• Educational Sessions • Industry Exhibits • Networking Opportunities
Registration Opening Soon Visit http://pelletheat.org/events for more information
Key Topics: • Enhancing Pellet Operations • Preparing for OSHA Inspections • New Technologies Shaping the Pellet Industry • Exporting Pellets • Policies & Regulations Impacting the Industry • Pellet Fuel Standards
Who should attend: • Pellet Fuel Manufacturers • Industry Suppliers • Equipment Manufacturers • Pellet Buyers from International Markets • Retailers and Distributors • Federal, state, and local government biomass experts • Anyone interested in learning more about the densified biomass industry
Bring your Families! Discounts Available for Local Disney parks and other attractions For more information, contact PFI at email@example.com. 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. 2 PELLET MILL MAGAZINE | Q2 2014
Pellet Mill Magazine
4 2014 International Biomass Conference & Expo 43 2014 National Advanced Biofuels Conference & Expo 21 Advance Conveying Technologies 16 Agra Industries 32 Airoflex Equipment 12 AMANDUS KAHL GmbH & Co. KG 44 Astec, Inc. 29 BRUKS Rockwood 27 Calbrandt, Inc. 35 CPM Roskamp Champion 13 Dieffenbacher 20 EBM Engineering 11 Ecostrat 41 GreCon, Inc. 26 Industrial Bulk Lubricants 39 M-E-C Company
Q2 2014 | VOLUME 4 | ISSUE 2
FEATURES 18 APPLIANCES The Newest in Stylish, Warm Room Heating A snapshot of the features and efficiencies in pellet appliances for space heating By Chris Hanson
24 MARKETS The Challenge of Forecasting Pellet Demand Can the demand boost from this winter’s severe cold and high heating costs be sustained? By Susanne Retka Schill
30 INTERNATIONAL UK Coal-to-Pellet Conversions Ahead DECC names four biomass conversions to the list for support, leaving out Eggborough. By Keith Loria
36 Q&A At the Confluence of Forest Health and Renewable Energy Confluence Energy founder Mark Mathis talks about the pellet business in the Mountain West. By Tim Portz
23 MoistTech 2 Pellet Fuels Institute 7 Pellet Mill Magazine 17 SCHADE Lagertechnik GmbH
14 Seeger Green Energy, LLC
05 EDITOR’S NOTE
34 Timber Products Inspection/Biomass Energy Laboratories
Data Effort Reveals an Industry at Full Throttle By Tim Portz
33 Uzelac Industries
06 INDUSTRY EVENTS
15 Vecoplan LLC
08 STANDARD STEWARD
40 West Salem Machinery Co. 28 Wolf Material Handling Systems
Reap the Benefits of the PFI Standards Program By Jennifer Hedrick
09 TESTING GROUNDS
NSPS is on the Move, Comments Needed By Chris Wiberg
CONTRIBUTION 38 INCENTIVES Project Comparison Focuses Thinking on Effective Incentives Four New England pellet heat projects are compared on cost, fuel savings, payback and subsidies. By Eric Kingsley
10 INDUSTRIAL INSIGHT
Mitigating the 2 Leading Causes of Climate Change and Global Warming By Seth Ginther
12 BUSINESS BRIEFS 14 NEWS 42 MARKETPLACE Q2 2014 | PELLET MILL MAGAZINE 3
All Producers* Receive 2 FREE Passes
THE LARGEST BIOMASS CONFERENCE IN NORTH AMERICA
*Producers of Biomass Power, Pellets, Biogas and Advanced Biofuels
March 24-26, 2014 / Orlando, FL www.BiomassConference.com
Biomass Power & Thermal | Pellets | Biogas | Advanced Biofuels
Agenda & Industry Tours
FEATURING GENERAL SESSION
The State of the Industry: Conversations with Association Leaders
Joseph Seymour, Executive Director, Biomass Thermal Energy Council
Executive Director, U.S. Executive Director, Pellet Fuels Institute Industrial Pellet Association
President & CEO, Biomass Power Association
Patrick Serfass, Executive Director, American Biogas Council
Michael McAdams, President, Advanced Biofuels Association
March 24, 2014 / Orlando, Florida BIOMASS CHANNEL
CHECK US OUT Join the Discussion:
Contact Us: 866-746-8385 | firstname.lastname@example.org Follow Us: twitter.com/biomassmagazine
Editor’s Note »
Data Effort Reveals an Industry at Full Throttle
VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR email@example.com
Included with this, our second quarter issue of 2014, you will find the 2014 U.S and Canada Pellet Mill Map. I would argue it is the most comprehensive overview of the North American pellet production complex available, anywhere. The team at Pellet Mill Magazine engaged in a robust, month-long confirmation effort. We were able to update our data for nearly 80 percent of the operational, under construction and proposed pellet facilities in North America. For those of you who took the time to respond to our email inquiries or answered our calls, we thank you. Our efforts, conducted largely in January, found a pellet industry running its facilities near maximum capacity in an effort to satisfy strong demand. In Managing Editor Sue Retka Schill’s data-rich feature, “The Challenge of Forecasting Pellet Demand,” John Ackerly of the Alliance for Green Heat affirms this saying, “A lot of mills are working 24/7 now, they can’t make them fast enough.” The number of home heating days must also be paired with volatility in the markets of the heating fuels that pellets compete with to gain an accurate picture of the trajectory of demand. Retka Schill’s piece goes on to establish that price volatility, not sustained high prices, drives increased interest in pellet appliances, and a preceding year’s shipments to appliance dealers are as good a demand indicator as producers are likely to get. Recognizing that appliance sales ultimately generate pellet demand, this quarter’s issue of Pellet Mill Magazine features the first in a series on the array of appliances that utilize pellets to deliver heat. Staff Writer Chris Hanson’s piece offers a snapshot of appliances that, once installed, typically generate 2 to 2.5 tons of demand every year. Probably the most eye-popping data on the pellet map is the under construction and proposed new capacity. Our outreach efforts have affirmed that there are over 12 million tons of capacity in various stages of construction and development. Put another way, if each of these projects proceeds as planned, the North American pellet complex is set to double. And while this publication continues to cover the growing industrial demand in the United Kingdom (see Keith Loria’s page 31 feature), our outreach suggests that producers are finding new international markets for home heating pellets. Our plant map paints a picture of a quickly expanding marketplace; and this month’s issue takes a deep dive into the reasons.
