Woody Biomass Opportunities in the Upper Midwest -

Transcription

Woody Biomass Opportunities
in the Upper Midwest Pellets, Fuels for Schools and Electrical
Generation
WEBINAR
April 16, 2009 1:00 - 2:15 PM
Central time
Please test your audio by downloading the Duluth foghorn, a classic Great Lakes
sound!
• Webinar sponsored by the Midwest and Upper
Mississippi Valley Sections of the Forest Products
Society.
• The Forest Products Society's mission is to foster
innovation and research in the environmentally sound
processing and use of wood and fiber resources by
disseminating information and providing forums for
networking and the exchange of knowledge.
www.forestprod.org
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our chat feature.
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access is shown in the lower left box.
• This webinar will be archived. You will be notified of the web
location for access via e-mail following the webinar.
Webinar Agenda
• Wisconsin Fuels for Schools and Communities
Pilot Program
– Pamela Porter, Midwest Office Director for the
Biomass Energy Resource
• Wood Pellet Industry in the Upper Great Lakes
Region: Yesterday, Today, and Tomorrow
– Don Peterson, President of Renewable Resource
Solutions, LLC
• Woody Biomass Electrical Generation: A Utilities
Perspective
– David Donovan, Manager of Regulatory Policy, Xcel Energy
• Questions and answers
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Heating with Biomass:
Wisconsin Fuels for Schools and
Communities Pilot Program
Presentation to:
Forest Products Society (FPS) Midwest Section and
Upper Mississippi Valley Section
April 16, 2009
Prepared by:
Pamela Porter, Midwest Office Director
Biomass Energy Resource Center
BERC is a national not-for-profit organization
working to promote responsible use of biomass for
energy.
BERC’s mission is to achieve a healthier
environment, strengthen local economies, and
increase energy security across the United States
by developing sustainable biomass energy
systems at the community level.
BERC’s particular focus is on the use of woody
biomass and other pelleted biomass fuels.
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3
Project sponsors
State of Wisconsin
Jim Doyle, Governor
Office of Energy Independence
Judy Ziewacz, Director
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Wisconsin is a biomass powerhouse
• 15.9 million acres of forests
– #1 paper state in U.S.
– $20.2 billion in forest
products (2.5 more than MI
or MN
– Last decade, forestland has
remained steady or increased
• 15.7 million acres of cropland
– 24% of corn grown on
marginal or highly erodible
acres (Dane County)
• Well positioned to champion
renewable biomass energy
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Wisconsin School Biomass Systems
1. Barron High School, Barron
2. Woodland Elementary, Barron
3. Glidden High School, Glidden
4. Hayward Middle School, Hayward
5. Hayward High School, Hayward
6. Lake Holcombe High School,
Lake Holcombe
7. Park Falls High, Park Falls
8. Rice Lake High School, Rice Lake
9. Rice Lake Middle School, Rice
Lake
10.Hilltop Elementary, Rice Lake
11.Shell Lake High School, Shell
Lake
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Goals of Program:Building a Local
Energy Market
• Rapidly increase the number
of public schools and
communities that use biomass
for heating (wood chip, wood &
agricultural pellets)
Demonstrate the feasibility of
biomass heating in a
community setting.
• Save taxpayer money by
retaining energy dollars
• Promote use of locally
produced, renewable energy
• Help state meet goal of 25%
renewable by 2025
• Create local jobs
A renewable energy economy
won’t just happen by itself
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“Modern” Biomass Heating Systems
• Sustainable forest management
• Increased efficiency
• Lower emissions
• Lower time requirements
• Reliable operation
• Automated fuel handling
• Hot water boiler and heat distribution
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Program Design
•
Phase I – Produce feasibility study “Heating with
Biomass: A Feasibility Study of Wisconsin Schools
Heated with Wood”)
• Phase II – Conduct outreach with schools &
communities
• Phase III – Launch pilot program (Install Fall 2009)
• Phase IV – New statewide program (100 schools by
2015)
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Pilot Program 2009
• 2008 study of 1293 Wisconsin schools
–
–
–
–
–
–
Building size (ft2)
Fuel type (nat gas, LP, oil)
Fuel amount
Fuel price
School heating cost
Other (pool, cooking etc.)
• Up to 300 schools are candidates for conversion
• Biomass reduces costs up to 57% over gas; $3080,000 fuel savings annually
• Save $524k – $1.5 mil (30-year life cycle cost
savings wood vs. natural gas)
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Pilot Program 2009
• Announcement letter mailed by DPI to school
districts (45)
• Free prefeasibility studies to interested schools and
