2018 Pellet Mill Magazine by BBI International

NOVEMBER/DECEMBER 2018

Eyes on

Asia

Bruks, Siwertell Merger Creates Global Market Synergies Page 16

PLUS: Production Potential in Sri Lanka

Page 10

Japan, South Korea Policy Update Page 20

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NOVEMBER/DECEMBER 2018 | VOLUME 8 | ISSUE 6

Pellet Mill Magazine

Advertiser Index

2 2019 International Biomass Conference & Expo 18 Alfred H. Knight North America 32 Astec, Inc. 31 Biomass Magazine's Top News 29 Biomass Magazine's Webinar Series 15 CPM Global Biomass Group 19 Industrial Bulk Lubricants (a Dansons company) 23 Port of Stockton

Page 10

FEATURES 10 PROJECT DEVELOPMENT Cultivating Sri Lankan Supply

A group of ambitious Sri Lankan developers believe the country has much to offer the Asian wood pellet market. By Ron Kotrba

04 EDITOR’S NOTE

Ever-Evolving Markets By Anna Simet

16 BUSINESS Joining Forces

05 EVENTS

The merger of bulk material handling giants Bruks and Siwertell has resulted in an offering of complete, specialized solutions for customers on both sides of the pellet export equation. By Patrick C. Miller

06 COLUMN

Charting Our Strategic Direction By Tim Portz

07 COLUMN

20 Q&A Maintaining Momentum

Performance Despite Pests By Holger Streetz

Seth Ginther, executive director of the U.S. Industrial Wood Pellet Association, discusses the industry’s evolution, drivers and future opportunities. By Anna Simet

08 BUSINESS BRIEFS 30 MARKETPLACE

CONTRIBUTIONS 24 POLICY Asian Biomass Market: Growing Despite Policy Setbacks

COVER

Bruks and Siwertell merged in May, creating a company that develops, manufactures and markets products and solutions for bulk terminals, ship unloaders and conveying, screening and size reduction systems. PHOTO: BRUKS SIWERTELL

Despite the Japanese and South Korean governments introducing policies to curb the growth of biomass power, both markets continue to expand. By Racheal Levinson

28 TECHNOLOGY Biomass Storage: Fire Suppression Using Nitrogen Inerting

Nitrogen Inerting is an effective solution to mitigate the risk of biomass storage fires. By Vipul Dholakia, Xiaoyi He and Joanna Benson

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« Editor's Note

Ever-Evolving Markets

Anna Simet

EDITOR asimet@bbiinternational.com

For quite a while in the pellet export market, Asia has been viewed as the new Europe, a major driver being the biomass feed-in tariff rates set by the Japanese government. When these kinds of incentives are announced, for the energy industry, it’s comparable to a modern-day Gold Rush. Things can change, however, and in this case, it seems they have—at least, to a degree. On page 22, Hawkins Wright Biomass Research Manager Racheal Levinson discusses some key policy changes in Japan that have shaken out some of the many proposed projects—a number so high the government was likely blindsided—and will probably be the demise of more. But new deals are still being signed and the market is still growing, Levingston writes, and it will continue to do so, just not at the expeditious rate previously anticipated. Moving to a country that I can’t recall ever including in the pages of Pellet Mill Magazine, on page 10, Senior Editor Ron Kotrba digs deep into the roots of a biomass and pellet manufacturing initiative in Sri Lanka. Biomass Ventures’ ultimate goal is to build a robust feedstock supply chain from the ground up to feed pellet production for export and domestic power using Gliricidia Sepium trees, which are adapted to a wide range of agroclimatic and soil conditions and can be cultivated all over Sri Lanka. Partner growers have planted roughly 100 million Gliricidia trees to date, and Biomass Ventures founder Lucky Dissanayake says the aim is to plant 1 billion trees, and have 15 million tons per annum growing in Sri Lanka. Through the venture’s subsidiary Trinco Pellets, the aim is to produce and sell pellets under long-term contracts to the Japanese market, by 2021-‘22. “We have set a target of 150,000 tons of exports per year from a pellet manufacturing facility at Trincomalee, and then 150,000 tons of exports from Hambantota port,” Biomass Ventures’ Alexis Corblin tells Kotrba. Finally, the U.S. Industrial Wood Pellet Association’s Seth Ginther answered a collection of questions I had for him in “Maintaining Momentum,” on page 18. In the Q&A, he covers everything from industry growth to past and present policy, to new opportunities on the horizon, as well as his perspective on the U.S. increasing its market share in Asia. “We see a lot of potential in the Asian markets,” he says. “The U.S. South has an abundance of lower-grade, affordable feedstock…all market projections indicate we will experience a surplus of this feedstock for the foreseeable future. This makes the region a very competitive supplier for both Japan and South Korea.” Undoubtedly, vast opportunity remains in Asian energy markets—which, if you haven’t yet guessed, is the theme of this month’s issue. It will be exciting and interesting to watch it all unfold, as the global pellet market continues to evolve, expand and, inevitably, compete.

4 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

Industry Events »

Editorial

PRESIDENT & EDITOR IN CHIEF Tom Bryan tbryan@bbiinternational.com EDITOR Anna Simet asimet@bbiinternational.com SENIOR EDITOR Ron Kotrba rkotrba@bbiinternational.com STAFF WRITER Patrick C. Miller pmiller@bbiinternational.com ONLINE NEWS EDITOR Erin Voegele evoegele@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

Art

ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com GRAPHIC DESIGNER Raquel Boushee rboushee@bbiinternational.com

Publishing & Sales

CEO Joe Bryan jbryan@bbiinternational.com SALES & MARKETING DIRECTOR John Nelson jnelson@bbiinternational.com BUSINESS DEVELOPMENT DIRECTOR Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Chip Shereck cshereck@bbiinternational.com ACCOUNT MANAGER Chip Shereck cshereck@bbiinternational.com CIRCULATION MANAGER Michele Rasmussen mrasmussen@bbiinternational.com MARKETING & ADVERTISING MANAGER Marla DeFoe mdefoe@bbiinternational.com MARKETING & SOCIAL MEDIA COORDINATOR Dayna Bastian dbastian@bbiinternational.com

EDITORIAL BOARD

Stan Elliot Pacific Coast Pellets Bruce Lisle Energex Corp. Derek Nelson Forest Business Network T.J. Morice TNT Ventures LLC Tim Portz Pellet Fuels Institute

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2019 International Biomass Conference & Expo March 18-20, 2019

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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

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The Biomass Preparation, Handling & Storage Workshop agenda will allow producers to take an in-depth look at the latest innovations and strategies in biomass handling and compare it to their own. Whether producers are sourcing wood chips from a handful of trusted suppliers for a campus boiler or are a biorefinery working to gather, store and convert hundreds of thousands of tons of agricultural residues, this agenda will offer practical value. (866) 746-8385 | www.biomassconference.com Subscriptions to Pellet Mill Magazine are free of charge—distributed bimonthly—to Biomass Magazine subscribers.To subscribe, visit www.BiomassMagazine.com or you can send your mailing address to Pellet Mill Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.com. Advertising Pellet Mill Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Pellet Mill Magazine advertising opportunities, please contact us at 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Pellet Mill Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to asimet@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

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« Column

Charting Our Strategic Direction BY TIM PORTZ

Last month, the Pellet Fuels Institute’s board of directors met in Indianapolis for its final meeting of 2018. Prior to the meeting, our board chairman invited each board member to prepare a list of the most urgent, strategic priorities they would like to see PFI take on. The goal was to identify three that would guide the efforts of our organization as we move into 2019 and beyond. While the list of initiatives the PFI could focus on is certainly greater than a few, we felt it was important to limit ourselves to just three, in order to determine which emerged as the most critical for our board. Overwhelmingly, the promotion of wood pellets as a viable heating and cooking fuel to new users was identified as the PFI’s top priority. This didn’t come as a surprise to any of our board members, and I believe each of us came to Indianapolis knowing this priority is a continuation of our stated goal of re-establishing 100,000 units sold as the new floor for annual pellet heating appliance sales. “Operation 100k” has been a rallying cry for our organization throughout the year, sharpening our thinking on several fronts while inspiring a revitalization of our relationships with retailers and appliance manufacturers. Our social media beta test, launched in September, was inspired by our members’ desire to get more actively involved in the promotion of pellet appliances. Growing efforts like these, and imagining new ones that will educate, inform and excite consumers about wood pellet heating, is now—formally—priority one. Next, our board recognized that the PFI Standards Program is easily the most concrete offering the association has produced for the industry for quite a while, and that it’s time to recommit ourselves to making sure that retailers and consumers know it. If we can build some momentum toward our priority of more units sold and installed, it is vital that the consumers and businesses who elect to purchase a wood pellet appliance have a quality experience. Fuel quality is central to optimal appliance performance, and wood pellet consumers deserve a clear and practical means of identifying wood pellets

