4th Qtr 2014 Pellet Mill Magazine

INSIDE: Q&A WITH PFI’S JENNIFER HEDRICK Q4 2014

Drax’s Upstream Pellet Play

The UK’s Biggest Pellet Buyer Becomes a Big US Producer Page 16

Plus: Italy’s Booming Growth Page 22

AND:

Pellet Fuel Institute's Conference Outlook Page 28

Alaskan Pellet Boiler Sets Stage for More Page 36

www.biomassmagazine.com/pellets

Contents »

Pellet Mill Magazine

Advertiser Index

Q4 2014 | VOLUME 4 | ISSUE 4

4 2015 International Biomass Conference & Expo 24 Agra Industries 31 Airoflex Equipment 13 American International TN LLC 45 Andritz Feed & Biofuel A/S 48 Astec, Inc. 47 BBI Project Development 39 B&W MEGTEC 11 BEDESCHI AMERICA, INC. 20 BRUKS Rockwood 21 Calbrandt, Inc. 33 CPM Roskamp Champion 25 Dieffenbacher 15 EAD 38 Fike Corporation 18 GreCon, Inc. 37 Industrial Bulk Lubricants 12 Logistec 39 MEGTEC Systems Inc. (Now B&W MEGTEC) 32 MoistTech 26 Northeast Wood Products LLC 30 Parr Instrument Company 19 SCHADE Lagertechnik GmbH

FEATURES 16 PROJECT Investing Upstream Drax invests in developing, controlling its own U.S. supply chain.

By Tim Portz

22 INTERNATIONAL Pellet Heat Amore Italy's growing market for residential heating pellets presents unique challenges.

By Lennart Ljungblom

28 OUTLOOK The Path Ahead Pellet conference talks focus on domestic industry outlook.

By Susanne Retka Schill

34 Q&A Many Hats for Hedrick 9 questions for the Pellet Fuel Institute’s executive director.

By Katie Fletcher

36 PROFILE Pellet Heat For the Pink Building Lessons learned could be applied to 150 federal buildings.

By Susanne Retka Schill

10 Seeger Green Energy, LLC 41 Uzelac Industries 14 Vecoplan LLC 2 Vibrafloor 43 Victam International B.V.

DEPARTMENTS 05 EDITOR’S NOTE

27 Walinga 42 West Salem Machinery Co. ON THE COVER: Drax’s Amite BioEnergy is on track for completion to produce 450,000 metric tons of wood pellets bound for the Drax power station in Yorkshire, England. The small town of Gloster, Mississippi, is visible just below the horizon.

PHOTO: TIM PORTZ, BBI INTERNATIONAL

CONTRIBUTION 40 INSTRUMENTATION Microwave Technology Aids Moisture, Density Measurements Instantaneous, automated systems help in meeting specifications.

By Paul Jadot

44 POWER How Pellets Compare to Fossil Fuels in Carbon Intensity and Cost

Understanding benefits and costs to inform policy incentives.

By Puneet Dwivedi

A Strong Finish for 2014

By Tim Portz

06 INDUSTRY EVENTS 07 PELLET PERSPECTIVE

Growing the Wood-to-Energy Sector

By Jennifer Hedrick

08 TESTING GROUNDS

Wood Pellet Quality Schemes

By Chris Wiberg

09 INDUSTRIAL INSIGHT

Positive Horizons for US Pellets Around the Globe

By Seth Ginther

10 BUSINESS BRIEFS 12 NEWS 46 MARKETPLACE

Q4 2014 | PELLET MILL MAGAZINE 3

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April 20-22, 2015

Minneapolis Convention Center, Minneapolis, MN www.BiomassConference.com

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10,000 (Short tons/yr) BIOGAS PLANTS

28,365 (kW)

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Editor’s Note »

All Markets Great and Small

Tim Portz

VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR tportz@bbiinternational.com

Anyone hoping to glean a sense of the pellet industry’s trajectory in 2014 simply has to read the four-page Pellet News section beginning on page 12 of this issue of Pellet Mill Magazine. The headlines in this section tell the tale of an industry squarely in a period of rapid growth and expansion. Our news section reports continued demand growth in Europe, a doubling of U.S. exports to Europe in 2014, new facilities continuing to be proposed to serve this expanding European market and early indications that the much anticipated Asian market is finally motivating project developers and their investors.

While the news section largely paints a picture of foreign demand, the steady progress being made in domestic markets shows up in a short piece about the U.S. General Services Administration’s inquiries into pellet heat for the federal buildings it manages. This story gets a more expansive look in Susanne Retka Schill’s page-36 feature “Pellet Heat for the Pink Building.” Her story reports that of the 1,500 buildings in the GSA’s portfolio, 150 of them are good candidates for pellet heating systems and offer attractive payback periods according to a study performed by the National Renewable Energy Laboratory. While hardly a market maker on its own, these opportunities add to the steady progress being made in a domestic market that often feels like it is being built building by building. Retka Schill’s page 20 coverage of the Pellet Fuels Institute’s annual conference contains indications that the expansion of the domestic market is finally accelerating. In her story she quotes John Shimek, with Hearth & Home Technologies Inc. who says, “This year has taken off. We’re doing everything we can to keep up.”

We’ve paired Retka Schill’s PFI conference coverage with the page-34 Q&A with PFI executive director Jennifer Hedrick and together they offer a comprehensive look at a domestic market well-served by Hedrick and her cadre of board members.

While we close 2014 from a print perspective with this issue, our reporting for the year is far from over. Two of the industry’s largest North American association events will take place this fall and Pellet Mill Magazine will be at both, offering online coverage of both the U.S. Industrial Pellet Association event in Miami and the Wood Pellet Association of Canada’s event in Vancouver, British Columbia. We fully expect that each of these events will offer similar assessments of an industry expanding on all fronts.

Q4 2014 | PELLET MILL MAGAZINE 5

Industry Events » USIPA’s 4th Annual Exporting Pellets Conference

Editorial

OCTOBER 1-3, 2014

PRESIDENT & EDITOR IN CHIEF Tom Bryan tbryan@bbiinternational.com VICE PRESIDENT OF CONTENT & EXECUTIVE EDITOR Tim Portzz tportz@bbiinternational.com MANAGING EDITOR Susanne Retka Schill sretkaschill@bbiinternational.com CONTRIBUTING EDITOR Anna Simet asimet@bbiinternational.com NEWS EDITOR Erin Vogele evoegele@bbiinternational.com

Fontainbleau Miami Beach Hotel Miami Beach, Florida Join us in Miami for USIPA’s 4th Annual Exporting Pellets Conference.

This is the only U.S. conference sponsored by the industrial wood pellet industry for the industrial wood pellet industry. The conference provides the opportunity to network with executives and professionals from across the industry. Speakers and panelists will include all major European utilities, major U.S. producers, and experts in all areas of the supply chain.

804-775-5894 | www.theusipa.org/conference

National Advanced Biofuels Conference & Expo

COPY EDITOR Jan Tellmann jtellmann@bbiinternational.com

OCTOBER 13-14, 2014

STAFF WRITER Katie Fletcherr kfletcher@bbiinternational.com

Hyatt Minneapolis Minneapolis, Minnesota Produced by BBI International, this national event will feature the world of advanced biofuels and biobased chemicals—technology scale-up, project finance, policy, national markets and more—with a core focus on the industrial, petroleum and agribusiness alliances defining the national advanced biofuels industry. With a vertically integrated program and audience, the National Advanced Biofuels Conference & Expo is tailored for industry professionals engaged in producing, developing and deploying advanced biofuels, biobased platform chemicals, polymers and other renewable molecules that have the potential to meet or exceed the performance of petroleumderived products.

866-746-8385 | www.advancedbiofuelsconference.com

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

Publishing & Sales CHAIRMAN Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com

International Biomass Conference & Expo

VICE PRESIDENT OF OPERATIONS Matthew Spoorr mspoor@bbiinternational.com

APRIL 20-22, 2015

BUSINESS DEVELOPMENT DIRECTOR Howard Brockhouse hbrockhouse@bbiinternational.com SENIOR ACCOUNT MANAGER Chip Shereck k cshereck@bbiinternational.com MARKETING DIRECTOR John Nelson jnelson@bbiinternational.com CIRCULATION MANAGER Jessica Beaudry jbeaudry@bbiinternational.com MARKETING & TRAFFIC COORDINATOR Marla DeFoe mdefoe@bbiinternational.com

Minneapolis Convention Center Minneapolis, Minnesota Organized by BBI International and produced by Biomass Magazine, this event brings current and future producers of bioenergy and biobased products together with waste generators, energy crop growers, municipal leaders, utility executives, technology providers, equipment manufacturers, project developers, investors and policy makers. It’s a true one-stop shop—the world’s premier educational and networking junction for all biomass industries.

866-746-8385 | www.biomassconference.com

International Fuel Ethanol Workshop & Expo

Subscriptions to Pellet Mill Magazine are free of charge—distributed quarterly—to Biomass Magazine subscribers.To subscribe, visit www.BiomassMagazine.com or you can send your mailing address to Pellet Mill Magazine Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to (701) 746-5367. Back Issues & Reprints Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at (866) 746-8385 or service@bbiinternational.com. Advertising Pellet Mill Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Pellet Mill Magazine advertising opportunities, please contact us at (866) 746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. Send to Pellet Mill Magazine Letters to the Editor, 308 2nd Ave. N., Suite 304, Grand Forks, ND 58203 or email to sretkaschill@bbiinternational.com. Please include your name, address and phone number. Letters may be edited for clarity and/or space.

JUNE 1-4, 2015

Minneapolis Convention Center Minneapolis, Minnesota The FEW provides the global ethanol industry with cutting-edge content and unparalleled networking opportunities in a dynamic business-to-business environment. The FEW is the largest, longest running ethanol conference in the world—and the only event powered by Ethanol Producer Magazine.

866-746-8385 | www.fuelethanolworkshop.com

Please recycle this magazine and remove inserts or samples before recycling TM

6 PELLET MILL MAGAZINE | Q4 2014

COPYRIGHT

Pellet Perspective »

Growing the Wood-to-Energy Sector

BY JENNIFER HEDRICK

What’s your mad cow?

That was the question asked by Carlton Owen at a series of meetings and conferences within the wood-to-energy sector over the past few months.

You no doubt remember mad cow disease. It was rampant in the United Kingdom in the 1990s— killing cows and people, shattering consumer confidence throughout the U.K., and halting beef exports. The first case was discovered in the United States in 2003, which could have been a harbinger of the end of the U.S. beef industry.

Except that didn’t happen.

