February 2015 March 2015
Driving Development Project Developers On Their Road From Concept To Construction Page 18
Plus: New Faces
In Domestic Pellet Market Page 20
And:
Cellulosic RINs: Big Boost For Biogas Page 34
www.biomassmagazine.com
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INSIDE ¦ MARCH 2015 | VOLUME 9 | ISSUE 3
06 EDITOR’S NOTE Here Be Dragons By Tim Portz
INCREASINGLY INNOVATIVE: The
rapidly growing pellet industry has stoked innovation, including the use of hot oil tube dryers. See Page 18.
07 INDUSTRY EVENTS 08 BUSINESS BRIEFS 46 MARKETPLACE
PHOTO: ASTEC INC.
POWER 10 NEWS 11 COLUMN Super Bowl of Politics By Bob Cleaves
12 DEPARTMENT Eagar To Get Started A small Arizona community is on track to deploy a novel technology that will convert the area’s abundant wood waste streams into power. By Tim Portz
20 PELLET 17 NEWS 18 CONTRIBUTION Pellet Plant VOCs: Best Practices In Control By Malcolm Swanson PE
20 FEATURE Opportunity Still Knocks While Europe’s growing demand for pellets is the industry's big story, two U.S. forest products businesses see continued opportunity in the domestic market. By Carla Harper
MARCH 2015 | BIOMASS MAGAZINE 3
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4 BIOMASS MAGAZINE | MARCH 2015
INSIDE ¦
ADVERTISER INDEX¦ 24-25
2015 International Biomass Conference & Expo
47
2015 National Advanced Biofuels Conference & Expo
48
4B Components, Ltd.
8
Airoflex Equipment
38
AMANDUS KAHL GmbH & Co. KG
16
American Pulverizer Co.
42
Andritz Feed & Biofuel A/S
36
ASGCO
2
Astec, Inc.
7
Bandit Industries, Inc.
10
Basic Machinery Co., Inc.
46
BBI Project Development
31
Continental Biomass Industries
13
Detroit Stoker Company
22
DI PIÙ
32
English Boiler & Tube, Inc.
14
Fike Corporation
9
Gray
37
Hurst Boiler & Welding Co. Inc.
45
IHI Power Services Corp.
23
Integrated Environmental Solutions
15
Iowa Economic Development Authority
19
Javo International BV
29
KEITH Manufacturing Company
4
New Holland Agriculture
26
ProcessBarron
30
Tramco, Inc.
43
Verdante BioEnergy Services
17
Williams Crusher
44
Wolf Material Handling Systems
MARCH 2015 | VOLUME 9 | ISSUE 3
THERMAL 26 NEWS 31 COLUMN Getting Woodstoves From Here To There By John Ackerly
28 DEPARTMENT Trial By Fire After a number of attempts, the community of Unity, New Hampshire, makes the economics for biomass-derived heat pencil out. By Katie Fletcher
34 BIOGAS 32 NEWS 33 COLUMN Good Policy Should Float All Bio-Boats By Amanda Bilek
34 FEATURE The Cellulosic RIN Revolution For biogas project developers, the revenue opportunity afforded by the renewable fuel standard has made the business case for vehicle fuel production hard to ignore. By Katie Fletcher
ADVANCED BIOFUELS & CHEMICALS 38 NEWS 39 COLUMN Say It Ain’t So, Joe By Michael McAdams
40 FEATURE Constructing A Full-Service Vision SG Preston plans to leverage ambitious vertical integration strategies to simultaneously enter multiple bioenergy markets. By Ron Kotrba
MARCH 2015 | BIOMASS MAGAZINE 5
¦EDITOR’S NOTE
Here Be Dragons While reading the features contained in this month’s Biomass Magazine, our project development and plant construction issue, I found myself thinking about the medieval cartographers and how they would represent the edges of the known world. Often they would include images of dragons or serpents, presumably to make the point that just beyond the area they were able to depict
TIM PORTZ
in a map there was risk.
VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR
Bioenergy projects also bring inherent risks and the
tportz@bbiinternational.com
theme that emerges from this month’s collection of stories is that during the development phase of each project, great effort was and is being made to mitigate those risks.
In Katie Fletcher’s page-34 story, “The Cellulosic RIN Revolution,” she makes clear
EDITORIAL PRESIDENT & EDITOR IN CHIEF Tom Bryan tbryan@bbiinternational.com VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR Tim Portz tportz@bbiinternational.com MANAGING EDITOR Anna Simet asimet@bbiinternational.com SENIOR EDITOR Ron Kotrba rkotrba@bbiinternational.com NEWS EDITOR Erin Voegele evoegele@bbiinternational.com STAFF WRITER Katie Fletcher kfletcher@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 OF OPERATIONS Matthew Spoor mspoor@bbiinternational.com
that biogas project developers have found the renewable fuel standard can deliver more
SALES & MARKETING DIRECTOR John Nelson jnelson@bbiinternational.com
economic certainty to their digesters via the generation of renewable identification num-
BUSINESS DEVELOPMENT DIRECTOR Howard Brockhouse hbrockhouse@bbiinternational.com
bers (RINs). We’ve been tracking this trend for well over a year now and Mike Silva, civil engineer and project manager at CR&R Environmental Services, underscores its importance saying, “RINs and Low Carbon Fuel Standard credits really helped us make the decision to go to transportation fuel versus electricity.” The project near Perris, California, still carries risk, of course, but the RIN platform contributed to a level of surety that got the money and the shovels moving. Carla Harper’s page-20 story, “Opportunity Still Knocks,” demonstrates that a care-
SENIOR ACCOUNT MANAGER Chip Shereck cshereck@bbiinternational.com ACCOUNT MANAGER Jeff Hogan jhogan@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com TRAFFIC & MARKETING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com
EDITORIAL BOARD MEMBERS Chris Sharron, Western Oregon Wood Products Amanda Bilek, Great Plains Institute Stacy Cook, Koda Energy
fully considered and well-executed business plan that avoids overreach is often the best
Ben Anderson, University of Iowa
risk mitigation approach available. Her feature traces the project development journey of
Adam Sherman, Biomass Energy Resource Center
two smaller pellet production facilities whose owners would probably prefer to call “right sized.” Amidst the excitement of rapidly expanding pellet markets overseas, these two plants took a measured approach and built pellet capacity that perfectly complements existing feedstock streams as well as the markets immediately available to them. Finally, I urge everyone to pay particular attention to the columns offered by both Amanda Bilek (page 33) and Mike McAdams (page 39) in the context of mitigating risk. Bilek, McAdams and every other association representative who contribute to our title wake up each day and work to build a policy environment that provides all of us with as
Justin Price, Evergreen Engineering
Subscriptions Biomass Magazine is free of charge to everyone with the exception of a shipping and handling charge of $49.95 for anyone outside the United States. To subscribe, visit www.BiomassMagazine.com or you can send your mailing address and payment (checks made out to BBI International) to Biomass Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 701-746-8385 or service@bbiinternational.com. Advertising Biomass Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Biomass Magazine 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 Magazine Letters to the Managing Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to asimet@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
much surety as they can deliver as we work to take market share from well-entrenched energy incumbents. McAdams’ column about the peril that poorly administered regulations can deliver an industry into is a must read and only buttresses the respect I have for everyone who, despite the risks that come with this industry, sails forth into the unknown.
6 BIOMASS MAGAZINE | MARCH 2015
COPYRIGHT © 2015 by BBI International
Biomass Magazine: (USPS No. 5336) March 2015, Vol. 9, Issue 3. Biomass Magazine is published monthly by BBI International. Principal Office: 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Periodicals Postage Paid at Grand Forks, North Dakota and additional mailing offices. POSTMASTER: Send address changes to Biomass Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, North Dakota 58203. Please recycle this magazine and remove inserts or samples before recycling TM
INDUSTRY EVENTS¦
Heating the Midwest
Bandit Builds your Bottom Line.
APRIL 20, 2015
Minneapolis Convention Center Minneapolis, Minnesota The Midwest relies heavily on fossil energy for heating homes and businesses. Heating the Midwest is a network of thermal biomass advocates working to increase awareness and usage of renewable biomass for heat, which has the potential to greatly reduce the region’s dependence on propane and fuel oil for thermal energy. Colocated with the 2015 International Biomass Conference & Expo, being held in Minneapolis, Minnesota, Heating the Midwest is a compelling combination of the right topics being discussed at the right place, at the right time. 866-746-8385 | www.biomassconference.com
International Biomass Conference & Expo APRIL 20-22, 2015
Minneapolis Convention Center Minneapolis, Minnestoa Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all biomass industries. 866-746-8385 | www.biomassconference.com
International Fuel Ethanol Workshop & Expo JUNE 1-4, 2015
Minneapolis Convention Center Minneapolis, Minnesota The FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. The FEW is the largest, longest running ethanol conference in the world—and the only event powered by Ethanol Producer Magazine. 866-746-8385 | www.fuelethanolworkshop.com
National Advanced Biofuels Conference & Expo OCTOBER 26-28, 2015
Hilton Omaha Omaha, Nebraska Produced by BBI International, this national event will feature the world of advanced biofuels and biobased chemicals—technology scale-up, project finance, policy, national markets and more—with a core focus on the industrial, petroleum and agribusiness alliances defining the national advanced biofuels industry. With a vertically integrated program and audience, the National Advanced Biofuels Conference & Expo is tailored for industry professionals engaged in producing, developing and deploying advanced biofuels, biobased platform chemicals, polymers and other renewable molecules that have the potential to meet or exceed the performance of petroleum-derived products. 866-746-8385 | www.advancedbiofuelsconference.com
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www.banditchippers.com | 1.800.952.0178 MARCH 2015 | BIOMASS MAGAZINE 7
Business Briefs PEOPLE, PRODUCTS & PARTNERSHIPS
BlueRock Energy, ReEnergy Black River announce agreement BlueRock Energy and ReEnergy Black River LLC have entered into a services agreement to support ReEnergy’s delivery of power from its 60 MW ReEnergy Black River facility to the Fort Drum U.S. Army installation in New York. Under the agreement, BlueRock Energy is performing load forecasting, scheduling and delivery services from the plant to Fort Drum and other wholesale support services. 4B Components promotes Knapp 4B Components Ltd. has promoted Brian Knapp to the position of vice president with responsibility for technical sales and service for the company’s electronics Knapp division. Knapp started at 4B in 2005 as an engineer within the electronics department and became tech team manager in 2010. He is an active member of the Grain Elevator and Processing Society and has made numerous industry presentations on the subject of hazard monitoring.
8 BIOMASS MAGAZINE | MARCH 2015
Terex Environmental Equipment announces new products Terex Environmental Equipment plans to launch two new products early this year: the TDS 820 slow-speed shredder and the TTS 620 trommel screen. The TDS 820 is a versatile slow-speed machine for shredding all types of material utilizing the same shredding tool. The TTS 620 features an efficient engine and hydraulic drive system combined with advanced material processing control. It is suited for screening compost, biomass, soil, gravel and waste.
