INSIDE: HOW GILLS ONIONS CONVERTS ITS WASTE TO ENERGY
October 2010
Pulling in
Feedstock Partners
Why Supply Agreements are Key to Financing Power Projects Page 34
PLUS: How San Jose Developed a Model Waste-to-Energy Project Page 40
How the US Can Realize CHP's Full Potential Page 46
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PACIFIC WEST EVENT
January 10–12, 2011 Sheraton Seattle Hotel Seattle, Washington
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Attend. Exhibit. Sponsor. With an exclusive focus on biomass utilization in California, Oregon, Washington, Idaho and Nevada, the Pacific West Biomass Conference & Trade Show is a dynamic regional offshoot of Biomass Power & Thermal’s International Biomass Conference & Expo, the largest event of its kind in the world.
Visit www.biomassconference.com/pacificwest and: View interactive exhibitor map See conference sponsors and review sponsor benefits Register to attend Explore conference agenda And much more!
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OCTOBER 2010 | VOLUME 4 | ISSUE 10
INSIDE ¦
FEATURES 34 FEEDSTOCK Supply, Supply, Supply A well-crafted biomass fuel supply agreement is a powerful tool for developers to use when they are trying to raise money for power projects. By Lisa Gibson
40 ANAEROBIC DIGESTION Zero Tolerance for Waste San Jose, Calif., is developing an anaerobic digestion system that converts organic waste into energy, which other municipalities will want to duplicate. By Lisa Gibson
46 CHP Cogeneration Sensation
TAKING OUT THE TRASH: San Jose, Calif., is working on a waste dry anaerobic fermentation process to divert more waste from landfills.
What will it take for combined heat and power, or cogeneration—once referred to by the U.S. DOE as the most promising option in the nation’s energy efficiency portfolio—to reach its full potential? By Anna Austin
PAGE 40
DEPARTMENTS 04 EDITOR’S NOTE Zeroing in on Power and Thermal By Rona Johnson
05 ADVERTISER INDEX 06 INDUSTRY EVENTS 08 POWER PLATFORM Biomass Industry Pushes Back Against Potentially Harmful Laws By Bob Cleaves
10 THERMAL DYNAMICS Bridging the Knowledge Gap By Kyle Gibeault
12 ENERGY REVIEW Water Usage in Biopower Production By Bruce Folkedahl
CONTRIBUTIONS 52 EFFICIENCY Energy Master Plans Streamline Operational Efficiency, Reduce Costs Businesses benefit from developing detailed energy management plans that can help them achieve efficiency and sustainability goals. By Jerry Carter and Zach Platis
58 INNOVATION Onion Processor Uses AD, Fuel Cells to Convert Waste Into Energy California-based Gills Onions uses its waste to produce its own electricity, allowing the company to save on power bills and protect against costly blackouts. By Kristina Gerber and Denise Johnston
13 LEGAL PERSPECTIVE New Possibilities in the Hunt for Biomass Project Financing By Hamang Patel
14 BUSINESS BRIEFS 16 BIOBYTES 18 INDUSTRY NEWS 64 MARKETPLACE OCTOBER 2010 | BIOMASS POWER & THERMAL 3
¦EDITOR’S NOTE
Zeroing in on Power and Thermal
RONA JOHNSON Editor rjohnson@bbiinternational.com
I am pleased to announce that Biomass Magazine is now Biomass Power & Thermal. Although it may look like a subtle change on the magazine cover, it is an important transformation in content. As the new title implies, we will strictly cover biomass-based electricity and heat. Historically this magazine also reported on biomass fuels and chemicals, however these topics are now the dedicated the focus of BBI International’s new publication Biorefining. The magazine's title and scope were changed because biomass involves a vast array of feedstocks and technologies and we want to provide readers with ample coverage of all aspects of the industry. It also allows readers and advertisers to hone in on their area of expertise, whether its biomass power, heat, fuels or chemicals. Specifically, it allows the staff of Biomass Power & Thermal to drill even deeper into every facet of biomass power and thermal including producers, feedstocks, technologies, research and development, project development, transportation and storage logistics, state and local legislation, advocacy groups, businesses and people. When we first started the magazine three years ago, we quickly realized that other than the feedstocks they use, there is a vast divide between the power and thermal, and biofuel and chemical spheres. The most obvious being the prolonged existence of the use of biomass for heat and power versus the nascent biofuels and biochemical industries. There are also a myriad of state and federal rules and regulations, programs and funding opportunities, and environmental challenges that affect all users of biomass that deserve more concentrated coverage. While these industries are forced to compete for attention and funding from state and federal governments, we wanted to make sure they didn’t have to fight for space in our publications. As our mission statement establishes: Biomass Power & Thermal’s international readership includes owners and managers of biomass power, combined heat and power, and district heating facilities; pellet manufacturing plant owners and managers; professionals working in captive feedstock industries—from food processing and waste management to agriculture and forest products manufacturing—and a growing number of industrial manufacturers, municipal decision makers, researchers, and technology providers engaged in biomass utilization globally. As a reader, I would see this as a sign that BBI International is confident in the use of biomass as a substitute for fossil fuels and that all of these industries will continue to flourish. The space below this column will be used to showcase associate editors, contributors or for letters to the editor. This week we are highlighting our associate editors.
For more news, information and perspective, visit www.biomassmagazine.com
Associate Editors Lisa Gibson authored the cover story “Supply, Supply, Supply” to echo a theme we’ve been hearing at our regional biomass conferences about the importance of having signed fuel supply agreements when developing biomass power projects. Gibson also profiled a waste-to-energy project in San Jose, Calif., that should serve as a model for other cities.
Anna Austin wrote the “Cogeneration Sensation” feature to get a sense of the interest in combined-heat-and-power systems, determine who are the best candidates for installation and find out what kinds of challenges and opportunities developers are facing.
ANNA AUSTIN
LISA GIBSON
Associate Editor aaustin@bbiinternational.com
Associate Editor lgibson@bbiinternational.com
4 BIOMASS POWER & THERMAL | OCTOBER 2010
ADVERTISER INDEXÂŚ
EDITORIAL EDITOR Rona Johnson rjohnson@bbiinternational.com ASSOCIATE EDITORS Anna Austin aaustin@bbiinternational.com Lisa Gibson lgibson@bbiinternational.com COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com
ART
2010 Southeast Biomass Conference & Trade Show
67
2011 Pacific West Biomass Conference & Trade Show
2 & 65
ADI Systems Inc.
56
Advanced Trailer Industries
28
Agra Industries
60
AMANDUS KAHL GmbH & Co. KG
54
Bandit Industries, Inc.
37
Biorefining
68
BRUKS Rockwood
63
Buhler Aeroglide
49
Buhler Inc.
38
ART DIRECTOR Jaci Satterlund jsatterlund@bbiinternational.com
Christianson & Associates, PLLP
21
Church & Dwight Co., Inc.
51
GRAPHIC DESIGNER Elizabeth Burslie bburslie@bbiinternational.com
CPM Roskamp Champion
27
PUBLISHING & SALES CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com VICE PRESIDENT Tom Bryan tbryan@bbiinternational.com VICE PRESIDENT, SALES & MARKETING Matthew Spoor mspoor@bbiinternational.com
CW Mill Equipment Co., Inc.
24
Detroit Stoker Company
43
E3 2010 Conference
44
Energy & Environmental Research Center
11
Everlasting Valve Company
48
GreCon, Inc.
55
Guascor Inc.
45
Hurst Boiler & Welding Co. Inc.
62
Indeck Power Equipment Co.
22
Intersystems
57
Keith Manufacturing Company
30
MAC Equipment EXECUTIVE ACCOUNT MANAGER Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Jeremy Hanson jhanson@bbiinternational.com ACCOUNT MANAGERS Marty Steen msteen@bbiinternational.com Chip Shereck cshereck@bbiinternational.com Bob Brown bbrown@bbiinternational.com Gary Shields gshields@bbiinternational.com Andrea Anderson aanderson@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com SUBSCRIBER ACQUISITION MANAGER Jason Smith jsmith@bbiinternational.com ADVERTISING COORDINATOR Marla DeFoe mdefoe@bbiinternational.com
7
Morbark, Inc.
39
Organic Power Solutions, LLC
32
Outotec (Filters) Oy
42
Peterson
66
Precision Machine & Mfg. Inc.
26
Process Equipment/Barron Industries
33
R.C. Costello & Assoc. Inc.
36
Schutte-Buffalo Hammer Mill
9
The Teaford Co. Inc.
25
Tri-Mer Corporation
31
TSS Consultants
50
West Salem Machinery
29
Weston Solutions, Inc.
61
Williams Crusher
23
Wolf Material Handling Systems
20
Subscriptions Subscriptions to Biomass Power & Thermal are $24.95 per year in the U.S; $39.95 in Canada and Mexico; and $49.95 outside North America. Subscriptions can be completed online at www. BiomassMagazine.com or subscribe over the phone at (701) 746-8385. Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (701) 746-8385 or service@bbiinternational.com. Advertising Biomass Power & Thermal provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Biomass Power & Thermal advertising opportunities, please contact us at (701) 746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Biomass Power & Thermal Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or e-mail to rjohnson@bbiinternational. com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.
Please recycle this magazine and remove inserts or samples before recycling
30%
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OCTOBER 2010 | BIOMASS POWER & THERMAL 5
¦INDUSTRY EVENTS Biomass South 2010 October 14-15, 2010 Holiday Inn at University of Memphis Memphis, Tennessee This event establishes the South’s leadership position in the transformation of the global economy from fossil fuel to biobased economy. The conference will promote a comprehensive vision of the emerging bio-economy; provide objective analysis of the region’s feedstocks and bioprocessing technologies; facilitate new partnerships and collaborations to build the regional renewable supply chain; support companies seeking to develop regional projects; outline the leadership role and growth of biomass in the current economy; direct public/private resources to promising projects; and develop alliances with key policy makers. (919) 941-5145 http://biomasssouth2010
10th Annual BioCycle Renewable Energy Conference from Organics Recycling October 18-20, 2010 Des Moines Marriott Downtown Hotel Des Moines, Iowa Project managers, policy makers, investors, utilities, consultants, farmers and researchers will learn from an outstanding faculty of speakers who will focus on latest developments in advanced systems, operations at innovative projects, economic and energy performance, and public policies that are helping to facilitate and fund development. Conference highlights include: renewable energy and sustainable communities; urban renewable energy opportunities; entrepreneurs in the biogas space; sourcing organics for codigestion and optimizing digester management. (610) 967-4135, ext. 22 www.jgpress.com/biocycleenergy/index.html
Southeast Biomass Conference & Trade Show
E3 2010
November 2-4, 2010
November 10-December 1, 2010
Hyatt Regency Atlanta Atlanta, Georgia With an exclusive focus on biomass utilization in the Southeast—from the Virginias to the Gulf Coast—this event is one of three distinct regional offshoots of the International Biomass Conference & Expo. Produced by Biomass Power & Thermal and Biorefining magazines, the program will include more than 60 speakers within four tracks: electricity generation; industrial heat and power; biorefining; and biomass project development and finance. (701) 746-8385 www.biomassconference.com/southeast
Saint Paul RiverCentre St. Paul, Minnesota Researchers, students, government officials, and nonprofit and business leaders from Minnesota and across the nation are expected to attend this event, which will focus on the intersection among innovative technologies and policies, environmental benefits and emerging market opportunities in the renewable energy sector. The goal of E3 is to share knowledge and discoveries in the areas of renewable energy and the environment while bringing together the world’s leading researchers and experts. (612) 626-1202 www1.umn.edu/iree/e3
Pacific West Biomass Conference & Trade Show
International Biomass Conference & Expo
January 10-12, 2011
May 2-5, 2011
Sheraton Seattle Hotel Seattle, Washington With an exclusive focus on biomass utilization in California, Oregon, Washington, Idaho and Nevada, the event, produced by Biomass Power & Thermal and Biorefining magazines, is one of three distinct regional offshoots of the International Biomass Conference & Expo. The program will focus on the vast potential for biomass utilization in the Pacific West, featuring more than 60 speakers within four tracks: electricity generation; industrial heat and power; biorefining; and biomass project development and finance. (701) 746-8385 www.biomassconference.com/pacificwest
America’s Center St. Louis. Missouri The largest, fastest growing event in the biomass industry was attended in 2010 by 1,700 industry professionals from 49 states and 25 nations representing nearly every geographical region and sector of the world’s interconnected biomass utilization industries—power, thermal energy, fuels and chemicals. With six tracks, 38 panels, 120 speakers, 400 exhibitors and an anticipated 2,500 attendees in 2011, the event will continue to be the industry’s leading educational, networking and business development forum. Speaker abstracts are now being accepted online. (701) 746-8385 www.biomassconference.com
International Congress on Energy Efficiency & Renewable Energy Sources for Southeast Europe
International Fuel Ethanol Workshop & Expo
May 2-5, 2011
Indiana Convention Center Indianapolis, Indiana Entering its 27th year, the FEW is the largest, longest-running ethanol conference in the world. The FEW is renowned for its superb programming which remains focused on commercial-scale ethanol production—both grain and cellulosic—operational efficiencies, plant management, energy use, and near-term research and development. With five tracks, 32 panels, 100 speakers, 400 exhibitors and an anticipated 2,500 attendees in 2011, the FEW remains the ethanol industry’s leading production-oriented educational, networking and business development forum. Speaker abstracts are now being accepted online. (701) 746-8385 www.fuelethanolworkshop.com
Inter Expo Center Sofia, Bulgaria This event offers innovative technologies and practices, strong international participation, numerous new business contacts and many parallel initiatives and discussions. Speakers from Bulgarian and other foreign companies, institutions and associations will present the latest achievements and novelties in the field of the renewable energy and energy efficiency: technologies for solar, wind, hydro, geothermal and bioenergy, energy efficient solutions, project financing and investment. +35932/ 945 459, 960 011, 960 012 www.viaexpo.com
6 BIOMASS POWER & THERMAL | OCTOBER 2010
June 27-30, 2011
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¦POWER PLATFORM
Biomass Industry Pushes Back Against Potentially Harmful Laws BY BOB CLEAVES
Biomass Power Association has been busy articulating to various state and federal agencies that certain proposed laws would harm the biomass industry, the larger renewable energy sector and the nation. There have been countless misunderstandings that have resulted in potentially damaging environment rulings proposed to regulate biomass power. As president of BPA, I have been working hard to represent our members’ best interests in the sometimes fierce battles with government agencies that have their states’ best intentions in mind but do not understand biomass or “biomass done right.” These agencies do not understand the implications their laws may have on a growing industry that contributes so much to the country, and it is of the utmost importance that we explain to them the harm these rulings will cause. BPA submitted comments to two government agencies—one federal and one state—to help clarify the misconceptions surrounding our industry. In both cases, BPA is fighting on behalf of not only biomass, but the entire renewable energy industry. Most people are surprised to learn that biomass supplies more than 50 percent of the nation’s renewable energy supply. In August, BPA submitted comments to Massachusetts Department of Energy Resources, the agency in charge of the environment, because the DOER misinterpreted the Manomet Center for Conservation Sciences report and used it as the basis for a proposed rule that would greatly increase efficiency criteria for biomass facilities. Complicating matters, the agency endeavored to circumvent normal procedure that prevented Massachusetts residents from expressing their civic right to weigh in on this issue. The comments we submitted to DOER questioned the proposed rule itself and the process by which the rule is being considered. Our comments clarified that biomass done right works and explained why the Manomet report did not provide a clear picture of biomass and its actual emissions: “Fundamentally, all of Secretary [Ian] Bowles’ regulatory directives are misplaced and inappropriate for a simple reason: the Manomet study has absolutely nothing to do with the way that biomass energy is produced, or likely to be produced, anywhere in New England. Quite simply, Secretary Bowles took the results of the study to sug8 BIOMASS POWER & THERMAL | OCTOBER 2010
