INSIDE: HOW TO ECONOMICALLY CONVERT BOILERS TO BIOMASS June 2011
Biomass Conference Review Event Draws Attendees From 22 Countries, 46 States, 8 Provinces Page 28
Plus: Japan Takes a Closer Look at its Renewable Energy Potential Page 38
How U.S. Cities are Getting More Bang from their Biogas Page 44
Why New Hampshire Biomass Plants are Stuggling to Survive Page 50
Now Accepting
Speaker Abstracts
Deadline: June 24th
The 2011 Northeast Biomass Conference and Trade Show offers industry experts an unparalleled opportunity to showcase their industry knowledge and expertise to biomass professionals in the northeast region of the United States. Speakers at BBI International Events enjoy: • Complimentary Registration for the Conference • Inclusion in both print and electronic marketing campaigns • Opportunity for inclusion in a weekly ‘Panel Preview’ marketing series • Exposure at a well attended, well produced industry event Don’t miss this unique opportunity. Submit an abstract today! www.biomassconference.com/northeast 866-746-8385 speakers@bbiinternational.com
Way Beyond Don’t just let the chips fall where they may. Bring us on board for your next biomass project. All fuels. All technologies. All industries. All services. Together we will find your solution. Learn more at www.burnsmcd.com/bmcdbiomass Ron Jones SPOKPOFT!CVSOTNDE DPN 4 8PPET .JMM 3PBE 4VJUF $IFTUFSmFME .0
Engineering, Architecture, Construction, Environmental and Consulting Solutions "UMBOUB t $IJDBHP t %BMMBT t %FOWFS t %PIB 2BUBS t 'PSU 8PSUI t )PVTUPO t ,BOTBT $JUZ .P t .JOOFBQPMJT 4U 1BVM t /FX &OHMBOE t 0SBOHF $PVOUZ $BMJG t 1IPFOJY t 4U -PVJT $ I B U U B O P P H B 5 F O O t , O P Y W J M M F 5 F O O t . J B N J t . J M X B V L F F t / F X : P S L t / P S G P M L ) B N Q U P O 3 P B E T 7 B t 0 ' B M M P O * M M t 0 N B I B / F C 1BMN #FBDI (BSEFOT 'MB t 1IJMBEFMQIJB t 3BMFJHI / $ t 4BO %JFHP t 4BO 'SBODJTDP t 4FBUUMF t 8BTIJOHUPO % $ t 8JDIJUB ,BO
JUNE 2011 | VOLUME 5 | ISSUE 6
INSIDE ¦
FEATURES 28 EVENT Gateway to Biomass St. Louis was truly the Gateway City for people in the biomass industry who attended the fourth annual International Biomass Conference & Expo. By Lisa Gibson and Erin Voegele
38 INTERNATIONAL Biomass Power: Pillar of a New Japan? The nuclear crisis in Japan may cause a shift to renewable energy, but changes in public policy, financial incentives and infrastructure need to be developed first. By Anna Austin
44 BIOGAS Maximizing Efficiency
38 DEPARTMENTS
Budget tightening efforts have prompted some U.S. cities to try to get more energy from biogas generated by their wastewater treatment plants. By Anna Austin
50 POLICY Out with the Old New Hampshire biomass power plants are in danger of extinction as their power purchase agreements expire and Public Service New Hampshire is not interested in renewing them. By Lisa Gibson
06 EDITOR’S NOTE Biomass Conference Takeaways By Rona Johnson
08 INDUSTRY EVENTS 10 POWER PLATFORM Massachusetts Policy Troubling for Renewable Energy Development By Bob Cleaves
12 THERMAL DYNAMICS Escaping Washington: A Look at Regional Efforts to Grow Biomass Thermal By Kyle Gibeault
CONTRIBUTIONS 56 CONVERSION Boilers: Economic Change From Coal to Biomass Converting coal- and oil-fired boilers to biomass can be done economically. By James Wise and Gareth Jones
14 ENERGY REVIEW EERC Biomass ’11 Conference Set for July By Chris Zygarlicke
15 LEGAL PERSPECTIVE Biomass Policy and Finance Roundup By Roger D. Stark
16 BUSINESS BRIEFS 18 FIRED UP 60 MARKETPLACE 61 ADVERTISER INDEX
JUNE 2011 | BIOMASS POWER & THERMAL 5
¦EDITOR’S NOTE
Biomass Conference Takeaways
RONA JOHNSON
Editor rjohnson@bbiinternational.com
The 2011 Biomass Conference & Expo was a huge success and provided tons of information, contacts and food for thought. The conference was held May 2-5 at the America’s Center in St. Louis. After taking in the event and listening to speakers and attendees, it seems to me that everyone in the industry is really looking for certainty as it applies to policies and incentives, regulations, feedstock supplies and technology. Although there are a lot of uncertainties now, I believe that in time, as legislators and the general public get a clearer picture of the opportunities that biomass-based energy present, those uncertainties will start to melt away. At the conference, I got a lot of questions about the availability and market for biomass. We tried to answer some of those questions in a panel titled Eyeing Future Markets for Biomass Commodities, which I moderated. The presenters were William Perritt of RISI, Brodie Govan of Argus Media Inc., Dean McCraw of McCraw Energy LLC, and Charles Brettell of Energy Asset Advisors LLC. While they are all well-connected and had excellent presentations, when it comes to markets there are no certainties. For example, who could have predicted the earthquake in Japan or the tornadoes that devastated parts of the U.S.? That being said, you may want to put these guys on your speed dial to keep up with all the market ups and downs. My favorite presentation at the conference titled Key Issues of Pellet Market Development in Sweden was by Bengt-Erik Löfgren, CEO of ÄFAB Älvdalens Fastbränsle AB-Sweden. Löfgren pointed out that the Swedish look at the Earth like it’s a company and they have to pay to use coal and oil, not just the cost of digging and drilling for it. And not surprisingly, as the country’s CO2 emissions have been reduced, its gross domestic product has increased. “We have earned money using biomass,” he said. Since 1990, the country’s GDP has increased 48 percent, 35,000 jobs have been created in rural areas, $18.2 billion has stayed in the local economy and its CO2 emissions have been lowered by 31 million metric tons (31 percent). Löfgren predicts that if the U.S. were to follow in Sweden’s footsteps, its GDP would rise rapidly, 25 million new jobs would be created and $46 billion dollars would stay in the U.S. economy. That presentation really made my day and truly validates the noble efforts of everyone involved in the bioenergy industry. To read more about the fourth annual International Biomass Conference & Expo, read Associate Editor Lisa Gibson’s feature “Gateway to Biomass” (page 28) and go to our website www.biomassmagazine.com.
For more news, information and perspective, visit www.biomassmagazine.com
Associate Editors
ANNA AUSTIN
Associate Editor Anna Austin delves into Japan’s energy future in light of the massive earthquake, tsunami and resulting nuclear meltdown, which could lead to an increase in biomass-based power on the island nation (see “Biomass Power: Pillar of a New Japan?). Austin also writes about how municipalities are getting the most bang for their biogas in her feature “Maximizing Efficiency at Wastewater Treatment Plants.”
6 BIOMASS POWER & THERMAL | JUNE 2011
LISA GIBSON
Associate Editor Lisa Gibson attended and reviews high points of the 2011 International Biomass Conference & Expo, which was held May 2-5 in St. Louis, in her feature “Gateway to Biomass.” In her other feature “Out with the Old,” she talks with biomass power providers in New Hampshire about the expiration of their power purchase agreements and the negative impacts it will have on the biopower and logging industries.
EDITORIAL EDITOR Rona Johnson rjohnson@bbiinternational.com ASSOCIATE EDITORS Anna Austin aaustin@bbiinternational.com Lisa Gibson lgibson@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com
ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com GRAPHIC DESIGNER Elizabeth Burslie bburslie@bbiinternational.com
PUBLISHING & SALES CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com ACCOUNT MANAGERS Marty Steen msteen@bbiinternational.com Chip Shereck cshereck@bbiinternational.com Bob Brown bbrown@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com Dave Austin daustin@bbiinternational.com Nick Jensen njensen@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com SUBSCRIBER ACQUISITION MANAGER Jason Smith jsmith@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com SENIOR MARKETING MANAGER John Nelson jnelson@bbiinternational.com Subscriptions Biomass Power & Thermal is free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside of the United States, Canada and Mexico. To subscribe, visit www.BiomassMagazine.com or you can send your mailing address and payment (checks made out to BBI International) to Biomass Power & Thermal Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com. Advertising Biomass Power & Thermal provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Biomass Power & Thermal advertising opportunities, please contact us at (701) 746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Biomass Power & Thermal Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to rjohnson@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
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COPYRIGHT Š 2011 by BBI International
JUNE 2011 | BIOMASS POWER & THERMAL 7
¦INDUSTRY EVENTS International Fuel Ethanol Workshop & Expo June 27-30, 2011
Indiana Convention Center Indianapolis, Indiana The FEW is the largest, longest-running ethanol conference in the world. Focused on production of grain and cellulosic ethanol, operational efficiencies, plant management, energy use and near-term research and development, the FEW will attract 2,500 attendees. (866) 746-8385 www.fuelethanolworkshop.com
International Biorefining Conference & Trade Show September 14-16, 2011
Steel City to host Northeast biomass event
10/11
With an exclusive focus on biomass utilization in the Northeast, from Maryland to Maine, the Northeast Biomass Conference & Trade Show is a dynamic regional offshoot of Biorefining Magazine and Biomass Power & Thermal’s International Biomass Conference & Expo, the largest event of its kind in the world. Taking place in Pittsburgh, Oct. 11-13, the event will connect the region’s current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels and biobased chemicals, with waste generators, aggregators, growers, municipal leaders, utility executives, technology providers, equipment manufacturers, investors and policy makers. The Northeast U.S. has vast forestry, agricultural and municipal biomass resources, and is home to hundreds of technologically progressive biomass power, biofuels and biomass thermal energy projects. This population-dense region is host to several world-class research institutions engaged in the development, scale-up and commercialization of next-generation bioenergy technologies. The sustainable utilization of forestry and wood processing residues―from manufacturing wood pellets in Maine and New York to converting pulp and paper mills to next-generation biorefineries in New Hampshire and Vermont―is only the beginning. With the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions, the region’s utilities are expected to employ biomass cogeneration, gasification and advanced combustion projects in unprecedented numbers, while also supporting projects that generate electricity from on-farm methane, municipal biosolids and landfill gas. Likewise, countless research institutions are partnering with private industry in the region to develop next-generation biofuels such as cellulosic ethanol. The Northeast Biomass Conference & Trade Show program will feature more than 60 speakers, including technical presentations on topics ranging from anaerobic digestion and gasification to combined heat and power and large-scale biomass combustion, within the structured framework of general session panels and four customized tracks: electricity generation, industrial process heat and power, biorefining, and project development and finance. The show is designed to help biomass industry stakeholders identify and evaluate solutions that fit their operations. It's time to improve operational efficiencies and tap into the revenue-generating potential of sustainable biomass resources in the Northeastern U.S. To attend, exhibit, speak or sponsor, visit www.biomassconference.com/northeast today.
8 BIOMASS POWER & THERMAL | JUNE 2011
Hilton Americas – Houston Houston, Texas The International Biorefining Conference & Trade Show brings together agricultural, forestry, waste and petrochemical professionals to explore the value-added opportunities awaiting them and their organizations within the quickly maturing biorefining industry. (866) 746-8385 www.biorefiningconference.com
Northeast Biomass Conference & Trade Show October 11-13, 2011
Westin Place Hotel Pittsburgh, Pennsylvania With an exclusive focus on biomass utilization in the Northeast—from Maryland to Maine—the Northeast Biomass Conference & Trade Show will connect current and future producers of biomass-derived electricity, industrial heat and power, and advanced biofuels, with waste generators, aggregators, growers, municipal leaders, utilities, technology providers, equipment manufacturers, investors and policymakers. Speaker abstracts are being accepted online through June 24. (866) 746-8385 www.biomassconference.com/northeast
Algae Biomass Summit October 25-27, 2011
Hyatt Regency Minneapolis Minneapolis, Minnesota Organized by the Algal Biomass Organization and coproduced by BBI International, this event brings current and future producers of biobased products and energy together with algae crop growers, municipal leaders, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all algae industries. (866) 746-8385 www.algaebiomasssummit.org
things are heating up in chicago!
