Biomass Fuel Supply

8/8/2019 Biomass Fuel Supply

1/16

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Financing Biomass Fuel

Pow er Plants: A Fuel SupplyPerspective

Pacific West Biomass Conferenceand Expo January 10

JD Lindeberg, PE, LEED AP, CFO and PrincipalResource Recycling Systems, Inc.

416 Longshore Dr.Ann Arbor, MI 48105734-996-1361 ext. 241

[email protected]


2/16

Biomass Compared to

Other Green Energy

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Low

T e c h n o l o g y M a t u r i t y

High Low Market Maturity

Mature Technologies Commercial

Emerging

High WTE3 (combustion)

Biomass1 (gasification)

Offshore WindParabolicTrough

Crystalline Silicon PV

Biomass Co-Firing (direct)

Anaerobic Digester Gas

Geotherma l

Land-BasedWind

Thin-Film PV

Landfil

l Gas (microturbines & fuelcells)

Concentrating PV

Dish Stirling

Tidal Barrage

Biomass DirectCombustion

Low-ImpactHydro

LandfillGas

NanoSolar CellsTidalCurrentOTEC 2

Biomass pyrolysis

Power Tower Wave

1. Biomass integratedgasification combined cycle

2. OTEC = ocean thermalenergy conversion

3. WTE = waste to energy

Low-

HeadHydro


3/16

So You Want to Build a

Biomass Pow er Plant!? Biomass is Green Power

Will Fit Within RPS Make a Long Term Deal (20 yrs)

Get a Power

Purchase Agreement

Build a New Plant (2- 40 MW) Convert a small coal plant Co-fire with Coal

Build/Convert aPower Plant

Determine Fuel Type Contract for Supply

Contract FuelSupply


4/16

Project Finance Primer

Two Kinds of Money will be Invested in your Project Equity The down payment in the form of

cash for which investors gain ownership in theproject

Debt The loan from a major bank whosereturn is interest

Project Financial Partners Have Distinct Needs Equity Gains return from the growth in value

of the company and other business related

benefits => M ore Entrepreneurial Debt Gains return SOLELY from interest

payments => M ore Risk Averse

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5/16

W hat Does this Tell Us?

Power Purchase Agreement Very Important Creates Revenue Certainty Relatively Easy Or Not!!

Power Plant Construction and Operation Very Important Creates Operational Certainty

EPC Contract for Engineering andConstruction

Guaranteed Operation Efficiency Tedious but Relatively Straight Forward

Fuel Supply Where is it? What does if Cost? If this were coal, gas or oil this would be EasyBut its not. This is Why I am Here Today

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6/16

Fuel Supply is Key to

Biomass Plant Success Whats a Developer to Do?

Long Term Contracts are Difficult for Non-MSWBiomass

Wood Chip/Manure Futures are Hard to Find We Have a Spot Marketplace

That Where a Fuel Consultant Job Starts Prove the Supply - Supply is Often Limited Determine the Competitors Identify the Disposal Economics Model Supply Economics Study the Impact of External Forces Determine the Carbon Benefits Create a Bankable Story

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7/16

Fuel Supply

Development - Supply Population and Economic Census Data Drives the

Effort

NAISC Classifications Identify Industries thatGenerate Biomass Waste (e.g.):

Develop Total Biomass Quantity Determine Availability (not 100%)

Identify Coverage Ratio - (3:1) is VERY GOOD

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Forests and Forest Products C&D Contractors

Farms Major ManufacturersBeverage Manufacturers Food Manufacturers

Furniture Industry Renderers

Wholesale/Retail Grocery Restaurants


8/16

Fuel Supply Development

- Competitors Other Similar Biomass Plants Competitive Alternative Uses (for woodwaste)

Pulp Manufacture High Value Board Manufacture High Value Cellulostic Ethanol High Value