The beef industry very strategically utilized an existing program established more than 20 years earlier—the beef checkoff program—to research the U.S. beef supply and inform Americans that it was safe. As a result, beef consumption actually increased.

The beef checkoff program, widely recognized through its campaign, “Beef. It’s What’s for Dinner,” and other commodity checkoff programs created through the USDA Program for Research and Promotion, have raised millions of dollars through producer assessments that are dedicated toward increasing consumer awareness and consumption, and growing markets.

The beef checkoff is only one example. Cotton, eggs, popcorn, pork, milk, almonds and sorghum are others on a long list of existing programs.

There is a paper and paper-based packaging checkoff that was launched just this year that is expected to raise $25 million annually. Carlton Owen and his staff at the Endowment for Forestry & Communities played a key role in the launch of the softwood lumber checkoff, which brings in $15 million per year.

The endowment has agreed to work with the wood-to-energy sector, including pellet manufacturers, power producers and possibly thermal energy producers, in the development of a checkoff program. It is already providing limited seed funding toward the exploration of the feasibility of such a program and has agreed to match the in-

dustry-raised dollars required for these early stages of development. This offer is not without a sunset, however, and we are approaching dusk.

A wood-energy checkoff would not be run by any of the trade associations. By law, it must be established by agreement of industry as a separate entity governed by an industry-elected board representing companies of varied size and geography.

The board would determine the checkoff structure and goals, how much money would be raised, and how the money would be used.

Importantly, there would be no free riders.

All would contribute a small amount (likely cents per ton), which would lead to a large amount from which all would benefit.

Money raised from checkoff programs can be dedicated to a range of initiatives, including: - Domestic and international promotion.

- Research and development.

- Exploration of new markets.

- Public education.

With the highly anticipated release of the U.S. EPA’s biogenic framework, concerns with meeting sustainability requirements, plus growing markets, access to feedstock, achieving and adhering to U.S. and EU policy, not to mention being prepared to assure that the facts regarding biomass use and benefits are researched, available and presented to the public, there is no shortage of issues to address.

While a checkoff program takes about two years to implement, these challenges will continue—and new ones will develop.

The beef industry stared down mad cow disease and today has built a checkoff program that, according a 2013 analysis, achieves a return on investment of $11.20 for every dollar invested.

What is the wood-to-energy sector’s mad cow?

How will we respond? The clock is ticking.

Author: Jennifer Hedrick Executive Director, Pellet Fuels Institute Hedrick@pelletheat.org 703-522-6778

Q4 2014 | PELLET MILL MAGAZINE 7

« Testing Grounds

Wood Pellet Quality Schemes

BY CHRIS WIBERG

If you are in the wood pellet manufacturing business, you have likely heard about various pellet quality schemes to certify or qualify your product.

While there are several, the four most commonly referenced in North America are the Pellet Fuels Institute Standards Program, CANplus, ENplus and DINplus. These schemes are similar in many ways, but provide different market opportunities, making it difficult for wood pellet producers to decide which quality scheme is best suited for their business models. Following is a high-level overview.

First, let’s talk about similarities. All provide a means by which pellet fuel producers can adhere to an established set of quality control and quality assurance measures to assure that the overall pellet production operation is committed to a quality process. In addition, each defines product grades and grade criteria to which the product is tested to verify compliance with the grade, and each provides a label that compliant producers can print on their bags or include with their bulk material shipping documents to signify quality. All of these quality schemes incorporate third-party auditing and testing and all of these schemes are overseen by an accreditation or certification body. At their cores, all of these quality schemes provide a sound basis for quality management.

Then, of course, there are numerous differences. This column is not long enough to go through all of the various nuances that make each of these quality schemes unique, so I will stick to the differences that provide key value towards selling wood pellets into various markets.

Established in 2002, DINplus was the first wood pellet quality scheme to enter the market. It was established by DIN Certco in Germany and early on gained much popularity in German and other European heating markets. DINplus was originally based on the German DIN wood pellet standards, which gave it a very regional emphasis, but has since adopted the European Union standards for wood pellets (EN 14961-2) and is now also referencing the newly developed ISO wood pellet standards (ISO 17225-2). Still recognized today, DINplus seems to be losing popularity to the development of the ENplus quality scheme.

The ENplus quality scheme was established in 2011 and has gained popularity rapidly in European

8 PELLET MILL MAGAZINE | Q4 2014

heating markets. ENplus is very similar to DINplus in many ways, but has expanded the scope over the entire supply chain, including trader certification, and incorporates tracking for greenhouse gas emissions and sustainability. ENplus was a collaborative effort by several European countries under the Pellcert project and is overseen by the European Pellet Council, which is part of the AEBIOM European Biomass Association. ENplus is based on the EU standard for wood pellets (EN 14961-2) and is anticipated to reference the newly developed ISO wood pellet standards (ISO 17225-2) with the next draft. Due to a robust acceptance within European heating markets, wood pellet producers from North America that are reasonably accessible to export trade routes can find great value in certifying to the ENplus quality scheme. Within North American markets, however, ENplus has been slow to emerge.

In recent years, Canada has also developed a wood pellet quality scheme called CANplus, which is essentially the same as ENplus, in that wood pellet producers first certify to ENplus and then apply to the Wood Pellet Association of Canada for CANplus certification. The primary difference between the two is that the CANplus quality mark uses the red maple leaf, and is intended for Canadian residential heating markets.

While DINplus, ENplus and CANplus are all based on the European Union and ISO standards (references grades criteria for A1, A2, and B based on EN 14961-2 or ISO 17225-2), the PFI Standards Program is the one quality scheme that currently reflects historical North American grade criteria— premium, standard and utility grades. PFI released the first version of its quality scheme in 2008. In 2010, the U.S. EPA made it known that it intended to regulate residential wood combustion appliances and the next year, PFI made substantial modifications to assure that the PFI quality scheme would comply with the EPA’s anticipated requirements.

The new rule is not yet finalized, but it is expected the U.S. EPA will reference the PFI quality scheme as part of its regulation.

Author: Chris Wiberg Manager, Biomass Energy Laboratory 218-428-3583 cwiberg@tpinspection.com

Industrial Insight Âť

Positive Horizons for US Pellets Around the Globe

BY SETH GINTHER

Look across the horizon for the industrial-grade wood pellet market, and you will see many positive developments for the industry. Not only is the industry achieving policy certainty and government support for biomass across the European Union, but also new markets are beginning to emerge in Asia. There are also opportunities opening up here at home in the U.S., and within the robust residential heat market in Europe.

The southeastern U.S. has spent the past decade developing the necessary infrastructure and supply chain to bring wood pellets to the world. Over the past several years, the U.S. has become the No. 1 exporter of wood pellets to Europe, exporting over 2.7 million tons of wood pellets in 2013 alone.

Industrial-grade wood pellets in the U.S. are harvested from forest products residues, such as sawdust, tree tops and limbs, and other fiber unusable for saw logs. Providing a market for this low-value fiber keeps the forest healthy by removing debris that would otherwise be left to rot or burn, and by allowing more space for replanting.

This industry also gives a small financial boost to the forest products market overall, which encourages private landowners to keep their land well-managed and forested, rather than converting to other uses such as agriculture or commercial development.

All this results in a product that is good for the forest, good for the economy and good for the environment. Biomass is currently the only renewable energy than can provide low-carbon, low-cost power that can balance the energy grid.

The European Union is leading the world in reducing carbon emissions and mitigating climate change, and the wood pellet industry is poised and ready to play a large role in these efforts. As EU mem-

ber states analyze their current energy portfolios, many are seeing the benefits of using woody biomass to reach their renewable energy goals.

The demand for industrial wood pellets for biomass conversions has been growing steadily in the U.K., Netherlands, Belgium and Denmark. There are dozens of projects in the supply chain, each of which will require a continuous and ever-increasing wood pellet supply.

The market in Asia is also promising. South Korea will need to rely heavily on imports for wood pellet supply because of the lack of domestic forest resources. It is estimated that 75 to 80 percent of its supply will need to be imported by 2020. Japan also has made commitments to reducing the use of fossil fuels and has ramped up both importation and domestic production of wood pellets.

The residential heat market in Western Europe will also offer some trading opportunities for producers, as Europe has predicted that its domestic supply will not be able to meet demand in the coming years.

Additionally, with the recent commitment from President Obama to reduce carbon emissions 30 percent by 2030, we expect to see growth in the biomass market domestically as well.

As we look out across the market place, we see industrial wood pellets playing a large role in mitigating climate change both here at home and around the world, and the U.S. stands ready to continue to provide a steady, sustainable supply to meet this growing demand.

Author: Seth Ginther Executive Director U.S. Industrial Pellet Association 804-771-9540 sginther@hf-law.com

Q4 2014 | PELLET MILL MAGAZINE 9

Business Briefs

PEOPLE, PRODUCTS & PARTNERSHIPS

CBI expands workforce Continental Biomass Industries has hired Bill Dicey as service manager.

He has 20 years of experience in parts and service management and will lead the service Dicey department in expanding CBI’s service offerings and elevating the CBI customer experience.

Wayne Pearson has been hired as materials manager. Pearson has more than 25 years of materials management Pearson background and will lead the development of a highly flexible materials team focused on reducing lead times and improving stock service levels. CBI has also promoted Nate Eskeland to parts manager. He has worked at CBI for 11 years and will lead the company’s parts depart-

ment in improving the distribution of parts to customers and dealers, ensuring order accuracy and timely deliveries. In addition, Tim Griffing has returned to the company as a stationary sales engineer covering North America. He has more than 20 years of experience in the design of sales and stationary systems for the wide range of markets CBI services.

Eskeland

Griffing

Wood Products included in BioPreferred program The USDA has issued a final rule eliminating the restrictions on including mature market wood products and other materials in the BioPreferred program. The action implements changes included in the 2014 Farm Bill.

Pellet Fuels Institute announces new chairman, board members Darryl Rose, senior vice president of marketing for Energex Pellet Corp., has been elected chairman of the board of the Pellet Fuels Institute for 2014’15. He has served two Rose terms on the PFI board and as a member of the membership, standards and conference committees. Stephen Faehner of American Wood Fibers will serve as vice chairman, and John Utter of Lignetics Inc. Faehner will serve as secretary/ treasurer. Scott Jacobs of AgriRecyle, outgoing chairman, will remain on the executive committee as past chairman. Chris Amey of Rentech, Stan Elliot of Olympus Pellet/Pacific Coast Fiber

Three Decades of International Renewable Energy Leadership Come to us for solutions that span project development, planning/financing, and project supervision after plant commissioning.