Q2 2014 | PELLET MILL MAGAZINE 5
Industry Events » International Biomass Conference & Expo
MARCH 24-26, 2014
PRESIDENT & EDITOR IN CHIEF Tom Bryan firstname.lastname@example.org VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR Tim Portzz email@example.com MANAGING EDITOR Susanne Retka Schill firstname.lastname@example.org CONTRIBUTING EDITOR Anna Simet email@example.com NEWS EDITOR Erin Vogele firstname.lastname@example.org
Orange County Convention Center Orlando, Florida Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true onestop shop—the world’s premier educational and networking junction for all biomass industries. 866-746-8385 | www.biomassconference.com
Pellet Supply Chain Summit
COPY EDITOR Jan Tellmann email@example.com
MARCH 24, 2014
Orange County Convention Center Orlando, Florida As the pellet export production capacity is set to more than double in the next 18 to 24 months, this summit will investigate the contributions of each stakeholder group along the supply chain and the challenges they’ll have to overcome as production and export capacity ramp up. The Sustainable Pellet Supply Chain Summit is a must-attend event for landowners, local and regional economic development officers, loggers, logistics providers, pellet manufacturers, commodity brokers, shipping companies and port professionals. Co-located with the 2014 International Biomass Conference & Expo, being held in Orlando, Fla., the Pellet Supply Chain Summit is a compelling combination of the right topics being discussed at the right place, at the right time. 866-746-8385 | www.biomassconference.com
STAFF WRITER Chris Hanson firstname.lastname@example.org
Art ART DIRECTOR Jaci Satterlund email@example.com GRAPHIC DESIGNER Raquel Boushee firstname.lastname@example.org
Publishing & Sales CHAIRMAN Mike Bryan email@example.com
Bioenergy Project Development Seminar
CEO Joe Bryan firstname.lastname@example.org
MARCH 24, 2014
VICE PRESIDENT OF OPERATIONS Matthew Spoorr email@example.com BUSINESS DEVELOPMENT DIRECTOR Howard Brockhouse firstname.lastname@example.org SENIOR ACCOUNT MANAGER Chip Shereck k email@example.com MARKETING DIRECTOR John Nelson firstname.lastname@example.org CIRCULATION MANAGER Jessica Beaudry email@example.com
Orange County Convention Center Orlando, Florida Designed to walk attendees through the project development life cycle, this preconference seminar will feature presenters with deep experience in moving projects from the concept phase to the construction phase. Attendees will learn about early project feasibility work, the role economic developers and host communities can and should play, how project capital is accumulated and the importance of a quality offtake agreement. This seminar is a must for anyone in the conceptual stage of a bioenergy project. 866-746-8385 | www.biomassconference.com
International Fuel Ethanol Workshop & Expo
MARKETING & TRAFFIC COORDINATOR Marla DeFoe firstname.lastname@example.org
JUNE 9-12, 2014 Subscriptions to Pellet Mill Magazine are free of charge—distributed quarterly—to Biomass Magazine 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 firstname.lastname@example.org. 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 email@example.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
Indiana Convention Center Indianapolis, Indiana Now in 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
Please recycle this magazine and remove inserts or samples before recycling TM
6 PELLET MILL MAGAZINE | Q2 2014
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The most comprehensive and only dedicated pellet industry magazine! As the pellet industry continues to evolve and expand, Biomass Magazine's Pellet Mill Magazine now offers you a forum to promote your products and services to pellet industry professionals. Pellet Mill Magazine delivers data driven content–features, technical contributions and expert commentary–to professionals in the densified biomass fuel industry. And Pellet Mill Magazine is the only magazine in the world dedicated to the pellet industry. Pellet Mill Magazine is distributed to more than 8,000 industry professionals. • Biomass Magazine subscribers • Pellet mill owners, operators & management • 6th Annual International Biomass Conference & Expo • AEBIOM Bioenergy Conference • Pellet Fuels Institute Annual Conference (Mailed to all attendees)
« Standards Steward
Reap the Benefits of the PFI Standards Program BY JENNIFER HEDRICK
Two years ago, the Pellet Fuels Institute kicked off its standards program to foster improvements in the consistency and quality of pellets manufactured in North America and to help consumers better understand what they are purchasing. This program is gaining momentum: More manufacturing facilities continue to qualify for the program and others are on the road to qualification. What does that mean exactly? Qualifying companies have worked with the program’s third-party auditors to establish—and comply with—a quality assurance and control (QA/QC) program that meets the rigorous requirements of the PFI Standards Program. Once qualified, companies are able to use the program’s quality mark—a label for their fuel bags that indicates their product has not only been subject to the program’s testing requirements, but it meets them. We recently came across a blog post by a consumer, saying: “As the biomass pellet industry has matured, the need for a third-party rating system that communicates information about pellet quality is more important now than ever.” He has a point. In the past, there has been confusion about what the various wood pellet designations mean: how exactly is “ultra premium” or “super premium” any different from “premium”? Like those of us in the PFI office, I’m sure many of you have fielded calls over the years from consumers asking for help understanding these differences in terminology. Labeling with the quality mark will help that—in fact, we’re already starting to hear from consumers who are noticing the mark and appreciate its clarity. It’s not just about the label. Simply going through the qualification process can tell a manufacturer more about a product than ever thought possible. One company qualifying in the program learned it needed to make a small tweak to bagging procedures, a discovery estimated to save $100,000 per year in production costs—
8 PELLET MILL MAGAZINE | Q2 2014
the process has already more than paid for itself. This company is not alone; other qualifying companies I’ve spoken with have similar stories about learning more about their business and improving their business practices. Enrolling in the program remains optional, though the entire pellet supply chain is keeping a close eye on the U.S. EPA’s newly proposed rule that seeks to revise the New Source Performance Standard for new residential wood heaters, including pellet stoves. As proposed, in order for stoves to be certified, they must be tested with pellets that meet a series of requirements that have been verified through an established QA/ QC program, such as the PFI Standards Program. This rule will have a real impact on how the pellet industry does business. If you’re a pellet manufacturer, I encourage you to start investigating how your facility can enroll in the PFI Standards Program. Joining the program is, by necessity, a rigorous process—but it’s completely doable, as many manufacturers have already demonstrated. It’s best to start with a thorough read of the program documents, which are found in the standards section of the PFI website. There’s a lot to consider when enrolling in the program. And, we’re happy to help with questions, as is the American Lumber Standard Committee, the program’s oversight body. There’s still a lot to do to make the PFI Standards Program more widespread—to encourage more pellet producers to sign on and to work with retailers so that they can both understand and communicate the program’s benefits to consumers. You’ll hear from us more on that in the months to come. Yes, there’s a lot of work to be done—but this is an opportunity for us all to raise the bar for the pellet industry. Author: Jennifer Hedrick Executive Director, Pellet Fuels Institute Hedrick@pelletheat.org 703-522-6778
Testing Grounds »
NSPS is on the Move, Comments Needed BY CHRIS WIBERG
Updating the U.S. EPA’s New Source Performance Standard for Residential Wood Heaters is far from a new idea. Originally published in 1988, it was supposed to have been updated within five years, but has lain fallow since then. The pellet industry was put on notice March 2010, when Gil Wood, EPA’s staff lead to the NSPS update, spoke at the Pellet Fuel Institute’s membership luncheon at HPBExpo in Orlando, Fla. Gil informed the pellet fuels industry that the NSPS update would include quality requirements for the fuel burned in pellet stoves, and then commenced detailing expectations for the quality requirements and the quality management system that would be required. While the pellet fuels industry already had standards, published by PFI in 2008, Gil made it clear that the voluntary program lacked key criteria necessary for inclusion in the NSPS. EPA wanted a system that included third-party oversight through an accredited auditing structure, stricter language regarding the prohibition of inappropriate material, broader industry buy-in and a laundry list of other items. The take-away message seemed to be that EPA was happy that the pellet industry had developed standards voluntarily, but substantial modifications would be necessary for them to be considered acceptable for the NSPS. It was also made quite clear that if PFI did not make the necessary modifications, EPA would develop its own standards for pellet fuels. Not long after the meeting in Orlando, work began through the PFI Standards Committee to rewrite the standards to incorporate the requirements outlined by EPA so PFI’s program could be referenced in the NSPS as the program by which pelletized fuel is graded, averting the threat that EPA would impose its own regulations. This process was completed in June, 2011. The PFI Standards Program contracts with the American Lumber Standard Committee to serve as the accreditation body that oversees and enforces the program. ALSC is the same organization that oversees the standards for softwood lumber, treated lumber, wood packaging materials
and other wood products. ALSC has accredited 12 auditing agencies and five laboratories to provide third-party inspections and testing to qualify producers and to monitor their production on a routine basis to assure continued compliance with the PFI Standards. Most importantly, dozens of pellet fuel production facilities have initiated the implementation of the PFI Standards Program requirements, 10 of which have achieved official qualification under the program. During the past four years as PFI developed its standards program, the NSPS has been delayed and, at times, seemed dormant. We have always known it would come at some point, but the extended wait made it hard to stay focused on its implications and why we went through all of the work of developing our standard. But at long last, EPA’s proposed NSPS was finally published Feb. 3 in the Federal Register. For the first time, we can see the actual words of the draft regulation and begin evaluating the implications of this regulatory update. For the specific reference to fuel quality as it pertains to pellet burning appliances, we can breathe a sigh of relief in that the draft NSPS does reference the PFI Standards Program rather than impose its own regulations. Our work is still cut out for us, due to the many inaccuracies in the published draft and the substantial information that has been requested by EPA to fill in the gaps of information needed to complete the development process. The deadline for comments on EPA’s NSPS is May 5. I would highly encourage anyone with interests in the pellet fuels industry to review the proposed regulation and provide comments as necessary to protect your interests. While this is primarily a stove regulation, the implications to pellet fuel producers is massive and we will only have a small window of opportunity to have our voices heard. Now is the time. Author: Chris Wiberg Manager, Biomass Energy Laboratory 218-428-3583 firstname.lastname@example.org
Q2 2014 | PELLET MILL MAGAZINE 9
« Industrial Insight
Mitigating the 2 Leading Causes of Climate Change and Global Warming BY SETH GINTHER
A recently released United Nations Intergovernmental Panel on Climate Change report argues that it is extremely likely that human activity is the dominant cause of climate change and global warming. The report states, “the atmospheric concentrations of carbon dioxide, methane and nitrous oxide have increased to levels unprecedented in at least the last 800,000 years . . . [and c]arbon dioxide concentrations of greenhouse gases have increased by 40 percent since preindustrial times.” What are the two factors contributing most to this alarming news according to the IPCC? Fossil fuel emissions (releasing more fossilbased carbon into the atmosphere) and deforestation/net land use change (less natural sequestration of carbon because of deforestation). Clearly the global strategy for mitigating climate change and global warming needs to include a suite of alternative energy sources, but woody biomass has the benefit of being the only alternative energy source that directly mitigates the two leading underlying causes of climate change. CO2 molecules are the same, regardless of where they come from. But burning fossil fuels to produce electricity releases carbon that would have remained sequestered in the ground for millions of years. It is a one-way process that adds greenhouse gases to the atmosphere and fuels climate change. Woody biomass for energy on the other hand, is part of a natural process known as the biogenic carbon cycle. Trees absorb CO2 as they grow. That same CO2 is released during the combustion process and in an equivalent amount, or even more, is removed from the atmosphere as the forest regenerates itself. Replacing coal with woody biomass through this process has been shown to reduce fossil fuel emissions of carbon dioxide, sulphur oxides and nitrogen oxides. Indeed, the U.K. Environmental Agency found that switching to woody biomass from coal can reduce carbon emissions 74 to 90 percent. Moreover, studies by the U.S. EPA, the National Renewable Energy Lab and the National Council of Air and Stream Improvement show that woody biomass is lower in sulfur, chlorine and nitrogen than coal. Woody biomass also has lower concentrations than coal
10 PELLET MILL MAGAZINE | Q2 2014
of trace metals including arsenic, beryllium, cadmium, lead and mercury and releases much less of these elements into the atmosphere. The key to realizing these benefits, though, brings us to mitigating the second leading cause of climate change—deforestation and other land use change. The biomass-to-energy industry is contributing to the growth of forests and carbon capture. The net volume of trees per acre has increased in all regions of the U.S. for more than 50 years, and the total acreage of forestland is within one percent of what it was 100 years ago. This means that U.S. forests sequester a substantial amount of carbon, with anywhere from 58 million to 84 million grams per hectare thought to be stored in the nation’s wooded areas. By creating additional markets for low-grade wood fiber, the woody biomass-to-energy industry helps ensure that forest stocks continue to increase thereby naturally sequestering more carbon. To those unfamiliar with our industry, it may seem counterintuitive, but the best way to ensure against deforestation and other land use change is to provide robust markets for forest products such as woody biomass. Forest owners are rational economic actors, which means that they will always be looking to maximize the economic value of their asset, the forest. Accordingly, the only way to incent forest owners to keep their forests working is to economically incent them to do so. The robust market for low-grade wood fiber that the woody biomass-to-energy industry provides to the forest owner helps to ensure that those forests continue as forests, instead of converting them to other uses, such as agriculture or development. This is leading to more forests, not fewer, which is the opposite of deforestation. Reduced emissions and increased forests, according to the IPCC, will help right the global ship on a path to mitigating climate change and global warming. Biomass hits the right policy notes yet again. Author: Seth Ginther Executive Director U.S. Industrial Pellet Association 804-771-9540 email@example.com
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PEOPLE, PRODUCTS & PARTNERSHIPS
specialist at the Oregon Department of Forestry; Michael Larrimore, business development representative at Cambridge EntTech; Paul Lewandowski, business development specialist at AFS Energy Systems; and Jay Van Roekel, biomass business unit manager at Vermeer. Reelected directors include Dan Arnett, biomass coordinator at Ernst Conservation Seeds and David Dungate, president of Bioenergy Project Partners.
