Biomass Power & Thermal - December 2010

INSIDE: GASIFICATION MAKES A COMEBACK IN THE U.K. December 2010

Digging In Builders Gear Up for Biomass Boom Page 22

Making Projects More Attractive to Investors Page 28

Plus:

Why Sweden Leads in Woody Biomass Utilization Page 34

Southeast Biomass Conference Review Page 40

www.biomassmagazine.com

May 2 – 5, 2011 America’s Center St. Louis, Missouri

2011 201 Exhibit Space & Sponsorships SSponso Sp p so so

Now Available

The 2010 International Biomass Conference was w a runaway success. Nearly 1,700 attendees, 300 exhibitors, exhibito ors, 120 speakers and 60 sponsors made for the largest and most successful biomass s conference & expo on earth. We expect exhibit space and sponsorship opportunities to go fast again this year. Don’t miss your chance to be a part of this cutting edge event. www.biomassconference.com 866-746-8385 service@bbiinternational.com 2011 Sponsors:

DECEMBER 2010 | VOLUME 4 | ISSUE 12

INSIDE ¦

FEATURES 22 CONSTRUCTION Building the Biomass Industry Construction companies anticipate a boom in biomass business as utilities convert from coal and industrial plants look to cogeneration to reduce their carbon footprints.

By Lisa Gibson

28 FINANCE Show Me the Money Financial experts weigh in on the developing biomass industry and provide insight into what it will take to get projects funded in 2011.

By Anna Austin

40 DEPARTMENTS 04 EDITOR’S NOTE Biomass Poised to Leap Economic, Political, Regulatory Hurdles

By Rona Johnson

06 INDUSTRY EVENTS 07 POWER PLATFORM Biomass Power: A Lot to Be Thankful For

By Bob Cleaves

09 THERMAL DYNAMICS Biomass Thermal: A Progress Report

By Kyle Gibeault

10 ENERGY REVIEW New Potential ‘Star’ in the Biomass Gasification Realm

By Chris Zygarlicke

11 LEGAL PERSPECTIVE Prepping for Project Development in 2011

By John Eustermann

12 BUSINESS BRIEFS 14 FIRED UP 56 MARKETPLACE 57 ADVERTISER INDEX

34 HEATING Biomass Sweet Spot Twenty percent of Sweden’s energy use is generated by biomass, a situation that developed out of the country’s need to import fuel, its strong forestry industry and government support.

By Lisa Gibson

40 EVENT Industry Convenes in Biomass Central The biomass-rich Southeast was the perfect setting for the Southeast Biomass Conference & Trade Show, where hot topics including the Greenhouse Gas Tailoring Rule and Industrial Boiler Maximum Achievable Control Technology rule were discussed.

By Anna Austin, Lisa Gibson and Rona Johnson

CONTRIBUTIONS 46 RESEARCH Biomass Briquettes: Turning Waste Into Energy Research at Boise State University has revealed that the heat output of densified biomass is comparable to fuels with higher energy content.

By Owen McDougal

50 GASIFICATION Biomass Gasification in the U.K.—Where are we Now? The U.K. is experiencing a renaissance in the development of advanced biomass gasification technologies that could move it to the head of the world pack.

By Matthew Aylott

52 OPERATIONS Sophisticated Biomass Plant Operations Yield Excellent Economics Plant managers who treat their operations as an investment and not an expense will optimize production, commercial viability and profitability of biomass power facilities.

By Douglas Machon

54 PROJECT DEVELOPMENT Immigration Visas Can Help Fund Biomass Projects Biomass project developers looking for financial assistance may find it through foreign investors using the EB-5 immigrant visa program.

By Laura Danielson and Todd Taylor

DECEMBER 2010 | BIOMASS POWER & THERMAL 3

¦EDITOR’S NOTE

Biomass Poised to Leap Economic, Political, Regulatory Hurdles

RONA JOHNSON

Editor rjohnson@bbiinternational.com

This issue of Biomass Power & Thermal is about financing and building the biomass industry, which is a monumental task given the state of the economy, the current political situation and the regulatory environment.

Although the economy may be coming around, banks still seem reluctant to put their money to work, and I’m sure private investors are wondering which way the political winds are going to blow now that the Republicans have taken over the House of Representatives.

I believe that no matter who is in the majority position in the House, lawmakers in general will support biomass energy because it is a sure-fire way to create jobs in this country, which is what the people who voted for them will be expecting from them in 2011. Government support should loosen investors’ purse strings.

Then there are the regulatory issues. Biomass Power & Thermal editors interviewed bankers, private investors and construction companies to gauge their attitude toward the industry today and looking ahead to 2011. As we had anticipated, they all agreed that the most pressing issues we face currently are regulatory in nature, including the Industrial Biomass Maximum Achievable Control Technology rule and the Greenhouse Gas Tailoring Rule.

These issues came up not only in our features but also in nearly every presentation and conversation at the Southeast Biomass Conference & Expo in November in Atlanta. The idea that woody biomass would not be considered carbon neutral in the U.S. is absurd especially when you look to the rest of the world where it is being embraced as a prime renewable energy source. As David Tenny, president and CEO of the National Alliance of Forest Owners, continues to stress, the U.S. forested area has been steadily maintained for the past 100 years while the use of wood for the housing, paper and energy industry has grown. To read more about the conference, see the “Biomass Industry Convenes in Biomass Central” feature starting on page 40.

Despite the regulatory cloud, the experts we talked to for this issue and attendees at the conference were enthusiastic about the biomass industry and the potential economic opportunities that it offers.

From the burgeoning biomass power industry in the European Union, which is turning to North America to supply biomass pellets, to the return of the Biomass Crop Assistance Program, to the companies that are developing biomass energy crops and the technologies to more efficiently convert biomass into power, fuel and chemicals, there are many reasons to be bullish.

It is my fervent hope that the regulatory issues will be settled in favor of the biomass industry, and that we will have more important things to discuss when we meet at the Pacific West Biomass Conference & Trade Show, which will be held Jan. 10-12 in Seattle.

For more news, information and perspective, visit www.biomassmagazine.com

Contributing Writers Matthew Aylott writes about how the resurgence in development of advanced biomass gasification technologies in the U.K. is allowing for a variety of feedstocks to be used and end products to be created.

MATTHEW AYLOTT U.K. National Non-Food Crops Centre

4 BIOMASS POWER & THERMAL | DECEMBER 2010

Laura Danielson and Todd Taylor provide details that could help biomass project developers find financial assistance through foreign investors looking to take advantage of U.S. economic opportunities.

LAURA DANIELSON Fredrikson & Byron

TODD TAYLOR Fredrikson & Byron

EDITORIAL EDITOR Rona Johnson rjohnson@bbiinternational.com ASSOCIATE EDITORS Anna Austin aaustin@bbiinternational.com Lisa Gibson lgibson@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

ART ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com GRAPHIC DESIGNER Elizabeth Burslie bburslie@bbiinternational.com

PUBLISHING & SALES CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com ACCOUNT MANAGERS Marty Steen msteen@bbiinternational.com Chip Shereck cshereck@bbiinternational.com Bob Brown bbrown@bbiinternational.com Gary Shields gshields@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com Dave Austin daustin@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com SUBSCRIBER ACQUISITION MANAGER Jason Smith jsmith@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com

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BiomassMagazine.com or subscribe over the phone at (701) 746-8385. Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com. Advertising Biomass Power & Thermal provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Biomass Power & Thermal advertising opportunities, please contact us at (701) 746-8385 or service@bbiinternational.com.

Letters to the Editor We welcome letters to the editor. Send to Biomass Power & Thermal Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to rjohnson@bbiinternational. com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

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COPYRIGHT Š 2010 by BBI International

DECEMBER 2010 | BIOMASS POWER & THERMAL 5

¦INDUSTRY EVENTS Heating the Northeast with Renewable Biomass April 13-14, 2011

Radisson Hotel Manchester Manchester, New Hampshire This conference will address how the Northeast can expand biomass heating, the challenges that need to be addressed and overcome, and the benefits of such an expansion, such as carbon reduction, energy diversity and security, and job creation. Expert panels, interactive discussions, technology demonstration and presentations from business leaders will provide something for everyone. http://heatne.com

International Biomass Conference & Expo May 2-5, 2011

Seattle to Regional Host Biomass Conference

01/10

With an exclusive focus on biomass utilization in California, Oregon, Washington, Idaho and Nevada, the Pacific West Biomass Conference & Trade Show, produced by Biomass Power & Thermal and Biorefining magazines, is one of three distinct regional offshoots of the International Biomass Conference & Expo.

The conference will be held Jan. 10-12 in Seattle at the Sheraton Seattle Hotel. Washington is a fitting venue for this biomass conference as the state has an annual production potential of more than 16.9 million tons of underutilized dry equivalent biomass, according to a biomass survey conducted by the Department of Ecology and Washington State University. The biomass supply is enough to produce more than 1,769 megawatts of electrical power through combustion and anaerobic digestion, which is about half of the state’s annual residential electrical consumption, according to 2003 figures from the Energy Information Administration.

This conference will focus on the vast potential for biomass utilization in the Pacific West, featuring more than 60 speakers within four tracks: electricity generation; industrial heat and power; biorefining; and biomass project development and finance.

Attendees of this regionally focused event will have the opportunity to network with sources of energy crops, crop and forest residues, wood chips and other types of biomass; producers and future producers of biomass power, heat, fuel and chemicals; pellet and briquette producers; construction and engineering professionals; investors; researchers; government and military officials; emissions experts; and municipal and state government decision makers.

All sessions and receptions will be conveniently located at the Sheraton Seattle Hotel. The conference will also feature a trade show with more than 60 exhibitors including technology developers, equipment suppliers and industry service providers. For more information, go to www.biomassconference.com/ pacificwest.

6 BIOMASS POWER & THERMAL | DECEMBER 2010

America’s Center St. Louis. Missouri The largest, fastest growing biomass event was attended in 2010 by 1,700 industry professionals from 49 states and 25 nations representing nearly every geographical region and sector of the world’s biomass utilization industries—power, thermal energy, fuels and chemicals. With an anticipated 2,500 attendees in 2011, this will be the industry’s leading educational, networking and business development forum.

Speaker abstracts are now being accepted online.

(701) 746-8385

www.biomassconference.com

International Fuel Ethanol Workshop & Expo June 27-30, 2011

Indiana Convention Center Indianapolis, Indiana The FEW is the largest, longest-running ethanol conference in the world, and is renowned for its superb programming which focuses on commercial-scale ethanol production— both grain and cellulosic—operational efficiencies, plant management, energy use, and near-term research and development. Speaker abstracts are now being accepted online.

(701) 746-8385 www.fuelethanolworkshop.com

International Biorefining Conference & Trade Show September 13-15, 2011 Hilton Americas-Houston Houston, Texas This forum will allow technology developers to connect with investors and strategic partners, putting them on a path toward deployment. Organized by BBI International and produced by Biorefining magazine, this event will include panels on project finance, market development and technology scale-up for advanced biofuels and biobased chemicals production.

(701) 746-8385 www.biorefiningconference.com

POWER PLATFORM¦

Biomass Power: A Lot to Be Thankful For

BY BOB CLEAVES

Just last month, I was in Stratton, Maine, (technically part of the town of Eustis, population 685) visiting a biomass power plant owned by Boralex. The plant provides well-paying jobs for many in the area, and I was lucky enough to witness these hard working Mainers in action.

In the woods, I watched loggers remove wood residue and byproducts from sustainably managed forests—forests that are so remote and unpopulated they are part of what Maine calls its “unorganized territory.”

The plant itself was a beehive of activity—logging trucks hauling chips, conveyors delivering wood to the boiler, and the 50-megawatt turbine humming, creating power for the New England grid. Who says manufacturing is dead in this country? Some folks get excited by the majestic size of a wind turbine—for me, it’s the size of the wood pile.

And, at the Looney Moose Café down the road, I shared with plant workers some of the best potato chips I’ve ever eaten while discussing the necessity of biomass power in Stratton and throughout the rest of the country.

I know that biomass power has faced many battles this year, but sitting in the Looney Moose snacking on potato chips, which the waitress informed me were of the gourmet frozen variety, I realized that the biomass power industry has a lot to be thankful for this holiday season.

We still produce 50 percent of America’s renewable electrical energy. While it can be frustrating that wind and solar power continue to garner much of the media’s attention, a visit to Stratton Maine reminded me how very real the biomass industry is to renewable

energy and rural economies across the nation. As for the waitress at the Looney Moose, the logger feeding slash material into the chipper, the boiler operator at the plant, they all know the importance of biomass power. This a world away from the Manomet Center for Conservation Sciences, the Greenhouse Gas Tailoring Rule and Production Tax Credits. It’s our job, as an industry, to tell the real story of biomass and mobilize this growing chorus of support as more legislators, scientists and the public learn about biomass and all that we do.

In Stratton, it’s almost impossible to find a business that is unaffected by the plant, and it’s no different in other rural communities where biomass plants exist throughout the country. We have the ability to create many more Strattons, but only if government adopts responsible policies. We know the potential is huge, both to generate more power and to find a home for wood byproducts, the removal of which results in healthier forests and an incentive to keep the landscape as working forests and not shopping malls.

In Washington and among the states, our challenges are significant, and yet we have tremendous support from a wide range of interests, from forest owners to environmental groups. There is a shared vision in making sure this industry not only survives but grows. A new Congress is moving into the city come the new year, and with a new Congress could come a new discussion around energy policy. Next time you’re in Stratton, stop at the Looney Moose and make sure to ask for the potato chips.

Author: Bob Cleaves President and CEO, Biomass Power Association www.USABiomass.org

DECEMBER 2010 | BIOMASS POWER & THERMAL 7

THERMAL DYNAMICS¦

Biomass Thermal: A Progress Report

BY KYLE GIBEAULT

As the Biomass Thermal Energy Council approaches its two-year anniversary in January, it is a good time to take stock and evaluate the progress we’ve made in growing the use of biomass for heating and combined heat and power (CHP) in the United States.

January 2009 was a decidedly tumultuous time for business in America. The economy was in a tailspin and the debate on energy policy was whipsawing in Washington. Several leading companies felt the biomass thermal industry needed a stronger, more unified voice to take on these challenges. And so BTEC was born.

BTEC has a simple message: When using biomass for energy, heating and CHP are the most efficient uses of the resource. We have shared this story with many leaders, always emphasizing the ways in which biomass thermal energy fulfills our energy policy objectives. Biomass thermal is a renewable source of energy that offsets imported fossil fuels, creates jobs and promotes the sustainable use of our natural resources. What’s not to like?

Despite the attractiveness of our story, mountains do not move overnight—especially in the District of Columbia Nevertheless, we have worked hard to build a community and get our message to important officials in Congress, federal agencies, environmental organizations, and trade associations. We’ve made significant progress.

In the past two years, we have: • Played a key role in the introduction of five bills (H.R. 2080, H.R. 5918, S. 1643, S. 3188 and S. 3626) to establish or expand federal incentives for biomass heating and CHP.

• Met with and submitted numerous comments to U.S. EPA, USDA, U.S. DOE, and other federal agencies on the Biomass Crop Assistance Program, Boiler Maximum Achievable Control Technology, the Greenhouse Gas Tailoring Rule and other issues important to the industry.

• Organized and participated in numerous briefings for Congress on biomass thermal energy.

• Co-hosted the first and second annual Heating the Northeast with Renewable Biomass conferences, which doubled in size and was completely sold out in 2010.

• Received a $60,000 grant from the U.S. Forest Service for education and outreach projects related to biomass thermal energy.

• Established thermal energy as a widely recognized and important energy end-use for biomass resources.

These are significant highlights, but there is much yet to do. Next year we are planning to expand our grassroots efforts and more deeply engage biomass thermal’s most vocal champions— our members. Our industry may be a relatively small one, but we have proven that with good ideas and passionate supporters you can make things happen. We look forward to working with the new Congress and industry leaders to make 2011 the year biomass thermal energy gets the recognition it deserves in federal energy policy. I hope you’ll join us in making this goal a reality.

