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Pellet Mill Magazine
12 & 36 2013 National Advanced Biofuels Conference & Expo 35 2014 International Biomass Conference & Expo 9 2014 Fuel Ethanol Workshop & Expo 24 Airoflex Equipment 2 Andritz Feed & Biofuel A/S 34 Biomass Industry Directory 31 BRUKS Rockwood 14 CPM Roskamp Champion 11 Dieffenbacher
Q2 2013 | VOLUME 3 | ISSUE 2
FEATURES 16 MARKETS Maturing the Bulk Market
High capital costs and low demand are deterring industry investments in domestic bulk pellet infrastructure. By Anna Simet
22 STANDARDS The Devil’s in the Details
The industry has been preparing for the U.S. EPA’s revised New Source Performance Standards, which will explicitly cover pellet stoves. By Sue Retka-Schill
28 INFRASTRUCTURE Preparing for a Pellet Tide
England’s ports are busily building or expanding infrastructure to accommodate massive volumes of imported wood pellets. By Tim Portz
32 Evergreen Engineering 13 Fike Corporation 21 Firelogic 20 GreCon, Inc. 15 Industrial Bulk Lubricants 25 KEITH Manufacturing Company 33 MEGTEC Systems Inc. 30 Price LogPro, LLC 18 RUF U.S., Inc. 26 Timber Products Inspection/Biomass Energy Laboratories 10 Vecoplan LLC 19 Vecoplan Midwest, LLC 27 Wolf Material Handling Systems
DEPARTMENTS 04 EDITOR’S NOTE
If We Build It, Will They Come? By Tim Portz
05 INDUSTRY EVENTS 06 STANDARDS STEWARD
When the Going Gets Tough, the Tough Start Promoting By John Crouch
07 INDUSTRIAL INSIGHT
Industrial Wood Pellets Help Keep U.S. Forests Working By Seth Ginther
08 PELLET ETTIQUETTE
Battling NIMBY-ism with Better Tactics By Al Maiorino
10 BUSINESS BRIEFS 12 NEWS
Q2 2013 | PELLET MILL MAGAZINE 3
« Editor’s Note
If We Build It, Will They Come?
VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR email@example.com
Whether a customer intends to heat a small, regional hospital in rural Maine, or produce thousands of megawatts of reduced-carbon electric power in England, deliveries of pellets must be uninterrupted and relatively easy. This quarter, Pellet Mill Magazine examines how markets and delivery infrastructure affect and drive each other. In Anna Simet’s feature, “Maturing the Bulk Market” (page 17), she describes the efforts by industry professionals to conceive and deploy cost-effective bulk delivery to residential, commercial and light-industrial pellet customers. The article rightly describes bulk pellet delivery as a classic chicken-and-egg scenario—while producers and distributors would be more than happy to expand their businesses and serve additional customers, investing in bulk delivery equipment is capital intensive. Without the guarantee of an immediate increase in customers and demand, producers choose to continue to satisfy customers with bags of pellets sold through retail channels or in one-off bulk delivery situations. Producers are struggling to make robust bulk delivery systems fungible and many find distribution to be outside of their core focus—pellet production— and better left to other parties. Fortunately, there are parties working to tease out a bulk delivery model that can work for producers, distributors and consumers. Examining the market and infrastructure from a different perspective is our feature “Preparing for a Pellet Tide” (page 28). It outlines how England’s port industry has responded to a customer need for infrastructure capable of unloading, storing and moving unprecedented pellet volumes. As more of England’s coal-fired power generation assets repower with wood pellets, its ports will have to build upon the experience of the facilities already moving significant pellet volumes, and develop deep expertise across the country’s port complex. As the story indicates, England’s ports are already well on their way to developing an infrastructure capable of handling the rapidly increasing volume of pellets being purchased by power producers there. Market growth and delivery infrastructure are inextricably linked. It is clear that market demand being generated by power customers like Drax has necessitated massive investment in port infrastructure. What is not yet clear, and remains an open but crucial question, is can pre-emptive investment in bulk delivery infrastructure attract new pellet customers stateside?
4 PELLET MILL MAGAZINE | Q2 2013
Industry Events »
National Advanced Biofuels Conference & Expo
Editorial PRESIDENT & EDITOR IN CHIEF Tom Bryan firstname.lastname@example.org VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR Tim Portz email@example.com MANAGING EDITOR Anna Simet firstname.lastname@example.org SENIOR EDITOR Sue Retka-Schill email@example.com NEWS EDITOR Erin Vogele firstname.lastname@example.org COPY EDITOR Jan Tellmann email@example.com
Art ART DIRECTOR Jaci Satterlund firstname.lastname@example.org GRAPHIC DESIGNER Elizabeth Burslie email@example.com
Publishing & Sales CHAIRMAN Mike Bryan firstname.lastname@example.org CEO Joe Bryan email@example.com VICE PRESIDENT, SALES & MARKETING Matthew Spoor firstname.lastname@example.org BUSINESS DEVELOPMENT DIRECTOR Howard Brockhouse email@example.com ACCOUNT MANAGERS Kelsi Brorby firstname.lastname@example.org Chip Shereck email@example.com MARKETING DIRECTOR John Nelson firstname.lastname@example.org CIRCULATION MANAGER Jessica Beaudry email@example.com ADVERTISING COORDINATOR Marla DeFoe firstname.lastname@example.org Subscriptions to Pellet Mill Magazine are free of charge—distributed twice a year—to Biomass Power & Thermal subscribers.To subscribe, visit www.BiomassMagazine.com or you can send your mailing address to Pellet Mill Magazine 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 (866) 746-8385 or email@example.com. Advertising Pellet Mill Magazine 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 Pellet Mill Magazine advertising opportunities, please contact us at (866) 746-8385 or service@ bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Pellet Mill Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to firstname.lastname@example.org. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
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SEPTEMBER 10-12, 2013
CenturyLink Center Omaha Omaha, Neb. Proving Pathways. Building Capacity. Produced by BBI International, this national event will feature the world of advanced biofuels and biobased chemicals—technology scale-up, project finance, policy, national markets and more—with a core focus on the industrial, petroleum and agribusiness alliances defining the national advanced biofuels industry. 866-746-8385 | www.advancedbiofuelsconference.com
Algae Biomass Summit
SEPTEMBER 30-OCTOBER 3, 2013 Hilton Orlando Orlando, Fla. This dynamic event unites industry professionals from all sectors of the world’s algae utilization industries including, but not limited to, financing, algal ecology, genetic systems, carbon partitioning, engineering & analysis, biofuels, animal feeds, fertilizers, bioplastics, supplements and foods. 866-746-8385 | www.algaebiomasssummit.org
International Biomass Conference & Expo MARCH 24-26, 2014
Orlando Convention Center Orlando, Fla. Organized by BBI International and coproduced by Biomass Magazine, the International Biomass Conference & Expo program will include 30-plus panels and more than 100 speakers, including 90 technical presentations on topics ranging from anaerobic digestion and gasification to pyrolysis and combined heat and power. This dynamic event unites industry professionals from all sectors of the world’s interconnected biomass utilization industries—biobased power, thermal energy, fuels and chemicals. 866-746-8385 | www.biomassconference.com
International Fuel Ethanol Workshop & Expo JUNE 9-12, 2014
Indiana Convention Center Indianapolis, Ind. Celebrating its 30th year, the FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. The FEW is the largest, longest running ethanol conference in the world—and the only event powered by Ethanol Producer Magazine. 866-746-8385 | www.fuelethanolworkshop.com
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Q2 2013 | PELLET MILL MAGAZINE 5
« Standards Steward
When the Going Gets Tough, the Tough Start Promoting BY JOHN CROUCH
Reading the tea leaves for our midterm energy future has become difficult over the past three years. Fracking for oil and natural gas has fundamentally altered assumptions about energy costs over the next decade, in some cases demolishing assumptions that once seemed obvious. Institutional projects that made sense strictly because of presumed energy-cost inflation are being reexamined. Fracking has had the most dramatic impact on the anticipated near-term cost of natural gas in North America. Gas is difficult to export in massive quantities, except via pipelines, which effectively strands this resource in North America. Oil, however, is the ultimate transportable energy source, particularly in refined form, and has also benefited from advances in fracking. Consequently, oil and heating oil will not remain independent of the dramatic growth anticipated in world oil demand over the next decade, which is good news for wood pellet projects. Currently, the North American industry is based on residential bagged fuel. There are a few bulk customers, and wonderful efforts are being made to create more, but the industry’s bottom line is tied to bagged fuel—several million bags— each year. Most is consumed by households that have other thermal energy sources available—oil, liquid propane, or electric. Much of the behavior of these “pellet supplementing” households is based on energy costs. Not just real energy costs, but 6 PELLET MILL MAGAZINE | Q2 2013