gest sweeping changes in the RPS without listening to the very authors of Manomet who, immediately after issuing the report, made clear that it was not a study of nonforest harvested biomass … In other words, the very authors of the study that the commonwealth is now relying upon to regulate all biomass make clear that their results are not relevant for all biomass.” BPA also submitted comments in August to the U.S. EPA in response to their proposed Boiler MACT rule, which would all but cease biomass production across the country by making emissions standards unattainable and unrealistic. We agreed that measures must be taken to protect public health and the health of the forests, but pointed out that the Boiler MACT rule was not the way to go about this. Rather, we suggested, EPA should consider tailored emissions standards for each industry based on an evaluation of specific criteria, such as types of boilers and fuels: "In light of the overwhelming support for biomass from every corner of government, it is imperative that EPA adopt a rule that is protective of the public health and the environment while also allowing this critically important energy source to be fully utilized. We are concerned that the proposed rules will impose tens of billions of dollars in capital costs at thousands of facilities across the country. Thus, we ask EPA to consider flexible approaches that appropriately address the diversity of boilers, operations, sectors and fuels that could prevent severe job losses and billions of dollars in unnecessary regulatory costs." In both instances, the biomass industry stepped up to the plate to educate the uninitiated about what we do. And we must continue to do so when false accusations emerge. As many forms of renewable technology remain in their infancy, or even adolescence, biomass is a mature renewable energy source that is critical to meeting the nation’s ambitious clean energy goals. I truly believe we are making progress and hope that the two government agencies considering stricter biomass rules will make the right decision. Author: Bob Cleaves President and CEO, Biomass Power Association www.USABiomass.org
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¦THERMAL DYNAMICS
Bridging the Knowledge Gap BY KYLE GIBEAULT
One doesn’t need to conduct extensive surveys to know that many in the United States have little knowledge about biomass and its use as a renewable source of energy. Everyone has seen and can describe windmills and solar panels, but how many in the public have even heard of a biomass boiler? Sustainable, homegrown biomass energy should be in the public lexicon along with the other renewables. If you’re reading this article, you probably already know that biomass energy can create domestic jobs, replace fossil fuels and help put the U.S. on the path to a renewable-powered future. You also know that just like every other energy source, biomass has its advantages and disadvantages. The problem we face today is that much of the public— and many policymakers—remain unaware, confused or misinformed about the benefits of using biomass for energy. Put simply, the biomass brand needs a boost. The potential of biomass energy in the U.S. is extraordinary. In our trade association, we have members installing wood boilers to replace oil heat systems in the Northeast; members growing miscanthus or selling agricultural byproducts in the Midwest; and members developing biomass combined-heat-and-power projects across the country. The economic and environmental benefits of these projects are real. The fuel supply is otherwise lowvalue residues or purpose-grown energy crops. On a number of levels, heating or CHP with biomass makes sense. For BTEC, our challenge lies in making the public and policymakers understand this message. Bridging the knowledge gap on biomass energy is a hurdle that we all must overcome, no matter the feedstock or end-use. Whether woody or nonwoody, power or transportation fuels or heating, we can all agree that a considerable increase in awareness
10 BIOMASS POWER & THERMAL | OCTOBER 2010
and support for biomass energy technologies is needed. The conversation needs to shift away from the instances where biomass energy isn’t a suitable solution towards the wealth of real-world, cuttingedge biomass projects that are in operation or under development today. BTEC is taking action to change the discussion. We were recently awarded a grant by the U.S. Forest Service to develop educational resources on the potential and benefits of biomass thermal energy. We will be producing fact sheets, webinars, audio interviews and Web resources on the issues most relevant for our sector. You can find out more information on this project on our website, www. biomassthermal.org. The education and outreach challenge goes beyond biomass thermal, however. This common problem requires a common solution. Granted, each sector of the biomass energy industry has its own advantages and disadavantages, its own goals and objectives, but the media and the public are often not as discerning. To many, biomass is biomass, plain and simple. Despite our potential differences, stakeholders in the biomass industry should consider whether there are universal principles and messages that can help us rise above the fragmented front we have put forth to this point. I invite any comments or discussion on this idea. In the long run, presenting a unified voice may be our best shot in getting biomass energy the recognition it so rightly deserves. If we’re all going to be in the same boat, we should work together to decide the destination. Author: Kyle Gibeault Deputy Director, Biomass Thermal Energy Council (202) 596-3974, ext. 327 kyle.gibeault@biomassthermal.org
¦ENERGY REVIEW
Reducing Water Usage in Biopower Production BY BRUCE FOLKEDAHL
The power industry is second only to agriculture as the largest domestic user of water, accounting for 39 percent of all freshwater withdrawals in the nation, of which 71 percent is used in fossil fuel-based electrical generation. The same technologies used to produce electricity from fossil-based fuels are, and will continue to be, used for a significant amount of biomass-based power production. Much of the water used for power generation, including biomass power generation, is consumed in the condensing step of the system where the steam exiting the turbine is cooled and condensed back to water. This water is sent back to the boiler for reconversion to steam to spin the generator to produce electricity. This steam is in a closed loop and has small losses from venting of steam and blowdown of water in the steam cycle to reduce impurities in the steam system. It is in the cooling loop, separate from the steam system, where water is used to condense the steam which has the most significant losses. The water in this loop is cooled by evaporation in large cooling towers to cool the water that is then used to condense the steam. The availability of water for use in biomass electric power generation is limited in many parts of the United States, and biomass power plants must compete with other industrial customers, agricultural interests and households for this limited commodity. Therefore, water is an important factor in obtaining site permits for new biomass power plant construction. Difficulty in obtaining necessary water permits can lead to delayed or abandoned projects. Also, it is often the case that additional infrastructure is required to provide a suitable supply, adding cost and environmental impact. In areas that do not have an adequate water source, biomass power plant construction is often not even considered, even though these locations are ideal in other respects. In addition, potential regulations curtailing CO2 emissions will impact water use. Because of the corrosive nature of
12 BIOMASS POWER & THERMAL | OCTOBER 2010
carbonic acid, water will need to be removed to low levels prior to pipelining the CO2 to its final destination. The EERC in conjunction with a commercial partner investigated a unique technology aimed at reducing the water use in power production systems that has many potential applications. This technology is a liquid desiccant dehumidification system (LDDS). The LDDS is an absorption-based system designed to recover moisture from process gas streams. This gas may be the effluent from an ethanol process, the exhaust from a biomass power generation system or any other moisture-rich gas stream. The LDDS concept has several features that make it potentially attractive for integration with a biomass utilization process: • The desiccant solution separates the process gas and moisture condensation space. In this respect, the LDDS performs a similar function to a water-selective membrane, but it is more robust and can resist fouling in harsh gas environments. • The LDDS produces high-quality product water without additional treatment. • The LDDS does not completely cool the process gas stream, which is an important consideration if the gas is to be exhausted to a stack. This is just one example where the EERC can play a part in cooperation with the biomass industry to provide value-added services and processes. The EERC is committed to reducing the water footprint of biomass utilization systems, whether it is in power production or in the production of bioproducts or biofuels, and is working with industry to do so. Author: Bruce Folkedahl Senior Research Manager, Energy & Environmental Research Center (701) 777-5243 bfolkedahl@undeerc.org
LEGAL PERSPECTIVEÂŚ
New Possibilities in the Hunt for Biomass Project Financing BY HAMANG PATEL
A lack of financing for biomass projects is a common lament for most biomass developers. As many developers already know, new market tax credit financing is a great way to obtain financing at better than market rates for biomass projects, if you can get the attention of a small group of banks with interest. Fortunately, a recent taxpayer-friendly ruling by the IRS creates new opportunities to attract individual investors to serve as the tax credit investor.
Background The new market tax credit program was created more than a decade ago as a way to direct funds to businesses located in low-income census districts. The program provides an investor with a federal income tax credit equal to 39 percent of an investment in an intermediary entity (referred to as a community development entity), which loans the investor's fund to the biomass project. This loan must be interest-only for at least seven years and have an interest rate at least 25 percent below a market rate. Under certain structures, a lender typically will discharge a substantial portion of the principal after seven years (after all, the lender has recouped its investment from the generous 39 percent tax credit and often doesn't also need a return of all of the principal). A biomass project will qualify for this financing as long as the project is located in a low-income census district. A liberal definition of "low-income" covers almost 40 percent of the United States, including many rural districts. A federal website mapping feature identifies whether an address is in a low-income census district (www.cdfifund.gov/what_we_do/mapping.asp). New market tax credit financing can also be coupled with traditional waste-to-energy financing, such as the production tax credit (PTC), investment tax credit (ITC), or the federal 1603 grant.
Current Tax Credit Problems To state the obvious, the tax credit appetite of banks has declined sharply in recent years. Nonetheless, there are still plenty of individual investors who are interested in offsetting taxable income. Until now, individual investors have shied away from investing in new market tax credits, because it has been assumed that these credits were subject to the restrictive passive activity tax limits (as is the case with the PTC and ITC), which limits the use of these credits for most individuals.
IRS Ruling In a June 2010 ruling, the IRS clarified that new market tax credits are not subject to these passive activity rules. This ruling creates opportunities for project developers to raise funds by finding one (or likely multiple) individual investors who could serve as new market tax credit investors. From the perspective of an individual investor, the return on a new market credit investment is comparable to a market-rate loan, but with a portion of the return coming in the form of tax credits. An individual investor's evaluation of this return would not be conceptually dissimilar from the way in which he or she would approach tax-exempt municipal bonds (i.e., the return should be calculated on an after-tax basis). While the task of finding financing for a biomass project is still not easy, this recent ruling at least opens new financing sources for a developer. Author: Hamang Patel Attorney, Michael Best & Friedrich LLP (608) 283-2278 hbpatel@michaelbest.com
OCTOBER 2010 | BIOMASS POWER & THERMAL 13
Business Briefs PEOPLE, PRODUCTS & PARTNERSHIPS
James River Equipment joins Morbark family James River Equipment, specializing in heavy equipment sales, service and parts, is now the authorized dealer of Morbark industrial equipment in all of Virginia and North Carolina and two counties in South Carolina. In business for more than 30 years, James River Equipment has 25 locations throughout Virginia, North Carolina, and South Carolina. They sell and service a full range of equipment in many industries including construction, forestry, paving, mining, agricultural, and consumer and commercial lawn care. Renewables specialist Consense scoops top national award Consense, which specializes in providing online consultation for the renewables sector, won the SME Innovation award at the National eWell-Being Awards 2010 and was selected by the judges as the overall winner of this year’s awards (beating more than 42 finalists across nine categories). Consense won for its Open Debate online consultation system which enables much wider community consultation and engagement for proposed renewable energy developments.
Track chipper redesign melds comfort with power
B&W subsidiary DPS to provide O&M services for Georgia biomass plant Delta Power Services LLC, a wholly owned subsidiary of Babcock & Wilcox
PHOTO: BANDIT INDUSTRIES INC.
Former US Ag Secretary joins Bion Bion Environmental Technologies Inc. announced that Ed Schafer, former governor of North Dakota and former secretary of the USDA, has agreed to join Bion’s management team through the end of 2013. Schafer will provide Bion with strategic advice, focusing on areas of public policy related to the livestock industry both domestically and internationally. In addition to his public sector experience, he has successfully led a multi-national consumer products business and several entrepreneurial start-up companies.
Sweet Ride: Bandit Industries Inc. has redesigned its track chipper with an eye toward the operator’s comfort and productivity needs.
With the recent redesign of the Bandit Model 3090 Track Chipper, land clearing contractors and loggers now have power and productivity without sacrificing operator comfort. Key upgrades to this 30-inch capacity chipper include a spacious operator’s cab with a rear entry door, an emergency escape door on the left and a pop-out escape window on the right. Convenient joystick controls operate all functions of the machine; from the loader’s main and jib boom movement, to the engine controls and feed system. Optional monitors provide a view of the discharge and infeed system from the operator’s cab. Anguil Environmental launches new website Anguil Environmental Systems Inc. launched a new interactive website that further defines its position as a pollution control thought leader and information resource for clients. The fully redesigned website, http:// anguil.com, focuses on information efficiency, quality content and effortless navigation. Anguil Environmental Systems case studies are now searchable by the 16 different industries they serve.
14 BIOMASS POWER & THERMAL | OCTOBER 2010
Power Generation Group Inc., has signed a multiyear, renewable contract to provide operations and maintenance services for Rollcast Energy's Piedmont Green Power biomass energy project in Barnesville, Ga. B&W PGG is a subsidiary of The Babcock & Wilcox Co. The 53.5 megawatt Piedmont Green Power plant is scheduled to go online in 2012. DPS will provide a variety of services for the facility both during construction and after the plant is operational, including selecting the site staff, managing day-to-day plant operations, performing equipment maintenance and repair services, and administering project contracts. BinMaster improves high temp vibrating rods The BinMaster Super High Temperature vibrating rod features a newly developed piezo system built specifically for higher process temperatures up to 482 degrees Fahrenheit (250 degrees Celsius). The SHT’s patented re-enforced membrane and the new piezo system features a standard insulation tube that insulates the electronics from excessive heat. The entire probe is constructed of stainless steel, and the electronics are mounted inside an IP66 /IP67 aluminum enclosure for advanced protection. The SHT can be used in all kinds of powdered or granular solids from light, fluffy materials with a minimum material density of 1 to one-fourth pounds
BUSINESS BRIEFS¦
SOURCE: JOHN DEERE
John Deere launches educational woody biomass website
Learning Experience: John Deere launched a new user-friendly website that helps educate and inform visitors about woody biomass.
John Deere Construction & Forestry has launched a woody biomass website (www.woodybiomass.com) designed to educate and inform about the importance of harvesting woody biomass. The user-friendly website explains what woody biomass is, why harvesting it is important, how it works as a fuel and what types of innovative public policies are needed to encourage responsible harvesting and the use of woody biomass. Vermeer launches multilingual, multimedia website To better connect with customers worldwide, Vermeer Corp. has launched a new multilingual and multimedia website designed to provide easy access to product and market-specific industry information. The redesigned Vermeer.com site provides detailed information on the current line of Vermeer products. The redesigned site can serve as an industry resource, providing information on market trends, equipment maintenance and operational tips, as
Nexterra recognized for best application of technology Nexterra Systems Corp. announced that it has received the Best Application of Technology Award from the British Columbia Technology Industry Association. This award recognizes Nexterra’s biomass gasification system at Kruger Products LP’s new Westminster tissue mill. The system converts wood residue into cleanburning syngas that is being fired directly into a boiler to generate 40,000 pounds per hour of process steam. The project will displace about 400,000 gigajoules of natural gas per year and reduce greenhouse gas emissions by 20,000 metric tons annually, which is equivalent to taking 5,500 cars off the road. Capstone C1000 Series receives UL certification Capstone Turbine Corp., a manufacturer of microturbine energy systems, announced that it has received Underwriters Laboratories certification for its C1000 Series products in accordance with UL 2200 and UL 1741. The C1000 is a compact and robust 1 megawatt power system that provides the same low emissions, low noise, high efficiency and extended maintenance benefits of Capstone's C30, C65 and C200 offerings. It features Capstone's patented air bearing, remote monitoring and diagnostic capabilities and integrated utility synchronization and protection.