Author: Kyle Gibeault Deputy Director, Biomass Thermal Energy Council (202) 596-3974 Kyle.Gibeault@biomassthermal.org

DECEMBER 2010 | BIOMASS POWER & THERMAL 9

¦ENERGY REVIEW

New Potential ‘Star’ in the Biomass Gasification Realm

BY CHRIS ZYGARLICKE

More than a decade ago, the U.S. DOE, the Energy & Environmental Research Center and KBR partnered to build a 1-megawatt (MW) version of a transport reactor integrated gasifier (TRIG) for converting coal to natural gas and other chemicals. Gasifiers are essentially low-oxygen thermochemical coal or biomass conversion systems that can provide a well-contained and clean synthetic gas for power and liquid fuels. A TRIG behaves more like a catalytic cracker used in oil refining and was installed in a 70-foot tower facility at the EERC. The transport concept is similar to a fluidized-bed gasifier, but allows for more coal feed and power output.

The system can be scaled up to 300 MW with respect to power output from its synthesis gas. Since then, the EERC has conducted several thousand hours of testing on this large pilot-scale system in Grand Forks, N.D., including some new work related to biomass gasification.

Over the past several months, the EERC’s TRIG system has undergone modifications to accommodate pressurized biomass feeding at a level of 500 to 600 pounds per hour. After the successful feed system upgrade, several hundred hours of gasification testing has been accomplished for 100 percent wood residue, switchgrass, and corn stover biomass and 20 weight percent blends of these biomass types with subbituminous coal. The reason for the blend testing is that coal-fired utilities, in the U.S. and abroad, are considering TRIGtype systems for converting mixtures of biomass and coal, since some regions may be up against challenges in finding sustainable biomass supplies. Unlike Europe, the U.S. does not have strong enough incentives to encourage using biomass in larger systems. Converting fossil feedstocks to energy, even using conversion systems that are fitted with clean emissions control systems, are still cheaper than utilizing biomass feedstocks, blending biomass with coal makes sense right now.

Results of the recent biomass testing in the TRIG system were positive, however. Biomass materials were processed through a hammer mill with a 1/8-inch screen before being blended with the coal or before being fed

10 BIOMASS POWER & THERMAL | DECEMBER 2010

into the TRIG system. Testing was done using air-blown and oxygen-blown gasification modes. Oxygen-blown gasification decreases the volume of greenhouse gas emissions and provides for more efficient separation and capture of carbon dioxide and other effluents. A larger-scale biomass TRIG system could enable effective biomass conversion and carbon capture, effectively providing a negative sum gain of greenhouse gas emissions.

The operating temperatures of the TRIG system are between 870 and 925 degrees Celsius at circulating velocities of 35 to 42 feet per second. Temperature and oxygen/air input play a major role in the TRIG system’s carbon conversion efficiency, synthetic gas quality and decreased production of unwanted tars. Carbon conversion was higher for the biomass tests than for straight coal or the coal/biomass blends. The syngas quality was excellent, showing nearly even levels of carbon monoxide and hydrogen, with much lower levels of methane. The main reaction chamber of the TRIG system showed volatile matter, organic carbon, aliphatics and methane reaching peaks at the midpoint of the chamber and then decreasing by the filter outlet. Hydrogen and carbon monoxide increased through the reaction chamber to the filter outlet. These reactions were a sign of good “cracking” of the syngas components and one reason for the excellent carbon conversion.

The quality of the syngas was important to research sponsors who were interested in converting the syngas to electricity (to utilize as a boiler fuel) and for the potential of reforming the cleaned gas to liquid biofuels such as green diesel.

In the future, more work will be done to optimize the TRIG system and to determine the costs for scaling up the system. Right now, these initial results hold promise for an upcoming new “star” in biomass conversion technology.

Author: Chris Zygarlicke Deputy Associate Director, Energy & Environmental Research Center (701) 777-5123 czygarlicke@undeerc.org

LEGAL PERSPECTIVE¦

Prepping for Project Development in 2011

BY JOHN EUSTERMANN

As 2010 comes to a close, some biomass project developers may be feeling a sense of "woulda, shoulda, coulda" when looking back. This may be the result of trying to meet year-end timing issues related to the 1603 Grant program, changes to the Biomass Crop Assistance Program, Qualified Energy Conservation Bonds and other bond financing requirements, and limits for city, county and state permit approval meetings. These issues can be stressful and result in hastily prepared project documents. In such situations, project developers often find they lose leverage when negotiating critical project development documents such as engineering, procurement and construction contracts, waste supply agreements, power purchase or biogas off-take agreements. Avoiding these situations is easier said than done, but with regard to those developers looking at developing 2011 projects, appropriate planning cannot be underestimated.

The following is a brief, high-level discussion of components in projects that tend to be underestimated or overlooked completely: the applicable city, county, state and federal permitting requirements and process; and the community involvement or "buy-in" process. These components involve third parties, which the developer has little if any control over, but potentially a measurable bit of influence if managed appropriately.

Permitting: Permitting is a requirement that must be performed with the utmost diligence and consideration. In a perfect world, consolidated permitting activities within interagency coordinating bodies, or through master agency agreements where agencies work under one regulatory framework, would likely expedite review, improve communication regarding cross-media impacts, and reduce costs, both for developers and the agencies. In the absence of a consolidated permitting environment, the developer is wise to put the permitting process at the top of the Gantt chart and to keep these permitting management activities in mind: •Location—Before committing to a property, understand the local zoning and potential obstacles that may arise at particular sites such as: wetlands, endangered species/ biological obstacles; airports, traffic and access issues; distance to utilities and feedstock; properties requiring rezoning in addition to other approvals; properties requiring use

permits and in some states, such as California, the additional environmental review that may accompany a use permit; and neighbors (see discussion below).

•Timeline—Develop a realistic timeline taking into account the application process and, potentially, the environmental review, including the additional time it may take to coordinate co-permitting agencies. In addition, the timing of the permits themselves, the decision-makers’ meeting schedules and related regulatory constraints, such as mandated notice periods, and even the length of agenda, need to be superimposed on the dates that are set out for the permits.

•Permits—Depending on the location and the type of facility, there may be air, water, and land use, utility and certainly building permits, all of which have timelines. A meeting with the main permitting agency early on in development is essential.

Community Involvement: Informed citizens, stakeholders, decision makers and opinion leaders are crucial to the successful adoption of any biomass project and engaging the services of professionals to assist with gaining consensus warrants consideration.

Though not applicable in all situations, the biomass developer should consider the following activities in developing a project: educate the public and decision makers about biomass systems and issues in sustainable biomass development; inform key project participants about corporate social responsibility and environmental and social implications of their involvement; conduct outreach to government decision makers, schools, nongovernmental organizations, sustainability groups and others; provide outreach on biomass utilization and seeking to create early dialog with the affected communities; attend civic leadership luncheons to hear about local issues as appropriate; educate farmers, operators, investors and others of research and development efforts and provide outreach and coordination with farming organizations and agencies, and sponsor information outlets regarding the project and the technology.

Author:John Eustermann Partner, Stoel Rives LLP (208) 387-4218 jmeustermann@stoel.com

DECEMBER 2010 | BIOMASS POWER & THERMAL 11

Business Briefs PEOPLE, PRODUCTS & PARTNERSHIPS

Bandit Industries adds dealers

operators of power generation and processing equipment. The program, OEM Parts Plus, features hundreds of the most commonly needed spare parts associated with original equipment manufactured under the Jerguson, Jacoby-Tarbox, HYCOA or Clark-Reliance brands. Orders placed online by 2 p.m. (ET) will be shipped the same day. For more information, visit www.clark-reliance.com.

will provide engineering, project management, procurement, manufacturing and supervision of construction and commissioning for the complete boiler island and estimates the entire plant to be fully operational by April 2012.

Martin Engineering offers expanded conveyor training

Bandit Industries signed on Bejac Equipment Corp. in southern California to carry its line of whole tree chippers and Beast Recyclers. Bejac has four locations—San Diego, Los Angeles, Sacramento, and Redding. With the addition of McClung-Logan Equipment Co., Bandit Industries has expanded its offering of Beast Recyclers and whole tree chippers to six locations in Virginia—Chesapeake, Manassas, Richmond, Roanoke, Winchester and Wise. Bandit also announced the addition of Blue Mountain Equipment Rentals to its dealer network, which will carry Bandit’s chipper and stump grinder line for select counties in Pennsylvania and West Virginia. Nortrax Inc., a John Deere construction and forestry equipment dealer, announced the addition of Bandit chippers and grinders to its equipment line-up. Nortrax will carry Bandit’s line of hand-fed brush chippers and stump grinders in Ontario and Newfoundland and will serve as the exclusive Beast horizontal grinder distributor in Quebec.

Clark-Reliance establishes overnight delivery service The Clark-Reliance Corp. has established a new online service to provide overnight delivery of critical parts to

Morbark announced it has signed a dealer agreement with Elliott & Frantz Inc., based in King of Prussia, Penn.

Elliott & Frantz will sell and service Morbark’s recycling and forestry product lines, in Maryland, Delaware and the District of Columbia, from its branch locations in Jessup, Md., and Delmar, Del. Founded in 1962, Elliott & Frantz has comprehensive experience in the construction equipment industry. The company maintains a parts inventory in excess of $2 million, a complete fleet of service vehicles and a service staff with the extensive knowledge and experience.

DP CleanTech to convert coal boiler to biomass DP CleanTech has teamed up with Axis Technologies, an engineering, procurement and construction supplier in Lithuania, to extend a pre-existing fossil fuel burning plant with a renewable biomass power plant. The plant in Siauliai, Lithuania, currently burns natural gas and heavy fuel. Owner Siauliai Energija, plans to add a new biomass-fired boiler, bringing increased power to the area for zero net gain in CO2 emissions. DP CleanTech

12 BIOMASS POWER & THERMAL | DECEMBER 2010

PHOTO: MARTIN ENGINEERING

Morbark expands East Coast dealer network

CLASS IS IN SESSION: Training is tailored to all levels of experience, from new-hire through senior engineer.

Martin Engineering has expanded its Foundations Training Program on the design and development of more productive belt conveyors to offer three customizable seminars. Training is available to suit individuals with varied levels of experience and responsibility from new hire to senior engineer. Attendees attain a better understanding of conveyor safety and performance, helping to justify upgrade investments and increase profitability.

Foundations Training Programs may qualify for Continuing Education Units or Professional Development Hours; they may also qualify toward the Parts 46/48 Annual Refresher Training. For more information, visit www.martin-eng.com.

Ascendant Partners assists Lincolnway Energy Ascendant Partners Inc. performed a full feasibility of the coal-to-biomass conversion process, including biomass volumes, logistics, quality, permit impli-

BUSINESS BRIEFS¦

PHOTO: HOWDEN NORTH AMERICA INC.

Howden North America moves to Columbia

SMOOTH MOVE: The company’s roots in the U.S. date back into the 19th century.

Howden North America Inc., a supplier of fans, rotary heat exchangers, compressors and gas handling equipment for the biomass, cement, HVAC, iron and steel, mining, navy and maritime, nuclear, petrochemical, power, transportation and tunnel ventilation industries, is relocating its corporate office from Camden to Columbia, S.C. The company, formerly known as Howden Buffalo Inc., also announced that it will now be known as Howden North America Inc. The company, which employs 89 people and moved to Camden in 1999, will move into

Stefan Kaiser Joins Vecoplan Stefan Kaiser has joined Vecoplan LLC in High Point, N.C., as head of business development. Formerly with partner company Vecoplan Stefan Kaiser brings AG in Bad Marienberg Germany, Kaiser biomass industry knowledge from will act as a liaison several continents between the two entito his new role as ties for the transfer head of business development in the of both technological U.S. and practical knowledge as it applies to best practices in the design, manufacture and implementation of turnkey Biomass Processing Systems in North America and Europe. In addition to experiential knowledge of the biomass industry on multiple continents, Kaiser brings an industrial engineering degree (Dipl.-Wirt.-Ing.) to his new position at Vecoplan. The course of study required to earn this degree combines engineering and business management with an emphasis on the realization of practical business advantages in the application of technological advancements for real world settings.

De Jaye Technologies unveils biomass process analyzers/ recorders De Jaye Technologies LLC is offering its DJCH4, a non-dispersive infrared (NDIR) methane emissions analyzer recorder for the PC. It continuously measures and records methane, carbon monoxide, carbon dioxide, oxygen and nitrogen oxide. An optional data acquisition board adds four millivolt and one

digital input for temperature, pressure, flow rate, moisture and hydrogen. HC interference with methane is reduced by 95 percent with a narrow band infrared filter on the methane detector. The DJCH4 software is easy to use and measures gas with two keystrokes. The data logger has a programmable interval and duration with over-range flags on the screen and the printout. Data is saved in both a report and Excel CSV format on the hard drive or a USB memory stick. MilliVolt input data is saved with the gas data in the Excel file for graphing or calculations. For more information, go to De Jaye Technologies’ website at www.5gas.com.

Waratah opens facility in Western Australia PHOTO: PHOTO: WARATAH FORESTRY ATTACHMENTS

18,200-square-feet of office space located at 7909 Parklane Road.

cations and pricing, to assess the technical, market, economic and financial implications of the biomass conversion for Lincolnway Energy. Working with Lincolnway, Ascendant identified and performed due diligence on more than 50 potential biomass resources to determine which would align best with Lincolnway operations. This is one of the many biomass projects completed by Ascendant Partners, including a wood pellet plant acquisition; biomass market assessment; wood pelleting feasibility, business planning and project development oversight; and assessment of biomass export opportunities.

DOWN UNDER OUTFITTERS: Waratah forestry equipment network includes service in Canada, the U.S., New Zealand, Finland, Russia and Brazil.

In response to the special product and support needs of its debarking eucalyptus customers, Waratah Forestry Attachments has opened a Western Australia facility. The new 5,300-square-foot facility, located at 22 Gibbons Road in Bunbury, singularly focuses on 616C harvester customers. A one-stop shop for customers to increase the uptime and productivity of their HTH616C harvesting heads, it sells these compact harvester/processors, a comprehensive range of 616C parts, and offers expert product rebuilding and maintenance services.

SHARE YOUR INDUSTRY NEWS: To be included in the Business Briefs, send information (including photos and logos, if available) to Industry Briefs, Biomass Power & Thermal, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also e-mail information to rjohnson@bbiinternational.com. Please include your name and telephone number in all correspondence.

DECEMBER 2010 | BIOMASS POWER & THERMAL 13

FiredUp

RENEWABLE OR NOT: A ruling that allows Duke Energy to use chips from whole trees to produce power and be eligible for renewable energy credits has prompted some environmental groups to file legal challenges against it.

Wood Chip Flap Duke Energy’s request to use wood chips ruffles feathers.

The North Carolina Utilities Commission has ruled wood chips as an eligible feedstock under the state renewable energy standard (RES), and decided that wood in general is a renewable biomass resource under state law and therefore eligible for credit when utilized for renewable energy. The ruling was prompted by a request from power utility Duke Energy to gain renewable energy credits under the state RES for cofiring two of the company’s coal-fired power plants with wood chips derived from lower-value whole trees.

Although it’s been viewed as positive from groups such as the North Carolina Forestry Association, others are crying foul for sustainability reasons. Some environmental groups even filed legal challenges against Duke’s request, citing that only wood waste and scraps should be used and granted credit.

While wood chips derived from low-grade whole trees—not to be confused with whole tree wood chips as it often is—may go against the grain of what biomass power industry says is typically used at plants, it could give the struggling forest industry a healthy boost.

Bob Cleaves, president and CEO of the Biomass Power Association, points out that fuel labels can be confusing. “Historically, what we’ve said as an industry is that we don’t use chips from whole trees,” he says. “That’s not actually accurate, because there are whole trees that are part of thinning operations that the industry uses, but these are consistent with a sustainable forestry plan.”