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10 PELLET MILL MAGAZINE | Q4 2014

I

Fuels, Nathan Smith of Koetter & Smith, and Don Wagener of Appalachian Wood Pellets have been elected as new directors to the board. Those elected to new terms on the Utter board include Troy Jamieson of Somerset Pellet Fuels, Gary Moore of Forest Energy Corp., Darryl Rose of Energex Pellet Corp., Bob Sourek, of Bear Mountain Forest Products, Jeff Thiessen of Dansons/IBL, and Utter.

Solid biofuel standards published The American Society of Agricultural and Biological Engineers has announced that the first seven international standards for solid biofuels have been published. The newly published documents include ISO 17225 Solid biofuels—Fuel specifications and classes—Part 1 general requirements; Part 2 graded wood pellets; Part 3 graded wood briquettes; Part 4 graded wood chips;

Part 5 graded firewood; Part 6 graded nonwoody pellets; and Part 7 graded nonwoody briquettes. Work has also begun on Part 8, which will cover thermally treated and densified biomass fuels.

Swaan recognized with award In recognition of his contributions to the BioEnergy Industry, John Swaan received the Founders Award in BioEnergy Excellence at the International BioEnergy Conference Swan & Exhibition held in June. Swaan is a key member of the FutureMetrics team. He has more than 25 years of experience in the pellet industry.

Conveyor Components Co. announces motion sensors Conveyor Components Co. has announced new Model MSD-800 series motion sensing controls for the protection

of indoor and outdoor rotating equipment, such as screw conveyors, belt conveyor pulleys, rotary feeders and bucket elevators, from costly damage by continuously monitoring rotary speed. The Model MSD alerts the operator of a change in speed by sending a signal to the control unit which can be used to sound an alarm and/or shutdown the equipment completely.

PHI Group partners to build pellet plants in Vietnam PHI Group Inc. has signed memoranda of understanding with two Vietnambased wood processing companies to set up joint venture wood pellet factories in Central and Southern Vietnam. The initial proposed combined capacities for the plants is approximately 400,000 metric tons per year.

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

Visit us at Booth # 29

Q4 2014 | PELLET MILL MAGAZINE 11

Pellet News Payback period in years (assuming diesel at $3.63 per gallon; 75% capacity factor) Pellet cost (per ton)

$400

$350

$300

$250

$200

System size (in BTUs/hr) 500,000

30.7

10.7

6.5

4.7

3.6

1 million

20.9

8.4

5.1

3.6

2.8

1.5 million

20.9

7.3

4.4

3.2

2.5

2 million

18.9

6.6

4

2.9

2.2

2.5 million

17.5

6.1

3.7

2.6

2.1

3 million

16.4

4.7

3.5

2.5

1.9

3.5 million

15.6

5.4

3.3

2.4

1.8

4 million

14.8

2.5

3.1

2.2

1.8

SOURCE: GSA

GSA report finds potential for pellet boilers in federal buildings, mainly in North A new report published by the U.S. General Services Administration finds wood pellet boilers should be considered at all hot-water heated federal facilities where natural gas is unavailable, particularly in northern regions.

The GSA’s Green Proving Ground just released a study of the retrofit done at the Ketchikan Federal Building in Ketchikan, Alaska, that installed a state-of-theart pellet-fired biomass boiler. GPG commissioned researchers from the National Renewable Energy Laboratory to evaluate the efficiency, cost-effectiveness, and operational functionality of the 1 million Btu boiler.

12 PELLET MILL MAGAZINE | Q4 2014

Efforts continue to assess biomass GHG emissions In the U.K., the Department of Energy and Climate Change recently announced that scientific analysis has proven that biomass from North America can help decarbonize U.K. electricity supplies. The analysis is the result of a scientific calculator that investigates the impact on carbon emissions of biomass sourced from North America to produce electricity. The calculator, also known as the Bioenergy Emissions and Counterfactual Model, was developed by the DECC and can be used by developers to ensure biomass is sourced responsibly.

In the U.S., the USDA has published a report that provides uniform scientific methods for quantifying the changes in greenhouse gas (GHG) emissions and carbon storage from various land management and conservation activities. According to the USDA, the report, titled “Quantifying Greenhouse Gas Fluxes in Agriculture and Forestry: Methods for Entity-Scale Inventory,” will help it develop new tools and update existing ones to help farmers, ranchers and forest landowners participate in emerging carbon markets.

Pellet News Âť Drax to expand US pellet production Drax Biomass, a subsidiary of the Drax Group plc, currently has pellet plants under development in Bastrop, Louisiana, and Gloster, Mississippi, along with an export facility in Baton Rouge, Louisiana. During its 2013 investor call in February, the company revealed plans to develop up to 2 million tons of additional pellet capacity, primarily in the U.S. During a separate investor call in July, Dorothy Thompson, chief executive of Drax, noted the company plans to expedite development of a third pellet plant that would feed into the port operation in Baton Rouge, and indicated a similar setup could be under development on the East Coast.

Recent announcements in South Carolina and Mississippi show the company is moving forward with those plans. Documents recently filed with

the Mississippi Department of Environmental Quality state that a unit of Drax is planning to build a pellet plant near Magnolia, Mississippi. The project, proposed under the title Pike BioEnergy LLC, would be located on a 103-acre site.

In addition, Abbeville County, South Carolina, has passed an ordinance that would allow Drax Biomass an option to purchase a 119-acre tract of land for the development of a new pellet plant.

Drax expected to proceed with 2 additional unit conversions Early last year, Drax Group plc converted one of its six power generation units to biomass, and has plans to convert at least two additional units. The U.K. government was expected to support the two additional unit conversions through early Contracts for Difference (CfD) under the Final Investment Decision Enabling mechanism.

In April, the U.K. Department of Energy and Climate Change announced it would award a CfD to only one of those two conversions. Drax appealed the decision and received a favorable ruling from the U.K. High Court. The DECC, however, appealed that decision, and the U.K. Court of Appeal ruled in its favor. In August, Drax announced it would not appeal that decision.

The company is currently expected to proceed with both biomass conversions. During a recent investor presentation to discuss financial results for the first half of the year, Dorothy Thompson, chief executive of Drax, said the company is confident it will convert at least three of its six units to biomass. The second unit conversion will now likely be supported by the Renewables Obligation.

Q4 2014 | PELLET MILL MAGAZINE 13

« Pellet News EIA: US pellet exports to Europe double Data recently released by the U.S. Energy Information Administration indicates U.S. wood pellet exports nearly doubled last year. In 2012, the U.S exported an estimated 1.6 million short tons of pellets (approximately 22 trillion Btu). By 2013, the volume increased to 3.2 short tons.

Information released by the EIA notes that more than 98 percent of U.S. pellet exports were delivered to Europe last year, and 99 percent of those exports originated from ports in the southeastern and lower MidAtlantic regions of the U.S. SOURCE: U.S. ENERGY INFORMATION ADMINISTRATION The U.K. accounted for almost no wood pellets. By last year, the the 59 percent of U.S. wood country imported 3.5 million short tons pellet exports in 2013. According to the from all sources. Belgium, Denmark, the EIA, the U.K. more than tripled import Netherlands and Italy are also significant volumes from the U.S. between 2012 European importers of U.S. wood pellets. and 2013. In 2009, the U.K. imported

Proposed plant to export pellets to Asia A proposed pellet plant under development near Mission, British Columbia, aims to produce wood pellets for export into industrial markets in South Korea and other Asian markets. The project is being developed by SMG Wood Pellet Inc., a subsidiary of Vancouver, British Columbia-based SMG Asset. The facility will be branded under the name Mission Wood Pellet.

Paul Adams, operations manager for SMG Wood Pellet, said engineering work on the facility is nearing completion, while fiber supply agreements and offtake agreements are in place. The company is in the process of securing necessary permits.

SMG plans to break ground on the project early next year with operations beginning in the second or third quarter. Once complete, the facility will have an installed capacity of 160,000 tons per year. Initial production will be in the range of 100,000 tons per year. “This is going to be a firstof-its-kind facility in North America,” Adams said, noting it will feature state-of-the-art technologies and best practices with regard to fiber handling and processing.

DESIGNING INNOVATION

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vecoplanllc.com 14 PELLET MILL MAGAZINE | Q4 2014

Pellet News » EU pellet statistics (in million metric tons) 2011

2012

2013

2014

2015

Production

9.47

10.652

11.5

12.5

13

Imports

3.115

4.267

6.045

7.5

8.5

Exports

0.068

0.09

0.132

0.15

0.15

Consumption

12.5

15

17.5

20

21

SOURCE: EU BIOFUELS ANNUAL 2014, USDA FAS GAIN

EU pellet demand to continue increase The European Union has filed its annual biofuels report with the USDA Foreign Agricultural Service’s Global Agricultural Information Network, reporting that heat and power production from biomass could account for about 45 percent of renewables in 2020, including 37 percent of renewables use in the heating and cooling sector, and 8 percent of renewables use in electricity production.

Wood pellet demand is expected to grow from 17.5 million metric tons last year to 21 million metric tons in 2015. Pellet

imports are also expected to grow, from 6.05 million metric tons in 2013 to 8.5 million metric tons in 2015. According to the report, if trade flows remain consistent with current patterns, the U.S. could supply half of that import volume.

Germany is currently the EU’s top pellet producer, with 2.35 million metric tons expected to be manufactured this year. The U.K., however, is Europe’s top pellet consumer, with an estimated 5 million metric tons expected to be consumed this year.

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E-Pellets to expand operations in Georgia E-Pellets Group LLC recently acquired the Louisiana Pacific OSB mill in Athens, Georgia, and plans to convert it into a 450,000-metric-ton-per-year wood pellet production facility. Pellets produced at the plant will be exported to the European Union for use in power plants. The closed mill was purchased for $13 million and is expected to cost $107 million to convert. The project is expected to be operational by next August.

The closed mill in Athens is not the only underperforming production facility E-Pellets has purchased in Georgia. Sega Biofuels LLC in Nahunta was purchased by the company to expand production volume to 150,000 metric tons. E-Pellets plans to continue this activity in the pellet industry. “We see an opportunity to be the largest Georgia-based producer of pellets, taking advantage of the state resources,” Ben Easterlin, developer with the E-Pellets Group, said.

« Project

RISING UP IN GLOSTER: Drax’s Amite Bioenergy began to take shape near Gloster, Mississippi, earlier this summer. The material handling, fuel preparation infrastructure and pellet lines are visible on the right and the woodyard and log crane are taking shape to their left.

16 PELLET MILL MAGAZINE | Q4 2014

Project »

Investing Upstream UK’s Drax Group pushes to bring two production facilities and a pellet terminal online in 2015.