communities (33)
• Letter of Interest to be selected as a “model”
biomass community project (22)
– Free engineered feasibility study
– Up to $250,000 in implementation grants
• Community projects selected (9)
– Feasibility
– Project champion
– Financial commitment
– Energy savings
– Other
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Antigo
Ashland
Barron
Crivitz
Eau Claire
Marathon
Marshfield
Muscoda
Tomahawk
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WOOD FUEL COMPARISON:
Best Applications for Woodchips
• Larger facilities
• Where fuel cost savings are very important
• Larger schools (more than 40,000 sq. ft.)
• Where there is room for: new boiler room, fuel
storage bin, tractor-trailer access
• In/near forested areas with an active forest
products industry
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WOOD FUEL COMPARISON:
Best Applications for Pellets
• Residential use (stoves & central heat)
• Small commercial facilities
• Small schools (under 40,000 sq. ft.)
• Locations with limited space
• Sites not far from a pellet plant
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Fuel Cost Comparison
$18.46
Fuel Cost Comparison ($/MMBtu)
$20.00
Switchgrass
Pellets
$10.87
$10.22
Natural Gas
$5.77
$4.00
$3.44
$6.00
$5.02
$8.00
$6.42
$10.00
$8.81
$12.00
$10.05
$14.00
$12.28
$16.00
$14.28
$18.00
$2.00
$0.00
Electricity
Heating Oil
Corn, grain
Propane
Wood Pellets
Corn, stover
Coal
Sawmill
Chips
Harvest
Residues
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Steps in Pilot Program
• Research school energy use, ID biomass candidates
• Develop strategy and outreach materials
• Build state partnership
• Recruit schools
• Hire project engineer
• Conduct feasibility studies (boiler capacity, wood usage
& price, fuel suppliers project costs etc.)
• Financing
• Decision-making
• Permitting
• Project construction
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Summary of Selected Projects
•
•
•
•
•
•
192,455 ft 2
57,836 gas therms displaced
40% first year fuel savings
10% IRR
3 pellet; 6 chip systems
3 combined systems
– Antigo (High school & Aquatic Center)
– Ashland (High school, elementary school,
Hospital, Technical College)
– Muscoda (High school, elementary school,
cheese Plant)
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How School Wood Systems Work
• Fuel Sources
• Fuel Transport and Delivery
• Building Space
• Fuel Storage at School
• Fuel Handling
• Combustion System
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Fuel Sources for School Wood Systems
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Fuel Transport and Delivery
Dump truck
“Walking floor” trailer
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Building Space for School Wood
Systems
Attached
Integrated
Separate
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Fuel Storage at School
Rice Lake, WI chip
system
Shell Lake, WI pellet
system
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Automated Fuel Handling
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Wood-Chip & Pellet Combustion
Wood chip and backup boilers
Wood or Ag pellet boiler
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Recommend biomass?
“Yes. But, a wood system is
definitely more maintenance.
And, you have to keep a
constant eye on your wood
source. But the cost savings
alone make it worth it.
We’re saving close to 100k a
year even when we calculate
in the additional labor
needed.”
Stacy Hom, Building &
Maintenance Supervisor, Barron
Schools
Stacy Hom & Bob Drevlow, Focus on Energy
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Recommend biomass?
“Our system has a payback
of 4-5 years. It provides a
market for our farmers,
shows students a practical
example of renewable energy
and saves the school district
money. My goal is to save
energy costs so we can
spend more in the
classroom.”
Jerry Gauderman - Superintendent,
Shell Lake School District
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Wrap-up
• Biomass is available and economical in approximately ¾
of state
• Modern biomass heating systems take less than 1 hr
maintenance/day
• Seven states have “Fuels for Schools” programs (VT,
ID,MT, NV, ND, UT, WY)
• Up to 300 Wisconsin schools can save $ by converting to
biomass
• Average fuel cost savings $35,000-$80,000/year;
$524,000-$1.5 million over life of system
• Nine communities (16 buildings) selected as “models” for
new pilot program.
• Goal construction Fall 2009
• 40% fuel savings vs. natural gas ($71,694 average
savings)
• 520,524 therms of energy saved (57,836 average)
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Contact Information
Pamela A. Porter
Midwest Office Director
Biomass Energy Resource Center
(608) 241-8640
[email protected]
www.biomasscenter.org
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WOOD PELLET
INDUSTRY IN THE UPPER
GREAT LAKES REGION
Yesterday, Today, and Tomorrow
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Don Peterson’s Experience