When loggers are harvesting for merchantable timber, Cleaves says, they may thin areas of non-merchantable trees that are spindly or diseased. “To the layman, that’s simply chopping down whole trees for electricity purposes,” he says.

Furthermore, some regions may be in dire need of forest

14 BIOMASS POWER & THERMAL | DECEMBER 2010

management and thinning. Only 300,000 tons of waste wood was collected in North Carolina in 2009, and on average only 6 percent of available residuals are collected across the Southeast each year, points out Tracy Beer, renewable energy strategy manager at Duke Energy. “Residuals aren’t making it out of the woods because there isn’t adequate economic signal to do so,” she says.

Aside from wood chips, Duke Energy will also be using wood waste, but in some cases there simply will not be enough waste wood materials available. “While it seems there are lots of impressions of an abundance of waste wood, those assumptions may not be completely accurate,” Beer says. “We would agree that more waste wood could be utilized, but there isn’t an unlimited supply.

Also, it is unlikely that all of that material will ever make it out of the woods, due to terrain, landowner preferences and so on.”

Bob Slocum, executive vice president of the North Carolina Forestry Association, says North Carolina has a whopping 18 million acres of forestland. “About 58 percent of the state is forest,” he says. “Only three other states have more forestland than North Carolina, and the South as a region produces more wood than any other single nation in the world, yet our timber inventories have continued to increase.”

Notably, the vast majority of the forestland in North Carolina and the South is privately owned. “About 88 percent in North Carolina,” Slocum says. “History has proven that one of the main reasons we have as much forestland as we do is that forests have economic value to the people who own them, so having strong and varied markets for wood is essential to maintaining our forest land base. Biomass can provide an additional market for low-value wood and give landowners an economic incentive to improve forest management and to keep their land in forest.”

FIREDUP¦

North Carolina’s vast forestland base supports the state’s largest manufacturing industry—forest products. “However, the economic recession along with foreign competition, regulatory costs and other factors have severely impacted this industry,” Slocum says. “Mills have closed and those remaining are running at reduced production levels. Markets for wood are similarly depressed and landowners are not only harvesting less timber but, lacking an economic incentive, are also making lower investments in forest management.”

Biomass projects such as Duke Energy’s may help get the ball rolling again. The company’s intent is to use the lowest value biomass products available, Beer emphasizes, and none of the wood chips used will come from saw timber; only residual material or lower value whole trees, in accordance with sustainable practices.

The problem is that the word sustainability is frequently used but no one provides a definition of what it really means, Slocum says. “What is sustainability and what are the metrics by which you determine this?” he asks. “If you can define the term and how it’s measured, then answering questions about forest sustainability becomes easier.”

Realistically, can our forests provide unlimited amounts of wood forever? “Probably not,” Slocum says. “There are limits to

what an acre of land can produce, and we know that we will likely have fewer acres in the future. But we also know that our forests are probably growing only half or less than what they are capable of growing. What is lacking, among other things, is the economic signal to landowners to make these investments.”

In other news, Duke Energy and Duke University are teaming up to build a pilot anaerobic digestion plant at Loyd Ray Farms, a 9,000-head hog finishing facility in Boonville, N.C., 115 miles west of Raleigh.

“The project is about learning a lot together,” says Jason Walls, spokesman for Duke Energy. Besides the benefit of the pilot plant acting as a model and reference for other farms, Walls said the real value of the project comes in two key areas. First, it would help fulfill a portion of the state’s RES that requires a certain percentage of electricity to be generated from hog waste.

“It also helps us better understand how this power plant interacts with our existing equipment,” he says.

The project is expected to generate 512 to 639 megawatt hours of energy per year, all of which will be used at the hog farm. In exchange for hosting the experiment, hog farmer Loyd Bryant gets the system at no cost and will own it after 10 years, according to Walls. —Anna Austin

PPA Power Will power purchase agreements make up for the lack of an RPS South Carolina’s state-owned power utility Santee Cooper has approved two long-term power purchase agreements (PPA) with four biomass power plants operating or in development across the state, totaling 95 megawatts (MW).

The contracts specify that Domtar Paper Co. LLC at Bennetsville, S.C., will provide 50 MW for 15 years, and Southeast Renewable Energy will supply 45 MW for 30 years from three 15-MW plants to be constructed across the state. The first two are expected to be online in 2012 or 2013 in Dorchester and Kershaw counties.

While Santee has had a renewable energy program for nearly a decade, South Carolina does not currently have a renewable portfolio standard (RPS). Aside from fulfilling its voluntary program requirements, Santee, which already produces 22 MW of electricity from landfill gas, cited that the biomass power generation is the most costeffective renewable resource in South Carolina. However, that may not be the perspective of other privately owned utilities in the state that have no renewable energy obligations.

According to the South Carolina Forestry Association, forests cover two-thirds of the total land area in the state, or 12.4 million acres, and each year the state grows 26 percent more timber than is removed by harvesting, land clearing, changes in land use and natural mortality.

in SC? Where does South Carolina stand in regard to current biopower production and its potential to host additional sustainable biomass projects? As of 2007, there was more than 500 MW of licensed industrial biopower capacity in the state, according to John Bonitz, farm outreach and policy advocate for the Southern Alliance for Clean Energy. “Many of those operations are probably defunct now though,” he said. “There are already a couple pellet mills in operation in S.C., plus a third in development. Combined, these pale in comparison to SACE’s 2009 estimate of South Carolina’s projected potential biopower capacity, which is more than 1,500 MW, 727 MW from forest resources alone.”

Bonitz says SACE applauds Santee Cooper, which is the largest power utility in the state, for signing PPAs for appropriately scaled biopower projects. “It’s exactly the kind of leadership role that publicly owned utilities ought to be playing in biopower, emphasizing moderate scale and thermal efficiency,” he says.

Bonitz adds that SACE, which is a strong advocate for the adaptation a federal RPS, has determined the state has the resources or growth potential to multiply this five or 10-fold. “But without an RPS, it is unlikely the investor-owned utilities will do the right things to make this happen,” he says. —Anna Austin

DECEMBER 2010 | BIOMASS POWER & THERMAL 15

¦FIREDUP

So Far, So Good Initial perspectives on BCAP final rule seem positive.

PHOTO: BOB NICHOLS, USDA

Bob Cleaves, president and CEO of the While it’s likely that many are still sifting Biomass Power Association, describes the rule through the 170-plus pages of the Biomass as “incredibly confusing. But we’re cautiously Crop Assistance Program final rule, the initial optimistic that there is an opportunity for us in consensus is that most relevant industry these rules,” he says. “We understand why the groups are satisfied with changes made to the USDA did what they did because of concerns program since it was implemented early this the CPA had, but we want to make darn sure year. that residues and byproducts that don’t have The final rule comes eight months after higher value actually do qualify. Our initial USDA froze the program to correct several read is that they would. We’re still studying oversights that were realized after initial BCAP IS BACK: Ag Secretary Tom Vilsack announced the release of the Biomass Crop them though, and have more questions than implementation, including the inclusion of Assistance final rule and provided details answers at this point.” wood scraps, sawdust, chips and shavings as about renewable energy initiatives to spur rural Steve Flick, board chairman of Centereligible materials for the matching payments revitalization at a press conference in October. view, Mo.-based Show Me Energy Cooperaportion of BCAP. As a result, material prices tive, the first farmer-owned co-op in the U.S. to apply and qualify for for already-established markets, such as particleboard, fiberboard and BCAP collection, harvest, storage and transport (CHST) payments, composite panel sectors, were artificially inflated. says the co-op is glad to see the USDA narrowly define the intent and Tom Julia, president of the Composite Panel Association—the spirit of the BCAP. “We’ve been reading it like kids studying for a final industry umbrella group that heavily advocated for the suspension of exam in college,” he says. “We’re still evaluating what we like, but what payments from BCAP until the issue was resolved—says BCAP has we do know is that we favor that it defines ‘higher and better use,’ and “morphed from a job killing welfare program to one that now makes that they made sure that the spirit was to create an industry that builds economic and environmental sense. It’s now rightly targeted to the biorefineries that utilize bioenergy crops at the producer level, mostly production of new sources of woody biomass, rather than raiding established, viable markets for the wood fiber upon which a wide range on a regional basis, because what we do in the Midwest won’t work with what the people do in Florida or California.” of American industries rely,” he says.

Flick says he thinks getting the program fully operational will be a The CPA also endorses the decision that in order to qualify for slow process, but from the experience, USDA will learn what to do and matching payments, eligible materials must be collected or harvested what not to do in the next Farm Bill. “The success in the program will directly from the land before transport and delivery, as opposed to bebe making sure the farmers can generate the same wealth growing these ing separated from higher value material after harvest and transport. In [energy] crops, because at the end of the day they still have to make the addition, all eligible material must be harvested in accordance with an same land payments.” —Anna Austin approved conservation, forest stewardship or equivalent plan.

One State, Two Attitudes Beaver Wood Energy experiences two different local climates in Vermont.

Beaver Wood Energy’s proposed 30 megawatt power plant and pellet mill in Pownal, Vt., has experienced more local concern than its identical proposed facility in Fair Haven, Vt. This can be attributed primarily to topographical differences, but also to where the communities are located.

Pownal sits in a valley, stirring up concerns about emissions, along with truck traffic and water use. “We definitely aren’t experiencing the same level of concern at Fair Haven,” says Tom Emero, managing director of development and operations for Beaver Wood Energy. “Vermont has by far one of the most aggressive permitting structures in the country and [Fair Haven residents] appear more confident that that aggressive structure will do a good job of ensuring that this plant is an excellent part of their community.” Emero does not consider the concerned Pownal locals as opposition, but simply a group of people seeking more information on the facility.

Many concerns come from the neighboring state that has posi16 BIOMASS POWER & THERMAL | DECEMBER 2010

tioned itself as the least welcoming of biomass power plants: Massachusetts. Pownal is 1.5 miles from the Vermont/Massachusetts state line and citizens there have played a significant role in raising objections. “There are certainly a lot of people from Massachusetts expressing concern,” Emero says. But he adds that Massachusetts locals are not responsible for the concerns of Pownal residents.

Vermont already has two biomass plants that have been operational for more than 20 years and are viewed as positives, says Eric Kingsley, vice president of Maine-based Innovative Natural Source Solutions LLC., who has attended public hearings in Pownal. In fact, Vermont’s political leadership supports biomass and the state will need new energy generation, as it may not renew the license of a 600 MW nuclear plant, he adds.

Both facilities should be completed in late 2013 or early 2014, Emero says. —Lisa Gibson

FIREDUP¦

North to Alaska State’s potential to develop CHP systems hindered by the lack of a forestry industry.

Nearly half of the roughly 700,000 people who call Alaska home live in Anchorage.

With the additional exceptions of Juneau and Fairbanks, the majority of the communities are rural with vast distances in between and some facing energy crises. Its layout makes the state a perfect candidate for community-scale combined-heat-and-power systems, but without an existing forest products infrastructure, developers have to start from scratch.

Dalson Energy is developing a 2-megawatt woody biomass gasification CHP project in Tok, Alaska, which has an isolated grid providing power for four small towns (including Tok) and not connected to any others, according to Thomas Deerfield, president of Dalson Energy. Deerfield calls the scenario a “perfect storm” because the load requirement is 2 MW and the town is surrounded by forests of small trees so dense it’s almost impossible to walk through, posing a severe wildfire risk.

That wildfire risk is a problem in numerous areas in the enormous state, as a robust forest products industry is nonexistent. “Wildfires are a huge problem up here,” Deerfield says. Ninety percent of Alaska’s paper mills have closed so no infrastructure exists for bringing timber or biomass out of the woods.

“I would say one of the main challenges (in developing biomass projects) is there is no significant timber harvest industry anymore,” Deerfield says.

Allen Brackley, research forester with the

Pacific Northwest Forest Experiment Station in Alaska, agrees. “Supplying biomass when you’ve got a robust forest industry is pretty simple business,” he says. But in some areas such as Sitka, the available amount of biomass is insignificant compared with the cost of harvesting equipment to source feedstock locally, he adds.

But not all the same problems exist throughout the diesel-dependent state. Some areas have little forestland and others simply would refuse to switch to biomass because their fuel oil prices are surprisingly low, such as in Anchorage. In addition, the willingness of landowners to harvest biomass varies and large chunks of the state’s woods are national forests. Another portion of the market is unable to make the switch to woody biomass because systems can’t be installed and there would be nowhere to store the biomass, Brackley explains. “You’ve got a series of different problems up here in Alaska,” he says.

Despite the challenges, both Brackley and Deerfield do acknowledge the potential for development in the state. “If you look at Alaska, we’ve got biomass coming out our ears,” Brackley says. “It’s about whether they’re willing to let you cut it or develop a plan to harvest.”

Deerfield says biomass heat in Alaska is “coming back in a big way,” with many projects under development and receiving assistance from the state and federal governments

BIOMASS BONANZA: Experts say despite Alaska's vast biomass resources, the statet has no infrastructure for harvesting woody biomass.

as well as regional Native corporations. He says he cannot identify one person in Tok who opposes his project there and he sees enormous potential for similar community-scale models all over the state, despite challenges in convincing some Alaskans to revert back to wood energy from the fossil fuels they’ve used for the past 50 years.

“Alaska is a harbinger of energy challenges in America, especially in rural areas where the needs are great and the scale is community and regional, not centralized and large-urban,” he says. —Lisa Gibson

Commencing Construction Iberdrola will produce enough power for 18,000 Oregon homes by 2012.

As a result of collaboration of state and community leaders, local industry groups, the U.S. Forest Service, the Bureau of Land Management and others, Iberdrola Renewables Inc. has its required permits and has begun construction on its 26.8-megawatt biomass cogeneration plant in Lakeview, Ore. Iberdrola, predominantly a developer of wind energy projects, plans to produce enough power for 18,000 homes in southern Oregon’s Lake County by the fall of 2012.

The project was owned by two other companies before being acquired by Iberdrola, which received a $1.7 million Recovery Act grant to help with costs.

The 55-acre plant site is about 20 miles from the California border next to Collins Pine Co.’s Fremont sawmill. Much of the

power plant’s fuel will be logging and mill residuals from the sawmill’s operations. In turn, the plant will provide the sawmill with the equivalent of 2 megawatts of steam to power its operations. In total, the plant will consume about 160,000 bone-dry tons of biomass.

When complete, Lakeview Cogeneration LLC will create 18 full-time jobs at the plant and an estimated 50-plus in the forest.

Electricity generated from the plant will be sold to local utilities, helping to meet the state's renewable portfolio standard (RPS).

Oregon's RPS requires the largest utilities in Oregon to provide 25 percent of their retail sales of electricity from renewable sources of energy by 2025, smaller utilities 10 percent and the smallest 5 percent. —Anna Austin DECEMBER 2010 | BIOMASS POWER & THERMAL 17

¦FIREDUP

Closing the Loop This year, Ontario, Ore.-based Agri Energy Producers Association grew 1,500 acres of a hybrid sorghum developed by energy grass seed company Ceres Inc. The grower-owned energy cooperative plans to grow up to 30,000 acres next year, marking its presence as a dominant U.S. energy crop producer.

AEPA members will have a leg up on other energy crop growers because they don’t have to search for a buyer. They plan to use the sorghum in their own closed-loop electricity production model.

AEPA co-founders Lance Wells and Kurt Christiensen started putting the co-op together about five years ago, according to Wells. “We created it because it was the best option versus getting investors,” he says. “This way, it's farmer owned. We needed a huge operation in order to back up a biomass supply chain—lots of growers—so we decided to create this.”

AEPA’s closed-loop model consists of growing and harvesting the sorghum plant and using presses to separate the juice from the fiber. The juice will be sent into a 5-megawatt (MW) biogas power plant and the fiber will be used as feedstock at a 10-MW biomass power plant. AEPA will sell the electricity to interested buyers.