FLSmidth AFT incorporates company, announces catalytic filter bag technology FLSmidth AFT Operations has announced FLSmidth Air Pollution Control Regional Services will be incorporated into its operational business unit. FLSmidth AFT and Regional Services have been collaborating for more than a decade due to their product and service synergies and shared customers in various industries. AFT manufactured filter bags and supplied related baghouse accessories while Regional Services
installed those onsite. The goal of this new alignment is to help customers comply with environmental regulations while optimizing their operations with the use of FLSmidth AFT professionally trained service personnel to provide customer service before, during and after the project is complete. FLSmidth also recently announced a cooperation agreement with Haldor Topsoe to develop a unique catalytic filter bag technology. The product, branded EnviroTex, is capable of removing dust, volatile organic compounds and nitrogen oxides in one integrated and cost-effective process. Algenol adds Zenk Timothy Zenk has joined Algenol as executive vice president of business development. Zenk previously served as senior vice president of corporate development for Zenk Sapphire Energy Inc. Richard Cranford, has also joined the company from Sapphire, along with Shaun Bailey and Jon Meuser from Synthetic Genomics, Jay Askander and Christoph Neuendorf from Alstom,
BUSINESS BRIEFSÂŚ
Jim Streemke from Amgen, Scott Schuh and Matt Wivinus from Boston Scientific, Mohamed Bekheet from Exterran, and Bill Rodriguez from UBS. Strategic alliance to commercialize CFP process Anellotech Inc., IFP Energies nouvelles and its subsidiary Axens have announced a strategic alliance to develop and commercialize a new technology for the low-cost production of biobased benzene, toluene and paraxylene using Anellotech’s process of catalytic fast pyrolysis (CFP) of nonfood biomass. The technology will address large-scale units and produce purified aromatics streams suitable for modern derivative production processes at a very competitive price with respect to their petroleum-based counterparts. DCT introduces quick-release bracket for dust suppression Dust Control Technology has introduced a new quick-release manifold bracket, engineered to limit worker exposure to harsh service environments and potential safety hazards, while minimizing process downtime. Designed to fit all fan-driven models of DustBoss atomized mist dust suppression equipment, the new bracket design allows
removal and replacement of the manifold in about five minutes, with no tools required.
Abengoa adds executive Abengoa has appointed Ignacio Garcia Alvear co-chief financial officer responsible for investor relations and capital markets, effective Feb. 1. Alvear previously served as chief financial officer of Abengoa Bioenergy. He replaces Barbara Zubiria. Garcia Alvear joined Abengoa in 1995. Abengoa’s board of directors has also appointed current CEO Manuel Sånchez Ortega as first vice-chairman, replacing JosÊ B. Terceiro. Independent director Antonio Fornieles Melero was selected to be lead director, second vice-chairman and a member of the audit committee and the appointments and remuneration committee. Covanta changes leadership Covanta Holding Corp. has announced Anthony Orlando, who has served as the company’s president and CEO since 2004 and director since 2005, will transition from his role of CEO in March. He will remain on the company’s board of directors. Stephen
Jones, who most recently served as senior vice president and general manager at Air Products and Chemicals Inc., will become Covanta’s president, CEO, and a member of the board of directors. Green Biologics raises $76 million Green Biologics has raised $76 million to support the acquisition and conversion of a Minnesota ethanol plant to produce n-butanol and acetone. The $76 million includes the closing of a $42 million followon equity funding round co-led by existing investors Swire Pacific Limited and Sofinnova Partners. The balance of the $76 million includes $34 million that was raised predominantly in debt financing from Tennenbaum Capital Partners, along with equity and debt investment rolled over by existing members of Central MN Ethanol Co-op LLC in Central MN Renewables LLC, a U.S. affiliate of Green Biologics. Ocean Park Advisors acted as financial advisor to CMEC on the CMR consideration election structuring and process. SHARE YOUR INDUSTRY NEWS: To be included in the Business Briefs, send information (including photos and logos, if available) to Business Briefs, Biomass Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also email information to evoegele@bbiinternational. com. Please include your name and telephone number in all correspondence.
BUILDING TOGETHER
FOR THE FUTURE %NQ NUDQ jUD CDB@CDR &Q@X "NMRSQTBSHNM†@ CDRHFM ATHKC $/" BNMSQ@BSNQ†G@R RDQUDC ANSG CNLDRSHB @MC HMSDQM@SHNM@K BTRSNLDQR SGQNTFGNTS SGD 4 2 6D G@UD CDRHFMDC @MC ATHKS @ VHCD U@QHDSX NE BNLOKDW HMCTRSQH@K OQNIDBSR QDRTKSHMF HM NUDQ HMCTRSQH@K E@BHKHSHDR @BQNRR SGD BNTMSQX 6HSG SGHR KDUDK NE DWODQHDMBD &Q@X HR BNMRHRSDMSKX Q@MJDC @LNMF SGD SNO BNMSQ@BSNQR HM L@MTE@BSTQHMF OK@MS BNMRSQTBSHNM 4MENQFDSS@AKD BTRSNLDQ DWODQHDMBDRv FQD@S OQNIDBSRv &Q@X
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MARCH 2015 | BIOMASS MAGAZINE 9
PowerNews Biomass Power 2010
2013
2014
2010-2014
New capacity additions (GW)
7.7
5.5
3.0+
-61%
Cumulative installed capacity (GW)
68
86
89+
31%
Typical total intalled cost range: OECD (2014 $/kW)
(% change)
1,800-6,820 1,880-6,820 1,880-6,820
Typical total installed cost range: non-OECD (2014 $/kW)
400-2,000
400-2,000
400-2,000
Global LCOE range (2014 $/kWh)
0.03-0.14
0.03-0.14
0.03-0.14
SOURCE: INTERNATIONAL RENEWABLE ENERGY AGENCY
IRENA: Renewables cheaper than fossil fuels The International Renewable Energy Agency has released a new report that determines many sources of renewable energy are now cheaper than fossil fuels. The report, titled “Renewable Power Generation Costs in 2014,” states that biomass, hydropower, geothermal and onshore wind are all competitive with or cheaper than coal, oil and gas-fired power stations, even without financial support and despite falling oil prices. Within the report, IRENA indicates biomass can provide dispatchable baseload electricity at very competitive costs. The
regional or country weighted levelized cost of electricity ranged from as low as 4 cents per kWh in India and 5 cents per KWh in China to 8.5 cents per kWh in Europe and North America over the past 10 years. IRENA said the potential for biomass cost reductions is highly heterogeneous due to the different stages of development of the various biomass technologies. While the cost reduction potentials for established technologies are relatively small, the longterm potential for cost reductions for less mature technologies remains good.
BMC www.basicmachinery.com
EU approves state aid for Teesside project The European Commission has approved the U.K.’s plan to provide state aid to the proposed Teesside combined-heat-and-power facility. The 199 MW, biomass-fired facility is one of eight renewable energy projects selected to receive the first contracts for difference (CfD) under the U.K.’s electric market reforms. The Teesside plant will be located in the Tees Valley in northeast England, and is scheduled to begin operations in July 2018. The project will provide electricity to the national grid and heat to local customers. In a statement, the European Commission said it has determined that U.K. plans to support the plant are in line with European Union aid rules. The aid given will be granted to the operator of the plant in the form of a variable premium above the market price for electricity to compensate for the higher costs of biomass energy. The European Commission has now approved state aid for six of the eight renewable energy projects awarded early CfDs, including five off-shore wind projects that were granted commission approval in July. As of the close of January, the Drax and Lynemouth biomass conversion projects were still awaiting state aid approval.
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POWER¦
Super Bowl of Politics: Debating the President’s Budget BY BOB CLEAVES
Earlier this month, President Obama released his fiscal year 2016 budget. As many of you know, this is an annual event, and mostly political theatre. Reading the proposal feels like Russell Wilson’s desperation pass to wide receiver Jermaine Kearse—bold, dramatic and fleetingly successful. It will rally the base and create a feel good moment, just like the prospect of handing the ball off to Marshawn Lynch on the 1-yard line with second down and goal. But, like the Patriots defense, I view this Republican Congress as stopping any major legislative initiatives and without the drama of a Malcom Butler interception. Enough from a Pats fan (is there ever such thing as enough?). Let’s look at this budget. As in the past, it’s helpful in understanding the priorities of the administration and how budget and tax issues might help our industry. For starters, the president is proposing to spend big on the Department of Energy, to the tune of $29.9 billion, an increase from $27.3 billion enacted for the department in 2015 and the $27.2 billion in 2014. Importantly, $7.4 billion is requested for clean energy technology programs alone. Climate change at various federal agencies comes out a big winner. EPA would get $8.6 billion, an increase of $500 million over the current year's enacted level, including $239 million for EPA's climate change initiatives, with $25 million set aside for helping states craft compliance plans for forthcoming power plant emissions regulations, and a $4 billion incentive fund to help states that want to go beyond those rules' minimum requirements. Over at USDA, $400 million to map flood risks, $200 million for USDA to plan for extreme weather
events, and funding for coastal, drought and wildfire resilience programs. Also, $500 million is proposed for the funding of a Green Climate Fund, the first tranche of a multiyear pledge. In the area of tax reform, oil and gas take a hit while renewables, including biomass, are promoted like never before. The budget proposes to cut more than $4.1 billion in oil and gas tax incentives next year. Through the decade running to 2025, the administration’s cuts in oil and gas incentives would total about $44 billion, while coal incentives would drop by $4.25 billion. These cuts include the repeal of intangible drilling costs that allow producers to write off well drilling expenses in one year. Eliminating the deduction—which can total as much as 90 percent of the expenses to drill a well—would cost the industry $2.3 billion in FY16 under the administration’s budget request. Other oil and gas tax credits, long favored by the industry, are on the presidential chopping block. The proposal seeks to repeal the percentage depletion incentive for oil and natural gas wells, valued at $1.1 billion; eliminates $295 million in tax preferences for coal, including mandatory cuts of $183 million for percentage depletion for hard mineral fossil fuels; $45 million for a domestic manufacturing deduction for hard mineral fossil fuels and $40 million for expense accounting of exploration and development costs. Author: Bob Cleaves President and CEO, Biomass Power Association www.biomasspowerassociation.com bob@biomasspowerassociation.com
MARCH 2015 | BIOMASS MAGAZINE 11
¦POWER
DEPARTMENT
A SIGNIFICANT BENEFIT: The forested areas surrounding Eagar, Arizona, are choked with fuel and susceptible to major fire events. In 2011, the Wallow Fire forced a complete evacuation of Eagar. The power project under development by the Concord Blue Eagar LLC would fit neatly into a multistakeholder initiative to fund forest restoration activities in the area, thereby decreasing the chance of catastrophic fire.
Eagar to Get Started Concord Blue Eagar LLC, a unique biomass power project that began its project development journey in 2009, is finally poised to break ground this summer, giving a unique conversion technology its first North American foothold. BY TIM PORTZ
T
he town of Eagar, Arizona, sits nearly in the middle of a straight line connecting Phoenix and Albuquerque. Situated at in the foothills of the White Mountains, Eagar is sandwiched between the massive Apache-Sitgreaves National Forest to the west, and to the south, the vast Colorado Plateau, which stretches north all the way to Utah. While only a small handful of actual roads service the vast expanse of forest and high desert that surround the town, this summer may find Eagar the convergence of a broad array of renewable energy, forest restoration, technology development and international business stories.
12 BIOMASS MAGAZINE | MARCH 2015
Eagar is the site identified by Concord Blue Energy USA Inc. to be the first North American deployment of a unique conversion technology initially developed and proven at pilot scale in Germany in 2002. The patented technology, which the company calls the Concord Blue Reformer, uses steam thermolysis to convert nearly any carbonaceous material into syngas and a char byproduct. The syngas from the Concord Blue Reformer is unique because of its high percentage of hydrogen, typically around 50 percent. While this syngas stream is of a high-enough quality that it can be reformulated into high-value biofuels and biochemicals, in Eagar it will be converted via
internal combustion into around 1 MW of electric power. “We came across Concord Blue in 2008 quite serendipitously at a conference and began to build a relationship with them,” says Gregory Bilson, now Concord Blue’s chief development officer. At that time, Bilson and his father, both serial entrepreneurs, were working to enter the renewable energy space under the project development banner Western Energy Solutions. “My father had built some solid relationships with a couple locals in Eagar, Arizona, one of them being the former town manager Bill Greenwood,” Bilson says. Greenwood, like town managers all
POWER¦
across the country, was constantly working to make the most of the resources at his disposal to generate stable economic activity and jobs within his community. “Eagar’s an area where they have quite a lot of wood waste, milling activity and stewardship activity,” Bilson says. “Bill was looking to bring in a project that would provide a place for this wood waste to go and help stabilize the job market they have there.”
