Kingsley inrs presentation biomass 4.7.2016

Biomass 101Forest Resources Association – Maine Forest Forum

April 7, 2016

Eric KingsleyInnovative Natural Resource Solutions LLC

[email protected] 207‐233‐9910

Innovative Natural Resource Solutions LLC• Founded in 1994• Offices in New Hampshire and Maine• Focus at the intersection of forest industry, energy and economic development

• Author of Maine Future Forest Economy Project (2005)• Services include:

‐ consulting in renewable energy‐ advocacy‐ forest management and protection‐ forest certification and sustainability

• Clients from the private, non‐profit and government sectors• Conducted work in all regions of North America• www.inrsllc.com

Note• INRS has significant experience with a number of biomass energy producers, and has worked with both Covanta and ReEnergy Holdings in the past.

• All of the numbers shared are generalized based upon significant experience with biomass plants around New England and beyond, and do not necessarily represent the situation at any specific plant.

• All biomass prices are, of course, hypothetical and may not reflect market conditions

• Today’s discussion is specific to biomass electric generation. Biomass thermal (heating) and biomass CHP have different economics and drivers.

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2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

2007 2008 2009 2010 2011 2012 2013 2014

Maine Timber Harvest by ProductData Source: MFS Timber Processor Report

Data in tons (INRS conversion)

SW Sawlog HW Sawlog SW Pulpwood HW Pulpwood Biomass

12%

7%

19%39%

22%

Maine Timber Harvest by ProductData Source: MFS Wood Processor Report, 2014

All data converted to tons by INRS

SW Sawlog

HW Sawlog

SW Pulpwood

HW Pulpwood

Biomass

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Sawlogs Pulpwood Biomass

Volume (Tons)Value ($)

Volume and Value to Landowner of Products from a Timber HarvestNorth East State Foresters 2013 (All NH 2010 data)

Maine

Future Forest Econo

my Project

2005

Most facilities with multi‐fuel options have a chart that looks something like this, and tells them what fuels to use at what price points.

MBTU Efficiency Net MMBTU

Natural Gas (1000 cubic feet) 1,025 85% 871

Biomass Fuel (green ton) 8,625 60% 5,175

Biomass 22.00$ 24.00$ 26.00$ 28.00$ 30.00$ 32.00$ 34.00$ 36.00$ 38.00$ 40.00$ $ / MBTU 4.25$ 4.64$ 5.02$ 5.41$ 5.80$ 6.18$ 6.57$ 6.96$ 7.34$ 7.73$

Natural Gas $ / MBTU4.00$ 4.59$ Wood NG NG NG NG NG NG NG NG NG4.50$ 5.16$ Wood Wood Wood NG NG NG NG NG NG NG5.00$ 5.74$ Wood Wood Wood Wood NG NG NG NG NG NG5.50$ 6.31$ Wood Wood Wood Wood Wood Wood NG NG NG NG6.00$ 6.89$ Wood Wood Wood Wood Wood Wood Wood NG NG NG6.50$ 7.46$ Wood Wood Wood Wood Wood Wood Wood Wood Wood NG7.00$ 8.03$ Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood7.50$ 8.61$ Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood8.00$ 9.18$ Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood8.50$ 9.76$ Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood9.00$ 10.33$ Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood9.50$ 10.90$ Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood10.00$ 11.48$ Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood

Biomass Electric Plants• 4 plants owned by ReEnergy Holdings

• Participate in CT REC market• 2 plants owned by Covanta

• Participate in MA REC market• Now disqualified from participation• (3‐year phase‐in to an unattainable standard)

• Plants in Portsmouth, Ossipee and Berlin, NH

• Other places in NH as well, but these are the close facilities.

$‐

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

Jan‐10

Apr‐10

Jul‐1

0

Oct‐10

Jan‐11

Apr‐11

Jul‐1

1

Oct‐11

Jan‐12

Apr‐12

Jul‐1

2

Oct‐12

Jan‐13

Apr‐13

Jul‐1

3

Oct‐13

Jan‐14

Apr‐14

Jul‐1

4

Oct‐14

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Jul‐1

5

Oct‐15

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Jul‐1

6

Oct‐16

Jan‐17

Apr‐17

Average Real Time Wholesale Electricity Prices, MaineFutures Prices as of 4/1/2016 10:00 AM

Actual Futures

Average over the next year$44.28

Biomass Electricity

(MWh)

“Green” Attributes(Renewable Energy Certificate)

Electricity (MWh)

(Wholesale)

Biomass Electricity – Fuel Costs

• ~1.7 green tons of fuel per MWh• That means if biomass fuel is $35 / tons, fuel cost is ~$59.50 per MWh

•Add in staffing, consumables (emissions control), maintenance, debt service, etc.

•Cost of generation (absent profit) is somewhere around $90 per MWh

Biomass Fuel Cost ‐ $ per MWh (estimated)

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$10

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$80

$22.00 $24.00 $26.00 $28.00 $30.00 $32.00 $34.00 $36.00 $38.00 $40.00

Biomass Electricity – RECs•Plants need Renewable Energy Certificates (RECs) to operate economically

• MA has effectively excluded stand‐alone biomass • Set an efficiency standard that cannot be met by a stand‐alone facility• Also a forestry standard, which suppliers were responsible for

• CT has a phase‐down for biomass beginning in 2018(?)• Biomass a huge economic boost to local regions, forestry• Only renewable with ongoing economic benefits• Apparently not as important to Southern New England as we would hope…

REC Prices (Connecticut, indicative, broker quote, 4.3.2016)

$‐ $10 $20 $30 $40 $50

2017

2016

2015Prices dropped about $15 per REC between Friday and Monday, given new information from ISO‐NE about total electricity load

What does it take to operate biomass in 2016?

$0

$10

$20

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$40

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$90

Revenue Expenses

Electricty RECs (CT) Fuel O&M

• Assumes:

• Electricity at current futures price for the next year

• RECs at current broker quote• Biomass fuel at $32, 1.7 green tons per MWH

• O&M at $30 per MWh

• With these assumptions, the business doesn’t work

Eric KingsleyInnovative Natural Resource Solutions LLC

Phone 207‐233‐9910Email [email protected]

Kingsley inrs presentation biomass 4.7.2016

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