BTEC elects board members The Biomass Thermal Energy Council has elected five new directors and reelected two directors to its 2014 board of directors. New directors include Dennis Becker, associate professor of environment and natural resource policy at the University of Minnesota; Marcus Kauffman, biomass resource
Baker Tilly attorney appointed to WBC Baker Tilly Virchow Krause LLP has announced Thomas Unke, team leader of the energy and utilities practice, was appointed to the Wisconsin Bioenergy Council, which advises the stateâ€™s Department of Agriculture, Trade and Consumer Protection on practices for sustainable biomass and bioenergy producUnke tion.
German Pellets earns ENplus certification German Pellets facility in Woodville, Texas, has received ENplus certification. The certification confirms the high quality of the products from the facility, which commenced operations in mid-2013. The plant has the capacity to produce 578,000 metric tons of wood pellets on an annual basis. CBI supplies equipment to Rentech Continental Biomass Industries Inc. is designing and building three debarking and chipping sytems for Rentechâ€™s Canadian wood pellet facilities, scheduled for installation in the spring. The CBI systems will deliver uniform 6 to 8 millimeter microchips in a single pass that can immediately be dried and milled into pellet feedstock. Viridis appoints chairman Viridis Energy Inc. has announced that Robert Aaron has been appointed chairman of its board of directors. He currently serves as CEO of Gilwern Associates, an advisor to
KAHL Wood Pelleting Plants Our biggest customer produces > 1 million t/a
AMANDUS KAHL USA Corporation 380 Winkler Drive, Suite 400 Alpharetta, GA 30004-0736 Phone: 770-521-1021, Fax: 770-521-1022,firstname.lastname@example.org, www.akahl.us
Viridis Energy’s largest shareholder, Cornwall Investments LLC. Aaron also serves as vice-chairman of HedgeServ Corp. and vicechairman of Investor Analytics LLC.
Vermont Wood Pellet makes leadership change Vermont Wood Pellet Co. has announced that co-founder and CEO Chris Brooks will be stepping into the dual role of president and CEO. Brooks’ co-founder Katie Ewald Adams will move into a more strategic role as chief marketing officer. Adams will remain active in promoting the VWP brand. When VWP prepared to open its facility in 2009, the two partners set a goal
to produce 10,000 tons of wood pellets per year. Now in the fourth year of operation, they have nearly doubled that goal and are exploring the construction of a second mill. ACORE appoints CEO The American Council on Renewable Energy has appointed Michael Brower as president and CEO. Brower has served as the interim president and CEO since July. He has been an ACORE member since 2002, is a member of the board of directors and is a long-time leadership council member. He most recently served as senior federal policy director at Mosaic Federal Affairs, a wholly owned subsidiary of Hiscock and Barclay LLP. He is a retired career Navy Officer and aviator who has served in the Secretary of Navy’s personal office as special assistant for air warfare communicating United States Navy legislative policy to the Congress for three Secretaries of the Navy.
m rgy Syste Heat Ene
Puritan Magnetics announces product Puritan Magnetics Inc. has announced the availability of its vertical spout magnets, which are engineered to remove fine-to-large ferrous contaminants from high volume, gravity fed product streams. They are ideally suited for products that would bridge or choke in a magnetic tube-type separator. Biomass energy quick assessment tool now available The New York Farm Viability Institute and the New York Biomass Energy Alliance have announced the availability of the Local Impact of Woody Biomass Energy Projects Quick Assessment Tool for Planners and Community Leaders (QAT). The QAT is available in both full and lite versions.
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 2014 | PELLET MILL MAGAZINE 13
Pellet News Obama signs Farm Bill, announces new rural business initiative
Forecast primary heating fuel use in winter of 2013-'14 Wood
President Obama signed the Agricultural Act of 2014 into law Feb. 7 during a ceremony at Michigan State University, ending the nearly three-year process to enact a new Farm Bill. The legislation extends, expands and modifies federal agriculture and nutrition programs, including farm income support, crop insurance, conservation, credit assistance, trade, research, international food assistance, rural development and other programs through the fiscal 2018 crop year. The 2014 Farm Bill also includes mandatory funding for a variety of energy title programs, including the Biomass Crop Assistance Program, the Rural Energy for America Program and the Community Wood Energy Program. During his speech at the MSU event, Obama also announced the launch of a new Made in Rural America export and investment initiative. The program is designed to help more rural businesses expand, hire, and export more products to the rest of the world.
SOURCE: U.S. EIA FEBRUARY STEO
Biomass heating initiative to launch in NY New York Gov. Andrew Cuomo has announced plans to launch a biomass heating initiative as part of his 2014 agenda. The program, known as Renewable Heat NY, is described in the agenda as “a long-term commitment to help the high-efficiency and low-emission biomass heating industry reach scale.” During the first year, the program will aim to increase consumer awareness and develop larger-scale anchor customers that energy firms need to begin the transition of their heating oil delivery business fleet to bulk biomass. The program also includes components
related to workforce training, manufacturer support, community support, and financing. "Renewable Heat NY will give the biomass heating sector a much needed boost, while at the same time spurring local economic activity and offering New Yorkers real savings and security,” said Charlie Niebling, president of the New York Biomass Energy Alliance. “Seventy-eight cents of every dollar spent on heating oil leaves the state; with biomass heating, fuel dollars remain in the state, recirculating in local and regional economies."
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14 PELLET MILL MAGAZINE | Q2 2014
Pellet News » Resources for the Future event addresses carbon accounting, forest management Resources for the Future recently hosted a seminar focused on carbon accounting and forest management. The event, titled “Considering the Contributions of Forests in the Management of Greenhouse Gas Emissions,” was co-sponsored by the Society of American Foresters. Roger Sedjo, senior fellow and director of the Forest Economics Total forest ecosystem carbon density imputed from forest inventory plots, conterminous U.S., 2000-2009. and Policy Program at SOURCE: WILSON ET AL., CARBON BALANCE AND MANAGEMENT 2013 RFF moderated the discussion, noting forests volves monitoring the overall stock of can play an important wood in the forest. “A huge advantage role in moderating greenhouse gas of the second approach is its low cost emissions. When it comes to monicompared with detailed monitoring of toring net biogenic emissions from individual facilities,” Sedjo said, noting bioenergy facilities, he said there are the U.S. Forest Service already collects two major options. The first focuses on individual facilities. The second in- much of the data that is needed.