Clyde Bergemann to provide boiler cleaning systems for UK plant PHOTO: CLYDE BERGEMANN POWER GROUP
well as customer case studies. Visitors to the site will also have the opportunity to download popular software applications developed by Vermeer. Video demonstrating Vermeer products working in the field are prominent throughout the site, helping to provide customers with a better idea of how these products can fit into their operation.
per cubic foot (20 grams per liter) to a maximum granular size of 1 to one-half inch (40 millimeters).
Squeaky Clean: Clyde Bergemann’s SCS Shower Cleaning Systems will be installed in the Riverside plant in Great Britain.
Von Roll Inova, the Swiss subsidiary of A-TEC INDUSTRIES AG conglomerate, has awarded Germany-based Clyde Bergemann Power Group with the turnkey delivery of three SCS Shower Cleaning Systems to be installed in the 72-megawatt Riverside facility in Great Britain. The SCS systems will be equipped to clean second and third open pass of all three combustion lines. Each combustion line processes 31.8 metric tons of municipal and commercial waste per hour to generate enough electricity to serve roughly 66,000 households. DP CleanTech expands in Thailand After successfully completing 18 biomass power plant projects in less than four years in China, DP CleanTech has identified Thailand as the next major market in its rapid roll-out of biomass power systems in Southeast Asia. In July, DP CleanTech opened a sales office in Bangkok, marking another milestone in its expansion strategy for biomass power in Southeast Asia. Thailand’s abundant resources coupled with its accommodative renewable energy policies represent an opportunity for further biomass development and a priority market for DP CleanTech.
SHARE YOUR INDUSTRY NEWS: To be included in the Business Briefs, send information (including photos and logos, if available) to Industry Briefs, Biomass Power & Thermal, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You may also e-mail information to rjohnson@bbiinternational.com. Please include your name and telephone number in all correspondence.
OCTOBER 2010 | BIOMASS POWER & THERMAL 15
BIOBYTES
BIOMASS NEWS BRIEFS
Sierra Pacific shuts down Loyalton plant Sierra Pacific Industries has shut down its Loyalton, Calif., biomass power plant because of reduced timber sale offerings making it impossible to operate, along with decreased electricity rates. Numerous government actions, including decisions not to implement laws passed by Congress, have cut off the company from feasible fuel
supplies, it said. In addition, Nevada Energy recently lowered the rates it pays to SPI for electricity generated from the Loyalton plant. The combination of the two factors made the facility uneconomic to run, according to the company. Those events, notwithstanding, SPI is exploring opportunities that might allow it to reopen the facility, it said.
MSU launches farmer network Kentucky’s Murray State University, with the help of Memphis AgBioworks, has launched its West Kentucky AgBioworks initiative to implement the results of a five-state, 98-county study by Batelle Technology Partnership Practice. The study concluded there is significant opportunity for the Mississippi Delta to join the global bioeconomy. The initiative will aim to
educate farmers on growing and testing alternative crops; to start an MSU demonstration crop; and to survey businesses in the region with a goal of determining who can use biomass and build processing plants. The program has received tens of thousands in funding already, including $50,000 from state agencies and $12,000 from participating counties, according to MSU.
Detroit Edison gets approval for power projects The Michigan Public Service Commission has approved two contracts totaling 20 megawatts (MW) of capacity, enough to power about 14,000 homes, to be sold to power utility Detroit Edison. Through the contracts, Waste Management Renewable Energy will provide 3 MW of
power from a landfill gas project, and L’Anse Warden Electric Co. will provide 17 MW from a wood waste biomass plant in Baraga County, Mich. Detroit Edison serves about 2.1 million customers in southeastern Michigan and expects to add 1,200 MW of renewable power to its capacity.
16 BIOMASS POWER & THERMAL | OCTOBER 2010
Pellet Power: Enviva LP has acquired CKS Energy, a pellet plant in Armory, Miss., and plans to more than double its production capacity.
Enviva expands through acquisition Enviva LP, a manufacturer of wood pellets and processed biomass fuel, has acquired Amory, Miss.-based wood pellet manufacturer CKS Energy. CKS provides pellets for industrial, commercial and residential customers, mainly in Europe where wood pellets are well-integrated into the energy sector. In the coming months, Enviva plans to hire additional staff for the CKS facility, which will be known as Enviva Pellets Amory. The company will also expand its production from current capacity of 50,000 tons per year to more than 100,000 tons per year, according to Enviva. Raw biomass material will be sourced locally and the facility will primarily serve Enviva’s long-term European customers. Enviva Chairman and CEO John Keppler called the acquisition a perfect fit as the company moves to increase its manufacturing footprint.
BIOBYTES¦
Washington DNR requests proposalsfor forest biomass study
Energy Crops: White Technologies has an exclusive license for micropropagation technologies for energy crops such as Miscanthus Giganteus.
The Washington Department of Natural Resources has released a request for proposals to assess forest biomass availability and sustainability harvest thresholds on forested land throughout the state for biofuel, heat and power generation purposes. The study is required by House Bill 2165, which was
enacted into law in 2009 and allows the DNR to implement biomass energy projects using forest biomass in eastern and western Washington through the authorization of long-term supply agreements. The deadline for the request for proposals was Sept. 13. The DNR anticipates beginning the study in early November.
White Technology, partners receive biomass project grant Indiana-based White Technology LLC has been selected along with its partners at West Virginia University to receive one of six renewable energy grants awarded by the West Virginia Division of Energy. The grant will fund a project that will demonstrate the environmental and economic benefits of reclaiming former mine land properties with sustainable and viable agricultural biomass for future renewable energy production. White Technology has an exclusive license for a Miscanthus giganteus and Arundo donax (giant reed) micropropagation technology developed by University of South Carolina plant geneticists.
Helius Energy secures site for new biomass plant Biomass energy developer Helius Energy plc announced it has signed an option to lease a 20-acre site at the Port of South Hampton, U.K., for the construction of a 100-megawatt biomass power plant. The option to lease the site from Associated British Ports is subject to the securing of a Development Consent Order, which Helius intends to submit an application for in the near future, and the company will
soon enter into consultation with the local community and relevant statutory authorities. Helius anticipates that the plant will require about 700,000 metric tons (771,000 tons) of biomass per year, a significant proportion of which will come through the Port of South Hampton.
Investment Opportunity: Akeida Capital Management provided Aspen Power LLC with the funding necessary for it to complete the construction of its Texas plant.
Aspen secures funding for plant Aspen Power LLC has acquired the necessary funding to complete construction of its 57-megawatt (MW) biomass power plant in Lufkin, Texas, which began in late 2008. Akeida Capital Management LLC provided Aspen with a $14.1 million junior loan to complete the waste wood-fired plant, the first biomass plant to be built in Texas, according to Akeida. Aspen Power’s sister company, Angelina Fuels, will provide the plant with about 1,500 tons of biomass per day from timber harvesting, sawmill and municipal cleanup activities in and around Lufkin. The facility will create 50 new jobs for locals and contribute to Texas’ renewable portfolio standard of 10,000 MW by 2020 with at least 500 MW generated from nonwind resources. Aspen Power will interconnect to the Electric Reliability Council of Texas.
OCTOBER 2010 | BIOMASS POWER & THERMAL 17
PHOTO: SHOW ME ENERGY COOPERATIVE
IndustryNEWS
Mover and Shaker: Show Me Energy was the first to apply and qualify for the USDA's Biomass Crop Assistance Program. Now members are waiting for the program to be reinstated and their CHST payments to resume.
Biomass industry anxious for BCAP final rule BY ANNA AUSTIN
When USDA put the Biomass Crop Assistance Program on hold in February until the final rules were established, it was anticipated that the program would be back by the end of the summer. As fall approaches, the final rules are still not out and it’s unclear when that will happen. Meanwhile, the program freeze has left those who were depending on collection, harvest, storage and transport (CHST) payments, which were being distributed before the program was halted, in sticky financial situations, and others unsure how to budget for 2011 or what crops to plant. BCAP is part of the 2008 Farm Bill and was designed to support the establishment and production of eligible crops for conversion to bioenergy in selected areas, and to assist agricultural and forest landowners and operators in supplying eligible material to biomass conversion facilities. CHST payments, the first of two different types of financial assistance BCAP will offer, provides matching payments to eligible biomass material suppliers in the amount of $1 per $1 paid per ton delivered to a qualified biomass conversion facility—a facility that will use the material to produce power, heat, biobased products, advanced 18 BIOMASS POWER & THERMAL | OCTOBER 2010
biofuels or any combination—up to $45 per dry ton for a time limit of two years after the first payment is made. According to a USDA report released in August, CHST payments dispensed to date total just less than $243 million. The USDA has estimated BCAP spending to total about $2.6 billion, including $2.1 billion for CHST matching payments over the next four years. USDA Farm Service Agency Communications Chief Kent Politsch said that the rules are moving through the approval process, but because there are so many branches of government that have to sign off on them, exactly when they will be ready for release is unpredictable. “It could happen in 10 days or a month or more,” he said. “Some agencies take longer to review it than others.” Steve Flick, board president of Centerview, Mo.-based Show Me Energy Cooperative, the first farmer-owned co-op in the U.S. to apply and qualify for BCAP CHST payments, said that the lack of payments, mainly in the past three months, has negatively impacted the co-op. “There are two things that have impacted us tremendously in Missouri,” Flick said. “The shutting off of BCAP, and also extremely wet weather—since spring, we’ve received twice the normal rainfall in western Missouri and there are switchgrass fields under water.”
INDUSTRY NEWS¦
Show Me is comprised of more than 600 midwestern farmerowners. Flick pointed out that while biomass crops such as switchgrass and miscanthus thrive in wet weather, farmers can’t get into the fields to bale the biomass energy crops. “We don’t mind getting rained on, but it’s just getting the time to bale, and biomass has to be dry enough to do that,” he said. The lack of BCAP rules has also impacted farmers from a crop selection standpoint, Flick said. “Farmers need to make some decisions as to what they’re going to do with some of their marginal land and sign up for the program within the next month or two. If they don’t, they lose a planting cycle. Typically, native grasses can be planted throughout the winter and spring up to July, but after that you have to wait another year. Nobody wants to move until they find out what those rules are.” From Flick’s perspective, part of Show Me’s success stems from getting things rolling before the economic crisis. “There is an underlying current of farmers in the U.S. that want to do this [grow energy crops], and the only thing holding them back is capital. We feel lucky to have launched in 2007, because in today’s capital-constrained market, I don’t think we could be doing what we are doing.” Aside from negatives associated with the BCAP freeze, Flick remains very confident in BCAP’s success; and in the competence of
Farm Service Agency Administrator Jonathan Coppess, in particular. “He is going to do a good job—he’s got the vision and aptitude to make it work,” he said. “He’s the right man to do that job, and it’s not easy.” Coppess was appointed to serve as administrator of the FSA in July 2009, having previously served as the deputy administrator for farm programs at the agency. “They know they need to roll [BCAP rules] out, and they’re doing an awful good job of trying to go through 24,000 comments, which is a tremendous undertaking,” Flick said. “I really think their contention is to make absolutely sure we don’t have any more debacles like we did last time.” The proposed BCAP rules contained several loopholes and oversights that prompted the program freeze. One example is the CHST qualification of certain materials that the pulp and particleboard/ fiberboard manufacturers utilize such as bark, sawdust and shavings, which increased the cost of materials for that industry. The final rule aims to fix that problem and others. Until then, it’s a waiting game. “We’re very anxious because we feel that this is a good program for farmers,” Flick said. “It’s our destiny as a country to reduce our dependence on foreign oil, and I don’t care if it’s liquid fuel or power, BCAP is the way to get started,” Flick said.
Renewable energy groups oppose Loan Guarantee Program cuts BY LISA GIBSON
A recent dip into the U.S. DOE’s Loan Guarantee Program funding has renewable energy groups feeling neglected as it is the second time funding has been “borrowed” for other purposes, the first amount still was not repaid. President Barack Obama signed legislation that would allow a trimming of $1.5 billion for funding of emergency assistance to various states. A package containing the measure has passed in the House, but is waiting on Senate action. A letter to Speaker of the House Nancy Pelosi, D-Calif., outlining the detriments of such a measure was signed by representatives from the American Wind Energy Association, the Geothermal Energy Association, the National Hydropower Association, the Solar Energy Industries Association and the Biomass Power Association. “This reduction in funding severely limits the DOE’s abil-
ity to support the suite of renewable resources through the loan guarantee program,” the letter reads. “Further, a solicitation for manufacturers of commercial renewable energy technologies has not even been released yet by DOE. The proposed cut makes it likely that manufacturers of commercial renewable technologies will not be able to take advantage of the DOE Loan Guarantee Program.” In 2009, funding was cut from the program for the Cash for Clunkers program. A total of $2 billion was trimmed from the $6 billion allocated in the American Recovery and Reinvestment Act to provide loan guarantees for an estimate $60 billion worth of renewable energy projects. With the latest rescission, $3.5 billion will have been cut from the program and many projects will go unfunded, the letter states. OCTOBER 2010 | BIOMASS POWER & THERMAL 19
¦INDUSTRY NEWS
Study: Proposed Boiler MACT means significant job loss BY LISA GIBSON
A study commissioned by the Council of Industrial Boiler Owners found that implementation of the U.S. EPA’s proposed Boiler MACT rule as is would result in substantial job loss, as well as reduced U.S. gross domestic product. The rule would strictly limit emissions of five hazardous air pollutants (HAPs)— mercury, hydrogen chloride, particulate matter, carbon monoxide and dioxin/ furans—for industrial, commercial and institutional incinerators, boilers and process heaters, including those using biomass. Under the proposed rule, sources emitting 10 MMBtu per hour and greater will be required to comply with numerical emission limits for those pollutants. In addition, many biomass boilers formerly categorized as multifuel boilers and not subject to the limits would fall under the incinerators category and would be required to adhere to them. The new CIBO study, The Economic Impact of Proposed EPA Boiler/Process Heater MACT Rule on Industrial,
Commercial, and Institutional Boiler and Process Heater Operators, found that for every $1 billion spent on MACT upgrade and compliance costs, 16,000 jobs will be put at risk and the GDP could be reduced by as much as $1.2 billion. Much of that pain would be suffered in supplier networks, it adds. Biomass Power Association president and CEO Bob Cleaves has been warning of the monetary expense
and job loss dangers of the proposed rule since its release in June, saying it would require costly retrofits at almost 100 percent of existing biomass power plants. “The Biomass Power Association has repeat- BPA President and CEO Bob Cleaves edly emphasized that maintains that the EPA’s proposed emissions limits MACT ruling will cause in the proposed the loss of thousands Boiler MACT are impossible to of jobs across America achieve. in an already troubled economy,” Cleaves said. “The Council of Industrial Boiler Owners is buttressing our views with its report on the potential effect of the MACT rule on jobs. We ask again that the EPA review its proposed ruling on biomass boiler emissions to consider what is at stake environmentally and economically for Americans.” Cleaves has charged that the limits are unachievable and would devastate the
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'Policymakers are rightly saying that we need to preserve and create more American manufacturing jobs today. This proposed Boiler MACT rule overshoots the mark and would result in Americans being put out of work.' ―Donna Harman, CEO, American Forest & Paper Association
biomass industry. According to the CIBO study, biomass won’t be the only industry hit. “The Council of Industrial Boiler Operators believes its members may be subject to significant economic hardship should the proposed EPA rules regulating boiler emissions be adopted,� it reads. “Potential consequences include the shuttering of domestic manufacturing capacity— and the associated jobs losses—for those CIBO members that find the capital costs associated with compliance via plant retrofitting make it economically unfeasible to continue operations.� The study was conducted by economic forecasting firm IHS Global Insight and quantifies the economic impact of
compliance to the proposed standards by all impacted sources. Upgrades alone for all the proposed standards would cost the country more than 337,000 jobs, the study forecast, and $5.7 billion in taxes. “The study released today (Sept. 15) by CIBO is but further evidence that excessive regulation would result in lost jobs—and those jobs won’t come back,� said American Forest & Paper Association president and CEO Donna Harman, adding that AF&PA commissioned its own study released in August that also showed significant job loss forecasts. “The CIBO study, much like the jobs impact study AF&PA released, shows disturbing job losses that can still be avoided as the rule
is being considered by EPA.� The comment period on the proposed MACT rule ended Sept. 14 and the rule should be finalized by Dec. 16 of this year. “Policymakers are AF&PA President rightly saying that we and CEO Donna Harman says the need to preserve and study is create more American CIBO further proof that manufacturing jobs the Boiler MACT proposed rules today,� Harman said. “This proposed Boiler would result in job losses. MACT rule overshoots the mark and would result in Americans being put out of work. EPA has a choice—they can regulate in a way that protects both jobs and the environment, or they can regulate in a way that sacrifices jobs.� ON THE WEB CIBO study: www.cibo.org
OCTOBER 2010 | BIOMASS POWER & THERMAL 21
¦INDUSTRY NEWS
CSU professor develops water-saving AD process BY LISA GIBSON
A Colorado State University professor is developing an anaerobic digester (AD) that uses less water than conventional systems, making it ideal and economically feasible for use at feedlots and dairies in the Western states. Sybil Sharvelle, assistant professor of engineering, said her process is separated into stages, beginning with water trickling over the solids and converting the organic material into liquid organic acids. The acids are then converted to methane in a separate high-rate digestion reactor. Sharvelle has experimented mainly with animal waste, but said the process is appropriate for any waste with solids content of more than 40 percent. “Aside from manure, we are also testing the reactor for conversion of the organic fraction of municipal solid waste to methane,” she said. The amount
of water saved varies depending on the quality of the feedstock, she added. “This technology is very beneficial in the arid West where water is a precious resource and also has a high dollar value,” Sharvelle said. “Agricultural producers in the West work hard to conserve water because they are often limited by water rights or have a financial benefit to do so.” The water required for conventional AD technology generally renders it economically unfeasible, she added. “The lower water requirement for the system we are developing will enable agricultural producers in arid climates to generate revenue through installation of the technology.” Sharvelle and graduate student Luke Loetscher are collaborating with Fort Collins, Colo.-based Stewart Environmental
Consultants Inc. and the university’s Agricultural Experiment Stations to evaluate the feasibility of AD at Colorado feeding operations, according to the university. The system is currently operating on a laboratory scale, but construction of a pilot plant is underway at a Colorado feedlot. The pilot will operate over the next year, followed by construction of large operations in the second year and full commercialization in three years, according to Sharvelle. Stewart Energy, a wholly owned subsidiary of Stewart Environmental Consultants Inc., is working to commercialize the process and has an exclusive option to license it from the Colorado State University Research Foundation.