STORY AND PHOTOS BY TIM PORTZ

S

tate Highway 19 heads north out of Baton Rouge, Louisiana, unfurling in a nearly perfect straight line 35 miles to the Mississippi border. Once across the border, the road becomes Mississippi Highway 33 and continues northward through some of the densest inventories of southern loblolly pine in the United States, eventually reaching the small community of Gloster, Mississippi. This road, two-lanes for the majority of the 60 miles between Gloster and Baton Rouge, is a vitally important component of the supply chain Drax Biomass is building to keep wood pellets produced in the U.S. moving to its massive power station in England.

Drax Biomass, a wholly owned U.S. subsidiary of Drax Group plc, is a part the transformation at the Drax Power Station from a reliance on coal and toward sustainable biomass. The future for singleasset power generators confined to coal inputs looks bleak in the United Kingdom as policymakers work to drive carbon out of the nation’s power grid. Fully aware of the policy trajectory and its implications for the business, Drax began investigating repowering a portion of its plant with biomass as a strategy for compliance more than a decade ago. Now, this transition towards biomass has become a central business strategy, and the next phase of its evolution has Drax investing hundreds of millions of dollars in U.S.based pellet production and transit facilities.

Gloster is the site of one of two pellet production facilities currently under construction. The second pellet production facility is being built in Bastrop, Louisiana. Together, the facilities will produce around 900,000 tons annually, making Drax not only the world’s largest consumer of wood pellets, but also one of its largest producers. “We selected these sites for our facilities because of their close proximity

to sustainable fiber resources and to existing logistical infrastructure, including transport routes to export facilities,” says Ken Budreau, senior vice president, development at Drax Biomass.

Drax Biomass must move its pellets as efficiently as possible to a port facility optimized to handle, store and load pellets onto waiting ships for delivery to England. Recognizing this, Drax Biomass is also constructing a terminal at the Port of Greater Baton Rouge capable of handling 3 million tons of pellets annually. The two production facilities and the port terminal represent a $375 million investment in Drax’s North American supply chain.

Drax’s plans are to convert three of its six boilers to biomass inputs. Once complete, these boilers will require nearly 7 million tons of pellets on an annual basis. This demand is arguably a big driver behind the surge in the construction of industrial pellet production capacity all across the eastern seaboard of North America, primarily in the southeastern United States. Despite this robust level of development and construction activity, Drax feels complementing this build-out with its own investment upstream is vital to its business interests.

“The biomass supply chain is still in its infancy and requires significant investment to support the emerging demand for wood pellets by Drax and others. We saw an opportunity to invest upstream and assist in the development of the biomass sector,” Budreau says. “It has always been clear to us that the biomass market is only just emerging.”

The Learning Curve Drax’s recent history more than supports Budreau’s assertion, as the organization began active research with biomass fuels in 2003. In addition to understanding how wood pellets work in boilers,

Q4 2014 | PELLET MILL MAGAZINE 17

« Project Steve Drayton, senior vice president of engineering at Drax Biomass, has been in the U.S. since April 2012, just months after Drax’s U.S. efforts got underway.

Drayton, who started his career at Drax in 1992, has worked on virtually all of Drax’s U.K.-based biomass efforts including a pellet production facility in Goole and the pellet handling infrastructure at the power station itself.

“Goole was a massive learning curve for all of Drax, especially me, as I was heavily involved in it,” Drayton says. “Learning how biomass behaves in a pipeline when we use pneumatic conveying. Learning how material grinds in a hammermill.

Learning what kinds of combinations you can use and then also transferring that into the operations side. How many operators does it take to run a plant and what are the critical parameters that you’ve got to measure? What are the true operating costs?

What are the true wear parts that you really do need to pay attention to and, when you FEEDSTOCK PREP AT AMITE: Workers install equipment on the dry hammermill line. Inbound material negotiate your contracts you get right, moves to the top of one of three platforms and works downward, exiting at the bottom to be conveyed as opposed to what the manufacturers down the production line. want to sell you that might sit on a shelf Drax has invested in pellet production in the tivities and operations in the U.K. until 2011, for 10 years? So, both commercially and United Kingdom, pellet receiving and handling have proven invaluable as the company’s North technically, it was a massive learning curve.” infrastructure in some of the U.K.’s biggest American strategy begins to take shape. The acWhile it is clear that Drayton and the ports and has designed and commissioned the cumulated knowledge from these early efforts Drax team accumulated a wealth of knowlworld’s first rail cars optimized for moving pel- informs nearly every decision the team makes edge from the construction of the Goole falets. These investments, largely confined to ac- as it builds out its U.S.-based supply chain. cility, the facilities Drax is building in Gloster

Project » and Bastrop are much larger than the 100,000 ton-per-year Goole operation. This step up in scale brings new challenges. “It’s about scale when you get over 150 and 200 trucks a day coming onto your site. That is a huge challenge, so logistics is one piece of it,” Drayton says. The size of the facilities affects equipment sizing and procurement as well. Drayton explains saying, “The other thing is, you’ve got to look at your single point failures. Obviously, when you get big, there are limits to some of these machinery capabilities. Dryers, for example, when you are on the cusp of going from one to two machines.

Making sure that in the design parameters, you are actually optimizing that single point, as opposed to building in a single point of failure.”

Drayton and his team selected a general contractor in September 2012 and gave Jacksonville, Florida-based design-build firm Haskell the notice to proceed a few months later. The team

A PLACE FOR EVERY PIECE: Equipment awaits installation at the Amite BioEnergy construction site.

Storage bins with explosion panels are visible on the right, with the dryer tube and the cyclones just beyond.

W E

C O N V E Y

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SCHADE Stockyard Equipment for Wood Pellets SCHADE Lagertechnik GmbH s Bruchstraße 1 s 45883 Gelsenkirchen s Germany sales@schade-lagertechnik.com s www.schade-lagertechnik.com Q4 2014 | PELLET MILL MAGAZINE 19

« Project mobilized in January 2013 and construction began. Work on the two production facilities is slightly staggered, with Amite BioEnergy scheduled to come online about three months before the Morehouse facility, and both facilities to reach full capacity in 2015.

As construction on the two facilities nears completion, Drayton and his team have already begun to stockpile inventories of wood. “We’ve got long-term contracts with a couple of counter parties and they’ve started bringing in wood for the Amite facility already. We’ll have sufficient supplies on hand when we start up,” Drayton says. “We have about 5 to 10,000 tons of logs on site right now in the log yard. As we start chipping and bringing the pellets online we’ll start ramping up wood deliveries so that when we are at 65 to 70 percent capacity we’ve got wood flowing in at the same rate.”

Staffing Strategy As state-of-the-art as each of these facilities is, they do not operate themselves.

Drayton and the Drax Biomass team had to develop and deploy a staffing strategy alongside the engineering and construction effort.

“We began staffing up nearly 18 months ago when we brought in our vice president of operations for the Gulf as well as the manager at Amite,” Drayton says. The team relied on these first hires to identify and recruit successive levels of supervisors, managers and operators at each production facility. “All of these guys have been through successive levels of safety training and operator familiarization, and we’ve sent them around the country to pellet mills to observe similar equipment, so that when we do start up, the guy operating each machine knows what he’s doing.”

A different approach was taken at the pellet terminal. “At the port, we looked at it very closely and we had a plan to recruit internally, but stevedoring is a different wheelhouse than pellet manufacturing. We’ve actually engaged a third-party expert to run that facility for at least the first three years.”

Within a year’s time, both Amite and Morehouse will be at full capacity, moving nearly 75,000 tons of pellets through the pellet terminal on a monthly basis to firmly establish Drax as one of the largest pellet pro-

Project »

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ducers in North America. That said, Drax continues to hint at even more production and logistics investment in the U.S. In July, during a midyear investors call, Drax Group CEO Dorothy Thompson said, “As mentioned at our preliminary results in February of this year, we are also evaluating options to build more pellet plants and port facilities with the aim of securing attractive returns and greater control of sustainable supply chains that we can leverage to our commercial advantage. We have identified the potential to accelerate investment in a third pellet plant in the U.S. Gulf region and we are evaluating the possibility of a U.S. East Coast pellet operation.”

It is clear that Drax has determined that amassing its own deep experience in pellet production and transport is vital to the success of its transition to biomass generation. Budreau underscores the importance of this experience saying, “Drax has been burning biomass for over a decade and during that period we have spent a significant amount of time getting to understand the global fiber market. By operating our own facilities in the U.S., we will continue to learn more about biomass sourcing and processing, so that we can operate our business efficiently and sustainably.”

Author: Tim Portz Executive Editor, Pellet Mill Magazine 651-398-9154 tportz@bbiinternational.com

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Pellet Heat

AMORE Italian love affair with high-style pellet appliances drives pellet sales.

BY LENNART LJUNGBLOM

22 PELLET MILL MAGAZINE | Q4 2014

INTERNATIONAL »

I

talian homeowners burned 2.5 million tons (mmt) of wood pellets for home heat in 2013, making Italy Europe's largest residential pellet market.

Over the past three years, Italy has seen a steady 15 percent demand growth. Only a small portion of Italian pellet demand is met by domestic production, however, making the country the main global importer of pellets for residential use. And, as its traditional European suppliers aren’t quite able to keep up with the expanding demand, overseas shipments are increasing.

Annalisa Paniz, the pellet expert in the Italian organization AIEL (Associazione Italiana Energie Agroforestali), reports overseas imports to Italy started to grow rapidly last year. Italian domestic production is stable or slightly down and will probably not exceed 300,000 metric tons per year, she says, not coming close to the expected consumption of 3 mmt this year. “Around 2 million stoves and 200,000 boilers are installed in Italian homes, and sales are stable and still strong,” she says.

About 600,000 tons of pellets are expected to arrive by ship this year. Last season’s difficulty in finding pellets on the market as winter approached led to considerably higher prices, she adds, and caused concern among market operators.

The growth in pellet demand is due partly to Italy’s unique renewable heat incentive, Conto termico, introduced by the Italian Ministry of Economic Development at the end of 2012. The incentive is working well, says Giovanni Trentin, export manager for the Palazzetti Group, one of Italy’s largest manufacturers of pellet stoves. “There have been complaints about the excess bureaucracy, so the energy authority, GSE, has done adjustments,” he adds. Extended last December, Italian consumers receive a 65 percent tax deduction for energy efficiency measures such as the purchase and installation of new equipment and a 50 percent tax deduction for building renovations. Starting in January, however, the deductible share in both schemes will gradually decrease to 36 percent.

