europe,” Strauss says. “The homeowner doesn’t even know it’s there, just set the thermostat and you’ve got heat. No bags to deal with no ash removal no cleaning. It periodically has to be serviced like any boiler that’s really it.”
The company offers semi- and fully-automated wood pellet boiler equipment systems, which require bulk storage bins that hold 3 to 4 tons of pellets, a tube or hose that goes from the bin to the boiler and a pneumatic system that automatically moves the pellets to the boiler.
MESys also offers a product for pellet stove owners who want bulk delivery but don’t have a bulk storage bin and don’t want to lift the 40-pound bags of pellets. “It’s a free-standing bag that holds a little over a ton of pellets and will take bulk delivery,” Strauss says. “It takes up about the same space as a pallet of bagged pellets and it has a little gauge at the bottom where the homeowner can open the gate and fill a bucket full of pellets and then dump those in the pellet stove.”
The company delivers bulk pellets by truck using a pneumatic pellet delivery system. “These trucks are state of the art,” Strauss says. “They are able to deliver rapidly and gently.” He says some companies use modified feed trucks to deliver pellets resulting in loss through breakage and dust creation. “They rip the pellets to pieces.”
Market Fluctuation
When MESys was founded in 2008 and oil prices spiked there was a flurry of interest in pellet heat, Strauss says. Then oil prices went down—equivalent to pellet heat and even lower—and interest died down.
“But right now pellet energy is the equivalent of about $1.95 per gallon of heating oil and heating oil in Maine is about $2 to $3.75, it really is about half the cost for equivalent energy,” he says. A home that burns 1,000 gallons of heating oil in a season will use slightly less than 8 tons of wood pellets. At current prices, 1,000 gallons of heating oil is about $4,000 and 8 tons of wood pellets is about $2,000, cutting annual fuel costs in half.
Strauss expects the pellet market will continue to fluctuate, however, until the public and policy makers understand, support and adopt pellet heating systems as they have in Europe. “In the U.S. 98 percent of pellets are burned in pellet stoves and in Europe 98 percent of pellets are used in pellet boilers,” Strauss says. “In Europe it’s normal to have a home heating system fueled by pellets. In fact, in Austria most new homes are built with pellet systems, but in the U.S. people don’t even know they exist. And they think it is primitive and dirty and requires a lot of attention and that’s just not true.”
Author: Rona Johnson
Editor, Pellet Mill Magazine
(701) 738-4940
rjohnson@bbiinternational.com
PELLET PITFALLS
German utility RWE Innogy is building a wood pellet mill in the Southeast U.S. to supply fuel for its parent company’s power plants in Europe. The move could be an indication of the challenges in consistently shipping high-quality pellets overseas.
By Lisa Gibson | April 28, 2011
•
•
•
•
•
•
•
PELLET PATRON: RWE npower’s Tilbury, England, Power Station will be one of the first customers of RWE Innogy’s Georgia Biomass pellet plant in Waycross, Ga. Both RWE Innogy and RWE npower are subsidiaries of German utility RWE. The Tilbury Power
PHOTO: RWE NPOWER
The Southeast U.S. offers an abundance of wood resources for pellet manufacturers and several have taken up residence there to utilize that supply chain. Some larger facilities are shipping their pellets overseas to better-developed markets in Europe that incentiveize industrial biomass use. While the U.S. pellet export market seems to be evolving and more companies are trying to break into it, one particular European utility has opted to come halfway around the world and operate its own pellet plant, shipping its product to its own European utilities.
Georgia Biomass in Waycross, Ga., is in its precommissioning phase and expects to begin shipping pellets in the second quarter of this year, according to Chief Financial Officer Sam Kang. The mill will produce about 750,000 metric tons of pellets per year for internal use by subsidiaries of German utility RWE, including recently acquired Dutch utility Essent, one of the largest pellet users in the world. With the marriage of Essent and RWE, Georgia Biomass—a subsidiary of RWE Innogy—completes the loop.
Of course the Southeast has ample resources and strict, reliable sustainability codes, but why not just purchase the pellets from U.S. producers already operating there?
Supply, Quality, Price
Many pellet mills, not just in the U.S., are privately funded and may not be well-capitalized, Kang says. Mills with thin margins or those that are kept afloat shipment-by-shipment can’t always provide security of supply, one of three main reasons RWE is constructing its own mill. Pellet mills with credit problems can run out of cash, putting their off-takers at risk of insufficient fuel supply. “[Essent has] had instances when people don’t deliver because the price of sawdust or shipping went up, for instance,” he says. “Little things like that happen and we just don’t want to be open to that.”
The next reason for an internal pellet plant is no surprise: quality. “Quality is very important and is one reason we did invest in our own pellet facility here in the U.S.,” Kang says. “We want to make sure we get the same consistent good quality.” Ash content, fines and calorific value are a few of the important elements, he says. “Yes, Essent has turned away shipments because of quality.” Contracts specify quality parameters for the delivered fuel and the buyer can and most likely will refuse a shipment if it does not meet those specifications. “Based on that, if there was any opportunity to renege on a contract, [the customer] would, and rightfully so,” says John Swaan, chief operating officer for Green Frontiers Energy Group. “If the criteria aren’t met, they have every right to refuse a shipment.”
“We’ve made tens of millions of euros in investments to convert existing coal plants to be able to cofire, so we want to be able to make sure that we will also be receiving those high-quality pellets so we get subsidies to repay our investments,” Kang says.