“What separates us from everyone is that we’re the only ones handling the wet [sorghum], so that’s the real secret,” Wells adds.

PHOTO: CERES INC.

Agri Energy Producers will grow and use their own crop to produce power

POWER PRODUCERS: Farmers in Oregon are growing hybrid sorghum and using it to produce their own power and selling power to the grid.

“We store it as silage, pull it out, split it apart and create electricity from both sides.”

AEPA’s first power plant is in the planning and financing stages, according to Wells. Meanwhile, the co-op will continue to recruit growers. “We’re set up to go nationwide,” Wells adds. “We can duplicate this model anywhere that this crop can be grown, and that has good interconnection points for the power sales.”

—Anna Austin

FIREDUP¦

Baiting Biogas Changes to policies could push biogas project development and industry growth.

A recent study by the Great Plains Institute illuminates the enormous potential of biogas projects in the U.S., but also illustrates the lack of incentives or support to develop them. On both the federal and state levels, existing and proposed policies could use changes or a push to jump-start a robust biogas industry and new proposals could use a champion.

One of the main problems with current policy is the fact that the focus for biogas projects lies almost solely in electricity generation, but the resource can be used for combined heat and power, natural gas replacement, transportation fuel and chemical production, according to Amanda Bilek, GPI energy policy specialist and author of “Spotlight on Biogas: Policies for Utilization and Deployment in the Midwest.” Specifically, the Business Energy Investment Tax Credit (ITC) gears its 30 percent credit only toward electricity-generating facilities. “What stakeholders would like to see is a way to open up this tax credit so that projects such as natural gas can also qualify,” Bilek says.

The grants in lieu of the ITC program, U.S. Department of Treasury’s Section 1603, could also use some revision, according to both Bilek and the newly formed American Biogas Council. As of September, only 0.1 percent of a total $5.2 million allocated to renewable energy under the program was awarded to anaerobic digestion biogas projects, according to the

council. Those grants are only available, if not re-authorized, until Dec. 31.

Industry stakeholders would also like to see changes in USDA’s Business and Industrial Guaranteed Loans program that would allow flexibility in the means of demonstrating business viability. The program does cover some biogas projects, but the main obstacle is the fact that it requires a traditional lender and businesses must provide balance sheets in order to obtain one.

“Some new businesses don’t necessarily have access to balance sheets from previous years to help secure that traditional lender,” Bilek explains.

As money always seems to be a development hang up, stakeholders say changes to state net metering rate policies allowing more payments for renewable electricity at retail rates would also lend a helping hand to biogas development. “It does help improve the economics for biogas projects,” she says of the retail rate. In addition, state renewable portfolio standards that include a resource carve-out for biogas projects would help significantly.

Changes to such policies will allow biogas to step into the spotlight and become part of our energy future, Bilek says, but she does not expect advancements until the new Congress convenes in January. “I doubt action on any of these policies is going to happen in the lame duck session,” she says. —Lisa Gibson

Process Baron

DECEMBER 2010 | BIOMASS POWER & THERMAL 19

¦FIREDUP

Made in China Biomass development in China seems to be growing exponentially with no end in sight. News reports are constantly highlighting new plant proposals and incentives, beckoning developers to join the markets and reap the benefits. The question is how to do it.

“China development is explosive,” says Simon Parker, CEO of DP CleanTech, a China-based biomass power provider. “It’s hard to exaggerate what is happening.” It is difficult to enter the burgeoning Chinese biomass market, Parker admits, but if it weren’t, profits wouldn’t be as good as they are.

Washington D.C.-based D4 Energy Group saw its window of opportunity in a partnership with Global Partners United Ltd., offering local marketing of its gasification technology in China. GPU already has a marketing presence in East Asia, but also has engineering and integration experience. “We found it critical to find a strategic alliance partner that not only brought relationships and marketing to the table, but also brought integration and engineering capabilities with it,” says Don Rosacker, CEO of D4 Energy. GPU has also demonstrated its expertise in protecting technologies in new and foreign markets, he adds.

Perhaps most important, GPU will represent a local presence for D4 Energy’s customers. Customer service and on-site support are critical with energy projects, Rosacker says, and customers can’t wait a week for someone to fly to China from the U.S. “GPU will provide what we call Tier 1 support and we’ll provide Tier 2 support to GPU,” he says.

As China represents such a substantial market for all products, a domestic infrastructure tends to develop very quickly, Parker says, even in new products. “This requires that companies who wish to tap that market have to work out quickly how to make themselves relevant locally very quickly,” he adds. “So a partnership, whilst not essential, can accomplish this goal.”

But every situation is different and a partner won’t always be the right route to take, Parker says. “It can be, or it can backfire,” he says.

20 BIOMASS POWER & THERMAL | DECEMBER 2010

PHOTO: DP CLEANTECH

How can developers enter the booming Chinese biomass market?

MODEL MARKET: Power companies such as DP CleanTech, which built this plant in Shanxian, are taking advantage of China's renewable power boom.

“The right partner with clarity upfront does help significantly. Getting the balance right here is the essential first step where each party can contribute and deliver the right solution.”

Rosacker says everything develops more quickly in China than in the U.S., as China has embraced clean energy and waste to energy.

“That goes without saying,” he laughs. The government in China is supportive of such renewable energy industries and eliminates obstacles to efficient development. “We have put obstacles on the local, state and federal levels,” he says of the U.S. But China’s quick development does come with its drawbacks.

“With such speed of development, sometimes capital is not allocated as efficiently as perhaps it could be in some instances,” Parker points out.

“The market is maturing rapidly and the government initiatives and focus to ensure balanced development of the industry is something deserving of respect,” he adds. —Lisa Gibson

FIREDUP¦

Biomass Barriers While it may seem the U.K. is poised to push to the front of the pack in biomass development, problems with policies and the government’s Renewables Obligation seem to be hindering meaningful growth in the industry.

The Renewables Obligation provides incentives in the form of Renewables Obligation Certificates (ROCs), banded by technology used. The bands are reviewed every five years, the next scheduled in 2013. Biomass currently receives between 1.5 and 2 ROCs and was finally grandfathered at current levels in July, having been the only renewable resource not given the privilege. It was a necessary change, but now different concerns loom. “This was a much welcome development, however construction periods for biomass developments will almost always span the banding review, and it is not certain that there will be a sufficient ‘grace period’ to enable the project to commission at least at the support level in place when financial close was achieved,” says Tricia Wiley with the Renewable Energy Association, adding that some uncertainty has plagued the market because of it.

In July, the Department of Energy and Climate Change implemented a split solution: grandfather support at current levels for anaerobic digestion and energy-from-waste generators; and grandfather a minimum level of support on accreditation for dedicated biomass.

The level of support is subject to change in the 2013 banding review.

“We’ve got a whole host of projects stalled at the moment because they won’t reach commission by 2013, which means they don’t know what support they could get,” she says. Development is even more difficult in Scotland, which is proposing that waste-to-energy technologies are grandfathered, but not dedicated biomass. “We’re working as an industry to try to influence the Scottish position at the moment,” Wiley says.

“From my experience, it is more difficult to develop biomass plants in the U.K. than in other parts of the European Union and it

PHOTO: SCOTTISH WATER

U.K. biomass development slows due to market uncertainty.

SLOGGING ALONG: Uncertainty over government policies and incentives has stalled renewable energy development in the U.K.

is more difficult to develop biomass plants in Scotland than it is in other parts of the U.K.,” says Donald MacBrayne, head of Horizons Environment, a Scottish Water subsidiary that runs the company’s Deerdykes, Scotland, 1-megawatt combined-heat-and-power anaerobic digestion (AD) facility. The plant digests 30,000 metric tons per year of waste from local authorities, supermarkets, hotels, restaurants and food producers. The facility is a merchant plant—built speculatively without contracts for inbound materials—and therefore was not funded by any banks, MacBrayne says, adding that securing funding is one of the most difficult aspects of AD development.

Currently, grant programs assist some developers in the U.K., but will expire in about two years and likely will not be renewed, Wiley says, making grandfathering of biomass technologies all the more important to development. —Lisa Gibson

DECEMBER 2010 | BIOMASS POWER & THERMAL 21

ÂŚCONSTRUCTION

POWERFUL PLANT: Boldt Construction, which built this biomass power plant for Laurentian Energy Authority in Minnesota, has experience with three biomass power projects in the Midwest and expects to see more projects develop.

PHOTO: BOLDT CONSTRUCTION

22 BIOMASS POWER & THERMAL | DECEMBER 2010

CONSTRUCTIONÂŚ

Building the

Biomass Industry The recent surge in the biomass market has sparked demand for plant construction, and builders expect the boom to last, despite the challenges and intricacies that can surprise developers.

BY LISA GIBSON

DECEMBER 2010 | BIOMASS POWER & THERMAL 23

¦CONSTRUCTION

SOURCE: BOLDT CONSTRUCTION

W

hen asked if he expects 2011 to be a good year for biomass project construction, Bert Bennett, biomass gasifier principal scientist for ICM Inc., responds with an enthusiastic “Definitely yes.” He’s not the only one with such a positive outlook on development in the industry and some attribute it to policies that are in the works to encourage a switch from fossil fuels.

“In 2011 and beyond, we may see an upswing in conversion projects as utilities move away from coal and convert to wood-fired renewable energy,” says Rick Cantor, vice president of business development for construction firm Fagen Inc. “This shift could be driven by the U.S. EPA proposed MACT (Maximum Achievable Control Technology) standards. Biomass cogeneration projects co-located with industrial plants could also become more active in the future.” The MACT rules set a limit on the amount of pollutants that can be released into the air and new proposals strictly limit several hazardous air pollutants (HAPs). As Cantor suggests, those proposals could mandate cleaner technologies at hundreds of power generating stations.

That demand for biomass construction and engineering, no matter the drivers, could last five to eight years, according to Bob DeKoch, chief operations officer for Boldt Construction. “Beyond that, it’s hard to say,” he adds. “These things cycle.” Boldt has taken full advantage of that cycle, with in-

TREND SETTER: Boldt Construction expects increased demand for biomass construction and engineering in the Midwest because there are several pulp and paper mills with ready access to woody biomass.

CONSTRUCTION¦ For projects that have secured financing, lenders have, in many cases, mandated the selection of a technically skilled contractor who can also provide a strong balance sheet, large bonding capacity and the ability to provide guarantees involving performance and schedule.

volvement in three Midwest biomass power projects. DeKoch says Boldt is not just entering an existing market, but caught it during resurgence. “The market is just developing,” he says.

The company sees enormous opportunity in the biomass power industry and DeKoch has noticed an increase in chatter about new projects.

Significant Southeast In the U.S., the biomass industry is perhaps developing most significantly in the southeast, with its plentiful wood resources. “The Southeast U.S. continues to appear to be the most active as far as projects currently in development go,” Cantor says. “This would be expected based on the concentration of wood biomass in this region of the country.” Outside of the Southeast, however, projects are also being developed throughout the country including in New England, Texas, the Northwest and the Midwest, he adds.

“It’s a growing trend in the Midwest,” DeKoch says as he describes Boldt’s project in Minnesota and two in Wisconsin.

“The upper Midwest has a lot of areas where pulp and paper mills thrived and they have a proximity to forest waste materials.” He adds that he doesn’t see a trend in size of recent biomass projects and it just depends on the customer’s needs. “Whether it’s large or small, it spans the full range,” he says.

ICM has focused on waste-to-energy and wood chip-to-energy projects for electricity generation ranging in size from five to 30 megawatts (MW), Bennett says. “Interest is very robust,” he adds. “And while Bert Bennett of ICM says interest we only started marketing our gasification in constructing technology this past March, we are very ex- biomass plants is cited about the interest we have received.” robust, and that the company has The company has one contracted project in received a lot of the final stages of detailed engineering and inquiries about a second recently signed a letter of intent. its gasification technology.

Bennett expects a third project to follow soon. “Hopefully by this time next year we will be combining a very robust interest with a very robust effort in manufacturing equipment and constructing biomass-to-energy projects,” he says.

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¦CONSTRUCTION

PIPING PROWESS: Victaulic supplies a coupling device that requires no welding and dramatically reduces pipe installation time.

Obstacles and Intricacies Those projects, however, won’t come without challenges and unpleasant surprises. Bennett, DeKoch and Cantor all agree that funding can be a major obstacle, but that’s not news to biomass developers. “The weak credit market has certainly been a key challenge to developers in their ability to obtain financing,” Cantor explains. For projects that have secured financing, lenders have, in many cases, mandated the selection of a technically skilled contractor who can also provide a strong balance sheet, large bonding capacity and the ability to provide guarantees involving performance and schedule. These projects are typically delivered under an engineering, procurement, construction (EPC) approach, where the contractor is responsible for all three elements. “The bottom line: in addition to construction expertise and experience, contractor financial strength is a key attribute for obtaining financing,” Cantor says.

For the customer and the EPC supplier, money from lending sources is still tight and the terms and conditions required by financing sources tend to be very onerous, DeKoch says. “The surprise might be whether the EPC builder will accept the terms or walk away,” he adds. “I think there’s more walking away these days in the interest of managing risk on the delivery side. In my 26 BIOMASS POWER & THERMAL | DECEMBER 2010

opinion, this area needs much more of a collaborative solution than we have today.”

Bennett says prices for ICM's services largely depend on the scope and scale of the project. “If we consider converting biomass to electricity and include fuel and ash/char handling, gasifier, heat recovery steam generator, turbine and emissions control systems, our estimated costs are expected to range from $3.5 million to $4.5 million per megawatt for small 5 MW projects,” he cites. For larger systems between 10 and 30 MW, costs will likely range from $3 million to $3.5 million per megawatt, he adds.

“They aren’t cheap,” DeKoch says, but clarifies that any project with boilers and power facilities is going to be expensive, regardless of the feedstock. Prices can range from $100 million to $400 million, he says. “This isn’t any more uniquely expensive than other forms of power generation.”

Besides costs, obstacles and potential unpleasant surprises for developers can include intricacies dealing with the supply of biomass and how to get it to the facility, DeKoch says. “Proximity to biomass would make the cost of generation better,” he says.

He also lists diligence, along with construction and design. “Customers have to be worried about whether they’re picking people who know what to do,” he cautions, adding that the interview and selection process is of paramount importance.

“The successful development of a biomass power project requires addressing project-specific commercial, technical and public relations issues, many of which can be especially challenging, if not deal breakers,” Cantor says. While project development can start with base design, every biomass project is different in areas including type of boiler, emission control, feedstock handling, plant size and layout, and site conditions. “The EPC contractor needs to work closely with the developer to finalize a cost effective design that meets the specific project goals including power output and air permit requirements,” he says. “Air emission permitting is an especially important design issue and several biomass power projects have been delayed until there is more clarity involving the EPA MACT standard ruling. In most cases, construction cannot start until the air permit is approved.”

He lists safety and quality as critical components to a plant’s success, as well as good community outreach, as locals will want to know that the biomass projects in their communities will have a positive economic impact. “It is therefore important that the contractor make every effort to hire local qualified vendors and subcontractors,” he says, adding that Fagen frequently attends public meetings with its project developers.

Finally, meeting schedule commitments is paramount to success of a project, Cantor says. The time crunch is exacerbated by a service date deadline of Dec. 31, 2013, in order to secure the investment tax credit. The EPC construction approach provides a method for fast-track project execution, he explains. “Procurement and construction can occur simultaneously as engineering progresses, as opposed to completing all engineering first and then going into construction.”

CONSTRUCTION¦ But developers can cut costs and schedules by using equipment catered to help specifically with that. Victaulic manufactures and supplies a mechanic coupling technology that can join pipe more quickly than welding, saving time and money on a biomass power project. The open flame-free technology forms and utilizes grooves at the end of the pipes, is environmentally friendly and can shave hours off piping installation time. “Part of the reason there is an interest in what we do is that in the construction process, we can pretty significantly reduce the total amount of labor that is required and thereby reduce the total amount of time and cost that is required to install piping at virtually any facility,” says Jim Renner, Victaulic’s vice president of biofuels and water systems technologies.