Renewable Resource Solutions, LLC (RRS)

8 Years

President
Reports Authored

“Forest Products Marketing Service Feasibility Study”
“Modular Biomass Power Plant Feasibility Study”
“The Real Cost of Extracting Logging Residues for Biomass Fuels – Great
Lakes Region”
“Pellet Technical Section 1, Resource Availability: Analysis of Extraction
Methods, Available Sources, and Delivery Costs of Wood Residues”
“East Central Wisconsin Biomass Feasibility Study"
Goodman Township Industrial Park – Biomass Energy Feasibility Study
Florence County Industrial Park – Biomass Energy Feasibility Study
Feasibility studies for wood pellet plants at 15 specific locations
RRS’ Involvement
RRS, LLC
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Wood Education Resource Center
Woody Biomass Consultant

Support the Wood
Education and Resource
Center of the USDA
Forest Service in the 20
states located within the
USFS Northeastern Area

Connecticut
Delaware
District of Columbia
Illinois
Indiana
Iowa
Maine

Maryland
y

Massachusetts
y

Michigan
y

Minnesota
y

Missouri
y

New Hampshire
y

New Jersey
y
New York
Ohio
Pennsylvania
Rhode Island
Vermont
West Virginia
Wisconsin
Woody Biomass Consultant (continued…)

Woody Biomass Utilization Awareness Services
Improve the quality of small to medium scale solid wood combustion
systems that are available in the US
Identify needs that state forestry, Extension, and USFS have in regard to
woody biomass
Inventory of existing woody biomass utilization and create a database
Conduct six assessments of woody biomass utilization opportunities in
cooperation with State forestry agencies.
Develop enhanced tools for preliminary feasibility analysis.
Develop informational products describing the use of wood as an
energy resource
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“Multiple Wood Using Systems at One Location”