6 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

that they know, with assurance, will perform in their appliance. While the PFI is confident its standards program does exactly that, it isn’t clear that consumers do. Moving into 2019, the PFI will take on that effort, as well as ancillary efforts including educating pellet retailers, appliance manufacturers and regulatory bodies about the value and utility of our standards program to their goals. Finally, recognizing that we’re not likely to achieve our first two priorities without help, our board is recommitting the PFI to meaningful industry partnerships and collaboration with groups that share goals and challenges similar to ours. One of the hallmarks of this industry is how it is intrinsically tied to other industries. We obtain our feedstock from our partners in the forest products sector, depend upon appliance manufacturers to continue to innovate in our category, and rely upon a broad range of retailers to offer our product to consumers. It is relationships like these that we look forward to reimagining and revitalizing in our efforts to grow our market and protect our right to do business. During the Indianapolis meeting, the board repeatedly underscored the importance of active engagement with our partners. Wanting the same things and working toward the same things are different, and we’re committed to finding initiatives and projects that materially connect to our two other priorities, and work in tandem with our partners. Now, our work is focused on identifying the tactics we will deploy to advance our strategic priorities. As an organization, we look forward to weaving these priorities into everything we say and do. Our committees now have an azimuth to guide their work, ensuring that what the PFI does on a day-to-day basis advances us toward our goals. We couldn’t be more excited to get started. Author: Tim Portz Executive Director, Pellet Fuels Institute tim@pelletheat.org 651-398-9154

Column Âť

Performance Despite Pests BY HOLGER STREETZ

The performance of a pellet plant greatly depends on feedstock quality and pretreatment. The usual difficulties in operation increase when the wood is infected with pests and varmints. Due to a dry and hot summer in Germany, we are expecting a lot more infected wood than usual. Here are some thoughts and clues to be better prepared for what is coming. Twenty to 30 percent of woody plantsâ&#x20AC;&#x2122; dry mass consists of lignin. While biological and chemical processes can break down lignin, higher-evolved organisms cannot, thus infestations by insects such as longhorn beetles do not decrease lignin in wood. Pelleting high ratios of infested wood in the feedstock mix, however, will cause major issues with stability and abrasion resistance. Plant cell walls are made of cellulose fibrils set in a matrix of pectins, hemicellulose, proteins and lignin. Cellulose is the backbone of the plant cell wall, characterized by its tensile strength, whereas lignin gives pressure strength, comparable to steel beams in a concrete ceiling. A healthy tree has multiple defense mechanisms against varmints. However, as soon as the bark is bruised, weakened by drought, or the tree is cut, varmints come along to lay eggs below the bark, in the wood, and the emerging larvae eat their way through. The most common green wood varmints are bark beetles, wood wasps, carpenter millers or longhorn beetles. There is also a variety of wet wood insects that need a fairly high moisture content to thrive. Often, the infected wood is not debarked and is already seized by fungi. Longhorn beetles are the most common green wood pest. About 26,000 species are known worldwide, with 200 in central Europe. Larvae are laid in the wood, where they develop and pupate. The active life of the adult is usually a maximum of 90 days, but in many species, 30 or less days. Adult beetles pose no threat to the wood, and some beetles are so rare that they are under species protection. Europe is mostly suffering from the red long horn beetle and the violet tanbark beetle. The biggest problem of varmints in green wood is larvae eating through in a hook-shaped path. Before pupating, larvae eat up to 1.5 inches horizontally into the heartwood, and gnaw a 1 to 1.5-inch-long vertical chrysalis chamber. These eating paths lead to a larger waste. A fungal infection is characterized by different destructive phenomena. White rot manifests itself in attacking the white matter, or lignin. The local lignin degradation creates honeycomb holes in the wood and turns it white. Brown rot mainly occurs on coniferous wood. It destroys the cellulose of

the wood, leaving the lignin, which then turns the wood dark. The wood is cracked, crumbly and eventually decays. The questions at hand now are: How should infected wood be dealt with? Is it still pelletizable? Does it affect the pelleting process and the quality? The unsightly truth is yes, varmints have a great negative effect on the quality of pellets, especially the structural strength. Pellets with a high content of infected wood tend to break much faster and have higher abrasion. The infestation often comes multilateral, affecting both structural components of the wood. A fungal infestation destroys lignin; insects digest the cellulose. Even with only one infestation, the woody material is weakened, and the ratio between cellulose and lignin is misbalanced. Many pellet producers in Europe add starch as a binder, but there are certain limits to its addition (1 percent), and it does not substitute for the natural balance of cellulose and lignin. Eventually, it works more as a lubricant than an adhesive. A longer, effective press channel only pretends to have an effect. The pellets look shiny and good, but this is only on the surface, as they will still suffer from the weak structure of the wood. Also, the effective press channel is longer in North America than in Europe, so any prolongation possibilities are already exhausted. It is common to add water in the pelleting process, which helps release lignin and lowers stress on the equipment. Increasing the moisture content, however, has no effect on the binding characteristics if the wood is already damaged. The only solution is to mix the damaged wood with healthy, green wood, fresh wood chips and clean sawdust to lower the structure weakening effects of infested wood. In portfolio theory, risk mitigation is achieved by diversification. The same principle can be applied to feedstock management: By sourcing from many suppliers and different woody biomass types, a plant can process a more homogenous feedstock than it would relying on fewer sources. This applies not only to already-infested or overaged wood, because the risk of a quality change is given at any time. In the case of infested wood, we found that the share should not exceed 15 percent, and must be mixed thoroughly with healthy wood to avoid feedstock imbalances. Author: Holger Streetz International Operations Manager, Bathan AG h.streetz@bathan.ch +491-735918-550

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Business Briefs

PEOPLE, PRODUCTS & PARTNERSHIPS

Sumitomo to build South Korea pellet-fueled power plant Sumitomo SHI FW has been awarded Gunsan City a contract by SK Engineering & Construction Co. Ltd. for design and supply of SMG Energy’s biomass power plant to be located in Gunsan City in South Korea. Commercial operation of the new plant is scheduled for December 2020. SFW will design and supply the 100 MWe CFB steam generator and auxiliary equipment for the boiler island. The CFB steam generator will be designed to burn 100 percent wood pellets, while meeting applicable environmental regulatory requirements. SFW has supplied over 30 CFB steam generators to South Korea, and the Gunsan plant will be the fourth firing biomass as its primary fuel. Enviva to supply pellets to converted Japan power plant Oct. 31, Enviva announced that wood pellet off-take contract agreements with Mitsubishi Corp. are now firm. The announcement follows news released by Mitsubishi indicating construction is underway on a biomass power plant conversion in Japan. Conditions precedent to Enviva’s previously announced takeor-pay off-take contracts to supply 630,000 metric tons per year of wood pellets to a Japanese customer have been satisfied and the agreements are now firm, the company said. Under the terms of the agreements with Mitsubishi, Enviva will be the exclusive, longterm imported biomass fuel suppliers to Aioi Bioenergy Corp., a joint venture between Mitsubishi Corp. Power Ltd. and Kansai Electric Power Co. Inc. According to Enviva, deliveries under the contracts are scheduled to begin in late 2022 and continue for at least 15 years. Simultaneous to Enviva’s announcement, Mitsubishi Corp. subsidiary Mitsubishi Corp. Power Ltd. announced it had begun work on a biomass power generation plant in western Japan, a project being executed through Aioi Bioenergy, and will be fired solely on Enviva-supplied wood pellets. Unit 2 of Aioi Power Station in Hyogo Prefecture will be converted from the use of heavy or crude oil. Mitsubishi said the unit has been offline since April 1, but will resume operations once the

8 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

conversion is complete. The unit is expected to begin generating power using biomass fuel in January 2023, and operate for a 20year period. Global Pellet to launch pellet brokering platform Global Pellet Inc. announced it has launched a website aimed at connecting buyers and sellers of wood pellets. Global Pellet is a Michigan-registered corporation focused on facilitating international trade within the energy industry. On the new website, globaljoule.com, wood pellet producers can register their businesses and products, and then be matched with purchase requests from registered buyers. Registration is by invitation only. End sellers and end buyers should send requests to register to director@globaljoule.com to request or offer products. Ring receives SFI President's Award The Sustainable Forestry Initiative Inc. announced that Bettina Ring has been named recipient of the 2018 SFI President’s Award. Virginia’s secretary of agriculture and forestry and an SFI board member, Ring is being recognized for her commitment to encouraging Ring diversity in the forest sector, and leadership in advancing sustainable forestry. Ring is the first woman to be appointed secretary of agriculture and forestry in Virginia, overseeing two agencies along with the Department of Forestry. Ring was appointed to Virginia Gov. Ralph Northam’s Cabinet in January. In October, she was appointed to Northam’s Conservation Cabinet, emphasizing the important role that the agriculture and forestry industries play in conservation and environmental stewardship in the Commonwealth of Virginia. Ring’s leadership is also supporting SFI’s efforts to encourage diversity in the forest sector. Prior to her current position, Ring was Virginia's state forester. Report shows Maine wood heat economic benefits The Maine Department of Agriculture, Conservation and Forestry’s Maine Forest Service recently released a report documenting the economic and environmental benefits of heating community, commercial and institutional buildings with modern wood chip and wood pellet technology and fuels produced in Maine.