“And given the vast amount of piping involved in biomass facilities, there are some pretty significant contributions we can make to the bottom line.” On a typical power and biofuels project, piping-related costs can account for up to a third of total capital cost, he cites. “So you’re talking about a pretty significant portion of the cost.” In addition, shortening the construction time allows the facility to open sooner, thereby operating sooner and gaining revenue sooner. The technology is used extensively in facilities like casinos, Renner says.

Staying on Schedule Building a project, especially from the ground up, takes time and requires a certain degree of patience and, in some cases, perseverance. Just like costs, timelines will depend heavily on the size, scope and other case-by-case intricacies, but DeKoch says to plan for a design, construction and engineering period of between two and three years.

Bennett offers an estimate of 12 to 16 months to construct a waste-to-energy facility using ICM’s gasification technology, again depending on size. ICM can manufacture its biomass gasifier in less than four months, he says, but heat recovery systems and turbines hold up the process, as they have longer lead times, in some cases more than a year after placing an order.

Regardless of timelines, costs and other hurdles, biomass power plant construction and conversion demand seems to be on an upswing. Half of Boldt’s $7 million firm is in power and energy including coal, wind, retrofits and biomass, DeKoch says, adding that biomass power is emerging as a common trend with a long history in the pulp and paper industry. “There’s a history of it and we were involved long ago,” he says. “[Biomass] isn’t the only trend in power and energy, but it’s becoming more significant.”

Author: Lisa Gibson Associate Editor, Biomass Power & Thermal (701) 738-4952 lgibson@bbiinternational.com

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¦FINANCE

28 BIOMASS POWER & THERMAL | DECEMBER 2010

FINANCEÂŚ

Show me the

Money

What makes biomass projects attractive to potential investors and lenders today and into the new year?

BY ANNA AUSTIN

DECEMBER 2010 | BIOMASS POWER & THERMAL 29

¦FINANCE

T

hough the U.S. is slowly hobbling down the path to recovery, the economic crisis will continue to hamper project development in 2011. Knowing just what lending intuitions and investors are looking for in new or existing projects, however, as well as what they aren’t, will help beef up project profiles.

While still up against a capital-constrained environment, compared with some other renewable energy technologies, biomass power is becoming an attractive potential investment. One significant reason is that reliable, consistent base-load electricity generation is critical to large power utilities and those are provisions that wind and solar do not bring to the table, says Jerry Peters, managing partner at California-based venture capital firm Energy Power Partners. “Base-load renewables are very important to utilities, especially if they desire to or are required by a state renewable portfolio standard (RPS) to generate higher and higher percentages of their power from renewables,” Peters says. “Intermittent resources like wind and solar require utilities to have significant amounts of backup power. We like biomass because it will deliver.”

While non-intermittency may be the most enticing quality to an investor or financer, according to Peters, cost competitiveness is a close second.

Lender/Investor Perspectives “To a large extent, over the next 20- to 30-year period, we expect biomass to be competitive with fossil fuels,” Peters says. “Particularly, we cite landfill gas as being very competitive, even with currently priced natural gas. In biomass-rich areas such as the Southeast, it can be very competitive with other sources of fuels, even without a lot of incentives.”

30 BIOMASS POWER & THERMAL | DECEMBER 2010

Paul Ho, managing director at private equity firm Hudson Clean Energy Partners, agrees that biomass is becoming more attractive to lenders than ever before, but he still believes it’s more difficult to finance biomass projects than wind and solar projects.

“Non-intermittency helps from a capacity standpoint, but feedstock requirements pose more of a risk—a lender or investor would have to be very comfortable, knowing there’s a definite way to mitigate feedstock price, availability and risk,” he says. “A very thoughtful feedstock procurement strategy is one of the first things we look at.”

Peters reiterates the importance of locking in a fixed fuel supply and price, pointing out that while most investors, both debt and equity, are comfortable with landfill gas projects, the challenge of securing fuel cost pass-throughs still exists for conventional biomass fuels. “I don’t see many lenders providing financing for projects that don’t have a fixed fuel cost—which you can get in landfill gas—or don’t have a pass-through of a commodity price to the utility,” Peters says. “I have seen a few, but they’re difficult.”

Peters adds that a long-term power purchase agreement (PPA) can be a powerful influencer as well. PPAs are more likely in states that have an RPS, as higher energy rates can be achieved through the availability of renewable energy credits. That isn’t always the case though, as Peters says his firm has seen some attractive projects in states without an RPS. Venture capital firms and banks aren’t the only inJerry Peters of Energy Power vestors to court today, as corporate giants such as Waste Partners says the Management are strategically investing in new compaventure capital nies and projects firm likes biomass because it is a nonWes Muir, spokesman for Waste Management, says intermittent source in 2011 the company will continue to make investments of power. and acquisitions, in addition to the many the company

FINANCE¦ “Banks are less capital constrained now, so more are willing to lend, and more biomass deals are getting financed so banks have more familiarity with the assets.” ―Paul Ho, managing director, Hudson Clean Energy Partners

made in the biomass energy/biofuel industry in 2010. The company uses a slightly different tactic than typical investors and lenders, however, by investing prior to the technology going commercial.

“We’re looking at all sorts of new and emerging technologies in waste-based energy,” Muir says. “We make these strategic investments in companies that we think show great promise, because getting them at the ground floor is a lot cheaper than going out and buying when [the technology] is commercially viable.”

Regardless how innovative or promising a project may be, existing or pending government regulations will be a key component of project finance in 2011. “Since it was assumed that biomass would be exempt, going forward we’re going to have to see some clarity with respect to how the U.S. EPA’s (Greenhouse Gas) Tailoring Rule may affect biomass,” Peters says. “One of the interests investors have had in biomass is that there’s the assumption that it’s treated as a neutral carbon source, and therefore isn’t subject to much regulation.”

That’s something the industry will need to overcome, Ho agrees. “Investors will be keeping a close eye on that,” he says.

While government grants and loan guarantees have played an incremental role in financing projects during the economic recession, Peters says U.S. DOE loan guarantee money through the Recovery Act is likely to soon run out. “I believe we only have enough room for about $20 billion, and the DOE recently issued its most recent guarantee for wind projects, which would bring it to $16 billion, so we’re just about out of that. A lot will depend on

government guarantee of debt, especially given conventional debt lenders' unwillingness to take on some of the risks associated with biomass.”

To really take off, from Peters' perspective, biomass will need continued government support, as well as the addition of a national RPS.

Talking Strategy Quasar energy group, an anaerobic digestion system developer, is one company that has been successful in financing projects despite the economic crisis. Quasar Chief Financial Officer Steven Smith says the first move in securing steady footing was careful, long-term development of the company’s technology.

“We spent a lot of time looking at European systems, selecting the best components from them,” he says.

After successfully developing its first facility in Ohio through a German firm, the company had fully engineered a “Lego building block model,” according to Smith. “They’re modular, expandable and repeatable, and we’ve invested lots of time in development so we would be poised to move forward,” he says.

Initially the company was planning on selling systems, as well as building and operating its own, but was forced to change plans. “When the capital markets went into the chaos that they did 24 months ago, the first component fell away,” Smith says.

“Folks didn’t have the capital for their existing core business let alone for something that could be complementary, or a new business stream,” he says. “When coupled with banks not being able to lend because their balance sheets weren’t strong enough, that created a lot of chaos.”

The company is building its facilities with 100 percent equity.

“We’re able to recapitalize part of the equity based on grants, incentives and low-interest loans from state agencies,” Smith says.

DECEMBER 2010 | BIOMASS POWER & THERMAL 31

PHOTO: QUASAR ENERGY GROUP

¦FINANCE

Addicted to AD: Quasar, which developed its flagship anaerobic digestion plant in Wooster, Ohio, says the largest contributor to its projects has been the USDA, through its Rural Energy for America Program.

“Right now, the largest contributor to our projects has been the USDA, through its Rural Energy for America Program. Ohio specifically has put some incentives in place to encourage not only renewable energy but the manufacture of components, and we’ve been fortunate to have some sponsorship from that.”

The most significant component to Quasar’s financial strategy has been the Recovery Act Section 1603 project cost reim-

bursement provision of 30 percent. “We already submitted one application, and from the date we put in the application to the time we received funds in our account was only a 27-day window,” Smith says. “They allocate 60 days if everything’s perfect, and we were so successful because we made sure that we fully understood the program—we aligned ourselves with accountants and attorneys who helped us develop a game plan—so

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FINANCE¦ that when we submitted our application, we knew it would be complete and accurate.”

Once Quasar completed the application and made sure everything was correct, the company went back through it once more to make sure it wasn’t giving too much or too little information. “There are a lot of horror stories out there, people saying they aren’t Steven Smith of getting the money, or that its taking longer Quaser energy than expected, but my response is that they group says the has been just weren’t prepared,” Smith says. “It is a company successful because daunting task, especially if you haven’t been it invested a lot of through it before, but it’s been a very good time in developing anaerobic digesprogram for us and we are hopeful that its tion system. some of the program terms get extended into next year for beginning construction.

We’re doing everything possible strategically to communicate with legislators to let them know it has been a meaningful program.”

Today, the banking industry is just not available for development companies such as Quasar, Smith says. “The way we get loans is by putting 100 percent cash in the bank to secure it. We had to do that for USDA purposes—you have to get a grant and a loan—so we personally guarantee it, and then we pledge cash so it really has no impact to my capital structure on the debt side.”

Overall, Smith, who has more than 25 years of experience in the capital market, says he predicts more of an interest in purchasing systems in 2011 than in 2010, though he still describes the capital markets as extremely chaotic. “I’ve never seen the market like it still is today,” he says.

2011 and Beyond The problem with moving forward with such chaos is that people are worrying about necessities versus luxury, and that will likely continue in 2011. “There’s legislation today that helps us, and if states and the U.S. want to pass an RPS that will help too,” Smith says. “There will be other meaningful incentives that will come into play, but right now it’s all on a year-to-year basis.”

Overall, the finance market conditions should be better in 2011 than in 2010, according to Ho. “Banks are less capital constrained now, so more are willing to lend, and more biomass deals are getting financed so banks have more familiarity with the assets,” he says.

Bob Cleaves, president and CEO of the Biomass Power Association, says he thinks the biomass power industry will continue to develop at the rate that it has been. “Disappointing, and opportunistic here and there,” he says. “I don’t think we’ll see a big movement of the needle until we get a federal renewable energy standard.”

As far as finance trends go, Peters says aside from landfill gas, he predicts lenders will show more interest in anaerobic digestion projects. “They skirt around the regulatory issues with respect to carbon, and there’s the fact that the fixed fuel is there.

We’re interested in looking at anaerobic digestion when it comes to biomass sources such as agriculture waste,” he says. “When most say biomass, they think burning forest residual, but we look at it as a much wider potential area. It will be one of the areas in which we will be focusing.”

Author: Anna Austin Associate Editor, Biomass Power & Thermal (701) 738-4968 aaustin@bbiinternational.com

DECEMBER 2010 | BIOMASS POWER & THERMAL 33

ÂŚHEATING

LEADER OF THE PACK: Sweden's extensive biomass utilization efforts have put the country ahead of the curve in the development of residue harvesting machinery.

PHOTO: SKOGFORSK

34 BIOMASS POWER & THERMAL | DECEMBER 2010

HEATINGÂŚ

BIOMASS

SWEET SPOT Sweden's well-established, worldleading woody biomass industry has fueled a relationship between the forestry and energy sectors.

BY LISA GIBSON

B

iomass generates 20 percent of all energy consumption in Sweden and wood-fired district heating systems satisfy more than half of the residential heat demand. The industry became robust because of a combination of factors and has evolved since its beginning 40 years ago.

Sweden has no domestic fossil fuels so when the first oil crisis hit in the 1970s, the country began to move toward a more environmentally friendly and cheaper energy alternative. Given the fact that about 60 percent of Sweden is covered in forests, woody biomass seemed the obvious choice.

DECEMBER 2010 | BIOMASS POWER & THERMAL 35

“We have a lot of forest,” says Gustav Melin, CEO of the Swedish Bioenergy Association (SVEBIO). “We have a strong forestry industry. We have no domestic fossil fuels and we have had politicians with good knowledge and a clear view for the future and for market conditions for biomass.”

In the dismantling of fossil fuel use, the Swedish government enforced carbon taxation for oil and coal consumers at a much higher rate than other countries, currently equaling $150 per ton of carbon dioxide.

“That high taxation led to oil prices going higher than biomass,” says Thomas Levander, head of the policy analysis unit for the Swedish Energy Agency, the central administrative authority for matters concerning supply and use of energy. So a combination of the punishment for using fossil fuels and state subsidies incentivizing the research into use of forest fuels gave the biomass industry a jump start. Since then, the country has taken away the subsidies, instead relying on general economic instruments such as the carbon tax, as well as the polluter pays principle, which mandates that the polluter or industry pays for any damages it causes to air, water or soil. “We don’t subsidize the system anymore,” Levander says. “We have before, but it wasn’t a good idea.”

In addition, the country’s pulp and paper industry is well-developed, as is the sawmill industry, providing a framework for a thriving biomass industry. About half of the forest fuel is actually used within the forest industry, Melin says. In fact, the countrywide switch began with substituting forest wood as an energy source within forest industries, according to Rolf Björheden, program leader of the National Forest Energy Technology program at Skogforsk, Sweden’s forestry research institute. “We’ve been doing this about 30 years longer than most of the world and about 15 years longer than the Finns, who are the second nation in the world to use forest biomass for energy,” he says. “We’ve built up the infrastructure needed for a functional market.” Levander adds that the country has also been ahead of the curve in the development of residue harvesting machinery.

PHOTO: SKOGFORSK

¦HEATING

PILOT POWER: The Växjö Värnamo Biomass Gasification pilot plant was designed to produce 6 megawatts (MW) of electricity and 9 MW of heat.

BIOMASS BASICS: Although Sweden has extensive district heating systems, most of the country's biomass plants primarily generate electricity.

36 BIOMASS POWER & THERMAL | DECEMBER 2010

HEATING¦ FUEL PRICE COMPARISON

Fuel wood Fuel chips Coal Fuel oil

SEK/MWh 180-200 280-350 520-600 (tax 410) 650-750 (tax 370)

Prices are in Swedish Krona per megawatt hour and refer to the residential sector only.

SOURCE: SWEDISH ENERGY AGENCY

While its extensive district heating networks are well-known, most of Sweden’s biomass plants primarily generate electricity, Björheden points out. Only the small district heating plants are exclusively heat producers, he adds. The biomass industry gets a portion of its timber residual feedstock from pulp and paper producers, as that industry can’t use certain types and grades of wood. “So they expanded their interest in that direction rather than creating new industries,” Levander explains.

was forced to step aside. “That industry has mostly disappeared from Sweden,” Levander says.

Similar to the change in pellet feedstock sources, raw biomass supplied directly to energy plants traditionally comes from sawmills, but increasingly from forests as demand climbs. “It’s the same thing there,” Ekstrom says. “That’s starting to be more expensive.

You start to see pulp mills and energy plants competing for the same product.” In some instances, it pushes up prices, but in others it

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Competition and Prices But with an increase in demand for woody biomass, concerns have been swirling about competition between the biomass and pulp and paper industries, as well as price hikes for wood fiber. “For more than 20 years, there was continuous arguing between the bioenergy people and the pulp industry foresters,” Melin says.

Pellet manufacturers in Sweden, as in many other countries, started with the cleanest wood, which is sawdust, according to Hakan Ekstrom, president of Wood Resources International LLC. Then when pellet capacity was expanded, not enough sawdust was generated to satisfy demand and other types of raw material were necessary.

