COGENERATION¦ Partnering Up For Collins, a project partner was a must. The company teamed up with renewable energy giant Iberdrola for a number of reasons, including financials. “The problem with cogeneration is that the prices are astronomical,” Mosby says. “Lakeview is a $90 million investment and we’ve had several tough years. We’re a profitable company, but we don’t have that kind of cash lying around.” The sawmill business has been tough especially with the depressed housing market. “It’s all tied to the housing market,” he says. The 26.8-MW cogeneration plant currently under construction will change the landscape a bit for the Fremont sawmill. It will use mill byproducts to generate all the steam for the mill as well as power for the grid, and Collins is responsible for supplying the plant with its fuel needs. Overall, the project is expected to have many positive economic impacts on the county, which has seen four sawmill closures in the past couple of decades. Utilizing wood resources in western Oregon has been a complicated and contentious issue over the past 15 years, Mosby says. Beginning in the early 1990s, the government put strict harvest regulations on federal forestland, which constitutes about 78 percent of the forestland in Lake County, and they are still in effect today, according to Mosby. “The environmental community has made it pretty tough to harvest any timber,” he says. Then it became apparent that there was a need for forest health management in the region. “We’ve had some huge fires,” Mosby says. “In 2001, we had a 100,000-acre fire and people started to realize we had a huge problem. If we didn’t ever harvest timber, we were going to perpetually have these fires coming through, generally started by lightening.” The solution was to build a sawmill in a remote location in Lake County, which is where Collins entered the picture. Not owning quite enough forestland in the region, Collins was able to work out a 10-year forest stewardship agreement with the government, with a 20-year memorandum of understand-
ing. “They guaranteed us 5,000 acres, and we decided to build a mill there, which opened at the end of 2007,” Mosby says. Realizing that there would be a substantial amount of biomass resulting from the mill’s operations, regional stakeholders decided that a nearby cogeneration plant seemed to make sense. After the project changed hands a few times, Iberdrola took it over and moved forward. “We’ll shut down our boiler when it’s complete in 2012,” Mosby says. Financially, what has made the large project investment attractive is the federal 1603 Program investment tax credit. “A $90 million facility with a 30 percent grant, they [Iberdrola] will get $27 million back, and up to $10 million back under a state plan,” Mosby says. “Those kinds of incentives make it attractive to bigger players.” Mosby advises sawmills considering similar projects to be patient, as a good project takes considerable time to develop. “The
whole idea of our cogeneration project was formed in 2004, and it won’t be operational until 2012,” he says. Because it has been in the cogeneration business since 1985, operating a 12-MW plant at its sawmill in western California, Collins has a good understanding of it. ”You need fuel, financing and a PPA (power purchase agreement) that makes sense,” Mosby says. “A lot of communities are interested in this type of a project, but realistically the stars have to align.” Choose a project partner with knowhow and access to capital, he says. “A lot of developers have big ideas, but they don’t have very deep pockets.” Author: Anna Austin Associate Editor, Biomass Power & Thermal (701) 738-4968 aaustin@bbiinternational.com
Energy Recovery from Waste Treatment • reliable biogas collection • low maintenance • biogas utilization systems
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