Experts discuss port projects More than 200 attendees recently tuned into a webinar on pellet port developments and projects, sponsored by Biomass Magazine. During the event, Ben Easterlin, senior vice president of development and construction at Enova Energy Group, discussed development at the Port of Port St. Joe in Florida. According to Easterlin, the company sees the project as a development opportunity to support its pellet exporting operations in the Southeast. “Enova expects one day, there will be dual-ship loading with modern dust control, with 20,000 metric tons or greater storage capacity,” he added. Andy Burns, vice president of Biomass Secure Power, spoke about his company’s quest for ports as part of its effort to find suitable locations for a pellet plant, noting that one of the greatest costs of pellet production is transportation. EcoFuels LLC Managing Director George Lyons spoke about the considerations that go into locating pellet plants and exporting facilities, including the impact on the carbon footprint of the resulting fuel. William Straus, president of FutureMetrics, rounded out the call with a discussion of the top three characteristics of a successful pellet product, including sustainability, consistency and reliable delivery.
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vecoplanllc.com Q2 2014 | PELLET MILL MAGAZINE 15
« Pellet News Herty adds new mobile equipment The Herty Advanced Materials Development Center has announced the addition of a new mobile pellet development unit (MPDU), a versatile pellet system designed for rapid screening of feedstocks and processing conditions. The MPDU is a research tool that is designed to be more versatile and cost-effective than full-scale systems. The unit can be rapidly reconfigured to assess feedstocks and identify optimum processing conditions. According to Herty, the MPDU can be employed either onsite at Herty or at a client’s site in a skid-mounted unit. It offers an option of six compression ratio dies and can produce up to 200 pounds of pellets per hour and provides realistic operational parameters that are relevant at the commercial scale. The equipment was obtained through a donation from Italy-based La Meccanica s.r.l., a company that specializes in the design and manufacture of pellet equipment.
16 PELLET MILL MAGAZINE | Q2 2014
Largest pellet-fired plants in EU Plant Name
Drax Group plc
660 (1 unit converted in 2013)
600 (2 units converted in 2013)
* Tilbury B's production stopped in 2013 SOURCE: EUROBSERV'ER SOLID BIOMASS BAROMETER 2013
Use of solid biomass continues to increase in Europe EurObserv’ER has published its annual Biomass Barometer, reporting that primary energy production from solid biomass increased to 82.5 million metric tons of oil equivalent (Mtoe) in Europe during 2012. The European Union produced 79.5 terawatt hours (TWh) of electricity from solid biomass in 2012 and consumed 68 Mtoe of heat from solid biomass. The E.U. consumed an estimated 15.1 million metric tons of wood pellets in 2012, with worldwide consumption estimated
between 22.4 million metric tons and 24.5 million metric tons. E.U. member states produced 10.5 million metric tons of wood pellets in 2012, up from 9.5 million metric tons the prior year. EurObserv’ER estimates that approximately 30 percent of the E.U.’s pellet consumption came from imported sources in 2012 and that the U.S. exported about 1.764 million metric tons of pellets to Europe. Canada’s exports were estimated at 1.346 million metric tons for the year.
Pellet News » European Commission proposes renewable energy, GHG reduction targets
Bonds authorized for Mississippi export project
Energy production from biomass and renewable In January, the European waste in EU-27 (in million metric tons of oil equivalent) Commission proposed new clean energy and greenhouse gas (GHG) emission reduction objectives. The proposal calls for a GHG reduction of 40 percent below the 1990 level by 2030 along with a European Union-wide 27 percent target for renewable energy. The new targets aim to build on previously established targets that are to be attained by 2020, including a 20 percent GHG reduction goal, 20 percent renewable energy goal and 20 percent energy efficiency improvements goal. The U.K.-based Renewable Energy Association has spoken out to criticize what it calls a “lack SOURCE: EUROPEAN COMMISSION, EUROSTAT new governance system based on national of ambition for renewable energy” energy plans, but that the U.K. government in the proposal, noting it sets no specific has been pushing for a technology-neutral targets for EU member states. The REA approach that downplays the role of renewalso noted that the proposal indicates the ables. renewables target would be ensured by a
County supervisors in Jackson County, Miss., recently authorized a bond issue for up to $24 million for the construction of a pellet export facility at the Port of Pascagoula. Green Circle Bioenergy will use the site to export pellets produced at its proposed 500,000-tonper-year pellet plant at the George County Industrial Park in Lucedale, Miss. The expected cost of the export facility is $30 million. The state has committed $10 million to the project and the terminal operator will invest $5 million. The extra borrowing authority above the $15 million difference is considered on the high side to cover unanticipated needs. According to Betty Ann White, the port’s manager of government affairs and public relations, construction of the export facility is expected to begin during the first half of this year, and be complete in 2015. A $14 million grant from the U.S. Department of Transportation is also supporting rail improvements to serve the new facility.
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18 PELLET MILL MAGAZINE | Q2 2014
The Newest in Stylish, Warm Room Heating With controls ranging from basic to highly sophisticated, pellet stoves are increasingly more efficient, easier to use and cleaner. BY CHRIS HANSON
Q2 2014 | PELLET MILL MAGAZINE 19
ong known as being great for room heating, pellet stoves have the potential to meet all the heating requirements of the smaller, energy-efficient homes of the future, especially if centrally located in a home with an open floor plan. The 2010 U.S. Census shows that the average size of new, single family homes declined from a peak of 2,582 to 2,392 square feet in just two years, and a 2011 National Association of Home Builders survey suggests that single-family homes will continue to shrink. “Stoves and inserts can be centrally located in such a way and be large enough that they can pretty much meet the heating demands of the house, but that’s not necessarily what they were intended for and some do it better than others,” says Scott Williamson, owner and independent pellet appliance servicer of Massachusetts-based Pellet Stove Service. “80 percent of my customers achieve maybe 75 to 100 percent of their heating needs off of one little appliance. It’s not what they were designed to do, but it’s the way pellets are adopted and used in the U.S.” Once consumers cross a certain threshold for heating requirements, then it would make more sense to install a pellet furnace or boiler, he adds. Pellet stoves and fireplace inserts are more popular in the U.S. than boilers and furnaces, Williamson says, due to their rela-
tively lower price and faster return on investment for consumers. He advises consumers to look beyond price, however, and consider control systems, plus investigate the technology involved in the burn pot. “The burn pot needs to stay free and clear so the air can move through it,” he explains. High quality pellets give the best performance, but consumers sometimes use pellets that contain recycled wood that may contain corrosive salts. These salts can cause the ash to fuse together at lower temperatures, clogging the vital ventilation holes. “Your burn pot can become a mess very quickly. You have to shut the whole unit down, clean it all out, put it back together and start it back up again.” To address this issue, some manufacturers use agitators, bottom and horizontal-feeding designs that push obstructions to the fringe of the burn pot and keep the chamber free and clear for air movement, Williamson says. Increasingly, pellet appliance manufacturers are adding features to increase efficiency and ease-of-use for consumers, Williamson says, noting a few interesting brands and models. In this issue, Pellet Mill Magazine offers a sampling of the pellet stoves available to consumers that illustrate a range of features, and a quick look at European designs for comparison. A future issue will take a look at larger pellet furnaces and boilers.
Harman XXV One of the most recognized names in the biomass stove market is Harman, from Hearth & Home Technologies. The XXV model boasts 50,000 Btu heating input, achieves 76 percent efficiency and can heat a 900- to 2,300-square-foot area. Pellets are pushed up into the burn pot from the 65-pound storage hopper. With the bottom-feed design, the incoming fuel drives any obstructions outward to the edges of the burn pile. Electrical power is required in all pellet stoves to operate the stove, run the fans, feed the pellets and provide operational information. An exhaust sensing probe (ESP) system in the Harman stove adjusts heat output and fuel rate. The built-in ESP microprocessor uses settings from the built-in thermostat and data gathered from room and exhaust sensors to maintain heating temperatures within one degree. In addition to setting the temperature, the ESP control panel allows the user to select between manual and automatic ignition and provides status updates, alerting the presence of operational irregularities. The XXV model is certified by the U.S. EPA with an emission rating of 2.4 grams per hour. One of the drawbacks of the internal thermostat, Williamson adds, is that it currently cannot be integrated with an external thermostat. Hearth & Home, however, expects to release the first of its newer models this summer that feature touch controls utilizing Wi-Fi
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Appliances » erating with a range of fuels, such as wood pellets, corn and even cherry pits. The St. Croix Hastings model is an EPA-certified, cast iron pellet stove, which operates at 78 percent efficiency, has a heat output of roughly 35,000 Btu and an emissions rating of 0.7 grams per hour. Like the other pellet stoves, the Hastings model has a control box that allows for general operation and alerts the user to potential problems within the unit. The model allows the user to toggle between manual, internal and external thermostat settings. The inter-
nal thermostat mode, or T-Stat, will heat the room to the desired heating level on the control board and drop to the lowest setting once the temperature reaches the desired level to maintain heat. The external SmartStat setting gives the stove the ability to relight itself when heat is required and judge whether to turn off or go into a pilot mode, based on how often the thermostat requires heat. St. Croix stoves tend to have tight heat exchangers that make heating and emissions cleaner and more efficient, Williamson says.