Focus On Forest Management Greenwood and the community of Eagar’s interest in forest management cannot be overstated. The vast stands of Ponderosa pines that border the community are federally managed national forests that have engaged in fire suppression for nearly a century. As a result, the forests have evolved into stands densely packed with fuel resulting in a very dangerous situation. In fact, in 2011, an unattended campfire resulted in the largest wildfire in the state’s history, the Wallow Fire, which burned nearly 850 square miles of forest, four commercial buildings and 32 residences. The town of Eagar and seven other nearby communities had to be evacuated. Recognizing that forest thinning had to be completed, the federal government worked to build a plan that would thin hundreds of thousands of acres, at the time the largest forest management and restoration project ever undertaken. The challenge was, and remains, figuring out a way to fund the much-needed thinning. Ideally, the restoration efforts can be partially funded by adding value to the wood harvested during the thinning operation. The forest products industry in the area is optimized to convert these smaller-diameter trees into dimensional lumber and other high-value products, but residuals from their operations and forest slash remain. Some of those materials are currently incinerated in nearby Snowflake, while others were simply burned in open pits. “One of the promises we made to the town when we came in was that we would take in all these slash materials so long as they were not contaminated with trash,” Bilson says. “We would divert them from the pit and convert them in a way that they were not combusted, which would reduce a lot of particulate matter they were used to getting.”
Driving Towards Economic Viability While a new home for these forest and sawmill residuals will be welcomed in Eagar, for the project to offer a long-term benefit for the community it must offer a return for Concord Blue. The opportunity first attracted the attention of Bilson and his father nearly eight years ago, but making the economics pencil out has proven challenging. “In terms of the Eagar project,” Bilson says, “the reason it dragged out for such a long period of time is that when we were originally brought in, we were under the impression that we’d be able to get a power purchase agreement from the local cooperative there.”
Call Toll Free: 1.800.STOKER4 sales@detroitstoker.com www.detroitstoker.com MARCH 2015 | BIOMASS MAGAZINE 13
¦POWER For various reasons, this power purchase agreement was slow to materialize. Early in 2013, things began to change and Navopache Electric Co-Op Inc. issued a request for proposal that was eventually awarded to Concord Blue, negotiated and signed. “Once that happened,” Bilson says, “the project basically came back to life and we were able to go back to actively developing the project.” The full value of the Concord Blue Reformer technology is not fully realized
through power sales alone, however. A byproduct of the unique, oxygen-free conversion environment is a carbon-rich material known as biochar. The production of biochar is very similar to the production of charcoal. The differences, largely, can be found in their eventual use. Charcoal’s ability to produce intense heat has led to uses ranging from cooking to more industrial uses including smelting. While proponents of biochar believe the material holds incredible promise, the markets are very much nascent.
“The main application for bioachar at this stage is as a soil amendment,” Bilson says. “There is also application in the industrial world and we’re working with one of the most established brokers in the U.S. to market char for this project.” While Bilson refrains from identifying the broker by name, the importance of finding buyers for this byproduct remains clear and Bilson and his team aren’t satisfied to rely on the slow-to-come soil amendment market. “We’re actually looking into creating new markets for a renewable char where it hasn’t been used before,” Bilson offers. Specifically, Bilson identifies all of the markets that are currently served by the activated carbon typically produced from coal streams. “There are certain niches in the market where a biobased activated carbon would be quite attractive,” Bilson says.
Eyeing Groundbreaking The Eagar project is small by design. Concord Blue’s technology brings with it incredible scalability, so facilities that dwarf the 1 MW Eagar installation are well inside of the Concord Blue Reformer’s operational parameters. “We figured the first couple of projects in North America would be mostly paid out of the cash drawer,” Bilson says. “So we targeted something that would be economically palatable at a smaller scale.” All that remains for Bilson and his team is the awarding of an air permit. Upon issuance of the air permit, dirt will begin to move. Because of the modular nature of the technology, Bilson expects that as long as permits are awarded this spring or even early summer, the construction can be completed in 2015 and commissioning can follow shortly thereafter or at the very beginning of 2016, thereby bringing to a conclusion a development story eight years in the making. Author: Tim Portz Executive Editor Biomass Magazine tportz@biomassmagazine.com 701-738-4969
14 BIOMASS MAGAZINE | MARCH 2015
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PelletNews Construction starts on British Columbia pellet plant Pinnacle Renewable Energy and Tolko Pinnacle Renewable Energy Industries Ltd. recently began construction of pellet plants: SOURCE: BBI INTERNATIONAL a pellet plant at Tolko’s sawmill in Lavington, Existing British Columbia. The plant is expected to be Under Construction operational by September. The facility, with an estimated annual capacity of 250,000 metric tons, will employ a drying technology that features a low operating temperature, resulting in a lower emission concentration and minimized fire risk. According to the companies, the plant will also implement bag house filtration on both the pellet plant and Tolko fiber delivery systems, improving overall air quality in the Lavington area. “Colocating the plant here at Lavington Huston will bring a number of benefits,” said Troy Burns Lake Connolly, general manager of B.C. Lumber at Strathnaver Tolko Industries. “It will allow us to deal with Quesnel the excess of sawdust and shavings that has Williams Lake been collecting, on site and at other locations in the valley, since Domtar Kamloops reduced its operations in 2013. It will also help us to create Armstrong more efficient rail and trucking logistics and Lavington improve the level of both emissions and fugitive dust control. This is a good project for the community and the mill, and one that supports the long-term viability of the Lavington sawmill.”
16 BIOMASS MAGAZINE | MARCH 2015
New pellet plants developed in Russia Pellet production is expanding in Russia. Swedish forestry company RusForest AB recently announced it has engaged AS Hekotek, a mechanical engineering company, to build a 30,000 metric ton plant at its Magistralny sawmill in eastern Siberia. Once complete, the facility will utilize sawmill residues, improving the long-term profitability of the sawmill. RusForest said the resulting pellets will be marketed in the European and South Korean markets. The plant is expected to be operational by the end of the year. Hekotek also recently announced the start-up of a 30,000 ton pellet plant in eastern Siberia that it built for Lesresurs LLC. The facility includes a 4.5-ton-per-hour pellet press and hammer mill supplied by Dutch producer CPM. Other parts of the production line, including various conveyors and production units and a drum dryer with a furnace for drying sawdust, were produced by Hekotek.
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¦PELLET
CONTRIBUTION
A DIFFERENT APPROACH: The generation of volatile organic compounds (VOCs) are a reality of wood drying, and hence pellet production. As the industry scales the momentum of innovation follows including new approaches for VOC destruction. Here a hot oil tube dryer is installed at a pellet production facility. PHOTO: ASTEC INC.
Pellet Plant VOCs: Best Practices In Control
T
o people outside the forest products industries, it is surprising to learn that the nice fresh pine fragrance our noses detect around a wood pellet plant is actually evidence of emissions of volatile organic compounds (VOCs). Since the EPA decided many years ago that VOC emissions must be controlled, state agencies and pellet plant operations, along with many others, have gone about the task of making it happen. Wood naturally releases VOCs whether it is still standing in the forest, being harvested, or processed into a product such as wood pellets. The natural VOC release is accelerated when heat is applied, as in a drying process, or when more fiber surface is exposed, as in size reduction via hammer milling. Also, forming the dried wood dust into pellets tends to release more VOCs, because of the application of a significant amount of energy to the material and the resulting temperature rise.
Accelerated VOC release in the pellet making process is not only an emissions issue but it also represents a loss of energy from the pellets. VOCs are natural chemical compounds that have energy content. Obviously then, the better job we can do of minimizing the release of VOCs from the wood, the higher the energy content of the pellets. So, the best means of VOC emission control is to, as much as possible, avoid releasing these valuable compounds from the wood in the first place. Of course, regardless of how we process the wood into pellets, some VOCs will be released from the wood. To keep the plant operation in environmental compliance, the VOCs released from the wood must be contained and controlled within the plant system. There are two fundamental approaches to VOC control. The most widely used approach is to incinerate the VOCs in a regenerative thermal oxidizers (RTO) or regenerative catalytic oxidizer (RCO)
_________________________________________________________________________________________________________________ CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).
18 BIOMASS MAGAZINE | MARCH 2015
at the plant’s exhaust points. A wet Electrostatic Precipitator (WESP) is typically used upstream to reduce the contamination that occurs in the RTOs and RCOs. This method is necessary when using the conventional convection type rotary dryers. A newer approach involves using a hot oil tube dryer, operating with a hot oil temperature of about 500 degrees Fahrenheit (vs. the 1,100 F hot gas temperature of the convection dryers), to remove water while removing less of the hemicellulose. The various compounds that make up hemicellulose are those that, when evaporated in the drying process, become VOCs. These compounds have relatively low boiling points, so, the drying temperature makes a difference in the mass of VOCs liberated. There is a significant difference in the economics of the pellet-making operation between these two different approaches to the VOC emissions issue. The WESPs, RTOs or
PELLET¦
RCOs required with the conventional dryer systems are major pieces of capital equipment. They must be maintained and require fuel and electricity to operate. By contrast, VOC control is incidental with the hot oil tube dryer. No additional special equipment or capital equipment is needed. Also, no purchased fossil fuel is needed. In fact, the VOCs that are evaporated from the wood in drying, although not a lot, are used as part of the fuel to run the drying process. So, instead of VOC destruction adding expense, it actually reduces operating cost. One large plant has a natural gas cost of $1.25 per metric ton of pellets or $625,000 per year for 500,000 tons. By contrast, the hot oil tube dryer system burns no fuel at all for destruction of VOCs. In addition to the avoiding the cost of fuel and maintenance for WESP or RTO type systems, a benefit is found simply keeping in the pellets what would, in the convection dryer systems, become VOCs. Hemicellulose has a higher heating value of 13.6 megajoules per kilogram, so, it has an energy content that is worth keeping. To determine the quantity of the VOCs being released from the wood in the pellet-making process, consider what EPA’s document, AP42, shows as the uncontrolled emission factor for condensables from the drying process of particle board making. (EPA considers this the process most similar to pellet making.) AP42 shows 1.1 pounds per ton. (See AP42, 10.6.2.) For a pellet plant producing 500,000 tons of pellets per year, the uncontrolled dryer emissions of condensables would be 550,000 pounds per year. Although experience shows that the pellets actually have a little more energy per ton when the material is dried in a hot oil tube dryer, the simplest way to show some value to this is just to consider that the 550,000 pounds per year of mass largely ends up in the pellets. That means, in effect, that a producer would have an extra 250 tons per year to sell. Since the cost of the overhead, material, and production are there either way, the entire sales price of $45,000 goes straight to the bottom line as net profit. Going back to EPA’s AP42 emission factor for condensable VOCs, we see that it is just that, condensable VOCs. Also, it shows only the VOCs from the drying process. The total mass is easily twice this amount when we
include noncondensables and emissions from other steps of the process such as dry hammer milling, pelletizing, and cooling. Because the hot oil tube dryer has a hot oil heater combustion chamber available in which to burn VOCs, noncondensables are scavenged from their various sources and used almost entirely as fuel for the drying process. This means that either some of the incoming green wood that would otherwise be used as fuel isn’t used that way and is, therefore, available to become pellets, or some purchased fossil fuel is not needed. In either case, a conservative way to apply a value to this is to say it is about the same as the additional pellet value associated with the condensables. So, the total additional pellet sales will be about $90,000. Again, this total goes straight to the bottom line because all costs are already there. As briefly mentioned above, retaining as much as possible in the pellets rather than evaporating it results in a higher energy content in the pellets. The jury is still out on exactly how much advantage, since it is virtually impossible to get a valid direct comparison but it appears to be on the order of 0.5 gigajoules per ton. Since this is anecdotal information at this point, the value is not included in the following totals. The maintenance cost for the WESPs and RTOs and associated equipment is around $2.25 per ton or about $1,125,000 per year. The capital cost of the equipment is about $13 million. This rather simplistic analysis does not attempt to address the cost of downtime associated with regularly washing the ceramic elements of the RTOs, etc. So, there is considerably more money that could be added to this bottom-line advantage calculation, if one wanted to take the time to work it out. Obviously, the assumption is made here that the capital cost and maintenance cost of the two different dryer islands (not the back end pollution controls) are at least similar. That may or may not be true, but there is no doubt that WESPs and RTOs or RCOs are required with the convection type dryers and are not required for the hot oil tube dryer systems. Author: Malcolm Swanson PE Astec Inc.