THE INTERNATIONAL CONFERENCE ON THERMOCHEMICAL CONVERSION SCIENCE join us for three days of
28–30 september 2011 we estin chicago river north h
• dynamic keynotes on the current vision of
peer-reviewed scientific
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sessions on gasification,
• presentations by the world’s leading researchers
pretreatment, pyrolysis, and upgrading—
• poster sessions • networking events
www.gastechnology.org/tcbiomass2011 Sponsors
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¦POWER PLATFORM
Massachusetts Policy Troubling for Renewable Energy Development BY BOB CLEAVES
Recently, the Massachusetts Department of Energy Resources made official a policy that was long in the making—the effective “delisting” of biomass electricity as a qualifying technology under that state’s renewable portfolio standard (RPS). By imposing efficiency standards that are technologically and financially unachievable, Massachusetts has become the only state in the nation—and perhaps unique in the world—in deciding that biomass is not a form of renewable energy. As an industry, we advocated that such a policy has no basis in science, is bad for rural New England, deprives the region of “baseload” sources of renewable energy, and shows a profound misunderstanding of the type of fuels that we use to create energy. But perhaps the most troubling aspect of the proposed rule is the message it sends to developers and investors. To appreciate the breadth of the problem in Massachusetts, we need to revisit the past 10 years or so. When the state adopted an RPS, the state agency—DOER—engaged in an exhaustive rulemaking process among all stakeholders to determine what type of biomass would qualify for the RPS. Keep in mind that the Massachusetts Renewable Energy Certificate program was, and remains, one of the more aggressive programs in the nation, which translated into significant benefits for owners and operators of renewable energy technology that qualified under the program, including biomass. Upon the adoption of these rules, a number of facilities in the region made significant investments. A coal plant was converted, boilers were retrofitted to the tune of millions of dollars, and qualifying facilities were sold to investors—all on the belief that Massachusetts had arrived at a policy
10 BIOMASS POWER & THERMAL | JUNE 2011
that could be relied upon, at least for a predictable period of time, so investments would be recouped. Enter Stop Spewing Carbon, a small vocal minority dedicated to stopping a number of new biomass facilities in western Massachusetts. They convinced the state to take another look at biomass, claiming that new biomass would cause deforestation. We all know the end of the story— the resulting study (the so-called Manomet [Center for Conservation Sciences] report), analyzed (using flawed methodology) the carbon impacts of harvesting natural forests for energy (not what we do), and the media (in error) concluded that biomass was “worse than coal.” That was all Gov. Deval Patrick needed to hear to declare, “off with their heads.” And in one stroke of the regulatory pen, woody biomass was disqualified. Never mind the fact that by displacing biomass, Massachusetts has inadvertently become the largest supporter of baseload coal and natural gas, or that the state’s own study had nothing to do with using forestry residues and byproducts. Investors and developers in all renewable energy sources should be concerned about the underlying message this sends: Come to Massachusetts and invest in our renewable markets, but we can and will change the rules of the game, and we don’t care if you lose your investment based on later policies we enact. We can and will change the rules, regardless of your reasonable expectations based on our representations. Author: Bob Cleaves President and CEO, Biomass Power Association www.USABiomass.org
• Educational Sessions • Industry Exhibits • Networking Opportunities
Register Now Conference and Hotel Registration now open. For more information, visit the PFI website.
www.pelletheat.org
Key Topics: • Maximizing Pellet Plant Operations • Fire Prevention and Safety • Combustible Dust Management • International Market Development • Industry Standards • Federal Legislative and Regulatory Update
Who should attend: • Pellet Fuel Manufacturers • Industry Suppliers • Federal, state and local government biomass experts • Anyone interested in learning more about the densified biomass industry
For more information, contact PFI at pfimail@pelletheat.org. The Pellet Fuels Institute, located in Arlington, Virginia, is a North American trade association promoting energy independence through the efficient use of clean, renewable, densified biomass fuel. For more information about pellet heat, contact the Pellet Fuels Institute at (703) 522-6778 or visit www.pelletheat.org.
¦THERMAL DYNAMICS
Escaping Washington: A Look at Regional Efforts to Grow Biomass Thermal BY KYLE GIBEAULT
There’s a reason people call Washington, D.C., a fishbowl. In this town, it’s easy to forget about the world going on outside our little tank. I recently traveled outside of our nation’s capital to learn more about what’s happening in biomass thermal in different parts of the country. What did I find? There’s a lot of activity at the state and regional level. In April, I flew to New Hampshire to attend the third annual Heating the Northeast with Renewable Biomass conference. Before the conference, I went on a day-long industry tour that really brought home the opportunities we have here in the U.S. We visited Masenic High, a school in New Ipswich, N.H., which recently made the switch from heating oil to wood pellets and has seen its fuel costs drop by roughly two-thirds. We also stopped by Nubanusit Neighborhood and Farm, a cohousing community in Peterborough, N.H. This neighborhood’s district heating system utilizes locally produced biomass fuel instead of imported fossil fuels to provide heat and hot water. Their six biomass boilers provide heat for every home in the community. These visits help bring to life what we all know: Advanced biomass heating systems are already producing real benefits at operating projects throughout the U.S. As made clear a few days later at the HeatNE conference by Christiane Egger of the Upper Austria Renewable Energy Agency and Herbert Ortner of ÖkoFEN, this technology is really gaining ground in parts of Europe. BTEC has been working hard to tell this story at the national level. But after seeing the interest and energy for regional activities at HeatNE, I began to think that maybe part of the answer for this industry also lies at the local level. Our organization was formed to bring all of the varying regional interests under one tent to develop a common message and unified voice for biomass thermal in Washington. We have succeeded in that respect. Every day BTEC is working on behalf of its members to advocate for federal incentives and regulations that would help grow the industry. These efforts are absolutely vital—they are the potential home runs that could transform the marketplace. But base hits can get you on
12 BIOMASS POWER & THERMAL | JUNE 2011
the scoreboard too. And there are smaller victories to be had at the state and regional level. Groundwork is now being laid at the state and regional level for bigger wins down the road. As evidence, look no further than the 400-plus attendees at the HeatNE conference in April or the recent meeting in Ladysmith, Wis., to discuss a similar undertaking in the Midwest. Another example: the Northeast Biomass Thermal Working Group, an informal regional coalition of biomass thermal advocates, recently attracted more than 350 industry people to sign a letter going to political leaders in the Northeast. Jonathan Kozol, an educator and nonfiction writer known for his books on public education in the U.S., once wrote: “Pick battles big enough to matter, but small enough to win.” There is an unprecedented level of support, interest, and coordination happening across the country for biomass thermal. It’s time to take advantage. What’s possible in the Northeast isn’t necessarily going to be true for the Midwest, the Southeast, or any other part of the country. The political environment, the economy, and the appetite for renewable energy can differ wildly from state to state. Each situation requires a unique approach. Our efforts on the federal level are essential, but there are also a lot of great things happening outside of Washington. In addition to supporting our national platform, we need your help in advancing the industry in your state and region. If you are from the Northeast, visit www.nebioheat.org and join their mailing list. If you’re in the Midwest, contact me to learn more about developments in that region. And if you’re from another part of the U.S., let’s talk and figure out how we can build momentum for biomass thermal in your state. There’s a lot of work to be done, but it’s great to see so many passionate advocates getting involved. I invite you to join us in helping build this growing industry in D.C. and beyond. Author: Kyle Gibeault Deputy Director, Biomass Thermal Energy Council (202) 596-3974 Kyle.Gibeault@biomassthermal.org
“The premiere organization for scientists, governments, and industry working in all aspects of algal biomass.”
Cultivate the
Algae Industry
Shay Simpson, Associate Director – Bioenergy Program at Texas AgriLife Research, a member of the Texas A&M University System
Attend the world’s leading algal industry conference.
2011 Algae Biomass Summit October 25 – 27, 2011 Minneapolis, MN
Attendees will gain the following: • Expertise from the leading algal industry players • Insight into where the algae industry is heading • Information on new opportunities created by the industry • Plans and strategies for your algae fuel venture • Knowledge on trends in external financing for algal projects • New cultivation and harvesting methods and techniques • A better understanding of the latest government policies
“One of the best biomass conferences I attended all year. The contacts and exposure have proven to be invaluable to our biomass program.” Richard Wilson, Marketing Manager, Applied Chemical Technology
More than 800 leaders will be in attendance: “This conference offered exceptional exposure, relationship building with the ability to cement meetings that were previously held by e-mail and phone only. The decision makers were there…” Victoria M. Kurtz, Fluid Imaging Technologies, Inc.
• Algae experts and leaders who are shaping the industry • The top algae biomass producers in the world • Companies in algae-related industries and businesses with synergistic operations • Entrepreneurs planning to start a venture in the algal industry • Venture capital, finance & investment companies exploring investments in this domain • The biofuels and other biofuel products research community • End-users who are purchasing and utilizing the energy created
Register Today! www.algaebiomasssummit.org
Questions? Call us at 866-746-8385 Follow us: http://twitter.com/algaeindustry
¦ENERGY REVIEW
EERC Biomass ’11 Conference Set for July BY CHRIS ZYGARLICKE
In 2002, the Energy & Environmental Research Center hosted its first biomass workshop in Grand Forks, N.D., with 80 participants and a focus on deriving heat and electricity from biomass. At that time, many people didn’t even know what types of materials constituted biomass. As a joke, when introducing the topic of biomass in a presentation, I would show a picture of the mysterious, yet benign green slime used to douse contestants in a children’s TV game show—using that image to reinforce the fact that most people simply didn’t know what biomass was. This year’s biomass conference, on July 26–27 at the Alerus Center in Grand Forks, is different. Not only do we understand the broad range of biomass feedstocks that could play an important role in our energy mix, but we also understand the technologies necessary to utilize that biomass and the economic potential for renewable energy from biomass. The conference has had different emphases over the years, and judging from the excellent lineup of speakers, this year’s emphasis will be on real-world options for economic feedstock acquisition and processing and near-term conversion options for energy, fuels and chemicals. The opening session will highlight the status of viable biomass technologies and industry from several standpoints. From the standpoint of North Dakota, an address will be delivered by North Dakota Gov. Jack Dalrymple, and a presentation will be given by Andrea Holl-Fennig, director of the North Dakota Renewable Energy Council. North Dakota is offering several incentives to help promote the development of biomass industries in the state. From a regional standpoint, EERC Director Gerald Groenewold and I will speak on the latest trends, opportunities and cutting-edge technologies. Next, Corinne Valkenburg from the U.S. Department of Energy’s Office of Biomass in Washington, D.C., will highlight the status of federal investment in biomass energy. Corinne comes fresh from a new federal budget and directives for biomass, so her talk will be timely. Finally, Margo Shaw, from Golden Associates in Winnipeg, Manitoba, will speak on trends in biomass resource and technology development from an international standpoint. 14 BIOMASS POWER & THERMAL | JUNE 2011
The opening session will end with presentations related to real-world and near-term biomass projects and finances. Hurst Boiler will answer questions about what it takes to make 5 to 50 megawatts of power from biomass using well-known combustion technology. This scale of biomass power production is usually feasible with readily available and economical biomass feedstocks such as wood residues. Rounding out the opening session, will be a panel discussion on the real-world costs and financial opportunities for biomass technologies in today’s economic environment. This panel will include Cole Gustafson from North Dakota State University, and attorneys Gregory Jenner from Stoel Rives LLP and Adonis Neblett from Fredrikson & Byron. Afternoon talks will focus on generating power from biomass both at the small scale using gasification or fast-pyrolysis of biomass and at the large scale using conventional cofiring in utility boilers (presentations by GE Global Research, Saskatchewan Research Council and Barr Engineering), liquid transportation fuels in the form of conventional and cellulosic ethanol (Poet LLC, American Coalition of Ethanol, the University of Tokyo-Japan, Karlsruhe Institute of Technology-Germany, the University of the Basque Count-Spain and Albemarle) and processing of biomass feedstocks including specific economic scenarios and technologies related to sugar beets, rice straw, tallow tree, wheat straw, corn stover, wood residues and crop oils (Desert Research Institute, CTT BioEnergy, MBI International and Seoul National University-South Korea). In all, this conference will be well worth your attendance. In recent years, this event has attracted thousands of attendees and garnered a reputation for facilitating outstanding networking opportunities that foster new business opportunities regionally and abroad. Special tours will be available, and a full room of more than 40 exhibitors will be present for practical discussions about technology options. For more information, visit www.undeerc.org/ biomass11. Author: Chris Zygarlicke Deputy Associate Director for Research, EERC (701) 777-5123 czygarlicke@undeerc.org
LEGAL PERSPECTIVE¦
Biomass Policy and Finance Roundup BY ROGER D. STARK
As oil prices hover above $100 per barrel, a variety of policies are vectoring U.S. bioenergy markets, creating a mix of uncertainties and opportunities that vary depending on federal policy determinations and the financial markets. The U.S. EPA has created uncertainty regarding the treatment of biomass as a carbon-neutral fuel under the Prevention of Significant Deterioration Clean Air Act permitting program, and its earlier determinations cast a cloud over whether biomass would qualify for favorable treatment under clean energy standards being considered in Congress. Separately, the approaching sunset of some federal tax incentive and loan guarantee programs requires action by biomass sponsors. Collectively, these trends are putting a premium on strategic project development decisions. Under most greenhouse gas (GHG) accounting systems, emissions of carbon dioxide from biomass are not counted because they are equal to the emissions that would occur due to the natural oxidation of biomass. In issuing initial PSD regulations and guidance, EPA inconsistently counted emissions from biomass in determining whether the PSD permitting trigger applied, while also suggesting that biomass fuels would reduce GHG emissions. EPA has deferred final resolution for three years, during which biomass carbon dioxide emissions are ignored for purposes of calculating whether PSD review and permitting requirements have been triggered. Other recent EPA rulemakings suggest it considers biomass to be a low-carbon fuel. Despite the temporary exemption, EPA’s final position on carbon neutrality is likely to follow other programs and most international and voluntary standards that favor the use of sustainably managed biomass. Project sponsors can take comfort in the fact that PSD construction permits issued for biomass facilities during EPA’s temporary exemption period, and that are not challenged on other grounds, will become final and binding in the ordinary course. Likewise, existing Regional Greenhouse Gas Initiative and proposed California regulations will favor sustainably managed biomass by ignoring its emissions for purposes of determining whether biomass facilities must purchase allowances under applicable cap-and-trade programs. Although EPA is developing additional GHG standards for electric generating units under CAA Section 111, these standards also will likely favor biomass by allowing states to create the standards and encouraging states to join existing cap-and-trade programs that favor biomass.
