Opportunities exist to develop biomass power in the region, but making the projects a reality won’t be easy.

That was the message delivered to 65 people attending a biomass power workshop held June 8 in Portland. The Northwest Environmental Business Council sponsored the event.

Speaker Bill Kitto of CH2M Hill was joined by Adam Serchuk, senior program manager with the Energy Trust of Oregon Inc. and Joe Barra, director of customer energy Resources at Portland General Electric (PGE). Kitto presented findings of a CH2M Hill study completed in 2004 for Energy Trust of Oregon. The study looked at biomass power potential in the Oregon service territories of PacifiCorp and Portland General Electric.

The study grouped opportunities in the biomass market into five segments — sewage treatment digesters, dairy-based digesters, landfill gas-to-energy, woody mill waste and forest residue, which includes timber residue and thinnings. The study identified forest residue as having the largest potential in terms of volume, but it is also considered the least mature market.

Kitto said there are almost 4.5 million tons of the fuel left on the forest floor each year that could deliver up to 300 to 500 megawatts (MW) of electricity. However, forest residue is expensive to collect, and the question of whether collecting the forest thinnings is harmful or helpful to forests and wildlife remains controversial.

Until recently, the resource was unattractive to power developers because of collection costs and the uncertainty of the fuel supply. Kitto said changes in federal forestry management laws now allow for longer contracts for thinning, which may make the resource more attractive. However, Kitto’s study showed it remains economical only with heavy subsidies.

The Confederated Tribes of Warm Springs in central Oregon is taking advantage of the new legislation and seeking funding from the Energy Trust of Oregon. Under a 20-year memorandum of understanding, the Tribes aims to gather fuel from nearby federal lands to be used in an 18-MW unit it is adding to its existing cogeneration plant at its sawmill. The fact that the Confederated Tribes already operate a cogeneration plant makes the project more attractive.

“Part of their motivation, they tell me, is revenue from power generation, but also fire control,” Serchuk said.

The Oregon Department of Energy reports biomass facilities in Oregon generated more than 1,100 megawatt-hours of electricity in 2004. The overall potential of biomass energy resources in the state is 524 average megawatts (aMW), with agricultural residue offering the most energy potential at 213 aMW. 

The primary obstacle to developers, according to the speakers, is making biomass power projects pencil out economically. Serchuk pointed to Oregon’s low avoided costs as a hurdle, along with interconnection issues, the possible expiration of federal tax credits, the uncertainty of fuel availability, and fuel delivery costs. Also, biomass projects are difficult because the power project must fit into a non-energy business.

“These are not energy people," Serchuk said. "They have no interest in being energy people. The only value to them of a project is the revenue stream. What they want to do is manage a dairy, or a mill, or a wastewater treatment plant.”

Interconnection remains a sticky issue to both project developers and utilities. The interconnection process can be costly and lengthy for the developer, but Serchuk said the Oregon Public Utility Commission (OPUC) is looking at standardized and streamlined procedures around the state.

“The developer may not appreciate how serious utilities take interconnections," he said. "On the other side of the ledger, utility personnel involved may have no particular mandate to encourage independent power production.”

On the positive side for developers, Serchuk said financial capital is available, and both PGE and PacifiCorp have standard purchase contracts in place for projects smaller than 10 MW.

Barra noted that PGE is seeking 65 aMW of renewable energy in its integrated resource plan. The utility has tariffs in place for net metering projects 25 MW or less, and for qualifying facilities 10 MW or less.

Within its service territory, PGE participates in wastewater treatment plant projects, including the City of Portland’s Columbia Boulevard plant. Since 2002, it has operated biodigesters at the Cal-Gon dairy farm near Salem, Ore., which deliver up to 70 kilowatts of electricity.

Despite the Northwest’s relatively low energy prices, state and regional incentives are strong, according to the speakers. The Oregon Business Energy Tax credit (which Gov. Ted Kulongoski has supported raising from 35 percent to 50 percent), the Federal Production Tax Credit, the Small-Scale Energy Loan Program, Energy Trust of Oregon programs, "green tags" and accelerated depreciation schedules all make biomass projects more attractive.

Serchuk also pointed to changes made by OPUC that could improve the economics. In the past, standardized contracts for projects 1 MW in size were available for only five years, and the price utilities were required to pay for the energy was relatively low.  OPUC has significantly increased the amount utilities are required to pay, extended the contract term to 20 years, and raised the project size cap to 10 MW.

Overall, despite the realities to developing biomass power, Grott said utilities are continuing to work on streamlining interconnection processes.

“They’re no longer in a blocking mode,” he said. “Biomass power will be a piece — not a huge wedge — but a piece of the energy pie.”