GE launches waste-to-energy project with Aseagas in Philippines

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From Biomass Magazine
Aboitiz Power subsidiary’s Aseagas Corp., which focuses on renewable energy solutions, has inked an agreement with GE’s Distributed Power business to power its first waste-to-electricity project in Lian in the province of Batangas, Philippines.

The 8.8-MW facility, the first “greener” energy venture of Aboitiz, will be a biomass power plant running with GE’s ecomagination approved Jenbacher gas engines. The Batangas plant will utilize organic waste from sugar cane and molasses from a nearby alcohol distillery. Aside from electricity, the plant will have by-products of fertilizer and CO2 that can be sold to farmers and beverage companies, respectively—achieving complete “no additional waste” production. The plant will be able to generate power for an estimated 22,000 homes.

“I think there’s a huge potential for biomass energy in the Philippines. Our population of about 100 million is bound to generate abundant biomass resources including agricultural crop residues, animal wastes and agro-industrial wastes,” says Aseagas chief operating officer Juan Alfonso. “The Philippines’ feed-in tariff allocation right now is 250 megawatts for biomass. Other countries like Germany, for example, have thousands of megawatts of biomass. So we’re just scratching the surface.”

Additionally, the Department of Energy has stated that the Philippines’ supply of biomass resources has the potential to generate a capacity of 4,450 MW, which is equivalent to 40 percent of the country’s energy needs, if developed. Abundant and with zero–carbon dioxide emissions, biomass is considered one of the solutions to the energy challenges of the future.

GE’s innovative gas engines technology will ensure the Aseagas power plant’s high levels of efficiency, modularity and reliability in supplying power to the Philippine grid.

“This collaboration is significant to GE because this is our first power generation deal with the Aboitiz group and is the largest procurement of Jenbacher engines in the Philippines to date,” said John Alcordo, ASEAN regional general manager for GE’s Distributed Power business.
Seven of GE’s Jenbacher gas engines, four J420 and three J320 units, will be delivered to Aseagas by October 2015 for the first of three phases of the project, targeting the power plant to go online before year’s end. The second phase commences early in 2016. DESCO Inc.—GE’s authorized distributor for Jenbacher gas engines in the Philippines—will be in charge of the installation and maintenance of the units.
The Aseagas venture signals rosy prospects in utilizing alternative sources of energy to broaden the country’s energy mix, which is seen as vital in powering sustainable progress. “Aside from contributing to the grid’s power generation mix, hopefully this project also increases awareness on how organic waste can be put to good use, such as for power generation,” Alcordo said.

Founded in 2005, ecomagination is the company’s commitment to technology solutions that save money and reduce environmental impact for its customers and GE’s own operations.

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Report explains how bioenergy supports sustainability goals

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From Biomass Magazine

US Department of Energy

According to an international report on bioenergy and land use, informed management of bioenergy crops can actually alleviate factors contributing to food insecurity, as well as provide practical avenues to significantly reduce greenhouse gas emissions, promote sustainable energy production, and preserve biodiversity. The Scientific Committee on Problems of the Environment (SCOPE), an international nongovernmental organization, published the SCOPE Bioenergy and Sustainability Report, titled Bioenergy and Sustainability: Bridging the Gaps, in April 2015. The Bioenergy Technologies Office (BETO) funded the work of several national laboratory researchers who contributed to the report.

The 21-chapter report examines global agricultural trends and concludes that land availability is not a limiting factor in the expansion of biobased fuels and products. It features detailed analysis demonstrating how energy crops can be used to improve soil conditions, restore productivity to currently marginalized lands, and expand economic opportunities for agricultural workers. Such findings have significant implications for the growing bioenergy industry, as the study addresses misunderstandings that bioenergy crops inherently compete with food production and worsen food scarcity in certain parts of the world.

Led by researchers from the Sao Paulo Research Foundation, the SCOPE report is the collective effort of 137 experts from 82 institutions and 24 countries to document and analyze impacts, benefits, and constraints related to the global expansion of bioenergy. Contributors include several BETO-funded scientists from Argonne National Laboratory, the National Renewable Energy Laboratory, and Oak Ridge National Laboratory.

SCOPE used peer-reviewed data and scientific evidence from more than 2,000 sources to evaluate how expanding bioenergy production and use affects energy security, food security, environmental and climate security, sustainable development, and innovation. The report identifies opportunities for bioenergy crops and technologies to improve agricultural productivity and environmental health, and provides a vision for sustainably reducing poverty and reliance on dwindling fossil resources.

BETO funding supports researchers from national laboratories, universities, industry, and non-profit organizations who contribute to peer-reviewed scientific studies such as the SCOPE Bioenergy and Sustainability Report. Learn more about how BETO supports the development of a sustainable bioenergy industry through its Sustainability Program.

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U.K. households supportive of renewable energy, biomass

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By Erin Voegele
Biomass Magazine

The U.K. Department of Energy and Climate Change has released an updated edition of its public attitudes tracking survey, reporting that 78 percent of U.K. households said they support the use of renewable energy provide electricity, fuel and heat. According to the DECC, this result is consistent with survey results from the past three years.

The majority, 71 percent, of respondents said renewable energy industries and developments provide economic benefits to the U.K. That statistic was also consistent with survey results from 2014 and 2013. In addition, 78 percent said that renewable energy developments should provide direct benefits to the communities in which they are located.

Approximately 63 percent of respondents said they support biomass technologies, up from 60 percent last year. In 2012, 64 percent of respondents indicated support for biomass energy.