Pellet Fuel Moderate Value Animal Bedding Low Value Firewood Low Value

Mulch/Compost Low Value Landfilling No Value

Foresee Future Competitive Uses PERHAPSTHE M OST IM PORTANT

Evaluate the Change in these Competitive Uses

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9/16

Fuel Supply

Development - Disposal Disposal (usually landfilling or incineration) Provides

a Baseline Cost/Price against which fuel is measured

Disposal Policy Determines Nature and Size of Recovery Opportunity for Urban/Industrial GeneratedBiomass Waste

Timber Practices and Forest Products IndustryCompetition Drive Forest Wood Waste Availability

Type of Disposal Opportunities (C&D landfills,incineration, MSW landfills, C&D Recovery Facilities,Organics Recovery) Indicate Market Maturity and

Appetite for Recovery

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10/16


Supply Economics Five Steps of Supply Pricing

Production (logging, waste stream) Processing (size reduction, dewatering,

pelletizing) Loading (loaders, conveyors, pumps)

Transport (chip vans, tankers, compactor boxes) Reclaim (conveyors, pumps, drying, mixing)

Final number(s) is a Blended Cost of FuelProcurement ($/bdt)

Production Dominates (production vs. w asteeconomics)

Transport is Proportional to Distance from

Plant

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11/16

Fuel Supply Economics*

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Process Step Cost Range($/ ton)

Comments

Production(forest only)

$2 - $5/ton Logging or fire prevention

C&DSeparation(urban only)

$25-$30/ton Would be tipfeesubsidized

Processing $10 - $15/ton Centralized, horizontalgrinders

Loading $1 $5 /ton At marshalling area

Transport $7.50 - $10/ton($0.15 - $0.20

/ton/mile)

@ 50 miles one-wayNo backhaul$4/gallon diesel cost

Total Cost $20.5 - $35/ ton

* Will vary depending on location


12/16


External Events Looking into the Crystal Ball of the Future is VERY

DIFFICULT

When Project Life Exceeds Twenty Years, PredictionBecomes Important

Fuel Supply Economics are Often Impacted byExternal Forces like: Diesel Fuel Cost Competition for Biomass Change in Disposal Laws (increasing or

decreasing supply) Regression Analysis of Factors that Impact Supply is

a USEFUL TOOL M odeling P redicts Effect in Case of Certain

Events IT CANNOT PR EDICT THE FUTURE!www.recycle.com


13/16


Carbon Balance Carbon Value M ay Drive The Future of Biomass Power

Development

Carbon Has Other Impacts as Well Removing Organics from Landfill Has a HUGE

Benefit to the Environment

Replacing Long-Term Carbon Cycle Fuel (e.g. coalor petroleum) with Short-Term Carbon Cycle Fuel(e.g. biomass) also has Benefits

These Benefits Can be Quantified => And

Monetized! The P roject Benefits From Avoided Carbon

Gasses Will Create Im mense Wealth if Capand Trade Legislation is Passed by Congress!

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14/16


The Story Bankers are Risk Averse - Equity Partners Take Higher

Risks with Higher Returns

They Will Fund Risk, but it Must be Well-Defined Developers and Entrepreneurs Are Risk Takers A Good Fuel Consultant Can Help with That by:

Getting Started Early on the Fuel Plan Telling the Fuel Story in Plain English Realizing Additional Questions will Always Come Up Knowing the Story is Always Needed Quickly

A Consultant M ay W ork for the Bank , but theDeveloper Pays the Bill!

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15/16

A Few Trends in the

Industry Most Interest is Coming in the Wood Waste Power

Plant World (fuel can be gotten in most places for

$20 - $30/ton) Many Wood Waste Plants are Small Coal (20-30 MW)

Conversion Projects Refuse Derived Fuel (RDF) is Staging a Bit of

Comeback (because its waste economics driven thecost of fuel can be quite low on paper)

Co-Firing with Larger Coal Plants is Attractive as Well

(emissions benefits, fuel cost reduction) Methane Generation with Anaerobic Digestion is

Gaining a Foothold with the AG/Food ManufacturingCommunity (universal feasibility has yet to be

proven)www.recycle.com


16/16

Questions/Discussion

Thank You for your time and attention!JD Lindeberg

Resource Recycling Systems Inc.734-996-1361

[email protected]

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Documents

Biomass Fuel Supply