MARCH 2015 | BIOMASS MAGAZINE 19
¦PELLET
OPPORTUNITY
STILL KNOCKS N
In an industry largely focused on adding capacity in half million ton chunks, two producers acted on an opportunity they saw for far smaller pellet operations. BY CARLA HARPER
THE NEW ADDITION: The installation of pellet capacity was a natural extension for a Hurley Wisconsin-based family of five distinct but integrated forest products companies. PHOTO: SNOW TIMBER PELLET LLC
20 BIOMASS MAGAZINE | MARCH 2015
ew development in the small-scale pellet space is not a venture of the past. In the past year, at least four projects with annual production volumes of less than 40,000 metric tons of pellets were announced in very different regions, with very different feedstock situations, to say nothing of markets. Two of these relative newcomers—Snow Timber Pellets LLC and Queston Wood Pellets—are up and running with explicit aims to serve a largely local market. By examining the stories of these two facilities, a common set of development characteristics shared by the two plants begins to emerge. Queston Wood Pellets and Snow Timber Pellets each were able to leverage existing capital, guaranteed feedstock supply, a familiarity with the requisite equipment, access to available markets and important transportation logistics to make their interest in pellet production become a reality. Together with these critical factors for success, both felt compelled to provide a high qual-
ity, readily available pellet to a waiting domestic market. This commitment is good news for residential and light industrial pellet users in New England and the Midwest.
2 Small-Pellet Approaches Snow Timber Pellets LLC is a pellet production effort of forest products manufacturers Snow Country Hardwoods and Snowbelt Hardwoods both based in Hurley, Wisconsin. Snowbelt Hardwoods has been operating since 1994, processing over 15 million board feet of hardwoods sourced predominantly from the forests of northern Wisconsin and Michigan’s Upper Peninsula. Snow Timber’s first load of pellets was shipped late last year and the plant is now operating two shifts a day, four days a week to produce around 240 tons of bagged pellets. Queston Wood Pellets, a spin-off of a Vermontbased family owned business in the New England industrial maintenance, engineering, and construction space, went into full production on Jan. 26 with a capacity of 35,000 tons annually.
PELLET¦
A long time in development, the pellet production facility graduated from test batches and incremental production to daily volumes closer to their nameplate capacity Jan. 25. “Today is the final shakedown,” says Steven Querrey, co-owner of the company with his brother, Dan Querrey, who serves as president. “We’ve been making pellets, but in one-off tons. We stop and tweak, and then start again. Tomorrow is full production.”
Influencing Factors Industry headlines the past several years have been dominated by the development of pellet facilities with capacities in the 500,000 tons per year range. Buoyed by financial incentives and carbon policy, entrepreneurs and project developers had little trouble amassing capital to enter the export market. The first of these projects began to emerge in the mid2000s and new projects continue to be announced on a nearly monthly basis. Whether European demand continues
its impressive momentum is of little consequence for Queston or Snow Timber. Both of these newcomers built their facilities to serve entirely different, and much closer-to-home markets. “We can’t compete with the East Coast when it comes to exporting our pellets into European markets; trucking to a rail line is a huge cost and not feasible for us at the moment,” Brady Francois, of Snow Timber Pellet, tells Biomass Magazine.
Stable, Priced Right, Ample It’s hard to underestimate the role of supply in making a pellet operation work. More than a few newcomers to the pellet game have shut down over the past five years or more due to supply issues. Manufacturers in the West have business models challenged by an inability to consistently get access to feedstock. Time and time again, pellet project developers build business plans that rely upon forest thinning contracts from federal lands only to be-
come acutely aware of the difficulty of these stewardship contracts when put into practice. In regions where more land is private and longer growing seasons dominate, the cost of raw material is at play. For Queston in Vermont, it’s a different story. “We have a lot of support within the chip industry with many companies wanting us to succeed,” Dan says. Phase two of Queston's plan involves a log yard where they bring in wood tapped from a 68-mile radius Vermont wood basket. Debarking and chipping will take place in the yard. The operation currently has a good relationship with a wood chip distributor. For the Snow Timber team, access to raw materials is central to their business plan and a competitive advantage they are eager to leverage. “We consider the high price mills are paying for pulpwood a big indicator for the future of our product,” Francois says. “A lot of people here burn wood in outside boilers. The cost of pulpwood is ridiculous. Many folks with their own MARCH 2015 | BIOMASS MAGAZINE 21
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22 BIOMASS MAGAZINE | MARCH 2015
VERMONT'S NEWEST CAPACITY: For now, Queston Wood Pellets will produce conventional pellets, but the company's long-term plans are to leverage a patented pellet production method that produces a reduced acid pellet company founders hope will fetch a premium in the marketplace.
wood burning boilers are migrating towards pellets.” For some producers, this rising price of pulpwood would present some very acute financial challenges. However, like other producers before them, Snow Timber Pellets is closely aligned with a parent facility already actively engaged in value-added forest products manufacturing. Snowbelt Hardwoods, in business since 1994, is a hardwood dry kiln operation that is one of five operating companies that coexist on a 55-acre site near Hurley, Wisconsin. The tip of the spear for these companies is Snow Ridge Lumber, which receives inbound logs and converts them into dimensional lumber. Wood chips and other residual woody byproducts from Snow Ridge Lumber are consumed by the kilns at colocated Snowbelt Hardwoods, which kiln dries green lumber from Snow Ridge. Finally, Snow Country Hardwoods converts the dried lumber into solid hardwood flooring, and a wide range of finished moulding and millwork. The sawdust generated by Snow Country Hardwoods supplies the vast majority of Snow Timber’s raw material needs. The fifth company operating under this broad umbrella is Snow Run Trucking, which the other companies utilize to get their products to market.
Collectively this family of companies seemed the perfect seedbed from which to grow a pellet production facility. Not only does Snow Timber enjoy ready access to feedstocks and important distribution logistics, the company was able to leverage robust in-house engineering and equipment expertise to bring the various components of their pellet production online and keep it running. “We looked at several different options for several years,” Francois says. “We considered everything from producing our own electricity to producing colored mulch, to pellet making. Ultimately, a pellet plant made the most sense for us.”
Starting With An Idea Without an already deployed family of forest product manufacturing facilities to leverage, the development team at Queston turned to intellectual property to gain traction with investors. Before there was a Queston Wood Pellets, the same ownership group had formed the entity Clean Tech LLC, which developed a patent-pending technology for producing a pellet that when burned emits fewer greenhouse gases and far less acid than a traditional pellet. “We’re putting our pellets on Tums,” Dan Querrey offers. “We are neutralizing the acids
PELLET¦ in our chips, which later become our pellets.” This technology and the pending patents were then leveraged to generate investor confidence when the team went looking for capital. “It really gave Queston some great value,” Dan says. This momentum, paired with professional connections helped the Querreys amass $1.5 million in capital. “We were able to be selective; even turned a couple down,” Steven Querrey says. “We’ve got an incredible group of investors.” Still just weeks into their foray into making pellets full time, Queston will, for now, produce only conventional softwood pellets. Once the production team irons out all of the expected bugs and brings the facility into a more predictable and consistent output, the plan will be to manufacture these enhanced, low-acid pellets a couple of days each week. “We’ve got several customers and clients who are waiting to run trials on our enhanced pellets” Dan says. Dan Querrey notes that the marketplace value of the enhanced pellets is still being determined. “From a Btu perspective, when tested in a calorimeter these pellets are virtually identical to conventional wood pellets,” he says. “However, when we actually burn our enhanced pellets in an appliance, we find that the internal temperatures of the appliance are 6 to 11 percent hotter when compared to a control.” Ultimately, Queston will look to leverage these enhancements in the marketplace via its own pellets as well as license the technology to other interested producers. Finally, and while not a direct infusion of capital for the company, Queston sees Vermont’s tax credits for bulk pellet conversion as an industry boost. Vermont offers upwards of a $4,500 tax credit, depending upon the system type. The team at Snow Timber Pellets, like their counterparts at Queston Wood Pellets are eager to achieve and maintain steady, nameplate capacity production. “We had a large learning curve,” Francois says. “It took us about six months to get the process running once all equipment was ordered. We are pleased with the product and the plant is built for easy expansion.” Owing to the vast majority of their inputs emanating from their forest products processing facilities, their pellet is composed of
95 percent hard maple and red oak kiln dried planer shavings and hog fuel. This formula yields the clean-burning pellet with a low-ash content and high-Btu content that discerning residential pellet consumers desire. “We use no written recipe or guidelines in making the pellets. We learned as we went along. We also believe in the use of third-party testers to ensure our quality,” Francois adds.
The Secret Sauce Many serious pellet buyers live in rural areas. The manufacturer with the knowhow and wherewithal to reach those markets first, fastest, and the cheapest wins. Freight costs are a major factor. Pellets compete against the other energy sources that require no rolling transportation, like solar, wind and natural gas. Propane is the closest competitor to the pellet. The Querrey family is all about local heating options. “We all have pellet stoves,” Steven says. “We’ve seen the market here monopolized by Big Box stores. There’s just not much local supply.” Steven admits that to stay only in Vermont is not realistic, but has no plans to look for wood or customers outside of New England. Snow Timber Pellets’ Francois says, “Logistics are key in this business. If we keep it local, that reduces transportation and enables us to balance quality, local availability, and keep the price competitive.” Snow Timber caters to a Wisconsin/Michigan base of customers buying pellets for its freestanding pellet stoves or pellet furnaces. Queston produces both bulk and bagged pellets and aims for an even split amongst those two distribution approaches. They are proponents of the New England bulk delivery movement and are already working closely with bulk distributors. With an eye on continued growth in the bulk market, they are actively developing a softwood pellet with greater durability so that it can withstand the rigors of pneumatic delivery systems. Querrey says, “Even with No. 2 heating at relatively low prices right now, the pellet stove industry is still booming in Vermont. It just makes sense.” Author: Carla Harper carlamgarrison@gmail.com
MARCH 2015 | BIOMASS MAGAZINE 23
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ThermalNews Colorado bill would incentivize biomass thermal projects in public buildings
Reports analyze impact of strong dollar, falling oil prices In two new research papers, FutureMetrics LLC President William Strauss has investigated the impact of a strong dollar and falling oil prices on the pellet sector. The first paper focuses on the impact of the strengthening dollar on utility and producer margins in the industrial pellet sector. The second features three interactive dashboards related to where crude oil prices are going and the resulting impact on pellets used for thermal applications in the domestic market. Since most long-term contracts for industrial wood pellets are paid in U.S. dollars, as the pound and euro weaken, the cost per ton in those currencies increases. While some currency risk can be hedged, the paper predicts that if the dollar continues to strengthen as expected, profit margins could be challenged.