INDUSTRY NEWS¦
EERC, Cummins partner for waste-to-energy project BY LISA GIBSON
Over the next year, researchers at the Energy & Environmental Research Center at the University of North Dakota will test multiple types of high-moisture feedstocks during a demonstration of the partnership between its gasifier and a Cummins Power Generation Inc. generator. The design and operation of EERC’s proprietary gasification system allow for feedstocks with higher moisture content than traditional systems, according to Nikhil Patel, EERC research scientist. In the process, the moisture in the biomass is used to improve the hydrogen content of the resulting syngas, he added. Feedstocks used in the demonstration will include municipal solid waste, wet wood, turkey litter and other opportunistic biomass fuels that are underutilized, according Bruce Folkedahl, EERC senior research manager.
“High-moisture biomass is a typically found fuel,” Patel said. Cummins, based in Minneapolis, is a worldwide leader in internal combustion engines and stationary power generation, and thus is an ideal partner for this research. “The partnership is beneficial to both entities and will advance the stateof-the-art in both distributed gasification and syngas use in internal combustion engine power generation,” Folkedahl said. The Cummins generator normally runs on natural gas, but has been fitted for syngas by EERC researchers. The demonstration of the technologies together will produce between 20 and 40 kilowatts (kW) of electricity, which will be used to power a heater. “The ultimate goal of the project is to implement commercial projects,” Patel said. Scale-up of the system
will be based on the particular use of the technology and will vary from the current size up to 500 kW or larger. “Some applications may only require 50 kW while others may need more depending on the end use of the electricity and the amount of biomass available for fuel,” Folkedahl said. The EERC hopes the outcome of the project will lead to further development and the demonstration of engine performance when using syngas. It will produce data for environmental permitting and provide strategies to achieve emission levels that meet current and future environmental regulations, which will be critical for successful commercialization of combinedheat-and-power technologies.
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Dow Corning considers biomass CHP
BY LISA GIBSON
Silicone-based product manufacturer Dow Corning is considering constructing a biomass combined-heat-and-power (CHP) plant on its Midland, Mich., site to power its existing facility as well as provide steam for its product manufacturing operations there. The company is currently in the permitting process and hopes to make a definitive decision on the CHP plant by the end of this year, according to spokesman Jarrod Erpelding. “Alternative energy is very important to us,” he said. “Currently, power and steam come from a coal-powered source.” Steam is a major component of the company’s operations, he added.
The biomass plant would be built on property owned by Dow Corning and immediately next to its existing manufacturing plant. Initially, it will run on chipped waste wood from woody biomass, but could also combine municipal solid waste, agricultural waste and other low-value feedstocks, Erpelding said. The company is in negotiations for the woody biomass feedstock, but has not begun discussions with suppliers for other sources. The plant would use a gasification process and the amount of electricity and steam it would produce has not been determined. Dow Corning has not released a cost for the facility.
This would be the first biomass endeavor for the company and depending on the amount of steam and power it produces, excess energy might be available for sale to neighboring facilities and the local grid, Erpelding said. If the plant proves successful, Dow Corning might consider expanding its biomass portfolio. Dow Corning’s silicone-based products are used in construction, solar, life sciences and personal products industries. Cirque Energy LLC would build, own and operate the Midland CHP plant for the company and is handling the environmental permitting.
Washington paper mill to install biomass boiler
BY LISA GIBSON
Nippon Paper Industries USA in Port Angeles, Wash., will replace its existing biomass/oil boiler with a more efficient biomass boiler that will supply steam for the paper mill and 20 megawatts of power for the local grid. The mill has a $71 million budget for the project and plans to apply for federal funding after completing the permitting process, according to mill manager Harold Norlund.
The old boiler will not be demolished, but might instead be used as a backup, pending permitting. The wood fuel for the boiler will continue to be residuals from local forestry operations, although more will be needed. Nippon does not own any land, but is surrounded by state Department of Natural Resources land, along with private timber operations. Norlund said
the company anticipates securing a supply within a 75-mile radius including two local sawmills. The company hopes to begin construction this fall and implement the system in mid2012. “We’re actually considering selling 100 percent of the electricity to the grid,” Norlund said. “Some public utility districts are looking for renewable energy that fits their portfolios.”
INDUSTRY NEWS¦
MGT signs MOU with Suzano for biomass supply BY LISA GIBSON
U.K.-based MGT Power Ltd. has begun securing a feedstock supply for its 300-megawatt Tees Renewable Energy Plant, signing a non-binding, long-term memorandum of understanding with Brazilian pulp and paper producer Suzano e Celulose S.A. The two companies are working toward developing a formal contract for the agreement, but MGT declined to release information on how long Suzano will supply pellets for the facility or the amount it will supply. The MOU is backed by an $800
Wood pellets from Brazil benefit not only from the country’s sunny conditions, but also from the advanced forestry technology developed by Brazilian universities to increase yields in poor soils.
million investment by Suzano, which will develop three projects in Northeast Brazil for the production of 3 million metric tons of eucalyptus pellets per year. The resulting electricity at Tees REP is expected to deliver more than an 88 percent carbon dioxide reduction compared with fossil fuels, according to MGT. Tees REP will be constructed in Teesside, England, and is expected to be completed and operational in 2014. Suzano will supply a significant portion of the clean wood fuel for the facility, but MGT is also looking elsewhere, including local sources. The company is limited, however, to 200,000 metric tons per year of road deliveries to avoid impacts on local roads, according to an MGT spokesman. The company will seek to diversify suppliers and geographies to ensure a reliable supply, he added. Suzano was chosen as a supplier because it is among the largest integrated
pulp and paper companies in the world, according to MGT. It will give project lenders comfort as Suzano is a well-established, publicly-traded company with sustainability credentials. Wood pellets from Brazil benefit not only from the country’s sunny conditions, but also from the advanced forestry technology developed by Brazilian universities to increase yields in poor soils, the spokesman said. MGT Power also is developing a 300 MW facility in Tyneside, England, but a supply for that facility has not been established as it is in very early stages of development, according to the company.
OCTOBER 2010 | BIOMASS POWER & THERMAL 25
¦INDUSTRY NEWS
Veterans Affairs medical center to install biomass CHP system
PHOTO: LOCKHEED MARTIN
BY ANNA AUSTIN
Fuel Supply: Waste wood helps power Lockheed Martin's CHP plant in Owego, N.Y.
The U.S. Department of Veterans Affairs is planning to install a biomass combined-heat-and-power (CHP) system at the VA Medical Hospital in Canandaigua, N.Y., and has selected Lockheed Martin and Whiting Turner as winner of the $15 million contract. The fully automated system will run on locally sourced woody biomass, including wood chips and bark salvaged from local lumber yards and logging operations. Lockheed Martin spokesman Cory Smith said the boilers to be installed will use an estimated 15,000 tons of wood chips annually. Lockheed Martin will build, install and test the equipment as well as train hospital employees to maintain the biomass system. Whiting Turner will provide on-site con-
struction leadership and work with the VA to integrate the biomass system. Lockheed Martin has a biomass CHP facility in Owego, N.Y., that opened in 2008. By switching from fuel oil to wood chips, the project has reduced the plant’s heating and cooling bills by half and reduced its carbon footprint by 25 percent. The Canandaigua biomass system will be the same configuration as the system in Owego. The project is being funded through the American Recovery and Reinvestment Act of 2009. Smith said this will mark the company’s second project after its Owego facility. Construction on the Canandaigua plant will begin this month and will take about three years to complete, according to Smith.
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INDUSTRY NEWS¦
NC passes CHP investment tax credit law BY ANNA AUSTIN
North Carolina is a step ahead of the federal government in making the installation of combined-heat-and-power (CHP) systems more economically feasible through a CHP or cogeneration investment tax credit. House Bill 1829 made several changes to North Carolina’s renewable energy investment tax credit, which was previously available only to solar, wind, geothermal and other renewable electricity production technologies. Beginning in August, businesses that install CHP systems can receive tax credits from the state equal to 35 percent of the cost of the equipment, construction, and installation, up to a maximum of $2.5 million. CHP systems for use in places other than businesses are eligible for a tax credit of up to $10,500. The new policy skates ahead of pending federal legislation introduced by House Rep.
Paul Tonko, D-N.Y. On a federal level, CHP systems are already eligible for a 10 percent federal business energy investment tax credit. The Innovative Energy Systems Act of 2010 (H.R. 4751) proposes the removal of the current tax credit limitations to small projects, as the 10 percent credit only applies to the first 15 megawatts (MW) of a project and is limited to 50 MW. The bill would apply the tax credit to a project’s first 25 MW, as well as provide a 30 percent credit for recycled energy and CHP with efficiencies above 70 percent. According to the U.S. DOE’s Office of Energy Efficiency and Renewable Energy, while the traditional method of separately producing usable heat and power has a typical combined efficiency of 45 percent, CHP systems can operate at efficiency levels as high as 80 percent.
While the fate of H.R. 4751 remains uncertain, North Carolina may see a CHP boom. The state currently has CHP installation capacity of about 1,482 MW at 45 sites, according to the U.S. DOE’s Energy and Environmental Analysis Inc. Keith McAllister, director of the Southeast Clean Energy Application Center, said that ICF International, which tracks information for the Energy Information Administration, estimates that the tax credit will increase the amount of CHP in the state by 103 MW in the near future. "The passage of this bill, which allows CHP fueled from any source to get the tax credit, should bring the bigger players to the table,” he said. “There are still barriers to the market place, but having these organizations' interest should help to remove those barriers as well."
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¦INDUSTRY NEWS
Adage secures woody biomass supply in Washington BY LISA GIBSON
Washington-based Green Diamond Resource Co. has signed a long-term supply contract with Adage, a biopower joint venture between Areva and Duke Energy, for a proposed 55-megawatt woody biomass power plant in Mason County, Wash. Adage will be responsible for removing the residue left behind by Green Diamond harvesters under the supervision of Green Diamond, the largest private forest landowner in the immediate area around the plant. Currently, slash left behind is piled and burned to clear the way for replanting, which by law must be done within three years of harvesting. “When we go back in, there’s no room to plant because there’s all this slash on the ground,” said Patti Case, public affairs manager for Green Diamond. “So we pile this residue and wait until fire season is past … and we burn it in the forest.” The slash piles contain limbs and soft wood that isn’t usable, along with defective and rotten pieces. The new agreement will save Green Diamond the cost of piling and burning the slash, Case said. The amount of residue Adage will harvest for its plant is confidential, according
to Case. She also declined to disclose how many acres of Green Diamond’s property will be harvested, but it will account for 15 to 20 percent of Adage’s required supply. She did say, however, that Adage will have access to most of the company’s land that can be affordably harvested for residue within a 50-mile radius of the proposed plant. Forest owners in the state of Washington are required to leave 17 to 20 percent of the residue behind to protect fish habitats, streams and upland wildlife, according to Case. “Washington state has arguably the toughest forest regulations in the world,” she said. Forest owners are also required to reduce wildfire hazards next to roads. “Instead of piling and burning, they’ll be taking that,” Case said.
28 BIOMASS POWER & THERMAL | OCTOBER 2010
Adage’s plant represents a $250 million investment in Mason County. It will be located in Shelton and is expected to create more than 400 jobs during construction and more than 100 during permanent operation, according to the company. Adage hopes to begin construction in early 2011, pending permit issuance, and will for the first time implement its partnership with John Deere. Earlier this year, the two companies announced an alliance to bring technology and process innovation to the fuel supply for woody biomass power plants. Adage is also developing a biomass power project in Florida and has faced effective, albeit small, citizen opposition at its proposed Gadsden County site in Gretna. After Gretna city officials announced in March they would defer decision on the plant for six months, the company suspended its air permit application. The city then answered back with a letter stating it considered the matter closed and would take no further action. Adage is still working to develop a plant in Hamilton County, Fla.
INDUSTRY NEWS¦
Nexterra debuts biomass CHP system
BY ANNA AUSTIN
'The difference between this system and the others we have is that it sends the syngas directly into an internal combustion engine to produce the power, as opposed to just steam.'
