It's been a tough year for renewable energy.
In May, the Bonneville Power Administration curtailed wind power producers in Oregon and Washington to protect BPA's own power sales. Just a few months later, renewable giant Iberdrola announced that it was shelving plans for a $100 million biomass-to-electricity plant in rural Lakeview that had been held up as a model of sustainability. And just last week, a Washington wind-power developer announced that it was abandoning plans for two wind farms near Steens Mountain. Against this backdrop, the cash-strapped Oregon Legislature whittled away at its most generous incentives for renewable energy development.
One of the few bright spots, though, is a technology that is more Christmas Valley than Silicon Valley, so-called biomass thermal energy, which is a fancy way of saying the good ol' practice of burning wood for heat, which after several millennia remains one of the most effective ways of warming our hands and our homes.
In Oregon, there have been more than a dozen small-scale biomass heat projects installed in the past half-decade, including two right here in Deschutes County over the past several months. At a time when other renewable energies are scrambling to justify their existence in the face of decreased demand and ample supply of traditional power sources, biomass, and specifically biomass for heat applications, is a seldom-cited success story. It's a source of frustration for advocates like Phil Chang who has worked on several biomass projects around the region as the natural resource program coordinator for the Bend-based Central Oregon Intergovernmental Council. Chang's projects include a new wood pellet boiler at Sisters High School and another at the new Deschutes Forest Supervisor's Office in Bend. There are several more projects on the drawing board, including more ambitious collaborations with Mt. Bachelor and another for the proposed Deschutes County jail expansion
Working with partners like the Sisters School District and scores of others across the state has convinced Chang that the future of biomass, or at least the near future, probably isn't the highly touted and heavily subsidized power projects that have been proposed in Lakeville and La Pine. Rather, says Chang, the greatest promise for biomass is a series of small-scale and mid-sized projects utilizing biomass both in the form of pellets and wood chips for commercial heating applications.
When taken alone. none of these projects have the economic or environmental impact of a utility-scale project. When taken together, however, the biomass projects represent a potentially significant market for forest material that otherwise goes up in smoke.
But unlike the lofty goals for other renewables, including solar, wind, geothermal and even wave energy, there's been little attention given to the vast market for biomass heating projects. Instead, the biggest incentives have been reserved for biomass-to-electricity projects like the stalled initiatives in both Lakeville and La Pine. But as those projects have grabbed headlines, the small-scale heating projects have continued to make headway in the biomass market.
"This is a technology that makes economic sense on its own two feet. It's highly efficient and yet the policies are definitely stacked against us because biomass isn't sexy and heat isn't sexy," Chang says.
The reality, though, is that many of the utility-scale projects that were touted in the region just a few years ago, including Lakeview and another 25-megawatt plant in La Pine, have stalled, at least temporarily, as energy prices have stagnated. Plans for a wood waste-to-electricity plant show little signs of progress in Warm Springs where the tribe plans to construct a 40-megawatt plant.
There are numerous factors contributing to the waning interest in large-scale wood-powered electricity plants, says Matt Krumenauer, a senior policy analyst with the Oregon Department of Energy.
Increased natural gas production and an ongoing recession that has curtailed the growth of industrial power demand contribute to the market. Politics also play a role. In California, lawmakers have been tweaking the state's renewable energy requirements, raising questions about how much power the state's utilities will have to seek from outside markets.
"That adjustment has created a little bit of uncertainty and when you're investing in a project that costs tens of millions of dollars, uncertainty is not your friend," Krumenauer said.
In Sisters, the total cost of biomass project was roughly $350,00, which the district funded through a combination of pass-through tax credits and a loan from its in-house building fund.
The district expects to recoup that investment in about five years, at which time they will realize annual fuel savings between $35,000 and $60,000. That's a not a big number for a school district like Bend - La Pine, but for Sisters, which operates only three schools, that can be significant. It's the difference between having a music teacher at the middle school or a foreign language at the high school.
It also gives the district some reliable numbers to use when forecasting the budget for the coming year, says Operations Manager Leland Bliss, during a 'tour' of the district's biomass heating facility, which Bliss and Chang refer to as a "boiler in box." The tour consists of cracking the door open on a small cargo container that holds the district's new biomass boiler, a modest construction of iron and aluminum with a cast iron door that, when coaxed open, reveals innards that appear not a whole lot different than your average fireplace.
As far as technology is concerned, this is pretty basic stuff. Wood pellets are stored in and then poured from an adjacent aluminum silo emblazoned with an "Outlaw Energy" logo, a nod to the high school's mascot, The boiler fires the pellets, heating water that is pumped through the school. While the concept is simple, it's also highly efficient. It's possible, says Bliss, that the district will be able to entirely bypass its diesel boilers this winter, further decreasing the district's fuel needs. That amounts to instant savings that can be ploughed directly into the classroom. It also takes some uncertainty out of the annual budgeting process. Unlike the relatively stable prices for wood pellets, fuel prices can fluctuate wildly during the course of a winter depending on weather, the price of crude and a host of other factors.