While support for renewables is widespread, U.K. households showed much less support for non-renewable energy technologies. Only 39 percent of respondents said they support the use of nuclear energy and only 24 percent said they supported the extraction of shale gas to generate heat and electricity in the U.K. Approximately 38 percent of people said were aware of carbon capture and storage (CCS) technology, and only 52 percent of those who were aware of the technology said they support its use.

The report also addressed public attitudes toward climate change. About 66 percent said they are concerned about climate change. In addition, 40 percent said they attribute climate change solely to human activity, while 42 percent said they believe climate change in caused by a mixture of natural and human causes.

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USDA grant supports installation of pellet boiler in N.H. school

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From Biomass Magazine

By Rep. Annie Kuster’s Office

Rep. Annie Kuster, D-N.H., recently announced two grants from the USDA’s Rural Development program that will support projects in two New Hampshire communities.  The Bethlehem School District has received a $30,000 grant that will be used to replace an oil-fired hot water boiler heating system at Bethlehem Elementary School with wood pellet boilers, and the town of Stratford has received a $15,000 grant to improve its town garage, which houses all town vehicles.

“In many rural areas around New Hampshire, Rural Development funding is crucial to recover from the effects of harsh winters and maintain municipal infrastructure,” Kuster said.  “I’m particularly excited to see Bethlehem Elementary making the transition to biomass heat, a renewable energy source that will help keep students warm during the frigid winter months.  I congratulate the recipients of these grants, which will help both towns thrive and serve the citizens of the North Country well.”

Kuster is a strong supporter of biomass energy, and has cosponsored H.R. 1145, the Biomass Thermal Utilization Act, which would establish tax incentives for the installation of biomass heating systems.  The BTU act would help consumers with the initial high cost of installing biomass heating systems, thereby allowing them to save money in the long term by using locally-sourced biomass instead of expensive home heating oil.  A member of the Sustainable Energy and Environment Coalition, Kuster has long advocated for the development of renewable energy in order to offset high energy costs, create more jobs for Granite State workers, and protect the environment.

The Rural Development Community Facilities program, which awarded the grants, helps maintain and improve essential community facilities that serve the public in rural areas.

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2015 Heating the Midwest conference commences in Minnesota

From Biomass Magazine

By Katie Fletcher

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Collocated with the 2015 International Biomass Conference & Expo being held in Minneapolis, Minnesota, the Heating the Midwest conference began on April 20 with a discussion on overcoming obstacles to speed up the deployment of biomass thermal solutions.
Tony “T.J.” Morice, the newly appointed chair of HTM and vice president of marketing, operations and business development of Marth Companies, kicked off the conference by congratulating Brian Brashaw, director of the Wood Materials and Manufacturing Program, on his leadership as the former HTM chairman. HTM began in 2011, focusing on thermal energy and opportunities within the Midwest, especially locations without access to the natural gas grid. “We want to increase growth in biomass heating in the Midwest, but there are obstacles to overcome,” Morice said. “Biomass heating projects need to be on the radar and the rural economic development focus needs to be understood.”

The first panel of the day began with some Austrian advice from Christiane Egger, deputy manager of OO Energiesparverband. Egger described how biomass thermal installations became Austria’s leading residential heat source by sharing activity that has taken place in Upper Austria, Oberosterreich. OO Energiesparverband was founded in 1991, and is mostly funded by the state to promote energy efficiency and renewable energy. Egger also manages Oekoenergie-Cluster in Upper Austria. This is a network of more than 170 renewable energy and energy efficiency partner companies in Europe. Egger drew attention to the dramatic increases in the OEC and the industry in general over the last 15 years. The number of partner companies has doubled from 74 to 170, combined revenues from these companies has jumped ten times from $250 million to $2.5 billion and exporting companies have increased from 12 to 108.

The state of Upper Austria, similar in geographical size to the state of Connecticut, has a population of 1.4 million, with biomass covering about 40 percent of heating in homes. Overall, renewable energy accounts for 35 percent of the total, primary energy demand in Austria; 16 percent clean biomass, 14 percent hydro, 5 percent solar and other renewables. Because of this, Egger said that Austria has avoided import expenses of fossil fuels by around $1.5 billion per year. The state has 50,000 automatic biomass systems installed—26,000 pellet systems, 24,000 wood chip systems and 330 biomass district heating plants. The main options for biomass heating installations in Upper Austria include modern stoves, automatic pellet heating, modern firewood boilers, automatic wood chip boilers, district heating and combined-heat-and-power (CHP) systems.

Egger also provided economic statistics by indicating that 4,500 jobs have been brought to the biomass boiler and stove industry in Austria across production, sales and installations, resulting in approximately $730 million in annual revenue.

All of these numbers contribute to Austria’s renewable energy goal of having all electricity and space heating needs met with renewables by 2030. Egger shared that Austria was able to create a successful biomass thermal energy market to work towards this goal with carrots, sticks and tambourines. Carrots represent financial incentives, sticks stand as regulatory measures and tambourines represent information and training.

The main market drivers Egger identified are outreach training, standards for fuel and equipment and cooperation across the value chain at an industry level. On the state and local government front, drivers include setting targets, removing administrative barriers and developing good incentive programs. Lastly, Egger believes the general public must be aware of the benefits, have the right combination of sticks, carrots and tambourines and maintain a long-term perspective.

Egger concluded by acknowledging Austria has made great progress over the past few years, but that 1.6 million households, or 45 percent, are still heating with oil and gas, so the opportunity remains to increase biomass’ place in Austria’s energy market.