Consumer-friendly and well-designed pellet appliances provide another incentive for style-conscious Italian consumers. The 20-plus Italian pellet stove manufacturers compete hard on the domestic and export markets, and to keep their positions, they constantly release new models and innovations. “Palazzetti has recently released an app which allows you to communicate and interact with your stove from a distance with your smart phone,” Trentin offers. “You can switch the stove on or off, set the temperature, program operating hours, and even lis-

Q4 2014 | PELLET MILL MAGAZINE 23

« INTERNATIONAL ten to the stove. The app tells you if it’s running out of pellets, if combustion is less than perfect or if you need to call for aftersales assistance.”

Palazzetti released its latest pellet stove this summer with a panoramic glass offering a striking vision of the flame. The new 9 kW, 94 percent efficiency pellet stove Ecofire Inés, replaces the design award-winning Lola. “By disabling the forced ventilation, Inés works even with natural convection,” Trentin adds, resulting in a quiet stove that incorporates automatic loading with the efficiency of combustion control.

Logistics

HIGH STYLE: Ecofire Inés by Palazzetti was released this summer. It features a nice flame, silent operation and 94 percent efficiency.

PHOTO: PALAZZETTI

Pellets arrive in Italy in one of three ways. Bulk shipments arriving in ships are the lowest cost, but with most Italian distributors being small scale, they are not able to handle the large volumes. The second option is to receive pellets already bagged or in bulk containers, with most distributors preferring bags. The third is by truck, and a large fleet of trucks arrives in Italy every day with 15 kg bags loaded on pallets or in big bags.

Eight to 10 trucks daily head to Italy from just one established exporter, Estonian-headquartered Graanul Invest, Europe’s second largest pellet producer. “We are shipping bagged pellets from our south Lithuanian production plant in trucks,” says Göran Westerlund, export developer. “There are indications

INTERNATIONAL » Growth of Italian Pellet Demand

SOURCE: ANNALISA PANIZ, AIEL

there will be a great need for pellets the upcoming season in Italy, sales of stoves are still high and the neighbor countries will use more pellets themselves, therefore their exports probably will decrease.”

“You don´t need to be so big to start exporting to Europe,

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but you need to work together with a specialist,” advises Arnold Dale, vice president, bioenergy, at the trading company Ekman & Co. “The largest importer/distributor in Italy handles around 200,000 tons per year, and there are some around 100,000 ton per year,” he explains. “The rest is handled by a large number of small distributors.” The main market for pellets in Italy is in the north, but prices there are lower than in the south. Italian buyers can be demanding, he adds, and working in Italy can be time-consuming.

Bulk shipments are obviously cheaper, if you count on large volumes and have efficient handling systems all along the line.

Containerized shipments offer their own advantages. One of those, points out Graanul Invest’s Westerlund, is that there are more potential customers able to accept container-sized lots than those that can accept large bulk shipments.

Speaking in July at the Pellet Fuels Institute conference in Orlando, Florida, Jouko Sipila, AgCom/International Feed, explained another advantage is that containerization allows justin-time operations with reduced storage risks, as well as lower shipping risks. Handling losses are minimized in container shipments compared to the multiple handling steps in bulk, he added, and shipping via container provides more flexibility with multiple ports as potential destinations.

At the same PFI event, Seth Walker from RISI walked

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BULK DELIVERY: Global Renewables receives bulk pellets in ship holds, bagging them for the Italian market.

PHOTO: GLOBAL RENEWABLES

through an economic comparison of bulk versus containerized shipping and concluded there can be only small, if any, profit from containers. The exchange rate between the dollar and euro, he added, is as important as the container shipping costs. Starting from a destination market price of 275 euros per ton for an Italian bag customer (value added tax included) and with an exchange rate of $1.35 per euro and working back, including multiple fees and handling costs along the way, Walker ends with a return to a U.S. pellet mill of $153 per ton for bulk pellets and $127 for bagged pellets sent in a container.

Major Players Nevertheless, several North American companies have found viable ways to navigate shipping intricacies or partner up to serve the growing Italian market.

American Bioenergy Exporters LLC, one of the newcomers entering the market last year, ships bagged pellets via containers. The company purchases quality pellets from American pellet manufacturers with American contracts and conditions. According to its website, it is shipping pellets made from southern yellow pine, and will supply hardwoods upon customer request. GLM Biolegno, the Italian sales arm of the organization, sells the pellets directly to Italian retailers and small distributors under the brand USA Eagle Pellet. In this way, differently sized customers can be served, from those taking just a few containers per year up to those taking several hundred.

INTERNATIONAL » Global Renewables markets two brands from North America. Global Renewables Italia S.r.l. imports 10,000 to 20,000 tons monthly, preferably premium ENplus A1 pellets. The Milan-based subsidiary of Global Renewables Ltd of New Zealand brings bulk pellets into Italian ports, such as Livorno on the west coast, where they are bagged for distribution. The Febo brand is produced in Georgia from pine shavings and is marketed as pellets of a “light golden hue, capable of producing intensive heat.” A second brand, Ecoflamma, is produced for Global Renewables by the Canadian Pinnacle Pellet Inc. The largest importer on Italy’s east coast is Adriacoke, which cooperates with Canadian Premium Pellet Ltd., Vanderhof, British Columbia. Adriacoke is headquartered in the Port of Ravenna and controls the entire supply chain in partnership with Group Setramar, a major Adriatic leader in dry bulk logistics, from container handling to unloading and bagging pellets. The Canadian pellets are marketed under the name Professional Pellets.

Another long-time Italian importer is Abellon Energy Italy S.r.l., a subsidiary of India-headquartered Abellon Clean Energy. Canadian subsidiary Abellon Energy Inc. operates the ENplus-certified Trebio pellet production plant in Quebec with a capacity of 130,000 tons per year.

Abellon Energy Italy has storage and bagging capacity in the port of Savonna, but also imports through Naples in the south.

In the big stove exhibition, Progetto Fuoco, held in Verona in February, Abellon launched Mr Pellets as its new brand for wood pellets. Other brands included Pellexo Bianca, produced by Viridis Energy, and Pelexo Platinum, produced by the Abellon facility in Quebec.

Viridis Energy Inc. has exported pellets to Italy since 2011 through its subsidiary Okanagan Pellets, Kelowna, British Columbia. The company recently launched the subsidiary Viridis Merchants to trade and broker pellets. Viridis

also has an agent contract with the Swedish trade company Ekman & Co. German Pellets is Europe’s largest pellet company with a global production capacity of 2.2 million tons. The company has ENplus certification for its Woodsville, Texas, facility where all 575,000 tons-peryear is intended for Europe. German Pellets owns several brands like Firestixx, Redflame and Woodox. In addition, in Northern Italy, its subsidiary, German Pellets Italy Holding, operates pellet-fed combined-heat-andpower plants.

Certified Advantage One consideration for all North American exporters is certification, advises Ekman’s Dale. “The ENplus system will help increase your export sales,” he says. Dale serves as a board member of the European Pellet Council and as president of the Eu-

ropean Industry of Pellet Suppliers. Around 60 percent of the pellets consumed for domestic heating in Europe will be ENplus certified by the end of 2014, according to the pellet council.

Other Italian distributors hold a different opinion of the value of certification.

“ENplus is a good initiative working for some Italian companies but is not needed for the majority,” says Ricardo Pascolini, marketing director at Eco Pellet. “We have our own established patented control system that certifies high quality. ENplus adds extra costs that may increase the sensitive market price.”

Author: Lennart Ljungblom Bioenergy Writer, Stockholm, Sweden lennart.ljungblom@mac.com + 46 - 70 739 01 05

Q4 2014 | PELLET MILL MAGAZINE 27

« Outlook

28 PELLET MILL MAGAZINE | Q4 2014

Outlook »

The Path Ahead PFI conference speakers project cautious optimism.

BY SUSANNE RETKA SCHILL

L

ooking at the positive projections for the pellet industry, the domestic pellet industry is understandably cautious. After all, the last boom cycle in pellet expansion was followed by price-depressing excess capacity. But with the industrial export market booming, and the potential for the export fever to spread to premium heating pellets, domestic producers are keeping their eyes on the path ahead.

Jennifer Hedrick, executive director of the Pellet Fuels Institute, cited promising statistics in her opening remarks at the PFI conference in Orlando in late July. “Supply and demand are starting to realign and promotion of home boiler systems is starting to expand demand,” she said. Capacity utilization plummeted from nearly 90 percent in 2007 to around 55 percent in 2009 due to price-depressing over expansion, she explained. Capacity utilization has since slowly rebuilt, with projections indicating it should reach 80 percent by 2018. North American wood pellet production is forecast to grow 14 percent annually over the next five years from 7.9 million tons in 2013 to 15.5 million tons in 2018, she continued. Exports are expected to increase from 4.5 million metric tons (mmt) in 2013 to 10.5 mmt in 2018, primarily coming from the U.S. South and Canada. Growth is expected to be a much more modest 5.8 percent per year in other regions that primarily supply the residential heating market, the U.S. Northeast, Pacific Northwest and Lake States.

Manufacturer’s View While Hedrick painted a somewhat cautious picture for domestic pellet producers in the long run, the panel of appliance manufacturers and distributors were bullish on this year’s outlook. “This year has taken off,” said John Shimek, with manufacturer Hearth & Home Technologies Inc. The marketing campaign to buy early and buy now is working, he explained, and consumers are buying pellet appliances. “We’re doing everything we can to keep up.”

When asked about the relative expense of pellet appliances in the panel discussion, Shimek replied that both low- and high-end appliances, ranging from $3,000 to $5,000, were selling equally well. Dutch Dresser, with Maine Energy Systems, admitted his company’s whole-home pellet boiler systems were “the most expensive in the room” at around $20,000, but added, “We do pretty well. Our growth has been hockey-stick shaped.”

In his company’s work to promote boiler systems using pellets delivered in bulk, Dresser added that he’s seeing a need to change the consumer message. With more appliance options entering the market, the messages informing people about the advantages of pellet heating need to expand to educating consumers to buy the appropriate quality system. He suggested introducing a new metric: “How long do you want your boiler to run unattended reliably?” If a boiler needs to be cleaned every three days, for instance, and the homeown-

Q4 2014 | PELLET MILL MAGAZINE 29

« Outlook ing translated from German. At Hearth & Home Technologies, Shimek said the company is introducing smart controls that can be adjusted to the homeowner’s preferred level of complexity. “We can also track use and send back diagnostic code to your dealer so when they come out to do service, they bring the right parts,” he added.