Free Webinar

4/23/09

10:00 EST / 9:00 CST

[email protected]
Wood Pellet Market
Overview
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National Pellet Stove Sales
*
Estimate from Piper Jaffray
*Approximate
FY09 1QTR National Average: Retail
Price/Ton[1]
State
Average Retail $/ton State
Average Retail $/ton CO
$ 230.00
MN
$ 259.86
CT
$ 323.17
NH
$ 287.23
ID
$ 175.00
NJ
$ 304.00
IN
$ 250.00
NY
$ 274.22
MA
$ 293.16
OH
$ 275.83
MD
$ 317.50
PA
$ 299.50
ME
$ 287.50
WI
$ 267.88
MI
$ 227.72
VT
$ 264.75
National Retail Average ‐ $289.24/ton (bagged)
[1]
Accessed: 3/5/09. Site Updated: 2009. http://www.woodpelletprice.com. 20
Fuel Cost Comparison
Wood Pellets
Cost per ton in dollars
$289.24
Appliance Efficiency 80%
Cost per million BTU=$22.04
Fuel Oil #2
Cost per gallon in dollars
Electricity
Cost per kWh in cents
$ 3.26
10¢
Natural Gas
LP Gas / Propane
Cost per therm in dollars
Cost per gallon in dollars
$ 1.55
$ 2.47
Hardwood (air dried)
Coal
Cost per cord in dollars
Cost per ton in dollars
$ 190.00
$ 250.00
Pellet Fuels Institute, Inc.; Fuel Cost Comparison Calculator
Current Wood Pellet Production
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Upper Great Lakes Wood Pellet Plants
American Wood Fibers
Schofield
Wisconsin
Bay Lakes Companies, LLC
Oconto Falls
Wisconsin
Minnesota
Bio Pellets
Deer River
Dejno's Inc.
Kenosha
Wisconsin
Elkhorn Industries, Inc.
Superior
Wisconsin
Great Lakes Renewable Energy, Inc.
Hayward
Wisconsin
Lone Tree
Bagley
Minnesota
Marth Wood Shaving Supply
Marathon and Peshtigo
Wisconsin
Pellet America Corp
Appleton
Wisconsin
Performance Wood (not operating)
Seymour
Wisconsin
PJ Murphy Forest Products (not operating)
Ladysmith
Wisconsin
Maeder Brother Quality Wood Pellets
Weidman
Michigan
Michigan Wood Pellet Fuel, LLC
Holland
Michigan
Michigan Wood Pellets, LLC
Grayling
Michigan
R.A. VanHorn, LLC
AuGres
Michigan
Fiber By-Products
White Pigeon
Michigan
Cascade Pellet Corp.
Gaylord
Michigan
Valley Forest Wood Products, LLC
Marcel
Minnesota
Vulcan Wood Products, LLC
Vulcan
Michigan
Current Pellet Producing Facilities

Existing Facilities in the United States (2008)

110*
*Approximation - an exact number is difficult to obtain as some are not registering or
joining associations so they can be tracked.
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Potential Wood Pellet Plant Locations

Possible plants
Goodman, WI
Grayling, MI
Bayfield County, WI
Boyne City, MI
Ladysmith, WI
Milwaukee, WI
Montello, WI
Mountain Iron, MN
Niagara, WI

Pellet Production Numbers

2006

483,500 tons available USA
2007
547,500 tons available USA
1.5 million tons North America

2008 (Estimated)
10 million tons worldwide*
US Dept. of Energy production
rates for 2008 will not be
available until June 2009.

Figures from a Piper Jaffray Study unless otherwise noted
* Wood Resources Quarterly
of the 10 million
“ Outtons
of pellets
produced [worldwide]
in 2008, Wood
Resources Quarterly
noted that an
estimated 25 percent
of that, or close to 2.5
million tons, was
exported from the
country in which the
pellets were produced.
”
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Wood Pellets

Currently, manufacturers in Wisconsin can produce
282,000 tons of pellets annually from wood
residues and paper.
There are seven more sites that have applied for
permits or have permits.
If these plants are built they will potentially
produce 337,000 tons or more annually. They are
primarily looking at roundwood or logging residue
as the feed stock.
Current Wood Pellet Markets
Location and Explanation
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Residential Wood Pellet Use

Convenience

Clean and allergy-free. Minimal dust or dirt is brought into the home
with pellet fuel.
Stored in less space. A winter’s supply of pellets for an average home
occupies a space roughly 6’ x 6’ x 6’, which makes them easy to store in
a small area of a dry garage, basement, utility room, or shed.
Easy to use. Load once a day. Precisely regulated fuel feed
automatically operates the stove according to owner-determined
settings.
Efficiency

More efficient fuel than cordwood. Pellets have 5-10% moisture content
in comparison to 30-60% for cordwood/woodchips.
Higher BTU content than cordwood. Wood pellets have a BTU output
content of 350,000/ft 3 of fuel, versus 70,000-90,000/ft 3 for
cordwood or wood chips.
Residential Wood Pellet Use
(continued)

Environmental

All natural fuel. Once compressed and dried, pellets hold their form with
natural lignin, which means no glue or binders are required.
Cleaner burn. Pellet fuel has proven to provide the cleanest burn of any
solid fuel. Pellet stoves exhaust an average of 1.2 particulate grams per
hour – well below the United States EPA wood burning limit of 7.5
grams.
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Commercial Wood Pellet Use