Business Briefs »

The Maine Forest Service analyzed the use of wood fuels in calendar year 2017 in hospitals, campuses, schools, municipal buildings and private businesses across the state. In the past 10 years, over 100 new installations have been made, nearly always replacing imported heating oil. Key findings of the analysis include savings in annual heating costs (versus average heating oil cost) was $5.5 million; direct spending on local fuels (wood pellets and wood chips instead of exporting fuel dollars for oil) was $6.3 million; and the total value of economic impact generated was $20.6 million. Maine pellet project awarded $200,000 grant A proposed wood pellet plant in Maine was recently awarded a $200,000 grant through the USDA’s Rural Energy for America Program. The REAP award was announced by Rep. Chellie Pingree, D-Maine. According to information released by Pingree’s office, T&D Wood Energy LLC was awarded $200,000 in REAP funding to support the development of a $5.7 million wood pellet plant in Sanford, Maine. The midsized pellet plant will be built adjacent to an operating white pine sawmill. The pellet mill will utilize all the wood residues coming from that sawmill. It will also purchase additional wood waste residues from other sawmills in the region. A USDA fact sheet on the project states the project will generate more than 164 million kilowatt-hours annually, enough electricity to power 15,142 homes. Pinnacle completes Alabama pellet plant acquisition Aliceville, Alabama Pinnacle Renewable Holdings Inc. has closed the previously announced acquisition of a 70 percent interest in an industrial wood pellet production facility in Aliceville, Alabama, from the Westervelt Co. Westervelt, a diversified land resources company, has retained a 30 percent interest in the Aliceville facility. The plant has an annual production capacity of 270,000 metric tons. Approximately 210,000 metric tons per year of that capacity is committed under a long-term off-take contract to a major European utility.

Pinnacle and Westervelt are currently undertaking a capital spending program to improve safety, product quality and plant efficiencies.

PHOTO: STUDSTRUP POWER STATION

Ørsted celebrates 50th anniversary of Studstrup Power Station Ørsted is celebrating the 50th anniversary of one of Denmark’s largest power stations. The then coal-fired Studstrup Power Station was inaugurated in October 1968, and converted to fire wood pellets in October 2016. The power station’s primary task is to produce green district heating for some 106,000 Aarhus homes. According to Ørsted, the facility consists of two units. While unit 3 is fueled by biomass, unit four is a spare unit fueled by coal. Unit three has the capacity to produce 360 MW of electricity and 510 megajouls per second of heat. As part of the conversion project, a storage silo with the capacity to store 65,000 metric tons of wood pellets was constructed at the power station, along with the installation of more than 800 meters of closed conveyor belts to transport wood pellets from the harbor to the silo and into the boiler. Ørsted has set a goal to phase out its use of coal completely by 2023.

SHARE YOUR INDUSTRY NEWS: To be included in the Business Briefs, send information (including photos and logos, if available) to Business Briefs, Pellet Mill Magazine, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also email information to asimet@bbiinternational.com. Please include your name and telephone number in all correspondence.

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« Project Development

Cultivating

Sri Lankan Supply With its quarter-century-long civil war over for a decade now, Sri Lanka is poised to enter the Asian wood pellet theater armed with Gliricidia and passionate developers. BY RON KOTRBA

PHOTOS BY BIOMASS GROUP LTD.

ri Lanka, the island nation off the southern tip of India, is not considered a hotbed of wood pellet activity. But if Lucky Dissanayake has her way, this may soon change. Born in Sri Lanka, Dissanayake owned a London-based book publishing company in the 2000s, two decades after the bloody civil war broke out between the Sri Lankan government and the Liberation Tigers of Tamil Eelam. In 2006, Dissanayake published Paul Brown’s “Global Warning: The Last Chance for Change.” The year she devoted to developing Brown’s book sparked Dissanayake’s interest in renewable energy. In 2009—the year the civil war ended—Dissanayake spent her own funds and two years researching renewable energy options for Sri Lanka. Afterward, in 2012, she founded Bio-

mass Group Ltd., a Singapore-based holding company, and incorporated its primary operating company, Biomass Ventures Pte. Ltd. The vision was—and still is—to develop and demonstrate a renewable energy model in her birth country of Sri Lanka that benefits the environment, increases energy options, improves the economy and empowers small farmers. At the heart of Biomass Ventures’ operations is Gliricidia Sepium, a rapidly growing, short-rotation tree found wild throughout Sri Lanka. According to Alexis Corblin, Biomass Ventures’ head of certification and sustainable development goals (SDG) reporting, Gliricidia is a native plant of Mexico and Central America. “Gliricidia was introduced to Sri Lanka in the 18th Century to provide shade to coffee plants, of which Sri Lanka was once the

10 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

Buddhism has always promoted the importance of respect for nature. Roughly 10,000 Buddhist temples are estimated to exist across Sri Lanka. Biomass Supplies actively works with temples in its catchment areas to plant triple fences around their temple lands. Here, field officers are planting with a Buddhist monk in Polonnaruwa.

world’s largest producer,” Corblin tells Pellet Mill Magazine. “Now it is pervasive across the country.” He says Gliricidia has adapted to a wide range of agroclimatic and soil conditions and can be cultivated all over Sri Lanka except in coastal areas, on mountain tops and in arid areas. “In Sri Lanka, Gliricidia Sepium is historically grown as a boundary fence tree, which does not require any special agronomic practices or care of pest control measures due to some inherited genetic characteristics,” Corb-

lin says. It is a drought-tolerant tree crop that absorbs nitrogen from the atmosphere with the least intake of soil nutrients. “Gliricidia is a nitrogen-fixing soil improver,” he says. “In addition to its use as live fencing by smallholders, its leaves and bark can be used as a highly effective organic fertilizer and pesticide, and it’s highly effective for intercropping as a shade tree.” With offices in Colombo, Polonnaruwa, Puttalam and a network of field offices across the Northern and North Central provinces

of Sri Lanka, and a network of staff working directly with its farmer-suppliers, Biomass Ventures’ ultimate goal is to build a robust supply chain from the ground up to feed pellet production for export and domestic power. In order to effectively divide the labor and perform the necessary overall functions of Dissanayake’s grand vision, three Sri Lanka-based subsidiaries have been, or soon will be, formed under Biomass Ventures: Biomass Supplies, Trinco Pellets and Dendro Power.

Supplies Biomass Supplies is tasked with developing an adequate supply chain of Gliricidia based on an outgrower, or contract farming, basis. Corblin says Biomass Supplies is inherently scalable thanks to its robust systems and the outgrower model that provides multiple socioeconomic benefits for its partners, which in turn helps ensure security of supply. “Biomass Supplies maintains positive, long-term relationships with our farmer-suppliers as they are the center of our operations,” Corblin says.

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“We were close to nature when we were young,” says Saman Weerasinghe, a Biomass Supplies field officer in Sri Lanka. “For generations, we had a habit of planting trees for occasions like birthdays. Kids nowadays are too occupied with tech gadgets and often forget their connection with nature. I always wanted my children to plant trees and I wanted to spread this habit across Sri Lanka. So we started working with school children spreading this good habit of planting trees.”