Biomass investments will continue to enjoy the benefits of state renewable portfolio standards, which generally allocate renewable energy credits to electricity generated from sustainably produced biomass. From a tax policy standpoint, biomass continues to benefit from incentives under applicable investment tax and production tax credits, and the U.S. Treasury grant in lieu of tax credit program. Under current law, open- and closed-loop biomass projects qualify for the production tax credit under Section 45 of the Internal Revenue Code, or the 30 percent investment tax credit (in lieu of the Section 45 credit), under IRC Section 48, until the end of 2013. Biomass projects also continue to be eligible for treasury cash grants in lieu of the Section 48 credit; provided that they file timely applications with treasury and comply with the applicable commencement of construction and in service deadlines (the latter deadline being Dec. 31, 2013). On the financing front, some tax advantaged investments are making a comeback. During the financial crisis, the rate of return for so-called tax equity peaked at levels in excess of 15 percent shortly before tax equity markets collapsed. Tax equity returns have since returned to precrisis ranges and there is a resurgence of investors ready to enter into tax credit transactions. On the debt side, however, tax-exempt debt transactions have not returned to precrisis levels. The USDA loan guarantee program is generally userfriendly and offers the potential for cofinancing guaranteed project debt with tax exempt debt. It remains to be seen how two key factors affect biomass. First, if the recent oil price spike extends, considerations regarding energy security and project economics will likely favor biomass development. Second, the Obama Administration’s Clean Energy Initiative offers opportunities for biomass proponents to affect the policy agenda and could enhance the policy environment for biomass projects. These developments present a picture of discrete risks and substantial opportunities, and put a premium on thoughtful near-term development and investment choices for individual projects and the industry. Authors: Roger Stark Partner, Ballard Spahr LLP (202) 661-7620 starkr@ballardspahr.com
JUNE 2011 | BIOMASS POWER & THERMAL 15
Business Briefs PEOPLE, PRODUCTS & PARTNERSHIPS
energy and initiatives at Google, U.S. DOE assistant secretary for energy efficiency and renewable energy under President Clinton, and a member of President Obama’s transition team. Walki’s biomass cover improves drying process
PHOTO: WALKI GROUP
McGinn takes helm at ACORE, Reicher to chair board of directors The American Council On Renewable Energy announced that Dennis V. McGinn has accepted the position of president. And Dan Reicher has become chairman of ACORE’s Dennis V. McGinn, a board of directors, strong advocate and promoter of clean with co-chairman of energy, has been the board of directors, named president of John Geesman, stepACORE. ping down. Retired Vice Admiral McGinn served 35 years with the U.S. Navy as a naval aviator, test pilot, aircraft carrier commanding officer and national security strategist. He is actively engaged in efforts at the national level to highlight the close link Dan Reicher, with years in energy between energy, climate 25 and environmental and national security. technology, policy, He is a strong advocate finance and law, is new chairman for innovative govern- the of the board at ment policy, public and ACORE. private partnerships and investments that will promote clean energy growth and innovation. ACORE also announced that Geesman, co-chairman of the board, a former commissioner of the California Energy Commission and former ACORE advisory board member, is stepping down. Replacing him will be Reicher, who has more than 25 years of experience in energy and environmental technology, policy, finance and law, is the executive director of the Steyer-Taylor Center for Energy Policy & Finance at Stanford University and a faculty member of the Stanford law and business schools. Formerly, he was director of climate change and
HIGH AND DRY: Residue piles covered with the Walki biomass cover are drier than piles that are left uncovered.
Logging residue is an inexpensive and easily accessible source of biofuel, but to improve the energy content it must first dry on the ground and after that it can be stored in piles for several months. To shelter the piles from moisture through rain, snow and ice, Walki Group has developed a paper-based, waterproof cover that can be chipped and burned together with the residue. The cover is a four-meter wide laminate, mainly produced from renewable fibrous materials. It shelters the top of the pile but leaves the sides open, allowing moisture to evaporate. In addition to shielding the residue from water and snow, the biomass cover also protects the residue from freezing, which can transform the pile into an icy heap that’s almost impossible to handle and has low energy content. Frontline, SGC Energia forge strategic partnership Frontline BioEnergy and SGC Energia announced that the companies have completed a set of transactions that will bring new capital investment to Frontline,
16 BIOMASS POWER & THERMAL | JUNE 2011
an Iowa-based gasification technology and project development firm. The scope of these transactions includes an agreement for SGC Energia to license Frontline gasification and gas conditioning technologies and a multiyear contract for Frontline to provide a range of engineering services to support SGC Energia. SGC Energia is a private European company with a main engineering and project management office in Houston. SGC Energia intends to leverage Frontline’s expertise in gasification technologies and project development to enhance its strategic efforts. With this Series B round investment, SGC Energia joins members of the Frontline management team and founding partner Chippewa Valley Ethanol Co. as owners and managers of Frontline BioEnergy. Bioprocess control appoints Andersson CEO Bioprocess Control AB announced the appointment of Patrik Andersson as its new CEO. With multiple years experience in a management role, Patrik will lead the company Patrik Andersson as it enters a new phase has been appointed to lead Bioprocess in its development. Control into a Based in Lund, Sweden, new phase of Bioprocess Control has development. a portfolio of products that improve the design and operation of biogas plants. The appointment of Andersson follows the mutually agreed departure of Kristofer Cook, former Bioprocess CEO and co-founder. After stepping down, Cook will continue to work on a part-time basis, while spending the remainder of his time with a new start-up project. Andersson officially took the helm on April 18, after working the past two years as incubator manager of Ideon Innovation in Lund, one
BUSINESS BRIEFS¦
of Sweden’s leading incubators for startup companies. Prior to that, he spent nine years in the Sapa Group, the world´s largest aluminum extruder. Capstone Turbine names senior VP, program management Capstone Turbine Corp. has named Robert C. Gleason senior vice president, program management. Darren Jamison, Capstone's president and CEO, recently announced the Robert C. Gleason creation of the new has been hired at Capstone Turbine position to ensure the to take on several timely execution of the new product company's critical cost development efforts. reduction programs, reliability improvement initiatives and U.S. DOE programs. The company has three new product development efforts underway: a flexible-fuel microturbine to run on agricultural syngas, an externally fired solar-powered microturbine and to increase the output of the C200 microturbine to 250 kilowatts and utilize the C250 as part of a new multistage high-efficiency C370 product. Gleason has more than 17 years of experience in program management, project engineering and business development in high technology companies. BinMaster now offers Internet-based, real-time inventory BinMaster Level Controls of Lincoln, Neb., announced the introduction of BinView, an inventory management system that offers real-time bin level monitoring for solid materials over the Internet or via a company LAN or VPN. The components of the BinView solution are BinMaster’s SmartBob2 or SmartBob-TS1 sensors mounted on the bins, a wireless or wired data communications network, a gateway to provide connectivity
to a personal computer or IP network, and data collection software that can be viewed securely by any authorized individual via an Internet connection or over the company’s LAN or VPN. BinView eliminates the need to manually check bin levels to improve safety and save time, money and manpower by improving the efficiency of ordering and logistics for all types of operations from farms, to processing and manufacturing operations, to the largest storage facilities. EPRI names Craver as board chairman The board of directors at the Electric Power Research Institute announced that Theodore F. Craver Jr., the chairman, president and CEO of Edison International, has been elected board Theodore F. Craver Jr. of Edison chair. Craver became was chairman and CEO of International elected chairman Edison International in of the board at the Electric Power 2008, and before that was chairman and CEO Research Institute. of one of its subsidiaries, Edison Mission Group, from 2005 to 2008. Before joining Edison in 1996, Craver was executive vice president and corporate treasurer of wholesale banking subsidiary First Interstate Bancorp, where he also served as executive vice president and chief financial officer. He also worked with Bankers Trust Co. of New York and Security Pacific National Bank in various capital markets sales and trading capacities. GE’s biogas engines to power China’s largest ethanol plant Supporting China’s efforts to increase the use of biogas for renewable energy production and in motor vehicles, GE is supplying its “ecomagination”-approved Jenbacher biogas engine technology to power China’s largest ethanol produc-
tion plant under construction in NanYang, Henan Province. Owned by Henan Tianguan Group, the ethanol plant will produce 500,000 cubic meters of biogas per day from cassava plants. A 36-megawatt (MW) on-site power plant featuring GE’s Jenbacher engines is being built in multiple phases to support the ethanol plant’s operations. For the 11 MW first phase of the power plant, GE is supplying four of its J620-biogas engine units. The gas engines will utilize the ethanol plant’s waste methane biogas to generate renewable electricity, which Henan Tianguan Group plans to sell to the regional grid. GE’s biogas engines will also use methane gas created by the anaerobic digestion of cassava biomass to production electricity for the site. CDC introduces the BPAL solution for biomass procurement management Circuit Design Corp. now offers the bioenergy sector its proven, comprehensive solution developed for the pulp and paper industry. Bulk Procurement and Logistics System functions allow advanced automation and integration of administrative and operational functions of a bulk feedstock procurement process, such as purchase planning, contract creation and control, truck reception and scaling, sample extraction and random laboratory testing, unloading site control and payments to parties under contracts.
SHARE YOUR INDUSTRY NEWS: To be included in the Business Briefs, send information (including photos and logos, if available) to Industry Briefs, Biomass Power & Thermal, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also e-mail information to rjohnson@bbiinternational.com. Please include your name and telephone number in all correspondence.
JUNE 2011 | BIOMASS POWER & THERMAL 17
PHOTO: RUSSELL BIOMASS LLC
FiredUp
RUSSELL RENDERING: Russell Biomass LLC will explore options for a CHP component in order for its proposed 50-MW biomass power plant to receive renewable energy credits.
Playing by New Rules Massachusetts has released its final ruling on RPS qualifications and it remains unfriendly to stand-alone biopower.
The Massachusetts Department of Energy Resources released a much-anticipated regulation in May that outlines qualification parameters for the state’s 20 percent by 2025 renewable portfolio standard (RPS). Uncertainty has surrounded the biomass industry in the commonwealth since the DOER released a draft proposal of RPS qualification regulations in September. One of the main issues with the proposal was the minimum efficiency standard of 40 percent for biomass power facilities to qualify and, unfortunately, the final draft didn’t revise that rule. The May ruling says a low-emission, advanced biomass power conversion technology using an eligible biomass fuel can qualify as an RPS Class I Renewable Generation Unit if it can demonstrate a minimum of 40 percent efficiency on a quarterly basis, among several other criteria. Still, 40 percent efficiency only qualifies for half a renewable energy credit (REC) per megawatt hour (MWh), ratcheted up to one full REC per MWh upon reaching 60 percent efficiency. The definition of eligible biomass fuel includes eligible biomass woody fuels, which are certain forest-derived residues, forest salvage, nonforest-derived residues such as those from primary and secondary forest product industries, yard waste and dedicated energy crops. Overall, the draft includes numerous changes from the original, but is still limiting for the Massachusetts biopower industry. 18 BIOMASS POWER & THERMAL | JUNE 2011
The efficiency standard will force several proposed projects to add combined-heat-and-power (CHP) components to receive RECs. “The efficiency requirement and GHG (greenhouse gas) benefits threshold (50 percent better than gas fired) are OK in the direction they go, but harsher than necessary to still achieve net GHG benefits,” says Peter Bos, developer for Russell Biomass LLC, which is developing a 50-megawatt biomass power plant in Russell, Mass. Bos says the bottom line is stand-alone biomass power is no longer economically viable. Currently, most biopower facilities in New England can achieve only 20 to 25 percent efficiency. Still, Bos says he supports the proposal in principle, even though it is much more stringent than necessary. “All parties should be willing to compromise and accept terms that aren’t perfect as long as they can still work, which they probably can for CHP biomass,” he says. But Bob Cleaves, president and CEO of the Biomass Power Association, isn’t as accepting. “New restrictions on larger biomass facilities, proposed (May 3) by the (Gov. Deval) Patrick Administration, demonstrate a profound lack of understanding of our industry and the science behind it,” he says. “Even worse, the proposal effectively changes the rules of the game in the eighth inning, which is completely unfair to investors who made significant investments based on rules already in place.”
FIREDUP¦ Along with efficiency standards, the final draft includes a number of provisions for eligible woody biomass fuels. For instance, a biomass fuel certificate must accompany every delivery of eligible woody biomass fuel or manufactured fuel to a generation unit. For forest-delivered eligible woody biomass fuel, the biomass fuel certificate must be issued with the eligible forest residue tonnage report, which details the amount of biomass that can be harvested, and includes a number of aspects including a signature of a professional forester who is certified by the Society of American Foresters, licensed by the host state of the harvest site, or certified by the DOER based on documentation that a professional forester has proficiency and experience in forestry, the final draft specifies. Whereas the September draft mandated that biomass harvests could not exceed 15 percent of the weight of all forest products, the May final regulation says the allowable percent removal limit will be determined as prescribed by the DOER in its Forest Derived Eligible Biomass Woody Fuel Guideline to protect soil nutrient retention. “Based on comments (on the 2010 proposal) and further research, DOER has concluded that the 15 percent limit is arbitrary and insufficiently based on science regarding soil nutrient needs,” according to the DOER. “Instead, the amount of biomass that should be left in the forest varies depending on the existing soil conditions.” The final forest protection regulations are more reasonable than those first proposed, Bos says, but still will be difficult for many wood harvesters to comply with because of time and cost. “Cutting down live trees doesn’t work for anybody, including biomass developers, so we’re OK with the prohibition against that in the regs.” The rewritten regulations are the result of a 2010 Manomet
Center for Conservation Sciences study, which found a debt-thendividend carbon impact for woody biomass. That spurred the Massachusetts Executive Office of Energy and Environmental Affairs to order a swift change to its RPS qualification rules to reflect the new findings. The study has been deemed flawed by the biomass industry, among others, for a number of reasons, not the least of which being that it takes slash, forest residue and other waste wood into account only alongside whole logs. “The administration continues to base its biomass policy on one flawed report, the 2010 Manomet study,” Cleaves says. “The report’s authors acknowledge that their study did not measure the emissions of biomass power generated using wood waste materials, which is the approach used by the vast majority of the industry in New England. Yet the Patrick Administration continues to legislate based on the carbon profile of using whole forests as biomass fuel—a practice that the industry does not engage in or condone.” Bos says the Manomet science behind the regulations has some validity but adds, “Unfortunately, the Manomet finding that a 100-percent waste wood-fueled biomass plant would produce GHG benefits favorable to even gas-fired power was lost in the press reports.” The new regulation will be referred to the Joint Committee on Telecommunications, Utilities, and Energy, which will have 30 days to review it and provide comments to DOER, according to Dwayne Breger, director of renewable and alternative energy development for the DOER. “After considering these comments, DOER anticipates filing the final regulation after another 30 days for promulgation,” he adds. —Lisa Gibson
Focusing on Feed and Fuel
PHOTO: SCOTT BAUER, USDA-ARS
Feed pellet co-op is developing biomass fuel pellets.
FORAGE AND FUEL: MnVAP is using alfalfa to produce animal feed pellets and biomass fuel pellets.