Marketing Insights

MANUFACTURER'S PERSPECTIVE: Richard Thomas, Courtland Hearth & Hardware, standing, moderated the PFI panel of appliance manufacturers and distributors. From left, John Shimek, Hearth & Home Technologies, Dutch Dresser, Maine Energy Systems, and Carrol Hudson, England's Stove Works. The fourth panelist, not pictured, was Jeff Thiessen, Dansons Inc. PHOTO: SUSANNE RETKA SCHILL, BBI INTERNATIONAL

er is often gone, that may not be the best choice. A higher-priced, more automated system might meet the consumers’ needs better.

Improving the ease of use for consumers is the big thing coming to the pellet appliance sector, said several speakers in the panel. Carroll Hudson, England's Stove Works Inc., said his company expects to have new control systems on the market later this year that can be operated from a

30 PELLET MILL MAGAZINE | Q4 2014

smart phone. “The ease of use in pellet appliances has helped expand the market on all sides,” concurred Jeff Thiessen, speaking on the panel from Dansons Inc., manufacturers of wood pellet Louisiana Grills.

Dresser added the European manufacturer of the boilers distributed by MES already has a smart-phone app that will even recognize how far from home you are and turn up the thermostat so the house is warm when you arrive home. The app is now be-

Ease of use is an important value for consumers that is being missed in consumer messaging said another conference speaker, Adee Athiyaman, professor of marketing at Western Illinois University. In his survey-based analysis of consumer behavior and attitudes regarding biomass heating products, he has identified several values considered most important, including cost, safety and ease of use. He then analyzed industry advertising to see which attributes are mentioned, finding that quality is most frequently mentioned in pellet appliance advertisements, followed by price and special offers, availability, safety and warranties, in that order. There is a big gap, he said. “The ads do not emphasize the ease of use of the product, which is a major concern for the consumers.” He encouraged conference attendees to prompt people to fill out the online survey, available at www.instituteintelligence.com.

Outlook »

SOURCE: EIA, US CENSUS AND US FOREST SERVICE INVENTORY DATA, 2014, ANALYSIS BY FUTUREMETRICS

The Case For Pellets William Strauss, FutureMetrics LLC, presented a summary of his ongoing analysis of the North American pellet market, describing the potential for market expansion. Strauss estimated there are about 4.4 million homes across northern tier states

that could potentially convert to pellet wood heating, being both in cold climates with large areas not on natural gas. “Growing that market takes patience and a lot of work,” he admitted. From his analysis of appliance sales data, Strauss is projecting 67 percent growth in pellet demand for domes-

tic heating, growing from 3.3 million to 5.5 million tons between 2013 and 2020. The expected 5.5 million tons is in the middle of a band with 95 percent confidence that could be as high as almost 7 million tons, or as low as nearly 4.5 million tons. “I don’t think natural gas will stay super cheap,” he

Q4 2014 | PELLET MILL MAGAZINE 31

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by 2017 there will be a 6 million metric ton gap between domestic production and demand. Currently, nearly all of the U.S. industrial pellet exports are originating in the South and heading for the United Kingdom.

While the industry is expecting an increase in demand for power generation in Europe and new markets opening up in South Korea, Strauss made a case for the strong potenPELLET PROJECTIONS: Jennifer Hedrick, PFI executive tial for market growth in director, shared industry projections from RISI at the PFI the U.S. power generation conference in July. William Strauss, offered a summary of FutureMetrics' analyses of market potential. sector. “About 77 percent of coal plants in the U.S. added, “Natural gas will soon be bidding are older than 35 years,” he pointed out. on global markets.”

“These are only pulverized coal plants, While the export demand projec- not stoker. It’s pretty easy to pulverize tions for industrial pellets is well-known, pellets and use them in pulverized coal Strauss addressed the potential for export plants.” The main cost for retrofits is in demand in residential heating pellets. storage and pellet handling, he added, He pointed out that in just four Euro- estimating the conversion of pulverized pean countries—Germany, Italy, Austria coal to pellets is nearly the same as natural and France—projections indicate that gas conversion. When looking at alterna-

Outlook »

SOURCE: ANALYSIS BY FUTUREMETRICS

tives such as wind, solar or hydro, the fuel may be free, but the capital expenditure is high. In contrast, most of the 35-yearold coal-fired power plants are paid for. “I think it makes really good sense for old power plants to convert,” he said.

On top of that is the potential for job creation, he said. The total jobs created to supply pellet fuel to a 500 MW power plant would number 3,481, according to his analysis, compared to the 2,538 jobs created by coal that was estimated in a 2013 Ernst & Young analysis. “We have a job-creating solution here for low-cost, low-carbon, baseload, dispatchable power,” he said.

That economic impact would be multiplied if accompanied by a conversion of half of the 4.2 million homes in northern tier states that are candidates for pellet heat. “There’d be 500,000 jobs created for the 2.1 million homes. And, if they cut heating costs in half, they can spend that money on other things. Plus when spending money on heating, a big portion goes to other countries,” Strauss added. “With pellets, we keep that money in the U.S.” While the potential is there, Strauss cautioned that the critical questions will be

how much sustainable pellet quality wood is available and what will be the highest, best use—heating, power or export?

“Will it be power at 35 percent efficiency, or heating at 85 percent efficiency?” he asked. In the discussion following his presentation, he added that initial studies done by power plants looked at converting pulverized coal plants to stoker plants using wood chips—a more costly option than pulverizing wood pellets. The Drax conversions in the United Kingdom are serving as a proof of concept, he added. “It’s showing it can be done. I think [power companies] will take another look, I think there is real opportunity.”

Author: Susanne Retka Schill Managing Editor, Pellet Mill Magazine 701-738-4922 sretkaschill@bbiinternational.com

Q4 2014 | PELLET MILL MAGAZINE 33

Q&A Many Hats for Hedrick

The Pellet Fuel Institute’s executive director, Jennifer Hedrick, shares insights on her many roles, as well as the challenges and prospects ahead for the pellet industry.

PFI served its membership for two decades without a full-time executive director. How did you come into this role?

The association had been moving toward this for a number of years. I came to PFI in 2008, first as the association manager in a newly created position to supplement the work of PFI’s executive director at the time, who was also working for the Hearth, Patio and Barbecue Association and who had just a small amount of time to dedicate to PFI. As it became more known what the growing needs of the association were, PFI leadership created the role of a full-time executive director in 2011.

I had been working intimately with the committees and the board, and was in the weeds on a lot of different programs. The board felt that I knew the areas that the association wanted to focus on and the direction that the organization wanted to take, and so I was, of course, very honored that the board would pick me to fill that role.

You’ve worn multiple hats during your tenure at PFI: point person for PFI’s standards program, and the PFI Annual Conference, as well as playing a key role in overall management and membership outreach, among others. Are you still wearing many of them?

I definitely still do wear many of those hats and it remains an ongoing challenge for me to try to determine how to balance those roles.

I think anyone who works in the nonprofit sector, including smaller trade associations, knows what that’s like. Sometimes you’re putting out fires when you want to be in the field tilling the soil. You just have to turn your

attention to immediate needs, but also keep at the forefront of the goals and mission of the association.

What gets you to come to work every morning?

One of the joys about being in the association world is working with the members. I have been working in Washington, D.C., since 1997, so being able to focus on an industry that is outside of Washington is certainly very appealing, as is working with members from all over the U.S. and Canada and other parts of the world. I enjoy the opportunity to look at the needs of those members and try to play a role in bettering their businesses and opportunities. I think that there are a lot of passionate people and I enjoy being an advocate on their behalf.

PFI has 90 member companies. How have you seen the association grow since you joined in 2008 and what are your hopes for the future?

I think overall one of our main goals has been to expand our relationships. We’ve seen the North American residential pellet market grow in small, but steady, increments over the years. And, the advent and growth of the export pellet market has obviously expanded the overall pellet market and created new alliances and business opportunities for our members. PFI leadership is focusing on new markets and market development, and embracing the changing industry. My hope for the future of PFI as an association is that we not only continue to advance the residential pellet market and create greater awareness of the benefits of using pellets, but also help to develop new markets and new market opportunities for our members for the various end users

PHOTO: ISTRICO PRODUCTIONS, ISTRICO.COM

34 PELLET MILL MAGAZINE | Q4 2014

Jennifer Hedrick

Q&A »

INTERVIEW BY KATIE FLETCHER

of pellets—thermal, power, absorbents and others. We cannot hang our hat on only the residential pellet market and expect to meet the ever-changing needs of our members.

Why join PFI? What are the benefits of membership?

That’s a question that I ask myself on a daily basis, and is one of the things that the PFI leadership has focused heavily on over the past year: What is the return we are giving to our members, and potential return to those who haven’t made that decision to join PFI? One of our members uses the phrase “defending your right to do business” and that is really spot on as our main deliverable as an association. Other opportunities include learning more about the issues that are impacting the industry, being privy to information that we collect through our partnerships and being able to provide that information to members to use as a resource and, in some cases, to guide their business decisions. We also create opportunities for companies to gather, to network, those business-to-business opportunities that occur through events such as our PFI Annual Conference and our Breakfast & Biomass event. PFI members are able to join the standards program at a discounted rate, and we believe that the market will prompt more participation in that standards program as consumers will expect to purchase fuel that has been qualified through it. We get calls all the time from people who say, “Well, why should I join PFI?” I enjoy those conversations, giving companies the opportunity to educate us about what they do, but also allowing us the opportunity to educate them on what we do as an association.

In 2011, the PFI Standards Program was launched. What is the program’s purpose and how has it shaped PFI?

We have five companies enrolled in the program that represent 10 mills and several companies in the process of enrolling.

We expect to see several of those come onboard within the next couple of months. One of the major goals of the program is to help consumers understand more about the fuel that they’re using in their appliances. The program’s quality mark found on bags of pellets will show consumers that the fuel they are consuming has been subject to a rigorous quality assurance, control and testing program and verified as meeting the program’s specifications. A great number of our members have been testing for a long time, both in-house and using outside labs. We’ve seen companies sign on to the program and become aware of tweaks they can make to testing or production practices to realize significant cost savings.

How is PFI’s relationship changing with Hearth, Patio and Barbecue Association?

In the past year, we have taken a close look at our goals and mission, what the pellet industry represents and what we do as an association to foster its development. This industry has expanded to more than just a residential pellet appliance industry, and we see the growing need to expand our mission and to address some of the newly developing markets and opportunities.

To do that most effectively, we have established a different relationship with the Hearth, Patio and Barbecue Association.

They will no longer manage our association, but we will continue to have a collaborative relationship. We plan to continue to host our Breakfast & Biomass at HPBExpo in March. Our relationship with HPBA has been long and fruitful and we’re very pleased that will continue.