North American pellet capacity SOURCE: FUTUREMETRICS
4.62
MILLION METRIC TONS
For Domestic Heating Market
12.04
MILLION METRIC TONS
For Export
Regarding falling oil prices, Strauss’s analysis finds that while the pellet sector could experience a slowdown in demand growth if crude prices remain low, he stresses that low oil prices will be temporary. Over time, he said, pellets for heating will remain the lower cost fuel.
Several bioenergy-related bills were introduced in the Colorado Senate early this year, including one that aims to create an incentive program to promote the use of woody biomass in public buildings. Jan. 7, State Sen. Matt Jones introduced SB15009, the legislation aimed at creating a wood biomass grant program to promote the use of woody biomass as a fuel source for public buildings. The program would be funded by an annual $1 million transfer from the state’s general fund for five fiscal years. The Colorado Department of Natural Resources would be tasked with awarding grants to a public entity that would use woody biomass as a fuel source. The legislation explains that preference would be made for projects that use a woody biomass energy system for two or more public buildings located near one another. The legislation also specifies that rules for the grant program would include criteria to evaluate grant applications, in part, based on an analysis of whether the building is located within a reasonable distance of a forested area of the state, as determined by the state forester.
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THERMAL¦
Getting Woodstoves From Here To There—In Utah and US BY JOHN ACKERLY
This February, the wood heating community experienced two major upheavals, one in a state where the governor proposed banning wintertime stove use and the other, of course, being the release of new national stove regulations for the first time since 1988. In both cases, industry agreed with the goals—cleaner stoves and cleaner air—but opposed the way government is getting there. In terms of execution and outcome, the Utah and federal regulations could not have been more different. The Utah government’s drastic proposal to ban stove use came out of the blue, while the EPA took nearly 10 years of slowly grinding bureaucratic wheels. Perhaps it was no coincidence that the Utah proposal went up in flames. In a somewhat embarrassing defeat for a well-intentioned idea, industry easily rode a wave of conservative outrage forcing the governor back to the drawing board. What drove the drastic proposal in Utah was pretty simple. It was the need to reduce terrible pollution in the Salt Lake area, which is prone to inversions. The state calculated that a complete ban would take fewer resources to enforce than the other options. Despite the turtle-like speed of EPA, there too the lack of resources made them lean on industry to undertake much of the necessary testing and studies. Funding for the EPA has been cut back, and this issue isn’t a high enough EPA priority to justify the expenses necessary to rewrite a major rule. The lack of resources seemed to just make everything go slower and slower. For instance, the initial voluntary program for outdoor wood boilers took 10 years instead of 3 years to finalize. The compliance desk at EPA doesn’t even have a full-time person, which causes bottlenecks. Despite the long delay, my organization, the Alliance for Green Heat, thinks the EPA did a pretty good job balancing all the different interests in its new standards for stoves. The EPA is supposed to write the rule based on BSER (best system of emission reduction) while simultaneously ensuring it’s cost effective and doesn’t unduly burden small businesses. And they are also supposed to be driven by health-based data. All these policy values conflict with each other, and ultimately allow the EPA the flexibility to make compromises based on good ideas, good business sense—and Congressional pressure.
While most people believe stoves can and should pollute our air less, a big chunk of America doesn’t agree with the goal of requiring stoves to be cleaner, or that people should be told when they can burn stoves and when they can’t. The EPA rule is seen by many as simple over-regulation that will drive up prices of stoves that are already clean enough and doing nothing to address all the old, unregulated stoves. But if most of us want to see steps taken to reduce smoke output from old or improperly used stoves, how do we get from here to there? One solution tossed about is a large federally funded changeout program that would give rebates or tax credits to remove millions of old stoves and replace them with cleaner ones. But there is little momentum or political will for that kind of funding, and even the stove industry doesn’t seem willing to put resources into trying to get Congress or the administration to fund something like this. We think a solution in Utah and elsewhere in the U.S. where wood smoke is too high could be sunset rules requiring homeowners to stop using old, uncertified stoves after a certain date, such as 2018. This is already being done in several counties in Washington state, and we will have to watch that closely to see how well it works. The EPA’s rule had some very creative provisions, which no one saw coming, and which may define the legacy of the rule. Everyone was watching for the emission standards that would kick in 2020 and the delayed implementation for warm air furnaces. But a provision that we think may have a huge impact, despite receiving little media attention, is the optional cordwood certification test. Moving the fleet of U.S. stoves from being tested with crib wood (2-by-4s and 4-by-4s) to regular cordwood is key to the future of cleaner wood heating. Instead of mandating any cordwood test standard, the EPA made it optional for now, and set the level at 2.5 grams per hour. Some stoves can already pass that, but watch this issue over the next months and years. The EPA could never set a cordwood standard that low if it were mandatory, but by making it optional, it may stick and turn out to be one of the most important legacies of this law. Author: John Ackerly President, Alliance for Green Heat jackerly@forgreenheat.org www.forgreenheat.org
MARCH 2015 | BIOMASS MAGAZINE 27
¦THERMAL DEPARTMENT
MULTILEVEL CONFIGURATION: Installation of the Hurst biomass boiler with a fuel reclamation system required specialized construction design to account for the unique terrain of the site and the 15-foot elevation discrepancy between the material handling and storage areas of the boiler room. PHOTO: JOHN CRESSY, SULLIVAN COUNTY FACILITIES DIRECTOR
Trial By Fire
A year after firing up a Hurst biomass combinedheat-and-power system to service two critical-use properties in Unity, New Hampshire, Sullivan County attests to the robust unit's reliability. BY KATIE FLETCHER
A
t the site of what was once a dairy barn built into the hilly countryside of Sullivan County, New Hampshire, a very different facility now resides. Although built for different purposes, each structure utilized the sloping terrain to its advantage.
Prior to vacancy, the dairy barn functioned as a two-level operation; cows on the upper level and a manure pit below. The natural gradient of the land worked well for the manure pit configuration. Today, “that downhill slope lent itself perfectly, so that now the chip trucks deliver on the upper
28 BIOMASS MAGAZINE | MARCH 2015
level into the chip bin, and then the hydraulic racks just pull it out and the regular feed system takes it to the boiler,” says John Cressy, Sullivan County facilities director. Two feasibility studies and multiple plant and biomass system tours later, the town of Unity now hosts a Hurst
biomass boiler district heating system to serve two of the town’s critical-use facilities. The county’s 166-bed nursing home and 168-bed prison complex, as well as a smaller meeting building, are connected to the system, primarily for heat and hot water. One other building, a carpenter shop/equipment
THERMALÂŚ
A SITE REPURPOSED: Sullivan County, New Hampshire’s, district energy project included tearing down an old dairy barn and erecting a 3,000 squarefoot building. This building houses the Hurst biomass heating system to serve the nursing home, prison complex and two other smaller onsite buildings in Unity. PHOTO: JOHN CRESSY, SULLIVAN COUNTY FACILITIES DIRECTOR
garage, is in the process of being brought online. Altogether around 300,000 square feet of conditioned space will be served. The combined-heat-andpower (CHP) system also provides all of the steam and some electricity to the facilities. The jail has a commercial
laundry that was already using steam dryers, so both steam and hot water are now provided to the laundry by the biomass plant. The system also lends about 5 to 10 percent of the total electricity load a year to a 40 kW turbine generator set at the nursing home. Cressy explains that it is not MARCH 2015 | BIOMASS MAGAZINE 29
¦THERMAL
cost effective to make steam solely for electricity generation as it is cheaper to purchase through the public utility. However, if the steam already being used to heat the building and hot water is utilized, it’s close to free. The amount of electricity produced is based on the amount of steam the nursing home demands, so it varies over the course of the year. The goal of the project is to get as close as possible to replacing 100 percent of the previously used fuel oil and propane gas with wood chips. Cressy and his team took the time to research the biomass-fuel technology before they reached where they are
today. Upon Cressy’s arrival to his role in Sullivan County five years ago, a feasibility study was in progress for such a biomass project. “That was exciting to come into a new position and realize that this was the initiative,” Cressy says. “Something that had been near and dear to my heart for a while.” The study results did not meet county expectations, however, and the project was put on the back burner. Two years ago, the county was approached by the USDA Forest Service Wood Education and Resource Center, with an offer to conduct a feasibility study. “The study came back and looked great,” Cressy says. “Armed with that information,
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itself nicely to a reciprocating floor fuel reclaim system,” Waller says. As for the entire system itself, Waller says, “It’ll last 25 years, or indefinitely if it’s maintained.” Sullivan County lit the fire Dec.1, 2013. The system has been operating for over a year, and has proved even more reliable than anticipated, according to Cressy, even though it was initially fired up in the heart of a very cold winter. “It’s not like we had a chance to warm up to it,” Cressy says. “We just launched and it was full steam ahead, it was kind of a trial by fire, literally.” Concrete data has yet to surface with the past year spent
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we were able to move forward with an approval process.” After a request-for-proposal process, a 5 million Btu per-hour, 150 pounds persquare-inch, hybrid-design Hurst boiler was selected. Additional Hurst project equipment includes a reclamation system with a nine-tree reciprocating floor, an oximizer deaerator with a duplex pump set and a propane package boiler. Bob Waller and his company, Thermal Systems Inc., are the authorized Hurst Boiler representatives serving New Hampshire. Waller and TSI helped oversee the project development. “Because of the terrain we’ve had to configure the equipment around, it lent
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learning how to effectively run the boiler, but Cressy believes better data will be collected at the end of this winter. “We’re still trying to figure it out, but I’m comfortable in saying that we’re doing 60 percent of our heating load, and I know it’ll be better than that,” he says. According to Cressy, in calendar year 2014, the county saved around $200,000 in fuel costs, out of a little over $500,000. The total project cost $3.4 million, and received grants totaling $675,000, in addition to a tax-exempt bond through a local bank. New Hampshire’s recent renewable energy incentives now available to the marketplace allowed the project to secure the
grants, and obtain an agreement to recover renewable energy credits after testing. Biomass projects in a rural town like Unity can make a real impact by moving fuel dollars back into the local economy, Cressy says. “I drive by the guy’s house who we buy a lot of our wood chips from,” he says. “It just doesn’t get, in my opinion, any better than that.” The locally sourced, renewable wood chips are provided by Cousineau Forest Products of Henniker, New Hampshire. Trucks deliver the material to the facility’s wood chip bin, which can hold 80 to 90 tons of chips at a time, or about a weeks’ worth in the winter months.