Joe Seymour, executive director of the Biomass Thermal and Energy Council, spoke of big policy activities in the United States at the state and federal levels. The Biomass Thermal Utilization Act was amongst the federal activities Seymour highlighted. The act provides a 30 percent investment tax credit for industrial and residential biomass thermal heating systems, helping put biomass on a level playing field with solar and geothermal technology. Another federal tax initiative mentioned was the CHP and waste-heat-and-power (WHP) investment tax credits. The CHP initiative provides a 30 percent investment tax credit for CHP units. Seymour said a separate 10 percent WHP tax credit is moving along as well. Besides these tax initiatives, Seymour made mention of thermal energy’s inclusion in the White House Executive Order.

Department pressure is also occurring at the federal level and BTEC is encouraging pledges of support. The Energy Information Administration updated its data collection pertaining to densified biomass fuels—how much is being produced, and for what price and market. EPA’s New Source Performance Standards on heater regulations made the list of federal activities as well. Next, how the government will create carbon and 111(d) was mentioned. Farm bill revisions passed in 2014 and the work of the Rural Energy for America Program rounded off the list.

Statewise, renewable portfolio standard (RPS) programs and thermal inclusion in utility goals were first mentioned. New Hampshire and Maine’s generous rebate programs were also discussed by Seymour. He stressed the importance of state wood energy teams as well, referring to them as laboratories for democracy.

Seymour concluded by saying critical messaging is finally being built. “We’re finally building that momentum,” he said. “It’s the boots on the ground that’s going to help move this market, until those in Washington can get their act together.”

William Strauss, founder and president of FutureMetrics, was the last of the speakers during the opening panel at HTM. Strauss said in the next 20 years pellets are expected to grow by about 20 million metric tons per year, heating markets are expected to grow about 5 million metric tons per year and an estimated 1.8 million tons of new, annual U.S. pellet demand for domestic heating is expected.
Strauss shared that 22.1 million tons of pellets were produced worldwide in 2013, and that North America has the capacity to produce nearly 16 million tons. The U.K. has the biggest end-use consumption of pellets, followed by Italy.

One obstacle with continuing pellet market growth is because it is partly driven by the market for heating oil. Strauss said it may be difficult for the pellet stove market to see growth this year because, as of March, pellet and crude oil prices hit close to a break even.
Strauss also shared his case to convert a home heating device to pellet fuel before home installation upgrades are made. Biomass Magazine reported on this subject earlier in April.

The resounding attitude amongst the panelists was that developing biomass thermal markets takes time and is challenging. “Developing a biomass thermal market is hard,” Egger said. “It takes passion and lifetime commitment.”

Adee Athiyaman, professor of marketing at Illinois Institute for Rural Affairs at Western Illinois University, was unable to present as originally planned on the panel. A white paper entitled “Tapping Unstructured Data to Gain Insights into Consumer Purchases of Biomass Residential Heating Appliances: An Exercise in Big Data Analytics”, which his presentation was based on, can be found here.

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EPA to finalize 2014, 2015 and 2016 RFS rules by November

From Biomass Magazine

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By Erin Voegele

The U.S. EPA has posted a notice to its website announcing that the volume requirements for the 2014, 2015 and 2016 renewable fuel standard (RFS), along with the 2017 volume requirement for biomass-based diesel, will be finalized by Nov. 30. A portion of the new compliance schedule is the result of a proposed consent decree in litigation brought against EPA by the American Petrochemical Institute and American Fuel and Petrochemical Manufacturers.

Under the proposed consent decree, the EPA said that it will propose 2015 RFS volume requirements by June 1 and finalize volume requirements for 2014 and 2015 by Nov. 30. Also under the decree, the EPA will resolve a pending waiver petition for 2014.
Outside the scope of the decree, the EPA has committed to propose RFS volume requirements for 2016 by June 1 and finalize them by Nov. 30. The agency also said it will finalize the RFS biomass-based diesel volume requirements for 2017 on the same schedule. Regarding the 2014 standard, the EPA said it will re-propose 2014 volume requirements by June 1 that reflect the volumes of renewable fuel that were actually used in 2014.

The consent decree relates to a lawsuit filed against the EPA by the API and AFPM on March 18 in the U.S. District Court for the District of Columbia. In the compliant, the oil groups allege the EPA has violated a nondiscretionary duty under the Clean Air Act to establish renewable fuels obligations for 2014 and 2015 and to approve or disapprove a petition filed by the API and AFPM to waive, in part, the 2014 RFS. That waiver petition was submitted to the EPA in August 2013.

Documents published by the EPA explain that the consent decree is not yet final. While it has been signed by the API and AFPM and lodged with the court, it has not been signed by EPA and has not been signed or entered by the court at this time. According to a notice filed by the EPA with the court, the consent decree is not final and cannot be entered by the court until the EPA administrator provides a reasonable opportunity by notice in the Federal Register for members of the public to comment in writing. Following the public comment period, if none of the comments disclose facts or considerations which indicate that the decree is inappropriate, improper, inadequate, or inconsistent with the CCA requirements, the administrator will request that the court enter the decree.

