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Cost still a hurdle for biomass energy projects  

Credit:  By Thomas Content of the Journal Sentinel, www.jsonline.com 22 January 2011 ~~

Under Democratic Gov. Jim Doyle, the red carpet was rolled out for initiatives to burn wood and other forms of biomass to produce energy.

A new administration in Madison, however, is pulling the rug out from under those projects.

Doyle spearheaded a plan to burn tree trimmings, wood and plants at the University of Wisconsin-Madison campus with an eye toward building a local industry supporting homegrown fuels. And he backed biomass when We Energies unveiled plans in September 2009 to build a wood-burning power plant near Wausau.

“The great northern forests in this state can be much of the answer to our energy challenges,” he said then.

Last week, Republican Gov. Scott Walker’s administration canceled plans to burn biomass in downtown Madison in a bid to save taxpayers the higher capital costs associated with the project.

Walker has expressed concern about the cost of energy and the impact of renewable power mandates on the state’s utility ratepayers.

As energy policy takes a right turn, We Energies’ proposed biomass power plant in north-central Wisconsin is on deck for a decision by state regulators. Making the decision: three commissioners at the Public Service Commission, all of whom were appointed by Doyle.

Walker will have a say in who runs the PSC, but has not yet appointed a new chairman for the agency. Walker’s pick will replace former state Sen. Mark Meyer, whose term ends in March. But the other two commissioners’ terms expire in 2013 and 2014, meaning Walker will have to wait at least two years to have a majority controlling the decision-making at the PSC.

A decision on We Energies’ $255 million biomass project is expected in February or March, an agency spokesman said.
Concerns over cost

Similar to the taxpayer-funded Madison project, concerns have been raised about the project’s cost compared with other alternatives.

The Citizens’ Utility Board, a utility watchdog group that has been supportive of wind power projects, is troubled by the biomass project’s impact on We Energies’ 1.1 million electricity customers. The group also is concerned that the project would add to the state’s greenhouse gas emissions.

“This project would be too expensive for ratepayers. Comparable wind projects are much less expensive,” said Charlie Higley, the group’s executive director.

The PSC had endorsed a biomass plant proposed by Xcel Energy Inc., but expressed concern when the price of the project surged. Xcel canceled its plan to build the wood-burning plant in Ashland in late November.

We Energies’ project is different from the Madison proposal, in part because the project is much closer to the state’s northern forests, utility spokesman Brian Manthey said.

Another key difference, Manthey said, is the project’s potential impact on the north-central Wisconsin economy. It’s projected to create 150 jobs in the supply chain for biomass harvesting and transportation to the Domtar paper mill, where the wood would be burned.

“With this project, Domtar will be able to retire its 1960s-vintage boiler equipment. It will improve the overall emissions from that plant and help them be more competitive in their industry, and help protect over 400 jobs associated with Domtar and Lignotech,” he said.

Lignotech is a chemical company, also in Rothschild, whose products are made from a byproduct from Domtar’s paper mill.
More expensive

In a comparison with several other power plant projects, the Rothschild proposal is more expensive.

We Energies would build its project for more than $5,100 per kilowatt. That’s more than twice the cost of the Glacier Hills Wind Park under construction northeast of Madison. It’s also more expensive than Xcel’s aborted biomass project.

Three years ago, Alliant Energy Corp. of Madison sought to build a power plant that would burn both coal and biomass.

The Nelson Dewey plant’s cost per kilowatt: $3,800. That’s one-fourth less per unit of energy than We Energies’ Domtar proposal.

Regulators, however, said the cost of Nelson Dewey was too much for the utility’s customers. They also raised concerns about the impact on the state’s greenhouse gas emissions from adding another coal-fired power plant to the state’s fleet.

We Energies says it recognizes that wind projects can cost less than biomass power plants. But to comply with the state’s 10% renewable energy mandate, the utility needed to diversify its energy mix after building two major wind farms.

“We’ve got the largest wind farm in the state, and we are going to eclipse that with the next one (now under construction),” Manthey said. “We already have a pretty good amount of wind in our mix. This will allow us to have a diverse fuel mix as well as help protect jobs and create others.”
Operation costs

Unlike wind farms, We Energies says, biomass plants can be powered up whenever they’re needed.

But opponents’ concerns come back to cost.

Packaging Corp. of America said the cost of collecting and hauling wood chips and other biomass to the plant may be higher than projected by the utility and Domtar. And CUB said the amount Domtar is contributing to the project isn’t sufficient.

What’s more, Higley said, the higher cost of the plant means it’s not likely to run that often. That’s because the wholesale energy market prioritizes which Midwest power plants will fire up on any given day based on which ones cost the least to run.

But the We Energies biomass plant would have to operate even when the regional energy market considers it too costly to power up. The reason: The plant will supply steam for the paper mill.

“Who’s going to pay for running the plant when it’s not economical to do so? We Energies did not identify how it will protect ratepayers from these uneconomic dispatch costs,” Higley said.

Source:  By Thomas Content of the Journal Sentinel, www.jsonline.com 22 January 2011

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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