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Kingsley inrs presentation biomass 4.7.2016

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presentation regarding biomass electricity in Maine and New England, made to the Forest Resources Association April 2016

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Kingsley inrs presentation biomass 4.7.2016

  1. 1. Biomass 101 Forest Resources Association – Maine Forest Forum April 7, 2016 Eric Kingsley Innovative Natural Resource Solutions LLC kingsley@inrsllc.com Phone 207‐233‐9910
  2. 2. 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
  3. 3. 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.
  4. 4.  ‐  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 Product Data Source:  MFS Timber Processor Report Data in tons (INRS conversion) SW Sawlog HW Sawlog SW Pulpwood HW Pulpwood Biomass
  5. 5.  ‐  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 Product Data Source:  MFS Timber Processor Report Data in tons (INRS conversion) SW Sawlog HW Sawlog SW Pulpwood HW Pulpwood Biomass
  6. 6. 12% 7% 19% 39% 22% Maine Timber Harvest by Product Data Source: MFS Wood Processor Report, 2014 All data converted to tons by INRS SW Sawlog HW Sawlog SW Pulpwood HW Pulpwood Biomass
  7. 7. 12% 7% 19% 39% 22% Maine Timber Harvest by Product Data Source: MFS Wood Processor Report, 2014 All data converted to tons by INRS SW Sawlog HW Sawlog SW Pulpwood HW Pulpwood Biomass
  8. 8. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Sawlogs Pulpwood Biomass Volume (Tons) Value ($) Volume and Value to Landowner of Products from a Timber Harvest North East State Foresters 2013 (All NH 2010 data)
  9. 9. Maine Future Forest Economy Project 2005
  10. 10. Most facilities with multi‐fuel options have a chart  that looks something like this, and tells them what  fuels to use at what price points.  MBTU Efficiency  Net MMBTU Natural Gas (1000 cubic feet) 1,025  85% 871  Biomass Fuel  (green ton)  8,625  60% 5,175  Biomass 22.00$     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 $ / MBTU 4.00$               4.59$           Wood NG NG NG NG NG NG NG NG NG 4.50$               5.16$           Wood Wood Wood NG NG NG NG NG NG NG 5.00$               5.74$           Wood Wood Wood Wood NG NG NG NG NG NG 5.50$               6.31$           Wood Wood Wood Wood Wood Wood NG NG NG NG 6.00$               6.89$           Wood Wood Wood Wood Wood Wood Wood NG NG NG 6.50$               7.46$           Wood Wood Wood Wood Wood Wood Wood Wood Wood NG 7.00$               8.03$           Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood 7.50$               8.61$           Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood 8.00$               9.18$           Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood 8.50$               9.76$           Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood 9.00$               10.33$         Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood 9.50$               10.90$         Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood 10.00$            11.48$         Wood Wood Wood Wood Wood Wood Wood Wood Wood Wood
  11. 11. 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.
  12. 12.  $‐  $20.00  $40.00  $60.00  $80.00  $100.00  $120.00  $140.00  $160.00 Jan‐10 Apr‐10 Jul‐10 Oct‐10 Jan‐11 Apr‐11 Jul‐11 Oct‐11 Jan‐12 Apr‐12 Jul‐12 Oct‐12 Jan‐13 Apr‐13 Jul‐13 Oct‐13 Jan‐14 Apr‐14 Jul‐14 Oct‐14 Jan‐15 Apr‐15 Jul‐15 Oct‐15 Jan‐16 Apr‐16 Jul‐16 Oct‐16 Jan‐17 Apr‐17 Average Real Time Wholesale Electricity Prices, Maine Futures Prices as of 4/1/2016 10:00 AM Actual Futures Average over the next year $44.28
  13. 13. Biomass  Electricity (MWh) “Green” Attributes (Renewable Energy Certificate) Electricity (MWh) (Wholesale)
  14. 14. 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
  15. 15. Biomass Fuel Cost ‐ $ per MWh (estimated) $0 $10 $20 $30 $40 $50 $60 $70 $80  $22.00  $24.00  $26.00  $28.00  $30.00  $32.00  $34.00  $36.00  $38.00  $40.00
  16. 16. 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…
  17. 17. REC Prices (Connecticut, indicative, broker quote, 4.3.2016)  $‐  $10  $20  $30  $40  $50 2017 2016 2015 Prices dropped about $15 per REC between  Friday and Monday, given new information  from ISO‐NE about total electricity load
  18. 18. What does it take to operate biomass in 2016? $0 $10 $20 $30 $40 $50 $60 $70 $80 $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 
  19. 19. Eric Kingsley Innovative Natural Resource Solutions LLC Phone 207‐233‐9910 Email kingsley@inrsllc.com

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