The Renewable Fuels Association has spoken out in support of the EPA rulemaking timeline. “We applaud EPA and API for reaching an agreement that will provide all stakeholders some certainty with regard to the renewable fuel standard,” said Bob Dinneen, president and CEO of the RFA. “No one has benefited from the delays in setting annual renewable volume obligations; and while we are sympathetic to the difficulty EPA faces in promulgating annual targets, the statute is clear about the volumes required and the agency simply has to do a better job moving forward. This consent agreement is a good start. We are particularly pleased that the agency has committed to addressing the 2016 RVO in the same timeframe even though that is outside the scope of the consent agreement. More important than EPA meeting its statutory deadlines, however, is that the agency recognize the market transforming purpose of the RFS and allow the RIN mechanism to drive investment in infrastructure and compel consumer choice at the pump.”

The American Coalition of Ethanol also supports the agreement between the EPA, API and AFPM. “The scheduling agreement between the oil industry and EPA is actually a good signal for the advanced biofuels industry because it lays out a time frame and a reasonable market expectation for resolving the regulatory uncertainty around the RFS,” said Brooke Coleman, executive director of the AEC. “Now that we have a better idea of when it will happen, we look forward to working with EPA to make sure that the new RFS proposal supports the commercial deployment of advanced biofuels as called for by Congress. We were encouraged by EPA’s decision late last year to pull a problematic 2014 proposal, and we are optimistic that EPA will make the necessary adjustments and put the RFS back on track going forward.”
Growth Energy said the EPA’s timeline will provide the industry with some certainty. “I am pleased to hear that the EPA has finally put a process in place to establish some certainty for biofuel producers with the recent announcement of the timeline for the proposed 2015 RVO rule by June 1st as well as the final 2014 and 2015 volume obligations by Nov. 30, 2015,” Tom Buis, CEO of Growth Energy, said. “Our producers have faced ambiguity for too long and today is welcome news that they are establishing a level of certainty with this announcement. However, far more important than timing is that that the EPA establishes a final rule that moves our industry forward, and reflects the bipartisan vision Congress intended for the RFS. Additionally, while not part of the consent decree, we are pleased to see that the EPA has committed to finalizing the 2016 RFS RVO numbers this year as well. By taking this action, they are ensuring that the RFS is back on a path to certainty for the biofuels industry, providing the necessary guidance for the industry to continue to thrive and advance alternative fuel options for American consumers.”
The American Coalition for Ethanol is also pleased with the EPA’s newly announced timeline. “ACE has consistently said it is much more important for EPA to get the RFS done right than it is for them to get the RFS done quickly, and that bears repeating given today’s announcement that the RFS will be getting back on track for implementation,” said Brian Jennings, executive vice president of ACE. “Last year Big Oil came close to bullying EPA to completely re-write the RFS so they could escape their legal responsibility to blend E15 and flex fuels into gasoline.  But thanks to comments from ACE members and other biofuel supporters, EPA wisely chose to abandon their proposal to set the 2014 RFS on the E10 blend wall.  It appears EPA is going to get the RFS back on track for implementation.  Our priority will continue to be to ensure EPA holds oil companies legally responsible under the RFS for making cleaner and less expensive fuel choices, such as E15 and E85, available to consumers.”

The National Biodiesel Board said it is supportive of the EPA’s announcement. “We are pleased to see the EPA make these further commitments toward ending these delays,” said Anne Steckel, vice president of federal affairs at the NBB. “Biodiesel is the most successful EPA-designated Advanced Biofuel under the RFS to date, and the Obama Administration should be doing everything it can to promote biodiesel so we can show that Advanced Biofuels are here today, cutting greenhouse gas emissions by more than 50 percent, creating jobs and reducing our dependence on global petroleum markets that wreak havoc on our economy. The RFS is the most successful policy we have for reducing emissions in the transportation sector, and it is working. We applaud the EPA for taking this step and look forward to working with the Administration in the coming weeks to get this program back on track.”

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Portucel breaks ground on pellet plant in South Carolina

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From Biomass Magazine

By Katie Fletcher

Last month, Portucel Sporcel Group broke ground on its Colombo Energy pellet plant in Greenwood County, South Carolina. This estimated $110 million global investment represents an important development in the company’s expanding bioenergy business.
Portucel is an integrated forest, pulp, paper and energy company, with its activities based at three large-scale production mills in Portugal.  According to a Portucel spokesperson, the opportunity to expand the company’s biomass business in the U.S. was presented on special conditions for pellet manufacturing, including raw material availability, energy costs and good infrastructure. The spokesperson added that the plant will be equipped with advanced abatement equipment for environmental emission control, and its environmental performance will rival similar plants in the U.S.
The company’s first U.S. pellet plant will be located in Greenwood County’s Emerald Road Industrial Corridor. The location in Greenwood allows the facility access to the surrounding forested area. “Colombo Energy will benefit from the very favorable conditions in terms of Greenwood County’s forestry raw materials and available energy,” Portucel spokesperson said.
In return, the facility is expected to create 70 new, local jobs. “The Portucel Group is very pleased to announce the construction of its new, state-of-the-art wood pellet facility in Greenwood, South Carolina,” said Diogo da Silveria, Portucel CEO. “Our facility will provide a renewable, sustainable source of energy for many thousands of electricity consumers for years to come, as well as jobs to many South Carolinians.”
Secretary of Commerce, Bobby Hitt, adds, “Recruiting foreign-based firms, like Portucel S.A., to South Carolina is a critical part of our economic development strategy. Portucel’s decision to establish manufacturing operations in Greenwood County is great news for the local community and state as a whole.”
Once fully operational, the facility will have the manufacturing capacity to produce 460,000 tons of pellets annually with the Colombo Energy Inc. brand. Scheduled completion is in the third quarter of 2016. A Portucel spokesperson said the company has already secured sales of 70 percent of its production through the signing of 10-year, fixed-price supply contracts, with most of the targeted sales for the European industrial market.
Overseas, the Portucel Group accounts for more than 3 percent of Portugal’s tangible exports. As of September 2014, the company achieved record paper output, as its year-over-year sales volume saw an increase of 3 percent, to 1.147 million tons. “The company has sales in 123 countries, on the five continents—with particular mention of the European and American markets,” the company spokesperson said. “Portucel is one of the most prominent Portuguese companies on the international stage.”
 