Farmer-owned co-op Minnesota Valley Alfalfa Producers (MnVAP) has officially produced its first batch of commercial fuel pellets after several years of research and development. President Keith Poier says the co-op is setting up a dedicated line for fuel pellet production. “Right now, we have one line and we’re alternating between alfalfa feed pellets and biomass fuel pellets, and we’re looking at being done with the second line in September.” MnVAP’s research is focused on making the biomass crop pelletization process more efficient. “Grinding and drying the feedstock are the major energy users,” Poier says. “When you process something, the price goes up. We’ve been trying to get that down to a cost that is effective.” MnVAP received a $1 million grant from Xcel Energy several years ago to test a Kinetic Disintegration System developed by First American Scientific Corp. that refines, dries
and grinds biomass using kinetic energy. It was found to reduce costs by 20 to 30 percent, and in 2009 the company received a permit for it. MnVAP also received a $400,000 grant from the Minnesota Department of Agriculture’s NextGen Energy Board. For feedstock, MnVAP has been using a mixture of agricultural residues such as soybean stalks, sunflower hulls and prairie grasses sourced from crops grown by co-op members. “A key area we’re heading for is a dedicated crop for fuel pellets,” Poier says. Alfalfa's feed value is currently too high to use as a commercial fuel pellet feedstock. There is a possibility that the leaves could be stripped off of the alfalfa to use as a feed product and the stalks could be densified and used as fuel, but it all depends on markets and availability, he says. Poier says the commercial biomass pellets the co-op produces will meet the Pellet Fuel Institute’s standards. —Anna Austin
JUNE 2011 | BIOMASS POWER & THERMAL 19
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Coppice Counts A recent U.K. Energy Research Centre study found that 7.5 million metric tons (8.2 million tons) of biomass can be produced from short-rotation coppice energy crops in England, making a substantial contribution to renewable energy targets in the country. The report, “Estimating the supply of biomass from short-rotation coppice in England, given social, economic and environmental constraints to land availability,” found that such large biomass production from willow and poplar would require 800,000 hectares (2 million acres) and could be grown almost entirely on marginal lands. “We therefore conclude that short-rotation coppice energy crops have the potential to play an important role in meeting U.K. renewable energy targets without compromising environmental sustainability or food production,” the study’s four authors write. The U.K. Renewable Energy Strategy specifies 15 percent of all energy and 30 percent of all electricity demand be met by renewable sources by 2020. Additionally, the Renewables Transport Fuel Obligation demands that biofuels comprise at least 5 percent of all transportation fuel by 2014. About 7.5 million oven-dry metric tons of biomass will be required for energy crops
to meet their share of these targets, the report says. That amount of biomass per year would theoretically generate 15.5 terrawatt hours per year of electricity, about 4 percent of the U.K.’s current demand. The southwest and northwest portions of England alone produce more than one-third of that figure, the report cites. High yields of short-rotation coppice can be achieved on even the poorest grades of agricultural lands in England, it adds, particularly in areas with high rainfall, like the northwest, and/or high soil water availability, like the east. As of 2009, biomass met only 2.8 percent of the U.K.’s electricity demand and 2.6 percent of energy demand, according to the report. Most of that material was landfill gas, waste wood or other residuals. Dedicated energy crops such as poplar, willow and miscanthus are responsible for less than 0.1 percent of the U.K.’s electricity and energy markets. Current energy crop yields are generally achieving less than 50 percent of potential, suggesting step-change improvements are likely over the coming years, according to the study. Further expansion of crops’ potential through new technologies, breeding and climate change could minimize the conflict with food production. “As a result, we are
PHOTO: STEPHEN AUSMUS, USDA-ARS
UK study shows short-rotation coppice could play an important role in meeting renewable energy targets.
'TREE-MENDOUS' OPPORTUNITY: A U.K. study found that purpose-grown trees could help the country meet its renewable energy target without compromising the environment or food production.
likely to see an increase in the value and production of these crops as feedstocks for heat, power and liquid transportation fuels,” the authors write. “This presents considerable challenges to future land use in England and more widely; making the best of the land available to us will ensure future viability of energy crops.” —Lisa Gibson
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Export Experts A number of financial programs are positioned to assist companies looking to enter export markets.
President Obama’s 2010 National Export Initiative seems to be taking off by leaps and bounds in its efforts to create American jobs through increased exports. Not the least of its accomplishments is the Renewable Energy and Energy Efficiency Export Initiative (RE4I), designed to identify key federal government export promotion programs and highlight opportunities related to the export of biomass feedstock and equipment. The RE4I has 23 commitments from eight different federal agencies and seeks to recommit the U.S. government to address trade barriers in the sector; increase the amount of trade promotion activities for renewable energy and energy efficiency companies; and improve the delivery of U.S. government export promotion services for renewable energy and energy efficiency companies. But one major factor that can make or break exporting success is, of course, money. It is essential in getting an export business off the ground—or on the boat, as the case may be. Luckily, there are a number of agencies that exist to help exporters clear hurdles, including the Small Business Administration. With its premier export financing offering, the Export Working Capital Program, the SBA aims to improve the number of small business exporters and increase the market to more countries, according to Richard
Ginsburg, the SBA’s senior international trade specialist. Proceeds from the Export Working Capital Program are authorized for use in insurance, fees, collateral and interest rates. Speaking during an April 18 exportfocused webinar co-hosted by the Biomass Thermal Energy Council and the U.S. Department of Commerce, Ginsburg also highlighted another program, Export Express, designating it as his favorite. It has a minimum turnaround time, under the right conditions, of about six seconds, he says. On the high end, it can take eight or nine days. “We think it’s pretty quick relative to the due diligence that goes into examining a transaction,” he says. The program offers loans and insurance for credit and the proceeds can go toward a number of transaction-specific areas. “It can be used to make you export ready,” he says. Interestingly, Ginsburg says 97 percent of all U.S. exporters are small businesses, and companies with 20 employees or fewer account for almost 70 percent of all U.S. exporters. But if yours is not considered a small business, the official export credit agency of the U.S. government, the Export-Import Bank, is a primary option for financing an entry into foreign markets. The bank recently opened an office specifically for renewable energy and currently has two biomass cases in
Contacts for Financial Assistance in Exports • Export-Import Bank (www.exim.gov): Craig O’Connor: (202) 565-3556 or craig. oconnor@exim.gov Hannelene Beillard: (202) 565-3652 or hannelene.beillard@exim.gov Rob Guthrie (562) 243-8625 or rob.guthrie@ exim.gov • Small Business Administration (www.sba.gov/ international) Richard Ginsburg: richard.ginsburg@sba.gov
the works, according to Hannelene Beillard, director of the bank’s environmental group. It provides export credit insurance, working capital guarantees, loan guarantees and direct loans. Beillard says eligibility is heavily dictated by the three c’s, which are cover policy: the Export-Import Bank must be open in the buyer’s country; content: the U.S. export must have significant U.S. content; and creditworthiness: the transaction must have a reasonable assurance of repayment. Both Ginsburg and Beillard make clear their openness and willingness to assist in efforts of U.S. companies to expand their markets and, in fact, it is necessary in order to meet ambitious export enhancement goals. “We are here to help with any project you may be pursuing,” Beillard says. —Lisa Gibson
JUNE 2011 | BIOMASS POWER & THERMAL 21
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Ready and Willing Mississippi’s floundering timber industry says it needs bioenergy projects. other groups including the Mississippi ForWhile not currently a popular place for estry Commission, the Mississippi Institute of biomass power, there is an ongoing push in Forest Inventory and the Mississippi Logging Mississippi to get officials and project develAssociation, have been putting together data opers to realize the positive economic impact on why timber prices in Mississippi have been bioenergy development could have on the so low, what the losses have been by county, state, as well as what the opportunities are. In particular, the difference new projects and what the possibilities are for a biomass energy industry. could make for the struggling timber/log“We already knew the answers, but we ging industry and the over-abundant wood needed supporting documentation,” Hendry resources available to developers. To paint a says. Some of the findings so far show that picture of what has happened in the sector 120 mills have been lost since 1996 with only during the past five years, Mississippi-based Timber Plus owner Van Hendry says in 2007, 117 remaining, overall global fiber pricing increased last year by roughly 17 percent the company had 120 people on its payroll, while Southeast U.S. pricing was down 10 two wood yards, six logging operations and percent—27 percent in Mississippi—and the made roughly $14 million in sales. state’s logging force has been reduced from Today, the company has nine employabout 2,700 crews to about 700 statewide. “In ees, no operating wood yards, two logging the last week, I know of five mills that have operations, and Hendry anticipates just a few million dollars in sales. “We’ve been hit pretty shut down,” Hendry says. Some underlying factors in what might hard by the recession, but we’re probably one hinder the development of new industries of the more fortunate ones, compared to that would utilize wood, such as biopower, insome of the other (timber) guys around here clude guarded wood baskets and the Forestry who’ve gone belly up and called it quits,” he Fairness Act, which was implemented in the says. state many years ago and designed to protect Even though timber demand has the sawmill industry. “When you peel the dramatically decreased in the past few years, layers back, at the core of it, the act prohibits Hendry points out that the supply hasn’t Mississippi from offering any state incentives changed a bit. In fact, there is about 41 milto get a new industry to come in,” Hendry lion tons of excess timber each year, and that says. Attempts by industry groups that have number is rising. Hendry, along with several
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SOURCE: MISSISSIPPI FORESTRY ASSOCIATION
banded together to get the act repealed have not been successful yet, he says, but is still a work in progress. In the meantime, they are working to get the attention of biomass project developers. “We’ve got a lot of resources here in Mississippi and we want people to come here for projects,” Hendry adds. “We have a heck of a lot of supply but we don’t have the demand. With rising energy costs, there is a lot of potential for somebody to come in.” —Anna Austin
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Oregon company says it’s making torrefaction economical. production, or when the torHM3 Energy in Gresham, Ore., is refied biomass is used as fuel one of many companies competing in the at a power plant, according to biomass torrefaction race, and CEO Hiroshi Morihara. Morihara believes the company is one of the With the help of a forerunners in commercializing a technology. $241,000 U.S. Endowment for Morihara points out that torrefaction Forestry and Communities is an old process as it has been traditionally grant, HM3 built a pilot plant used to dry and roast coffee beans, so there that has been operating the is no new invention regarding how it works. past two years. The company “Transferring torrefaction from coffee beans is in the midst of completing a to biomass is where the technology comes demonstration plant in Troutin,” he says. “For example, coffee beans have SCALING UP: HM3 Energy plans to build a commercial plant dale, Ore., and has selected a site in Oregon that would produce 45,000 tons of torrefied biomass a fairly uniform size, but biomass may be in for its first commercial plant in per year. any form from powder to chunks, so it’s not Prineville, Ore. The 45,000-toneasy to uniformly torrefy.” per-year facility is scheduled to Several different factors, including bioBut why is torrefied wood a better opmass size, can make torrefaction uneconomi- be completed by early 2013, and will process tion for power plants than wood chips? “Our about 5.5 dry tons of biomass per hour in cal if not approached efficiently. product is hydrophobic so it can be transphase one; 11 tons per hour in a later phase. “Also, when you torrefy, hemicelluloported using open hopper cars like coal is, it HM3 plans to build many of its own ses in the biomass become gaseous volatile can be stored outdoors like coal is, and it can plants and sell product, as well as eventually organic compounds, which are pathogenic,” be pulverized easily,” Morihara says. “Coal licensing the technology to others. AssumMorihara explains. “We have a complete power plants don’t have to change anything. ing a feedstock price of $50 per dry ton, a combustion of that gas. Depending on the Most have to spend $2 million to $3 million wood species, about 30 percent of the weight utility should expect to pay about $130 per retrofitting the boiler feeding system if they dry ton for torrefied biomass, Morihara says. of the wood is hemicelluloses, and it has want to use biomass that isn’t torrefied.” about 10 percent of the biomass’s energy. We “The going rate right now is about $35 [for The cost to build a 100,000-ton-per-year feedstock], but that price is depressed and use that energy to dry the incoming feedcommercial-scale plant would be about $15 we expect it to recover,” he says. The energy stock.” million, according to Morihara. value, which is about 10,000 Btu per pound, The beauty of that component is that —Anna Austin the hemicelluloses are completely combusted, is comparable to some western U.S. coal, he adds. there are no pathogenic emissions during
JUNE 2011 | BIOMASS POWER & THERMAL 23
PHOTO: HM3 ENERGY
Smoothing Out the Wrinkles
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BCAP: Matchmaking USDA is finally moving ahead with the energy crop production portion of the Biomass Crop Assistance Program. The agency is still erring on the side of caution, however, as funding amounts are unclear—and the 2012 Farm Bill is looming—but approval of the first BCAP project area has restored some enthusiasm for the program. BCAP project areas provide financial incentives—annual payments to land enrolled and establishment cost-share payments— to farmers, ranchers and forest landowners to produce biomass crops for heat, power, biobased products and advanced biofuels. BCAP Project Area No. 1, approved on May 5, was proposed by Missouri-based, farmer-owned cooperative Show Me Energy. The 39-county project area is in central and western Missouri and eastern Kansas, and will consist of lowland and highland native mix grasses, according to Show Me Energy board President Steve Flick. “We kept it simple; we’re using no woody biomass crops,” he says. “The farmers decide if they want to plant a highland mix or lowland mix, and they don’t have to harvest it initially if they don’t want to because it’s only mandatory to harvest it once in five years.” Growers can sell their crop to any qualified biomass conversion facility. Flick
says Show Me Energy will buy all biomass produced in the project area for use at its Centerview, Mo., biomass pellet plant, which is in the process of validating modular technologies for gasifying biomass pellets to produce electricity and BENEFITTING FROM BCAP: The USDA has approved the first BCAP project area, which was proposed by Show Me Energy in Centerview, Mo. biobutanol. The target for storage and transport (CHST) payments durthis project area in 2011 is 20,000 acres of ing the pilot version of the program. Since the biomass crops. When fully enrolled, the area program has been reinstated, Poet LLC has may have up to 50,000 acres, or a total of been the only CHST qualifier. 150,000 tons per year from land enrolled in USDA FSA Communications Chief BCAP contracts. Most of Show Me Energy’s Kent Politsch says Poet’s corn stover feed600 members live in the project area, Flick stock is unlike most other energy biomass says, but nonmembers in the area can also because it can only be collected once a year, participate by contacting a local USDA Farm during a brief window after harvest and Service Agency office. before planting, and prolonged exposure to Flick says the co-op worked hard over weather can damage the quality and transmany months to put the proposal together. portability of the bales. “FSA anticipates “Hopefully this [approval] will get people energized [about BCAP],” he says, adding that announcing additional facilities soon,” he says. “In making those announcements, FSA has he suspects several more BCAP project area to exercise care to minimize mid-year funding approvals will soon follow. “We hope so, because we’d like to interface with other groups.” disruptions and take into account the uncerShow Me Energy was also the first quali- tainty regarding final BCAP funding levels.” —Anna Austin fier for BCAP matching collection, harvest,
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24 BIOMASS POWER & THERMAL | JUNE 2011
PHOTO: SHOW ME ENERGY
USDA announces first project area and expects to announce more matching payments soon.