Will not work for all facilities. An assessment would need to
be done to ascertain feasibility.
Use the present fuel budget allocations and convert the
facility essentially ‘free of charge’

Locking in at the current fiscal year’s allotted fuel budget for a 5 to 7
year period, utilizing a green energy program, Renewable Energy
Credits, and other local, state, and federal incentives.
Raw Material Sources

Manufacturing Residue
Whole Tree Chips
Biomass Chips
Roundwood
Urban/Residential Wood
Salvaged Wood (Disease, Insect, Weather, Etc.)
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Wood Pellet Plant Locations

Without Adequate Rail Service

50 mile procurement radius
Adequate Utilities
Class A Road
Distance from Neighbors
Local Support
Challenges and Opportunities
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Challenges

Competition for the Resource
Traditional Markets (Pulpwood)
Biomass Burning Facilities
Ethanol, Bio-Oil, Etc.
Animal Bedding
Landscape Mulch

Challenges Continued…

Financing
Banks
Foreign Investors
Angel/Private Investors
Government Grant
Utility Assistance
Non Profit Agencies
Industry Associations

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Permitting
Knowing the Process in Your State
Learn from Others
Get the Right Consultant
Know What You Want to do for Site Layout Up Front

Consistent Raw Material
Consistent Quality Pellets Need a Consistent Species
Mix
Dirt Free
Dependable Suppliers
Knowing Wood Species Attributes

29

Sustainable Raw Material
Ownership of Forest Land
Supply Chain (Loggers)
Willingness to Commit to Long Range Contracts

Production

Process
Design of System
Quality of Equipment

Safety

Fires
Weather
Cold Weather Can Affect Dryer Output
Rain Affects Moisture Content of Raw Material Stored
Outside

30

Fossil Fuel Price Fluctuation
Affects Conversions to Pellets
Affects Transportation Costs of Raw Material and
Finished Products

Price History of Heating Oil
31
Price History of Propane
Opportunities

Industrial Pellets

Customers
Schools
Community Buildings
Industry
Power Plants

Incentives
Production
Raw Material Used

32
Opportunities Continued…

Residential Pellets
Bulk Storage
Auto Feed System

OPET Organization for the promotion of Energy
Technologies
National Capacity and Production
Renewable Wood Energy: 4/24/2007 Marth Companies
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WORLD TOTAL WOOD
ENERGY/COUNTRY
WHO’S USING WOODY BIOMASS?
Renewable Wood Energy: 4/24/2007 Marth Companies

Animal Bedding

All Types of Animals
Home
Barn
Shelters-Clinics
Dairy Farms
Poultry Operations
Etc.

Traditional Bedding in Short Supply

Lumber and lumber product markets in decline
34

District Heating
Local opportunity
Independent utilities
Residential new construction appliance savings
Commercial single source appliance installations
Non-explosive fuels

Potential Funding
35
Potential Funding

USDA
Rural Energy for America Program (REAP)
Rural Development Business and Industry Guaranteed
Loans (B&I)
Value-Added Grant

Potential Funding

US Department of Energy

Biomass Research and Development Initiative
36
Potential Funding

US Forest Service Grants

Typically due in February
Forest Products Laboratory

Pre-application typically due in November
Potential Funding

Small Business Administration (SBA) Programs (504)
37
Michigan Funding/Incentives

Industry Recruitment/Support

Property Tax Exemption

Nonrefundable Business Activity Tax Credit
Refundable Payroll Tax Credit
Renewable Energy Renaissance Zones
Alternative Energy Personal Property Tax Exemption
Forest Products Processing Renaissance Zones (FPPRZ)
Personal Property Tax Relief in Distressed Communities
Industrial Property Tax Abatement
Other Incentives

Charter One’s Job Creation Loan Program
Michigan Economic Development Corporation – Capital Access Program (CAP)
Minnesota Funding/Incentives