the rate of increase in energy costs. Many of these households have saved hundreds or thousands of dollars over the last five to 10 years, using biomass for 60 to 95 percent of their thermal energy. These families purchase 2 to 5 tons of fuel a year, incrementally or all at once, often shopping for the best price among several mass merchants. What happens to these consumers when the price of more convenient fuels stops rising? While prices for some nonnatural gas heating fuels will undoubtedly be higher by the decade’s end, what about the next two years? As we have seen with gasoline prices, a price that once was thought of as unbearable can become routine. I suggest the biomass fuel industry focus more on making a case for pellet heat that transcends the issues of fossil fuel costs. We could promote our industry in terms of renewable energy, locally produced energy and the jobs that it creates, as well as household self-reliance. Many of us are promoting pellets with these messages, but I’m afraid some have gotten a little lazy, and are used to depending on rising energy costs to “lift all boats,” rather than thinking about consumer promotion. The pellet fuel industry must increase its ethic of promotion, at the fuel producer level and throughout the value chain, of both the fuel and appliance sides, to avoid being caught unaware and having to chase consumer behavior to attempt to rectify declining utilization rates. Consumers have never failed to
value convenience. Furthermore, many of our consumers are aging and older folks, even more vulnerable to the seduction of convenience versus cost. As an industry, we can highlight new ideas in the value proposition and reach both new and existing consumers. Not just an industry of fuel producers, or appliance manufacturers, but as a pellet industry. We can’t sit back and depend on the sticker shock of energy prices to make our value proposition for us. We need to articulate all the reasons to use residential thermal biomass, and articulate it as a whole community of interest. We might benchmark ourselves on the propane industry, which has actively embraced the promotion of propane for many years, adopting a check-off system that funds a major promotion and utilization program through their education foundation. Whatever the industry decides to do, we need to get started. Our value proposition is based on much more than rising energy prices, but it’s up to us to articulate that. We can no longer count on rising energy prices. They will rise again, but not for a while. In the meantime, we need to maintain our share of customers and our percentage of household heat, and perhaps even increase it. Author: John Crouch Director of Affairs, Pellet Fuels Institute 916-536-2390 email@example.com
Industrial Insight Âť
Industrial Wood Pellets Help Keep US Forests Working BY SETH GINTHER
Industrial wood pellets, sustainably sourced and supplied from the U.S., are proving to be a clean alternative to coal for European utilities. Biomass combusts like coal but is much cleaner. In fact, according to the U.K Environment Agency, switching to biomass from coal reduces carbon emissions between 74 and 90 percent. Biomass also emits significantly lower levels of ash, nitrogen, sulfur, mercury and other heavy metals that are harmful to the environment. Through their use of woody biomass, European utilities are using less coal and other fossil fuels. That is unquestionably good for the environment. Sustainable, working forests have yielded many products that serve a multitude of varying industries. The U.S. industrial wood pellet industry relies heavily on low-grade wood fiber raw materials that others in the traditional forest products industries leave behind. This includes sawdust and chips from sawmills, tree tops and limbs as well as precommercial and commercial thinnings. Within that category of byproducts is pulpwood, which, in most instances, the industry uses where there is no other competitive market for the material in the region.
The sheer economics of forestry favors growing large trees that yield the highest-value products, like lumber for homes or furniture. Energy production is one of the lowest-value uses of forestland. Simply put, the industrial wood pellet industry cannot compete for higher-priced fiber as a feedstock for industrial wood pellets. Accordingly, the industrial wood pellet industry can only afford to use byproducts.Sourced responsibly, the use of these byproducts will always be sustainable. This is evidenced by a recent study of U.S. wood bioenergy markets by Forisk Consulting, which concludes that the likely marginal increase in wood demand from bioenergy projects compared to the overall forest industry in 2023 will be between 4 to 9 percent of the total wood use of the forestry sector. The study further concludes that the vast majority of wood use in the U.S. will still be from the traditional forest products sector, and that, relating to bioenergy, there are no viable scenarios generating wood demand levels at the regional or national level that affect net forest growth or sustainability. All of this is backed up by the fact that the U.S. leads the world in sustainable forest practices, and re-
lies on a comprehensive framework of federal, state, local and private sector laws, regulations, programs and practices developed over decades and adapted to local conditions and needs. Owners of working forests in the U.S. work within a framework designed to produce needed source material and reduce potential environmental risk. Federal laws, such as the Clean Water Act, the Clean Air Act, the Endangered Species Act, the Migratory Bird Treaty Act, and the Coastal Zone Management Act, govern forestry in woodlands and swamps. Similar protections exist at the state level through water quality and best management practices, enforced by state forestry and regulatory agencies. Finally, biomass for energy actually helps conserve forestland. Markets beget more forests. When existing markets for forest ownersâ€™ products are strong, or when new markets like biomass emerge, they provide forest owners with the means to keep their land forested. That, indeed, is very good for the environment. Author: Seth Ginther Executive Director U.S. Industrial Pellet Association 804-771-9540 firstname.lastname@example.org
Q2 2013 | PELLET MILL MAGAZINE 7
« Pellet Etiquette
Battling NIMBY-ism with Better Tactics BY AL MAIORINO
Biomass projects continue to be met with NIMBY-type groups protesting companies’ efforts to start new projects. Although these projects can create plenty of jobs, they are met by opposition groups who cite various concerns. For example, a biomass project in Greenfield, Mass., was met with local opposition due to the noise and disruption the project would have on the surrounding community. Another project in Siskiyou, Calif., faced similar opposition and was delayed several years before finally being approved. Hu Honua Bioenergy faced the same battle when trying to develop a biomass power plant in Hawaii. In the midst of construction now, the plant faced almost three years of delays. Companies need to look at their strategy of building public support to counter the NIMBY effect to projects, as the outcome for a smooth entitlement of their projects is at risk. The U.S. Chamber of Commerce stated that in 2011 more than 350 energy projects were delayed or abandoned due to public opposition, and the economic impact of these projects were estimated at about $1.1 trillion in GDP and 1.9 million jobs a year. That is a lot of missed opportunity for jobs and clean energy, all due to public opposition. Having been in the business of running public affairs campaigns to build public support for controversial projects for nearly 20 years, I can tell you that the key piece of the puzzle missed by developers in their public outreach strategy is the “campaign” style approach the opponents seem to do so well. Too often biomass proposals do not offer up an aggressive public af-
8 PELLET MILL MAGAZINE | Q2 2013
fairs campaign when they announce a project, often letting crucial time pass between the announcement of a proposal and when public outreach begins. Opponents use this time to build opposition and sway residents against these projects. By running a political style campaign, you can reach all residents, identify the supporters, and harness them into action for your project. Here are some crucial tactics that biomass companies should consider in their outreach efforts: • Announce your proposal wisely. When announcing a project, have a few pieces of direct mail ready to hit all the households in the host community to spread the positive benefits of the project. Follow this up with newspaper, Web ads, and phone banking of the community to, again, further identify supporters. Have an open house to answer residents’ questions and recruit supporters. All of this should be done in the first few weeks after announcing a project, to not allow the opposition to gel and take over the narrative. Too often companies allow precious time between announcing a project and disseminating information to the community. • Meet with identified supporters. Once you have a database of supporters built from the mailers, ads and phone calls, the developer should meet with them so that they know they are not alone in their support, and they are a grassroots force that can begin to write letters to public officials, the newspapers, and attend key public hearings and speak out. Rarely will a supporter write a letter for you or attend and speak at a public hearing if you have not had the face to face contact with them previously.