PFI’s work relies upon multiple committees. How do you attract members to the committees, and keep them engaged?

There are so many options for people to spend their time, and they have limited time to give to volunteer activities. We try to provide as many resources as we can to our members to really help them make informed decisions about getting involved and extending their talents and resources in ways they like. We have some volunteers who have been involved in the association for a number of years and have built PFI into a stronger organization. We are excited, too, because of opportunities to engage with younger members who are new to this industry and have different needs, desires and ideas. That is sort of a challenge too, as boomers have different needs than millennials and different ways of wanting to spend and give their time.

What are some of the biggest challenges you are currently facing in the industry, and what do you see looking ahead?

There is a lot of misinformation shared by a variety of groups who do not see the value of biomass. As an association, it is really up to us to be the deliverer of good information and to be a resource not only for our members, but also for others who don’t understand the biomass industry; those who don’t understand the benefits and opportunities created—jobs in rural areas, fostering a sustainable resource—the list goes on. We have to stay ahead of the game, and be proactive versus reactive.

There are challenges on the regulatory front, looking at the U.S. EPA and what they have proposed on the New Source Performance Standards and biogenic emissions.

Q4 2014 | PELLET MILL MAGAZINE 35

« Project Profile

Pellet Heat for the Pink Building T

An Alaskan boiler retrofit illustrates the potential for biomass heating in other federal buildings.

BY SUSANNE RETKA SCHILL

PINK BUILDING: A pellet biomass boiler retrofit at Ketchikan, Alaska’s, federal building has opened the way for more facility conversions.

PHOTO: GSA

36 PELLET MILL MAGAZINE | Q4 2014

he pink, six-story Ketchikan Federal Building is a landmark in the southeastern Alaskan community of Ketchikan, population 8,000.

When it came time to replace the original 1938-vintage steam radiators—the kind that clank and bang all winter long—the building not only got a more efficient hydronic heating system, but a state-of-the-art pellet boiler to match.

As the first pellet boiler among 1,500 federal buildings managed by the General Services Administration, the Pink Building (as it is known locally) has become a case study. The GSA’s Green Proving Ground Program asked the National Renewable Energy Laboratory to study the potential for biomass heating in other federal buildings.

The study shows positive results for pellet heating systems and identified 150 buildings as possible candidates for biomass heating across the nation. That was in spite of the fact that NREL found the payback for Ketchikan boiler system was going to be much longer than ideal, at an estimated 30 years, due to the high cost of removing and replacing the original steam-heat radiators and installing a back-up oil boiler. Of the total $4.7 million project cost, NREL researchers estimated $450,000 was directly associated with the biomass heating system. Another factor increasing this system’s payback was the installation of an oversized pellet boiler and the relative high cost of pellets due to the remote location.

“This was a new technology for us, we’re learning,” explains Jim Langlois, Alaska-based property manager.

“This is what it was all about.” Planned before he became property manager, he explains the America Recovery and Investment Act helped move the project forward. The retrofit was completed in January 2012 and, after a year’s operating experience, NREL conducted efficiency testing at the site and evaluated the lessons learned.

NREL’s efficiency tests were done during an unusually warm period in the winter of 2013, when daytime highs were in the mid-50s. Even though the boiler was running at just 45 percent of full load, NREL calculated an 85.6 percent efficiency factor, verifying the manufacturer’s claims. NREL’s overall assessment was quite positive: “The biomass system works well, needs very little

Project Profile »

Payback Varies by System Size and Pellet Cost Savings are greatest with larger systems and lower fuel costs

Pellet Cost ($/ton) System Size (BTUs/hr)

$400

$350

$300

$250

$200

PAYBACK IN YEARS 500,000

30.7

10.7

6.5

4.7

3.6

1,000,000

24.1

8.4

5.1

3.6

2.8

1,500,000

20.9

7.3

4.4

3.2

2.5

2,000,000

18.9

6.6

4.0

2.9

2.2

2,500,000

17.5

6.1

3.7

2.6

2.1

3,000,000

16.4

5.7

3.5

2.5

1.9

3,500,000

15.6

5.4

3.3

2.4

1.8

4,000,000

14.8

5.2

3.1

2.2

1.8

Diesel Price $3.63/gallon; 75% capacity factor (At a 50% capacity factor, the payback period increases 30%) SOURCE: NREL/GSA

Sample Payback Calculations Capacity factor of 75%; Average diesel price of $3.63 per gallon or $26.19 per MMBtu Pellet Cost $/ MMBtu Pellet Fuel Price

$400

$350

$300

$250

$200

$24.55

$21.48

$18.41

$15.34

$12.27

$1.64

$4.71

$7.78

$10.85

$13.92

4,000,000

4,000,000

4,000,000

4,000,000

4,000,000

26,280

26,280

26,280

26,280

26,280

Biomass System Cost

$640,195

$640,195

$640,195

$640,195

$640,195

Annual Savings

$43,127

$123,771

$204,414

$285,057

$365,700

Simple Payback in Years

14.8

5.2

3.1

2.2

1.8

Fuel Price Difference per MMBtu (pellets vs. diesel) System Size Btu/hr Heat Used MMBtu/yr

SOURCE: NREL/GSA

maintenance or attention of any kind, and performs well within the efficiencies put forth by the vendor. These biomass hot water heating systems are efficient, cleaning burning and provide a reliable source of renewable energy.”

The biggest issue identified in the Ketchikan installation is that at 1 MMBtu per hour output, the pellet boiler is oversized with a system capacity factor

of about 13 percent, according to the report. “Since there was a large amount of capital expended for a system that is often idle or at low load, the payback is high at approximately 30 years. Additionally, the payback is calculated using the most current price for pellets in the area, which is approximately $250 per ton.” The report goes on to say that in other installations, the backup oil-

Q4 2014 | PELLET MILL MAGAZINE 37

« Project Profile heating system, as required in federal buildings, could help meet peak heating demand.

“A typical rule of thumb is to design the system output for 60 percent of the peak load,” the report says, while adding that a higher percentage may be warranted in areas with a flatter heating load profile.

Points for Evaluation While detailing the Ketchikan installation, the NREL researchers discuss the technology and multiple points applicable

to other potential installations. “This type of technology has been commercially available for many years,” the report says, describing pellet boilers as a mature technology. “However, small biomass systems that require little operator attendance are relatively new.” Other points made in favor of pellet heating include: • The availability of multiple vendor sources should aid competitive pricing.

• Biomass fuel pricing has remained stable compared to fossil fuel.

Ketchikan, Alaska

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• Recent improvements in biomass systems and the implementation of pellet fuels has made the required maintenance and operational attendance minimal.

The report also makes a number of observations and recommendations: • Biomass heating systems be considered for buildings with hydronic heating, as the conversion from steam heat to hydronic is not likely to offer a reasonable payback. Generating steam with biomass on a small scale is feasible, although hot water systems are more common and less expensive.

• Deployment economics will vary from building to building depending primarily on the size of the biomass system, the hours of operation throughout the year and fuel costs. Candidate buildings will have a substantial heating load and an extended heating season.

• Energy savings due to the difference in efficiencies between the old and new technologies can be an advantage.

• A major consideration will be the proximity to fuel sources. Several suppliers that are relatively close would be preferable, since relying upon a single supplier could introduce supply risk.

Also, transportation comprises a large percentage of fuel cost. A current rule of thumb is that transportation cost is about 15 cents per ton-mile and, if the project

Project Profile » is remote, bad roads and high fuel prices could double the transportation cost.

• Candidate buildings will be located where natural gas is expensive or not available.

Unique Location Ketchikan is also a case study in how each location will be unique. The community is located on the coast of a large island in Southeast Alaska, 679 miles north of Seattle and 235 miles south of Juneau. Average low temperatures during January and February are just under freezing and record lows hover around 0 degrees Fahrenheit. While Ketchikan may not meet the criteria for extreme cold, it does meet the criteria for lacking inexpensive natural gas for heat. “Everything here is brought in by barge or airplane,” Langlois explains. The federal building typically required 9,000 gallons of fuel oil each winter. In contrast, the new, efficient pellet boiler required just 83 tons of pellets for the first fiscal year.

That was not for an entire heating season, though, but rather from startup in January 2012 through Sept. 30. Initially, bulk pellets were brought up from the lower 48 which added substantial transportations cost, but Langlois reports the Ketchikan Federal Building now has a contract with a local pellet producer.

Tongass Forest Enterprises is a new pellet producer, starting quite small to meet the initial limited local demand— the federal building, the city library and a handful of others. The company specializes in producing custom building products, such as flooring, trim, paneling and decking, and it manufactures outbuildings like saunas and small green houses. It works in four woods that come from the Tongass National Forest, including Sitka spruce, western hemlock, yellow and red cedar.

“We build up enough sawdust and make pellets,” says Larry Jackson, owner. The pellet operation runs one 1-tonper-hour unit that, if it ran 200 production days a year, would produce roughly

2,000 tons annually. “It’s not profitable,” Jackson says, but it has helped turned a liability into a positive, taking a waste stream and making a new product. “Right now, we're running 10 percent capacity because we don't have the demand. We're trying to grow with demand in the region.” All of the business is bulk, delivered in a used feed truck the company located in Iowa.

Fostering the growth of a pellet industry was one of the initial goals of the project, Langlois adds. “Southeast Alaska is try-

ing to develop a pellet mill industry. There's a push here and people are being proactive in trying to get this going. If we can establish fuel suppliers locally, it generates jobs.”

Author: Susanne Retka Schill Managing Editor, Pellet Mill Magazine 701-738-4922 sretkaschill@bbiinternational.com

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ÂŤ Instrumentation

Microwave Technology Aids Moisture, Density Measurements Industrial inline and at-line methods measure core and surface moisture of wood pellets.

BY PAUL JADOT

T

he accurate measurement of the moisture of wood pellets is of crucial importance in nearly every stage of the manufacturing process. Wood pellets can’t be too moist or too dry, and bulk density has to be on target. Instantaneous and accurate automated moisture measurement systems that allow continuous adjustments to the production process guarantee superior product quality, reduce raw material waste, diminish cus-

40 PELLET MILL MAGAZINE | Q4 2014

tomer complaints, save energy and ensure adherence to industry norms.

The role of the quality assurance staff of a wood pellet plant is to provide verifiable and real-time data to the manufacturing department to enable it to meet or exceed product specification targets at the lowest possible cost. Systems that largely rely on manual or semimanual measurement data collection methods cannot sufficiently reduce the variability of the production in-

puts in a timely manner. Also, those tend to be labor-intensive.