SOURCE: NEXTERRA SYSTEMS CORP.
The University of British Columbia will soon be home to the first installation of a new biomass combined-heat-andpower (CHP) system developed by Nexterra Systems Corp. and GE’s Jenbacher gas engine division. The city of Vancouver and local companies will supply tree trimmings and other urban wood waste diverted from the city landfill as fuel for the plant. The 2-megawatt (MW) system will require about 12,500 bone-dry tons of wood waste, according to Darcy Quinn, Nexterra business development manager. The CHP system combines Nexterra’s gasification and syngas conditioning technologies with a GE high-efficiency Jenbacher gas engine. Though Nexterra has several other biomass gasification system installations around the world, Quinn said this is the first demonstration of this particular application in North America. “The difference between this system and the others we have is that it sends the syngas directly into an internal combustion engine to produce the power, as opposed to just
—Darcy Quinn, business development manager, Nexterra Model of Efficiency: This architectural rendering shows how UBS's CHP steam system will be housed.
steam,” he said. The electricity produced by the system will be distributed throughout the UBC campus to meet some of the college’s power needs; waste heat will be recovered from the engine to produce enough steam to replace about 15 percent of UBC’s current natural gas requirements. Additionally, UBC will see a greenhouse gas emissions reduction of 4,000 metric tons per year. The system at UBC is on the small end of what Nexterra believes is the sweet spot for sizing these particular systems, according to Quinn, as that range is expected
to be within 2 to 10 MW. Compared to conventional biomass power system electrical efficiencies of about 18 to 21 percent, this CHP system has demonstrated a 26 to 30 percent electrical efficiency, he said. Other partners in the project include the province of British Columbia, the Canadian government, the city of Vancouver, FPInnovations, BC Bioenergy Network and Sustainable Development Technology Canada. Quinn said the installation at UBC should be completed in the third or fourth quarter of 2011.
OCTOBER 2010 | BIOMASS POWER & THERMAL 29
ÂŚINDUSTRY NEWS
Manitoba proposed rules encourage biomass power BY ANNA AUSTIN
New regulations proposed by the Manitoba government aim to improve air quality in the province while encouraging the use of natural biomass materials as fuel. Manitoba Conservation Minister Bill Blaikie made the announcement August 23, emphasizing that the new rules would help make the air cleaner and also streamline the approval process for new clean energy systems such as biomass, as a heat and power source to replace fossil fuels. Thermal treatment technologies included in the proposal are combustion, gasification and pyrolysis. Blaikie added that the proposed laws would make biomassbased systems more attractive to industry by putting in place a simpler and faster permit system. The regulations would also level the playing field for biomass thermal systems currently competing with fossil-fuel based
incineration systems, by requiring additional air quality protection. Manitoba Hydro Senior Bio Systems Engineer Dennis St. George agreed with Blaikie that the new incinerator rules will help promote the use of biomass and other wastes as fuels for heat and power generation in Manitoba. “I'm also sure that customers who are currently relying on incineration to dispose of their waste materials will appreciate having Manitoba Hydro's Power Smart Bioenergy Optimization Program available to add value to their business,� he said. Manitoba Hydro, the fourth-largest utility in Canada and largest exporter of electricity to the U.S., currently runs the Power Smart Bioenergy Optimization Program to provide financial incentives to customers who are interested in converting their raw forms of biomass—typically bio-
30 BIOMASS POWER & THERMAL | OCTOBER 2010
mass already available on-site—to produce energy, displacing some or all of the energy purchased from Manitoba Hydro. “With the utility’s capacity links to the U.S., we can then put this energy into the U.S. market where it offers better value,� St. George said. Overall, every little push forward helps the biomass-to-energy sector move ahead, according to St. George. “In general, the biomass-to-energy sector has not received the same attention as the other renewables ON THE WEB like wind and solar," The new regulations he said. "To date, can be found at there hasn't been an www.gov.mb.ca even playing field for biomass to energy and typically projects have relied solely on the project benefits to move ahead. Policy and markets are two key areas that influence the potential for biomass energy.�
INDUSTRY NEWS¦
Ontario biomass conversion plans progress BY ANNA AUSTIN
The proposed conversion of an Ontario coal-fired power plant to biomass has achieved a critical next step in project implementation: the province has directed the Ontario Power Authority to begin negotiations to purchase power generated at the plant. The 211-megawatt (MW) Atikokan Generation Station, which is about 200 kilometers (125 miles) northwest of Thunder Bay, Ontario, will be the first power station that Ontario Power Generation will convert to biomass. The company owns three other coalfired power plants in Canada, and previously announced plans to evaluate repowering all of them with biomass by the end of 2014. OPG Spokesman Ted Gruetzner said that although the order from the province to the OPA to buy the biomass power is one important pillar to the project, capital costs and
availability of fuel are still being evaluated. The Atikokan plant will require about 90,000 metric tons (99,000 tons) of wood pellets per year; less than 1 percent of the total allowable annual forest harvest in Ontario. OPG began a call for potential feedstock suppliers in mid-March. “We had some interest in that, but we’re still working through that process in terms of coming out with the supply contracts,” Gruetzner said. OPG’s proposed biomass conversions are in accordance with Ontario’s commitment to eliminate all coal-fired power generation in the province by the end of 2014, as part of the province’s Green Energy Act of 2009. The act also features North America's most comprehensive renewable energy feed-in tariff, which offers guaranteed and attractive prices to developers of biomass, biogas, wind, water
and solar power projects. The rate for biomass is 13.8 cents per kilowatt for plants under 10 MW and 13 cents for larger facilities. According to the Ontario Ministry of Energy and Infrastructure, in 2009, generation by Ontario's coal plants was at its lowest level in 45 years, down more than 70 percent from 2003. Provincial Parliament Member Bill Mauro said the power purchase agreement marks the end of six years of efforts to keep the Atikokan generating station running, as closure of the plant would have been devastating to businesses and homeowners in Atikokan, a town of about 3,400 people. Aside from saving jobs at the plant, OPG estimates that about 200 construction jobs will be created during the conversion.
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OCTOBER 2010 | BIOMASS POWER & THERMAL 31
ÂŚINDUSTRY NEWS
Massachusetts proposed RPS stymies biomass
BY LISA GIBSON
If drafted renewable portfolio standard (RPS) regulations pass in Massachusetts, biomass power plants will be required to achieve between 40 and 70 percent efficiency and 50 percent greenhouse gas (GHG) reduction relative to life-cycle emissions from a combinedcycle natural gas facility using the most efficient technology. Not only would those standards be nearly impossible to meet without substantial investments, but it would thwart development of new plants, costing hundreds of jobs in an already struggling economy. The Massachusetts Department of Energy Resources released draft regulations for RPS qualification Sept. 17, drawing from the results of the Manomet Center for Conservation Sciences’ Biomass Sustainability and Carbon Policy Study,
'Our guys need jobs. We have no jobs right now. I have guys who are having trouble putting food on their families’ tables.' —Wayne Lehman, Laborers Local Union 596
along with public input. The study results showed a debt-then-dividend model in which woody biomass power initially emits more carbon per unit of energy than fossil fuels and makes it up over time. But it has been controversial in numerous aspects, perhaps most notably its evaluation of whole tree feedstock, which is not used by most biomass power plants. It does take slash and forest residue into account, but only alongside whole logs. That greatly affects the carbon footprint, according to Bob Cleaves, president and CEO of the Biomass Power Association. “So essentially, the patient has been given a pre-
scription for an ailment that doesn’t exist,� Cleaves said in a media call Sept. 20. The regulations will determine which projects will receive renewable energy certificates, therefore determining economic feasibility. The draft regulations also include an encompassing definition of biomass, further limiting all biomass harvests to just 15 percent of the weight of all forest products. That greatly increases forest fire hazards as well as takes away a key market for forest owners, according to Kent Lage, executive director of the Massachusetts Wood Producers Association, who also participated in the call. The limitation
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INDUSTRY NEWS¦
should be based on a site-specific evaluation, not a one-size-fits-all standard, he added. “We’ve got some major concerns about that.” Pioneer Renewable Energy is developing a $250 million, 46-megawatt biomass power plant in Greenfield, Mass., that would pay more in local property taxes than the top 10 taxpayers combined, according to Principal Matt Wolfe. He argued the rules, specifically the efficiency standard, will most certainly stop development in all of New England. “In our opinion, it’s completely arbitrary and not scientific,” he said. Richard Rosen, of American Ag Energy, said he has proposed projects that would allow greenhouses to use heat from biomass power plants, but the proposed regulations would stomp them out. “We
have four projects under development now in New England and none of them will be built under these rules,” he said. Wayne Lehman of Laborers Local Union 596 echoed the same sentiment, focusing on job loss. “Our guys need jobs,” he said. “We have no jobs right now. I have guys who are having trouble putting food on their families’ tables.” When jobs in the biomass sector have arisen recently, they have been shot down just as quickly, he added. The proposed rule also mandates cutting plans, fuel certificates, tonnage reports and forester certifications. It requires Forest Impact Assessments be conducted by the DOER every five years. Generation units using eligible woody biomass fuel or manufactured biomass fuel would also have to produce a quarterly report
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addressing biomass input heat content, useful thermal energy, merchantable bioproducts, renewable generation and overall efficiency. A comment period on the proposed rules is open until Oct. 21 and final rules should be released by the end of the year. No state has proposed, let alone implemented such strict efficiency standards and Cleaves maintains they are unachievable and would “chill” any project in the commonwealth of Massachusetts, where biomass currently makes up 50 percent of the renewable portfolio. He said the rules attempt to increase efficiency of a project that doesn’t exist—one that uses whole trees. “We are confident that no new facilities will be based in New England under these rules,” he said.
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total systems solutions OCTOBER 2010 | BIOMASS POWER & THERMAL 33
¦FEEDSTOCK
34 BIOMASS POWER & THERMAL | OCTOBER 2010
FEEDSTOCKÂŚ
Supply
Supply
Supply The strength of a biomass power project can hinge on the credibility and detail of a fuel supply agreement. Aside from the fact that a plant can't operate without feedstock, the lack of a solid, sustainable fuel supply will exponentially decrease the chances of securing outside funding. By Lisa Gibson
OCTOBER 2010 | BIOMASS POWER & THERMAL 35
¦FEEDSTOCK
W
ith a long-term fuel supply agreement in place, a proposed biomass power plant near Shelton, Wash., is one giant leap closer to becoming a reality. It will use residue from nearby forestry operations to generate 55 megawatts (MW) of power for sale to the Pacific Coast grid. Washington-based developer Adage announced the agreement with Green Diamond Resource Co. in August, saying it’s critical to the success of the plant. A detailed fuel supply agreement can make or break a project, according to JD Lindeberg, chief financial officer and principal of engineering and consulting firm Resource Recycling Systems Inc. “A lot of developers don’t have any sense about how detailed the fuel piece needs to be,” Lindeberg says. A solid agreement evaluates obvious factors such as availability and price, but also needs to account for possible price changes in the life of the agreement, current and future competitors for the supply, the impacts of external factors, supply economics, and exogenous variables such as the price of diesel and gross national products. Not only are such well-crafted fuel supply agreements important for operation of a plant, but they are also a staple in securing project funding.
charge in interest, banks think differently about the risk involved. “That’s something developers forget,” Lindeberg says, adding that banks need 50 successes to make up for one failure. Another aspect easily overlooked by developers is the relationship between a fuel supply agreement and a power purchase agreement (PPA). “Personally, I think developers go too far negotiating their PPA without understanding the price of fuel,” Lindeberg says. “One of the lessons I think people need to learn is that you’re not going to get your fuel supply agreement sorted out in a final way [without a PPA]. It needs to proceed in parallel.” But even if those two critical elements are negotiated in parallel, other factors can throw off the balance and devastate a project, as learned by a California-based wood products manufacturer. In mid-August, Sierra Pacific Industries was forced to abruptly close its woody biomass power plant in Loyalton, Calif., because of in-
“In general, these facilities are financed on some sort of long-term debt and whoever is supplying the debt wants to know that the price of fuel isn’t going to become exorbitant and last from year five to year 20, which means they won’t get paid on their debt,” Lindeberg says. Developers can and will be denied funding without a solid, detailed fuel supply agreement. Although it’s possible to apply again, first impressions can be hard to overcome. “You lose credibility with the financers,” he says. “These finance guys don’t like to look at things twice. It’s easier for them to come to a conclusion and not change it.” Banks are generally much more conservative than equity lenders because banks don’t make multiples on the money they lend. Since they only earn what they
36 BIOMASS POWER & THERMAL | OCTOBER 2010
PHOTO: SIERRA PACIFIC INDUSTRIES
Fixated on Financing
Piling Up: Woody biomass feedstock is dumped onto a growing pile.
PHOTO: SIERRA PACIFIC INDUSTRIES
FEEDSTOCK¦
Stockpiling: A conveyor is used to move woody biomass.
sufficient and expensive fuel supplies coupled with a decrease in rates paid for its electricity by utility NV Energy. The plant was powering and getting feedstock from SPI’s nearby sawmill until it shut down in 2001, requiring SPI to develop fuel supply contracts with other organizations to keep the 16 MW power plant running and supplying the grid. “Then it’s a scramble to find the wood,” says Mark Pawlicki, director of corporate affairs and sustainability for SPI. “We don’t have a ready supply like we did when we had a sawmill.” SPI quickly developed fuel supply contracts with landfills, the forest service and others but transportation was costly and the forest service reduced its timber offerings. Even so, the operation was doable until the power rate decrease. “The combination of the high fuel costs due to the reduced availability of timber and a simultaneous reduction in rates made it uneconomical,” Pawlicki says. SPI is exploring options for opportunities to reopen the plant in the future, he adds. “There’s obviously a relationship there between what you’re paying and what you’re selling the power for,” says Tom DePonty, director of public affairs at Adage. After having secured the first fuel supply agreement for its Shelton plant, Adage is now marketing its output to utilities in Washington and Oregon. The company signed a lease agreement for the land in August and is currently in the middle of the permitting process. Adage has not yet applied for funding opportunities, but the fuel contract is a great first step, DePonty says, adding that it’s crucial to have in place at the time of funding application.