PUTTING THE WOOD-PELLET INDUSTRY IN MOTION. St. Croix Hastings
signals, says Karen Smeltz, marketing specialist for Hearth & Home. “We’re really marketing to the younger generation that will be buying a home or renovating and who want the smartphone-like experience that they are used to.”
Quadra-Fire Classic Bay 1200 Another model of pellet stove from Hearth & Home technologies is the QuadraFire Classic Bay 1200. The CB 1200 is also EPA certified and is capable of reaching 17,200 to 47,300 Btu per hour. Similar to the Harman XXV, the CB 1200 has an average heating area of 2,350 square feet, but with a higher efficiency rating of 85 percent. Depending on the density of the pellets, the CB 1200 can store 80 pounds of pellets and has a remote-control and programmable wall-thermostat options.
St. Croix Hastings When looking for pellet stoves, some users might not expect to see one from the Midwest. Nebraska-based, St. Croix Genuine Stoves offers multifuel stoves capable of op-
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Travis Industries AGP Lopi
Travis Industries AGP Lopi Travis Industries Inc.’s AGP Lopi stove is certified by the EPA and produces less than 1 gram per hour of emissions. The unit can hold 80 pounds of pellets in its hopper and produces roughly 41,000 Btu to heat approximately 2,000 square feet. The AGP Lopi has a control panel at the back of the stove and dials for selecting the desired heating level and fan speed. The fan speed control has an automatic setting to make the unit more user friendly. Additionally, the control panel allows the user to program multiple heating settings that can align with demands from an external thermostat.
Enviro M55 Cast Iron Canada-based Sherwood Industries Inc. manufactures the Enviro brand of heating appliances. With a 76.6 percent efficiency and a two grams per hour emissions rating, the EPA includes the stove on its list of certified wood stoves. The M55 Cast Iron has a 2,500-square foot-heating area and holds 60 pounds of pellets in its hopper. Like the other stoves, 22 PELLET MILL MAGAZINE | Q2 2014
Enviro M55 Cast Iron
the M55 Cast Iron has attractive features that set it above older models on the market. The unit has a side control panel, powered by standard 120 volt power, that can toggle between premium and regular pellets as well as adjust heating levels. Other features include an agitator to clear obstructions within the burn pot and safety switches to deactivate the unit if the stove overheats or the fire dies and the exhaust temperature drops below 120 degrees Fahrenheit. Like the other U.S.-manufactured models, the stove has the more traditional wood-stove look.
The Slick Europeans North American manufacturers are keeping an eye on the high-tech designs coming from European manufacturers entering the U.S. market. “A lot of European stoves model their combustion delivery process and air intake the same way. They all kind of use the same technology,” Williamson says. “But the Rika brand does it very well.” The Austriaheadquartered manufacturer uses algorithms that measure the rotations per minute in the combustion motor and the amount of electric-
ity and air pressure within the stove to determine the correct amount of fuel to feed into the burn pot to keep the unit at its highest efficiency, Williamson says.
MCZ-Wittus Ego For comparison, Pellet Mill Magazine profiles a unit from Italian manufacturer, MCZ Group S.p.A, which sells its pellet appliances under the Wittus label in the U.S. The Ego Air model has an EPA-observed 78 percent efficiency rating, a hopper that holds just over 33 pounds of pellets and has a 24,000 Btu output. The appliance is controlled through multiple inputs. It features a topside control panel, but is capable of syncing with a remote and external thermostat. The control panel displays basic information, such as operating temperature and alerts. An optional remote control can adjust fan speed and flame levels, as well as power the unit up or down. The stove can be also be integrated with an external thermostat. With the multiple controls, the Ego Air can be manually controlled or programmed to automatically adjust to the heating demands of the room. European stoves are highly customizable
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to the user, but that customization can be a downfall, explains Williamson. For instance, a novice user might not know how to find the most efficient settings, thus leading to more ash build up, extra maintenance or improper handling. “That’s one of the problems Europeans have, they try to give too much control over what’s going on. It’s like sitting in a Mercedes and adjusting the seat to find a radio station. It’s impossible,” says Williamson. U.S. stoves tend to be more user-friendly and simple to operate, but finding an ideal unit can be a challenge. Another thing to consider is installation. European stoves tend to be powered with 230-volt connections, most likely requiring the expense of wiring a new outlet, whereas the North American stoves are powered with standard 120-volt connections. This review of a handful of the many models of pellet stoves available on the market illustrates the multiple features and benefits that need to be weighed by consumers when choosing a new appliance. External thermostats allow the user to set the desired room temperature, while some models do not have that option. Different stoves require different
maintenance schedules. Some suggest daily cleaning while others may have only weekly or monthly suggested maintenance intervals. Price is always a big factor, as is appearance. Pellet stove purchases and installation costs can range between $2,000 and $3,500, says John Ackerly, president of the Alliance for Green Heat. "They are easily half to one third of the price of a boiler." North American-made stoves tend to have a more traditional wood stove appearance, while European designs have more contemporary styling. For pellet producers, the improved designs for pellet appliances, increased efficiency, ease-of-use and reduced emissions, all promise to attract new customers who quickly discover pellet heating provides not only a warm, comfortable heat, but an affordable and renewable alternative. Author: Chris Hanson Staff Writer, Pellet Mill Magazine 701-738-4970 chanson@ bbiinternational.com
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24 PELLET MILL MAGAZINE | Q2 2014
The Challenge of Forecasting Pellet Demand Can the demand boost from this winter’s severe cold and energy costs be sustained? BY SUSANNE RETKA SCHILL
winter like this one promises to give the pellet industry a big boost with more homeowners turning to economical pellet heat in the face of soaring propane prices and continued high heating oil costs. Pellet producers have been running hard this winter to keep up with demand and several Northeast producers report they sold out on their production by midwinter. Producers in the West who have seen excess supply and production relative to demand in recent years welcomed the opportunity to bolster supplies in the East. Will this winter’s boost be the start of a long-term trend? A look at the recent past raises the question whether the increased demand can be sustained and turned into something more like Europeans’ embrace of pellet heat. One place pellet producers look for patterns in the market to project future demand is the annual statistics report from the Hearth, Patio and Barbeque Association. Don Johnson, director of market research for HPBA, tracks the number of pellet stoves shipped to dealers in an annual survey of heating appliance manufacturers that also includes fireplaces, cordwood and gas stove shipments. He estimates the survey covers about 90 percent of the industry. While the results are only reported in the aggregate, given the relatively small number of manu-
PHOTO: HEARTH & HOME TECHNOLOGIES
Q2 2014 | PELLET MILL MAGAZINE 25
« MARKET facturers, they do provide a glimpse of the market dynamics behind the adoption of the appliances that drive fuel pellet sales. The pellet stove segment is the most volatile portion of the hearth industry, Johnson says. “When consumers view the price of heating their homes as expensive or unstable, pellet stove sales jump up, higher than wood stoves.” But, he adds, when there’s no crisis bringing instability to oil market and as consumers get used to higher prices, pellet stove movement is affected. “These are the first hearth product sales that decline. And when price becomes higher, these are the first to go up. They go down lower and go up higher.” Pellet stove sales were growing nicely a decade ago, from just under 34,000 in 2002, growing rapidly each year to 119,000 in 2005 and 133,000 the year after. A big dip in 2007 to 54,000 appliances was followed in 2008 by the record-holding peak of 141,000 pellet appliances shipped from manufacturers. That peak was partly due to the energy efficiency tax credits introduced as part of the stimulus package that offered a maximum $1,500 credit for new windows, insulation and renewable heating conversions, including pellets stoves. Some theorize the bump in 2008 is directly responsible for the dive in 2009 sales to 46,000. Shipments dropped a bit lower once again in
2010 before rebounding to 62,000 in 2011. The most recent figures available for this article were 48,000 pellet stoves shipped in 2012. Last year’s numbers were due out March 1, but it will be another year before the full impact of this year’s cold winter will be known, when 2014 appliance shipments are reported in early 2015. Fluctuating sales present a challenge for appliance manufacturers when planning production schedules. “Companies have a hard time forecasting how many stoves to make,” Johnson says. There were years in the recent past when there weren’t enough stoves nor pellets to fuel them, he says. Forecasting the demand for pellets to fuel those stoves is equally challenging as this year demonstrates so well. “A lot of the mills are working 24/7 now, they can’t make them fast enough,” says John Ackerly, president of the Alliance for Green Heat. The average pellet stove uses between 2 and 3 tons of pellets each year, he explains. Doing the math and using an average of 2.5 tons expected demand per stove, the 48,000 stoves shipped to dealers in 2012 would have added about 120,000 tons of demand for fuel pellets. Everyone knows this winter will boost pellet stove sales, and thus, demand for pellet fuel. The question is by how much?