Poor adherence to product specifications may result in rejected lots. When pellets are too moist, the product quality is inferior and production speeds cannot be optimized. When too dry, the pellet press may clog. Quality suffers when adjustments to equipment such as dryers or conveyer speeds are based on inaccurate, incomplete or historical data, or when moisture data

Instrumentation » collection is only done in the final prebagging phase of the process. Measuring the moisture of the sawdust/wood particles at the beginning of the production process and of the pellets at the end of the line are two key quality control inputs.

Industrial users and retail customers expect product performance to meet the advertised specifications of the manufacturer, and they purchase pellets on a weight basis. High-moisture products have a lower Btu value per unit-weight and are more expensive to transport than comparable, drier pellets. Pellets with varying density, and thus uneven Btu output, will create difficulties for large and small users, alike. For example, owners of home furnaces with minimal automation may have difficulties controlling heat output. It goes without saying that customer complaints and product returns are a drain on company resources.

It is also important to note that energy consumption is reduced when drying results closely track product moisture targets. Dryers are an integral part of pellet processing lines, and automatic adjustments to the drying process (in conjunction with automated control devices) can only be made when continuous high-speed moisture measurement systems are used.

Measurement Locations • Wood strands can be measured before and after the dryer to measure and control the drying process using an inline planar sensor, installed at an angle or flush with the chute’s sidewall. Such installations require the sensor mounting in a hinged flap or a removable panel to facilitate easy inspection and cleaning.

• Temporary storage of wood particles in a silo before moistening allows for the continuous moisture measurement using a high-speed planar sensor, located near the bottom of the silo to ensure moisture readings when the silo is only partially full. The sensor has to be mounted in a hinged door or a removable panel to facilitate easy nullification, inspection and cleaning.

• After moistening of the sawdust or wood particles, an inline sensor measures moisture continuously. The sensor should be angled or flush with the chute’s side wall, when inclined.

• Between the hammer mill and the dryer and press are locations where continuous inline measurements are important and a sensor is easy to install. The installation requires an angled mount to ensure the coverage of the sensor with moving products.

• At the bagging station, the final moisture and density can be inspected for final quality control inspection. Here, the opportunity exists to measure the moisture at-line using laboratory equipment and inline using planar sensors. In this location, bypass sensors are of particular relevance because they can measure bulk density of the final pellets and provide outputs to the pellet presses to control the density.

Q4 2014 | PELLET MILL MAGAZINE 41

ÂŤ Instrumentation INLINE BYPASS: This TEWS bypass sensor with a 124 mm diameter top can be used inline.

PHOTO: TEWS

Methods For instantaneous, true-core moisture and density measurements in the wood pellet industry, there are three types of moisture measurement systems or devices: inline systems, at-line instruments and bypass systems.

Inline systems combine high-speed moisture sensors with fast processors and data analyzers that compute and present density-independent moisture measurements and product temperatures in real time. The processors are networkable and provide an array of outputs to enable the direct control of devices using analogue or digital outputs to computerized control systems. They also provide outputs for data analysis and storage. Low-powered resonance microwave sensors are particularly effective in measuring core moisture independently of mass, at acquisition frequencies exceeding several thousand times per second.

At-line and laboratory instruments using resonance microwave technology provide extremely accurate and instantaneous measurement results for both moisture and density of pellets on a sample basis. They are often used as a verification tool of the accuracy of the inline measurement systems. They are also used to support product development and testing.

Bypass systems are particularly effective in accurately measuring bulk density

42 PELLET MILL MAGAZINE | Q4 2014

Instrumentation » of wood pellets in addition to moisture.

Here, a tubular resonator microwave sensor is used whose microwaves penetrate the collected sample. The processor is programmable to control valves to divert pellets from the main conveyer or chute into the bypass feed tubes to fill the cavity (e.g. pneumatically or by way of augers). After the instantaneous measurement is completed, the system releases the sample back into the main flow. The full cycle of filling the sensor, measuring and releasing pellets takes just over one minute. The sample collection frequency is entirely programmable. Bypass sensors are used primarily to accurately determine bulk density, a proxy for Btu output. Analogue outputs are available to control devices that can impact density, such as pellet presses.

tutes what is called the microwave moisture value, which in turn represents the core moisture. The absolute moisture content in the material (percent of the product mass) is calculated using an initial calibration against a standard reference method such as a drying oven, rapid moisture analyzer or Karl-Fischer titration.

The patented resonator method developed by TEWS Elektronik, Hamburg, Germany, is based on measuring attenuation and frequency shifts as two separate parameters.

This permits the measurement of the moisture independently from the mass or density of a product. For more than 25 years, TEWS Elektronik has supplied precision moisture-measuring systems to the wood products industry. MebTec Technology Inc. is Tews' North American agent.

Author: Paul Jadot President, MebTec Technology Inc. 919-240-4425 Paul.jadot@mebtec.com

Technology Inline systems based on the commonly used infrared light (NIR) are not able to measure core moisture of pellets because NIR light only reacts to surface moisture.

In addition, color and ambient light affect the signal. Low-powered resonance microwave technology overcomes those limitations by completely penetrating the wood pellets. Additionally, the sensor chamber functions as a resonator, with walls designed to reflect the microwaves, creating a standing wave pattern when the sensor is empty (at resonance).

Microwave resonance technology is based on the interaction between the microwaves and water molecules in the wood pellets. During this process, the sensor, such as a high-speed planar sensor, builds up a weak microwave field and constantly analyzes the resonance frequency of the sensor system by scanning the microwave frequency. If pellets are moving into the microwave field, a shift in resonance frequency occurs and its amplitude is dampened. The relationship between frequency shift and dampening in this context is a density-independent measure of the water content in percent and thus compensates for any density effects. This ratio consti-

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ÂŤ Power

How Pellets Compare to Fossil Fuels in Carbon Intensity and Cost Why doesn't the United States use wood pellets instead of coal and natural gas for electricity generation?

BY PUNEET DWIVEDI

B

iomass-based electricity generation could help in reducing carbon emissions from the U.S. electricity sector, which currently emits about 35 percent of total carbon emissions nationally. The use of wood pellets instead of coal and natural gas would help in reducing carbon emissions of the electricity sector in the United States. However, special policy incentives in the form of direct subsidies, carbon tax and carbon markets will be needed to promote use of wood pellets as a potential feedstock for electricity generation in the United States, in general, and the South, in particular.

There are 128 biomass-based power plants across 27 states with a combined capacity of 3,269 MW. The majority rely upon tree bark, low-quality wood chips and waste paper for electricity generation; none are utilizing wood pellets. This is unanticipated, especially when the U.S. is a leading exporter of wood pellets to Europe, where electric utilities are working to meet the EU goal of

44 PELLET MILL MAGAZINE | Q4 2014

sourcing 20 percent of total energy from renewable sources by the end of 2020. To understand why the U.S. is so different from Europe, we need to understand the potential carbon benefit and unit cost of electricity generated from wood pellets in the U.S. compared to coal and natural gas.

Carbon and Cost As shown in the chart, the carbon intensity of a unit of electricity consumed within the U.S. ranges from a carbon dioxide equivalent (CO2e) of 189 to 261 kilograms (kg) CO2e/megawatt hour (MWh), depending upon the rotation age of the loblolly pine plantation providing the pellet feedstock. An increase at the rotation age of 12 years was due to the use of fertilizers. Pellet manufacturing contributed the most to the carbon intensity of generated electricity, followed by pulpwood production at about 21 percent across rotation ages. The burning of wood pellets at the power plant contributed about 12 percent towards overall

carbon intensity. Emissions related to pulpwood transportation to a wood pellet plant increased with a rise in rotation age since pulpwood availability typically goes down.

Relative carbon savings from pelletderived electricity ranged from 79 to 85 percent compared to coal power and 59 to 70 percent compared to natural gas. Across rotation ages, relative savings from pellet-derived were 83 percent and 68 percent, compared to coal and natural gas respectively.

The cost of a unit of electricity consumed within the U.S. ranged between $171 and $175.40 per MWh, depending upon the pine rotation age. The cost of pulpwood procurement (stumpage, logging, and pulpwood transportation) was about 26 percent of the overall cost across rotation ages. Manufacturing of wood pellets and generation of electricity at the power plant contributed about 30 and 40 percent, respectively, toward the overall cost of a unit of electricity across rotation ages. The average unit cost was $173 per MWh, which was 73 percent

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

Power Âť

Your global equipment supplier for the biomass industry CARBON INTENSITY OF A UNIT OF ELECTRICITY CONSUMED IN THE U.S. Red and black circles show the relative percentage savings in carbon emissions due to the use of electricity derived from wood pellets instead of coal and natural gas, respectively.

SOURCE: PUNEET DWIVEDI

and 157 percent higher than the average obtained from coal, at $100 per MWh, and natural gas, at $67 per MWh, respectively.

This cost differential is the main reason U.S. electric utilities show little interest in utilizing wood pellets. Therefore, special policy incentives will be needed to promote wood pellets as a potential feedstock, instead of coal and natural gas.

Policy Alternatives The first policy approach could be to provide direct subsidies to those electric utilities interested in generating electricity from wood pellets. A minimum payment of $73 per MWh of consumed electricity will likely be needed to promote wood pellets, instead of coal. To replace natural gas with wood pellets, however, a minimum subsidy level of $106 per MWh of consumed electricity will be needed.

The second approach could be to tax carbon emitted while producing electricity from coal and natural gas. In this case, a minimum carbon tax of $70 per metric ton CO2e will be needed for coal and a minimum carbon tax of at least $235 per metric ton CO2e for natural gas.

A third option could be to establish carbon markets at the national or regional

levels. The carbon prices should be reasonably close to $73 per metric ton CO2e or higher to compensate electric utilities utilizing wood pellets.

Enacting these incentives would be quite challenging, considering the current state of debate on reducing carbon emissions in the United States at the federal and state levels, amalgamated with the recovering economy. Recently proposed carbon pollution standards by the U.S. EPA could help in promoting wood pellets as a potential feedstock, especially in those states that do not have sufficient forestry resources.

Carbon pollution standards are still evolving, however, and the agency is currently deliberating key components of proposed carbon standards with several stakeholders.

Nevertheless, the use of wood pellets as a potential feedstock for electricity generation will face a stiff competition from natural gas in coming years, as abundant quantities of natural gas are available at relatively cheaper rates for a foreseeable future.

Author: Puneet Dwivedi Assistant Professor, Sustainability Sciences Warnell School of Forestry and Natural Resources, University of Georgia 706-542-2406 puneetd@uga.edu

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