• Build grasstops support. In addition to reaching out to residents, also meet with stakeholders, well-known members of the community, businesses, associations, and other civic groups to attempt to bring them on board for support. • Keep an updated database. As you begin to identify supporters of your project, that information should be put in a database to refer to throughout the entitlement process of your proposal. Coding your supporters by local legislative districts can also help if you need to target a particular local legislator who may be wavering in support. The key goal of these types of campaigns is to never allow the opponents an opportunity to seize the moment because of inaction by the developer. Just announcing a biomass project is not enough to assume that everyone will be on board to support it. By running an aggressive campaign and identifying supporters, you have taken a key step of any successful campaign. Knowing what to do with the identified members of a community who support your project is the next step, and one that will allow vocal support to outnumber opponents, whether it be petitions, letters or crowds at public hearings. In 2013 and beyond, expect NIMBY opposition to biomass projects. Meeting this challenge with proven grassroots techniques will be critical to making this year a success for biomass companies. Author: Al Maiorino President, Public Strategy Group Inc. 617-859-3006 www.publicstrategygroup.com
SARY R E V A N NI 1984 –
PEOPLE, PRODUCTS & PARTNERSHIPS
ABP makes investments to support Drax conversion Associated British Ports has signed a 15-year contract with Drax Power Ltd., an operating subsidiary of Drax Group plc, to make terminal investments of up to £100 million ($154.86 million) to handle wood pellet shipments at its Humber Ports of Immingham, Hull and Goole to support Drax Power’s conversion to biomass. At the Humber International Terminal at Port of Immingham, ABP will create a dedicated import facility, the Immingham Renewable Fuels Terminal, to handle Panamax-size bulk carriers. It will service up to 3 million metric tons of wood pellets per year. At Hull, ABP is investing in dedicated handling equipment and storage facilities sufficient to handle 1 million metric tons of biomass each year. At Goole, which is only seven miles from Drax, investments will be made in warehousing.
Niebling rejoins INRS Charlie Neibling has rejoined Innovative Natural Resources Solutions LLC. He served as a partner with the company in the mid-1990s. INRS is a natural resource Niebling brings a consulting company wealth of knowledge and experience to with offices in New INRS. Hampshire and Maine that specializes in renewable energy and forest sustainability. As a member of the INRS team, he will continue to work in the biomass thermal sector, in both development and strategic communications. For the past seven years, Neibling was the general manager of New England Wood Pellet. He maintains a consulting agreement with NEWP. Neibling
was a founder and first board chair of the Biomass Thermal Energy Council and recently received the 2013 International Excellence in BioEnergy Award from BBI International. Forestry Endowment adds chief financial officer The U.S. Endowment for Forestry and Communities has announced the addition of Signe Cann as chief financial officer. In her new role, Cann will be responsible for the Endowment’s finances and organization efficiency. Prior to joining the Endowment on a full-time basis, she had been conducting a short-term consulting project on ways to enhance the organization’s financial systems. In January, she accepted the role of interim CFO.
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10 PELLET MILL MAGAZINE | Q2 2013
ClearSign, Grandeg announce partnership ClearSign Combustion Corp. and Grandeg have announced their intention to enter into a development agreement for the integration of ClearSignâ€™s proprietary ECC technology into Grandegâ€™s line of commercial wood pellet boilers. Grandeg said it intends to provide up to $500,000 in funding to support a phased initial project, with the goal of releasing a first commercial solution to the market in 2014. The companies also intend to explore the possibility of further extending their collaboration as the current program progresses. BPA announces additions to board of directors The Biomass Power Association has announced Tom Beck, chief commercial officer of ReEnergy Holdings Inc., as its
new chairman of the board. Paula Soos, vice president of government relations at Covanta Energy Corp., the current chair, will serve as vice chair. Bill Libro, director of government affairs for Minnesota Power, and Marvin Burchfield, vice president of the solid fuel business unit at FSE Energy, are joining the board as new members.
Morbark introduces updated microchipper Morbark Inc. has announced its redesigned 40/36 Whole Tree Microchip-
m rgy Syste Heat Ene
per. The latest model includes an enhanced drum set with 16 knives utilizing standard hardware, an operator-friendly, slide-in forestry grate system to reduce oversized chips and a mechanically driven chip accelerator. The new model is able to produce 95 to 98 percent acceptable micro-chips at volumes of more than 70 tons per hour. In customer tests, 95 to 98 percent of the micro-chips produced passed through a half-inch grate, and 72 to 74 percent passed through a one-fourth inch grate. These micro-chips are vital for pellet mills, according to Morbark, eliminating the need to regrind the wood fiber prior to pelletizing. SHARE YOUR INDUSTRY NEWS: To be included in the Business Briefs, send information (including photos and logos, if available) to Business Briefs, Pellet Mill Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also email information to email@example.com. Please include your name and telephone number in all correspondence.
Biomass Pelletizing & Energy Systems Pellet Plants | Dryers | Furnaces | Steam Boilers | Thermal Oil Heaters | Cogeneration Dieffenbacher USA, Inc. 2000 McFarland 400 Blvd. | Alpahretta, GA 30004 Phone: (770) 226-6394 | firstname.lastname@example.org
www.dieffenbacher.com Q2 2013 | PELLET MILL MAGAZINE 11
Pellet News Pellet plant holds grand opening in North Carolina Enviva LP celebrated the grand opening of its 500,000-metric-ton pellet plant in Northampton County, N.C., on May 21. The facility is near the towns of Gaston, Roanoke Rapids and Garysburg. A twin facility is currently under construction on Southampton County, Va. Wood pellets produced at the facility are being exported to Europe via Enviva’s Port of Chesapeake export terminal outside of Norfolk, Va. The company acquired the deep-water port from Giant Cement company in 2011. Plans for the new plant were announced in August 2011. A grant from the state’s One North Carolina Fund supported development of the facility. North Carolina Gov. Patrick McCrory was on hand with several other local and state officials at the plant’s opening festivities. “Enviva’s decision
to locate this facility in Northampton County is a big win for the region, the forest products industry and the state of North Carolina,” he said. “They are creating good jobs in a growing industry and represent exactly the kind of business North Carolina needs to continue to attract to our state.”