“Initially, farmers were wary, but we have diligently worked to gain their trust over the past five years. We have organized more than 700 training programs where we share knowledge on how Gliricidia can increase soil productivity while reducing erosion and soil contamination associated with the use of chemical fertilizers, therefore enhancing food production.” Dissanayake says Biomass Supplies’ 50,000 outgrower partners have planted roughly 100 million Gliricidia trees to date. “That is approximately 2,000 trees per smallholder farmer on their triple fences and intercropped with their cash crops,” she says, adding that the farmers use the leaves to make fertilizer, pesticide and fungicide. Come harvest time, the farmers do not fell whole trees. “We are only interested in harvesting the branches,” Dissanayake tells Pellet Mill Magazine. She says how this works is straight forward. “Farmers cut the branches on their smallholder plots and bring them to designated collection centers where they are paid for the fuelwood and transport costs. We collect from there.” Dissanayake says the 100 million trees are currently growing 1 million metric tons of biomass fuelwood—branches that are growing thicker on the tree—that ultimately will be converted

into pellets and then power. By partnering with companies and institutions, Biomass Supplies has access to another 200,000 smallholder farmers in addition to the 50,000 currently engaged. “We are targeting registration of 500,000 smallholder farmers,” Dissanayake says, “so the aim is to plant 1 billion trees and have 15 million tons per annum of growing fuelwood in Sri Lanka.” These farmers are being registered as part of the multistage PLanT platform deployment. All over the world, farming and supply chain management have become high-tech operations, and Biomass Ventures’ work in Sri Lanka is no different. Information technology is driving inventory management and harvesting data through development and deployment of what’s called the PLanT platform, Stage 1 of which is currently underway. PLanT stands for produce, logistics and traceability. “PLanT supports supply chain transparency, sustainability verification, audit requirements, and automation of tasks,” Corblin says. “The PLanT platform forms the backbone and provides the possibility for Biomass Supplies to scale in Sri Lanka. PLanT acts as a hub with developed application program interfaces and partner management that will enable partners

12 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

to integrate their offerings—for example, social impact certification and research, agricultural advice, market and weather information, soil monitoring, satellite and drone imaging and so forth.” PLanT is being developed in stages, the first of which has been deployed “to support the field officer network and the training, prospecting, registration and management of farmers, their land parcels and relevant crops,” Corblin explains. “PLanT development is now focused on the second stage to support the management of biomass and produce buyers, thus enabling us to increase farmer incomes. Further development stages are scheduled through late 2019 supporting value-added supply chain processing, impact measurement and supply chain traceability.” Biomass Supplies’ revenue will come from the sale of biomass feedstock to Trinco Pellets and Dendro Power, along with other potential revenue streams such as carbon credits. “Afforestation and reforestation create a carbon sink for which the company intends to approach the global carbon market,” Corblin says. The first phase of this process is to achieve Verified Carbon Standard/Climate Community and Biodiversity Standard

Project Development » Corblin says. “This has enabled Biomass Supplies to develop grassroots-level communications with farmers and gain critical insights into how best to organize collections and supply logistics from our farmer-suppliers.” Furthermore, Biomass Supplies has exported and tested 300 tons of Gliricidia sticks to a coal-fired power plant in Japan. The company also achieved certification by the Roundtable on Sustainable Biomaterials in 2015.

Gliricidia branches, the harvest from one smallholder farmer, are neatly stacked awaiting collection.

certification. “This is issued for those private- and public-sector projects that support climate action and sustainable development with standards, tools and programs that credibly, transparently and robustly assess environmental and social impacts,” he says. “Working toward this goal, Biomass Supplies started its affiliation with South Pole Group in June 2017.” South Pole Group is a Swiss carbon finance consultancy founded in 2006. “Since then, South Pole Group and Biomass Supplies have collaborated to develop the project document that will be submitted for VCS/CCBS accreditation, therefore registering our carbon credits as verified carbon units,” Corblin says, adding that its carbon credits from Gliridicia plantings will be ready for sale in 2020. The EU’s Technical Assistance Facility funded this carbon registration with a grant and soft loan. Corblin says based on current working assumptions, including a projected 1 billion Gliricidia trees with a rotation age of 20 years, existing allometric equations to calculate the growing rate, and after discounting the buffer for permanence risk, the long-term average verified carbon units calculated by South Pole are 5,249,381 tCO2eq over 30 years. “If we consider that 100 trees produce 1 ton of

biomass annually, 1 billion trees will generate 5,249,381 tCO2eq, and an assumed price of $10 per tCO2eq on the voluntary carbon market, then the total potential financial benefits through the voluntary carbon market is $52.5 million over 30 years,” Corblin says. “These funds will be used by the Biomass Foundation to develop agricultural support systems such as cascading water tanks, drip irrigation systems, flood and drought insurance, and more.” Since 2013, Biomass Supplies has been educating and training farmer-suppliers on how they can achieve immediate financial savings on their agrochemical inputs by using Gliricidia. “This patient approach has yielded outstanding results,” Corblin says. “Relationships have also been cemented with farmer organizations, state-owned coconut plantations and private plantations, the Catholic Church, Buddhist temples, and the Sri Lankan branches of the Air Force, Army, Navy and Civil Defense Force to supply Gliricidia biomass feedstock.” The company has also been making deliveries of Gliricidia sticks to local industries near Trincomalee since 2013. “These companies are involved in garment manufacturing and require steam generated by biomass boilers,”

Pellets and Power In 2016, Trinco Pellets was incorporated as a Board of Investments company. The aim of Trinco Pellets is to produce and market sustainability-certified biomass chips and white and black pellets that directly displace coal consumption. “[Trinco] Pellets aims to sell its product under long-term contracts to the high-value Japanese market, earning valuable foreign exchange,” Corblin says. “We have set a target of 150,000 tons of exports per year from a pellet manufacturing facility at Trincomalee, and then 150,000 tons of exports from Hambantota port.” He says these goals are to be completed in stages from 2021-’22. Seeger Green Energy completed a prefeasibility study for Biomass Ventures in 2016 on pelleting Gliricidia. The company then hired German consulting firm Plant Engineering GmbH as its owner-engineering resource. Corblin says Plant Engineering designed a 150,000-ton pellet facility in March 2017, completed the request for proposal and obtained competitive offers from several European EPC contractors. Since then, Biomass Ventures has identified available private land sites to build pellet processing centers. It has qualified Gliricidia with Japan’s Ministry of Economy, Trade and Industry under the ¥24 tariff and held negotiations with several Japanese trading houses. “There have been more than 35 investor visits to Sri Lanka to see our operations,” Corblin says. For several years, Biomass Group has been proactively pursuing discussions with multiple funding sources, including a number of Japanese trading houses, Japanese banks and development finance institutions, which, according to Corblin, have expressed strong interest and support for investment pending further development. This April, the company closed on a 35-year lease for seven acres at the BOI-approved Kappalthurai Industrial Estate, 10 kilometers from Trincomalee Harbor.

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Sri Lanka is a multireligious, multiethnic country. Biomass Supplies works with leaders of all religions—here, explaining planting techniques with a Catholic church in Puttalam.

Corblin says Trinco Pellets has long planned for initial pellet production to begin in the fourth quarter of 2019, but he says it is likely that exportation of pellets will be delayed until 2020-’21. “The delays are a result of the delays in biomass power development in Japan,” he says. “To contain risk, the intention is to sign a long-term offtake contract for pellet sales to commence in 2020-’21 and use this contract to fund immediate purchase of the equipment.” Biomass Ventures’ Dendro Power division has yet to be incorporated. The plan is to develop Sri Lankan power production using domestically grown Gliricidia feedstock to add power to the national grid from at least four 10-megawatt (MW) plants, each contracted for 20 years with the Ceylon Electricity Board. “Biomass Group plans to install its power stations adjacent to pellet processing centers to make use of the waste heat for feedstock drying,” Corblin says. “This is still work in development.” Ultimately, the group has the optimistic goal to generate 340 MW of wood power by 2025. Between 2011 and 2017, Biomass Group has raised funding from 26 investors. In September 2017, it concluded an investment deal from InfraCo Asia under its codevelopment program. InfraCo Asia InfraCo Asia is a commercially managed infrastructure development and investment company of the Private Infrastructure Development Group, a multiowner organization that promotes private infrastructure invest-

ment in developing countries through specialized finance and project development facilities. Dissanayake first became acquainted with InfraCo Asia at a conference in Singapore in 2015 and reached out with a proposal to invest in the Sri Lankan project. According to Lindsey Zouein, communications advisor for InfraCo Asia, InfraCo Asia’s mandate is to stimulate greater private-sector investment in South and Southeast Asia. “To achieve this aim, InfraCo Asia funds development activities by taking an equity stake with a focus on socially responsible and commercially viable infrastructure projects that contribute to economic growth, social development and poverty reduction,” Zouein says. InfraCo Asia is currently funded by three members of PIDG: the Australian Department of Foreign Affairs and Trade, the Swiss State Secretariat for Economic Affairs (SECO) and the U.K. Department for International Development (UKAid). InfraCo Asia invested $2.44 million in Biomass Ventures under its codevelopment program. The investment was in the form of a convertible loan. “Consistent with its mandate, InfraCo Asia provided catalytic funding to Biomass Ventures at an early, high-risk stage of project development when other private players were not willing to invest,” Zouein says. “This allowed the supply business to scale up and also allowed the pellet business to start taking shape. InfraCo Asia also brings with it a disciplined approach to project development that leads to capacity building with respect to internal processes and also an introduction to international investors and lenders through InfraCo Asia’s extensive network. The company