FIREDUPÂŚ
Fine-Tuning Changes to the USDA’s REAP allows more projects to qualify.
The USDA’s Rural Energy for America Program grant deadline is approaching and it’s important to note two changes the agency made to the program in 2011. REAP was part of the 2008 Farm Bill and is now in its third year. The program provides grants and loans for energy audits, energy efficiency and renewable energy Ag Secretary Tom development, as well as funding for agricul- Vilsack announced that $61 million in tural producers and rural small businesses guaranteed loans to conduct feasibility studies for renewand $42 million able energy systems. Funding is limited to in grants will be $50,000 for feasibility studies, is awarded on available through a competitive basis (a point system) and can REAP in 2011. cover up to 25 percent of total eligible project costs, or $500,000 maximum. Eligible candidates for feasibility studies and renewable energy system funding assistance include projects that will use biomass, biogas, wind, solar, geothermal, hydropower and hydrogen-based sources to produce heat, electricity or fuel. U.S. Secretary of Agriculture Tom Vilsack announced in mid-April that $61 million in guaranteed loans and $42 million in grants would be available in 2011, while noting the program changes. The first is that agricultural producers in nonrural areas are now eligible for REAP assistance, as previous guidance mandated that those in urban areas were ineligible for the
program. This provision includes agriculture producers such as greenhouses/nurseries and dairies that receive at least 50 percent of their gross income from agriculture. Preference will be given to those that employ less than 15 people and see less than $1 million in annual revenue; nonprofits and public projects are not eligible. Small businesses (fewer than 500 employees and annual revenue less than $6 million) must be located in rural areas, as was the case for REAP qualifiers in 2010. The second change made to the program allows REAP to provide funding for the installation of flexible-fuel pumps. In short, these changes will allow more projects to qualify, but the program remains highly competitive. According to the USDA, grant requests of less than $25,000 are highly favored, and strong preference is given for technology that is commercially available, or has a proven operating history and has an established design, installation and service industry. Precommercial technologies ON THE WEB that have emerged through the research To contact your state rural and development process and have development office, visit www. commercial potential may qualify, but rurdev.usda.gov/recd_map.html require substantially more documentation. The USDA’s application deadline for the 2011 funding cycle is June 15. Applications can be acquired from and submitted to state rural development offices. —Anna Austin
JUNE 2011 | BIOMASS POWER & THERMAL 25
¦FIREDUP
Turning up the Biomass Heat The governor of Vermont has requested state incentives be implemented for wood pellet heat.
Vermont has rich wood resources and the opportunity for further development of that local fuel and its local biomass equipment manufacturing. Thus, the governor has requested the state develop and implement incentives to spur a switch from oil to wood pellet heat in residential and commercial applications. Gov. Peter Shumlin called on the state-contracted program Efficiency Vermont and the state Department of Public Service to craft the incentives. The request also 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,” Shumlin says. “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, deputy policy director for Vermont Energy Investment Corp., which runs Efficiency Vermont. The state already provides direct financial incentives to consumers for high-efficiency fossil fuel stoves, he says, and this program will be similar, although the specific amount has yet to be determined. “Really what the governor asked us to do is expand the eligibility of the existing program to include biomass fuel systems as well,” Twigg says. The wood pellet incentives will essentially be a rebate paid by Efficiency Vermont for purchasing wood pellet-burning equipment. The expectation is the incentives will be based on Btu output, as well as efficiency, according to Andrew Perchlik, of the state’s Clean Energy Development Fund. “The incentives won’t be huge,” Twigg adds. “The available funding in this area is pretty limited.”
26 BIOMASS POWER & THERMAL | JUNE 2011
PELLET PREFERENCE: Vermont Gov. Peter Shumlin has requested the development of initiatives to encourage wood pellet heat in his state.
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 says. “At this point, it’s a matter of getting some information from industry and doing some work on our own to specify the eligible equipment and determine an appropriate rebate.” The money comes from the Regional Greenhouse Gas Initiative, which provides carbon reduction funding to New England states, Perchlik says. Biomass advocates in Vermont had questioned the lack of biomass funding for thermal efficiency and the legitimate argument prompted the governor’s request, he adds. “The governor wants to send a signal about making this a priority and now we have some work to do to make it happen,” Twigg says. —Lisa Gibson
FIREDUP¦
Pellet Prospects Report analyzes current and future European pellet markets In 2009, Europe consumed 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 it with three goals in mind: map current European wood pellet demand and supplies; provide a comprehensive This chart shows the balance of pellet volumes for the major European country markets in 2009. overview of major market types and prices; In addition, the report considers current After Europe, North America has the and discuss the future outlook in light of raw and future supplies for pellet production and largest pellet production facilities. Capacity material supply. The work was published in analyzes future pellet demand. It lists the EU grew from 1.1 million metric tons in 2003 to Biofuels, Bioproducts & Biorefining. member states with the most potential for ad6.2 million in 2009, the report says. Canada In 2009, approximately 670 European ditional wood and wood waste use for heating exports 80 percent of its pellets and the U.S. pellet plants produced more than 10 million and electricity production as: Germany (43 exports only 20 percent. The majority of U.S. metric tons of pellets, making it the largest million metric tons), France (19 million), U.K. pellets are used in residential applications. producer in the world. At the time of the (14 million), Spain (13 million), Poland (7 milThe report also studies residential and report, Sweden and Germany were the largest lion), Belgium (7 million), Greece (6 million) industrial pellet pricing, and transport costs pellet producers, both producing about 1.5 and Italy (6 million). “It is uncertain to what and pellet trends. “The pellet market is quite million metric tons. Sweden is the largest conextent the demand for woody biomass will dynamic due to economic developments and sumer of wood pellets at about 2 million metbe covered by wood pellets,” according to the recently released government biomass support ric tons and Germany, with a consumption of report, which concludes by saying that pellets plans,” the report reads. “Public support is just below 1 million metric tons, exports more and other woody biomass sources could play a needed to cover the additional costs of capital than 500,000 metric tons. The chart maps out significant role in meeting the EU’s renewable investment, operation and maintenance of consumption, production, import and export energy goal of 20 percent by 2020. figures for the 15 largest European pellet mar- renewable energy equipment, and pellet fuel feedstock, in comparison with their fossil fuel —Lisa Gibson kets including Sweden, Germany, Denmark, alternatives.” Austria, France, Italy and others.
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ON THE POLICY FRONT: The leaders of several renewable energy industry groups formed a plenary panel at the International Biomass Conference & Expo to talk about their key policy goals and how Congress and the administration perceive their industries.
28 BIOMASS POWER & THERMAL | JUNE 2011
EVENTÂŚ
Gateway to
Biomass From well-rounded industry tours to a jam-packed expo hall and intriguing panel discussions, the 2011 International Biomass Conference & Expo in St. Louis lived up to its reputation as the largest and most comprehensive biomass conference in the world. BY LISA GIBSON AND ERIN VOEGELE PHOTOS BY WHITNEY CURTIS
JUNE 2011 | BIOMASS POWER & THERMAL 29
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B
iomass enthusiasts packed the trade show hall at the fourth annual International Biomass Conference & Expo in St. Louis, establishing new business connections, learning about products and services, and discussing the informative presentations they took in during panel sessions. The event, located at the America’s Center just blocks from the Gateway City’s trademark arch, attracted nearly 1,400 attendees from 22 countries, 46 states and eight Canadian provinces. Breakout panels divided into six feedstock-based tracks and further into four focus areas—thermal, power, biorefining and project development—consistently drew in the majority of attendees with their intriguing content and reputable speakers. Richard Newell, administrator for the U.S. DOE’s Energy Information Administration, delivered the keynote address, detailing the biomass portions of the EIA’s Annual Energy Outlook 2011 report, and emphasizing the interconnectedness of biomass and biofuels within the energy sector. “We need to pay increased attention to biomass in the interconnectedness of ener-
EXPO EXPERIENCE: A wide range of technologies, services, equipment and supplies were showcased by 218 exhibitors at the 2011 International Biomass Conference & Expo.
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NEWELL'S NEWS: EIA Administrator Richard Newell told conference attendees that the use of biomass to produce liquid fuels and power is expected to increase significantly through 2035.
ATTENTIVE AUDIENCE: Nearly 1,400 people attended the 2011 Biomass Conference & Expo and had the opportunity to hear 175 speakers and moderators.
gy,” Newell told the crowd. Two important points he emphasized are that biofuels feedstocks can also be used to generate electricity, and that biofuel production itself can foster a biopower coproduct. The EIA predicts consumption of biomass for liquid fuels and power will increase Continued on page 33
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Biomass tour covers AD, gasification and landfill gas conversion
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32 BIOMASS POWER & THERMAL | JUNE 2011
Weaving through the six enormous anaerobic digester tanks at Anheuser-Busch’s complex in St. Louis, Ed Randazzo proudly pointed out the lack of foul smells. Randazzo is an operator at the Anheuser-Busch Bio-Energy Recovery System (BERS), just down the street from the company’s brewery and bottle factory, and the first of three tour locations held in conjunction with BBI International’s International Biomass Conference & Expo. About 50 people took part in the industry tour and got a well-rounded look at three different biomass technologies: anaerobic digestion, gasification and landfill gas conversion. The Anheuser-Busch digester consumes effluent from the beer-making process, among other wastes, Randazzo explained to an attentive subgroup of tour attendees. Participants got to view the biomass used in the anaerobic digesters through a microscope, almost making it possible to catch a glimpse of the tiny microbes that live on the granular biomass and carry out the process. The system takes in about 3 million gallons of wastewater per day and reduces the facilities’ organic waste by about 80 percent while producing about 900,000 square feet of biogas daily, used to generate process heat for the company’s plant. Material screened out of the wastewater is sold to a family horseradish farm in southern Illinois. The next stop was the IESI MO Champ Landfill, where constant truck traffic made it necessary for tour guests to view the landfill through the bus windows. A landfill gas recovery operation at the site provides renewable electricity for two asphalt plants, a commercial greenhouse, a concrete facility and a local high school. Plans for expansion of the landfill gas utilization system are slated for operation in August 2012 and will be carried out by electric company Ameren Missouri. The expansion will increase electricity production to about 15 megawatts (MW) and to about 60 MW in 2025. The site also serves as a limestone quarry, and one of its two landfills sits at the bottom of a 250-foot deep mining trench. The bus crossed a one-way bridge before driving partway into the enormous hole for tour attendees to view a landfill only partially full. A large portion of the black ground liner remained exposed with massive trucks pushing around the garbage piles.
Upon leaving the site, the tour bus was required to take the same precautions as all other exiting traffic to minimize the amount of sediments and mud removed from the location. It entails driving through a strong sprinkler-type mechanism that essentially creates a white wall of recycled water.
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BRIQUETTING SYSTEMS
TRASH TO ENERGY: A landfill gas operation at the IESI MO Champ Landfill provides electricity to several businesses and a school.
Last, the group stopped at Innovative Energy Inc. to see the company’s 2 MW gasifier model in the St. Louis suburb of Fenton. The system can gasify any carbon-based fuel, including wood, municipal solid waste, ag residue, energy crops, plastics, tires, shingles and paper. During the tour, though, the company was experimenting with some switchgrass pellets. CEO Glenn Foy explained that many biomass projects fall through because of feedstock issues. “We thought fuel flexibility was critical,” he said. The gasifier itself is quite small, at about four feet in diameter and 15 feet tall. A yellow rope separated the tour guests from the gasifier’s proprietary processes, but several company employees spoke to the crowd about the system using diagrams and flow charts to illustrate its functions. Because it is a distributed energy system it doesn’t require transmission lines like wind, coal and hydropower to get the power from where it’s produced to where it will be used, they said. Driving back to the city, tour guests discussed the compelling aspects of all the tour sites and wondered about the proprietary elements of Innovative Energy’s system and what might set it apart from other gasifiers. —Lisa Gibson
EVENT¦ Continued from page 31
significantly through 2035, driven primarily by cellulosic biofuels and electricity. Even with projections of meaningful increases, fossil fuels will still provide 78 percent of U.S. energy in 2035. Renewable energy consumption is expected to increase to 14 percent in 2035, up from 8 percent in 2009. The increased use of cellulosic biomass for liquid fuels and power will come primarily in the areas of energy crops and crop residues, urban wood waste and forest biomass, Newell said. The EIA predicts, however, that both liquid biofuels and biomass power will compete for the same biomass supply. Newell also said natural gas, wind and other renewables will account for the vast majority of capacity additions through 2035. In the near term, a substantial amount will come from wind, but that tax credit is set to expire, shifting new capacity to other sources. By the same projections, biomass electricity production increases fourfold by 2035 in the areas of combined-heat-andpower (CHP) and cofiring with coal. The largest opportunity, though, he reiterated, is the cogeneration of biomass electricity with the production of advanced biofuels. In closing, Newell told his audience that policy changes and higher oil prices are moving the U.S. toward increased use of biofuels. He cautioned, though, that uncertainties, such as those in policy and market, land use, infrastructure changes and technology development, still lie ahead.