¦FEEDSTOCK 'If you can get into the marketplace first and establish relationships and treat your ally, Adage will source its supply within 50 miles of the plant, but could expand desuppliers well, then we’re ready to rock and roll.' —JD Lindeberg, chief financial officer and principal,Resource Recycling Systems Inc. pending on availability and ease of transport routes. “There obviously could be some opportunities to go farther than that Adage hopes to break ground at the 30 percent of the plant’s requirements and based on road configuration and things site next year and commence operation in the rest is being negotiated for three or like that where it could be economical,” late 2013. The company will be responsible four additional contracts all providing the DePonty says. for harvesting the residue, including limbs, same residual material, DePonty says. softwood, and defective or rotting pieces, The company chose Green Diamond Feedstock Economics from Green Diamond’s forestry opera- because of its ability to be a long-term Feedstock can be sourced as far as tions, under Green Diamond’s supervision. sustainable supplier, he adds, although the 75 to 100 miles from a power plant, acThe harvests will make up between 20 and timeline of the contract is confidential. Ide- cording to Lindeberg. “It’s very difficult to transport it farther than that and still have a cost-effective fuel supply,” he says, adding that the “big trick” is the cost to bring it in. Quality pellets, guaranteed. For perfect pellets the entire production system When a tree is logged, 50 to 60 permust work together flawlessly. Buhler enables total process control by cent of that tree doesn’t leave the forest, providing a complete process design package and key equipment for he cites. The leaves, tops and other residue drying, grinding, pelleting, cooling, bagging and loading. This, combined are left behind. Then, when it’s taken to with Buhler’s integrated automation system, unrivaled after sales support the sawmill, only about 50 to 60 percent is and training provides a seamless solution, guaranteed. used for lumber, the rest—bark, sawdust and other products—is left behind. “Between 60 and 70 percent of that tree that’s cut down for wood is waste,” Lindeberg says. “That waste is some of the primaBuhler Inc., 13105 12th Ave N., Plymouth, MN 55441, T 763-847-9900 ry fuel supplies for these biomass power buhler.minneapolis@buhlergroup.com, www.buhlergroup.com plants.” The least expensive way to acquire forest residue feedstock is in spot markets from smaller players, Lindeberg says. Spot markets represent an avenue for a transaction somewhat similar to open solicitations. “I’m paying a price and people who have it show up,” he explains. “A spot market is much more volatile in terms of pricing.” Spot markets are a favorable alternative to long-term supply agreements with one large supplier, he says. “The point I try to make to these guys is this is not about typical financial guarantees. This is about economic guarantees.” The lack of a market price for feedstock deters long-term supply contract development, according to Stephen Dinehart, principal of Heartland Business Consultants in Wisconsin. A feedstock pricing mechanism is crucial to the future development of the biomass market, he says. Today’s markets are single-buyer domiThe solution behind the solution. nated and influenced by social factors, es38 BIOMASS POWER & THERMAL | OCTOBER 2010
FEEDSTOCKÂŚ pecially when developers are securing sup- ways to convince them that supplying a pow- velopment’s three-legged stool, supported by plies from small, local operations. er plant is a better option. PPAs and the actual construction or converThe biomass industry is no stranger to sion of a power plant. “You’ve got to have Prepare for Competition opposition, but securing feedstock agree- all three of those things or no one’s going to A biomass power plant will seldom be ments that spell out the material used can give you any money,â€? he says. “[Fuel supply the sole user of woody biomass feedstock in help clear up misunderstandings and rumors agreements are] not necessarily any more ima region. Besides wood pellet plants, direct about clear-cutting and burning whole trees. portant than the other two, but without any competition can include mulch/compost- Working with local suppliers can make a proj- one of them, you’re not going anywhere.â€? ing, board manufacture, firewood, animal ect more tangible for local citizens, DePonty Author: Lisa Gibson bedding, and pulp and paper mills. Paper says. “It helps them understand more clearly Associate Editor, Biomass Power & Thermal mills, however, cannot use bark or tree tops what the project is all about,â€? he adds. (701) 738-4952 lgibson@bbiinternational.com and, under the right circumstances, can Biomass fuel supply agreements make boost the available feedstock supply if they up one sturdy leg of what Lindeberg calls deincrease harvesting rates. “That competitor can sometimes be a complement: the more activity they have, the more fuel you might have, but it’s just of a different nature,â€? Lindeberg explains. Needless to say, wood pellet manufacturers also represent competition in the marketplace. But many competitors can’t take the lower-grade woody biomass that power plants can. “The biggest competitors are other biomass power plants,â€? Lindeberg says. “That’s potentially problematic.â€? Foreseeing future competitors is perhaps the most important aspect, but there is a benefit to being the first operation in a given location. “If you can get into the marketplace first and establish relationships and treat your suppliers well, then we’re ready to rock and roll,â€? he says. “You’re there first and you’re going to keep getting that material.â€? “When we started looking at western Washington, the first thing we did was evaluate the available feedstock, the land ownership and also the existing users of biomass Great New You Just Can’t Beat A Morbark Opportunities: in that region to kind of assess whether a For Speed And Consistency. t 8PPE 1FMMFUT project was viable in that region,â€? DePonty t $P 'JSJOH 8JUI $PBM If you’re ’ llooking ki to make k hay h with i h high hi high-speed h speedd sawdust d prod production, duction i says, adding that Adage discovered the viÂŽ t "OJNBM #FEEJOH look no further than Morbark. With a Morbark Horizontal Grinder brant forestry environment was more than and a 16-knife Quick Switch option, you can produce hardwood adequate to supply its plant, along with othsawdust for wood pellet production, direct co-ďŹ re input, or animal ers existing or proposed. “We think this is an bedding more efďŹ ciently than ever before. And what’s more impressive, you can get an unmatched 40 tons of hardwood sawdust per hour exceptional location for biomass.â€? with 95% 1/4â€? minus, all day – every day. To see for yourself, go to Another competitor for biomass feedwww.morbark.com for a video demonstration and specs, or call stock is alternative disposal, such as landfill800-831-0042 to set the time and place to see it in action. ing. “If they have other means of disposal See it in action at www.morbark.com instead of you, they will always consider doing that,â€? Lindeberg says. “Never underesÂŽ timate the potential for people to continue doing the same thing.â€? Evaluating suppliers’ BUILDING EQUIPMENT THAT CREATES OPPORTUNITIES other disposal options and prices can expose
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¦ANAEROBIC DIGESTION
40 BIOMASS POWER & THERMAL | OCTOBER 2010
ANAEROBIC DIGESTION¦
Zero
Tolerance for Waste
San Jose, Calif., will be home to the country’s first commercial organic waste dry anaerobic fermentation process, translated from applications across Europe and modified to create a reference and model for installations in the U.S. By Lisa Gibson
OCTOBER 2010 | BIOMASS POWER & THERMAL 41
¦ANAEROBIC DIGESTION
M
aking its U.S. debut, a dry fermentation process will convert organic waste from San Jose and surrounding communities into power for its own operation and others
nearby.
The anaerobic digestion process is commonly used and well-known in Germany and across Europe, but San Jose’s installation will be much bigger and modified for use in the U.S. A contributor toward the city’s 2008 Zero Waste Strategic Plan, the project will increase the amount of garbage diverted from landfills and could serve as a model for urban anaerobic digestion projects all over the country. Developer Zero Waste Energy Development Co., a joint venture between local sister companies GreenWaste Recovery and Zanker Road Resource Management, is in the middle of permitting the commercial facility, dubbed Zanker Road Biogas, and plans to break ground this year and begin operation in late 2011. The plant will be flanked on two sides by Zanker Road Resource Management’s existing outdoor processing operations for mixed waste and construction and demolition debris. While that waste is unlikely to be digested at the biogas facility, it could be used as bulker after the digestion process, according to Emily Hanson, GreenWaste community relations manager and project director. In fact, feedstock contracts for Zanker Road Biogas have yet to be negotiated, but Hanson isn’t worried.
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'The opportunity we have in San Jose is to create a reference facility that we’ll collect data from and provide that information for other municipalities and agencies that might be interested in how this would work,' ―Jo Zientek, deputy director of Integrated Waste Management, San Jose
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The Cutting Edge “Most companies wait until they have a guaranteed feedstock to develop innovative projects,” Hanson says. “What we have opted to do, and it’s a little more risky but it also puts us on the cutting edge, is we’ve decided to plan and develop this anaerobic digestion facility, even though we don’t have a guaranteed feedstock at this point.” The feedstock will come from contractual agreements and open markets from regional jurisdictions, but if necessary, could come from GreenWaste’s existing dirty materials recovery facility (MRF), less than 10 miles from the project site. The MRF already processes multifamily waste from San Jose; 100 percent of all waste including garbage, composting and recycling from nearby Los Altos Hills, Woodside and Portola Valley; a portion of waste from Palo Alto; and open market materials.
ANAEROBIC DIGESTION¦
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Each week, 1,600 tons go through the facility for a recovery rate of 75 percent. “We process those organics and municipal solid waste and then in the back end, we end up with a very rich organic fraction,” Hanson says. From there, the processed material goes to Z-Best Compost—owned by Zanker—in nearby Gilroy, Calif., where it is composted for landscaping markets. That organic material would make great feedstock for the biogas facility, but Hanson hopes additional contracts will make its use unwarranted. “By the time the facility is on line, it’s likely we’ll have enough material where we won’t have to divert from our sister facility,” she says. “We are currently seeking out new sources of organic material, so it may be the case that we don’t have to offset any tons that are going to Z-Best. Z-Best could maintain its consistent flow of material from the GreenWaste MRF, and all of the extra material that is organic through other contracts and through open market services will then to go Zanker [Road Biogas].” Those potential contracts include one that would allow collection of all the commercial organic waste in the city of San Jose, an unspecified amount as it has been an open market and not tracked closely. “If we are awarded that processing contract, the feedstock would completely take up one entire phase of our anaerobic digestion facility build out,” Hanson says. Zero Waste will know in November if it has been awarded the contract. The resulting biogas will be converted to power and initially used for the process itself and perhaps the adjacent Zanker facilities. The amount of power it produces will depend entirely on the composition of the feedstock, efficiency of operation and other factors expected to be polished in the three-phase build-out strate-
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¦ANAEROBIC DIGESTION tion for other municipalities and agencies that might be interested in how this would work,” says Jo Zientek, deputy director of Integrated Waste Management for the city of San Jose.
The U.S. Translation After numerous trips to German dry fermentation plants and copious amounts of research, GreenWaste and Zanker agreed on translating the technology to a U.S. utilization. Besides being bigger than installations in Europe, Zanker Road Biogas will also employ modified odor-control systems and will be tailored to achieve a high-quality composting product. “Energy output is an important component, but we want to have a saleable quality compost on the back end, which is something they don’t do in Germany and they don’t do in Europe,” Hanson says. “They don’t prioritize high-quality compost.”
PHOTO: GREENWASTE RECOVERY
gy, starting at double the size of any existing similar operations in Germany. The facility will be capable of taking up to 150,000 tons of waste per year, but will start on a smaller scale. The build-out phases will not be distinguished by feedstock tonnage, but instead by the improvements made to the system as it operates and as Zero Waste learns how to cater it to applications in the U.S. “Our intention is as soon as it’s operable and we’re able to start calibrating the productivity of the facility, we will then be able to inform any changes we want to make on phase two to optimize its efficiency,” Hanson says. Although the facility will be a commercial operation, it will be a demonstration of U.S. applications and will be somewhat of a learning experience for GreenWaste, Zanker and the city. “The opportunity we have in San Jose is to create a reference facility that we’ll collect data from and provide that informa-
Collection Protection: Composted material is stored in the yard at Z-Best and will be used for landscaping.
Zientek is hoping both water and energy use can be reduced in the San Jose application, along with other improvements. “There are lots of operational decisions that we will learn quickly how to maximize gas output, to maximize throughput and to maximize quality of the compost on the back end,” Hanson says. “The potential the project has and the amount of energy that can be produced is really exciting for the industry and I think it also demonstrates that there is a lot of interest in doing biogas projects all across the country and that’s really exciting to see,” says Amanda Bilek, energy policy specialist at Great Plains Institute and author of the report “Spotlight on Biogas: Policies for Utilization and Deployment in the Midwest,” released in August. The study analyzes state and federal policy that could increase biogas project development in the U.S., focusing specifically on agricul-
44 BIOMASS POWER & THERMAL | OCTOBER 2010
ANAEROBIC DIGESTION¦ tural opportunities in the Midwest. “It is important to have technologies and tools for urban communities as well and municipal solid waste or source-separated organics are a big part of that,” Bilek says. Zanker and GreenWaste also developed Zero Waste Energy, a new company that will market the technology throughout the country. “The intention there is to combine not just the anaerobic digestion process, but also the front-end processing so you get the best feedstock that goes into the anaerobic digesters,” Hanson says. She declined to release a cost estimate for the facility, saying it’s a moving target, but did say Zero Waste will seek funding through the U.S. Department of Treasury’s Payments for Specified Energy Property in Lieu of Tax Credits program.
tunnel for another 21 days then is removed and stacked in piles outside to cure for screening, grading and marketing to landscape operations. Zanker Road Biogas will also be located near the city’s existing wastewater treatment plant, the country’s largest tertiary plant, which includes its own biogas process for the 100 million gallons of wastewater it processes per day, according to Michele Young, organics manager for the city of San Jose. The existing AD plant, which generates one-third of the treatment plant’s power requirement, has made the new project a more welcome addition and hopefully will help curb citizen opposition. “The public feels like renewable energy generation and this kind of technology innovation is one of the most appropriate uses of the land surrounding the wastewaThe Process ter treatment plant,” Young syas. “I think Zanker Road Biogas will be divided we have a very high interest rate in the techinto two parts: the digestion process and the composting process. Everything takes place within an enclosed building with extensive odor control along with a huge biofilter. “One of the concerns facilities like this have encountered in Europe is the odor, so we’re going above and beyond in terms of sizing the biofilter as well as the number of air exchanges per hour to control the odors,” Hanson says. Even the receiving halls where truckloads of waste will be dumped are enclosed with negative aeration so the smell will not escape when the doors are open, she adds. Depending on the composition of the feedstock, it could be mixed for consistency and then it’s off to the air-tight, gas-tight digestion tunnels. The particular technology is scaled on eight digester units, so multiple tunnels will be digesting simultaneously. Inside the tunnels, the material is heated before the 21-day anaerobic digestion process, where the resulting biogas is captured. On day 21, the tunnels are purged of any remaining methane (biogas) and oxygen is blown through the pile, Hanson explains. Then the material is removed and bulked. That same day, the material goes to an enclosed composting
nology and how it links to the activities that already are taking place in that area.” Bilek hopes the facility will have a large and lasting impact on the city, as well as the rest of the country as it watches the plant’s development and operation. “I think that the large-scale examples have a larger impact, but they also have a really interesting story to tell and that becomes useful when project developers and people who are interested in advancing biogas projects can take that interesting story to their policy makers and show the amazing potential that biogas projects, especially at the large scale, really have for energy production,” she says. Author: Lisa Gibson Associate Editor, Biomass Power & Thermal (701) 738-4952 lgibson@bbiinternational.com
OCTOBER 2010 | BIOMASS POWER & THERMAL 45
ÂŚCHP
COGENERATIONSENSATION Biomass cogeneration, or combined heat and power, applications are expected to move the U.S. toward greater energy security and a cleaner environment. By Anna Austin
46 BIOMASS POWER & THERMAL | OCTOBER 2010
CHP¦
W
hen Hurricane Katrina struck in 2005, the Mississippi Baptist Medical Center in Jackson, Miss., remained open and operational despite the loss of grid power for several days, according to the U.S. DOE. This was because the hospital's combined-heat-and-power (CHP) system provided electricity, hot water and cooling service beyond what could be provided by its backup generators alone. The ability to produce electricity on-site rather than being reliant on the grid not only provides consistency and reliability for institutions such as hospitals where electricity is imperative, but also reduces grid congestion and avoids distribution costs. Those are only a few of the many outstanding benefits of CHP or cogeneration, and its widespread potential in the U.S. is looming. In fact, in 2008, the DOE published an in-depth report on the potential of CHP deployment in the country and determined that it is one of
the most promising options in the country’s energy efficiency portfolio. Notably, the report points out that while CHP has been around in one form or another for more than 100 years—it is a proven, not speculative, technology and still remains vastly underutilized even though it’s one of the most compelling sources of energy efficiency that could, with even modest investments, quickly move the U.S. toward greater energy security and a cleaner environment.
