A new biomass plant under construction in Georgia highlights the challenging economics of the technology, even in a state so rich in forestry waste it exports it to other countries.
The 50-MW Albany Green plant — the largest renewable energy project in the state so far — is a unique collaboration among Georgia Power, private companies (including Procter & Gamble) and a nearby Marine base. While the cost for biomass generated electricity is too high to compete with wind and solar, the project also produces steam for industrial use, which improves its economics.
Because Albany Green is situated in the midst of rich timber tracts, biomass harvesting will be restricted to a 100-mile radius, and will include forestry residues locally sourced that would otherwise have been left to decay, burn or dispose of in a landfill. This includes trees not suitable for saw or pulp mills, discarded tree tops, limbs or branches, sawdust, mill waste, demolition debris and the seasonally available shells of pecans and peanuts.
“This plant represents years of planning and deadline extensions in an effort to utilize pine trees and forest debris in generating electricity,” explains Tim Echols, vice-chair of the Georgia Public Service Commission. “It was no easy thing to bring about this biomass power plant.”
Other pending biomass projects may have even more trouble securing financing. Echols notes that Georgia Power’s 2016 Integrated Resource Plan does not include a carve-out for biomass. “Instead, biomass will compete head to head with imported wind from Oklahoma and utility-scale solar, which is obviously bad news for biomass.”
Two thirds of Georgia is forested—25 million acres—and the state is ranked first in the nation for commercial timberland. More than a dozen plants in the state export wood pellets to supply renewable fuel to power plants in Europe — where electricity prices are high and the fuel is classified as “carbon neutral” by the European Union (even though many scientists reject biomass as a climate solution).
As with other biomass operations, Georgia biomass plants transform wood products into pellets that offset or replace coal and oil in a power plant. The source material is renewable, but whether it is carbon neutral has been hotly debated. In the case of Albany Green, the sources are predominantly forest residues (logging residues and residues from sustainable forest management) as well as sawmill residues and urban wood residues that would have otherwise been landfilled.
Mary Booth, director of the Partnership for Policy Integrity, is a skeptic. “This plant has a 1,037 million BTU boiler that is capable of burning 100-110 tons of wood an hour,” she explains. She believes much of that wood will be harvested when green, and “a boiler that size burning green wood chips can end up being as dirty as coal.”
Green wood is about half water by weight, so more of it has to be burned to generate the same amount of power as coal. Says Booth: “Fuel efficiency takes a hit—it can be as low as 24 percent, whereas traditional coal plants are 33 percent, and new coal plants are much higher. More carbon dioxide can come out of the stack per megawatt hour than coal. That’s not acceptable.”
Yet for Georgia, biomass is a lucrative industry—at least for exports. Georgia’s residues from timber harvesting (tops and branches) exceed five million dry tons annually, according to a 2008 report by the Georgia Forestry Commission. Georgia Biomass in Waycross is the world’s largest biomass pellet facility, and exports 750,000 tons of processed wood pellets a year. The Port of Brunswick has expanded in order to ship a million tons of pellets a year. But biomass generation for in-state use is an upward battle, largely because of the availability of cheaper locally available power from gas and solar.
The 2007 capacity price for biomass—$0.13/kW—was held over by the PSC to encourage biomass-based energy, says Echols.
“Obviously, that was when natural gas was very expensive,” he says, “and those prices are long gone.” Biomass generation works best at co-generation facilities, says Echols, because there is a use for the steam. “But clearly the 2007 capacity prices, approved by the Public Service Commission, that have been carried over is what has made most of it possible.”
Competition from Renewables
Even at $0.13/kW, says Echols, the project had trouble securing financing. Now, with 1,600 MW of new renewables approved by the PSC last summer, much of it likely to be solar, Echols expects the solar price to be “in the $0.06/kW ballpark, and obviously you can’t build a biomass plant for that.”
In addition, federal tax incentives for biomass are about one-third of solar and wind, according to Ron Melchior, executive director of distributed energy at Constellation, which had the winning bid to develop the plant from Georgia Power. “Biomass is an established technology, and incentives tend to be reduced as a technology ages,” Melchior said.
Albany Green succeeded in part because of a timely coalescence of need and availability. For Procter & Gamble, it is an important step forward in the company’s mandate to get 30 percent of its energy from renewable sources by 2020—up from 10 percent. Ultimately, the company plans to be 100 percent renewable.
“We’ve had a formal sustainability division since 1999,” explains Jack McAneny, director of global sustainability at Constellation. The company is a member of the Renewable Energy Buyers Alliance, which works with 60 multinational companies, with a goal of helping them purchase 60 GW of additional renewable energy in the U.S. by 2025. P&G also worked with the World Wildlife Fund to be sure the plant meets sustainability standards.
In addition, P&G already had a smaller cogeneration plant in Albany, which provided 30 percent of their energy needs. The new plant will provide 100 percent of P&G’s steam requirements, according to Melchior, and 70 percent in renewable electricity energy credits—with a 20-year power purchase agreement.
The nearby military base sealed the deal, with an 8.5-MW steam turbine that will run on steam purchased from the plant, and will launch in 2018.
Looking to the future, Echols notes that the PSC granted “yet another extension to the remaining biomass megawatts to be developed in Madison County, Georgia. This 109-MW facility will be one of the largest in the state if it comes to completion —and I am hoping they can work out their financing.”
Echols points out that keeping a balanced energy portfolio protects Georgia ratepayers against natural gas volatility. The state currently has 330 MW of power purchase agreements with various Biomass Proxy Qualified Facilities. Additionally, there are six pending biomass projects (including Albany Green) with a total capacity of approximately 178 MW, according to John Kraft, a spokesman for Georgia Power.
Yet it’s uncertain whether Georgia Power has built a premium into the power they are buying from the plant, which might be passed on to ratepayers. Some of the company’s costs are available in public dockets, and others are, says Kraft, “trade secrets. As in every ‘marketplace,’ the value (and cost) of capacity and energy is constantly changing. Amounts we are paying for this biomass project are tied to the capacity value we identified in the RFP for 2015 capacity.”
Booth thinks it’s likely that a premium has been built into the cost of power from the plant.
“Other biomass plants in the southeast—such as Piedmont Green Power in Barnesville, Georgia, or plants in Virginia owned by Dominion, which converted three coal plants to biomass—found a way to get Tier 1 renewable energy credits out of the state and pass fuel escalation costs on to ratepayers at the same time,” Booth said.
Even though Georgia is growing its solar power very quickly, notes Echols, “the PSC’s goal is building a robust renewable energy industry that will bring long-term economic health to the rural forests and farmland. Because semi-trucks loaded with chips and pellets arrive around the clock, biomass provides a steady supply of electricity whether the sun is shining or the wind is blowing.”