Experts ponder future of biomass industry

By Phil Reese, Reese-Chambers Systems Consultants, and Bill Carlson, Carlson Small Power Consultants By Phil&

Pages: 1 2 3 4 5

Green power is born

In 1978, Congress passed the Public Utility Regulatory Policies Act (Purpa) in an effort to diversify and strengthen domestic energy production. Soon afterward, California instituted policies to aggressively implement Purpa and stimulate development of renewable energy sources.

Recall that the late 1970s were marked by such high inflation and energy scarcity that experts were projecting a rise in the price of crude oil to $100 a barrel or more by the mid-1980s. In response to that environment, California required its three regulated IOUs to offer long-term power-purchase agreements (PPAs) to qualified facilities at very attractive prices for both demand and energy. Some of the PPAs had terms as long as 30 years and an initial 10-year period during which the energy prices were fixed. These lucrative contracts were instrumental in kick-starting California's biomass power industry.

2. Waste? Not. Using urban wood waste as power plant fuel decreases the amount of waste that must be landfilled. Should developers be given economic credit for processing these waste streams? Courtesy: Colmac Energy Inc.

Biomass power emerges

The first small biomass plants in California began producing electricity in 1982. By the end of the decade, the state's wood-fired generation infrastructure had grown considerably.

Most of California's early biomass plants burned sawmill residues exclusively. But as more plants were constructed and the number of operating sawmills declined during the 1980s, biomass facilities learned the value of fuel diversity. Forest thinnings, agricultural by-products and residues, orchard removals, and urban wood waste began ending up in boilers. So did urban and construction waste, discarded "raw" furniture, waste from wood product manufacturing, broken pallets and trusses, landscape and right-of-way trimmings, and dunnage. Only demolition wood waste was ruled out because of the perceived hazards of burning painted or treated wood.

By the late 1980s, California's biomass industry was consuming over 7 million tons of organic waste annually—about 25% of the volume being sent to the state's landfills. Turning biomass into electricity became an integral part of the state's management of forest, agricultural, and other wastes. By the early 1990s, 49 biomass plants were supplying over 800 MW of reliable baseload generation to the state's grid. In California, biomass power was in its heyday.

The climate changes

Over the next 15 years, three events conspired to slowly undermine the foundation of California's biomass power industry. The grim oil price projections that followed the Arab oil embargo and energy crisis of 1973 proved very wrong. And energy payments to the early biomass plants dried up as their PPAs' initial fixed-price period expired.

The size of the payments was based on exaggerated projections of utilities' avoided costs, which in turn assumed rapidly increasing energy costs. But the utilities' actual avoided costs turned out to be significantly lower. In many cases, the revised energy payments were too small to support the continued operation of a biomass plant. Yet by the end of the 1990s, there were still 38 biomass plants on-line in California.

The third event that further eroded the state's biomass industry was the California electricity crisis of 2000–2001. In their quest for lower-priced supplies, the state's utilities bought out one-fourth of existing biomass-fueled electricity production contracts. Spiking wholesale prices opened the door of opportunity for a short while—as did a short-lived $10/ton state subsidy for burning agricultural waste (see sidebar "Biomass improved air quality in California")—and four idled plants totaling less than 65 MW of capacity were restarted. But between 2000 and 2005, ten more California biomass plants shut down for good, leaving the 28 plants and 550 MW of capacity mentioned at the top.

3. Grating wood. The boiler at Hampton Affiliates' 7-MW biomass plant in Darrington, Wash., is equipped with a Wellons stoker-fired rotating grate system and produces 140,000 lb/hr of steam. The plant entered operation in 2006. Courtesy: Wellons Inc.

Biomass improved air-quality in California

In the Central and Southern Valleys (the Sacramento, San Joaquin, Coachella, and Imperial Valleys) of California, the traditional way to dispose of agricultural (ag) residues is to burn them in open fields. Among the residues burned in this way are orchard prunings and removals, vineyard prunings, and rice crop wastes. As more biomass plants were built in California, there was less open burning of ag waste in rural agricultural areas. This was good for the environment, because the plants that began burning the waste did so in highly controlled boilers equipped with pollution controls. In some areas, air pollution emissions fell by over 95%.

Just as California biomass plants were shutting down in the late 1990s for economic reasons, the state Legislature recognized the positive impact of the biomass plants on air quality. It put in place a $10/ton subsidy that was paid to plants that collected and used as fuel ag wastes that otherwise would have been burned out in the open.

Many of the plants used the subsidy to purchase collection and chipping equipment, or to hire third-party suppliers to collect additional wastes. The result was a significant upswing in ag residues in late 2000 and early 2001. Hundreds of thousands of tons of additional ag waste were collected and used for plant fuel, with attendant reduction in air pollution from open burns.

But in mid-2001, the Legislature pulled the plug on the subsidy. That left many of the biomass plants with equipment that had to be paid off, or with contracts that had to be honored or bought out.

The net effect of the ag fuel subsidy was the shuttering of a substantial number of California biomass plants. Subsequently, widespread open burning resumed.

Pages: 1 2 3 4 5