Ultimately, although very different in nature, both the prison and nursing home need care 24/7. Redundancy becomes especially important in this case, and so the old boilers are maintained and in place if needed. Both Cressy and Waller believe biomass heating will continue to play a large role in New Hampshire. “It’s been a good alternative, especially here in the Northeast, and the Hurst technology has been a big part of thermal systems for 50 years now,” Waller says. Education is key for public support of these projects. In fact, inspired by the initiative, Cressy has visited local high schools, and shared his
knowledge with the students. He sometimes tells the students, “It’s kind of like grandma’s wood cook stove with a tea kettle on top, but a whole lot more high-tech.” More high-tech indeed. “To me, all of the economic benefits and all of the environmental benefits are great, but there is so much real-life learning to be done on a project like this,” Cressy says. “Math, science, physics, welding, construction, environmental studies, etc., therein lie some of the unheralded benefits.” Author: Katie Fletcher Staff Writer, Biomass Magazine kfletcher@bbiinternational.com 701-738-4920
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MARCH 2015 | BIOMASS MAGAZINE 31
BiogasNews California biogas project wins grant
2014 RIN data RIN Category
No. of RINs
No. of RINs for renewable methane-based fuels (milions)
(millions)
Biogas
D3
32.96
D4
2,686.88
D5
142.89
D6
14.33
D7
0.05
20.35
Renewable CNG
Renewable LNG
14.91
17.35
0.06
SOURCE: U.S. EPA
Biogas-based fuels top 2014 cellulosic biofuel production U.S. EPA data indicates nearly 17.21 billion renewable identification numbers (RINs) were generated last year, including more than 33.01 cellulosic RINS. Approximately 32.96 million D3 cellulosic biofuel RINs were generated in 2014, along with 54,308 D7 cellulosic diesel RINs. According to the EPA, 683,643 D3 RINs were generated for ethanol, 44,168 for cellulosic renewable gasoline, 14.91 million for renewable compressed natural gas and 17.35 million for renewable liquefied natural gas. Approximately 142.98 million D5 advanced biofuel RINs were generated
32 BIOMASS MAGAZINE | MARCH 2015
in 2014, with 20.35 million generated for biogas. D5 RINs were also generated for ethanol, naptha, heating oil, nonester renewable diesel and renewable compressed natural gas. More than 14.33 billion D6 renewable fuel RINs were generated last year, with 14 billion of those RINs generated for ethanol. The remaining D6 RINs were generated for biodiesel and nonester renewable diesel. In addition, nearly 2.69 billion biomass-based diesel RINs were generated last year, with 2.14 billion of that volume generated for biodiesel.
The California Energy Commission recently awarded Colony Energy Partners Tulare LLC a $5 million grant to support the construction of a biogas project in Tulare, California, that will produce 2.8 million diesel gallon equivalents of biogas each year. The total cost of the project is estimated to be between $25 million and $30 million. The grant will help purchase the main pieces of equipment for the plant, such as a gas conditioning skid and digester equipment for what is referred to as the Endeavor facility. The project’s high-solid anaerobic digester design can process locally collected dairy manure, food and agricultural processing residuals, restaurant and cafeteria food scraps, restaurant grease trap residuals, and organic municipal solid waste. The facility is permitted for up to 500 tons of waste per day, with a solids content up to 40 percent. The digested waste will produce approximately more than 1.5 million standard cubic feet per day of biomethane.
BIOGASÂŚ
Good Policy Should Float all Bio-Boats BY AMANDA BILEK
There are exciting biobased industry developments happening all across the U.S., no doubt about it. Biobased industry development is also facing its share of challenges, but significant opportunities can be found at the state and local level. In Minnesota, there are project proposals moving forward in the metropolitan area that would use anaerobic digestion (AD) to process organic material from households and institutions to produce biogas. The biogas would be cleaned and compressed to fuel garbage trucks, buses and other heavy-duty vehicles. These projects will help metropolitan counties reach increased recycling goals and zero waste goals for the city of Minneapolis. Outside of the Twin Cities metropolitan area, other proposed projects would collect organic materials from food processing facilities and livestock operations to codigest at regional (AD) facilities. These projects are also planning to clean and compress biogas for transportation fuel. As I have written about before, newly adopted rules by the Environmental Protection Agency under the renewable fuel standard that allow certain biogas pathways to generate cellulosic RINs is proving to be a game changer for the U.S. biogas market. In addition to the biogas project proposals, Minnesota has a global leading cluster of renewable chemical company headquarters and R&D facilities that are looking to scaleup to commercial production. Minnesota also has a strong foundation of established biofuel and forest product manufacturing facilities. Factor in access to abundant agricultural and forestry feedstocks, intellectual capital, and infrastructure and Minnesota has many of the essential ingredients for a strong bioeconomy. In Minnesota the legislative session is well underway. My organization, the Great Plains Institute, staffs and facilitates a diverse coalition of business, agricultural, forestry, and environmental interests called the Bioeconomy Coalition of Minnesota. The mission of the coalition is to articulate and implement a Minnesota state policy and regulatory agenda to expand renewable chemical, advanced biofuel, and biomass thermal energy industries, along the entire value chain from R&D through commercial production and use. The Coalition came together in 2012 and has been working to implement state policy that will take advantage of the countless project development opportunities to build a strong bioeconomy, including biogas projects. Instead of trying to advance individual projects that would use one type of feedstock or a specific technology to produce a singular
renewable fuel or biobased product, the coalition believes we have a stronger chance of implementing truly transformative policy by bringing all of the biobased project opportunities under one unifying policy agenda. What unites the agenda for our coalition is the opportunity for Minnesota to use our tremendous biomass resources to displace petroleum in transportation and the materials and products we use every day. This year the coalition is working to advance a policy that would establish a production incentive program for the commercial deployment of advanced biofuel, renewable chemical and biomass heat. Eligible projects would produce their product in Minnesota and utilize Minnesota agricultural and forestry feedstocks. A production incentive will make an annual per unit payment to the facility for the actual production of an eligible product over a 10-year period. A production incentive requires the private market to secure financing and end-use agreements, but once a facility is up and running the state incentive can help pay down debt. It is a an approach that allows the state to help first of its kind and early stage technology scale-up companies without risking those dollars with an up-front investment that may never come to pass. Minnesota has a history of using the production incentive model. It was a key element in the construction and operation of our existing ethanol industry. Over a 10-to-15 year period, the state of Minnesota invested over $500 million to build our 20 ethanol plants. Although the production payments have ended, those plants still in operation today contribute, conservatively, at least $5 billion annually back to the state in economic activity. A very good return on investment for the state of Minnesota. The Bioeconomy Coalition is working to build on a strong foundation of biobased industry development, replicate past success, and move Minnesota toward becoming a global center for the global bioeconomy by enabling the commercial development of advanced biofuels, renewable chemicals, and biomass thermal energy. If you are interested in looking into the details of the production incentive policy, please visit the Minnesota Legislature’s website and do a bill search for HF 536/SF 517. Please contact me if you have specific questions or would like to get involved. Author: Amanda Bilek Government Affairs Manager, Great Plains Institute 612-278-7118 abilek@gpisd.net
MARCH 2015 | BIOMASS MAGAZINE 33
¦BIOGAS
The Cellulosic-RIN
REVOLUTION Expanded cellulosic fuel pathways have led to a surge of biogas-based fuel credits, and producers are taking advantage of a significant boost to project economics. BY KATIE FLETCHER
T
raditionally, the biogas project end market has been the sale of power to the grid, but transportation fuel may become the new end use of choice. Conversion of biogas into compressed natural gas (CNG) and liquefied natural gas (LNG) is now frequently considered when penciling out project financials, and not without reason. The volume of biogas-based transportation fuels used for compliance with the renewable fuel standard (RFS) has increased. As a recap, last July the U.S. EPA expanded cellulosic fuel pathways to include CNG and LNG from biogas created in landfills, municipal wastewater treatment plant (WWTP) digesters, agricultural digesters and separated municipal solid waste (MSW) digesters. A booming volume of cellulosic renewable information numbers (RINs) from renewable CNG and LNG pursued the ruling, and as a result has increasingly shown the potential for biogas as a source of transportation fuel. According to the EPA, the net number of cellulosic biofuel or (D3) RINs generated 34 BIOMASS MAGAZINE | MARCH 2015
in 2014 was nearly 33 million. EPA’s RFS2 data for the total production of biogas-based transportation fuel in 2014 by total volume in gallons and total quantity of RINs was nearly 15 million for CNG and over 17 million for LNG. In December alone, 8.5 million D3 RINs, the highest reported number for any single month in 2014, were generated. Needless to say, biogas-to-fuel project activity is increasingly occupying the industry. Many, if not all, developing biogas projects that chose transportation fuel over power as the end product, did so because of the opportunity to generate RINs. In fact, some say the reason was, “100 percent,” says Mike Silva, civil engineer and project manager with CR&R Environmental Services. “RINs and LCFS (low-carbon fuel standard) credits really helped us make the decision to go to transportation fuel versus electricity.”
Expanding Compressed Potential Southern California-based CR&R is a recycling and waste collection company that is in the process of building a biogas-to-fuel
project, which “when it’s all built out it will be the largest in the world,” Silva says. The estimated $30 million capital cost of the project includes a number of components through a four-phase build out. The project broke ground at the end of June in Perris, California, and the first phase is scheduled to be completed this July. Each phase is designed to handle a capacity of 83,600 tons per year of municipal organic wastes, making full build out capacity nearly 335,000 tons per year. The commissioning of phase two is scheduled to commence within a few months, even before phase one’s completion, and Silva expects both phases will be completed and operating by the close of the year. The remaining two phases will be subject to acquiring additional contracts to justify construction, but if all goes as planned the entire complex’s anticipated completion will fall within the next three years. The project stands on part of a 52-acre site where CR&R’s waste and recycling facilities are located. A little over 9 acres of space is dedicated to the anaerobic digestion (AD)
BIOGAS¦
RIGHT TO WORK: The BioCNG project in Colorado has already made ample progress since December ground break. According to Mike Melan, project manager, the BioCNG-100 skid and hydrogen sulfide removal vessels are onsite, and half of the underground piping is installed and buried. PHOTO: CITY OF GRAND JUNCTION
CONSTRUCTION UNDERWAY: CR&R Environmental Services is implementing German-based Eisenmann’s biogas technology for its project in Perris, California. The high-solids anaerobic digestion system employs a continuously fed, horizontal plug flow design, which allows the Perris facility to take liquid and solid waste. PHOTO: CR&R ENVIRONMENTAL SERVICES
facility currently under construction on the site. The digester’s infrastructure was just completed at the end of January, and according to Silva, the company will begin installing Eisenmann’s digester technology over the next few months. According to Silva, the digester will create between 450 and 500 standard cubic feet per minute (scfm) of biogas from phase one, which will then be converted in this phase into 1 million gallons of diesel gallon equivalent (DGE) renewable natural gas (RNG) per year. Initially these gallons are fueling 70 CR&R collection vehicles, and, when all is said and done, Silva estimates about 150 CNG vehicles will run on the fuel. CR&R al-
ready has a CNG slow-fill fueling station, and three facilities using the renewable fuel. The gas conditioning system is supplied by Greenlane Biogas. The system uses water scrubbing and other advanced technologies to clean raw biogas to vehicle and pipeline quality gas. Once subsequent phases are completed, CR&R will have the capacity to inject the upgraded biogas into the Southern California Gas pipeline. “When the whole thing is built out we’ll have the capacity to produce 4 million DGE,” Silva says. “I can probably use about a million of that onsite, so down the road 3 million DGE will go into the pipeline.” The multimillion dollar project has re-
ceived assistance with state grants. The first phase of the project received about $5 million in grants, including $4.5 million from the California Energy Commission, and another $500,000 from the California Air Quality Management District. Subsequent to these grants, CR&R applied for grants on phase two, and was awarded a $3 million grant from CalRecycle, which Silva says primed the pump for this phase. The company has also been awarded a contract with the city of Los Angeles, which has yet to be finalized. The potential to produce 4 million DGE of CNG gives CR&R not only the ability to utilize the gas in its CNG-collection vehicles, but also to generate cellulosic RIN and LCFS credits. “Our research indicates that it is not cost effective to make electricity,” Silva says. “If you can make vehicle fuel, and you can use vehicle fuel, that is the highest and best use in our analysis and market.”