Quality problems can arise when using poor raw materials or having inadequate cooling in the pelletizing, storage and handling processes, according to Swaan. “You cannot pile up residue, process it, bring it in and expect it’ll be magically altered and refined to something that’s suitable,” he says. “Junk in is still junk out.” Management of the raw material is crucial, he adds, and handling it correctly, in the case of forest residues, means avoiding scraping it through the forest floor and pushing it into piles. “As soon as you contaminate it with dirt, obviously you’re going to have some issues.” While the problem isn’t common in U.S. pellet mills, it has happened in the past and is a lesson today’s manufacturers can learn from others’ mistakes. “What the industry has to learn … in North America is that even though it’s an industrial pellet, it still means that you need quality residues,” Swaan says.
The final major driver in RWE’s decision to develop Georgia Biomass is price risk. “Part of vertical integration is that then you would be insensitive to large price movements,” Kang explains.
But supply, quality and price aside, Georgia represents an ideal location because it has sustainably grown and harvested desirable trees as crops for decades. “We specifically chose Georgia in the Southeast U.S. for the southern pine,” Kang says. The tree is abundant, and has ideal calorific value for RWE’s processes. “More trees are grown than cut down each year,” he says. “We’re looking for long-term production here.”
It goes without saying that not all U.S. pellet manufacturers are guilty of supply and quality issues, and many are successfully shipping pellets to Europe fairly frequently, such as Green Circle BioEnergy Inc. in Florida and Fram Renewable Fuels LLC in Georgia. Some say success in export markets depends on proximity to wood supply and port access. “European buyers are the same as buyers the world over,” says Harold Arnold, president of Fram Renewable Fuels. “They want the product at the lowest possible price. Not every project in every location can be profitable. All have their unique problems and conditions.”
Similarly, the hardships RWE and Essent have endured with suppliers are not attributable only to North America. “It can happen anywhere,” Kang says, adding that the economics, logistics, fiber sustainability and material quality in the U.S. simply represented the best opportunity for RWE and its internal pellet demand at the time it made its investment decision.
Disconnect?
But while some European pellet customers might say suppliers and brokers aren’t following through on their quality, volume and price commitments, it’s possible they simply don’t understand the cost of delivering a consistent quality product overseas, says Pete Stewart, president and CEO of Forest2Market, a provider of market trend and industry information for forest products and bioenergy. “On one hand, European utilities say they can’t get consistent deliveries at a good price,” he says. “But on the other hand, they won’t pay the price to get a quality product over there.”
Stewart doesn’t consider RWE to be one of those ill-informed utilities. “They pretty much understand the cost,” he says, adding RWE might not fully nail down exact cost figures until it begins shipping commercial quantities from Georgia. “Right now, their costs to manufacture and deliver a pellet is way in excess of market price, so they’ll certainly be losing on [Georgia Biomass], or they could easily replace the volume in that plant with market-based product, but that doesn’t mean they can replicate the quality of their product in the market, or the timeliness of delivery,” he says. Timeliness and quality are major components of cost, he adds. “I would suggest the price right now doesn’t really take into account consistency or strict adherence to quality measures and that might be the disconnect between the markets and what it really costs to get a decent product to a location in Europe.”
The U.S. is the No. 2 producer of wood pellets in the world, but only exports 20 percent of its product, according to the American Biomass Trade Cooperative (ABTc). In comparison, Canada exports about 80 percent of its product. International investors are indeed reluctant to work with American producers because of shipping hurdles and the inability to secure on-time and undamaged product, according to the cooperative. In accordance with RWE’s reasoning, that security of supply is the primary concern of foreign pellet customers, according to Scott Miller, founder and president of bioenergy marketing and consulting firm The Miller and De Wulf Corp., and marketing consultant for the ABTc. Among other initiatives, the cooperative seeks to serve as a middleman between American biomass product manufacturers and foreign customers, marketing and connecting the two.
“We will definitely be trying to streamline communication across the pond,” Miller says. The possible pricing disconnect is one element of biomass exporting that the cooperative could tackle with its work. “It’s an understandable concern,” he says.
In the thick of it, though, the view might be much different. “That’s just typical business,” Arnold says of the suggested pricing disparity. “I don’t think there’s a disconnect. I think it’s just the long-term situation in business.” The buyer will never propose to pay more than the market price, he adds. “It’s capitalism at its best.”
There is substantial risk involved in the pellet export industry, specifically for startups, which account for a significant portion of manufacturers in the U.S., Kang says. But Georgia Biomass avoids that risk by supplying its own internal demand, although Kang says selling to third parties is an option if excess supply exists after RWE’s demands are met. Even though RWE’s mill means reduced interest in the global pellet market, Kang is still hoping for the success of pellet producers because it builds stability in that market. “I would be very happy to see the success of all the pellet producers because it only helps the whole industry,” he says.
But it is a tough business to be in, Arnold cautions. “Wood pelleting is not a get-rich-quick scheme,” he says. “It is capital intensive and dirty, dusty manufacturing at its best.” He adds that the hype surrounding the wood pellet industry and its export potential has led many project developers to believe pellet manufacturing is a business with guaranteed profits. “Unfortunately it is not,” he says. “The same discipline must be applied to the pellet business as any other. You can make a little money at it, but there’s an awful lot of hard work to do it.”
Author: Lisa Gibson
Associate Editor, Pellet Mill Magazine
(701) 738-4952
lgibson@bbiinternational.com
Subscribe to:
Post Comments (Atom)
.JPG)
No comments:
Post a Comment