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A Double Edged Sword

From Biomass Magazine

By Anna Simet

With an improving economy comes a strengthened dollar, and that’s good news to U.S. consumers—we’re getting more for our dollar, and we have more dollars to spend elsewhere. It is not, however, good for trade and foreign U.S. investment.

With an improving economy comes a strengthened dollar, and that’s good news to U.S. consumers—we’re getting more for our dollar, and we have more dollars to spend elsewhere.

It is not, however, good for trade and foreign U.S. investment.

One year ago, the U.S. dollar was trading at 80 cents. This month, it was (briefly) trading for 100, a 12-year high against the euro. It recently slipped to just over 97 cents, but nonetheless, its high value has U.S. businesses with international interests cringing. Here is a graph that illustrates how the dollar has soared over the past year:

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So what does that mean for the biomass industry?

Let’s start with U.S. pellet exports. Since I’m terrible at math—hence my career choice in words—I asked my friend Bill Strauss over at FutureMetrics if he would be willing to juggle the numbers for me, and he was extremely helpful, as always. He made it seem pretty easy—here’s what Bill said:

If the U.S. price of delivered pellets is $200 per metric ton, the cost to the EU buyer when the Euro was at 1.36 euros per dollar in early October 2013, was 147.06 per metric ton. So, 200/1.36.

Keeping the price in dollars the same and converting to euros at today’s exchange rate of 1.09 euros per dollar, the price in euros is 183.49 per metric ton. So, 200/1.09.

 Today, the cost to a buyer in the Euro zone is 30.49 more euros for the same metric ton than it was about 18 month ago, a 21 percent increase in cost for the same pellets.

Bill pointed out that the Canadian dollar has not strengthened against the euro and British pound nearly as much at the dollar, which leads me to believe Canadian producers must have a competitive edge right now.  “Where the markets are most competitive, on the spot markets for heating pellets, some U.S. producers are seeing their margins shrink to remain competitive,” Bill added.

I imagine that U.S. producers focused on exporting are working hard to minimize costs wherever possible, from the woods to the port.  And new and developing projects must absolutely do the same. Weaker foreign currency means more money out of the pockets of overseas customers, money they will not or cannot spend, and the pressure is likely already on to lower the price per ton.

FutureMetrics has a cool dashboard that illustrates the cost scenario on both ends and takes into account all of the metrics involved—you can play around with the numbers and get a better idea of costs and profit involved on both ends.

Moving on to investments on U.S. soil, here’s an interesting point that I read in a Financial Time article—some are viewing this situation as sort of a blessing in disguise.

When Drax was questioned as to whether this was hurting its business, the answer was…not really. Surprising, but it makes sense: while the utility is spending more to invest in the U.S. market (hundreds of millions in its facilities in Mississippi and Louisiana,  and, as we reported in November,  is still scoping out the Northeast for other projects) these investments are long-term, and will likely pay off in a strong economy.

The situation isn’t a whole lot different for providers of any kind of bioenergy-related equipment that  export or are engaged in projects outside of the U.S.—while talking with Craig O’ Connor,  director of Office of Renewable Energy & Environmental Exports at the Export-Import Bank of the U.S., he said exporters are indeed taking a hit. While U.S. products are generally considered high-quality and are well-liked, customers will be forced to look elsewhere if they can’t make the numbers pencil out. Therefore, lowering prices may be the only option in the near-term.

Talk about a double-edged sword—stronger dollar, stronger economy=weakened financial models, shrinking profit margins.

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Ontario invests in Rentech pellet plants

By Ontario from Biomass Magazine

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Ontario is investing in two projects to help Rentech Inc., a Northern Ontario fiber company, convert two idle wood product mills into facilities that manufacture wood pellets, a sustainable energy source. The two facilities have created over 60 jobs in Northern Ontario.

Through the Northern Ontario Heritage Fund Corp., Ontario will invest $4 million into the two plants. The facilities, located in Wawa and Atikokan, will turn Crown-owned wood materials that previously would not have been used or sold, into wood pellets to be used to produce electricity in local and international power production facilities.

The Wawa facility has already secured a sales contract with a U.K.-based company for their production. The Atikokan facility will sell to Ontario Power Generation, which has phased out coal and is using sustainable resources like wood pellets to produce electricity.

Investing in private-sector job creation projects is part of the government’s economic plan for Ontario. The four part plan is building Ontario up by investing in people’s talents and skills, building new public infrastructure like roads and transit, creating a dynamic, supportive environment where business thrives and building a secure savings plan so everyone can afford to retire.

 “Rentech’s proposals for these two plants show innovation, business savvy and responsible management of resources,” said Michael Gravelle, Minister of Northern Development and Mines and chair of the NOHFC. “Our government is proud to support Ontario wood products and invest in these sustainable projects that will create jobs in Northern Ontario.”