“That’s when you start to see competition between pulp mills and pellet manufacturers,” he says. Previously, competition was fierce between board and pellet manufacturers, but eventually the biomass industry won the battle with its willingness to pay more for the raw material and the board industry

DECEMBER 2010 | BIOMASS POWER & THERMAL 37

ÂŚHEATING means prices won’t go down. “I think you see this more in Sweden because they’re ahead of most other parts of the world,â€? Ekstrom says. The cost of forest fuel materials has risen since 2005 because of increased demand, BjĂśrheden says, having been nominally static for the previous 25 years. “In real terms, that means a very, very strong decrease in price actually,â€? he adds.

But the competition between the pulp and paper and biomass industries is not an issue all over the country. In fact, some, such as Levander, argue it’s not an issue anywhere

in the country, but recognize that changes in certain factors could make it one. BjĂśrheden says it hasn’t been an issue because the energy sector has not bought significant amounts of pulpwood. Ekstrom, however, says it is becoming a concern in the central portion of the country, where landowners are demanding more money from pulp and paper producers. “You see landowners starting to tell pulp mills, ‘If you don’t pay more for the pulp wood, we’re going to sell it to the energy plants instead,’ which forces prices up in some regions,â€? he says.

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Even with possible competition, significant price increases will be slow to mature. “That won’t happen overnight,�

Ekstrom clarifies. “Initially, the energy companies will go out and look for, at least right now, less expensive biomass than round wood.� But the demand and competition hasn’t hurt the energy industry, Ekstrom says, and prices for biomass material are not at risk of approaching that of oil and coal, due primarily to the carbon tax. In addition, Sweden’s experience and longevity in the biomass energy industry means demand will not likely increase exponentially. “They’re starting to get to a level where the problem might not expand on the demand side dramatically over the next 10 years,� Ekstrom says.

Although Melin acknowledges there’s been a long-standing argument about supply and pricing between the two industries, he says now the energy wood demand is a good thing. “Today, the pulp industry is happy about the bioenergy development since they actually gain money on the power production that is done at every site,� he says. “I believe they also have started to understand the possibilities of better management of forests.�

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From a forest owner’s perspective, demand and price increases for wood fiber isn’t bad. “If we have an industry that develops and starts to pay more for the products of forestry, according to market principles, that must mean that this new industry can do better things and provide better services,â€? BjĂśrheden says.

Melin agrees. “The use of bioenergy is actually a way for the foresters to get paid for better management of their forests, so to me there are only benefits to the industry,� he says.

Besides, biomass harvesting is not the most significant thing that happens in land management sectors in Sweden, BjĂśrheden emphasizes. “The big change is that we clearfell areas normally after 70 to 100 years of management,â€? he says. “That’s the really big event in the life of that forest.â€?

The country has maintained its forestlands this way for the past 800 years.

HEATING¦ It goes without saying that good silvicultural practices don’t include the removal of biomass from delicate areas, and the country also does not remove biomass material from national forests. Sweden’s forest practices are constantly monitored and have not remained the same throughout the biomass industry’s 40-year history. The country spends more resources on monitoring and sustainability than on technology research and development, Björheden says. Sweden implements a host of measures to ensure sustainability and forest health in the wake of its intensified forestry. “Our governmental board of forestry has a balanced view and the mission to take both environmental and production goals into account,” Melin says.

“We can see that when you pick up residues, it might even be good for the environment,” Levander explains. For the most part, he adds, citizens and environmentalists trust in the policies implemented by the government and view them as responsible.

For instance, laws mandate that ash from burning forest residues must be applied back to the forest. “That’s the secret behind counteracting the negatives,” Björheden says. “Any lasting success in this is that you have to counteract as many of the negatives as possible.”

Much like in the U.S., some Swedish citizens oppose residue removal, even with policies in place to prevent over-utilization, Björheden says, recognizing that many citizens are not particularly well informed.

Even though the municipal veto does permit a community to halt development, no plant in Sweden has been shut down or development stopped in response to citizen opposition, he says. On the contrary, citizens in municipalities with extensive woody biomass use are proud of their vision and approach to a fossil fuel-free existence.

Residue removal has not been a large issue in the general public, Björheden says, but it is between forest industries and the Forest Stewardship Council. “They’re constantly talking about this and I think in general, cooperation has been good and both parties have benefitted.”

And like the Manomet Center for Conservation Sciences study that evaluated forest

biomass carbon neutrality and sustainability in Massachusetts, Sweden’s governmentfunded research into woody biomass use for electricity and heat has found that it is only carbon neutral after a period of time, not instantly, Levander says.

Further research in the country is geared toward development of gasification systems for biomass and a pilot combined-heat-andpower plant operated briefly in Värnamo.

Chemrec has also established a black liquor gasification plant for liquid biofuels production in Piteå.

With such up-and-coming research and the fact that Swedish forests capture more carbon dioxide than goals dictate, Björheden says the country is proud of its progress.

“Presently, our conscience is fairly good,” he adds. “But we can do better. We can do more. We can’t stop global warming in Sweden, but we can do our part.”

Author: Lisa Gibson Associate Editor, Biomass Power & Thermal (701) 738-4952 lgibson@bbiinternational.com

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DECEMBER 2010 | BIOMASS POWER & THERMAL 39

¦EVENT

INDUSTRY CONVENES IN BIOMASS CENTRAL

40 BIOMASS POWER & THERMAL | DECEMBER 2010

EVENT¦

The Southeast’s reputation as a prime hotspot for biomass energy development drew a record crowd to BBI International’s regional Southeast Biomass Conference & Trade Show in Atlanta.

BY ANNA AUSTIN, LISA GIBSON AND RONA JOHNSON

E

nthusiasm was not lacking at the Southeast Biomass Conference & Trade Show, but the event, held Nov 2-4 in Atlanta, wasn’t all pie in the sky either. While the Southeast’s potential to become the country’s regional industry leader was emphasized—which included growing energy crops such as giant miscanthus and switchgrass, utilizing abundant woody biomass resources for power and fuel production and taking advantage of pellet export opportunities—speakers and attendees didn’t tiptoe around the major hurdles that the industry faces; namely, the U.S. EPA’s Greenhouse Gas Tailoring Rule, the Industrial Boiler Maximum Achievable Control Technology (IB MACT) rule, and the need for statewide and federal adoption of renewable portfolio standards.

DECEMBER 2010 | BIOMASS POWER & THERMAL 41

¦EVENT “In the forest products indusKeynote speaker David try, just about every product Tenny, president and CEO has a residual use for energy. of the National Alliance of If it’s no longer economic or Forest Owners, pointed out more efficient than a fossil to attendees that the Tailorfuel, that creates a very real ing Rule, if enforced on Jan. 2 consternation in terms of the as currently proposed, would marginal benefit that biomass no longer deem biomass comDavid Tenny of the energy is providing. It could be bustion as a renewable energy National Alliance the difference between a profit generation method. The rule of Forest Owners and a loss in such a razor-thin could drastically affect the said the U.S. EPA's Greenhouse Gas market, and it will have a real relationship between forest Tailoring rule as it's impact on existing capacity owners and biomass markets, currently written would impact and investment in biomass enTenny said, as it treats bioexisting capacity ergy today.” mass carbon emissions the and investment in Tenny said forest ownsame as fossil fuels, not tak- biomass energy. ers were surprised at the final ing into account the biogenic Tailoring Rule announcement, carbon cycle.

Tenny emphasized that despite the because there was no indication in the increased use of biomass as an energy draft rule that biomass energy would source, U.S. forest stocks have been be regulated identically to fossil fuels. steadily maintained over the past 100 “That’s the disconcerting aspect of the years—the nation’s total forest land base rule that has all of us concerned, as it is constitutes about 755 million acres— the ROI (return on investment) for forand total growing stock has actually est owners,—the carbon stored in prodincreased by 50 percent in the past 50 ucts and the environmental benefit that years. “From a carbon context, which is come from these markets over time— very important to forestry, we are netting taking that off the table poses a very about 800 million metric tons from these real question: What are the comparative forests, which is about 8 percent of all advantages to biomass energy over fossil net carbon sequestration, net that occurs fuel energy under this policy?”

Those in states with renewable portfrom all land uses so it’s very significant,” Tenny said. The products produced from folio standards looking to receive credit the forestry industry are sequestering an are aware that the EPA will regulate bioadditional 100 million metric tons per mass carbon emissions and may choose year, he pointed out, and there has been other sources of renewable energy, Tencontinuous replanting of trees for many ny pointed out. “Other sources won’t have this conflict, of where you’re getyears.

Historically, the housing and paper/ ting a benefit on one hand but creating paperboard industries have been signifi- costs on the other hand.”

Tenny encouraged attendees to educant markets for the forest industry, but right now both are at an all-time slump cate their delegates about the impact the and the paper industry capacity is not Tailoring Rule will have on their industry, expected to recover, according to Tenny. and to seek an amendment that recognizThese are two major markets that the for- es biomass carbon life cycles, measures est industry has traditionally banked on, forest carbon flux at a national scale, and if it is not amended, the Tailoring avoids differentiating between “good” Rule will negatively affect an additional and “bad” biomass, and fixes the problem now rather than deferring the solumarket—biomass energy.

“Now, biomass is a regulated source tion.

Panelists during the first plenary panof carbon as opposed to a voluntary source of carbon offsets,” Tenny said. el, which examined the viability, benefits 42 BIOMASS POWER & THERMAL | DECEMBER 2010

EVENT¦

FROM CHOPPING

TO MATERIAL HANDLING

FULL HOUSE: Attendees packed the room during the panel on Southern Energy Crops: Optimizing Regional Crops to Feed the Growing Biomass Derived Energy Industry at the Southeast Biomass Conference & Trade Show.

and potential downsides of co-firing biomass with coal in the Southeast, echoed Tenny’s message, saying the Tailoring Rule and the IB MACT are of great significance, and are currently cooling some utilities’ attitudes towards biomass.

Proceeding with Caution Power utility Duke Energy is currently co-firing with biomass at its Lee Steam Station in South Carolina, and is waiting for permitting to use biomass at its Buck Steam Station in North Carolina.

Additionally, the company has developed sites to demonstrate biomass woody and perennial plants and planting techniques.

“We are the first and only state to have a mandatory renewable portfolio standard (RPS) in the Southeast,” said Tracy Leslie, renewable energy strategy manager for Duke Energy. North Carolina, where Duke Energy does business, has a goal to replace 12.5 percent of its electricity with renewables by 2021. Despite the mandate, Duke Energy recognizes the opportunities for developing local fuel supplies and how that could benefit loggers and landowners, she add-

TO WET OR DRY STORAGE

ed.

Although Duke Energy recently prevailed when it was determined that whole tree chips would be included in the definition of woody biomass in North Carolina’s RPS, the company has the same concerns as others looking to utilize biomass: price escalation, competition and having a sustainable supply, according to Leslie.

Unlike Duke Energy, Southern Co. operates in states where there is no RPS, said Jeff Wilson, senior engineer, research and development for the utility, which produces more than 40,000 megawatts of electricity in the southeast. And there is little demand for green power from consumers.

However, half of the company’s power is generated by coal and that will have to be cut in half using new generation sources by 2015.

The company is looking at several options including nuclear, biomass and natural gas. Initially it was determined that it would be viable to convert its Plant Mitchell to biomass even without an RPS because the cost of delivering coal to

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DECEMBER 2010 | BIOMASS POWER & THERMAL 43

¦EVENT

PELLET PANEL: Panelists (left to right) Thomas Meth, Karl-Heinz Schulz, Saritha Peruri and Johnny Leggett discussed key issues that could help the Southeast take advantage of export opportunities for biomass pellets.

that plant is so high. That project has been put on hold until the EPA irons out the IB MACT and Tailoring Rule, he said.

“The EPA Tailoring Rule could kill biomass in its tracks,” he said. As for the IB MACT, Wilson said the EPA has created a “Franken-plant” with standards that may be unachievable.

In the meantime, the company has put competition aside and will continue to test biomass combustion options and is attempting to answer questions such as what will it do to boilers, selective catalytic reduction systems and fly ash.

Wilson criticized lawmakers for pushing biofuels and not biopower specifically. Wilson also touched on the negative press that biomass is currently enduring in light of the conclusions of a study conducted by the Manomet Center for Conservation Sciences that generated news stories concluding that woody biomass was worse than coal. The industry has also been unfairly criticized by people who think that biopower facilities are going to clear-cut forests to produce power.

Moving away from policy implications and hindrances, during the second and final plenary session speakers weighed in on the potential for biomass pellet exports from the Southeast to Europe, as demand there is growing and the EU aims to source 20 percent of its energy from renewable sources by 2020.

Examining Export Opportunities There’s no question that tremendous potential exists in the Southeast U.S. to develop a robust wood pellet industry, according to Johnny Leggett, senior project manager of engineering firm

44 BIOMASS POWER & THERMAL | DECEMBER 2010

“Biomass and pellets will take a leading role in achieving the binding European 2020 renewable energy sources targets.

Europe will remain dependent on international pellet imports.”

―Karl-Heinz Schulz, vice president of technology and engineering, BiEnergy Group

Hunt, Guillot & Associates LLC. “It’s no surprise to anyone in this room that the world demand for renewable energy is increasing,” Leggett told attendees. The audience stayed silent when he asked if anyone thinks there is not a demand for pellets. “Come on,” he prodded, still met with silence broken by a few chuckles.

Satisfied, he went on to share that the keys to awakening that giant in the Southeast are harvest techniques, pellet plant location, plant operation costs and plant performance.

Fellow speaker Saritha Peruri, manager of business development for California-based energy crop company Ceres Inc., introduced the crowd to another opportunity for pellets, dedicated energy crops. “There are more opportunities than just wood,” she said. Energy crops are favorable to woody crops in many ways, she added, including moisture content, yield and carbon life cycle.

“Biomass has a massive identity crisis in the U.S.,” she said, citing currently proposed unfavorable federal policies such as the Tailoring Rule and IB MACT. But energy crops are expected to be the most dominant type of biomass used in the European Union by 2020, she cited. “So American growers can focus on European export opportunities,” she said.

EVENT¦ The Southeast U.S. is the most attractive region to supply the European demand, with its export logistics, superior biomass yields and availability of contiguous acres. This could start soon, especially with the reinstatement of the Biomass Crop Assistance Program, which makes the economics of energy crops favorable again with matching payments to support growers. Eventually, the U.S. can “jump on the bandwagon” and fire up its own domestic pellet markets when it’s ready, Peruri said, with many lessons already learned from the involvement of the Southeast region in the EU’s markets.

But the U.S. will not soon have a robust pellet market, so those European markets are crucial to any developing market in the Southeast, according to panelist Karl-Heinz Schulz, vice president of technology and engineering for North Carolinabased pellet manufacturing solution firm BiEnergy Group.

Biomass encompasses a 65.8 percent share of the European renewables market, he cited. “Biomass is clearly the way to accomplish those (renewables) goals,” Schulz said.

Pellet exports from the Southeast will not come without challenges, however, and Schulz named five: location; longterm off-take and feedstock agreements; management of currency; and management of shipping risks; and optimization of plant designs to match project-specific requirements.

Panelist Thomas Meth, executive vice president of sales and marketing for Virginia-based pellet manufacturer Enviva LP, discussed pellets themselves, along with the suppliers of today. He said Russia, South America and the Baltics will be competitors for North America in exports to Europe.

“There are 400 pellet plants in Europe,” Meth said. “We have a lot to learn.” But the potential is tremendous, according to Meth, and solid biomass will be the answer to meeting Europe’s goals.

“Biomass and pellets will take a leading role in achieving the binding European 2020 renewable energy sources targets,” Schulz added. “”Europe will remain dependent on international pellet imports.”

BBI International’s next regional event, the Pacific Northwest Biomass Conference & Trade Show, will be held Jan. 1012 in Seattle. For more information, go to www.pacificwest. biomassconference.com.