14 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

also requires all investee companies to strictly adhere to the International Finance Corp.’s performance standards, and also follow InfraCo Asia’s procurement policy that is based on transparency, competitiveness and value for money.” The investment, according to Zouein, has been used for strengthening the team, further developing Biomass Supplies and for the establishment of the proprietary PLanT platform. Furthermore, InfraCo Asia’s investment “has made Biomass Ventures of interest to institutional investors,” Zouein says. “It has also allowed Biomass Ventures to build more robust processes internally and adhere to international standards of project development.” Three criteria must be met before InfraCo Asia makes an investment: commercial viability, development impact, and additionality. “During the investment screening process, this project scored high in all three aspects,” Zouein tells Pellet Mill Magazine. “However, the development impact area is where this project stands out in particular. The number of farmers that will benefit directly from this project in terms of increased income levels on a longerterm basis is an important metric for InfraCo Asia. Furthermore, the majority of the beneficiaries are women and given the focus that InfraCo Asia and PIDG have on promoting gender equality, this project is an important example of how a project could be designed to benefit women in the community.” This is also the first project in which InfraCo Asia has invested in the biomass sector. The investment will help build its experience in what Zouein says is generally one of the

Project Development Âť

riskiest sectors in the renewable energy space. â&#x20AC;&#x153;This is also InfraCo Asiaâ&#x20AC;&#x2122;s second foray into Sri Lanka and will allow it to better understand the regulatory, commercial and political landscape in order to increase its exposure in a country that is now on the path to growth after decades of internal conflict,â&#x20AC;? she says. Zouein says the Sri Lankan project continues to make progress towards financial close of the first pellet production facility. â&#x20AC;&#x153;The first requirement,â&#x20AC;? she says, â&#x20AC;&#x153;is to get an offtake contract or spot contract and then proceed on pellet plant funding.â&#x20AC;? Changing Asiaâ&#x20AC;&#x2122;s Biomass Landscape Corblin highlights that Japanâ&#x20AC;&#x2122;s main Asian suppliers of wood pellets are Vietnam and Malaysia. â&#x20AC;&#x153;South and Southeast Asian countries are attractive supply sources where production capacity can be expanded,â&#x20AC;? he says, â&#x20AC;&#x153;but [some of them] draw on a mixture of unsustainable sources, such as roundwood from fastgrowing forestry plantations, residues from wood processing industries, and other residue sources such as rubber wood plantationsâ&#x20AC;&#x201D;all

with related environmental and social negative impacts such as deforestation, loss of habitats, loss of biodiversity, migration and so forth. Vietnamese raw material, for example, is mainly supplied by mill residues from the countryâ&#x20AC;&#x2122;s rapidly growing wood products industry, itself heavily dependent on imported timber.â&#x20AC;? Palm kernel shells (PKS) are major competition to wood pellets in Asia for power generation. â&#x20AC;&#x153;PKS are obviously linked to one of the main commodities driving deforestation in the producer countries,â&#x20AC;? Corblin says. â&#x20AC;&#x153;Despite a theoretical potential of approximately 15 million tons of PKS in Indonesia and Malaysia, only a limited share of these volumes will be available in the long run to meet demand.â&#x20AC;? He says the PKS market will experience considerable changes in the future. â&#x20AC;&#x153;Increased mobilization efforts from international buyers in combination with often-challenging inland logistics, and further increasing domestic demand for PKS as biomass fuel are likely to result in considerable price increases,â&#x20AC;? Corblin says. Compared to Europe, and looking at the ongoing international and academic debate

over the large-scale use of wood to produce energy, Corblin says the emerging Asian market may have a more varied appetite for different forms of biomass. â&#x20AC;&#x153;The sustainability of biomass supply, commercially, socially and environmentally, or the greenhouse gas emissions of different feedstock supply chains, could become key criteria for Asian buyers,â&#x20AC;? he says. â&#x20AC;&#x153;Biomass Suppliesâ&#x20AC;&#x2122; ethical biomass provides social, environmental and economic cobenefits that other biomass sources do not deliver, and therefore offers a responsible alternative to monocultivation, forest biomass and waste residues. We are promoting an alternative approach that will play a significant role in the biomass business globally.â&#x20AC;? Author: Ron Kotrba Senior Editor, Pellet Mill Magazine 218-745-8347 rkotrba@bbiinternational.com

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Bruks wood pellet loading equipment is installed at the Port of Wilmington, North Carolina. The Enviva terminal serves as the shipment point for biomass fuels manufactured at the company's Sampson County facility.

JOINING

FORCES The merger of Bruks and Siwertell has created a global bulk material handling group focused on complete, specialized solutions for customers. BY PATRICK C. MILLER

PHOTOS BY BRUCKS SIWERTELL

n May, two of the biggest names in bulk material handling merged, creating a synergy between U.S., Asian and European wood pellet markets. JCE Group AB in Sweden and Cargotec Corp. in Finland signed a deal to create the Bruks Siwertell Group. The newly formed company develops, manufactures and markets products and solutions globally for bulk terminals, ship unloaders, conveying systems, screening and size reduction. JCE owns 52 percent of Bruks Siwertell shares, and Cargotec owns 48 percent.

As Bruks Siwertell CEO Peter Jonsson points out, for many years, the two companies have served as industry leaders in the bulk handling market, with each company offering its own diversified equipment portfolio. The current industry climate and the potential for growth led to a discussion about a joint venture between Bruks and Siwertell, he says. “Both companies worked together to ensure the merger process was efficient and mutually beneficial.” Following the merger, Per Karlsson, Siwertell president, remarks, "This is a true partnership between two strong brands, Si-

16 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

wertell and Bruks, as they complement each other very well both in terms of product portfolio and market coverage. Siwertell will benefit from Bruks' strong position in the U.S. market, whereas Bruks will gain access to Siwertell's Asian network, knowledge and exposure.” Capitalizing On Asia The new business arrangement is already paying off in Asian markets, Jonsson says. “Prior to the merger, the Bruks U.S. group was focused on exports. We were supporting the wood pellet producers by

Business »

A Siwertell ship unloader operates at Ørsted in Denmark. It's designed to handle both biopellets and coal with a capacity of 800 tons per hour.

exporting their products,” he explains. “Siwertell was very involved in the import side. They had the equipment to offload the pellets coming into Europe. “Now that we’re one unit, we’re capitalizing on both sides of the spectrum in the Asian market,” Jonsson continues. “We have several large utilities in Asia asking for our help on the unloading side. We’ve parlayed our relationship with customers here in the U.S. to introduce them to these utilities in Asia. In some cases, the U.S. pellet manufacturers didn’t know about these opportunities. We have brought them to the

table, informing them that a particular utility is looking to import millions of tons of wood pellets. If they’re not talking to each other, we offer to make the introductions.” Siwertell is an international supplier of ship unloaders, road-mobile unloaders, port-mobile unloaders, ship loaders, mechanical and pneumatic conveying systems and bulk terminal solutions. Most equipment is customized according to individual bulk operating requirements, but it also offers standardized products. Bruks is a global provider of mechanical-engineering and equipment supply for the bulk materials

handling industries. The company provides specialized customer solutions, including the development of custom machines and systems. Its product portfolio offers a wide variety of customized solutions for the bulk materials handling industry. “Capitalizing on their combined global market coverage enables both brands to extend their customer relations and create a wider geographic reach,” Jonsson says. “The joint venture between Bruks and Siwertell offers customers complete dry bulk terminal and sales bulk handling, as well as processing systems for wood yards, pel-

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ÂŤ Business

Bruks provided engineering and equipment to receive and feed raw material to the Drax Biomass Pellet Plant Woodyard in Beekman, Louisiana.