Policy Powwow Following Newell’s morning address was an association executive roundtable discussion of overarching policy goals for multiple aspects of the biomass industry. Featured speakers were Mary Rosenthal, executive director of the Algal Biomass Organization; Charlie Niebling, chairman of the board of directors for the Biomass Thermal Energy Council; Bob Cleaves, president and CEO of the Biomass Power Association; Norma McDonald, vice chair of external affairs and co-chair of legislative and regulatory affairs for the American Biogas Council; Bob Dinneen, president and CEO of the Renewable Fuels Association; Joe Jobe, CEO of the Continued on page 36
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www.jeffreyrader.com JUNE 2011 | BIOMASS POWER & THERMAL 33
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The farming community is an integral part of the biorefining and biomass heat and power industries. Its contribution to the growth of the industry can—at times—be overshadowed by the massive amount of attention paid to research, development and scale-up activities. Attendees at the 2011 International Biomass Conference & Expo in St. Louis had the opportunity to learn more about the farming community’s perspective of the biomass industry during a panel titled Enlisting Farmers in the Profitable Production of Biomass Supply Chains. Daniel Simon, a partner in Ballard Spahr LLP’s Energy and Project Finance Group, opened the panel with a historical overview of the Biomass Crop Assistance Program. Although the program initially faced a variety of implementation issues, the USDA is forging ahead. During his presentation, Simon noted that USDA originally planned to accept project area proposals for BCAP on a rolling basis, but in a surprise move announced a May 27 application deadline for the program earlier this spring. Although the move came as a bit of a shock to those following the program, he noted that it is understandable under the circumstances. “I think USDA wants to get the money out the door as quickly as possible,” Simon added. The optimistic schedule established by the USDA called for the state level Farm Service Agency to review the applications by June 10, with federal reviews following two weeks later. The biggest question with the program right now is whether Congress will continue to fund the program in fiscal year 2012 and beyond, Simon said. The USDA seems to strongly support this program, he noted, but said it has had “a very tortured history.” For this reason the USDA seems motivated to roll out the program correctly and make sure the assigned funding goes to support the best possible projects. Don McCabe, vice president of the Ontario Federation of Agriculture, also participated in the panel and shared valuable insight from the perspective of the farming community. McCabe noted there seems to be a lot of potential in the biomass power sector, but potential doesn’t necessarily
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AGRICULTURE ANGLE: Don McCabe of the Ontario Federation of Agriculture participated in a panel discussion about the role of farmers in the biomass industry and talked about what it will take to get them involved.
EVENT¦
equate to reality. “Talk to me in three years; talk to me in 10 years and I’ll tell you if it’s a reality or not,” he said. “There is no silver bullets here folks, but I’m very optimistic there is a whole lot of silver buckshot.” McCabe offered a simple explanation of what famers need in order to become involved in biomass production—fair compensation. “Don’t come insult me by offering me $35 a ton for corn stalks,” he said. “I’ve got earthworms that are hungry. They are going to eat it before you are.” He elaborated by noting that famers already supply our society with food, clothing, hunting opportunities, jobs, and several other important products and services. “So, now you want me to supply electrons?” he said. “I’ll do it, but show me the money, because something has to give … $7 corn is here to stay and so are soybeans.” In addition, McCabe spoke about the farming community’s needs regarding long-term contracts for biomass crops, simple logistics plans and strong federal policies. Risk was a primary topic of Timothy Baye’s presentation. Baye is a professor of business and a bioenergy specialist with the University of Wisconsin-Extension. The biomass value proposition is “all about risk,” he said. “It’s all about dealing with risk involved from the ground to the conversion—and getting paid for that risk. When you first think about biomass supply you are thinking about optimizing the value extraction. It’s a good place to start. Think about all the variables. The pulp and paper industry has a long history of dealing with a lot of bulky products, logistics [and] pricing.” There are also comparisons that can be made with the grain, oil, gas and coal industries. Aaron Schuchart, a managing partner with Biomass Integrators LLC, closed out the session with a discussion of how biomass composition, genetics, agronomic practices, soil composition and harvest dates all contribute to the impact biomass fuels have on boiler operations and emissions. “Ideally as an industry, we would have a database to actually quantify all of these independent variables and their effect on fuel
composition, but unfortunately we do not have that,” he said. “So, what we recommend for any project that is going to employ a dedicated energy crop, we suggest a one-year pilot program—at a minimum— as part of your feasibility prior to actually scaling to [the commercial level].” Schuchart also spoke about federal policy needs. While there has been a lot of talk about
BCAP, he noted that there are several other actions the federal government could take to support the biomass industry, including the development of crop insurance for dedicated energy crops and the inclusion of grasses grown under conservation programs. “I think those two things would be really helpful,” he said. —Erin Voegele
JUNE 2011 | BIOMASS POWER & THERMAL 35
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National Biodiesel Board; and Michael McAdams, president of the Advanced Biofuels Association. Moderating the all-star panel was Tom Bryan, vice president of BBI International. Niebling and McDonald both identified parity as a key goal of their organizations. Biomass thermal energy has been entirely overlooked by federal policy, Niebling said, and BTEC strives to ensure it is incorporated into whatever kind of clean energy or renewable energy policy platform Congress pursues. “We also obviously have a challenge
in educating a new crop of (Congressional) members and their staffs,” he said. “We still face real challenges in making sure people understand the [role thermal energy] plays in the pressing energy challenges in our country.” McDonald also noted that her organization is working to discontinue policies that encourage organic waste to be disposed of in landfills rather than to be used to create renewable energy. “At the federal level we are focused on incentives that will ensure that the organic fraction of municipal solid waste, for instance, receives equal treatment in terms
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of the definitions of biomass,” she said. On the state level, the ABC also intends to work with the generators of organic waste to divert that material from being landfilled.
POLICY PANEL: Norma McDonald of the American Biogas Council says the organization is encouraging the use of the organic fraction of municipal solid waste to create renewable energy in lieu of landfilling.
Panelists addressed the need for a federal clean energy standard and Cleaves emphasized that saving the USDA’s Biomass Crop Assistance Program is a crucial nearterm goal. But all the speakers agreed that prodding Congress to take action on their important issues is going to be difficult because of the focus on debt reduction, as well as the upcoming 2012 election cycle. “This is a really depressing fact, but really we have between now and the summer,” Cleaves said. “Then, nothing is going to happen until the 2012 election.”
Something Old, Something New In addition to traditional plenary and breakout panel discussions, this year’s conference featured a few important changes including the addition of a keynote speaker to kick off day two. Hannalene Beillard, senior business development officer for the Export-Import Bank of the United States, delivered an extremely relevant keynote address on funding biomass export endeavors, including details on what her organization can offer entrepreneurs. It was appropriately followed by a plenary session comprised of company executives well-versed in global project development. Simon Parker, CEO of DP Cleantech 36 BIOMASS POWER & THERMAL | JUNE 2011
EVENT¦ Skeptics, drew a crowd of about 50 listeners and even ran long with a steady flow of audience questions and input. It featured John Nelson, BBI International's senior marketing manager, as well as moderator Matthew Spoor, BBI’s vice president of sales and marketing. The two were joined in the discussion by Greg Veerman, principal/executive creative director of Astronaut Studio, and Scott Miller, founder and president of The Miller DeWulf Corp. and avid blogger and tweeter. GOING GLOBAL: Seth Ginther of the newly formed U.S. Industrial Pellet Association told conference attendees about the opportunities for wood pellet exports to Europe.
Co. Ltd., walked the audience through the development of biopower markets in China, where DP Cleantech excels in its development. “DP Cleantech rode on the back of a tiger,” he said. Then, after panelist Christian Morgen, vice president of marketing for Inbicon, discussed the company’s cellulosic ethanol demonstration plant in Denmark, Brad Saville, vice president of research and development for Mascoma Canada Inc., discussed the company’s endeavors with its flagship biomass preparation technology, as well as its pretreatment and cellulosic ethanol plant development. The company has worldwide experience with multiple feedstocks, including in Italy, Spain, China, France, and the U.S. and Canada. Last, Seth Ginther, executive director of the newly-formed U.S. Industrial Pellet Association, highlighted export opportunities spurred by Europe’s wood pellet demand. “Folks, this is a huge opportunity to create jobs; to put people back to work,” he said. Each new exporting pellet plant could employ about 60 people in the facilities themselves and more in the forests. “It’s a great economic driver,” he said. “There’s lots of demand coming down the pike and estimates say this will grow.” The event ended with a social networking panel, another new addition to the agenda. The Business n’ Breakfast Series, Social Media and PR Strategies to Grow Your Business and Win Over Industry
With the successful conclusion of the 2011 event, BBI International has high hopes for the 2012 International Biomass Conference & Expo, which will be held April 16-19 at the Colorado Convention Center in Denver. Author: Lisa Gibson Associate Editor, Biomass Power & Thermal (701) 738-4952 lgibson@bbiinternational.com Erin Voegele Associate Editor, Biorefining Magazine (701) 540-6986 evoegele@bbiinternational.com
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¦INTERNATIONAL
38 BIOMASS POWER & THERMAL | JUNE 2011
INTERNATIONAL¦
Biomass Power:
Pillar of a New Japan? Recent events in Japan may fuel a new push toward renewable energy as the country reevaluates its energy portfolio. BY ANNA AUSTIN
I
n the wake of Japan’s Fukushima nuclear power plant incident, a result of the massive earthquake and resulting tsunami that devastated Northeastern Japan on March 11, the country’s Prime Minister Naoto Kan said that Japan will push toward more renewable energy— solar and biomass energy specifically—as pillars of a new Japan. The road to achieving that goal appears to be long, as renewable energy in Japan has been slow to develop. In 2008, biomass, solar and wind combined accounted for about 1 percent of the renewable energy produced, most of which is generated from biomass heat. That same year, renewables accounted for about 4 percent of the country's total energy generation, compared to 11 percent in the U.S., or 40 percent in Sweden. Since then, the percent of renewbles has fallen to 2 percent. Nuclear power has been thriving in Japan since the 1970s, and today it accounts for 30 percent of the country’s electricity generation, ranking it third in world production (see chart on page 42). The World Nuclear Association projects that number will rise to 40 percent within the next six years, and though the Fukushima incident may slow that progress, it is still likely to reach that number unless there is a drastic shift in renewable energy development. Japan imports nearly 80 percent of its energy requirements, mainly because of the high electricity demands of its extremely dense population, and a significant lack of its own natural resources. Japan leads the world in liquid natural gas imports—virtually importing all that it consumes—as well as coal imports, and is the second-largest net importer of oil, according to the U.S. Energy Information Administration. JUNE 2011 | BIOMASS POWER & THERMAL 39
¦INTERNATIONAL A 2010 report released by the “Japan Renewable Energy Policy Platform,” the first renewable energy white paper to be published in the country, states that Japan’s renewable energy market has remained in a grounded state because market policies for renewables have not been sufficiently examined or implemented. It points out that to expand the renewable energy market, it will be necessary to provide financial support, develop infrastructure to encourage participation by citizens and communities, and establish a new social system based around the social consensus of potential environmental impacts of renewable energy. But even if these things are done, does Japan have enough renewable resources to continue to grow its biomass power industry? Satoshi Hirata, deputy director of the National Institute of Advanced Industrial Science and Technology’s Biomass Technology Research Center in Kagamiyama, Higashi-Hiroshima, believes it does, though it is limited to certain biomass resources.
Japan Energy Mix in 2008
Exploring Renewable Resources As is the case with other densely populated areas, there is an abundant supply of municipal solid waste (MSW) in Japan, and the country is no stranger to waste-to-energy technology. It is the largest user of thermal treatment of MSW in the world, consuming 40 million tons per year. Since there are only about 190 MSW power generation facilities out of about 1,900 incineration facilities in Japan, there is still room for growth, including refuse-derived fuel (pellets made from MSW) opportunities, according to Tsuneo
SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION
INTERNATIONAL¦ Kusuda, chief researcher at the Research Institute of Innovative Technology for the Earth. Outside of MSW, there isn’t enough land to grow energy crops on a scale that would make a significant difference in power generation, according to Hirata. That’s mainly due to the fact that Japan is quite small—the country’s entire land area totals about 145,902 square miles, compared to the U.S. with more than 3.5 million square miles—and about 73 percent of that land is forested, mountainous and not usable for agricultural, industrial or residential use. However, there is a small amount of unused residue available from major food crops grown in Japan—such as rice, corn and wheat—that amounts to about 14 million metric tons per year, according to the Japan Ministry of Agriculture, Forestry and Fisheries. “Rice hulls are not used in combustion processes because they contain a lot of silica,” Hirata says. As is the case with the biomass power industry in other countries, he says combustion is the dominant commercial conversion process, as gasification is still in between demonstration and commercial stages. The amount of woody biomass in the country is a slightly different story. “There are abundant woods, so the [woody] biomass power industry does have potential for expansion,” Hirata says. On forested land in general, there are just under 62 million acres. According to a 2008 survey of annual potential amounts of woody biomass in Japan, prepared by the National Renewable Energy Laboratory in Colorado, it is estimated that on average nearly 35 million
metric tons of wood residuals are available annually in Japan from logging, forestry and construction activities. While wood waste left in the forest—about 8 million metric tons annually—and residuals are expected to be increasingly utilized as fuel in coal power plants, they are still quite limited, according to Yoshinao Ogawa, director of the department of renewable energy in Japan's trade and industry ministry. And importing additional biomass resources doesn’t pencil out, according to Hirata, who doesn’t believe that importing biomass resources to Japan is economical. “It’s more economical to import biofuel or biochemicals than feedstock materials,” he says. Sven Teske, renewable energy director at Greenpeace International’s Climate & Energy Unit, agrees that Japan’s biomass resources will only go so far, but says if done right, it could still make a difference. “Using residuals, especially in cogeneration power plants, could increase the bioenergy share,” he says. The cost of collecting and transporting these resources, however, are challenges that have yet to be overcome. Still, Hirata says the industry does seem to be growing. That may be evidenced by the February 2011 commissioning of the country’s largest 100-percent wood-fired power plant.
Facility Snapshot The 33-megawatt (MW) Kawasaki biomass power station took less than two years to build, as foundation work began in the fall of 2009. It is fueled by 180,000 tons of wood chips per year, mainly
¦INTERNATIONAL Number of Nuclear Reactors in Operation Worldwide
SOURCE: INTERNATIONAL ATOMIC ENERGY ASSOCIATION
wood waste collected from construction sites in Japan’s Kanto region. Kawasaki Biomass Electric Power, Japan Bio Energy Co. Ltd. and its holding company jointly operate the plant.