"I've lived in Oregon my whole live and I've been burning firewood my whole life. It's the most economical fuel you can find," Bliss says.
For Chang, it's about more than one boiler and one school. The goal is to create a small industry around the woody biomass projects. At the moment, no single heat project is going to have much of an effect on the market for forest by-products. But that could change, a few dozen projects located in a defined geographic area could create enough demand for small-diameter trees as well as limbs and other "waste" material to help underwrite large-scale forest restoration, a big selling point for biomass projects in places like Central Oregon.
It's a relative easy sell in far-flung areas like John Day and Burns that don't have access to natural gas lines and instead rely on relatively costly heating oil and propane. Tree-rich Idaho and Montana both have formal "fuels for schools," biomass heating programs. It's a harder sell in urban areas where natural gas costs are typically lower than the cost of wood pellets. But there are opportunities, says Chang. Deschutes County has looked at the cost of doing a biomass boiler as part of the jail expansion and found that it could save the jail money over the long term by running a low-cost wood chip system.
Ironically, a new state law that requires public buildings to dedicate 1.5 percent of the total construction cost to incorporating solar energy could be a major obstacle, says Chang. It's another example of how easy and efficient heat projects often take a back seat to technologies like solar, says Chang.
"Thermal is the forgotten realm," he says, despite the fact that it accounts for roughly one-third of our nation's energy consumption.
Making a Go of It
St. Helen's based SolaGen is one of the few North American manufacturers that builds and installs small-scale commercial biomass heat systems. Founded by Francis Sharron, an engineer and veteran of the Northwest sawmill industry, SolaGen employs about 20 people at its plant in rural northwest Oregon. Sharron built the business with his brother based on work he had done for companies like Weyerhauser that have long used wood waste from their operations to generate heat and electricity.
He estimates that there are three dozen companies in Europe that do what SolaGen is doing in Oregon, most of them on a much larger scale. Sharron said that's because Europe has much higher renewable energy requirements, but also because the cost of fossil fuel is much higher there.
Sharron estimates that his company has installed about 30 biomass thermal systems in the Northwest and he gets more inquiries every week from those interested in the relatively low-cost technology, but financing remains a huge obstacle.
"They are all excited and motivated, but at the end of the day I say, 'This is all fine and dandy, but this will take some money... and that's where the phone goes deadly silent," Sharron says.
While his company is booked through the end of Februray with orders, Sharron says that the "floor has fallen out" of the woody biomass industry as incentives dry up.
At this point, Sharron said he is hoping to capitalize on the momentum created by recent projects, even as the incentives dwindle.
"We've gotten a tremendous amount of interest form schools, courthouses and hospitals that want to jump on the bandwagon," he said. "Unfortunately, it's really tough for them to get the money."
The state of Oregon is aware of the challenges facing the industry, says Krumenauer. Like Sharron, Krumenauer is hoping that the recent spike in biomass power projects will create enough momentum to sustain the industry in the absence of popular programs like the Business Energy Tax Credit. In the meantime, he said his agency and the governor's office are working on ways to continue to support the industry with programs like Gov. Kitzhaber's Cool Schools initiative that will provide low-interest loans to help Oregon schools convert from costly heating oil and propane to biomass.
"There will be less money available through the state's incentive programs than there used to be so that will certainly have an impact. But we're trying to come out with new, creative programs to promote these projects," Krumenauer says.
Down The Road
In rural Lakeview, the news of Iberdrola's decision to shelve the massive biomass project has been met with resignation. The community had high hopes, not just for biomass, but for other renewable technologies, including geothermal, that leaders hoped would help revive the area's diminishing economic base.
Jim Walls, executive director of the Lake County Resource Initiative, spent five years courting and shaping the planned biomass energy plant, beginning with the commission of a locally funded feasibility study and culminating with the breaking of ground last year on the biomass project that was to operate in concert with a newly retooled small-diameter sawmill in town. Walls said he and others had expected the project to deliver dozens of construction jobs during the building phase, as well as dozens more in the operational phase, stretching from the plant to the forest where material would be culled. He started to have doubts in late summer when it seemed progress was slowing, just when it should have been ramping up. Then came the news in October, Spain-based Iberdrola, for whom Lakeville represented its first foray into biomass, had been unable to secure an all-important power purchase agreement. In other words, there was no customer for Lakeville's electricity. Iberdrola announced that it was stopping work on the project indefinitely.
Walls and others in town remain hopeful that demand for electricity will rise in the future and California utilities will be back in the market. In the meantime, though, they are not holding their breath.
"The reality is that when these things get shelved, they're not as easy to un-shelve as people think," Walls says.