The City's Future While CR&R’s CNG project will utilize MSW-digester gas, a project that recently broke ground in Colorado will utilize biogas from an existing digester at the Persigo WWTP in Grand Junction. The determining factor in whether to undertake this type of biogas project is again, RINs. City of Grand Junction officials say without RIN generation, the costs of infrastructure could not be recouped during the life of the project. The project development company, BioCNG LLC, echoes the reasoning of the city regarding the opportunity to generate RIN credits. “I think that makes a big difference in somebody pulling the trigger and actually doing one of these,” says Steve Wittmann, senior client manager with BioCNG. “Some clients say that they’re going to look at the project financials without RINs, and not rely on the government program to make the project go forward, and then the RINs are just gravy on top, but everyone that gets into these projects looks at the RINs as a significant piece of revenue coming out of them.” The launch of this project occurred in December, after Grand Junction chose BioCNG to install a biogas conditioning system and gas pipeline to the WWTP. The conditioning system will produce about 500 gallons of gasoline equivalent (GGE) per day from 100 scfm of biogas, which will be channeled in a nearly 6-mile pipeline to an already existing CNG slow-fill fueling station upon its anticipated completion in April. MARCH 2015 | BIOMASS MAGAZINE 35
DIGGING IN: Mid-December, a groundbreaking ceremony was held to launch a biogas-to-fuel project at the Persigo Wastewater Treatment Plant in Grand Junction, Colorado. Those attending included Grand Junction Mayor Phyllis Norris and Mesa County Commissioner Steve Acquafresca, along with Leslie Hentze, representing the Colorado Department of Local Affairs, and Mike Melan project manager for BioCNG. PHOTO: CITY OF GRAND JUNCTION
The fueling station also includes a fast-fill component privately owned by Monument Clean Fuels to meet the fueling needs of the public. Gas at the site currently comes from the public utility gas distribution system, but once the biogas connection is made will only be used in the event that there is not enough biogas to meet fueling needs. This fueling station is expected to serve 38 city-owned CNG vehicles by the end of the year, including utility trucks, pickup trucks, cars, street sweepers, dump trucks, refuse trucks and Mesa County-owned Grand Valley Transit bus fleet. The city presently has 28 vehicles, and plans to convert eligible fleet vehicles over to CNG as vehicles are replaced.
36 BIOMASS MAGAZINE | MARCH 2015
According to various city representatives, the vision is for Grand Junction to become the most livable community west of the Rockies, and this is why the city decided to pursue a project to capture and utilize the excess biomethane gas that is currently flared off at the WWTP. According to Don Tonello, wastewater services manager, the WWTP produces 120,000 cubic feet per day (cfd) of methane, 16 percent of which is used to heat the digester process, but 100,000 cfd is flared or wasted into the atmosphere. This amount is equivalent to 400 gallons of fuel a day. Upgrading the flared gas to CNG will result in offsetting 146,000 gallons of liquid fuel per year, enough
to fuel 263 vehicles, and a total carbon dioxide reduction of 2.8 million pounds per year. Besides fueling the vehicles, BioCNG is adding a separate pipeline to the WWTP boilers so that the CNG can be used in lieu of natural gas, if desired, because it has a similar Btu value. Besides utilizing a once-wasted resource, city representatives say the project will bring significant economic benefits. The financial plan for the project assumes a RIN credit and the city fleet and the county-operated bus system purchasing the fuel at $1.50 per gallon equivalent. The city paid an average of $3.28 per gallon for diesel fuel last year. The $2.8 million project will be jointly owned by the city of Grand Junction and Mesa County, Colorado.
The Larger Picture The Persigo biogas project is BioCNG’s seventh CNG project to date. All of the sites have the ability to generate RINs. Two of its projects are adding an additional BioCNG system to increase total fuel production. One such project is with Louisiana’s St. Landry Parish
BIOGASÂŚ
Solid Waste District. The solid waste district is expected to add an additional BioCNG system and fueling station by October, expanding its RNG production capacity from 250 GGE of CNG per day to between 700 and 750 GGE per day. One end user is the St. Landry Parish sheriff ’s department fleet. “Interest in BioCNG for fleets has increased substantially over the last several years,� Wittmann says. “The ability to lock in fuel prices is appealing to municipal and private fleets across the country. RINs increase the value of a BioCNG project as they bring overall fuel costs down. BioCNG is economically feasible, better for the environment, and CNG vehicles run quieter than diesel vehicles.� BioCNG was created specifically to work in the biogas market making CNG fuel, and there are a number of other developers who focus their expertise on converting biogas to fuel. For instance, CR&R’s AD project isn’t the only activity Greenlane Biogas has had this year. Mid-December, Colony Energy Partners Tulare LLC selected Greenlane to provide the upgrading technology to its proposed biogas project in California. The project is estimated to produce 2.8 million DGE each year, displacing diesel-fueled trucks in the San Joaquin Valley. “The highest-value market use is CNG,� says Matt Schmitt, Colony Energy Partners vice president of project development. Greenlane and BioCNG are joined by companies both developing upgrading technology, and performing natural gas vehicle conversions. Natural gas vehicle models are also being produced for purchase by Honda, Ford, GM, Chrysler and others. Although there have been multiple, effective biogasto-fuel projects, and more on the horizon, the end use has to exist for continued success. “I think the projects that make the most sense are projects where an owner already has a fleet of vehicles, or has access to a fleet of vehicles, that are currently running on CNG,� Wittmann says. “Being able to use the gas to fuel your own vehicles or identifying a fleet partner to purchase the fuel is a key component to a successful project.� Successful projects have an end use for the gas, as well as fueling infrastructure, which is currently one of the impediments with these ventures. Many projects have one
fueling station. The St. Landry Parish project had only one fueling station at its landfill, and thus decided to build another 15 miles away to provide a more convenient location for the public to access the fuel. Limited infrastructure is one challenge, as well as associated costs. Investments must be made into gas upgrading technology, as well as natural gas vehicle conversions or new vehicle purchases. Even so, renewable CNG and LNG are lowcost, domestically produced transportation fuels, with proven, multidimensional benefits
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MARCH 2015 | BIOMASS MAGAZINE 37
AdvancedBiofuelNews Oregon Clean Fuels Program implementation SOURCE: OREGON ENVIRONMENTAL QUALITY
6.5% 3.5% .25% REDUCTION
1.5%
10% 2025
and beyond
REDUCTION
2024
REDUCTION
2022
REDUCTION
2020
REDUCTION
2018
2015
Oregon begins phase 2 of Clean Fuels Program In January, the Oregon Environmental Quality Commission voted 4 to 1 to approve rules for the second phase of the Oregon Clean Fuels Program. The program, which is similar to California’s Low Carbon Fuel Standard, requires a 10 percent reduction of greenhouse gases from transportation fuels over a 10-year period. The process to establish the Oregon Clean Fuels Program has been ongoing for several years. The program was first approved by the state’s legislature in 2009.
The Oregon Environmental Quality Commission adopted rules for the first phase of the program in December 2011. Those rules allowed the department to collect information on fuels that were being imported into the state. While phase two of the Oregon Clean Fuels Program is being implemented, the program could be short-lived. It is currently subject to a statutory sunset date of Dec. 31. The state’s legislature must consider whether to remove that sunset date this year.
E2 predicts growth in advanced biofuels Advanced biofuel capacity topped 800 million gallons last year, up from the previous year and almost double the capacity in 2011, according to a study released by Environmental Entrepreneurs (E2). The E2 Advanced Biofuel Market Report 2014 projects that by 2017, 180 companies could be producing 1.7 billion gallons of advanced biofuel, doubling current capacity. E2 defines advanced biofuel as a nonpetroleum liquid fuel that achieves a 50 percent reduction in carbon intensity compared to a petroleumfuel baseline, as determined by the U.S. EPA and the California Air Resources Board. According to the report, the 2014 capacity for drop-in biofuels was in the range of 214 million to 216 million gallons, with a projected increase to between 319 million and 347 million gallons by 2017. By 2015, E2 predicts 15 to 27 producers could be manufacturing drop-in biofuels. Cellulosic capacity was 58 million gallons last year. Capacity is expected to increase to between 182 million and 215 million gallons by 2017, with 26 or 27 producers manufacturing the fuel.
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ADVANCED BIOFUELS AND CHEMICALS¦
Say It Ain’t So, Joe BY MICHAEL MCADAMS
Just like the famous quote from Joseph “Shoeless Joe” Jackson of the 1923 World Series, the biofuels industry ought to be asking the Obama administration to “say it ain’t so” that you are not going to get the 2014 renewable volume obligations (RVO) out before the spring of 2015. Today, the administration is more than 15 months late on the 2014 RVO and two months late with the 2015 RVO—remember the statute calls for next year’s RVO to be published in November of the preceding year. In other words, the RVO for 2015 were due in November 2014 and the 2014 levels was due in November 2013. Unfortunately, this delay, the regulatory uncertainty it creates for the market and obligated parties, the chaos in the pathways process, and the general lack of leadership from the White House is limiting—possibly destroying—the future of the industry. As an industry, we simply cannot afford for the administration to stall for another year to announce the RVO for 2014, 2015 and 2016. However, as I look at the White House and the recent exodus of staff, I fear no one is paying attention to advancing the industry. The president and the new Congress need a stark reminder that we are key to their “all of the above energy strategy” or “greenhouse gas reduction strategy.” We cannot be left in suspended animation for two years in a row when the price of oil is $46 dollars a barrel. Now more than ever, we should realize that the folks across the ocean, who have lots of oil but are unable to grow biofuels in a desert, do not share our view of the world and would love for us as a nation to abandon our diversified portfolio approach to fuels policy moving forward.