Though the Kawasaki plant was a milestone for the industry, the first wood-fired power station in Japan capable of generating more than 10 MW was fired up beginning in 2006 by First Energy
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INTERNATIONAL¦ Service Co. in Iwakuni City, Yamaguchi Prefecture. There are several other commercial woody biomass-only plants across Japan, including Gonoike Bioenergy Corp., a 21-MW power plant in Ibaraki Prefecture that is owned by two companies including Mitsubishi Corp.; and Agatsuma Biopower, a 13.6-MW power plant in Gunma Prefecture that is owned by Orix Corp. and Tokyo Gas Co. Ltd. According to Hirata, there are 61 boiler and turbine power generation plants (excluding refuse incineration plants) that utilize biomass, as well as 10 gasification and gas engine plants, and 14 power plants that are cofiring biomass with coal. Whether the nuclear crisis will help spur growth in the biomass energy industry, Hirata says that it’s a possibility, but points out that nuclear can’t be replaced with just biomass energy.
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Making use of the wood debris from the earthquake is a good start moving forward, and the Japan Forestry Agency has a plan to utilize the waste materials left behind in the Tohoku region. The agency has requested JPY 300 million ($3.7 million) for the project that would subsidize local communities’ purchasing of crusher machines. About 80 percent of the estimated 25 million metric tons of disaster debris is believed to be wood materials. The solar sector is by far the most heavily subsidized renewable energy sector in Japan, but Hirata says there are some subsidies and tax incentives for the installation and operation of small-scale biomass energy plants. None are on a national level, however.
10 10
Teske says the most effective incentive that could increase biomass power generation or renewable energy, in general, in Japan would be a feed-in law, and a bonus for heat generation. “We see bioenergy cogeneration power plants as an important player within a smart energy system,” he says. Increasing renewable energy generation is particularly important in Japan, especially in the aftermath of the nuclear incident, from Teske’s perspective. “The share of dangerous nuclear energy is over 20 percent,” he says. “After the Fukushima disaster, Japan will have to fill the gap as fast as possible, with a mix of renewable energy technologies.” Biomass, solar photovoltaic and hydropower will make substantial contributions to electricity production, and in particular, nonfluctuating renewable energy sources, such as biomass and geothermal will be important elements in the overall generation mix, according to Teske. With the right policies in place, and the development of a sustainable bioenergy supply chain, he adds, biomass utilization in the country could speed up. “By 2030, we think the primary energy share of bioenergy could at least be increased by a factor of three,” Teske says. Author: Anna Austin Associate Editor, Biomass Power & Thermal (701) 738-4968 aaustin@bbiinternational.com
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JUNE 2011 | BIOMASS POWER & THERMAL 43
ÂŚBIOGAS
BIG ON BIOGAS: Ameresco says it is seeing a resurgence of interest in biogas production at wastewater treatment plants. PHOTO: AMERESCO
44 BIOMASS POWER & THERMAL | JUNE 2011
BIOGASÂŚ
Maximizing
Efficiency
Cities around the nation are finding ways to squeeze every drop of value out of biogas generated at their wastewater treatment plants. BY ANNA AUSTIN
JUNE 2011 | BIOMASS POWER & THERMAL 45
¦BIOGAS
W
ith shrinking budgets and skyrocketing energy costs, U.S. cities are looking at all possible ways to save or make money. One option that is quickly becoming a trend is maximizing utilization of the biogas emitted from anaerobic digesters at city-owned wastewater treatment plants. By law, wastewater treatment plants are required to destroy, or flare, any unused biogas, due to the pollutants that direct venting would emit into the atmosphere. Flaring is safe and about 98 percent effective, but in some cases it can mean money wasted. In October 2010, San Antonio became the first city in the nation to treat its wastewater treatment plant’s biogas and directly inject it into the natural gas pipeline. Shortly thereafter, the city of Dallas brought a simi-
lar project online, and several more projects of the same nature are on the verge of reality in California. “We’re seeing a resurgence of interest lately,” says Micheal Bakas, senior vice president of renewable energy at Ameresco, the technology provider for both Texas projects. “There’s a reasonable market for these types of projects in the U.S. The big thing is that wastewater treatment plant managers need to become better educated about this type of opportunity at their facility because it’s a revenue contributor, whether it be royalties for the gas or a cheap source of energy. If they learn that these opportunities are out there, they can investigate whether a project like this is applicable to their plants.” There are a few factors to weigh when making that determination, according to
‘In today’s economic climate, people are hesitant to pay much of a premium for green gas, but we’ve managed to do it, and San Antonio is saving money.’
—Micheal Bakas, senior vice president of renewable energy, Ameresco
Bakas, and the type of project varies with each treatment plant.
Making it Work The amount of biogas that could be produced, and whether it’s enough to make a project worthwhile, needs to be evaluated at a potential project site. Some wastewater treatment plants already utilize their biogas to a certain extent to generate electricity or heat that is consumed on-site, but often there is excess biogas, says Frank Mazanec of BioFuels Energy LLC, which is developing a project at the Point Loma Wastewater Treatment Plant in San Diego County, Calif. “The question is, do you sell the gas, or do you sell electricity produced at the site?” If the plant is in a region with low electricity costs, it’s harder to make a project work, Bakas says. The facility in Dallas makes heat and electricity from the biogas, and the plant purchases what it needs from Ameresco, which owns the biogas recovery system. “If they’re able to buy electricity from the grid very inexpensively, then
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PHOTO: SOUTHERN CALIFORNIA GAS CO.
BIOGAS¦
ESCONDIDO ENERGY: A project in Escondido,Calif., which is in the testing stage, aims to process biogas into natural gas and inject it into the pipeline.
it’s hard to compete with,” he says. “The quality of gas from the plant is also a big factor, as well as whether it is consistent and how much clean-up has to be done to it.” In San Antonio, the plant processes the biogas into a natural gas product and injects it into the natural gas pipeline, where it is piped to California and sold to power plants to earn renewable energy credits. A project in Escondido, Calif., being developed by the city and Southern California Gas Co., is currently in the testing stage and aims to do the same thing. Both employ a pressure swing adsorption system to remove CO2 and nonmethane compounds from the gas, preparing it to sufficient quality (meeting the pipeline owner’s gas specifications) for injection into the pipeline. Ron Kent, technology development project manager at SoCalGas, explains that the project in Escondido consists of nine vessels containing zeolite beads, which are microporous, aluminosilicate
minerals commonly used as commercial adsorbents. “The zeolite material preferentially absorbs CO2 onto the surface, but doesn’t adsorb methane, he says. “As you increase the pressure slightly—and it goes up to about 100 pounds—the CO2 sticks and the methane does not. As you draw down the pressure, the methane is sucked off, and eventually all of the CO2 is sucked off. All of the vessels alternate being pressurized and depressurized, and split the gas into two streams.” The project being developed by Biofuels Energy at Point Loma has a slightly different twist. The plant already uses two-thirds of its biogas to generate its own electricity, but due to a series of unique constraints, the city was unable to produce additional electrical energy with the remaining biogas—about 1.3 million Btu per day. “We’re processing that gas and bringing it up to 98 percent methane,” Mazanec says. “Once the gas is processed and the CO2, sulfur, siloxane and other constituents are removed, it’s put into the
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¦BIOGAS ‘Because they are base-load energy plants—unlike wind or solar where power is generated only a portion of the time—they generally they have a lower cost than other renewables because the biogas is always flowing.’
—Micheal Bakas, senior vice president of renewable energy, Ameresco
PROJECT PARAMETERS: Ameresco put up the capital costs and owns and operates biogas plants in Dallas and San Antonio, but other projects are set up differently.
pipeline and now referred to as direct biogas, so we can get credit for it under the state renewable portfolio standard (RPS). San Diego Gas & Electric did not allow treated biogas to be injected into the pipeline prior to November 2009, so this project will be the first to do so unless Escondido beats it to the punch. Once the gas is in the pipeline, it will flow 25 miles to the University of California-San Diego to power a 2.8-megawatt (MW) fuel cell that Biofuels Energy will have installed there. In order to make projects pan out financially, they can be set up a number of different ways, Bakas says.
Project Business Models In the Dallas and San Antonio cases, Ameresco put up the capital costs and owns and operates the biogas plants. “They’re capital intensive, so we can finance a project if that’s what the facility wants,” Bakas says. Ameresco will pay the San Antonio Water System an annual royalty of about $200,000 a year during its 20year contract, treating and delivering up to 1,060 standard cubic feet per minute. The project was profitable from day one, but a complete payback comes in about 15 to 20 years, according to Bakas. A local gas utility was purchasing the gas initially, but Ameresco is currently selling it to EDF, a large French utility that is transporting it to California to sell it at a much higher price because of state incentives. “To make this work, you need to be able to recover costs while competing with the current energy market,” Bakas says. “In today’s economic climate, people are hesitant to pay much of a premium for green gas, but we’ve managed to do it, and San Antonio is saving money.” 48 BIOMASS POWER & THERMAL | JUNE 2011
BIOGAS¦ In Dallas, the 4.3-MW biogas facility provides power and heat to the water utility’s facilities, offsetting 60 percent of the energy that it pulls from the grid, and also uses waste heat from the generators to heat its digesters. About 80 percent of the biogas produced at the facility is being utilized, while a typical electricity production plant might only be able to use 35 percent of its energy product, Bakas says. As a result of the project, the city will save an estimated $1.5 million annually. Biofuels Energy also finances, owns and operates projects, but rather than send the gas to a customer, the company sends it to itself. “We own the fuel cells, so we’re really piping the gas to ourselves,” Mazanec says. “In Point Loma, we’re selling the energy under a 10-year PPA with UCSD, and the same thing will happen with the city of San Diego at the South Bay water treatment facility, where we’re installing a 1.4-MW fuel cell. We’ll direct one-third of that energy and two-thirds of the energy at UCSD to the city of San Diego under a 10-year PPA. Kent says it hasn’t yet been determined who will own the Escondido biogas plant, but assuming the technology being tested proves successful, it could be the city or SoCalGas. So far, SoCalGas has paid to rent the equipment being tested, and has an option to buy it from Canadian technology provider Xebec Inc. While it seems many customers would rather the developer put up the capital costs and own the facility, others are interested in owning the plants, Bakas says. Ameresco has recently been awarded a contract by the city of Philadelphia for a biogas recovery project at its wastewater treatment plant, and in that case the city will own it, and the company has also been shortlisted on a similar cityowned project in Washington D.C. The cost is different for every project, he adds, as they are all customized.
Finance markets have been fairly tough and lending has been difficult, but Ameresco has managed to persevere. “We haven’t run into a project at a plant that we haven’t been able to do, unless it’s a technological problem like not enough gas,” he says. The contracting process is another challenge. “It’s usually lengthy, because most of these facilities are publicly owned and have to go through a whole design and solicitation process,” he says. “The big thing to keep in mind if you are a wastewater treatment plant is to make sure you do a great job qualifying who you partner with, because it’s not a simplistic venture. These are long-term marriages so make sure your partner will be there for 20 years, and have the financial wherewithal to do that, as well as the technological depth to perform over those years because inevitably things do come up. You want to make sure you’re with a firm that can meet those challenges.”
Mazanec says he believes these new projects in California will pave the way for similar projects utilizing landfill gas. The state doesn’t currently allow landfill gas to be injected into the pipeline. “It’s precluded by regulation, but that will hopefully be the next step,” he says. While California has a strong RPS of 33 percent by 2020, a great incentive for biogas energy projects, it doesn’t mean they aren’t feasible in states without them, Bakas adds. “Because they are base-load energy plants— unlike wind or solar where power is generated only a portion of the time—they generally they have a lower cost than other renewables because the biogas is always flowing.” Author: Anna Austin Associate Editor, Biomass Power & Thermal (701) 738-4968 aaustin@bbiinternational.com
Finding Financing “The size or the project, how much clean up you have to do, and how far you have to pipe the gas range all over the board,” Bakas says. “Cost is dependent on the nature of the technology you have to install to clean the gas, and the amount of gas you’re processing.” JUNE 2011 | BIOMASS POWER & THERMAL 49
¦POLICY
50 BIOMASS POWER & THERMAL | JUNE 2011
POLICYÂŚ
Out Old with the
PHOTO: NEW HAMPSHIRE TIMBERLAND OWNERS ASSOCIATION
With expired power purchase agreements and no interested buyers, four New Hampshire biomass power plants face possible shutdowns that would impact more than just the facilities themselves. BY LISA GIBSON
JUNE 2011 | BIOMASS POWER & THERMAL 51
¦POLICY
I
PHOTO: NEW HAMPSHIRE TIMBERLAND OWNERS ASSOCIATION
n the late 1980s, the state of New Hampshire made sure it was economically wise and feasible to construct new biomass power plants that would help reach renewable energy goals, even though its renewable portfolio standard (RPS) was not implemented yet. Part of the state’s push for the new, clean power included forcing its largest power distributor, Public Service New Hampshire, to enter into 20-year power purchase agreements with six independent biomass power plants. So with long-term revenue assurance in hand, those plants were constructed and each began producing between 15 and 20 megawatts (MW) for distribution to the utility’s ratepayers. Fast-forward to today. Four of those power agreements have expired and PSNH has no interest in renewing them; the spot market for power and renewable energy certificates (RECs) is grossly unsatisfying due to depressed pricing; and New Hampshire’s RPS isn’t conducive to older renewable power. Without improvements to policy or increases in power and REC prices, the outlook is bleak for Bridgewater Power Co., Indeck Alexandria, and Pinetree Power Tamworth and Bethlehem, both owned by GDF Suez. “Right now we’re losing money,” says Mike O’Leary, plant manager for Bridgewater Power, owned by Harbert Power Corp. and Public Service Enterprise Group. “If the situation continues based on the current forecast for power prices and REC prices, I don’t see [Bridgewater] surviving until the end of this year.”
Contributing Factors Since the expiration of the long-term agreements with PSNH, some of the plants, including Bridgewater, were able to establish short-term agreements on the spot market with smaller utilities. But severely depressed power and REC prices don’t support continued operations or justify longer-term agreements, O’Leary says. “We’re hoping we can offer a long-term agreement that makes sense to keep us operating.”