NC approves lease for export facility The North Carolina Council of State has approved a lease agreement between the North Carolina State Ports Authority and Enviva Holdings LP. The agreement could result in the construction of a wood pellet export facility at the Port of Wilmington, approximately 50 miles north of the state’s South Carolina border. If built, the port would receive, store and load wood pellets for export to Europe. Under the agreement, Enviva could construct a facility that includes two storage domes, a rail car unloading station and a ship loader and a conveyor system. Enviva would also be responsible for financing the estimated $35 million project. The initial lease term is 21 years with two 5-year renewal options. According to the ports authority, the move is part of a continued focus on efforts to expand economic opportunities in the state and enhance the viability of North Carolina’s ports. The agreement could bring an estimated $2 million in annual investment and $1.25 million in annual revenue.
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12 PELLET MILL MAGAZINE | Q2 2013
Pellet News » Report: Ample opportunity for biomass thermal growth in Midwest
FutureMetrics Inc. recently 2012 heating of Midwest homes and businesses prepared a working report for the Heating the Midwest with Renewable Biomass steering committee. The report outlines a vision to achieve 15 percent renewable thermal energy in the Midwest by 2025, with 10 percent derived from biomass. According to the report, thermal accounts for approximately 38 percent of energy consumed in the U.S. However, only 3.5 percent of thermal energy needs are met by the use of solid biomass fuel. In the Midwest, fossil fuels account for the vast majority—97 percent—of the thermal energy consumed by the residential sector. To date, no Midwestern states have adopted formal targets to reduce the the U.S., biomass is by far the Midwest’s more reliance on fossil energy in heating markets. abundant renewable resource for thermal The report points out that while other applications. renewable thermal energy options do exist in
Viridis prepares to restart plant Vancouver, British Columbiabased Viridis Energy Inc. has announced the closing of the second tranch of its $5 million nonbrokered private placement. It consisted of 20 million units priced at 10 cents per share. The first tranch closed earlier this year. The proceeds of the private placement will primarily go towards capital expenditures and operating expenses associated with the company’s Scotia Atlantic Biomass Co. Ltd. pellet plant. Viridis acquired the facility last year. The Middle Musquodoboit, Nova Scotia-based facility is expected to become operational this summer, bringing the company’s total annual pellet production capacity to 180,000 metric tons. Viridis is also studying expansion alternatives for the Okanagan Pellet Co. plant it owns in Kelowna, British Columbia.
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« Pellet News Case study: Blue Mountain Hospital in John Day, Ore. Building area
50,000 square feet
Biomass percentage of building heat
Ponderosa Pine wood pellets
Cost per ton delivered
Annual biomass fuel cost
Annual heating cost savings (vs.crude oil)
Project total cost
SOURCE: "FINANCING WOODY BIOMASS CLUSTERS: BARRIERS, OPPORTUNITIES AND POTENTIAL MODELS FOR THE WESTERN U.S."
Report investigates ways to overcome development barriers The U.S. Endowment for Forestry & Communities Inc. has released a report that identifies factors that have contributed to the success or failure of biomass energy projects, with the goal of understanding how bioenergy can be more widely adapted in the U.S. The report, titled “Financing Wood Biomass Clusters: Barriers, Opportunities, and Potential Models for the Western U.S.,” is part of a series produced by the Endowment in collaboration with the U.S. Forestry Service. The analysis utilizes survey data collected from 73 bioenergy plants and eight producers and distributors of biomass fuel. Of the 73 facilities, five are com-
bined-heat-and-power plants, three produce electricity only and the rest produce only thermal energy. Barriers to the development of bioenergy facilities identified by the analysis include high upfront capital costs, a lack of profitability among fuel producers and the seasonality of heat demand. Additional barriers include feedstock transportation costs, unreliable biomass fuel sources, insufficient policy incentives and risk aversion. In addition to describing several actions to overcome these obstacles, the report also includes case studies that investigate the economic benefits of switching from fossil fuel to pellet heat.
Colorado producer doubles capacity Kremmling, Colo.-based Confluence Energy has acquired certain assets of Walden, Colo.-based Rocky Mountain Pellet. The transaction has nearly doubled the company’s original 100,000-ton-pellet production capacity. The facilities, located 60 miles apart, both began production in 2008. Both plants have also sourced pine beetle-killed wood as feedstock. Late last year, the U.S. Forest Service awarded Confluence Energy a 10-year
14 PELLET MILL MAGAZINE | Q2 2013
feedstock materials contract for beetle-killed trees. The acquisition includes one building and approximately 90 acres of land. The transaction also includes all fixed and mobile assets on the site. With the completion of the deal, Confluence Energy gains facilities housing four pellet presses with a combined annual production capacity of 120,000 tons. The acquired facility is expected to be fully operational by midyear.
Pellet News » German Pellets plans second US plant German Pellets has announced plans to develop a 1-million-metric-ton plant in the central Louisiana town of Urania. The facility is being developed at the former site of a Georgia Pacific fiber and particleboard plant that closed more than a decade ago. Much of the location’s infrastructure is already in place, including railway siding. The plant is expected to be operational next April. Pellets produced at the facility will be shipped via the harbor of Port Arthur on the Gulf of Mexico, a deep-water port where
German Pellets operates storage and loading systems. The company is also developing a 500,000-metric-ton plant in Woodville, Texas. That facility sits in the site of a former woodchip mill. German Pellets operates 14 additional pellet plants throughout Germany and Australia. Earlier this year, the company announced it was also developing a storage shed for wood pellets on the Wismar seaport in Germany, along with Seehafen Wismar GmbH.
Pellet producers receiving $1,000 or more in payments: Enviva LP
New England Wood Pellet LLC
Lignetics of Idaho Inc.
Appling County Pellets LLC
Bear Mountain Forest Products Inc.
Maine Woods Pellet Co. LLC
Somerset Hardwood Flooring
Forest Energy Corp.
Geneva Wood Fuels LLC
Marth Peshtigo Pellet Co. LLC
American Wood Fibers Inc.
Hassell & Hughes
Green Valley Dairy LLC
Marth Wood Shaving Supply Inc.
Turnman Hardwood Flooring Inc.