Authors: Anna Austin Associate Editor, Biomass Power & Thermal (701) 738-4968 aaustin@bbiinternational.com Lisa Gibson Associate Editor, Biomass Power & Thermal (701) 738-4952 lgibson@bbiinternational.com Rona Johnson Editor, Biomass Power & Thermal (701) 738-4940. rjohnson@bbiinternational.com

DECEMBER 2010 | BIOMASS POWER & THERMAL 45

ÂŚRESEARCH

PHOTO: BOISE STATE UNIVERSITY

CONTRIBUTION

Figure 1 BIOMASS PACKED: Boise State University researchers tested biomass briquettes of four different compositions, left to right, 100 percent paper, 1:3 paper to biomass, 3:1 biomass to paper and 100 percent paper to demonstrate that the energy output of densified low-energy feedstocks can be similar to that of higher energy content fuels.

Biomass Briquettes: Turning Waste Into Energy A Boise State University study proves that low-energy feedstocks can be densified and when combusted produce heat output comparable to higher energy content fuels.

BY OWEN MCDOUGAL, SETH EIDEMILLER, NICK WEIRES, MARK SWARTZ AND MIKE MCCORMICK

F

uel briquettes generated by the lowpressure compaction of paper, sawdust, agricultural or yard waste, etc. currently serve as an alternative to firewood, wood pellets and charcoal in developing countries in Africa, Asia and South America.

Research at Boise State University in Idaho, explored both the caloric content and shape to optimize burn efficiency of the biobri-

quettes. The energy content of briquettes ranged from 4.48 to 5.95 kilojoule per gram (kJ/g) depending on composition, whereas the energy content of sawdust, charcoal and wood pellets ranged from 7.24 to 8.25 kJ/g.

Biobriquettes molded into a hollow-core cylindrical form exhibited energy output comparable to that of traditional fuels. The study demonstrates that low-energy content feed-

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Power & Thermal or its advertisers. All questions pertaining to this article should be directed to the author(s).

46 BIOMASS POWER & THERMAL | DECEMBER 2010

stocks can be composted, pressed and combusted to produce heat output commensurate with higher energy content fuels.

In 2006, the U.S. produced more than 227 billion kilograms (kg) of solid waste; this equates to approximately 2.1 kg per person per day, where approximately half of this amount is in the form of paper and horticultural rubbish[1]. Conversion of these wastes into combustible biomass briquettes would provide a means to satisfy individual energy

RESEARCHÂŚ

PHOTO:BOISE STATE UNIVERSITY

Figure 2

FIRE IN THE HOLE: The biomass briquettes were combusted in a testing apparatus that consisted of a fume hood, controlled burn chamber, Bunsen burner and thermocouple.

needs while alleviating landfill use[2,3]. Further, lumber has become a scarce resource in many regions of the world, and there is a pressing need for sustainable fuels to augment or replace traditional wood fuels[4].

The energy produced when properly molded biobriquettes are combusted is comparable to traditional fuels. These biobriquettes can be burned in unmodified wood and wood pellet stoves, fireplaces, patio heaters and charcoal grills, and provide a lowcost method for converting organic wastes into energy [5]. Ideally, biofuels can be made from renewable and readily available materials, and their production should result in a reduced environmental impact when compared to traditional fuels being replaced[6].

The four types of biobriquettes produced and analyzed in this study consist of the following compositions: 100 percent biomass, 3:1 biomass to paper, 1:3 biomass to paper and 100 percent paper. This manuscript focuses on briquette composition and produc-

tion, combustion, and energy content as determined by oxygen bomb calorimetry.

Biobriquette Composition and Production The materials for biobriquettes including paper, leaves, pine needles, sawdust and shop waste were ground into particles of 6 to 8 millimeters (mm) in diameter to increase surface area for soaking and to enhance packing efficiency[7]. Briquettes made entirely of shredded paper were prepared by the addition of just enough water to cover the material and soaked for approximately one week. As the ratio of biomass to shredded paper increased, the amount of time required to soak the material for successful molding also increased.

For instance, biobriquettes made entirely of shredded leaves required approximately five weeks soak time before pressing. The soaked material was tested for readiness by pressing a scoop of the mash by hand.

Mash that held its form in the palm of the hand was considered ready to be pressed into briquettes.

Compaction occurred at moderate to low pressures (approximately 30 to 50 megapascal (MPa)) using adaptations of the original hand-operated lever press developed by Ben Bryant of the College of Forest Resources in Seattle, Wash.[8-10]. The mold for this press consists of a 100 mm diameter poly vinyl chloride (PVC) pipe with predrilled holes that was capped at the bottom with a thick piece of plastic drilled to accept a 38 mm diameter dowel used to create the central air channel in the briquette. Presoaked material was loaded into the mold around the dowel and the mold was capped with a plastic plug to create the air grooves at the briquette base. The concept of air grooves to increase surface area and facilitate air flow in the base of the briquette was introduced by Kobus Venter of Vuthisa Technologies, a briquette stove

DECEMBER 2010 | BIOMASS POWER & THERMAL 47

ÂŚRESEARCH manufacturer in South Africa. Once loaded into the press, the biomass was compacted; the briquette manually pushed out of the PVC mold and placed onto a drying rack.

After drying, the briquette dimensions were 97 mm outer diameter, and approximately 70 mm in height, with a 38 mm inner diameter hollow core. Figure 1 shows biobriquettes composed of 100 percent paper with increasing percent biomass to 100 percent biomass.

A Bunsen burner was used to simultaneously ignite the hollow core center, bottom and sides of the briquette. Upon ignition, flames formed a convection column in the center of the briquettes facilitated by the air grooves in the bottom of each briquette.

The air grooves appeared to enhance the combustion, which lead to increased burn temperatures, combustion rates, more complete combustion and cleaner burns as evidenced by less smoke emission as compared to wood, wood pellets and charcoal[11].

Calorimetric Analysis A Parr oxygen bomb calorimeter interfaced to a Vernier Logger Pro thermocouple was used to determine the caloric content of the biobriquette materials relative to traditional fuel sources. Bomb (or constant volume) calorimetry experiments were performed by traditional methods[12-17]. Briefly, the sample to be tested was grated, filtered with a 20-mesh sieve and then pressed into a 1 gram (g) pellet. Ignition of material under 2.533 megapascal oxygen (MPa O2) resulted in an observed temperature increase of the steel bomb vessel. The caloric content of the material was then calculated while taking into account corrections for unoxidized fuse wire. The heat capacity of the calorimeter was calibrated with benzoic acid and naphthalene standards[15].

Combustion Analysis The combustion tests were carried out in a fume hood with a face velocity of 30.5 meters (m) per second, to provide a steady flow of air. Biobriquettes, weighing on the order of 100 g each, were placed on a wire mesh stand 21 centimeters from the floor

Figure 3 CALORIE COUNT: The oxygen bomb calorimetry results of the briquettes were compared with traditional fuel sources.

SOURCE: BOISE STATE UNIVERSITY

of the hood and enclosed in a modified Weber chimney stove topped with wire mesh.

A Bunsen burner placed under the briquette served as the ignition source. Once the biobriquette had begun to combust, the ignition source was removed and a 2-liter (L) aluminum saucepan containing 500 milliliters (mL) of deionized water was placed on top of the stove (Figure 2). This process was implemented in order to monitor the heat output from the biobriquette once the Bunsen burner was removed. The temperature of the water bath was recorded by the Vernier Logger Pro device interfaced to a computer, which measured the temperature change in the water every second over a span of 4,000 seconds (just over an hour).

The four types of briquettes mentioned earlier were combusted in this study. In addition, traditional fuels including charcoal, wood and wood pellets were ignited and energy output was monitored under the same set of conditions (i.e. mass of 100 g, consistent ignition time by Bunsen burner, same method of recording heat output).

Briquettes of each composition were tested from two to four times whereas traditional fuel sources were tested thrice each.

48 BIOMASS POWER & THERMAL | DECEMBER 2010

Calorimetric Results Figure 3 shows the results of the oxygen bomb calorimetry experiments. The caloric content of the briquettes increased with the percent of biomass in the briquette. The lowest value was found to be 4.48 kJ/g for 100 percent paper briquettes and the highest was 5.95 kJ/g for 100 percent biomass briquettes. The values for the 1:3 and 3:1 parts paper to biomass briquettes were determined to be 5.48 and 5.90 kJ/g, respectively. In all cases, the briquette materials were found to be lower in caloric content than wood pellets (8.25 kJ/g), wood (7.24 kJ/g), and charcoal (7.33 kJ/g). It should be noted that the caloric content of materials vary depending on the calorimetry method. In this study, bomb calorimetry was used on materials grated through a 20 mesh sieve to ensure consistent surface area of the sample. It is also important to note that combustion of unmodified materials will generally yield lower energy values than materials of increased surface area[18].

More effective thermal output is achieved by increasing the surface area, which allows biobriquettes to compete in terms of energy output with traditional fuel sources that may have greater caloric contents.

RESEARCHÂŚ MS; Junk Mail Reduction, http://deq.state.ms.us/MDEQ.nsf/ page/Recycling_JunkMailReduction?OpenDocument (Accessed 16 July 2010).

3. Recycling Advocates, Portland, Ore.; Ten Ways to Stop Junk Mail Reduce, Reuse, Recycle, www.recyclingadvocates.org/pdf/ pubs/junkmail.pdf (accessed 16 July 2010).

4. Chaney J O, Clifford M J, Wilson R, An Experimental Study of The Combustion Characteristics of Low-Density Biomass Briquettes.

5. Landfills: Environmental Problems, www.landfill-site.com/ html/landfills__environmental_probl.php, Search Term: Landfill Problems, (Accessed 17 July 2010).

6. Demirbas A. Sustainable Charcoal Production and Charcoal Briquetting. Energy Sources, Part A: Recovery, Utilization, and Environmental Effects, Vol. 31, Is. 19, January 2009, pp.

1694-1699.

7. Grover P D, Mishra, S K, Biomass Briquetting: Technology and Practices. Food and Agriculture Organization of the United Nations, Bangkok, Thailand. The FAO Regional Wood Energy Development Program in Asia, April 1996.

Figure 4 BIOBURN: Researchers produced results of the combustion profile modification with variable Bunsen burner ignition times, and charted the difference between a rapid flaming burn and a slower, smoldering burn for the biobriquettes.

SOURCE: BOISE STATE UNIVERSITY

Combustion Analysis When approximately 100 g masses of wood and wood pellets were rapidly ignited, the result was an average increase in temperature of 500 mL of deionized water of between 57 and 64 degrees Celsius, respectively. The charcoal sample was the slowest to ignite, resulting in the smallest water temperature increase, a change in temperature of 17 C, although it burned for the longest duration. In comparison, it was found that briquette combustion was optimized by airflow grooves and a 150 second ignition time in an air-rich environment. These conditions mimic the combustion of multiple briquettes at one time, which is their intended use.

To demonstrate the characteristic properties of biobriquette combustion under these ideal conditions, an experiment was conducted using the 1:3 part biomass to paper briquette. The results of this test demonstrate that biobriquettes can produce temperature changes for 500 mL of water that are consistent with those of wood and wood pellets (i.e. a change in temperature less than or equal to 47 C) (Figure 4). Ignition times of 60 and 90 seconds provided

8. Volunteers in Technical Assistance, Arlington, Va.; Understanding Briquetting, www.cd3wd.com/cd3wd_40/vita/ briquett/en/briquett.htm (accessed 17 July 2010).

9. Volunteers in Technical Assistance, Arlington, Va.; Understanding Wood Wastes as Fuel, Technical Paper #46, www.bioenergylists.org/vitawood (accessed 17 July 2010).

slower, smoldering burns with a change in temperature of less than or equal to 20 C, but as ignition times increased to 120 and 150 seconds, peak temperatures rose accordingly, which caused an increase in water temperature between a change in temperature of less than or equal to 40 C and a change in temperature of less than or equal to 47 C, respectively (i.e. commensurate with traditional fuels).

10. Volunteers in Technical Assistance, Arlington, Va.; Understanding Paper Recycling, www.cd3wd.com/cd3wd_40/ vita/paprrcyc/en/paprrcyc.htm (accessed 17 July 2010).

Discussion

14. Sturtevant J M. Technique of Organic Chemistry. In: Weissberger A, editor. Physical Methods of Organic Chemistry, New York: Interscience Publishers, Inc; 1959, vol. 1, pt. 1, p.

597-8.

Study results show that the energy output of biobriquettes compressed from biomass waste is nearly equivalent to that of common fuel sources when burned in an oxygen-rich environment comparable to unmodified wood and wood pellet stoves, fireplaces, patio heaters and charcoal grills.

There are many clear advantages of biobriquettes, including the simplicity by which they can be produced and the availability and affordability of materials used in their production.

REFERENCES 1. U.S. EPA; Municipal Solid Waste: Basic Information, www. epa.gov/msw/facts.htm (Accessed 16 July 2010).

11. Legacy Foundation, Ashland, Ore.; Fuel Briquettes, www. legacyfound.org/ (Accessed 16 July 2010).

12. Jessup R S. Precise Measurement of Heat of Combustion with a Bomb Calorimeter. Natl Bar Std US Monograph 1960; 7.

13. Coops J, Jessup R S, van Nes K, Hubbard W N, Scott D W, Prosen E J, et al. Chapters 3, 5 and 6. In: Rossini FD, editor. Experimental Thermochemistry, New York: Interscience Publishers, Inc; 1956.

15. Oxygen Bomb Calorimetry and Combustion Methods, Parr Instrument Co. (Moline, Ill.); 1960, Tech. Manual 130.

16. International Critical Tables. New York: McGraw-Hill Book Company; 1929, vol. V, p. 162.

17. Selected Values of Chemical Thermodynamic Properties, Natl. Bar. Std. U.S. Circl 500, 1952.

18. Holstein S, Stanley R, McDougal O M. Fuel Briquettes Out of Junk Mail and Yard Wastes. J Chem Innovation 2001;31:22-8.

Authors: Owen M. McDougal, Seth Eidemiller, Nick Weires, Mark Swartz and Mike McCormick Professor of Chemistry and Biochemistry, Boise State University (208) 426-3964 owenmcdougal@boisestate.edu

2. Mississippi Department of Environmental Quality, Jackson,

DECEMBER 2010 | BIOMASS POWER & THERMAL 49

¦GASIFICATION CONTRIBUTION

WASTE TO ENERGY: In the U.K. advanced gasification technology will most likely be used to produce energy from novel forms of biomass including leftover food and municipal solid waste.

Biomass Gasification in the UK—Where are we Now? After years in the dark, gasification is lighting the way towards sustainable energy production.

This article from the U.K.’s National Centre for biorenewable energy, fuels and materials looks at recent progress in biomass gasification and what the future holds for the technology.

BY MATTHEW AYLOTT

B

iomass can be thermally converted into energy by a variety of methods. The main three ways are combustion, pyrolysis and gasification. Gasification is a thermochemical conversion process that reacts carbon-based materials at high temperatures (800-1,200 degrees Celsius) with a limited amount of oxygen, air and/or steam. The reaction yields a combustible gas, mainly comprised of carbon monoxide and hydrogen. This gas can be used to generate heat and power or converted into a number of useful products, including fuels such as ethanol, synthetic diesel or jet fuel; and chemicals such as methanol or synthetic lubricants.

The gasification process itself can be either autothermal or allothermal. In autothermal gasifiers, the energy necessary for gasification is provided within the gasifier by partial combus-

tion. Allothermal gasifiers are externally heated, for example by electricity in the case of plasma gasifiers or via heated bed material. The type of gasifier used will depend on the input feedstock, its characteristics and the required end use.

Gasification is capable of converting a wide range of sustainable and low-cost feedstocks into energy. In countries with low-population densities and high resources this might be wood or energy crops, but in the U.K. it is more likely we will see novel forms of biomass being used in gasification, such as leftover food and municipal solid waste (MSW).