MARKET » NSPS to Bring Big Changes The U.S. EPA published its proposed rule to establish New Source Performance Standards for new residential wood heaters, hydronic heaters and forced-air furnaces and new residential masonry heaters in the Federal Register Feb. 3, officially opening a 90-day public comment period. The agency’s proposed standards bring pellet stoves, not named in the 1988 standards being replaced, under regulation. “The EPA is proposing that wood and pellet stoves initially meet a 4.5 grams per hour (g/h) standard, and then meet a much stricter standard of 1.3 g/h five years after promulgation,” John Ackerly, president of the Alliance for Green Heat, explains. "Alternatively, the EPA proposes a three-step process of going to 2.5 g/h after three years and then 1.3 g/h after eight years." The proposed rule will have a big impact on pellet producers as well. EPA is saying new pellet appliances are to be tested for their compliance with the emissions standard with certified pellets—certified under the Pellet Fuels Institute, or equivalent, standard. “EPA also wants manufacturers to say that unless you use a certified pellet, it will void the warranty on the stove,” Ackerly adds. While the NSPS, when promulgated sometime next year, will not affect installed or unsold stoves still in inventory, it will bring a big change to the pellet heat industry as the new stoves enter the market in the years to come. Comments to the proposed rule are due May 5. They can be filed on www.regulations.gov under Docket ID: EPA-HQ-OAR-2009-0734.
Pellets Are Local Complicating the challenge of properly forecasting demand growth is the local and regional nature of pellet production and the corresponding regional market structure that can cause distribution problems, Johnson says. “One year out West, they were looking for pellet fuel and ran out. The people there made contracts with producers out East to get more fuel the next year, then a problem developed out East.” This year’s cold-driven demand presents a similar scenario, along with the concern that perceived supply problems would dampen the prospects for growth. “There isn’t a pellet shortage, but the pellets aren’t necessarily getting to where they need to be,” Ackerly says. “If the media gets on to that and it becomes a big story, then that makes people shy away from pellets. That hap-
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« MARKET pened three or four years ago, and that still is in the mind of consumers. What if there’s a pellet shortage?” There also is confusion about the pellets made in the South, he adds. “That huge development of companies in the South, building for export, is for making totally different pellets. It’s not as though those pellets could be shipped up North for heating. These are industrial pellets and you can’t put them in a wood stove. The ash content is really high and it’s a bigger-sized pellet.”
Promise of Efficiency The best pellet stoves are finely tuned, efficient stoves that rely upon those high quality pellets for the best performance. The U.S. EPA is pushing to make that the norm with its new standards for heating appliances. In 2010, the agency initiated a lengthy process that included outlining its goals early on for the development of third-party certification to beef up the voluntary pellet quality program developed by the Pellet Fuels Institute. EPA’s new regulations for wood stoves are up for public comment now. “We will see the average efficiency of pellet stoves go way up. The efficiency standard will be really good for consumers,” Ackerly says. “And honestly, I don’t think it’s going to be much of a burden for the manufacturers because it’s not that hard to make an efficient pellet stove. A lot haven’t focused on that because they haven’t had to. These efficiency standards are really good for consumers. They do cost manufacturers money, but I think it gets consumers higher efficiency in stoves. It gives consumers better experiences and they’ll more likely tell their neighbors. I think it will help pellet stoves take off—the higher in efficiency they are, the more folks can save money with them.”
European Experience Pellet quality standards have been part of the pellet industry in Austria since the early days of the industry, says Christiane Eggers, head of a state agency program in Upper Austria that supports the work of a cluster of 160 companies in the energy efficiency and renewable sector. Upper Austria was the first to adopt a pellet standard that provided the foundation for what is now the EN standard. “With a standardized fuel, the manufacturers could develop an appliance that was much better, with higher efficiency and low emissions,” she says. There are a number of factors behind the enviable growth in the European pellet market. Energy cost is the big one. Europeans face extremely high prices for fossil fuels and electricity. “In Austria, it’s three or four times more than the U.S. and Italy is double that,” Eggers says. Those high costs fed into an interesting reaction by consumers in some countries facing deep economic downturns. “In the central parts of Spain that have a cold climate and use central heating, sales for biomass boilers were pretty good,” Eggers says. While installing a pellet boiler heating system can cost upwards of $20,000, it is seen as a good investment. “If
28 PELLET MILL MAGAZINE | Q2 2014
MARKET » unsure about the banks, many bought a biomass boiler because they knew, while it’s a high investment at the moment, it will guarantee low fuel prices for the next 20 years.” Upper Austria’s work with pellet heat goes back 20 years. The state was promoting biomass heat in the mid1980s when pellets were first developed. Eggers says boilers for central heating were the focus in her state from the beginning. She remembers well the trade show in 1998 when the first automated pellet boilers were introduced and pellets were still uncommon. “People came up to me with pellets in their hands saying, ‘What is this?’” she recalls. People liked the idea of buying a local fuel that was environmentally responsible. The new bulk handling systems and automated controls made the pellet appliances much less work to use. “Plus it was cool and new,” she says. Consumers ordered 1,000 units that first year. The 10 or so pellet appliance manufacturers she works with have gone on to capture a 25 percent share of the European market for boilers, producing around 55,000 units per year. She has made multiple trips to the U.S. to help introduce seven of those companies to the U.S. market. In response to the initial question of whether consumers get used to high energy prices, Eggers says the Upper Austria and European experience suggests that consumers respond to alternatives that meet their needs. One of the services her agency offers to consumers is product-independent evaluations of energy efficiency and alternative energy options. People like to use wood, she says, but they don’t want extra work. Pellet heating alternatives that reduce energy costs and are convenient, efficient, stylish and high-tech, even though costly, do attract consumers. Author: Susanne Retka Schill Managing Editor, Pellet Mill Magazine email@example.com 701-738-4922
ONGOING CONVERSIONS: Drax expects to complete the second of three conversions to biomass power this year. The first came online last year, and the third is to be finished in 2016. PHOTO: TIM PORTZ, BBI INTERNATIONAL
30 PELLET MILL MAGAZINE | Q2 2014
UK Coal-to-Pellet Conversions Ahead The move from coal to biomass power continues as DECC names projects for support program.
BY KEITH LORIA
Q2 2014 | PELLET MILL MAGAZINE 31
n December, the U.K. Department of Energy & Climate Change revealed the names of 10 renewable energy projects that would receive government help, including four biomass projects that were designated provisionally affordable. The four biomass projects included the Lynemouth Power Station conversion, the Tees Renewable Energy dedicated biomass project with combinedheat-and-power, the Drax 2nd Conversion Unit and Drax 3rd Conversion Unit. In 2013, the U.K. imported 1.5 million metric tons of U.S. pellets, more than the combined total of the rest of the EU imports from the U.S. If finalized, the Lynemouth conversion from coal to biomass would be expected to use approximately 1.5 million metric tons of sustainably sourced wood pellets per year. That is much smaller, though, than the project left off the list, the Eggborough conversion that would have potentially used as many pellets as the Drax conversion.
The Latest on Lynemouth The DECC confirmed the Lynemouth project met the minimum criteria for an investment contract under its Final Invest-
32 PELLET MILL MAGAZINE | Q2 2014
ment Decision (FID) Enabling program, part of the government’s proposed Contract for Differences mechanism aimed at supporting major low-carbon energy projects. “This is a good step forward for Lynemouth Power, but there are a number of steps remaining before we can make a final investment decision,” says Bob Huntington, Lynemouth Power’s managing director. “It gives us the confidence that the project would be commercially viable.” Lynemouth Power Station will use sustainably sourced wood pellets, primarily imported from North America and European states in the Baltics as well as Portugal and Russia. “The biomass will be purchased from suppliers with robust sustainability credentials assured by the Green Gold Label, or similar global certificate systems, for all stages in the production, processing and transportation of sustainable biomass,” Huntington says. “Biomass is a carbon-neutral technology and converting Lynemouth Power Station to use biomass will bring a number of environmental benefits. It will result in a substantial reduction in the amount of ash created by the power station; a biomass
plant would have significantly lower emissions of sulfur oxides and nitrogen oxides; and it would save approximately 700,000 metric tons of CO2 compared to continuing to burn coal.” RWE Group purchased the coal plant in December 2012, when the Lynemouth plant already had received planning consent. The final investment decision is due to be made during the first quarter and, if favorable, construction will begin this summer with completion projected by the end of 2015. “During construction, this project will lead to hundreds of jobs and in the long term create tens of highly skilled roles in biomass generation,” Huntington says. “The station has always played an important role in the local community and we hope to continue in this legacy.”
What’s Up With Tees? MGT Power Ltd. reports its proposed Tees Renewable Energy Plant will be one of the world’s largest dedicated biomass power stations when completed. Located in Teesport in northeast England, company information says the 275 MW plant will generate enough carbon-neutral elec-
Q2 2014 | PELLET MILL MAGAZINE 33
tricity to power around 600,000 homes. “As it will operate base-load, it will produce in one year as much green electricity as the largest 1,000 MW wind farm projects, and save 1.2 million [metric tons] of CO2 from being emitted every year,” a company news release says. “The station will help to meet the EU's renewable energy target of 20 percent by 2020, accounting for 5.5 percent of the U.K.'s target.” According to Ben Elsworth, MGT Power CEO, since the company secured the government’s approval to construct the Tees Renewable Energy Plant in July of 2009, it has been working on project financing and arranging the main contracts for the plant’s design and construction. The Tees Renewable Energy Plant is expected to enter commercial operation in 2015.
