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www.recycle.com
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
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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
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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
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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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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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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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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
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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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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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Fuel Supply Development
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 ($/bdt)
Production Dominates (production vs. w asteeconomics)
Transport is Proportional to Distance from
Plant
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Fuel Supply Economics*
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Process Step Cost Range($/ 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
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Fuel Supply Development
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
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Fuel Supply Development
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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Fuel Supply Development
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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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
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Questions/Discussion
Thank You for your time and attention!JD Lindeberg
Resource Recycling Systems Inc.734-996-1361
www.recycle.com