ABCs of CHP CHP is a form of distributed generation and is defined by the U.S. EPA as an integrated system that generates at least a portion of the electricity requirements of a building, facility or campus, and recycles the thermal energy exhausted from the electric generation; energy that would normally be wasted. Generally, CHP systems consist of
OCTOBER 2010 | BIOMASS POWER & THERMAL 47
¦CHP several individual components, including a prime mover (heat engine), generator, heat recovery and electrical interconnection, all configured into an integrated whole. Prime movers for CHP systems such as steam turbines, gas or combustion turbines are capable of burning a variety of fuels, including biomass or biogas. According to the U.S. Energy Information Administration, reciprocating engines are the primary technology of choice and are used in about 47 percent of existing CHP systems in the U.S. Additional components used in configuring
a complete CHP system include boilers, absorption chillers, desiccants, engine-driven chillers and gasifiers. While CHP systems can run on fossil fuels, there are many advantages to using biomass including reduced greenhouse gas/ carbon dioxide emissions, local economic development, waste reduction and the security of a domestic fuel supply. In 2008, more than 60 percent of current biomasspowered electricity generation in the country was in the form of CHP, according to the EPA. Wood and other biomass fueled
8
ACCREDITED
48 BIOMASS POWER & THERMAL | OCTOBER 2010
approximately 3 percent of existing U.S. CHP capacity. Christopher Recchia, executive director of the Biomass Energy Resource Center, says a good biomass CHP system candidate should be able to successfully source a local fuel supply such as low-grade wood Biomass Energy Director that might have previ- Resource Christopher Recchia ously been used by pulp says medium- to and paper but declined large-sized college are good over time, or from plen- campuses candidates for biomass tiful forest land that isn’t CHP systems. being successfully or actively managed. “Or, if you’re in a place like Nebraska, energy grass or agriculture residues that aren’t being used might be a good source,” Recchia says. Virginia-based nonprofit BERC is a leading organization involved in the assessment, development and management of community-scale biomass energy projects. BERC expertise includes biomass fuel systems, environmental policy and management, biomass fuel supply, and project and program management. Supporting Recchia’s viewpoint is a biomass cogeneration project being developed by Iberdrola Renewables, set to break ground this fall in Lake County, Ore. Spokeswoman Jan Johnson says one of the most attractive qualities of implementing the project was the ability to secure a good biomass fuel supply partner. The 24-megawatt (MW) plant will be co-located with a sawmill and utilize its waste byproducts as feedstock, while in turn supplying the mill with steam. Once a biomass resource is secured, however, there are still a few other essential components involved in being a good candidate, Recchia says.
Contemplating Candidacy “One of the first things that should be done is to look at all of your buildings and gather any heat demand information you have,” he says. “If you have hourly data, that is great, but any data is good data.”
CHP¦ Next, a facility’s existing system and fuel usage should be examined, whether it be coal, oil or natural gas, as well as whether there are multiple buildings already connected and if the existing system is steambased or hot water based. “A lot of colleges, for example, have steam-based systems,” Recchia points out. “Hot water is more efficient and modern, but we find that a lot of colleges are already committed to a steam distribution system and can’t change that. That’s okay, but if they don’t currently have a distribution system we encourage a hot water system.” If a medium- or large-sized college— which Reccia says BERC has typically found to be the best candidates for biomass CHP systems—wants to figure out if a system applies to their needs, they should also evaluate their energy demands and heat load system. “We definitely support CHP but we also really support thermal-led CHP, which is when you’re looking to maximize heating and cooling demands that you might have, and produce whatever amount of electricity proportionally, which can be supported by that type of system,” he says. “Otherwise, you may get into a situation where you’re producing electricity, but you’re wasting a lot of heat and that will reduce the economics of it.” While people become excited about CHP, Reccia says what BERC generally finds is that the thermal side of CHP helps subsidize the electrical component. “It is usually most cost effective if you do straight thermal and a little less cost effective if you do CHP, but there are a variety of reasons why people choose to go the CHP route. We’re supportive of that, as long as you’re trying to maximize the efficiency of the system overall,” he says. Biomass CHP installation activity hasn’t kept up with current interest because of the cost barriers, Reccia adds. “Colleges are becoming interested in it because they climb onto the climate change commitment, and this is a very good way to help them with that,” he says. “So we’ve seen an increased interest, but definitely not as many installations.”
Once deemed a good candidate for biomass CHP, there are other issues to consider. In particular, what kind of state or federal programs or incentives are available to help alleviate costs, as well as what might prevent a project from getting off the ground?
Incentives and Barriers In addition to supporting research, in 2001 the DOE established the first of eight regional CHP, or clean energy application, centers to provide local technical assistance and educational support for CHP develop-
ment. That same year, the EPA established the CHP Partnership Program, which encourages cost-effective CHP projects and the expansion of CHP development in underutilized markets and applications. Other federal tax incentives that may be applicable to CHP include a Recovery Act production tax credit of 1.5 cents for any closed-loop biomass project and a 75-cent credit for any open-loop biomass project for the first 10 years, and a 10 percent investment tax credit for the first 15 MW of CHP systems under 50 MW placed into service
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¦CHP between now and Jan. 1, 2017, under the Energy Improvement and Extension Act of 2008. For the past several years, many states have begun to realize that a variety of policy measures are needed to remove the barriers to CHP development, and have implemented a series of incentives, including adding CHP to receive credit under renewable portfolio standards (RPS). Currently, 13 states include CHP or waste energy recovery in their RPS. One recent push for CHP support occurred in North Carolina, which in August passed a 30 percent tax investment credit law for biomass CHP projects. Keith McAllister, director of the Southeast Clean Energy Application Center, says that CHP hasn’t seen a lot of activity in the state, but that the interest level has been rising over the past few years, particularly for biomass-fueled projects. "The passage of this bill, which allows CHP fueled from any source to get the tax
credit, should bring the bigger players to the table,” he says, pointing out that there are still barriers to the market place. So, what are these barriers? Reccia says mainly, much like many new energy projects, initial capital cost is the culprit. “Even though we can usually show a cost savings in one year by converting— particularly with fuel oil, natural gas a little less so—they are very capital intensive and a lot of colleges don’t have that type of capital available, although they are in better positions than other public buildings that want to use this.” In addition, where feasible, biomass CHP systems are factored at a comparatively higher cost than other fuel sources and vary based on the size of the application as well as the fuel type, according to Neeharika Naik-Dhungel, program manager of the EPA’s CHP Partnership. “For example, at a large wastewater treatment facility, successful turbine installation may be about 15
percent higher using biogas than natural gas, whereas a smaller biogas unit may cost twice as much than a comparable natural gas-fired CHP system,” Naik-Dhungel says. “This includes the cost of ancillary equipment such as piping, storage or a flare required to be installed for a biogas CHP. However, these costs are one set of factors in a CHP development and are not the sole determinant of a successful CHP project. The benefits of a biomass CHP application, range from greenhouse gas reductions, energy cost savings, local economic development, waste reduction and the security of a domestic fuel supply.” In addition, competition for biomass fuel supplies is intensifying in some regions, so a biomass CHP project may have difficulties securing a steady source or fuel contract. And while tax incentives might be good for biomass CHP projects, many colleges are tax exempt. “So it wouldn’t help them much unless they bring in a private entity or third party,” Reccia adds. “They would definitely make the money back, they just don’t have it right now.” Still, there will be continued activity in the future because of the role a biomass CHP system can potentially play in a sustainability strategy and in the renewable market. “There has been steady activity in the market over the past three to four years,” Naik-Dhungel says. “Five to 15 biomass CHP systems are being planned at any given point with four to eight systems being installed in a year. Its growth will continue in sectors and applications where there are long-term sustainability commitments, and where the project financing lends to the application. There have been and continue to be applications in district energy systems on university campuses and for local government, wastewater utilities and other anaerobic applications such as dairy farms. In the industrial sector, there will be continued applications in the paper, chemical, wood products, and food processing industries, but only when feasible.” Author: Anna Austin Associate Editor, Biomass Power & Thermal (701) 738-4968 aaustin@bbiinternational.com
50 BIOMASS POWER & THERMAL | OCTOBER 2010
ARM & HAMMER SODIUM BICARBONATE FOR AIR POLLUTION CONTROL
ÂŚEFFICIENCY BY JERRY CARTER AND ZACH PLATSIS CONTRIBUTION
Power Plan: Companies can benefit from a clearly written road map detailing how they can conserve energy and take advantage of renewable options.
Energy Master Plans Streamline Operational Efficiency, Reduce Costs Industrial and manufacturing companies can realize cost, efficiency and operational benefits from an integrated energy master plan versus the conventional piecemeal approach to managing energy and sustainability initiatives. BY JERRY CARTER AND ZACH PLATSIS
N
ot too long ago, making decisions about a company’s energy management and sustainability was a fairly uncomplicated process for most facility managers. Switching to fluorescent lighting, upgrading the heating, ventilating and air conditioning systems, and streamlining production by upgrading to a more integrated process controls architecture are among scores of initiatives a company may have undertaken in pursuit of more
energy efficiency, productivity and sustainability. But today it is different. For industrial and manufacturing companies with large campuses or multiple facilities, possibly operating with different production systems and scattered across various geographic locations, managing such a task can become a significant challenge. The importance of the problem is magnified even further for those facilities that have high energy usage, deal with hazard-
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Power & Thermal or its advertisers. All questions pertaining to this article should be directed to the author(s).
52 BIOMASS POWER & THERMAL | OCTOBER 2010
ous materials or have sizable waste disposal issues. For large operations, campus facilities or companies with multiple locations an energy audit alone may not be sufficient to cover all the mitigating factors needed to be addressed. What such a company needs is a clearly written road map to achieving its energy and sustainability objectives.
SOURCE: SSOE
EFFICIENCYÂŚ
Step-by-Step: A comprehensive energy master plan details how to utilize energy assets, how and when to replace them and how to be most efficient when adding to them.
Although the components of the energy master plan are not entirely new, the necessity of putting this all together into a single, integrated package is a new approach, something that many larger companies are now recognizing they need in order to make smarter energy decisions.
Comprehensive Approach to Energy Planning The solution for resolving the integration of energy and sustainability projects and assets in large industrial, manufacturing and institutional facilities is a fully integrated energy master plan. This is a long-term, broad-scoped plan that puts in place a company’s strategy to optimize all facets of energy efficiency and sustainability. This begins at the purchase of energy and other utilities, and cov-
ers all aspects of their use, distribution, measurement and minimization of waste. The plan establishes recommendations on how to best utilize energy assets, how and when to replace them and how to be most efficient when a company needs to add to them. Energy master plans also provide the individualized and detailed steps to plan for energy and sustainable systems within each building of a whole-building campus or multiple-location context. The buildings, and the energy and sustainable initiatives installed within them, are totally integrated into one uniform and holistic system. Although the components of the energy master plan are not entirely new, the necessity of putting this all together into a single, integrated package is a new approach, something that many larger companies are now recognizing they need in order to make smarter energy decisions. This approach allows energy managers to recognize opportunities for conservation, sustainable design and renewable energy
that more narrowly focused energy audits might not. An integrated energy master plan, because of its comprehensive protocol, will not only address facility operations, but process functions for review, as well. For example, integrating discrete control automation systems within different process functions in a cement plant into one centralized controls architecture can significantly reduce process cycle times, improving throughput, energy usage and equipment return on investment, not to mention production per labor hour. An integrated energy master plan would address this. A food processor that is blanching and chilling pasta in 10,000-pound batches per hour will find that by switching to a continuous cook and chill method, it can process the same volume of pasta in the same time, while reducing its cost for heating the cooking water. An integrated energy master plan would not only deliver the benefit of the continuous processing method over batch processing, but
OCTOBER 2010 | BIOMASS POWER & THERMAL 53
¦EFFICIENCY would show the energy conservation in using the spent, warmed-up chiller water as make-up water for the cooker, thereby reducing the energy needed to bring the cooker up to its required 200 degrees Fahrenheit cooking temperature. An energy master plan which integrates facility and process functions is of critical value to an industrial, manufacturing or institutional facility. Further, such a plan takes into consideration a company's higher-level, longterm business goals. This may include portraying an image that reflects environmental awareness, energy conservation or possibly healthy working conditions for employees by promoting a working environment that utilizes sustainable materials. In this regard, an energy master plan extends beyond those responsible for energy management, going well into the upper strata of corporate decision making for marketing, human resources, facility operations and investor relations.
Through a systematic analysis of these interdependencies and optimized energy benefits, a much more efficient and cost-effective energy plan can be realized that takes into account the longterm business goals of a company.
Managing Energy and Sustainable Initiatives With the continual increases in energy costs, power quality issues and stiffer pollution regulations the need for streamlining energy usage and providing for sustainability issues has never been stronger. Facility managers are being hit with a barrage of energy-efficiency and sustainability information from suppliers. Mandates from local, state and federal government agencies require decisions from company managers on issues which many have little previous experience handling. Additionally, the influx of incentives promoting energy efficiency, as well as renewable and alternative en-
ergy production demand astute attention because of the corporate benefits they can impart. Companies may not have considered with a high level of detail what their energy asset portfolio looks like and what the optimal next incremental investment is to enhance their sustainability. Is this the year that an industrial company should be converting its fleet to natural gas? Or do the market trends show that two years from now such a switch would be half the cost or offer better tax credits, and therefore it should wait? A manufacturer with a budget of $3 million a year dedicated to improve its energy assets may have six plants in as many states with varying power consumption and power quality issues, variations in air quality, and differences in wastewater effluent and treatment processes, and a dozen other influencing factors. What is the best place for it to invest that capital?
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EFFICIENCYÂŚ With the continual increases in energy costs, power quality issues and stiffer pollution regulations the need for streamlining energy usage and providing for sustainability issues has never been stronger.
Legislation from U.S. EPA regulations and local building codes on what energy and sustainable initiatives can and need to be undertaken, and what has to be reported is ever-increasing. Many companies are unaware of these regulations, and many would not know where to begin if they were required to implement them. It has been common practice for manufacturing, industrial and institutional facilities to contract with different
suppliers to implement their energy and sustainability projects. This has the liability of a piecemeal approach where the individual projects lack full integration and foresight, which can result in nonoptimized energy usage and a failure to fully realize senior management objectives. For example, a pharmaceutical processor, to become more sustainable, may desire to install a combined-heat-andpower (CHP) capability to offset its electric and hot water costs by capturing biogas from its wastewater treatment plant. But 10 years earlier, the plant upgraded its wastewater treatment to an aerobic reactor, incapable of producing sufficient biogas for CHP. Had an integrated energy master plan been put in place earlier, the pharma processor would have foreseen the capability for CHP within its plant and built an anaerobic reactor instead, which produces usable biogas.