 “The conversion of the two coal plants in Thunder Bay-Atikokan has led directly to the creation of the need for biomass pellets,” said Bill Mauro, MPP Thunder Bay-Atikokan. “I’m excited by the additional direct and indirect employment that will be created both in Atikokan and Wawa through this new industry in Ontario, and am pleased that our government has been able to support these two Rentech plants through the Northern Ontario Heritage Fund Corporation.”

“The conversion of the previous particleboard plant in Atikokan by Rentech to make wood pellets creates much needed jobs in Atikokan, as well as creating forestry and transportation jobs in our area, said Dennis Brown, mayor of Atikokan. “I would like to sincerely thank all those who made it happen, especially Rentech, Ministers Bill Mauro and Michael Gravelle and the entire provincial government. We now have essentially a brand new facility that will help take Atikokan well into the future. This is great news for Atikokan!”

“We are pleased that through the leadership of Minister Gravelle and MNDM that funding from NOHFC has brought this project to fruition,” said Ron Rody, mayor of Wawa. “The community of Wawa welcomes the much-needed economic stimulus the Rentech Operation will bring to the Superior East Region. Above all it instills confidence, hope and a revitalized energy for our residents to invest in their community.”

“We are thankful for the ongoing support from the Ontario government and in particular, Hon. Michael Gravelle, the Minister of Northern Development and Mines and Hon. Bill Mauro, the Minister of Natural Resources and Forestry,” said Stephen Roberts, managing director of Rentech Canada. “The partnership and support of the Northern Ontario Heritage Fund Corporation played an important role in constructing the Atikokan and Wawa pellet facilities. We look forward to continued success in Northern Ontario, and are proud of our contribution of new jobs and local economic development.”

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Renewable Heat Wave

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From Biomass Magazine

By Katie Fletcher from Pellet Mill Magazine

Price is key. No matter the purchase, ultimately, if the price is right a customer’s inclination to make an investment escalates. This notion holds true when consumers consider their energy source options. Case in point, three years ago, the United Kingdom initiated an environmental program to support biomass-heat installations and other renewable heat sources through financial incentives. It opened a nondomestic renewable heat incentive (RHI) scheme for applications in November 2011, with a domestic RHI following last spring. The incentives created the right price for many consumers of biomass-heat that qualified under the nondomestic RHI in business, industry and public-sector organizations, and for homeowners, private landlords, social landlords and self-builders under the domestic option.

The  RHI, which traces back to the 2008 Energy Act, was introduced in the legislation principally to help meet the U.K.’s goal of generating 15 percent of energy from renewable sources by 2020, as set out in the Renewable Energy Directive. The government has identified indicative contributions of renewable energy from the electricity, heat and transport sectors that would allow the U.K. to meet the overall target as cost effectively as possible. The Department of Energy and Climate Change identified that for heat, up to 12 percent could be generated from renewable sources by 2020, increasing from the approximate 2 percent reported in December.

Although the RHI supports the installation of renewable energy technology other than biomass, biomass plants have achieved the quickest rate of uptake. Other incentivized technologies for both residential and commercial consumers include air-source and ground-source heat pumps and solar thermal systems, and in the commercial sector, water-source heat pumps, deep geothermal plants, biomethane production for injection and biogas plants. Consequently, the uptake has had a sizeable impact on the supply and demand for many of the plants’ sources of fuel, pellets and wood chips. “The renewable heat incentive has caused the wood heating industry to explode in a way nothing else prior to that and probably subsequent is going to,” says Julian Morgan-Jones, Wood Heat Association chairman and managing director of South East Wood Fuels Ltd.

South East Wood Fuels transports predominantly wood chips and some wood pellets to commercial and institutional wood heating customers in the South East and London. The industry has grown from about 50,000 tons of A1-grade pellets in 2010 to 240,000 tons projected in the current year, according to Bruno Prior, managing director of Forever Fuels Ltd., a wood pellets supplier in the U.K., and a board member of the WHA with Morgan-Jones. Neil Harrison, co-founder of re:heat and WHA vice chairman, says the RHI is “probably the most generous renewable energy support scheme, if not in Europe, probably in the world, at the moment.” He adds, “The economics are very strong for biomass as a result.”

The RHI can be regarded as one of the key reasons there was a need for the association. “The WHA is there to grow and maintain the wood heating industry in the U.K., and to also do work to improve standards and improve the reputation of the industry,” Harrison says.

The WHA falls under the umbrella of the Renewable Energy Association, which was instrumental in lobbying for the RHI scheme. There was a need for an association that reflected the specific needs of the wood heating industry, Morgan-Jones says. Now, 140 representatives from various companies are members of the association.

While the WHA helps support the wood heat industry as it grows under the RHI, the Office of Gas and Electricity Markets (Ofgem) serves as policy administrator. Ofgem E-Serve publishes guidance materials, receives and assesses applications, makes payments to approved applicants, ensures ongoing compliance with scheme rules and provides quarterly and annual public reports.

Each RHI scheme has its own tariffs, but similar conditions, rules and application processes. Applicants must fill out online applications under both schemes. Installations for the nondomestic scheme are provided subsidies payable for 20 years to eligible renewable heat generators. These tariffs are available at a different rate depending on the size of the boiler. The tariff levels for boilers up to 999 kilowatts (kW) are based on a two-tier payment structure: tier-one payments up to 1,314 peak load hours of operation (15 percent annual heat load) and tier-two payments for operational hours above this. This tariff structure operates on a 12-month basis, starting with the date of accreditation or its anniversary. Small biomass boilers up to 199 kW receive 6.8 pence (p) (10 cents) per kWh for tier one and 1.9 p per kWh in tier two. These tariff rates will be revised on April 1, 2015. The eligible-sized medium biomass boilers between 200 kW and 999 kW receive a tier -one payment of 5.1 p per kWh and 2.2 p per kWh for tier two. A single tariff level of 2 p per kWh is available for boiler capacities of 1,000 kW and above.