Michigan Wood Pellet Fuel LLC
FPE Renewables LLC
Pellet producers earn payments under USDA program In May the USDA announced $14 million in payments to 162 advanced biofuel producers in 38 states under the Bioenergy Program for Advanced Biofuels. Two dozen pellet producers received awards of more than $500 during the most recent round of funding. The program awards payments to eligible producers based on the amount of advanced biofuel produced from renewable sources of biomass, other than corn starch. While liquid biofuels currently account for a significant portion of the awards, other advanced biofuels, including wood
pellets and biogas, are also eligible for the program. Since the program’s inception, more than 280 producers of all types of biofuels have received a total of $192.5 million in payments. “These payments represent the Obama administration’s commitment to support an ‘all of the above’ energy strategy,” said Acting Under Secretary for Rural Development Doug O’Brien. “Producing advanced biofuels is a major component of the drive to take control of America’s energy future by developing domestic, renewable energy sources.” Q2 2013 | PELLET MILL MAGAZINE 15
PELLET EXPRESS: Sandri has four dedicated wood pellet delivery trucks that service about 100 customers. PHOTO: SANDRI
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Maturing the Bulk Market
Domestic demand for bulk pellets has increased slightly over the years, but not enough to drive investments necessary for market maturity. BY ANNA SIMET
Q2 2013 | PELLET MILL MAGAZINE 17
« Markets References to chicken-or-egg scenarios are very common within many of the bioenergy industry sectors, and the bulk domestic pellet market is no exception. While producers are eager to expand capacity, distribu-
tors desire to grow their businesses, and system manufacturers are dedicated to absorbing a bigger piece of the residential and industrial heating market pie, the industry remains in pursuit of a catalyst to foster this growth. The collective industry perspective suggests that catalyst is many more installations of central heating systems, but that is not as clear cut a solution as it seems. The industry needs to ready itself to assure customers of a headache-free, rewarding experience, so it’s also a question of which part of the supply chain should make the first moves and necessary investments.
Costs All Around Jonathan Kahn, CEO of Geneva Wood Fuels in Strong, Mich., says his 80,000-ton mill does a few bulk deliveries to some locations—for example, 35 tons to a school or hospital—but overall, bulk delivery activity is very minimal. “The reality is that there are very few of those types of customers.” More people are heating with wood pellet stoves these days, he points out, but there are very few people who have invested in central heating systems, the initial capital costs of which are usually the deterrent. Along with the cost of the system is a storage silo and mechanical delivery system, in most cases, all together costing a typical
homeowner between $8,000 and $15,000, plus the cost of a few deliveries per year (about 10 tons total) to keep their silo full. While that number seems huge, most will see a payback in just a few years. “In the old days, it was a big deal to go from a wall unit to central air conditioning, and this is a similar type of decision,” says Kahn. “In certain parts of the country, pellets are half the price of oil, on a Btu-equivalent basis. Someone willing to make the investment could probably have a payback in three to five years.” In the West, most homes that utilize pellets have freestanding pellet stoves or fireplace inserts, so the convenience of having pellets delivered to residences probably doesn’t play a monetary role at this point, or help justify cost, according to Western Oregon Wood Pellet owner Chris Sharron. Pellet fuel is sold at all kinds of retailers these days, including grocery stores, and consumers are making weekly trips to these stores anyway, he says. “Therefore, there’s no decrease in convenience, nor increase in cost, in picking up some bagged fuel during that trip.” On the wholesaler side of the equation, a new pellet truck can cost anywhere from $50,000 to $200,000, according to Kahn, and to make many deliveries in one run, the truck and trailer has to have a 20 to 30 ton capacity. “If it’s in a neighborhood, that size of a truck might be too big—you can’t have that going into someone’s driveway—so you have to have an 8 to 10 ton truck going out and making these deliveries,” he says. Additionally, silos can cost anywhere from $100,000 to $150,000. On the producer side, Sharron says due to highly competitive merchandising amongst retailers—such as Home Depot, Lowe’s
C AT C H T H E
MARKET SHARE YO U ’ V E B E E N M I SS I N G
Versati wood and biomass briquettes are quickly becoming Versatile a go g go-to -to biofuel for consumers all over the U.S. They are cclean, lea eaan, af affordable, and can be used in any wood-burning device ffrom fr rom mﬁ ﬁreplaces replace and stoves to ﬁre pits. Briquettes will open doors to new markets and d growth oppo opportunities for your business, and because they can be made from materials you already process (and then some), it’s simple to get started. Plus, with substantial savings on energy, maintenance, and labor, briquettes are cheaper to make per ton than pellets! What are you waiting for? For more information call 440-779-2747 or visit www.ruf-briquetter.com and catch the market share you’ve been missing! *Source: Hearth, Patio, & Barbecue Association – based on appliance shipments from 1998-2011.
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The Total U.S. Wood-Burning Appliance Market (including ﬁreplaces, freestanding stoves, and inserts)
13% Market Share Pellet Appliances*
87% Market Share Briquette-Friendly Appliances*
and Walmart—retail prices for pellet fuel are currently fairly low. “Since WOW delivers truckload quantities (average 26 tons per load) direct to the individual store, the delivery cost per ton is [relatively low],” he says. “In contrast, the cost to deliver smaller quantities of bulk pellets directly to a residence is high. This is exacerbated in the West because of low population densities, and especially because there isn’t much urban use of pellet fuel, due to highly developed natural gas infrastructure. So there would not be much, if any, savings relative to direct delivery to the consumer.” One might think there would be a cost savings to producers for bulk versus bagged fuel, due to the eliminated cost of packaging, but for most pellet manufacturers employing automated packaging systems, the cost of packaging is also relatively low, Sharron says. “Therefore, although there might be a savings, it wouldn’t be significant—maybe somewhere in the $10 per ton range (the bag cost itself).” Aside from cost, another factor that comes into play for bulk consumers is fuel availability. “One can’t go to Lowe’s and buy bulk pellets, and they definitely don’t want to buy 200 bags of pellets to open and dump in their silo,” points out Kahn. “This is when an equipment distributor should be able to say, ‘We have a relationship with this mill, or several, so don’t worry, we’ll take care of getting them delivered.’ That’s a way make it a complete experience for the customer.” Such relationships—between system providers, pellet wholesalers and producer— may be key to making the whole bulk market model work.
PHOTO: AARON D. PRIEST
SYSTEM ACCESSORIES: Homes and businesses investing in pellet central heating systems will need to purchase additional equipment, including silos.
Q2 2013 | PELLET MILL MAGAZINE 19
« Markets Market Model Since manufacturers, for the most part, don’t want to be doing pellet deliveries—with the exception of large industrial orders—the model the industry is trying to create is similar to the model that the heating and propane industry developed following World War II, according to Charlie Niebling, who served as general manager for New England Wood Pellet for seven years and is now employed with Innovative Natural Resource Solutions. “That’s where you have central fuel depots where pellets are shipped in, and there are dozens, if not hundreds, of wholesale retail distributors that manage the logistics of getting the fuel from the central location out into the landscape where the customer is,” he says. New England Wood Pellet began the process of launching the bulk delivery market back in 2003. “We were the only one doing it then,” Niebling says. “Somebody had
to take the plunge, make the investment, and get something going.” The company worked to build a small clientele for the next several years, but ultimately wanted to focus on pellet production and not distribution. Niebling says since then, the industry has been slowly and steadily working to create a network of authorized distributors who invest in the satellite storage depots and delivery trucks. “We don’t give them exclusive territories because we want to foster some degree of competition, but also because there can’t be three or four businesses right now top of each other, because there isn’t enough market [demand],” he says. He points out that the industry consists of multiple different types companies that are dependent on each other—pellet manufacturers, distributors and heating system providers—but typically, there isn’t common ownership. One exception to that is Sandri, a bulk pellet distributor and heating
system supplier, which bought New England Wood Pellet’s commercial pellet boiler business Propel in 2010. At the time, Jake Goodyear, Sandri vice president of operations, was an employee at NEWP, but moved to Sandri with the sale of Propel. He says for a company like Sandri, it hasn’t been too difficult to expand its capabilities to bulk pellet deliveries. “Sandri has been in oil delivery for 60 years, so it’s totally normal for us to deliver fuel, to pick it up from somewhere and deliver it to the end customer.” Sandri has four dedicated vehicles that deliver to around 100 customers, the majority being commercial, and schools constitute the single largest customer. While industry growth has increased during the past couple of years, Goodyear says it’s been almost entirely subsidy driven. “It’s been a very difficult environment in which to sell new, high-capital cost technology, just because of the economic times,” he says. “There have been some subsidies available that have helped the business grow, mostly state-level, but our industry did get some stimulus funds as well.” Even for a fairly large fuel distributor like Sandri, making a $250,000 investment in a delivery vehicle to try to grow a market around it doesn’t make much financial sense. “We have to get a lot of these [systems] installed before there’s a reliable supply available,” says Goodyear. So what may be the best tactic to grow the market, thus justifying investments?