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Exacerbating the already enormous problem is the structure of the state’s 23.8 percent by 2025 RPS. Like some other New England RPSs, New Hampshire’s divides RECs into classes I, II, III and IV. Biomass power can be eligible for classes I and III. A number of issues can determine biomass REC categorization, but because of their operation start dates, none of the four plants are certified for anything above Class III, and some are not even certified for that. REC prices are low because of an overcapacity of qualifiers, and the demand requirements of Class III RECs are based off utility load, which has gone down significantly with the economic downturn, O’Leary says. “With the REC program, you can’t foresee everything and I think that the REC was really designed to compensate the renewables for the fact that renewables cost more than conventional generation and then the energy would take care of itself,” he says. “Well, unfortunately, the energy prices dropped incredibly low and the REC price dropped to a fraction of the alternative compliance payment.” The RPS specifies percentage requirements for each class every year up until 2025. The problem is that no increase in Class III energy is required of utilities above the current 6.5 percent. For 2011, the Class I requirement is 2 percent, increasing 1 percent each year until it reaches 16 percent in 2025. “Class III is already topped out,” says Scott Tranchemontagne, president of Montagne Communications. He works closely with the biomass industry and launched a website to bring attention to New Hampshire’s biomass issues. “What they need moving forward is more Class I energy and less Class III energy. I firmly believe that if they were able to offer Class I RECs, they would have a much stronger chance of getting a power purchase agreement.” And he might be on the right track, as PSNH has entered into a PPA with the Berlin Project, a proposed 70 MW biomass power plant in Berlin, N.H. “It may not be a case of apples and oranges, but it is certainly a case of McIntosh versus Golden Delicious,” says Martin Murray, PSNH senior
PHOTO: NEW HAMPSHIRE TIMBERLAND OWNERS ASSOCIATION
POLICY¦
CHIP DUMP: A trailer dumps wood chips for use by New Hampshire's biomass power plants, which are losing their power purchase agreements.
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¦POLICY corporate news representative. “They’re all biomass plants, but the fact is the [Berlin] plant will produce Class I renewable energy certificates, which are different entirely from Class III.” But Murray also emphasizes the market price problems, saying the 20-year agreements were extremely costly to PSNH’s ratepayers and renewals are not in the best interest of the utility’s customers. “We’re just getting out from under those,” he says. “We do have an obligation to meet all our requirements; to serve customers and to procure renewable energy certificates, but we also have an obligation to do so in the most cost-effective manner. Our customers just can’t afford anymore to be paying more for energy than what it’s worth.” Martin points out that PSNH is not the only utility that is uninterested in purchasing power and RECs from the biomass power plants and acknowledges their challenge. “These biomass power plants are in
a pickle,” he says. “They are finding it very difficult in today’s deregulated marketplace to sell their product and to make a product based on the market price. Their production cost is at or above market price.” The plants are caught in a downward portion of an economic cycle, he adds, and given the cyclical nature of the business, might find success again down the road if they can survive this difficult streak. But PSNH won’t be the saving grace in the meantime. “They’ve gotten our money in the past,” Martin says. “We don’t want to hand it over again in the future, at least not without a well-reasoned discussion about the costs and the benefits.” Despite PSNH’s seemingly steadfast refusal to renew the agreements, O’Leary isn’t bitter and instead expresses understanding of the utility’s reasoning. “We’re not looking for a long-term agreement,” he says. “We understand that there is more risk to rate-
54 BIOMASS POWER & THERMAL | JUNE 2011
payers. We understand that PSNH has an obligation to their ratepayers. We’re looking for a short-term bridge that gets us to the point where the market turns around.”
Not-So-Quick Fix It seems a bridge is crucial, but it may not connect to a better market. If the push for changes such as updates to the RPS succeed, it might simply bridge the older biomass power plants to a more friendly policy environment. But a policy change will take time, making that bridge from here to there even more crucial. Working around policy changes, it’s possible for the power plants to qualify for Class I RECs, but the process involves substantial upgrades that would expand capacity and in some cases add emission controls. Bridgewater currently sells energy to power distributor ISO-New England and RECs to the Class I market in Connecticut. The plant isn’t even certified for Class III in New Hampshire because of its particulate emissions, so the investment to qualify for Class I in New Hampshire would be outrageous. “We’ve made an offer to the utility to put in particulate emissions removal and qualify for Class III if we could get a contract for a certain period of time,” O’Leary says. So the better option seems to be a change to the RPS itself, which could include a new alternative compliance payment amount—paid by the load-serving utility to the power generator—or a percentage requirement change for REC classes, O’Leary says. “We feel like we are victims of shortterm low natural gas prices, and we think it’s in the best interest of the state to come up with a mechanism that keeps us going until those natural gas prices rebound, which will bring up the regional average for energy.” Some of the state’s politicians realize that sustaining operation of the plants is important, Murray says, and if the solution is subsidizing by the state, PSNH only asks that the burden be shared by all the state’s energy customers, not just its own. “People want to find a win-win solution,” Murray says. “There are discussions going on but
POLICY¦ ration, as well. The delivered price of that wood is about $25 per ton. “Logging contractors are going to be directly impacted if these plants shut down,” Johnson says. “It will severely curtail their operations. They have a lot at stake.” The trickledown effect is much greater than with natural gas operations because the feedstock is locally sourced and consumed, he adds. Together, the four plants employ between 400 and 500 people, including the feedstock suppliers in the woods. Studies have shown that the impact of the four biomass facilities to the state is around $50 million including fuel and wages, but Johnson says that’s conservative and is closer to $70 million. “That’s a significant chunk of change that will disappear from the economy,” he says. Whatever the solution to the looming closures, it needs to take effect soon to preTrickledown The shuttering of the plants would vent significant adverse impacts to the state, have an enormous impact on the state of New Hampshire, not the least of which falling on the loggers and feedstock providers, thus the push from the timber industry to solve the problem. “Those power plants consume a tremendous amount of lowgrade wood and that’s of concern to me as a logging contractor,” Johnson explains. “If I can’t get all the low-grade wood on a typical harvest, then I’m forced to take only the nicer wood in order to make that a profitable operation.” An ideal split for a timberland owner is one-third low-grade wood, one-third mid-grade and one-third high grade, he says. But more often than not the composition is 50 to 60 percent low-grade wood. It can be used for pulpwood or cordwood, but most is only used in whole tree chips. “If we’re going to sustain and continue to grow good wood, we need to have a market for the low-grade wood that comes out of a typical forest in New England,” Johnson says. Each of the state’s six independent biomass power plants use around 200,000 tons of wood annually, which is a large portion of the wood supply, he says, adding the two plants still under long-term power agreements are teetering on contract expino solution has been found because it is a real challenge.” In fact, a number of discussions seem to be underway with multiple organizations pulling state senators and even Gov. John Lynch into the mix to help find that solution. The New Hampshire Timberland Owners Association has held a series of meetings to address the problems, drawing about 200 people to a mid-February gathering designed to discuss options to support the plants, according to the association’s program director Eric Johnson. “We’re fortunate we’re a small state and access to politicians is pretty readily available,” he says. “A lot are small business owners themselves and understand the risks, investments. A lot have taken the perspective that this is a small business issue.”
not to mention the loss of hundreds of jobs for working families. The issue has been front and center for Johnson in his work for the association for the past three or four months he says. “It has the potential to be a huge issue for us if these plants shut down. It will have a big impact on the working forest and our members.” O’Leary exudes hope for a timely resolution and continuance of biomass operations in New Hampshire. “We’re optimistic that the load-serving entities in the state will recognize the importance of in-state generation and the economic impact of this industry.” Author: Lisa Gibson Associate Editor Biomass Power & Thermal (701) 738-4952 lgibson@bbiinternational.com
JUNE 2011 | BIOMASS POWER & THERMAL 55
¦CONVERSION CONTRIBUTION
Boilers: Economic Change From Coal to Biomass Torrefaction, pelletization and gasification can offer viable and economic means to convert coal- or oil-fired boilers to biomass. BY JAMES WISE AND GARETH JONES
C
learly there are significant economic, environmental and political reasons for changing boiler fuel from fossil fuels to renewable biomass materials. Up to now the conversion of coal- or oil-fired boilers to biomass has been a costly proposition, with the boiler needing to be significantly modified or even replaced to allow the burning of biomass materials. Hundreds of millions of dollars have been spent in the past few years in the conversion from coal or oil to one or another biomass material. Many boilers have been modified to burn natural gas, but this is another fossil fuel with finite reserves.
Development in the past few years has produced technology that could completely change the situation. One of the technologies is the combined use of two conventional processes, which have been used for many years and are currently in use in other industries. Biomass can now be converted to a material that can be fed to the boiler in place of the coal with no or minor modifications to the boiler. The two processes are torrefaction and pelletization. Another technology, equally known and proven, and showing equal or greater promise, is gasification. The gas produced
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Power & Thermal or its advertisers. All questions pertaining to this article should be directed to the author(s).
56 BIOMASS POWER & THERMAL | JUNE 2011
can replace fossil fuels whether it is coal, oil or natural gas. Both of these technologies will enable “green” credits to be obtained, which will enhance the economics of using them.
Torrefaction and Pelletization Most of us are familiar with torrefaction as the process that roasts the coffee beans to give the product we grind to make our coffee. In the process, volatile material is driven off and the remaining solid matter of the bean, which is biomass that is largely carbohydrate, is roasted to improve the flavor and make the beans ready for grinding. The same process applied under carefully controlled conditions to biomass, such as wood waste from the
CONVERSION¦ forestry industry, reduces the total dry weight of the biomass by some 30 percent while retaining about 90 percent of the thermal capacity. In effect, the process increases the energy density of the biomass by 20 to 30 percent depending on the feedstock and process conditions. The resulting energy density is similar to that of sub-bituminous coal and about twice that of pelletized sawdust. The torrefied biomass, which results from the process, can now be ground and pelletized also by a conventional and well-known process often used to produce animal feed as well as fuel for residential stoves. The final product is easy to handle and transport. The bulk material receiving and handling systems as well as the feed equipment of most coal-fired boilers will handle it without modification, either mixed with coal or alone. The torrefied pellets are delivered to the power plant using the same equipment that is used to handle coal. The pellets can be stored with the coal because torrefaction changes the biomass to a hydrophobic material, so the pellets will not absorb water in storage. The transport cost per unit of energy produced is much lower for torrefied and pelletized biomass than for bulk unprocessed biomass, due to the energy density and physical compaction. The pellets can be mixed with the coal before pulverizing for a pulverized coal boiler, or fired mixed, or separately in other boiler types. Emission controls will need to be checked, but current controls in place would normally be adequate for firing torrefied material. The greatest barrier to conversion to torrefied/pelletized biomass is availability of sufficient product. Currently, there are no operating plants in the United States, although there are demonstration plants running in the Netherlands and Sweden. Considerable work in developing the technology and equipment has been done in these countries as well as in Ukraine and Australia. Various machine manufacturers now have integrated torrefaction units and pelletizers have been available in a wide range of production rates for decades.
So far there is only one commercial torrefaction plant operating in the world, located in the Netherlands. It supplies torrefied biomass pellets to large coal-fired power plants, which receive a green credit for each ton of biomass burned. Integro Earthfuels and Agri-Tech among others that are now planning similar plants in the United States. Torrefaction and pelletization of biomass provide a viable and economic alternative to the modification of coal-fired boilers. Considerable savings in the cost of conversion in the United States can be realized once commercial plants are installed and running. Capital spent in installing plants using torrefaction and pelletization will be much less than that necessary for the sum of the costs of conversion of each individual boiler.
Gasification Another technology that shows obvious promise in the conversion of coal, oil or natural gas-fired boilers to alternate renewable fuels is gasification. Again, this is not new technology, having been used extensively in Germany during WWII to substitute coal and biomass for scarce liquid fuels. In the recent past, gasification has gotten a bad name for poor reliability and operational sensitivity, but new technology has resulted in gasifiers that are both simple and robust. One equipment supplier has developed a family of gasifiers that can process 150 to 600 bone dry tons per day per unit. These units have proven to be extremely flexible and reliable on biomass. Even more interesting is that they work equally well on refuse-derived fuel (RDF). During a trial burn, the fuel—landfill material (garbage, trash, plastic and paper) with no prior processing—was gasified and the gas burned without any problems. The conversion from coal to syngas (synthesis gas) is simple. The required number of gasifiers are installed, normally outside. Each unit has a loading/metering system feeding the gasifier. The gasifier itself is a skid-mounted, pre-erected unit requiring
only a foundation, electric power and igniter fuel. The discharge from the gasifier(s) is piped into the furnace. For burning in a boiler, gas cleaning is not required. Ash is minimal out of the boiler. Most of the ash is discharged at the exit of the gasifier and consists of inorganic material and ungasified biomass, which has proven to be a valuable byproduct as a soil conditioner/ fertilizer. Emission controls for burning syngas normally consists of a wet electrostatic precipitator. The production unit for the syngas should quickly pay for itself by avoiding continuously purchasing coal, oil or natural gas, even when using relatively pure biomass as raw material. If RDF is used the payback will be much faster. These two processes, whereas not fully proven commercially in the U.S., have reached a level of development, which enables a confident prediction that they will be able to significantly reduce the investment needed to convert boilers from fossil fuels to biomass, especially when factoring in the effect of green credits. Where biomass is readily available, torrefaction/pelletization can provide a viable and economic means of converting boilers to biomass fuel. Gasification, especially of RDF, can do likewise in areas where biomass is less available. ADDITIONAL REFERENCES “A review of torrefaction for bioenergy feedstock production,” Ciolkosz and Wallace, October 2010. “A Study of Torrefaction for the Production of High Quality Wood Pellets,” Jianghong Peng August 2007. "Torrefaction for biomass upgrading," Bergman and Kiel. Available at: www.ecn.nl/biomass “Biomass Torrefaction as a Preprocessing Step for Thermal Conversion,” August 2009, © EverGreen Renewable LLC Handbook Biomass Gasification, edited by H.A.M. Knoef and published by the Biomass Technology Group, The Netherlands in 2005 Authors: James L. Wise P.E., Process Engineer, Baisch Engineering Inc. jwise@baisch.com (920) 766-3521 Gareth Jones Executive Consultant, Baisch Engineering Inc. gjones@baisch.com (920) 766-3521
JUNE 2011 | BIOMASS POWER & THERMAL 57
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