The UK Goal
Drax Power Station is currently the largest single emitter of carbon dioxide in the U.K., but conversion of half of its generating capacity to sustainable biomass will see its emissions reduced by around 10 million metric tons. The station will use a range of biomass feedstocks, the majority being wood pellets shipped from the U.S. The 700 million pound ($1.5 billion) biomass conversion project is in the midst of transitioning three of the six-660 MW power generation units at Drax’s power station in North Yorkshire to biomass. The conversion of one unit was completed in 2013 and the conversion of the second unit is on track for completion in the second quarter of this year, with the third scheduled for completion in 2016.
These renewable energy projects are all part of the U.K.’s attempt to meet its 2020 renewable energy targets. All countries in the European Union are aiming for 20 percent of their energy needs to come from renewable sources by 2020. Although several sources report the U.K. is in danger of not meeting that goal, a recent DECC report shows Britain’s latest Renewable Energy Roadmap is on the path to success. According to the report, “the government’s commitment to costeffective renewable energy as part of a diverse, low-carbon and secure energy mix is as strong as ever. Alongside gas and low-carbon transport fuels, nuclear power and carbon capture and storage (CCS), renewable energy provides energy security, helps us meet our decarbonization objectives and brings green growth to all parts of the U.K.” Since 2012, the U.K. has made good progress towards its goal, delivering 15 percent of its energy demand from renewable sources. “We are fully committed to achieving this target and have seen a significant amount of deployment to date, particularly in the renewable electricity sector,” the report reads. “This was demonstrated in 2012 when more than 4 percent of the U.K.’s energy came from renewable sources—above our interim target. We will continue to monitor our progress towards the target, ensuring that we have measures in place to reach our goal.” In 2013, the DECC announced changes, prioritizing shared funding across technology groups above the previous key priorities of least cost and speed to deliver, explains Nigel Adams, member of parliament and parliamentary private secretary to the Leader of the House of Lords. “Originally, the DECC came up with a list of 16 projects that qualified for FID Enabling and whittled it down to just 10, based on criteria that included costeffectiveness, project readiness and supply chain support, and contribution to energy
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security,” he says. “On the 19th of December, 10 of the projects were told they were ‘provisionally affordable’ and able to access the FID Enabling process.” A surprising omission to the list was the Eggborough Power Plant in his district, which is now in danger of closing. Eggborough would have been a huge boost for pellet imports at an estimated 6 million metric tons, or more, of demand. For consumers, the loss of Eggborough to the U.K. grid could mean a price spike of 38 pounds on their bills. “Eggborough’s conversion represents 750 million pounds of inward investment across the region which will be lost if the project does not proceed,” Adams says. “The conversion would safeguard the 800 existing jobs onsite as well as create many new jobs in the supply chain. The conversion would also support thousands of jobs in the global supply chain from companies that provide (amongst others) rail, ports, logistics and engineering services.”
Eggborough’s Next Steps A big proponent for the Eggborough plant, which was set to begin work on the conversion this spring, Adams says he was taken by surprise, as was Eggborough and a number of other stakeholders across government and industry when it wasn’t on the U.K. DECC’s list of 10. Currently, Eggborough is investigating its options. Adams says timing will be a critical, with a resolution needed as quickly as possible. As things currently stand, the future of Eggborough Power Station is uncertain. “Eggborough will need to find a solution in collaboration with government. Should this not occur, the most probable outcome now is that the plant will no longer be supplying power to the grid beyond 2015 and the U.K. will lose circa 4 percent of capacity just at the time when its regulator, Ofgem, estimates the country could, under given circumstances, have a capacity margin of less than 2 percent, a figure which includes Eggborough’s out-
put,” Adams says. “In short, there would a real danger of the ‘lights going out’ in the U.K. should Eggborough, in conjunction with government, not find a solution for conversion.”
The UK Process For many in the U.S., the U.K.’s renewable energy programs and regulatory system are something of a mystery. The Renewables Obligation is the existing, market-based support mechanism for renewable projects in the U.K. Tradeable RO certificates are awarded for each megawatt hour of renewable energy generated. That process is being phased out in March 2017, Adams explains, to be replaced with a new mechanism designed to support all low-carbon projects (including CCS and nuclear) called Contracts for Difference, part of the Electricity Market Reform proposals that are designed to decarbonize the electricity sector, ensure security of supply and provide value for the consumer. “In order to prevent a hiatus in investment and encourage early take up of the new support mechanism, the government introduced the Final Investment Decision Enabling process,” Adams says. For American pellet exporters, it is a big disappointment that Eggborough didn’t make the DECC’s initial list of 10, although understanding the importance of the power plant’s output to meeting U.K. demand offers hope for a reversal in the final list. Learning more about the projects that did make the list suggests U.K. pellet demand will continue to grow. Author: Keith Loria Freelance Writer firstname.lastname@example.org
Q2 2014 | PELLET MILL MAGAZINE 35
Q&A At the Confluence of Forest Health and Renewable Energy As the pine beetle epidemic ravages Colorado’s stands of lodgepole pine, Mark Mathis and Confluence Energy stand ready to help clean up the devastation.
We all understand that the pellet business, by nature, is relative to the feedstock. It made geographic sense. We looked at the progression of the disease and Kremmling was at the epicenter. There also was a desire to locate in a rural area. The metrics came together. The feedstock was accessible and there was also a desire by the state and local community to have a renewable energy component as part of their economic picture. It just made a lot of sense then, and it still does now. It was a good decision.
Recognizing that something had to be done with the millions of acres of dead and dying lodgepole pine trees in the mountains of Colorado, Confluence Energy LLC founder Mark Mathis started acquiring capital to build a pellet mill. Six years later, Confluence Energy’s interdependence with this unique feedstock continues. Mathis is now working to diversify the company’s product offering, maintain a stewardship contract with the U.S. Forest Service and fully integrate the operations of a recent plant acquisition, while making sure production stays tightly correlated with difficult-to-project regional demand.
In 2013, Confluence was awarded a 10-year stewardship contract to remove and utilize stands of beetlekilled trees. What percentage of Confluence’s inbound feedstock comes from beetle kill stands? It’s probably about 80 percent. We get some white fir and some other indigenous species, mostly conifer. For all intents and purposes, though, we live and breathe on dead and dying lodgepole pine.
How did you get your start in pellet production?
How did you decide upon Kremmling, Colo., as a location for your facility?
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Does pelletizing these beetleaffected feedstocks offer any particular production challenges?
PHOTO: Element One Photography
We got into production in 2008. At the time, there were a lot of political conversations going on about global warming, climate change and energy independence. Oil was at $147 a barrel and we had a pellet shortage in the U.S. I couldn’t buy pellets for my woodstove back in 2007 and 2008. So we did some metrics on utilizing beetle kill material as a viable, whole tree wood pellet input. It penciled out and so we started down the road to capitalizing the facility and finding a location.
Yes and no. The benefit is that when you are dealing with a single species you can enjoy some of what I call the Betty Crocker cake mix approach. Let’s say you are in Wisconsin, and you are dealing with deciduous and coniferous inputs. You are constantly working on the mixing ratio to produce a consistent pellet. Since we deal mostly with conifers, it takes a little bit out of the recipe. It’s more of an add water, stir and bake mentality. But there are challenges in a whole tree environment for size reduction
INTERVIEW BY TIM PORTZ
that you don’t experience if you are dealing with sawmill residuals. It’s not anything that is insurmountable, it just has its own uniqueness.
Is there competition for those feedstocks from other forest products industries? I think that is probably one of the biggest things out here. When we came into the market in 2008, we were the sole users of the material. There is this connotation that the material is free and it isn’t, but I will call it affordable feedstock. Since that time we’ve had three or four sawmills come into the region to make studs and one-by-fours from the material. We now have four mills competing for the same acreage that served just us four years ago.With 80 percent of the ground owned by the federal government, we live and breathe off that federal land. With the federal government being distressed and not funding things the way some of us think it should, we don’t see that improving in the future. Can you talk about the importance of the coproducts Confluence offers to your operation and your business? Gross margins aren’t very good in the pellet business and you are only generating cash flow about five months out of the year. You’ve got to fund your company for the other seven months and that is always a challenge. It’s hard to be consistent operationally when you shut down and start up as part of your normal operations. As a result, any kind of diversification with pet bedding or other coproducts helps take the seasonality out of the business. Certainly pellets are a high-volume commodity
business, but these coproducts compete in more of a niche or boutique market that can potentially deliver better margins. How is the market for pellets as a home heating option in the Mountain West? Have recent higher propane prices resulted in increased demand? The biggest competitor to pellets is propane, natural gas or cordwood. We had some record high propane prices driven by seasonality and weather conditions this year. We saw a small increase in natural gas prices, which, in my opinion, wasn’t the biggest driver, but we did see shortages in propane and very high prices, which drive people in rural areas to pellets. Some pellet operators in the near Mountain West built insufficient inventories due to fiber access or plant break downs. Thus, retailers who earlier in the year had decided not to go with us called us back looking for pellets. That was a lot of volume and we were able to meet some of that demand. Most of our retailers exceeded their allocations. So we were put in a tough spot because we had our production plans and had secured X amount of fiber. Then with this surge of demand, we just didn’t have enough capacity to meet all of it, even though we are the largest producer in the region. I think it’s fair to say there were some needs that went unfilled. Are there opportunities in the area to convert larger commercial or light industrial facilities to pelletderived heat?