Looking Ahead As is the case with other technologies, there are always early adapters who decide to switch to something new, simply because they believe it’s the right thing to do. “Not necessarily because they’re going to save money, and for the first five years, that was the customer base,” explains Niebling. “In 2008, when energy prices went through the roof, we saw a lot of interest from other people who were primarily focused on saving money, especially heating oil and propane people…the recession took a lot of wind out of that market development for two reasons—the energy crisis came down as dramatically, and people didn’t have the money for the upfront capital costs, which
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Markets » are very high compared to oil or natural gas systems.” As Goodyear pointed out, the Recovery Act funded some installations, Niebling says, emphasizing the importance of tax credits to jump start the market, especially the passage of the recently introduced Btu Act. Goodyear says one of the biggest problems today is that there just isn’t a lot of knowledge of the existence of pellet heating systems. “It will take much more than going around and knocking on doors… the industry needs to do more to promote itself and raise awareness of the existence and benefits of biomass heating, and pellet central heating, in particular.” He agrees with Niebling on making the case to legislators that funding installations would be a worthy use of state or federal dollars, and would help alleviate the chicken-or-egg issue. “If you have the volume, the costs are going to come down rapidly. The same scenario happened for solar, when significant state and federal subsidies greased the skid and got the volumes up, so the manufacturing costs came down, hence end user costs. European countries have seen success in using incentives, as well as public promotion and strict mandates/laws. “For example, Denmark passed a law making it illegal to install a fossil heating system if one lives within an area that has access to district heating,” says Niebling. “In Austria, you can’t build a new building with a fossil fuel heating system. While we can’t do those things in the U.S., because it’s totally against our political tradition and culture, and those mandates would never get off the ground, we can certainly do the incentives.” Sharron notes that he believes there will always be a bagged fuel market, even if bulk delivery takes off. “Many pellet stove users initially bought the stove to save money on their heating costs,” he says. “Many of these people live paycheck-to-paycheck and can afford, relative to cash flow, to buy bags of pellets as they need them, but they cannot afford to have a 1-ton-plus bin filled all at once.” Aside from commercial and industrial opportunities, growing the bulk market has to begin with homeowners making the in-
vestment in pellet burning systems, thus increasing and geographically concentrating demand, Sharron concludes. “From an investment standpoint, this will make it easier to pencil for everyone. The fuel is already available, and at a very competitive price versus most alternative, even if the consumer has to go pick it up themselves in bagged form. Cost and convenience can only improve with increased demand and consumption, therefore, home delivery of bulk fuel is likely to develop. When that day arrives, the consumer will enjoy the best of both worlds, relative to cost and convenience.” For now, however, the industry will continue to prime itself for when the market develops—while advocating itself to lawmakers and educating the public—and the companies working to make it happen will likely continue to take the necessary risks, even if it isn’t yet lucrative, or even profitable. “I don’t think anyone’s making
any money distributing bulk pellet fuel right now, there just isn’t enough density of demand anywhere,” says Niebling. Small successes are being achieved however, in some places with the right landscape, such as Maine. “Several companies there have taken some risks, and we’re slowly seeing development of the infrastructure,” Kahn adds. “We’re talking hundreds of thousands of potential candidates in Maine alone—the potential is huge.” Author: Anna Simet Managing Editor, Biomass Magazine email@example.com 701-751-2756
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The pellet industry is paying close attention to EPA discussions as the New Source Performance Standards rule takes shape. BY SUSANNE RETKA SCHILL
Q2 2013 | PELLET MILL MAGAZINE 23
« Standards The future of the pellet industry will be impacted by the updated New Source Performance Standards being written by the U.S. EPA, as pellet-fueled appliances will be explicitly covered. In the 1988 rule, pellet stoves were not named. Some manufacturers were certified under the standards, while others avoided EPA certification through the fuel-to-air ratio exemption. The pellet industry has long anticipated the new rule and worked in advance toward getting two key components in place—testing methods and pellet standards. “In the past, pellet stoves have been tested as an adjunct, cobbled-together version of wood stove test methods,” explains John Crouch, director of public affairs for the Pellet Fuels Institute. Several years ago, when the rule updating process first began, appliance manufacturers took the lead in writing a new ASTM test method for pellet room heaters (E1509-12), keeping the EPA in the loop as the method was developed. The second component the industry has worked to get in place in advance of the NSPS is an expanded thirdparty verified pellet standard. “PFI has been anticipating the release of the NSPS for the last couple of years, and early on, we heard from Gil Wood about EPA’s desire to reference our program in the NSPS,” explains Jennifer Hedrick, executive director of the Pellet Fuels Institute. The existing voluntary pellet standards program was modified with EPA input, to fine-tune the grading system and include third-party verification. One company has enrolled in the program to date, she adds, while others are taking steps to beome enrolled.
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25-Year History of Wood Heat 1988: U.S. EPA Phase I emission standards enforced, requiring stoves to be manufactured to emit less than 8.5 grams per hour (316 models pass muster). 1990: EPA Phase II emission standards enforced, requiring stoves to be manufactured to emit less than 7.5 grams per hour (134 models pass muster). 1990s: After the EPA standards, hundreds of wood stove manufacturers close down. Of approximately 500 manufacturers prior to the EPA regulation, only about 100 remain. 1991: The Gulf War causes another oil shock and wood stoves become popular again. 1992: All new stoves sold must meet Phase II standards. From a high of about 450, only about 50 stove manufacturers are left making EPA certified stoves. 1993: Catalytic stoves become very popular during initial period of EPA standard enforcement, but customer dissatisfaction quickly put a damper on that and spur cleaner designs of noncatalytic stoves. 1993: Pellet Fuels Institute established. 1999: The Y2K scare spurs another brief rise in wood stove sales. 2006: Wood is sixth largest supplier of energy in the U.S. 2009: Obama administration enacts first substantial national tax credit for residential wood and pellet stoves (30 percent up to $1,500). 2009: EPA officials formally recommend a review of the New Source Performance Standards (NSPS) to reassess whether national emissions standards should be stricter and whether other types of appliances should be regulated. 2010: New Hampshire is first jurisdiction in the U.S. to initiate an incentive program for the kind of automated, bulk-fed pellet boilers that have been receiving government incentives in many European countries. 2012: In February, the first draft of the new NSPS are released by the EPA. 2013: In March, a second draft of the revised NSPS is released. The final rules are expected to be published in the Federal Register in October. CREDIT: ALLIANCE FOR GREEN HEAT
Standards » That is likely to be at least a year away, if not longer. The development of new environmental standards for home heating appliances has been a lengthy process. The first draft of the NSPS that came out in February 2012 was not well-received, admits Gil Wood, the EPA lead on the program. The following November, a national stakeholder forum was held in Minneapolis to discuss the issues and potential options. Since then, Wood has been making multiple presentations and seeking additional input on the new draft that followed, including a webinar in early May cohosted by Biomass Thermal Energy Council and the Alliance for Green Heat. The EPA prefers a two-step approach to phasing in the new program, Wood explains, with one level of emissions taking effect immediately and a tighter level five years later. Step 1 reflects levels already achieved by many appliances, while Step 2 strengthens the emission limits to reflect today’s best demonstrated technology. The agency is seeking comment on a second approach that would achieve the same end goals in three steps over eight years. The first step for room heaters, which includes pellet and wood stoves, would adopt the Washington state noncatalytic emission levels immediately upon promulgation of the rule—a standard that is already met by more than 85 percent of sales of EPAcertified wood stoves, Wood says. “In general, pellet stoves are a lot cleaner than cordwood stoves, but not all of them,” he adds. The other category of residential heating devices that use pellets, hydronic heaters (better known as outdoor/indoor wood boilers utilizing water jackets), will start in Step 1 with the emission levels from the EPA’s Partnership Program Phase 2. A total of 36 hydronic heater models from 17 U.S. manufacturers, including nine pellet models, have already qualified at this level in the voluntary program.