let plants, pulp and paper mills, saw mills and more. This dynamic new company also provides an extended service network to its customers worldwide.â&#x20AC;? Combining Complementary Strengths The core focus areas of each company complement one another with Siwertell having a solid presence throughout Eu-

rope and Asia, particularly with its unique screw-type ship unloader. Bruks maintains a strong presence in the Americas, with a complete product portfolio of solutions for conveying and storage, stacking and reclaiming, and its newly developed belt conveyer product. â&#x20AC;&#x153;Bruks has a longstanding commitment to providing optimized solutions to the wood pellet industry,â&#x20AC;? Jonsson says. â&#x20AC;&#x153;The

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company designed a complete product line to handle timber in the forest and process excess materials at saw mills. Equipment includes hammer mills to create sawdust from wood chips, as well as products to produce, transport and store wood pellets. â&#x20AC;&#x153;Siwertell's screw-type ship unloader is unique and efficient for handling wood pellets,â&#x20AC;? he continues. â&#x20AC;&#x153;The ship unloader is currently the only one on the market with the capacity to handle both coal and wood pellets on one machine. This is particularly innovative, as many power stations are transitioning from coal to wood pellets for energy production.â&#x20AC;? Jonsson says the merger to create the Bruks Siwertell Group has resulted in a diverse business strategy focused on developing specialized solutions for customers. The group plans to grow its sea terminal business by providing complete sea terminals to feature ship loading and unloading, conveying, stacking, reclaiming and storage. â&#x20AC;&#x153;Siwertell's product line includes a unique ship unloaderâ&#x20AC;&#x201D;undeniably the most efficient and environmentally friendly equipment to continuously unload ships on the market today,â&#x20AC;? Jonsson explains. â&#x20AC;&#x153;Coupled with Bruks conveying and dry bulk material storage solutions and strong product portfolios for ship loading, Bruks and Siwertell's joint venture will provide significantly more innovative solutions for its customer base.â&#x20AC;? Thus far, Jonsson says, the Bruks Siwertell customer base has embraced the new brand. He believes the integration of the two companies has been seamless. As a result of the merger, the group is seeing new business and developing new leads worldwide. To date, Jonsson says Bruks Siwertell has an extensive list of prospects and has made several joint proposals that uses its combined product portfolio. Although the number of large-scale wood pellet industry projects varies from year to year, Jonsson says the wood pellet market remains an important and significant part of Bruks Siwertell's business.

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18 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

Author: Patrick C. Miller Staff Writer, Pellet Mill Magazine pmiller@bbiinternational.com 701-738-4923

PHOTO: BRUKS SIWERTELL

Case Study at a Glance: Avedøre Power Station Denmark-based Orsted’s two-unit power station in Avedøre, Copenhagen, was converted from coal to wood pellets and straw, beginning in 2016. Serving this multifuel demand is a Siwertell ST 790-M unloader. Under the terms of the turnkey contract with Dong Energy, Cargotec took full responsibility for the delivery of the Siwertell ship unloader, from the initial order until the plant was commercially operational. The unloader was manufactured in Estonia, and delivered as a complete system on board a heavy lift vessel, direct to Avedøre. Following installation, testing and commissioning, the first wood pellets were unloaded within a few weeks of the unloader arriving. The fullyenclosed design results in minimal dust emissions, and spillage is completely eliminated, minimizing environmental impact and significantly reducing the risk of fire. The unloader can handle coal or pellets without any need for adjustment. Once unloaded, the cargo can be directed in multiple ways. The service agreement with Orsted provides a safe, economical and reliable operation of the Siwertell unloader, and covers call-out-based service including mechanical, instrumentations and electrical maintenance training, regular inspections checking the machine status and performance. - SOURCE: SIWERTELL

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« Q&A

MAINTAINING MOMENTUM The U.S. Industrial Wood Pellet Association’s Seth Ginther discusses a decade of growth, and what’s on the horizon for the still-expanding industry. BYANNA SIMET

For our new readers, tell us about the U.S. Industrial Wood Pellet Association, and its history and mission. Founded in 2011 by several industry leaders, including Enviva, Fram Renewable Fuels, ecoFUELS, Georgia Biomass, and the Westervelt Company, USIPA promotes sustainability and safety practices in the woody biomass sector and advocated for the growth of the global bioenergy market. We represent U.S. wood pellet manufacturers, as well as others in the supply chain, from shipping and transport, to equipment manufacturing, to traders and brokers, to producers. The association provides a unified voice for the industry, works with regulators on renewable energy policies, and educates policymakers on the

sustainability of the industry and U.S. forestry practices. Looking back on the year, what are some standout milestones or accomplishments the industry achieved? Our biggest achievement this year was in the European Union. Two years ago, the EU started the process of developing the EU Renewable Energy Directive for 2021-‘30 (also known as REDII) to comply with the commitments made in the Paris Agreement and to set emissions and renewable energy targets. The REDII proposed a new set of bioenergy sustainability criteria that would apply across all member states.

20 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

USIPA, our members, and our partner organizations across Europe and North America supported the idea of harmonized criteria, as it provides regulatory clarity and allows for easier trade of our product. Throughout the lengthy legislative process, we advocated for smart bioenergy policies that would support the strong history of forest stewardship and private landownership we see here in the U.S. Southeast. In the end, the final REDII bioenergy sustainability criteria strikes the right balance of ensuring sustainable practices while also recognizing the complexity of forest products markets in the U.S. Additionally, the EU Parliament, EU Council, and European Commission recognize the important role that bioenergy plays in

meeting emissions requirements and providing stable, secure power generation. We are pleased with the outcomes of this legislative process, which was finalized this summer, and look forward to continuing to supply Europeâ&#x20AC;&#x2122;s energy markets. What does the U.S. export market looklike right now, in terms of capacity, production, etc.? Our members are on track to export about 6 million metric tons of wood pellets this year. We are seeing new development from some of our existing members, and also seeing some new investments being made from some new faces. There is another 1 million to 1.5 million metric tons of capacity in the pipeline.

The export market experienced a multiyear boom, beginning in roughly 2008. How would you describe recent growth? As the industry has matured, we are seeing steadier, incremental growth. This is to be expected as the industry really started from zero in 2008 and ramped up quickly. With the REDII policy secured, there are additional opportunities in Europe, including the German power market and the industrial heat market in the Netherlands. The Asian market also continues to hold promise, so we anticipate the incremental growth will continue. The European market has been the major driver of the U.S. market, which,

as I already mentioned, really started gaining momentum about a decade ago. Can you summarize the drivers of that demand? The drivers of that demand have been the Kyoto Protocol, the Paris Agreement, and the EUâ&#x20AC;&#x2122;s own emissions targets. To comply with the Kyoto Protocol and establish the EU as a leader in climate change mitigation, the EU developed its first Renewable Energy Directive, which established a 20/20/20 emissions by 20 percent, and use 20 percent renewable energy by 2020. This was the original driver of the European market, as EU countries needed to quickly source reliable renewable energy. They understood that sustainable biomass could provide baseload, on-demand

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« Q&A

and over 50,000 people are employed in Germany’s coal industry, so moving to renewable energy resources will not be easy. However, our industry has a proven track record of success in helping member states reduce coal usage, so we see great opportunity for biomass, both domestic and imported, to play a role in Germany’s decarbonization. There is also the industrial heat sector in the Netherlands, where large manufacturers who are major heat users will need to find renewable sources to comply with Dutch regulatory requirements. We have a surplus of available lower-grade feedstock in the U.S. South, and we have already developed the supply chains to export our product to northwestern Europe, so we have a prime opportunity to supply this market as well.