4-Stage Integrated Energy Master Plan An integrated energy master plan is individualized for each company, but includes the following four-stage parameters: • Investigation: The first phase of an integrated and comprehensive energy master plan is investigation. What is a company trying to achieve with such an initiative? What is, and what is not to be considered within the scope of the plan? This involves interviewing key personnel relative to known and unknown problems regarding energy, production and maintenance issues. It also includes identifying constraints, such as financial, physical, cultural, zoning and any other limitations that may be intervening factors in an energy strategy. The investigation also includes review of historical utility bills, a review of the company’s carbon footprint and emissions, gathering of relevant facility,
OCTOBER 2010 | BIOMASS POWER & THERMAL 55
¦EFFICIENCY Energy master planning is a valuable fundamental building block for all high-energy-consuming industrial and manufacturing operations for reducing energy usage, utility costs and promoting sustainability. But more importantly, it can provide for efficient, long-term management of a company’s energy assets.
electrical and mechanical drawings, specification sheets and automated energy management system records. • Visioning: This phase brings together key decision makers, such as the chief executive officer, the head of energy or the head of facilities, to understand what their vision is. Is it to reduce energy consumption over a period of time, to manage risks, or to add renewable en-
ergy? What exactly is their goal, their vision? How do these goals tie in to the overall business objectives of the company, including factors such as product line changes and expansions, and facility build-outs or acquisitions that would influence decisions? What do they want to end up with 10 years from now, so that can be backed up into a 10-year or fiveyear plan. It presents an in-depth review of the findings from the investigation phase, including quantifying and visualizing system consumption and output; benchmarking to baseline and best practice systems; summarizing objectives and critical issues; identifying opportunities to pursue; and considering potential paths to follow. This step includes a review of energy and sustainability technology trends. Critical to this phase is a clarification and modification of the vision for the energy plan, as needed to achieve its
stated goals, and to determine what is to be included and not included in the plan, as well as to determine how to manage constraints. • Analysis: A company now looks at all of the opportunities available, compared with the clarified vision and plan. It more closely investigates those technologies that can be utilized, and assembles basic costs and a phasing schedule to stagger the introduction of the technology as deemed most effective. A multipleapproach master plan is then drafted. This part of the plan assesses energy and water efficiency, facility and equipment enhancements, heat and water recovery, control systems, sustainable systems, utility billing rate structure, peak shaving and shifting, and on-site power generation including renewable energy. • Deliverables: The final phase encompasses finalizing the energy master plan. This comprehensive plan includes an investment plan, energy targets, build-
ADI treatment systems can tackle the toughest wastewaters from ethanol and biodiesel plants, producing effluents for discharge or reuse. Our waste-to-energy systems produce renewable energy in the form of biogas, which can be used to offset electrical or natural gas expenses. An unparalleled team of wastewater treatment experts and project managers work together with you to make every project a success. High-rate and low-rate anaerobic processes, biomethanators, aerobic systems, and membrane bioreactors (MBRs) are all available from ADI Systems Inc. • Water reuse/reclamation • Thin and whole stillage digestion • Biogas recovery, scrubbing, and utilization systems • Eliminate surcharges and meet even the most stringent effluent limits
1.800.561.2831 systems@adi.ca 56 BIOMASS POWER & THERMAL | OCTOBER 2010
EFFICIENCY¦ Energy Master Plan Action Items • Investigation: Interviewing key personnel to determine energy, production and maintenance issues, identifying financial, physical, cultural, zoning and other constraints, reviewing the utility bill history, the company’s carbon footprint and emissions and gathering system records • Visioning: Bringing key decision makers together and determining their goals and how those goals tie in with the businesses core objectives. • Analysis: Surveying all the opportunities available and drafting a multiple-approach master plan. • Deliverables: Finalizing the energy master plan which includes understanding the plan, communicating and presenting it to management and implementing it.
ing sustainability targets, emissions and carbon footprint targets, operational targets, informational targets, and maintenance and upkeep targets. The plan also identifies final budget and resource commitments. This section phases in all of the technologies and how the capital spending will be administered. It puts together any kind of internal communications tools that will be needed—such as implementing a cultural shift at the facility locations that talk about reducing water consumption or turning lights off. Everything needed to understand what this plan is, how to communicate the plan, how to present it to management, and then how to implement the plan.
process systems with a company’s overall sustainability objectives is ideal for a complete and integrated approach. Energy master planning is a valuable fundamental building block for all highenergy-consuming industrial and manufacturing operations for reducing energy usage, utility costs and promoting sustainability. But more importantly, it can provide for efficient, long-term management of a company’s energy assets. Authors: Jerry Carter Senior Associate and Business Leader, SOSE Group's Sustainable and Renwable Solutions Zach Platsis Energy Specialist, SOSE Group's Sustainable and Renwable Solutions www.ssoe.com
Total Energy Management There is clearly superior value in consolidating all of a company’s energy assets into one package. For optimized feasibility, integrating both facility and
OCTOBER 2010 | BIOMASS POWER & THERMAL 57
¦INNOVATION
BY KRISTINA GERBER AND DENISE JOHNSTON
PHOTO: GILLS ONIONS
CONTRIBUTION
Waste Reduction: At Gills Onions, employees remove the top, tail, and skin—roughly 35 to 40 percent—of the onion, generating some 1.5 million pounds of waste per week. Prior to installing an anaerobic digestion system, Gills had been disposing of the waste by spreading it as compost across the 15,000 acres it farms at Oxnard, Calif., at an annual cost of $400,000.
Onion Processor Uses AD, Fuel Cells To Convert Waste Into Energy Gills Onions' new energy recovery system converts about 300,000 pounds per day of onion waste to methane gas that feeds two 300-kilowatt fuel cells. The system is efficiently offsetting all of the company’s baseload power costs while reducing carbon emissions by up to 15,000 tons per year. BY KRISTINA GERBER AND DENISE JOHNSTON
G
ills Onions, one of the largest fresh onion producer/ processors in the world, was disposing of 1.5 million pounds of onion waste every week by spreading it as compost across 15,000 acres it farms in Oxnard, Calif. It was an arduous, time-consuming process that cost the company approximately $400,000 annually. Gills had also long-faced two even
potentially costlier concerns: high electricity costs (12 to 13 cents per kilowatt hour plus a 15 percent rate hike for 2010) and electricity blackouts. After experiencing a series of blackouts that had jeopardized the extensive refrigeration required to process and protect its fresh-cut onions, the 27-year-old family owned company began to aggressively pursue a long-held desire to convert its onion waste into energy.
The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Biomass Power & Thermal or its advertisers. All questions pertaining to this article should be directed to the author(s).
58 BIOMASS POWER & THERMAL | OCTOBER 2010
Determining how to efficiently convert onion waste into methane gas through anaerobic digestion presented a challenge, according to Bill Deaton, president of Deaton & Associates LLC, the Kayenta, Utah, chemical engineering and energy consulting firm retained by Gills to study the concept and develop a plan. “It works well at breweries where beer waste is used to run boilers and on
PHOTO: GILLS ONIONS
INNOVATION¦
Energy Juice: The onion juice is diluted and fed to the energy recovery system’s fully automated biothane UASB reactor.
dairy farms where manure is converted into fuel. But until Gills decided to try it, no one had used microorganisms to generate digester gas from onion waste before,” Deaton says. After testing by Ruihong Zhang at the University of California, Davis confirmed that the sugar content in onion waste was ideal food for methaneproducing microbes, Deaton assembled a team of engineers and contractors to develop an efficient waste-to-energy system they named the Advanced Energy Recovery System. In late winter 2009, following a multiyear research and design process, a new energy recovery system went fully on line at Gills, converting the company’s onion waste to methane gas that feeds two 300-kilowatt fuel cells. Today this system is offsetting 100 percent of the company’s baseload power costs and its expensive waste hauling and disposal operation is no longer necessary.
PHOTO: GILLS ONIONS
Biogas Production
Livestock Feed: After the juice has been extracted, the remaining onion solids are further dewatered in a cake press and sold as cattle feed.
During its fresh cut operations, Gills removes the top, tail and skin, which is roughly 35 to 40 percent of the onion. This waste, generated at a rate of approximately 300,000 pounds daily, now goes through grinding and pressing equipment where 30,000 gallons of onion juice (approximately 75 percent of the total waste) is separated from the solids. The juice is diluted and fed to the energy recovery system’s fully automated anaerobic digestion process. Microorganisms in the digester convert the juice’s sugar content into methane and carbon dioxide. The remaining leftover solids are sold as high-value cattle feed. In the first step, the onion juice flows to the anaerobic reactor’s equalization tank that ensures the influent is pumped to the anaerobic digester at a constant, continuous flow. The equalized water is pumped to a rapid mix tank, where the influent is mixed with a dilution stream
OCTOBER 2010 | BIOMASS POWER & THERMAL 59
¦INNOVATION
FROM CHOPPING
PHOTO: GILLS ONIONS
TO MATERIAL HANDLING
Reactionary: The new energy recovery system at Gills uses two 300-kilowatt fuel cells. The methane produced by the Biothane anaerobic digester feeds the fuel cells, which reform the methane to hydrogen and carbon. The hydrogen and carbon recombines with air in the fuel cells to generate electricity in a classic oxidation/reduction reaction.
TO WET OR DRY STORAGE
and conditioned for efficient anaerobic digestion by adjusting temperature, pH and nutrients (including phosphoric acid and nitrogen). A heating recirculation loop maintains the necessary temperature. From
the rapid mix tank, the stream is pumped through a static mixer, which injects ferric chloride and micronutrients into the stream prior to entering the digester. “The temperature of the feed flow
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PHOTO: GILLS ONIONS
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Separation: Onion waste now goes through grinding and pressing equipment where 30,000 gallons of onion juice (approximately 75 percent of the total waste) is separated from the solids. The juice is diluted and fed to the energy recovery system’s fully automated anaerobic digestion process. Microorganisms in the digester convert the juice’s sugar content into methane and carbon dioxide.
60 BIOMASS POWER & THERMAL | OCTOBER 2010
INNOVATION¦
is between 35 and 40 degrees Celsius (95 to 104 degrees Fahrenheit),” Deaton says. “To obtain this mesophilic condition, we brought waste heat from other processes in the plant to heat the digester feed.” The system’s upflow anaerobic sludge blanket (UASB) reactor has a working capacity of 550 cubic meters and a hydraulic retention time of just 29 hours. During this period, anaerobic bacteria within the digester convert the biodegradable onion waste material into methane, carbon dioxide and new biomass. Feed flow from the rapid mix tank splits and enters the bottom of the digester through two feed headers. A proprietary feed distribution-piping system is used in the distribution of the digester feed across the bottom of the digester. The distribution system is specifically designed to create good initial flow distribution of the conditioned onion juice through the sludge bed. The feed flows upwards through the digester. At the top of the reactor, effluent flows over weirs that spill equally into a continuous trough system and combine into a settler drop box. Once collected in the drop box, it exits the digester and flows to a standpipe. An anaerobic effluent composite sampler located in the recycle piping upstream of the rapid mix tank automatically collects samples of the effluent to determine digester performance. Biogas exits the digesters through a gas nozzle at the top of each digester vessel. Excess biomass is periodically removed from the digester and pumped to a tanker truck. Vent gases from the equalization tank, rapid mix tank, digester and standpipe are collected via a vent air blower and purified in a biofilter. One initial challenge the team faced was foaming generated in the sludge bed due to the high protein content of the onion waste. “But by making several modifications and changing some of the gas piping, we eliminated the foaming issue,” Deaton says.
Digester Selection The team selected Biothane to build the specialized reactor to produce the methane. Biothane, a Veolia Water Solutions & Technologies company, is a leading biotechnology company that focuses on highly efficient, cost-effective biological methods to treat wastewater while creating energy and reducing pollution. “We liked the idea of the UASB reactor having a sludge bed system rather than a fixed bed,” Deaton says. “Initially we had considered using a fixed-bed reactor because of the high surface area for the bacteria to form. But after further consideration, we decided we didn’t want to deal with the blockage, cleaning, or any of the other issues that can arise with
¦INNOVATION
fixed-bed reactors when treating a waste material containing pulp, like diluted onion juice,” says Deaton. Biothane’s UASB reactor forms a blanket of granular sludge that suspends in the tank. “By suspending the bacteria, you can mix the feed with it and get good contact, and you don’t have to deal with the problems of the fixed media in the bed.
Ultimately, the simplicity of the UASB played a big part in our decision to select it,” Deaton says. “Plus, there was a lot of engineering we did outside of the reactor—we transferred waste heat from other processes in the plant with the onion juice, then diluted the onion juice and added micronutrients when necessary.” Before the methane could be safely
fed into the system’s fuel cells, the team had to first overcome a serious obstacle. The methane produced by the feed flow has high sulfur content—part of what makes onions smell and makes people’s eyes water. “You can’t send high-sulfur gas to these fuel cells because they have very stringent gas quality specifications for displacing natural gas as a fuel source,” Deaton says. A grant to fund research by the Gas Technology Institute helped solve the issue. Consequently, the reactor was modified to allow for the collection and conditioning of the biogas. “With this modification, the biogas flows from the digester into a conditioning process that purifies, dehumidifies and compresses the gas, making it acceptable for use in these high-efficiency fuel cells,” Deaton says. “As a result, the system produces about a 70 percent methane gas, which is very high quality for biogas.”
Fuel Cells=Clean Energy Because Gills wanted an energy recovery system that produces clean heat and electricity, it ruled out engines, combustors or boilers, choosing fuel cells instead. Although relatively new to commercial industry, fuel cells are increasingly being adopted because they generate a highly clean form of energy, run quietly, and produce power and heat at high efficiency. The new energy recovery system at Gills uses two 300-kilowatt fuel cells manufactured by Fuel Cell Energy. The methane produced by the anaerobic digester feeds the fuel cells, which re-form the methane to hydrogen and carbon. The hydrogen and carbon recombines with air in the fuel cells to generate electricity in a classic oxidation/reduction reaction. The end-products are electricity, water and carbon dioxide. The two fuel cells generate enough combined electricity to power the equivalent of 460 homes. “A standard power plant runs at about 30 percent efficiency,” Deaton says.
62 BIOMASS POWER & THERMAL | OCTOBER 2010
INNOVATION¦
“These fuel cells are currently running at 47 percent efficiency. And, because this is an industrial site, Gills can take advantage of all the heat being generated, too—using it to heat water, evaporate water, and refrigerate or chill plant water. So, the system is actually running at about 80 percent efficiency and negligible emissions.” The emissions avoided by using fuel cells, plus the emissions avoided by not trucking away and land applying the onion waste, yields an approximate 15,000 ton-per-year reduction in the company’s carbon emissions. Since the fuel cells are designed to supply base-load power and do not ramp up and down quickly, Gills Onions is able to offset 100 percent of its base-load power costs. Therefore, the company is able to bring the power up and hold it steady 24/7. “In a large fresh-cut produce plant like Gills, there are high, around-the-clock refrigeration demands. You don’t ever want to lose the cold chain in maintaining fresh onions. This constant demand is now satisfied with the AERS process on-site,” Deaton says.
back comes fairly quickly,” he says. As the system’s project manager, Deaton says he is pleased with what has been accomplished, but he also says the work is not yet finished. Future plans include further reducing the carbon footprint through energy storage, water re-use, and extracting quercetin from the onion waste for use as an anti-oxidant supplement for humans.
Authors: Denise Johnston Vice President Marketing and Sales, Biothane LLC denise.johnston@veoliawater.com Kristina Gerber Project Manager, Biothane LLC kristina.gerber@veoliawater.com
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Quick Payback, Flexibility Gained The entire project cost $9.5 million. Deaton says the savings of $400,000 a year from eliminating waste hauling, $700,000 a year in deferred electricity costs, plus $2.7 million in incentives for the project from Southern California Gas Co. (as part of the state’s Self-Generation Incentive Program) and tax credits should enable Gills to receive a five-year payback. “Meanwhile, we’re working on another process to take the remaining 25 percent of the waste left after the grinding and pressing process and reduce that by half. This should add another 20 to 50 percent to energy production. When you’re offsetting Edison Power at about 12 to 13 cents per kilowatt hour, the pay-
OCTOBER 2010 | BIOMASS POWER & THERMAL 63
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