State Loan Programs

Value-Added Stock Loan Participation Program
Utility Grants
Minnesota Power - Power Grant Program
Xcel Energy - Renewable Development Fund Grants

Production Incentives

Minnesota - Renewable Energy Production Incentive
38
Wisconsin Incentives

Industry Recruitment/Support

Sales Tax Exemption

Energy Independence Fund Grant and Loan Program
Renewable Energy Sales Tax Exemptions
State Grant Program

Focus on Energy - Renewable Energy Grant Programs
Conclusion

Huge opportunity if done correctly
Need for consistent high quality pellets
Sustainable raw material supply is needed
Innovations in residential pellet stoves and storage
systems
Working together as an industry
Residential delivery systems
Commercial delivery systems/bulk transport
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Questions?
Donald R. Peterson
WERC
Wood Education
And
Resource Center
Woody Biomass Consultant
1353 West Highway US 2
Suite 2
Crystal Falls, MI 49920
E: [email protected]
T: 877-284-3882
F: 906-875-3724
Biomass Energy and its
future in Wisconsin
David Donovan
Manager, Regulatory Policy
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“When I look ahead to the future of my
industry, I see electric production that will
be highly efficient, harness diverse
resources, and be nearly emission-free. I
believe this future is possible. But we need
to support both smart policy and new
technology today to make it happen
tomorrow.”
Dick Kelly
Xcel Energy President and CEO
November 2006
A Leader in Renewables
z #1 Wind Power Provider in U.S.
z #5 Solar Power Provider in U.S.
z #1 Renewables Provider in Wisconsin
41
A Leader in Renewables
z 14% renewables (2008)
z 19 hydroelectric plants
z 2 biomass plants
z Large amounts of
purchased wind
Bay Front History
z Constructed in 1916 by Ashland Light & Power
and Street Railway Company
z Improvements increased to five boilers and six
turbines for a capacity of 92 MW
z In 1979, first investor-owned, electric utility
plant in the nation to burn waste wood
z In 1986, began $15 million life extension
resulting in current configuration of three
boilers and turbines with capacity of 74 MW
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Bay Front Operations
z 35 full-time employees
z Wood purchases of ≈ $5.0 million in 2008
z $20 million+ local economic impact
z Generates an average of 325,000 MWh/year
z Helps meet Wisconsin’s RPS
z Beneficial use of fly ash to construct “pad
sites” to aid local farmers, ranchers, others
Fuels at Bay Front
z Waste wood
z Natural gas
z Coal
z Shredded tires
43
Bay Front Operations
z Installed nitrous oxide (NOx) reduction system
to meet Clean Air Interstate Rules
z Reissuance of Clean Air Mercury Rule
Bay Front Gasification Project
z Need for long-term plan for Bay Front
z Financial and environmental considerations
z Convert remaining coal-fired boiler to use
biomass gasification technology
z Project allows plant to use 100% biomass
z Approx. $58 million
z Adds 200,00-250,000 tons of biomass per year
44
Biomass Gasification Process
Major Environmental Improvements
z NOx: 60%
z SO2:
80%
z Particulate Matter:
80%
z Avoids 100,000 tons coal per year
z Avoids 200,000 tons CO2 emissions per year
z Reduction in mercury emissions
45
Regulatory Process
z Feb. 2009 – Filed Application with PSCW
z Certificate of Authority vs. CPCN
z March-April 2009 – MPUC, NDPSC applications
z Spring - Summer 2009 – Environmental
Assessment
z Fall 2009 – Public hearings
z Fall or Winter 2009 – PSCW decision
Review Process
z Impact on electric rates
z Emissions reductions
z Construction schedule
z Regulatory approval process
z Fuel availability
z WNDR sustainable biomass harvest guidelines
z Biomass fuel flexibility, energy plantations,
grower cooperatives
46
Customer and Community Impacts
z Eco-municipality goals of Chequamegon Bay
z Retain fuel costs in Wisconsin
z Support local economic development
z Achieve carbon management goals
z Meet renewable portfolio standards
z Support local agricultural industry
47