The residential RHI has a single tariff of 12.2 p per kWh, payable quarterly for seven years, although a recent reduction in the tariff to control the budget, or degression, decreases the payment to 10.98 p per kWh for applications submitted after the first of the year. The biomass technology covered includes biomass-only boilers and biomass pellet stoves with integrated boilers. Although there is no limit on the capacity of the product, it must be certified by the Microgeneration Certification Scheme or an equivalent scheme. Besides this certification, the renewable technology must be listed as eligible on the Product Eligibility List, have an Energy Performance Certification for the property and meter the heating systems to receive payments in certain situations, among a number of other credentials. RHI applicants for both schemes must also be below certain emission levels. As of September 2013, all applicants with a biomass boiler are required to submit an RHI emission certificate or environmental permit. The maximum levels for biomass boilers are equal to 30 grams (g) per gigajoule (GJ) particulate matter (PM) and 150 g per GJ nitrogen oxide (NOx).

Doubling The Industry
There is no denying that biomass installations have risen above other renewable energy technology covered by the RHI. According to a recent Ofgem E-Serve quarterly report, 7,258 installations are accredited in the nondomestic scheme and more are expected. Between September and December 2014, 1,203 new, full applications and three preliminary applications were accredited, or an increase of 130 percent since the same quarter in 2013. These installations and other RHI technologies amount to over 1 gigawatt (GW), which was the reported installed capacity as of Aug. 15 last year. Even with the exclusion of residential applications until last year, around 6,500 biomass installations have been approved as of mid-February, according to Ofgem accreditation reports.

DECC releases forecast expenditures on a monthly basis based on data provided by Ofgem. DECC estimates the cost of RHI payments over the 12-month period following the assessment date, which assumes that all installations that were accredited or had registered full applications by that date would receive payments from the start of that 12-month period. As of Dec. 31, £153.6 million (British Pounds) ($236.7 million) is the forecast expenditure for all nondomestic biomass applications, including combined-heat-and-power systems. Small boilers up to 199 kW account for £110.5 million of the forecast amount. The total forecast expenditure, i.e., expenditure for the scheme as a whole over the next 12 months, is £270.4 million. Biomass leads all other technology with these budget commitments by a ratio of 19 to 1, truly proving dominance within the scheme. A similar theme can be found in the residential market, with total forecast expenditure for biomass plants as of Dec. 31 at £17.02 million, a staggering comparison to the combined total of £3 million for all other technology under the domestic RHIs.

Increased expenditures to biomass installations have naturally translated into growth in the wood fuel industry. Edward Billington grew his pellet distribution business, Billington Bioenergy, over the years, and now it has recently been acquired by the Drax Group. This partnership resulted as Drax hopes to help transform the U.K. heat market in the same way they’ve transformed the power market. Billington believes this opportunity will help develop the marketplace for the long term. Billington estimates that Billington Bioenergy serves about 2,000 approved RHI applicants. “We have seen a good uplift in the industry this winter, with a good number of installations going in, both domestic and nondomestic,” Billington says. “The growth has been encouraging, and certainly manageable to date. However, it has been so slow in starting, and coming from such a small starting point, that the U.K. needs to sustain these growth rates at least for the next few years, or even to accelerate them a bit more, to build a truly sustainable wood pellet industry in the U.K. for the long term.”

A pellet producer in the space, Verdo Renewables Ltd., has pellet plants in Andover in Hampshire and Grangemouth, Scotland. Each U.K. plant has the capacity of 55,000 metric tons of wood pellets and 15,000 metric tons of wood briquettes per year. Richard Smith, managing director at Verdo and chairman of the U.K. Pellet Council, agrees with Billington in that the RHI has started to have a considerable impact this winter. “It’s really shown that the demand for pellets has grown dramatically,” he says.

Smith adds that everybody has seen significant growth, and although they haven’t finalized their numbers, they estimate that “the demand in 2014 was just under 150,000 tons, and demand in 2015 will be upwards of 300,000 tons.” Smith says, “Roughly, the sector has doubled for purely heating pellets, this does not include cofiring pellets at power stations.”

Policing The Cowboys
Upon the onset of winter, biomass boiler installations are increasing at a fairly rapid rate, perhaps even too rapidly for the industry to keep up. Billington alludes to a potential concern when he says the growth needs to be sustained. Harrison’s business, re:heat, provides a wide range of services to the biomass heat market. A lion’s share of the business is the distribution of boiler equipment, but lately the company has been doing a lot of consultancy and remedial work for customers who have been left with an installation that isn’t working properly. “There is a growing body of that type of stuff, unfortunately, which is why we need to work together as an industry to put together proper standards and police the cowboys,” he says.

Cowboys in the U.K. are people, generally contractors, who don’t do a proper installation job. “As one might expect, a rapidly growing industry brings its own challenges in terms of available skills and expertise and problem resolution processes,” Morgan-Jones says. “Currently there are a fair number of poorly conceived and implemented boiler installations and so we’re getting customers who have problems. The WHA is looking to help standards and training for all parts of the supply chain to improve this and maintain the reputation of the industry. Equally, installers and fuel suppliers need to learn how to work together to determine the cause of problems and solve them rather than blame each other. At the end of the day, we all need happy customers.”