The new standards do not affect existing heaters, Wood adds, only new ones manufactured and sold after the new rule takes effect, which is expected sometime in 2014. The agency will allow a market pass-through for some already-manufactured, unsold appliances. The exception will be outdoor wood boilers and certain indoor heaters, where the rules are likely to be effective immediately. “So many of the units sold in the past 10 years are so dirty, we just can’t allow them to be sold once this rule becomes final,” explains Wood. The Alliance for Green Heat is one organization that will likely applaud that. The group points out the 1988 regulations only covered wood stoves with a firebox volume of less than 20 cubic feet, an air-to-fuel ratio of less than 35-to-1, a burn rate of less than 5 kilograms per hour and a total weight of less than 800 kilograms. “Thus, whole classes of stoves have cropped up which are specifically designed to avoid EPA regulation through the air-fuel ratio loophole designed for fireplaces,” the alliance says, specifically mentioning outdoor wood boilers, or hydronic heaters. There is also a glut of ultra-cheap wood stoves on the market, according to the alliance.
Tighter Emissions Standards The new standards will be much tighter than the old, which required residential wood stove particulate emissions be less than 7.5 grams per hour (g/hr) for noncatalytic wood stoves and 4.1 g/ hr for catalytic. The new rule tightens the emissions standards to 4.5 g/hr in the first step, and the number “on the table” for the fiveyear standard, Wood says, is 1.3 g/hr. “We believe that it is a costefficient goal.” The rule also eliminates separate emission targets for catalytic and noncatalytic stoves in favor of a single number, Wood adds, due to technology improvements that make separate standards unnecessary.
Q2 2013 | PELLET MILL MAGAZINE 25
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For hydronic wood boilers, Step 1 is already met by a number of models with emissions of 0.32 pounds of particulate matter per million Btu heat output. The step-two level to be met in five years would cut that in half to 0.15 lb PM/MMBtu. “That’s a number that was discussed by a number of states,” says Wood. “But that number is still on the table.” The EPA also proposes to change the test methods used to certify appliances, Wood explains. “As the numbers get tighter, we need greater precision.” The testing methods will be targeted for each class of appliance—room heaters, forced-air furnaces, hydronic and masonry heaters—to better test performance experienced in the real-world conditions in which the appliances are used. In addition to testing for particulate emissions, the current NSPS draft rules require manufacturers test for carbon monoxide levels and efficiency. Target levels won’t be regulated, Wood adds, but rather the information will be reported to the agency. Manufacturers will also be allowed to publish the appliances’ efficiency ratings. Efficiency testing of appliances will be a good thing for the industry, Crouch says.
Standards » “There won’t be a target, but it will be measured. And it will be on the hang tag for the consumer to see.” Other possible features in discussion for the new rule may be more problematic. There are indications the EPA could include emission caps on different levels of heat output, possibly in four steps from low- to high-heat output, for example. “That could force changes in appliances that might surprise people,” says Crouch. Manufacturers of pellet boilers are concerned that there may be some features in the NSPS that reflect the European handling of thermal storage, and may be difficult to transfer to the U.S. market. If a pellet boiler, for instance, is certified for emissions using thermal storage and a consumer opts to not buy the separate thermal storage component, the appliance would not be in compliance with EPA rules. The details of how a situation like that may be handled in the rule is the cause of some concern, Crouch explains. Since many pellet stoves already meet the new emission targets, there is also the possibility the EPA may tighten the standards for pellets. “There’s no reason that we would legally be prohibited from doing it,” says Wood. “But as we look at these units that are competing with each other— wood stoves, pellet stoves—is there a great benefit for squeezing the number tighter, if they’re already doing it?” Issues surrounding the idea have included the potential for backsliding by those now exceeding the standard and the relative cost of the appliances. “We’ve asked for comment on that issue—should we set a tighter limit for pellet stoves?” Other issues may emerge when the proposed rule is finalized. The Clean Air Act does require that regulations be costeffective, Wood says. “It looks achievable; it meets the cost-effectiveness test.” At the time of the webinar, during which Wood spoke in early May, the agency was still working on the cost-effectiveness report and Wood couldn’t comment on specific numbers, but he says that the benefits EPA has monetized for this rule are far greater than the cost. The cost/benefit analysis will be scrutinized by the industry. “We’ll be looking closely at what the cost effectiveness of the
various levels will be, and in pellet stoves particularly,” says Crouch. “We are interested in levels that allow appliances to be made that meet consumers’ needs at a price that consumers think is reasonable. That includes not being so carefully tuned that they can only burn perhaps very specific grades of pellets.”
Remaining Steps The agency expects to get the draft submitted to the Office of Management and Budget this summer, which would lead to getting the proposed rule published in the Federal Register by the end of summer, Wood says. A 90-day comment period will be followed by an agency review. “Typically, it takes a year before the final rule is promulgated,” he says, giving mid-2014 his best estimate for the NSPS to take effect. Crouch cautions that with the large number of regulations the OMB reviews, the process is likely to take longer. Once the rule is in final form, the industry will be re-
viewing it closely to see what changes have occurred since Wood began making the rounds to outline the agency’s current thinking and solicit more input. “We think pellets will be well-served by being uniformly certified, depending on what the final regulations look like,” says Crouch. “Until the rule is published in draft form, there’s still speculation on what exactly it says. The devil is always in the details. We want to see the details.” “We think the first step is going to be pretty good,” Crouch adds. “The Washington state number of 4.5 is certainly doable.” Some manufacturers will need to get appliances certified, of course, he points out. “The details are down the road.” Author: Susanne Retka Schill Senior Editor, Pellet Mill Magazine 701-738-4922 firstname.lastname@example.org
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DUST DETERRENT: Port of Tyne purchased two of these specially designed mobile hoppers to help control dust during the unloading process. Fans and air dams at the top of the hopper capture and reclaim fugitive dust as the pellets are dumped into it.