state policy driver, we don’t see institutions or other facilities moving to a solid fuel. If there isn’t a regulatory driver, or a deep economic reason for private industry to go in the direction of renewables, they probably aren’t going to, and I believe you are fighting an uphill battle. Don’t get me wrong, it’s a good fight to fight, but there are easier battles out there to win. Last year you acquired Rocky Mountain pellets, a producer in northwestern Colorado. How has the integration of that facility into Confluence Energy gone? It’s gone better than expected. We had done some forecasting and it was a good acquisition for us. They were our No.1 competitor. We are potentially looking at doing more of those types of acquisitions. What are your priorities for Confluence Energy in the year ahead? I believe that pellets, in their own right, are a regional application. We are focusing on being that low-cost, high-quality provider and integrating some of the benefits of now having two plants. Both plants were doing some things right and wrong, so we’ve got some work there. Finally, our stewardship project is a priority. We have a 10-year contract for our wood fiber at a reasonable rate, and we want to make sure we execute on that.
We have three or four facilities like that that we serve right now. You can only focus on so many things and they are a fraction of our gross revenues. Until we get higher natural gas prices or some sort of federal or Q2 2014 | PELLET MILL MAGAZINE 37
BIG ON PELLET HEAT: Jackson Laboratory, Bar Harbor, Maine, brought its wood-pellet burning steam facility online in 2011, displacing approximately 1.2 million gallons of No. 2 fuel annually. PHOTO: JENNIFER TORRANCE, THE JACKSON LABORATORY
Project Comparison Focuses Thinking on Effective Incentives Four pellet heat projects provide different levels of savings and returns. BY ERIC KINGSLEY
tates are ramping up efforts to promote heating with biomass, and wood pellet mills and heating appliance manufacturers have opportunities to help shape these policies. Heating with wood pellets has a range of benefits including using a domestic (often local) fuel source and providing consumers with a low-cost, renewable alternative to oil and propane. These and other benefits, including jobs, have policymakers looking for ways to encourage wood pellet projects, large and small.
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When designing policies to support biomass thermal projects and infrastructure, it’s important to think about what we’re trying to accomplish. Policymakers have lots of tools available. New Hampshire is on the verge of rolling out a firstin-the-nation thermal Renewable Portfolio Standard, New York’s Gov. Andrew Cuomo recently announced new programs to provide capital to demonstration projects, and other states are experimenting with support mechanisms. Each tool can be used to sup-
port wood pellet projects, but often it’s important to think first about what a policy is trying to accomplish, and then consider the best tools to achieve that goal. The following, based on a presentation I gave at the Pellet Fuels Institute annual meeting last summer, provides a brief look at a few projects in northern New England. Each of these projects received some level of public support, state or federal. I would also note that each project had a different goal. These are all good projects, using pub-
Incentives » Project
Biomass Fuel Type
Customer Capital Cost
Annual Fuel Savings
Payback Period (years, full cost)
Payback Period (w/ subsidy)
Subsidy / 20 year savings
lic support to accomplish different things. To make comparisons simple, I will use some basic assumptions and metrics: • Oil is the heating fuel being displaced, which is generally true in northern New England; pellets generally compete well on a Btu basis against oil and propane, but may have challenging economics against natural gas via pipeline. • Oil and wood pellet prices are held constant for 20 years. This isn’t how the world works, of course, but it makes the comparison simple and helps eliminate long debates about assumed escalators. • Annual fuel saving estimates are simply the differential between the cost of wood pellets and the cost of an equivalent amount of oil.
• The 20-year savings is simply the annual fuel savings for 20 years, less the capital cost of the project. No accounting is made for operations and maintenance costs (for either the pellet units or oil), and no accounting for inflation.
Project Profiles Let’s start at my house. I live in Maine, the state with the country’s greatest reliance on heating oil. In 2008, we purchased a pellet stove. The receipts are long gone, but
the full price—installed with a floor guard and venting system—was about $3,400. We received a federal tax credit of $1,000 (no longer available). The pellet stove is centrally located in the part of the house where we spend time, and has become the favorite spot for dogs and kids (parents too, but only on a space-available basis). We buy 2 tons of pellets a winter— the stove is clearly supplemental heat. Those pellets displace about 245 gallons of heating oil annually, and provide us a sav-
Through purchasing a renewable fuel from local forests and mills, decreased use of oil, and retained wealth in the community, wood pellet heating systems provide a range of public benefits.
Q2 2014 | PELLET MILL MAGAZINE 39
« Incentives ings of around $390 on heating costs. Over 20 years, we can expect savings of about $4,400 dollars. At the other end of the spectrum is Jackson Laboratory, a research campus located on Maine’s Mount Desert Island. This facility—known globally for its cutting edge research on genetics—installed a new “powder burn” system in 2011 which uses wood pellets crushed and burned in suspension to generate heat and electricity. This facility, which uses around 12,000 tons of wood pellets annually, is the largest single wood pellet user in the country. The project cost $4.4 million, and was supported with a $1 million grant from The Efficiency Maine Trust, a quasi-governmental agency. Jackson Labs saves about $1.74 million annually on fuel costs with this new unit, and is expected to save more than $30 million in the next 20 years. Somewhere between these two—and an area with great promise for market expansion—are residential systems used to heat the entire home. As profiled in the last issue of Pellet Mill Magazine, the Northern Forest Center led an effort to build a cluster of wood pellet-heated homes in Berlin, N.H. This effort, dubbed the Model Neighborhood Program, resulted in 37 new units, with a total project cost of around $790,000. Each boiler received funding from the New
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BUILDING THE MARKET: Projects like the Model Neighborhood Program, which subsidized the installation of 37 whole-home heating systems in Berlin, N.H., help with building a bulk delivery infrastructure which will benefit the entire community. PHOTO: NORTHERN FOREST CENTER
Incentives » Hampshire Public Utilities Commission through a rebate program, plus support from the Northern Forest Center. This cluster of 37 boilers—which were meant to serve as a model for both neighbors and for other communities—results in a total of $98,000 in annual fuel savings according to information available on the project’s real-time dashboard found on the Northern Forest website at: www.northernforest.org/berlin_dashboard.html. Assuming that these fuel savings stay constant, this group of homeowners can expect to realize savings of $1.2 million over 20 years. One of the truly innovative features of the Model Neighborhood Program is that it is using a cluster of users to build the supply infrastructure for bulk delivery that, over the long-term, has the potential to benefit the entire community. It will be interesting to look back in five years and see if these projects—which received more than half of their money from sources other than the homeowner—have built the knowledge base and infrastructure to encourage more wood pellet heating systems in Berlin and surrounding communities. A final project for consideration is Millinocket Regional Hospital, a small community hospital in northern Maine. With 25 beds, this is the type of hospital critical to rural communities that often struggles
financially. In 2013, this hospital brought a wood pellet boiler online to provide heat to the entire facility, at a total project cost of $518,000. Maine, using money from the federal American Recovery and Reinvestment Act, paid for half of the project’s capital cost. More information on this and other Maine ARRA wood heating projects can be found at a dashboard created to track these systems, www.mfs.nmcc.edu. The hospital expects to enjoy annual fuel savings of about $360,000, realizing savings totaling $2.9 million over 20 years. That’s money that can be used to support the hospital’s core mission, providing health care to the people of Maine’s Katahdin region.
Planning Incentives Each of these projects benefits not only the host—my family, a genetics laboratory, a community hospital—but also the entire region. Through purchasing a renewable fuel from local forests and mills, decreased use of oil, and retained wealth in the community, wood pellet heating systems provide a range of public benefits. It is for those reasons that state and federal programs seek to increase the use of biomass thermal systems, including wood pellets. As the projects above show, wood pellets provide some real cost-saving opportunities
over the life of a system. In my firm’s experience, however, the relatively high capital cost of wood heating systems, coupled with the perception of pellets being a niche or emerging fuel, can serve as deterrents to wider adoption. State and federal subsidies, often modest compared to the size of the project, can provide an incentive for a project host to make the decision to move to pellets. When industry advocates for new or expanded programs and support, careful consideration should be given to what is trying to be accomplished, whether the tool is expected to accomplish that goal, and what level of financial support is necessary. Funds are scarce—and always should be—so designing systems that leverage funds to the greatest benefit possible will serve industry growth well. Author: Eric Kingsley Partner, innovative Natural Resource Solutions LLC Kingsley@inrsllc.com 207-772-5440
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