Solving these problems is one of the three core objectives of the WHA to meet in this year and beyond, Morgan-Jones says.  The first objective is funding––the government funding for the RHI is committed only until March 2016. The U.K. has an upcoming election in May, so it is essential for the industry to get the best possible deal from the new government for the RHI beyond this point. The second objective is to raise awareness about the WHA, and promote wood heating to a larger audience in the marketplace. The third big focus is quality and standards. “We need to professionalize the industry, make sure we have the right training and best practices, and do it effectively,” Morgan-Jones says.

Harrison believes the real crux of the issue is that biomass heat is still fairly new technology in the U.K. He recalls just five years ago he could name most of the companies and individuals in the space, and now there are new companies entering the industry almost every day. “They don’t always enter it with the right level of skills and knowledge to actually execute a successful project, so that is a critical issue,” he says. “It doesn’t take a rocket scientist to work out the kinds of things that can happen when you have lack of barriers to entry, low-skill levels and a very generous tariff support regime.”
Another critical issue is the disproportionate awarding of funding. Prior says, the RHI has encouraged the installation of many small biomass boilers, but there are many things that need to be done to improve the program. “We have a very cost-effective technology that is being encouraged in some ways cost ineffectively,” Prior says.

For example, a critical issue is the disproportionate awarding of funding to sub-200 kW boilers (furnaces), which creates unintended consequences, encouraging boilers to be both oversized and undersized for the requirement leading to inefficiencies and/or under-powered systems.
He adds that even if the budget is extended after the upcoming elections, it will only be available for a few more years. “Beyond that, we are going to need to be pretty cost competitive, because we’re not going to be in the same world of generous financial subsidies,” Prior says.

Yet another challenge with the RHI is the the tension between the need for change in the future and the fear of change in the future, creating uncertainty amongst potential applicants. “The RHI could be improved after the general election,”  Prior says. “However, the new government will need to strike a careful balance between correcting the worst failings in the design, and creating further uncertainty and complexity that inhibits investment. There is no time to be lost if the U.K. is to get anywhere near its 2020 renewable heat commitments.” 

Billington believes changing the program has made it difficult to understand for some. “My personal opinion remains that it was too complex, and the rules were altered and tinkered so much that few truly understood it or could trust in its development,” Billington says. “Had they made it simpler and made a clearer commitment to it, then it would have been better understood and more effective, and you might have achieved more at a lower cost. Hence, it is crucial now that they don’t keep tinkering, but rather allow the policy to settle down and have a stable run for the time being.” 

Some changes coming this year will impact biomass installations. One change is degression, which, according to Prior, has been 30 percent over the past 12 months. One big change in autumn, subject to parliamentary approval, is associated with government plans to introduce sustainability criteria for using biomass fuels. The easiest way for applicants to comply with the criteria will be to source an approved fuel from the Biomass Suppliers List, a pre-approved list of fuel suppliers.

An Unknown Future
The stability of the program is called into question with policy stagnation due to the election in May, not to mention current low oil prices. “It is crucial that they come back to seeing the bigger picture for the election, that biomass heating represents a sensible and sustainable alternative to using fossil fuels, improves our energy security, and that the RHI represents good value for money to develop this technology quickly in this country,” Billington says.

Another question is whether there will be an opportunity for North American producers to take advantage of the growing market. The schemes have clearly created the opportunity for expansion in the U.K. wood-heat industry, but when it comes to the U.S., as one of U.K.’s largest biomass suppliers for industrial power, the opportunity is less clear. Based on conversations with players in the industry, the general sentiment is that the opportunity isn’t there at the moment, but could certainly be in the future. This potential opening for U.S. producers seems to circle back to “if the price is right, then the opportunity is there,” Harrison says.

Billington thinks that North America’s involvement will become very important and actually help make the U.K. market fully robust and sustainable. “The key, however, is to get the quality right,” he says. “Achieving the EN-plus quality standard fully and consistently is more difficult than it might initially appear, especially when transporting over distances. The U.K. producers have done a superb job at this, and very much set the level which others must achieve.”

Smith with Verdo Renewables says that there is still a mindset change that North American producers must make to hit the U.K. heat market. “They are used to supplying large shiploads to power stations, and the power stations are traditionally near ports, and have significant dock sites,” he says.
Smith adds that the distribution network in the U.K. is significantly smaller than the power-pellet demand, so there is a limited ability to import 15,000-metric-ton shipments and store the pellets. The financial cost to ship is high for the still relatively small market, and the quality of the pellet once it arrives is not always ideal in terms of fines, which is probably the main challenge for U.S. and other exporters targeting the U.K. market.

Time was needed for the RHI to make an attention-worthy impact, but now that it is catching hold, people in the industry hope funding can continue until at least the end of the decade to help create a sustainable market for the future. “There is a certain amount of inertia in getting these markets to move,” Morgan-Jones says. “The RHI has done this, but it has taken a while for the momentum to build, and now that it has we need to ride the wave while it’s here. That wave could go flat on the beach if the budget is not supported beyond 2016 and it would be a huge shame not to use this momentum to achieve the government’s carbon reduction targets for 2020. My hope is certainly that for the next four years the wave continues to grow until it hits the beach in 2020, and then the hope there is that by 2020 there is some other scheme in place to be able to make sure it is sustainable on an ongoing basis.”
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