As President Kennedy once said, “the time to repair the roof is when the sun is shining.” If the president and Congress are serious about energy diversification, energy security and curbing greenhouse gas emissions, they need to look past the current low oil prices and work to give our industry the certainty and security it needs to grow. Because, while oil prices may be low now, we all know that $100 barrels of oil are not too far in the distant future. And when they return, we will need a diverse array of options available that only our industry can provide. We all have a stake in the success of the advanced and cellulosic biofuels industry and we must get involved to raise the alarm for our industry. So, get active today. Call your member of Congress, and tell the administration to wake up and make a decision on the RVO now. Ask the tough questions, why can’t they announce 2014 since they already know the numbers? Why can’t they announce the 2015 numbers since they have the 2014 numbers? As an industry we delivered the goods last year and are being forced to enter 2015 with unnecessary regulatory uncertainty, which is crippling our growth. To add insult to injury, four out of the five biofuels related tax provisions were cut from the administration’s 2016 budget proposal and inexplicably no one has revised the cellulosic waiver credit number despite the difference between the wholesale price of gasoline. Our industry already faces many challenges, regulatory uncertainty should not have to be one. It is time to act. Author: Michael McAdams President, Advanced Biofuels Association michael.mcadams@hklaw.com www.advancedbiofuelsassociation.com
MARCH 2015 | BIOMASS MAGAZINE 39
¦ADVANCED BIOFUELS AND CHEMICALS
Constructing a
Full-Service
40 BIOMASS MAGAZINE | MARCH 2015
ADVANCED BIOFUELS AND CHEMICALS¦
In the early stages of project development, startup company SG Preston has big plans for renewable diesel and its brand. BY RON KOTRBA
A
groundbreaking ceremony symbolically represents the beginning of a construction project. But for those who have traveled that long and often rocky road of project development, the event is equally representative of an end, punctuating years of studies, planning, fundraising, engineering and analyses, a transition from the virtual to the concrete. The advanced biofuel space is an industry of startups, some much farther along and more experienced than others. But even the most developed companies in this sector are still relatively new; and they all had a beginning, a time in the early stages of project development when enthusiastic executives strove to turn their business model and vision into commercial-scale production. Formed in 2012, SG Preston is one of hundreds of startup companies in the advanced biofuel space. The name first appeared on the advanced biofuel radar last summer when it announced plans to build a 120 MMgy renewable diesel facility in Lawrence County, Ohio. “The cornerstone of SG Preston’s bioenergy development and service strategy is the integration of existing delivery systems into the energy supply and development value chain through four divisions,” says R. Delbert LeTang, the company’s founder and CEO. Those divisions are SGP Biomass, SGP Wood Pellets, SGP BioEnergy and SGP Biofuels. SGP Biomass is “an integrated developer and supplier of various forms of environmentally sustainable and certified biomass feedstock to leading companies in the U.S.,” LeTang says. Using its proprietary U.S. Biomass Supercorridor logistics platform, this division involves the responsible harvesting, collection, processing, manufacturing and delivery of naturally occurring waste-derived products, including wood, fats, oils and more, for use by indusR. Delbert LeTang, founder and CEO, SG Preston try. “SGP Biomass’ vertically integrated feedstock development and supply model allows the company to control the volatility of the traditional feedstock supply chains, eliminate middlemen and brokers, and mitigate commoditization of its own, and its clients,’ primary input raw materials,” LeTang says. SGP Wood Pellets is an integrated developer of wood pellets from environmentally sustainable and certified biomass feedstock that intends to eventually supply international markets with product. “We have more than 2 million metric tons of orders from the EU market,” LeTang says, although he admits the company currently possesses no pellet mill production assets. “We are very conservative, very careful in developing our steps forward until we thoroughly understand the financing and political aspects of these markets,” he says. “We are investment and operations guys. Members of our management team have an average of 20 years’ expe-
MARCH 2015 | BIOMASS MAGAZINE 41
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rience in development, power generation, renewable energy, capital markets, investment banking and operations. We know how the renewable energy game is being played. Most of it is being led by who’s financing you and how pretty your website is—that’s not us. We are more interested in getting tangible, real work done and being consistent within our model. We want to make that crystal clear to the market. Most are riding the wave of the momentum, but we’re different. We are the momentum.” The company’s third division is SGP BioEnergy, which LeTang says was recently established to acquire distressed or noncore biomass-to-electricity assets at significant discounts. “These are plants that have been shuttered or have underperformed due to volatile feedstock prices, unpredictable supplies or environmental regulation,” he says. SGP Biofuels, the company’s fourth division, is a developer of low-carbon biofuels and chemicals from biomass using proven, commercial-scale conversion technologies to supply global clients in the petroleum and chemical industries. “SGP Biofuels’ facilities are designed to be profitable without incentives,” LeTang says. “Our business’ cash flow is predictable, sustainable and real from the outset. We believe in a fundamentally sound business and prefer to pass on some or all of the incentives that we have to our investors in order to accelerate getting their investment capital back to them sooner.” So far, the company is delivering waste woodchips to customers, LeTang says, but “everything else is in development. This industry is an industry of startups. It’s all new. What separates us from others is how completely we develop our business model.” He says SG Preston strives to stand as a “thought leader” in the bioenergy industry. “SG Preston’s model for renewable energy is unique,” LeTang says. “Each project begins by first establishing a thorough understanding of the challenges, then executing a contract for developing a turnkey bioenergy product and delivery solution to the project’s unique specifications. We be-
SG Preston’s
SAIFF Strategy SG Preston says its operating model is driven by its proprietary SAIFF strategy (Strategize, Analyze, Initiate, Followthrough, Feedback) to underscore excellence in every component, including: • Continuous iteration of best practices in enhancement and implementation. • Rigorous focus on process improvements and efficiencies. • Highest quality assurance. • Cutting-edge strategic and competitive research. • Effective strategic planning, deployment and execution.
lieve that all customers are different and focus our bioenergy solutions on being additive to the client’s unique offerings.” When asked to explain what SG Preston’s renewable diesel project development business model is, Clifton B. Strain, the company’s senior vice president and chief financial officer, says, “The formula is very simple and well-known—best-ofbreed execution team, technology that has been proven at commercial scale with products that are guaranteed, a valueadded approach to meeting client needs, strategic relationships with our community partners, a financial model that works without much need for federal incentives, complete integration on feedstock acquisition and effectively planned logistics.” LeTang says the plan to develop renewable diesel facilities “came as another spoke in the company’s overall operating philosophy that various forms of organic waste and innovative technologies for converting these wastes into usable fuels and products have met at a crossroad,” he says. “We call that crossroad ‘opportunity,’ especially when we see that overall client demand is virtually unserved for these renewable products.”
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FIRST SITE: SG Preston has the South Point site in Lawrence County, Ohio, under option until the preengineering study on its 120 MMgy renewable diesel facility is completed. PHOTO: SG PRESTON
South Point The site in Lawrence County, Ohio, where SG Preston plans to construct its renewable diesel facility, is a 66-acre plot in South Point. “The South Point site has the ideal profile for our facilities because it offers all of the components of our logistics strategy—skilled labor, established logistics infrastructure and a community motivated by the promise of rebuilding itself,” says Dwayne Brown, senior vice president of SG Preston’s internal division the company refers to as its Strategic Intelligence Group. LeTang describes its SIG as an internal group within SG Preston that houses its proprietary strategy and process intellectual property. The group was designed as a filter for identifying, evaluating and commercializing proven biomass conversion technologies. “It’s where we do our magic with the integration of logistics, various forms of biomass and conversion technologies,” LeTang explains. “The plant site in Lawrence County is currently under option until we have completed our pre-engineering study,” Brown says. A pre-engineering study is the
first stage of engineering an actual facility, which assesses the operational and integration aspects of installing the chosen conversion technology into a standard refining platform, and ballparks the capital costs required to build the plant. “The rest of the development process is the fine-tuning of that,” LeTang says, adding that reproducibility of subsequent facilities will be a “fine-tuning function of logistics and location.” Brown says each planned facility has a series of standard development stages for which pre-engineering is the first and necessary step. “From our standpoint, once we have begun this phase of exploration, we are pretty much committed to that location,” Brown says, adding that the South Point site is “all about the logistics—the combination of rail, road, water and even the presence of available pipeline capacity is critical to our strategy.” Bill Dingus, executive director of the Lawrence County Economic Development Council, says, “This project will be of significant economic importance to southern Ohio, bringing long-term employment and income to the region. We look forward to
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supporting the development of new energy technologies, and passing on the benefits of commerce and cleaner air to local residents.” Preliminary estimates on the cost to build SG Preston’s South Point facility come in at around $400 million. Strain wouldn’t disclose details on how the company plans to pay for it, or how much SG Preston has raised to date. “I will say that the project will be financed with a combination of debt and equity and that we are in discussions and negotiations with several interested financing sources,” Strain says. “We have a very process-driven and demonstrated financing strategy for our company, as well as for our biofuels portfolio. Investment partners will be announced as we progress through our development cycle.” LeTang says SG Preston is not involved in research and development, and it does not rely on experimental technologies. “We license waste conversion technologies developed by leading universities, research labs, think tanks, government agencies and private groups, globally,” he says. “Our emphasis is replicability, scale and rapid deployment to match the pace of our global energy and resource challenges and demand.” LeTang says the technology it will license for the South Point facility is proven on a commercial scale and “one of only
44 BIOMASS MAGAZINE | MARCH 2015
two used in commercial production today.” After its announcement last year, reports indicated the company would be licensing Honeywell’s UOP EcoFining technology, “and I didn’t refute that,” he says. Last summer a spokesperson for Honeywell’s UOP did admit negotiations were underway. “We wanted to be clear that there is no formal agreement, although UOP and SGP are in talks,” the spokesperson said. LeTang says his technology partner is reluctant about him publicly disclosing any information on SG Preston’s use of its technology at this point. Though SG Preston has experience in supplying waste woodchips, and technologies do exist for converting wood to renewable diesel, LeTang reiterates that SG Preston does not involve itself with “experimental technologies, only proven ones,” intimating the company will use more traditional sources of waste fats, oils and greases. The company would not give specifics on its feedstock arrangements for the South Point site. “The majority of feedstock for our products and fuels are developed and sourced internally,” Brown says. LeTang adds that the majority of the feedstock used in this market is purchased from trading platforms or brokers. “We go directly to the waste owners and developers,” he says, “and we have our own program and logistics ex-
pertise to get it to our own facilities. When 50 to 70 percent of the cost of production is feedstock, we cannot allow third-party control over that.” Brown says the process of selecting an EPC contractor is already underway. “We have begun this process and will continue to explore the universe of players who offer the capabilities that we need and, most importantly, demonstrate the ability to work well with the remainder of our team and at our pace of development,” he says. Well before a shovel has broken ground in South Point, Ohio, SG Preston is already eyeing a site in Indiana for its second renewable diesel plant. “Logansport, Indiana, is slated as a second location that we have added to our development calendar,” Brown says. “We expect to announce more locations shortly.” Logansport is home to a Tyson chicken plant, but when asked if feedstock negotiations are underway with Tyson, Brown says SG Preston’s discussions with feedstock owners are confidential. Today’s environment of low oil prices and significant policy uncertainty in the U.S. with the on-again off-again biodiesel and renewable diesel blenders credit and woefully late renewable fuel standard (RFS) volume obligations certainly alter the value proposition for advanced biofuels. Strain says SG Preston’s business model is designed to op-
ADVANCED BIOFUELS AND CHEMICALS¦
SG Preston’s
PRINCIPLES 1. Business begins with people. 2. People conduct business with other people that they know and like. 3. Responsible businesses establish a meaningful presence in every community in which they work. 4. The best businesses are built by matching the skills of intelligent and highly motivated people with the best tools and partners.
SG Preston demands recognition that it is different than the myriad of other startups in renewable energy. Why? “The SG Preston model is client-demand driven,” LeTang says. “Not a single product is developed without a committed client attached. We are not research and development driven, nor are we scientists. We only license proven technologies from credible research institutions. So there is no guessing game with the technology. Our company is also fully vertically integrated, so many of the commodity exposures that plague our competition do not exist with our business. The rest is really a function of execution as we have virtually de-risked the most challenging elements, and for that, we assemble and partner with the best of the best of service providers to ensure effective execution.” Ultimately, SG Preston wants to build a brand people trust. “From our standpoint,
a brand represents a promise,” LeTang says. “It is the basis from which clients, communities, investors and other stakeholders determine whether what we are doing is in line and a good fit with who they are and what their own brand represents. This is where the relationship of business happens. For SG Preston, we are building a company based on a promise to deliver a competitive, tangible return to investors, to reinvigorate jobs in our host communities, to deliver value-added products to strengthen our clients’ product blend, and to be an overall good steward to other stakeholders in our industry.” Author: Ron Kotrba Senior Editor, Biomass Magazine 218-745-8347 rkotrba@bbiinternational.com
5. The best partners strengthen teams. 6. Smart businesses operate with integrity, discretion, humility, unwavering commitment and powerful insight. 7. Truly effective solutions consider the perspectives of all affected stakeholders.
erate profitably without incentives. “Having said that, incentives will only help to strengthen the model. We have committed to building a tremendous franchise with long-lasting benefits for our customers, community, employees and investors,” he says. “We are not comfortable tying the success of our business to the vagaries of the incentive environment, but we do think that incentives will allow us to build an even stronger company.” Regarding state and local incentives, Strain says they are helpful and demonstrate a community’s commitment to a given project. “Should these incentives be available, it would allow us to build a more financially sound business with less financial leverage and greater financial flexibility,” he says.
MARCH 2015 | BIOMASS MAGAZINE 45
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