Seth Ginther

power that could balance the grid alongside other renewables, which could be intermittent and unstable. The REDII (discussed above) established similar rules to comply with the Paris Agreement, this time committing to reduce emissions by 30 percent and increase renewable energy usage to 32 percent. This will continue to drive demand and potentially open up new markets for us in Europe. Some predictions indicate the European market is set to plateau. Do you agree with that, or there any new potential markets or trends there? There are still opportunities for growth in Europe. As mentioned above, the REDII sets up the industry with regulatory certainty and government support, two key factors required for the growth of any industry. In Germany, for example, a commission has been established to submit plans by the end of the year for abolishing coal-fired power. Of Germany’s energy, 40 percent provided by coal, one of the largest shares in Europe,

Moving on to Asian markets, which is the theme of this issue of Pellet Mill Magazine, does the U.S. industry have a chance at gaining more market share there, or will it focus on growth elsewhere? I have been told Canadian producers have a route advantage that U.S. producers just don’t. We see a lot of potential in the Asian markets. The U.S. South has an abundance of lower-grade, affordable feedstock. In fact, all market projections indicate we will experience a surplus of this feedstock for the foreseeable future. This makes the region a very competitive supplier for both Japan and South Korea. Combined, these markets are projected to be larger than current European markets, so there is opportunity for all of North America to successfully supply Asian demand. Is there a possibility of exporting wood pellets from the West Coast, especially with the massive amounts of dead and dying trees there? Is there a chance it might be economically done in the future? Currently, the most economical location is the southeastern region of the U.S. because the industry has spent the past decade building out supply chains, and because of the very strong and active forest products industry that already exists in the region. The West Coast is certainly a future possibility, but there are still many uncertainties, such as the price of feedstocks, the investment needed to build out

22 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

infrastructure, and the availability of fiber, as the western U.S. has vast amounts of federally owned lands, which have strict limits on harvesting rates. In the U.S., have there been any favorable policy developments in terms of incentivizing energy derived from pellets and other biomass? Over the past few months, the U.S. EPA has released the Affordable Clean Energy rule, which provides states instruction and guidelines for developing state plans to reduce carbon emissions and increase renewable energy usage. While the U.S. has no national emissions target at this time, many states and localities are committing to the promises in the Paris Agreement and creating their own environmental goals. Additionally, EPA, DOE, and USDA sent a letter just this month to Congress touting the benefits of woody biomass energy and outlining their plans to develop policies around the use of biomass as a renewable energy source. This could open up a favorable situation for a domestic U.S. market for pellets. Safety is critical in this industry. How important is this topic to the industry and your members, and why? What is the motto or bottom line when it comes to safety? Safety is priority number one for our industry and our members. Providing a safe work environment for industry employees is nonnegotiable. USIPA’s Safety Work Group, which is comprised of safety and operations professionals from each pellet producer, has developed a set of industry best practices and holds routine calls and meetings to provide updates and discuss safety incidents. What are some major areas of focus of your association in 2019? In 2019, we will be focusing on communicating our industry’s positive message (we have a great story to share!), and continuing to strengthen current markets and explore new ones. Author: Anna Simet Editor, Biomass Magazine asimet@bbiinternational.com 701-738-4961

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« Contribution

FIGURE 1: Japan Feed-in Tariff Approvals SOURCE: METI

ASIAN BIOMASS MARKET: GROWING DESPITE POLICY SETBACKS Growing biomass demand in Asia continues to capture the attention of the international wood pellet industry.

espite the Japanese and South Korean governments introducing policies to curb the growth of biomass power, both markets continue to expand, albeit at a slower rate than some had anticipated. The Renewable Portfolio Standard, introduced by the South Korean government in 2012, has supported the rapid growth of bioenergy. It requires energy companies with capacity exceeding 500 MW to obtain an increasing proportion of their electricity from renewable sources. To satisfy their RPS targets, obligated companies can either produce their own renewable energy, which will earn them renewable energy certificates (RECs) per megawatt-hour (MWh) of renewable energy produced, or purchase RECs on the market. But in May, the government announced changes to the RPS, which threatened to jeopardize some planned biomass projects. The government decided to change the REC

BY RACHEAL LEVINSON weightings of some biomass technologies. Its motivation was to reduce obligated companies’ reliance on biomass and imported materials in achieving their RPS targets, and encourage deployment of other renewable technologies. The new REC weightings (Figure 1) apply to new biomass projects, or operating projects that wish to change their fuel type, while existing projects will continue to receive the previous REC weightings. The changes mean new, dedicated plants using imported biomass will see their support fall from 1.5 REC/MWh to 1 REC/MWh, while new cofiring and coal-to-biomass conversion projects using imported wood will now receive no support at all. However, support has increased for projects planning to use domestic, “unused wood,” e.g. forest residues. The government has introduced a grace period, which means planned, dedicated biomass projects can still claim the old REC weightings if they secure construction plan approval be-

fore January 2019. Any projects that fail to obtain construction approval by this date will only be eligible for the reduced support. Our analysis suggests that the new REC weightings for dedicated plants will threaten their economic viability, making it vital for those in the planning stages to secure the old weightings. It is difficult to know which dedicated plants in the pipeline will be able to meet the six-month permitting deadline, but the grace period has incentivized planned, dedicated projects to move quickly with development plans. Since the announcement, GS EPS’s planned 100-MWe Dangjin 2 biomassfired plant, SMG Energy’s 100-MWe Gunsan plant and CGN’s 109 MWe Daesan plant have all made important steps toward developing their plants, and look likely to have secured the old REC weighting. However, there are a number of other planned, dedicated plants that could be in jeopardy. We understand that Hangyang/ KHNP, KOMIPO and KOWEPO/BOIM are

CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Pellet Mill Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

24 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

South Korea biomass REC values, per MWh

all working to move forward as quickly as possible with their dedicated biomass projects, but have yet to make any new announcements. In addition, the cuts to support for planned cofiring and coal-to-biomass conversion projects means GS E&R has cancelled its plans to cofire at its Donghae Electric Power plant, and KOEN will no longer convert its Yeongdong unit No. 2 from coal to biomass (it will continue to cofire biomass at the unit). Other companies that already cofire wood pellets in their coal plants to help meet their RPS targets will be unaffected by the changes, including the five state-owned generating companies that have been the main consumers of wood pellets in South Korea. Therefore, shortterm biomass demand should be stable, but there has been mounting speculation that the South Korean government could soon change its policy and reduce support for existing cofirers, too. We understand that a decision is expected from the government about whether to curb cofiring in mid-2019. Meanwhile, in Japan, higher-than-expected demand for feed-in-tariff (FIT) support from biomass projects has led the government to review its policy and take steps to control growth. By March 2017, the capacity of approved biomass projects under the FIT general wood category (which includes imported wood pellets, palm kernel shells and wood chips) was almost 12 GW, three times the country’s 2030 “best energy mix” target of 2.7 to 4 GW. However, the latest statistics released by Japan’s Ministry of Economy, Trade and Industry show a decrease in the certified capacity of biomass projects in the FIT. The data, which was valid as of March, indicates certified capacity of general wood projects fell 38 percent from a year earlier. As of then, there was 7.4 GW of general wood approved capacity. Of that, less than 10 percent was operational (662 MW). General wood still accounts for the largest category of biomass capacity. Several factors are likely to be behind the fall in approved capacity under the FIT, with milestone deadlines the major contributor. New FIT projects are required to provide evidence of a grid connection agreement within six to nine months of receiving FIT certification. There was a large jump in FIT-approved capacity in March 2017, meaning all of these projects needed to secure a grid connection before the end of 2017. The data for March 2018 indicates that a significant number of those projects failed to obtain a grid connection in time and therefore lost their subsidy support.

Former REC value

Revised REC value

Wood chip/pellet cofiring

Domestic unused woody biomass cofiring

1.5

Wood chip/pellet conversion

0.5

Domestic unused woody biomass conversion

Wood chip/pellet dedicated

1.5

1.5, permitting completed within 6 months 1, permitting completed in H1 2019 0.5, permitting completed H2 2019 onward

Domestic unused woody biomass

1.5

SOURCE:HAWKINS WRIGHT

The government also introduced more stringent sustainability requirements for palm oil projects. In March 2017, 38 percent of approved “general wood” capacity was, in fact, planned palm oil projects. In April 2018, Japan’s Agency for Natural Resources and Energy updated its guidelines for biomass power projects receiving FIT support, and introduced more stringent sustainability and traceability criteria for liquid biomass projects. Palm oil certification is still very limited in Indonesia and Malaysia, meaning sourcing significant quantities of certified palm oil would be very challenging (and costly). In 2017, around 17 percent of total plantation area in Malaysia was RSPO certified, and 15 percent in Indonesia. Another deadline that could further impact the pipeline of FIT biomass projects is that projects approved before April 1, 2018, must have ordered equipment within two years of getting FIT certification. Only a small number of boiler manufacturers—around four or five—can provide the necessary equipment, and this will constrain the number of projects that can secure an order by the deadline. Therefore, we expect that more FIT biomass capacity will be cancelled. This likelihood has led some industry representatives to warn that boiler manufacturing capacity could pose a risk to achieving the country’s 2030 biomass power targets. Looking ahead, the move to auctioned FIT-supported biomass projects will also greatly reduce the potential rate of biomass deployment in the FIT. METI has introduced a bidding system for general wood biomass projects with a capacity above 10 MW, and for all liquid biomass projects, such as palm oil. The quota for the first general wood auction—i.e., the total capacity of biomass power projects that will be

awarded a FIT—will be 180 MW, and it will be held in December. Despite all of the above challenges, the progression of Japanese projects continues to accelerate. It seems that almost weekly there are announcements of new projects, and those in the pipeline are reaching key milestones. Noteworthy developments in just the past few weeks include a financial close on Aioi’s 200-MW, biomass-fired power plant, Equis Bioenergy issuing a notice to proceed on a planned 50-MW power plant in Tokuyama, and Idemitsu Kosan beginning a feasibility study on a 50-MW power plant at its Tokuyama complex in Yamaguchi. Judging by experience in Europe, it is far from surprising that the large pipeline of projects is now being whittled down. At Hawkins Wright, we have always taken this likelihood into account when forecasting biomass demand growth in Asia. Even accounting for the recent changes, there is still significant growth on the horizon. As a result, the region will soon rival Europe in terms of industrial wood pellet demand volumes. The policy changes in both countries and subsequent impact on demand forecasts has meant Hawkins Wright has updated the policy and demand sections of its Asia Pacific Biomass Demand & Supply report, originally published in April 2018. The new, condensed, report Asian Biomass Demand is available from December 2018. Author: Racheal Levinson Biomass Research Manager, Hawkins Wright racheal@hawkinswright.com www.hawkinswright.com