Market Development in the U.K. Over the past 10 years, investment in biomass gasification in the U.K. has been small, particularly in comparison to countries such as Sweden, Germany and the U.S. Project Ar-

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Power & Thermal or its advertisers. All questions pertaining to this article should be directed to the author(s).

50 BIOMASS POWER & THERMAL | DECEMBER 2010

able Biomass Renewable Energy (ARBRE)— built near Eggborough (Northeast England) in 2001—was among the first of its kind in the U.K., producing energy from gasified biomass.

The plant cost £30 million ($48 million) but closed after only eight days of operation never to reopen. The closure of the project left nearly 50 local farmers without a market to sell their biomass, having planted 1,500 hectares (3,700 acres) of short-rotation coppice willow. However, ARBRE’s failure was less a result of the gasification technology, and more due to a change in the commercial strategy of the projects parent company and bankruptcy of the turnkey contractor appointed to oversee the project.

Now nearly 10 years after the doors closed at ARBRE, gasification is undergoing something of a renaissance in the U.K. New technologies are allowing a variety of different feedstocks to be used and end products to be produced.

GASIFICATION¦

Figure 2 POWER AND FUEL: Ineos Bio plans to produce renewable energy and bioethanol, via gasification and fermentation, using prepared biomass waste.

SOURCE: INEOS BIO

Figure 1 DIGGING DEEPER: Research institutions are working on gasification technology and gasification plants in the U.K., particularly with the intent to tackle some of the more traditional problems associated with biomass gasification— ash clinker and tar production.

SOURCE: NNFCC

Current Research and Development The U.K. has a growing research and development network for biomass gasification (Figure 1). Universities—Newcastle, Leeds, Cranfield and UCL—are playing an important role in the design of advanced gasification systems, particularly with a view to tackling some of the more traditional problems associated with biomass gasification of ash clinker and tar production.

Much of the primary research and development on gasification has involved using wood as the feedstock, because in most parts of the world it is the largest source of biomass. However, the U.K. is unique in that it has a comparatively small and localized wood resource but a high population density. As a result, waste is often a more readily available feedstock for gasification than wood.

The U.K. produces more than 17 million metric tons (18 million tons) of MSW each year, compared to just 4.6 million metric tons of surplus wood. Recovering the energy stored in MSW will help tackle the dual prob-

lems of climate change and constraints on landfill space; by 2015 the U.K. must reduce the amount of waste sent to landfills to less than 35 percent of that sent in 1995. This has led to technology providers developing novel processes for converting waste to energy, although most are currently at the planning or demonstration scale.

Commercial Production of Energy and Fuels from Biomass New biomass gasification projects are emerging across the U.K., highlighting the growing interest in the technology as a mechanism for creating fuel and energy from renewable sources. This includes energy-from-waste projects, which use the renewable (biogenic) and nonrenewable parts of the feedstock, as well as plants using traditional sources of biomass or utilizing the biogenic fraction of MSW by advanced separation.

For example, in Newport on the Isle of Wight, Energos Ltd. has been operating its commercial gasification plant since 2009. The plant is designed to run on 30,000 metric tons of fuel annually, produced from 60,000 to 70,000 metric tons of MSW. The technology generates more than 2 megawatts of electricity, enough to power up to 3,000 homes.

Elsewhere, Ineos Bio plans to produce renewable energy and bioethanol, via gasification and fermentation, using prepared bio-

mass waste (Figure 2). Its commercial-scale biorefinery (planned for construction on Teesside, England) is due to be operational by 2012. Approximately 50 percent of the input energy is expected to be recovered, mainly as ethanol with some electricity being exported to the National Grid.

At a site near London, British Airways and U.S. bioenergy group, Solena, are planning to produce jet fuel from gasified waste.

Eventually, BA hopes the project will produce at least half of the airline's fuel needs for its London City Airport operations.

Biossence has been granted planning permission to develop the East London Sustainable Energy Facility. This facility will gasify local waste left after recycling into renewable electricity, at efficiencies of 35 to 40 percent.

Eventually ELSEF hopes to produce enough energy to power about 10,000 homes a year.

Together these projects, among others, will leapfrog the U.K. into a world-leading position with respect to the advanced gasification of biomass. Challenges remain before this can be achieved, however, including securing finance for projects and developing strong and sustainable feedstock supply chains.

AUTHOR: Matthew Aylott Staff Writer, U.K. National Non-Food Crops Centre M.Aylott@nnfcc.co.uk www.nnfcc.co.uk

DECEMBER 2010 | BIOMASS POWER & THERMAL 51

ÂŚOPERATIONS

PHOTO: NAES CORP.

CONTRIBUTION

OPERATIONS EXCELLENCE: NAES-operated biomass facilities have established support and oversight structures to maintain exceptional plant operations.

Sophisticated Biomass Plant Operations Yields Excellent Economics Plant operators who treat their facilites as investments and implement sophisticated plant operations processes create lasting economic value.

BY DOUGLAS MACHON

A

carefully developed plant operations approach represents a critically important variable to optimize the production, commercial viability and plant profitability of biomass power generation facilities.

Bridging the gap between a good project plan and a profitable power plant requires an integrated operations capability that should be implemented early. Early involvement demonstrates to the financial community the cohesion to bring operations expertise to bear early enough to make a difference in optimization of process technology in order to help miti-

gate technology and operations risks, as well as the commitment to establish value through cost-effective, long-term operations performance.

Investing in Plant Operations Exceptional performance begins by treating plant operations as an investment, not an expense. Doing otherwise has been demonstrated to be a disastrous strategic decision.

Why? Because in the absence of an owneraligned, experienced, sophisticated, proactive, performance-oriented operations capability,

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Power & Thermal or its advertisers. All questions pertaining to this article should be directed to the author(s).

52 BIOMASS POWER & THERMAL | DECEMBER 2010

even the best project plan will fail to reach pro forma expectations. This holds true for the owner attempting to save money by developing an untested internal operations capability or one who hires a conflicted party to watch over their handy work.

Best Practices Starts with Pedigree Simply stated, there is no substitute for the experience gained from operating assets under a wide variety of conditions. Equally true is that excellence in plant operations cannot be established and sustained without a sophisticated support and oversight structure.

Few organizations possess the collective institutional platform required for exceptional plant operations.

PHOTO: NAES CORP.

OPERATIONS¦

GETTING IT RIGHT: Operators should manage their assets to the owner's priorities and not the original equipment manufacturers.

• Procedures: Development and implementation of custom-designed systems descriptions and operating procedures that detail exactly what it takes to operate the plant • Maintenance: Implementation of a custom computerized maintenance management system in order to capture costs and maintenance history of all equipment and parts used • Performance: Continuous development of operating options to maximize plant performance beyond OEM contract guarantees • Optimization: Encourage participation in enhancement initiatives based on industry users’ groups, extensive training, industry conferences, specialized workshops and an experience database • Warranties: Formal fault-scrutiny designed to proactively identify warrantee issues and potential serial failures • Relations: Enhancement of community relations by providing a consistent relationship with the regulator, off-takers, landowners and environmental agencies • Reporting: Development and implementation of reporting standards and requirements • Oversight: Continuous project management and oversight of asset and implementation of performance engineering and optimization efforts, as needed.

PHOTO: NAES CORP.

The Results

SAFE AND SOUND: Operators need to adhere to and implement all local, state and federal safety and environmental laws.

Project financing entities will expect that operations success will best emanate from those firms that can demonstrate the capacity to provide the following: • Alignment: Management of the asset to the owner’s priorities, not the original

equipment manufacturers (OEMs) • Safety and Compliance: Adherence and implementation to all local, state, and federal compliance laws in the areas of safety, environment and North Electric Reliability Corp. through defined approaches

Owners who treat plant operations as an investment and actually do implement sophisticated plant operations processes create lasting economic value: • Obtain standard commercial financing • Maximize employee safety • Operate in compliance • Avoid fines and penalties • Mitigate technology risk • Eliminate or minimize forced outages • Minimize unscheduled repairs • Maximize uptime • Attain higher productivity/performance • Optimize profitability.

AUTHOR: Douglas Machon Business Development, NAES Corp. doug.machon@naes.com

DECEMBER 2010 | BIOMASS POWER & THERMAL 53

¦PROJECT DEVELOPMENT CONTRIBUTION

CASH INFUSION: The EB-5 immigrant visa program could encourage more foreign investment in renewable energy projects.

Immigration Visas can Help Fund Biomass Projects Renewable energy project developers may find funding opportunities through foreign investors.

BY LAURA DANIELSON AND TODD TAYLOR

F

unding for renewable energy projects has been challenging, as private investors may not have the resources or are concerned about regulatory uncertainty. Federal funding, once viewed with great hope, has turned out to be a frustrating, and often hopeless, endeavor.

But the U.S. is still one of the best markets in the world for renewable energy projects, and even if many U.S. investors are unwilling to participate, there are many foreign investors looking to take advantage of the opportunities.

The EB-5 immigrant visa category offers U.S. renewable energy projects and foreign investors an avenue to make it all work.

Congress created the EB-5 immigrant visa category for investors making significant investments in commercial enterprises that benefit the U.S. economy and create at least 10 full-time jobs. Due to onerous restrictions, however, this category was underutilized for many years. In 2003, Congress initiated a study

of the EB-5 program to determine why and concluded that the rigorous application process was deterring applicants. It also found that even though few people had participated, EB-5 investors had invested an estimated $1 billion in a variety of U.S. businesses. Since then we have seen a steady growth in the number of EB-5 investment projects, and particularly in the number of approved regional centers. Even though the category remains underutilized, EB-5 investment is increasingly being looked at as a means of revitalizing the U.S. economy.

Basic EB-5 Requirements Approximately 10,000 visas are reserved annually for applicants to invest in a new commercial enterprise employing at least 10 fulltime U.S. workers. To qualify under the EB-5 program, the new enterprise must be one in which the applicant must invest (or be in the process of investing) at least $1 million (or

The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Power & Thermal or its advertisers. All questions pertaining to this article should be directed to the author(s).

54 BIOMASS POWER & THERMAL | DECEMBER 2010

$500,000 if investing in a “targeted employment area,” discussed below). The investment must benefit the U.S. economy and create the requisite 10 jobs. Permanent residence for EB-5 investors is granted conditionally for two years, after which time they need to file an application to remove the conditions, proving that their investment has continued to qualify.

After developing the EB-5 category, Congress created a program to encourage its utilization, called the Investor Pilot Program, which set aside 3,000 EB-5 visas each year for those who invest in “designated regional centers.”

Although efforts are underway to make this program permanent, it is still temporary and was recently renewed until Sept. 30, 2012. At present, more than 90 percent of all EB-5 investments are made through regional centers, of which there are about 75. A regional center is an “economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation or increased domestic capital investment.” The benefit to investors is that the pilot program does

PROJECT DEVELOPMENT¦ not require that they employ 10 U.S. workers (indirect job creation is sufficient) or that they be engaged in the direct management of the business.

To be approved, a regional center must submit a detailed proposal outlining how it plans to focus on a U.S. geographical region to achieve the required job creation and growth.

It must also outline the amount and sources of committed capital and the plan for promoting the project.

sets owned by the investor may be considered capital if the investor is personally liable and the assets of the new enterprise are not used as security. A signed promissory note, for example, generally constitutes a contribution of capital provided the petitioner is obliged to make all the requisite payments and there are no “escape” clauses. USCIS has ruled that the full amount of the promissory note must be paid off by the end of the two-year conditional residence period.

Qualified Investors

New Commercial Enterprises

USCIS precludes corporate or other nonindividual investors from the EB-5 category, but more than one investor can participate in the same, new commercial enterprise provided that each one has invested (or is actively in the process of investing) the required amount and that a minimum of 10 jobs are attributable to each investor. The source of all capital must be identified and all invested capital must have been obtained lawfully. The regular EB-5 program and the pilot program have similar requirements, with the distinction that the former requires the investor to submit all of the evidence whereas the latter requires the regional center to certify that the investor has met its criteria regarding the particular investment project.

In addition, it is critical that all investors prove that their capital is “at risk” at the time of making the application. It is not enough to intend to invest; there must be an actual commitment of funds, which can include certain debt arrangements.

To prove that the capital was lawfully acquired, investors must submit tax returns for the previous five years. In a regular EB-5 case, investors must prove that they will be managing the new commercial enterprises.

To qualify as “new,” businesses must be created after Nov. 29, 1990, and must be “commercial” for-profit entities. There are exceptions, however, when an investor restructures, reorganizes or expands. Unfortunately, the rules provide minimal insight into what level of restructuring or reorganizing must be done to establish a new enterprise, and all but one of the challenged cases found that the businesses failed to do so. Expanding an existing business requires that there be an increase of at least 40 percent in the net worth or the number of employees.

A new enterprise established through the capital investment in a troubled business must prove that the number of existing employees will be maintained at no less than the pre-investment level for a period of at least two years.

A “troubled business” is one that has been in existence for at least two years and has incurred a net loss, during the 12- to 24-month period before the petition was filed, of at least 20 percent of the business’s net worth before the loss.

To qualify for the lower investment amount of $500,000, the employment must be created in a targeted employment area. Therefore the EB-5 investment must either be in a rural area or in a high unemployment area.

To qualify for EB-5 status, investments must “benefit the U.S. economy,” but no guidance is provided in the rules as to exactly what this means. The USCIS examiners are therefore left to their own interpretations when adjudicating petitions.

Normally, except with troubled business applications, at least 10 full-time jobs must be created per EB-5 investment. These jobs must be for direct employees of the enterprise and not for independent contractors. The employ-

Qualified Investments USCIS requires that the entire amount of capital be invested and at risk at the time the application is filed, including binding debt arrangements. The term “invest” means to contribute capital, so a contribution made as a loan in exchange for a note, bond or any other debt arrangement does not qualify. “Capital” means cash and cash equivalents, inventory and other tangible property. Retained earnings do not qualify as capital. Indebtedness secured by as-

ees may be U.S. citizens, lawful permanent residents, or other immigrants (asylees, refugees, and conditional residents), but they cannot include the investor’s dependents. Full-time jobs require at minimum 35 hours per week (including job sharing arrangements). The jobs don’t need to be created immediately at the time of the initial investment and can be rolled out over the two-year period of the EB-5 investor’s conditional residence, with a detailed business plan explaining the strategy. The jobs must be located in “targeted employment areas” to qualify for the $500,000 investment.

Removing Conditional Residence When the initial application has been approved, the investor either adjusts status (if within the U.S.) or is admitted on an immigrant visa, at which time he or she becomes a conditional resident for two years. In order to remove the conditions, a petition must be filed establishing that the individual invested the required capital and that the investment created or will create 10 full-time jobs. Technically, under the rules, an investor will qualify for removal of the permanent residence conditions if it can be shown that the capital investment requirements have been “substantially met” during the conditional period, but as a practical matter, USCIS is most likely to require that the capital has been fully invested. If the 10 requisite jobs aren’t fully staffed by the end of the initial two years, USCIS will want proof that those jobs will be created “within a clear, defined and credible period of time.” Investors’ conditional status is extended during the pendency of their applications. If denied, the EB-5 investor will be asked to leave the U.S. and is deportable.

The history of the EB-5 program has proved difficult, with USCIS applying an extremely strict interpretation of the rules. Given the persistent high rates of unemployment in the U.S. at present, we can only hope that USCIS sticks to its word and allows vital investment into our country at a time when it is most needed.

Authors: Laura Danielson Chair Immigration Department, Fredrikson & Byron (612) 492-7248 LDanielson@fredlaw.com Todd Taylor Co-Chair Clean Technology Group, Fredrikson & Byron (612) 492-7355 ttaylor@fredlaw.com

DECEMBER 2010 | BIOMASS POWER & THERMAL 55

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56 BIOMASS POWER & THERMAL | DECEMBER 2010

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DECEMBER 2010 | BIOMASS POWER & THERMAL 57

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