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Preparing for a
Pellet Tide As coal stations in England migrate to wood pellets, the country’s ports are racing to develop robust storage and handling infrastructure. STORY AND PHOTOS BY TIM PORTZ
Q2 2013 | PELLET MILL MAGAZINE 29
« Infrastructure While moored at the Port of Brunswick in late June, Dutch cargo vessel Koningsborg filled its cargo holds with nearly 7,500 tons of wood pellets and prepared for a 10-day trip to England. Once full, the vessel slipped quietly under the Sidney Lanier Bridge, and set an azimuth to take the vessel around the southern coast of the island nation and up its eastern shore, to a waiting port complex built upon the Humber Estuary. The estuary is among the busiest port complexes in all of Europe, positioned near robust road and rail infrastructure and within a 4-hour drive of 40 million people and over 60 percent of the nation’s manufacturing capacity. Nearly 25 percent of all of the United Kingdom’s seaborne trade passes through one of the estuary’s ports, and the bulk of energy products that move in and out the ports of Hull, Grimsby, Immingham and Goole illustrate the story of the incredible energy transformation underway in the U.K. Once a vital component of the U.K.’s coal export business, the ports have adjusted as the nation’s coal exports continue a steady decline that began just before World War I. As the U.K. embarks on its ambi-
tious plan to halve its greenhouse gas emissions—from its 1990 levels—by 2025, its ports are once again evolving to support the country’s energy strategy. Responding to a policy environment that has simultaneously placed a price on carbon and incentivized the production of renewable energy, the first wave of the U.K.’s largest coal-fired power producers have begun their conversions from carbondense coal to wood pellets. The largest of these converters, also one of the largest coal-fired power plants in all of Europe, is a 3,960-MW power station in Drax, owned and operated by the Drax Group. This massive facility, responsible for the production of nearly 7 percent of all the electricity produced in the U.K., was at one time the largest single-site consumer of coal in the kingdom. Already, the power station has converted one of an eventual three boilers to burn wood pellets. This conversion project, initially planned to be fully complete in 2016, is ahead of schedule and will consume nearly 7 million tons of pellets per year. Nearly all of these pellets will be sourced from foreign suppliers, arriving in the U.K. at a handful of ports with rail lines connecting them to Drax.
UNLOADING THE WARNOW MARS: Grab-by-grab, 26,003 tons of North American wood pellets were unloaded in early May at the Port of Tyne, which was among the first ports to invest in pellet infrastructure and is currently the market leader amongst British ports for pellet imports.
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Infrastructure » In the late 2000s, long before construction crews began work to convert Drax’s first boiler to wood pellets, the Drax Group began readying its infrastructure partners to handle the massive quantities of woody biomass pellets, a feedstock the ports were largely unfamiliar with. In November 2009, the Port of Tyne and the Drax Group signed an agreement that would guarantee the Port of Tyne shipments of up to 1.4 million tons of wood pellets per year. This agreement provided the surety the port needed to transform itself into a facility capable of handling this new feedstock. Commenting on the agreement at the time of its signing, Port of Tyne CEO Andrew Moffatt noted, "There is some fairly extensive work to be done to accommodate the specific requirements of this project, and we are investing over £16 million ($23.8 million) to ensure everything will be ready in time for the Port to be able to handle the new biomass cargo." Since the signing of the agreement, the Port of Tyne has made investments in offloading infrastructure, a 70,000-metric ton covered storage facility, a rail car loading silo, and two state-of-the-art mobile pellet hoppers, which effectively eliminate the fugitive dust created when pellet vessels are unloaded. The investments now exceed £20 million, and Moffat considers his facility a leader in the space, saying, “By increasing our throughput capacity and investing in the infrastructure to meet the growing demand from the power industry, the Port of Tyne is now one of the first ports in Europe to be handling the import of wood pellets on this scale.”
Immingham/Grimsby Assuming pellets arrive at England’s ports predominantly in vessels capable of carrying between 15,000 and 25,000 tons, Drax’s demand alone will result in the berthing and offloading of anywhere between 280 and 465 vessels per year. With other power facilities having already converted to wood pellets or contemplating doing so, neither Drax nor the country’s other producers can risk having only one port capable of handling wood pellets. To guarantee an uninterrupted stream of pellets, pellet infrastructure would have to be built at more than one port.
STAUNCH STORAGE: When complete, this load-out silo will hold just over one trainload of wood pellets. Additional Hull port improvements include a rail siding to access the silo and warehouse conversion for pellet storage.
The Humber estuary and its complex of ports, owned and operated by the Associated British Ports, lies just over 120 nautical miles south of Port of Tyne, both of which enjoy direct rail access to the Drax Power Station. In April, the Port of Im-
mingham, already the U.K.’s largest handler of dry bulk cargo, announced it had contracted with Graham Construction to design and construct the Immingham Renewable Fuels Terminal. The facility will consist of over 1 kilometer of covered
GOING UP IN HULL: The view from the uppermost reaches of Hull’s rail-loading pellet silo provides a clear view of the rail bed work being completed to deliver rail cars to the silo’s load-out system. Pictured is a converted coal train carrying wood pellets away on the existing rail line.
32 PELLET MILL MAGAZINE | Q2 2013
Infrastructure » conveyors, four storage silos able to hold nearly 100,000 tons of pellets, road and rail load-out facilities and extensive safety systems that will establish the port as a major player in the U.K.’s pellet supply chain, boasting abilities to handle more than 3 million tons of pellets each year. Putting the investment in context of the port’s energy history, John Fitzgerald, ABP port director at Grimsby & Immingham said, “Immingham has always been an energy port ever since it opened just over 100 years ago, so it is fitting that the U.K.’s largest, most technically advanced biomass handling terminal will be built here.” Just north across the Humber estuary lies the port of Hull, also owned and operated by the ABP. In late April, the residents of Kingston-Upon-Hull witnessed a concrete silo rise from the port, one of the most visible components of the new pellet handling facilities. When complete, it will bring Hull’s annual pellet capacity to 1 million tons. The silo is just one aspect of the stateof-the-art pellet handling systems being constructed by Hull’s own Spencer Group. When finished, the silo will facilitate the loading and unloading of rail wagons in a continuous and uninterrupted loading methodology. Using an innovative array of magnets and pneumatic switches, specially designed rail wagons will open, accept a full load of pellets, and close without any spillage. Once operational, this facility will be able to load a 30-wagon trainload of cars with 1,500 tons of wood pellets in just 45 minutes. Together, the ports at Immingham and Hull are poised to make the most of the opportunity presented by the U.K.’s increasing appetite for wood pellets. Explaining how each port brings important characteristics to the opportunity, Mike Sellers, deputy port manager at Hull says, “The Humber is an ideal location for imports of biomass ,given the close proximity to the power stations. Immingham can serve deeper draughted vessels at the Humber International Terminal, and Hull has significant spare rail capacity. This makes the Humber ports an attractive proposition.” Within the first days of July, the Koningsborg completed its journey to Hull and
offloaded its load of pellets. Now able to handle shipments of pellets, the Koningsborg was unloaded by conventional drybulk unloading systems in the shadows of equipment being used in a race to finish the pellet terminal there. Like its counterparts in the region, the Port of Hull knows that the Koningsborg and vessels like it will soon return, laden with a feedstock that figures largely in the U.K.’s aggressive low-carbon
energy strategy. If the U.K.’s pellet play is to deliver the results policymakers hope it will, England’s ports must be ready. Author: Tim Portz Executive Editor, Pellet Mill Magazine 651-398-9154 email@example.com
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34 PELLET MILL MAGAZINE | Q2 2013
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