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Proactive inerting is recommended both at the receiving facility and at the biomass production facility where material is stored in large silos prior to shipment. PHOTO: BIOMASS MAGAZINE

26 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

Contribution »

BIOMASS STORAGE: FIRE SUPPRESSION

USING NITROGEN INERTING A silo fire can be devastating and expensive, leading not only to the complete loss of stored material, but also to an extended production loss by the plant. Nitrogen inerting is an effective solution to mitigate risk. BY VIPUL DHOLAKIA, XIAOYI HE AND JOANNA BENSON

iomass is a preferred fuel for renewable, carbon-neutral electricity generation by power plants. The U.S. is the largest global exporter of densified biomass, predominantly to the European Union. These wood pellets are stored in very large silos, both after production and prior to export, leaving them prone to unique operational and fire safety challenges. One of the main safety issues with wood pellet storage is the potential for a silo fire. A silo fire usually initiates deep inside the center of the silo and is not easily detected until it has engulfed most of the biomass inside. Once a silo fire has started, most options to control the fire while saving the structure and material within are futile. Methods for Detecting and Preventing Silo Fires Biomass fires often begin with smoldering due to the biological and chemical activities that produce combustible gases, such as methane and carbon monoxide (CO). These gases build up in concentration and ignite in the presence of air, producing heat. The local temperature rise further increases the chemical oxidation, with rapid generation of combustible gases spreading the smoldering fire throughout the interior of the silo. Depending on the porosity of biomass and the air ingress into the silo, the combustible gases slowly rise to the headspace, creating an explosive atmosphere at the silo’s top. The potential for exposure to a high

concentration of CO and the explosive mix of gases precludes firefighters from fighting a silo fire from the top. The typical method for detecting an incipient fire in a storage vessel is by monitoring the combustible gas concentration in the headspace. In the case of biomass silo fires, this approach may not be very effective due to the slow rise of combustible gases through the biomass. Depending on the height of biomass in the silo, it could take days before a concentration rise is detected in the headspace. By this time, the chemical and biological oxidation has spread to cover a significantly larger volume inside the silo (Persson, H., 2013, “Silo Fires: Fire Extinguishing and Preventive and Preparatory Measures,” Swedish Civil Contingencies Agency). A preventative approach to a silo fire is the application of water or foam from the top of the silo. However, this method is potentially hazardous due to the buildup of combustible gases in the headspace. Additionally, the use of water leads to swelling and bridging of the biomass, which can result in silo collapse without effectively extinguishing the fire in the interior of the silo. Preventing, Suppressing Silo Fires Using Nitrogen One approach to suppressing a silo fire is by injecting an inert gas, such as nitrogen, into the silo. However, large volumes of nitrogen are not always readily available or near

the silo. Although nitrogen can be delivered in bulk quantities by tanker from their production plants located nearby, some infrastructure is required for injecting nitrogen into a silo, such as piping, injection point location and orientation that needs to be built into the silo itself. Sufficient nitrogen delivery could take days, and depending on the fire intensity and the silo size, it could take weeks to months to extinguish a fire on-site. A silo fire can be devastating and expensive, leading not only to the complete loss of stored material, but also an extended production loss by the plant. Given the extreme challenge of fighting a silo fire once it has begun, preventative approaches like proactively inerting storage silos with dry nitrogen are the best option. As the oxygen concentration in the storage area is lowered by displacement with nitrogen, the energy required to start a fire becomes significantly higher. Furthermore, combustion cannot be sustained below the limiting oxygen concentration of the biomass, therefore protecting the silo and its contents. The purging with an inert gas during the filling and emptying steps can also be a penetrative approach. Dry nitrogen gas can also reduce moisture on the surface of the biomass, helping curtail biological activity while cooling the biomass to lower the chemical oxidation rate. Providing a continuous purge of dry nitrogen gas into the silo creates a lower oxygen concentration in the headspace, and reduces the risk of an explosive atmosphere forming in the headspace.

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ÂŤ Contribution Figure 1

The formation of volatile gases, such as methane, and their concentration distribution can be simulated through computational modeling. This illustration shows the methane distribution in a silo with continuous nitrogen inerting.

Designing a Nitrogen Inerting System for Biomass Storage Proactive inerting is recommended both at the receiving facility (i.e., power plant) and at the biomass production facility where material is stored in large silos prior to shipment. A cost-effective silo inerting process can be designed utilizing computational modeling of gas flow within the silo, and requires the installation of plug-free nitrogen injection nozzles. To ensure uniform nitrogen gas dispersion with optimal nitrogen gas usage, the number and placement of gas injection nozzles are critical to the design. Computational Fluid Dynamics can be used to simulate the spatial distribution and generation of combustible gases within a silo, using standard or material-specific reaction models. Inefficient nozzle design and placement can lead to pockets of high oxygen and combustible gas concentration in the silo, thereby creating unsafe conditions. CFD can also be used to create oxygen and combustible gas concentration profiles under both transient conditions, for example, during startup or a nitrogen injection surge, as well as for steady-state operation in a specific silo. The inerting system can be designed to control to a maximum combustible gas concentration in the silo, to a maximum oxygen concentration in the silo, or both. Along with this prevention approach, the capability of injecting a large volume of nitrogen in the event of a fire can

Figure 2

Computational modeling can be used to design an efficient inert gas delivery system. This illustration shows the transient oxygen distribution as nitrogen is injected into the silo at a fixed flow rate.

also be built into the design. On-site nitrogen storage or generation equipment can be specified to meet a steady inerting requirement, as well as to achieve a surge flow during an emergency event. Figures 1 and 2 are examples of CFD modeling results used to design fire prevention and suppression systems for biomass silos at both a biomass power station and a biomass production and storage facility. In one case, a coal-fired power station made the decision to convert its primary fuel source to wood. To store the biomass safely, a nitrogen injection and delivery system was designed to prevent the buildup of methane and other flammable gases, thus mitigating the risk of a silo fire. Extensive CFD simulations were performed, based on the specific geometry of the silos to minimize methane concentration and optimize nozzle placement within the silo to ensure the most cost-effective gas distribution (see Figure 1). In addition, a nitrogen gas delivery system including nitrogen flow controls linked to gas and heat sensors, as well as proprietary injection nozzles designed to alleviate plugging with dust particles, were added. In another case, a storage facility had experienced a silo fire that resulted in months of smoldering wood pellets and eventual silo collapse. When rebuilding the facility, for both fire prevention and mitigation, the silos were designed to be inerted with nitrogen below the limiting oxygen concentration of the wood pel-

28 PELLET MILL MAGAZINE | NOVEMBER/DECEMBER 2018

lets when filled to capacity. CFD studies were used to evaluate the nitrogen injection system design and validate the number and placement of the injection nozzles (see Figure 2). Transient simulations performed showed not only the propagation of an inert atmosphere, but also the time required to dispel oxygen from the silo geometry at a given flow rate. This enabled the operation team to fine tune their operating strategy, validate their design and ensure adequate nitrogen was available on-site to reduce the oxygen concentration in a silo at any given time. The examples in Figures 1 and 2 demonstrate that a range of solutions exists for fire suppression and inerting biomass silos. These solutions can be designed and engineered to the specifications of a storage project and can include consultation on the approach to fire mitigation, CFD studies to validate a design based on simulation results, and the addition of specific flow control systems or plug-free nozzles, along with nitrogen supply. Given the immense risk posed by fire in a biomass silo, implementing a fire suppression system optimized for a specific operation is vitally important to ensuring a safe and profitable operation. Contact: Air Products 800-654-4567 info@airproducts.com www.airproducts.com

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