By Janel Ruehl, Central Oregon Intergovernmental Council
Although many people have heard the phrase “biomass” at some point in the last decade or two, few are knowledgeable about the wide range of utilization strategies available today. The widely publicized closure of a number of large-scale electrical generation projects and the difficulty of competing with subsidized renewable energy sources such as solar and wind have made some cynical of the potential for successful biomass utilization projects. What does success look like in this current landscape, and what can we learn from the lessons successful project developers have learned along the way? Panel one focused on modern success stories from four biomass utilization projects in the Pacific Northwest region, giving us insight into potential pitfalls and opportunities.
You might hear Wallowa Resources Community Solutions, Inc. referred to as “a diversified biomass campus” or a “forest products business cluster”. These titles both point to the success that Wallowa Resources has found through product diversification. Matt King, Wallowa Resources’ Energy Program Advisor, demonstrated the established relationship between project scale and complexity/cost: the more biomass volume is utilized, the more complex and costly the project. By integrating a number of smaller, diversified product streams Wallowa Resources has found greater project sustainability. Matt highlighted five primary benefits of integration: 1) reduced in-woods harvesting and trucking costs, and lesser site impacts; 2) integrated and diversified merchandising and marketing; 3) economic diversity, predictability, and stability; 4) increased forest health and restoration; and 5) additional supply to regional mills and industrial forest products customers. Unlike a “typical” forest products supply chain, Wallowa Resources draws on small-diameter wood from forest restoration to make an array of products including small saw logs, posts and poles, animal bedding, wood hog fuel for energy use, particleboard furnish, bundled and bulk firewood, and energy. This model has created a sustaining niche market for Wallowa Resources, but not without challenges. Matt and his colleagues are still wrestling with the low value of small-diameter wood products, the difficulty of finding equity partners, a lack of ancillary forest products businesses to support the mill supply chain, and limited supply due to limited forest stewardship.
Nick Johnson is interim Executive Director of Lake County Resources Initiative (LCRI). As a non-profit organization focused on renewable energy, forest research, and economic development, LCRI has partnered on the Red Rock Biofuels project in Lakeview, OR. While not the direct operator, LCRI’s partnership has enabled this large-scale biomass utilization project to move beyond development and into implementation. What does it take to get a large-scale project off the ground in today’s environment? According to Nick and LCRI, you must consider communication, collaboration, and availability. Good communication builds vital community support, and LCRI has leveraged their communication networks to organize public events and encourage transparency throughout the development phase of the Red Rocks project. Collaboration with the stakeholders of the Klamath Forest Health Partnership has maximized their ability to leverage funds. In addition to helping secure USFS supply chains, LCRI has helped tap into the abundant supply of biomass on private lands throughout the county by coordinating with landowners. LCRI has an ongoing interest in biomass utilization as it relates to economic development and job creation in their region, and their success with the Red Rock Biofuels project highlights how non-profits can play a vital role in development. However, the project still faces many hurdles as it moves into implementation in 2018 and beyond, including securing adequate and consistent supply for such a large scale.
In the Hood River area, the Wind River Biomass Utility (WRBU) is gaining ground on their combined heat and power biomass utilization project. Norman Ward, one of four founding members of the utility, explained that WRBU will produce electrical power for commercial & residential use, thermal power for commercial & residential use, biochar for agriculture, and firewood for camping & home heating. When in full operation, the facility is expected to process 12,000 dry tons annually. To date, the project has found success by focusing on their firewood operation. Starting in 2016, WRBU produced 15.5 cords of seasoned firewood from small-diameter wood, more than quadrupling this by 2018, with 95.5 cords produced. They deliver bundled firewood to four state parks and six USFS campgrounds, along with one private campground/RV park and one grocery store. This portion of the facility currently employs three people but is anticipated to represent just 22% of the overall project revenue once the facility is fully operational. Meanwhile, the WRBU team has been busy securing grants and investment funding to scale up their operations, delivering a Combined Heat and Power Feasibility Study with the Skamania Co. Port, a Small Generator Interconnection Report, and a Thermal Greenhouse Feasibility Study between 2014 and 2018. They’ve completed design and engineering plans for the full facility secured a long-term lease for 25 acres in the Wind River Business Park and acquired most of their necessary operating equipment. The team has incorporated new ideas as they go, including an innovative design for onsite greenhouses utilizing biomass heat to expand the local food system. Like Wallowa Resources, WBRU will be considered an “integrated campus” when fully operational, utilizing a diversity of products and income streams to be sustainable and competitive in the market.
Here in our own backyard, the Ochoco Lumber Company has been partnering on biomass utilization efforts for years. Founded 93 years ago, Ochoco Lumber has seen huge change in the forest products industry in Crook County. With zero operational mills in Prineville today, Ochoco Lumber recognizes that there is currently a huge issue with forest health and density. From their mill in John Day, Ochoco Lumber processes small-diameter wood products and torrefaction is their newest project. Torrefaction is a thermal process to convert biomass into a coal-like material, which has better fuel characteristics than the original biomass. Torrefied biomass is more brittle, making grinding easier and less energy intensive (learn more about torrefaction in our Panel 3 post). Bruce Daucsavage, CEO of Ochoco Lumber, shared some project statistics. The torrefaction project will cost less than $20 million with zero debt incurred. It will process over 200,000 green tons of biomass annually. The project is well supported by a range of stakeholders, including Oregon Senators and Congress members, environmental groups, and community members. Several Oregon banks have expressed an interest in kick-starting the project. According to Bruce, Ochoco Lumber is also interested in opening a new mill in Prineville, but the undertaking is expensive. Investment in equipment is particularly costly, and estimates from a recent mill opening in Idaho put the total project cost around $80 million.
All of the success stories highlighted in panel one share the themes of diversification/ integration and collaboration. While WRBU is working off a tiered system of implementation starting with firewood, Red Rock Biofuels worked in partnership with LCRI to develop and launch a large-scale project. There is no one-size-fits-all pathway to success, but it’s clear that flexibility and innovation are important elements in today’s successful biomass utilization projects.
- Integration of multiple technologies and products can actually make projects less costly and complex.
- Collaboration, communication, and a solid supply chain are crucial elements to any project’s success.
- Consider a tiered implementation approach: start with a product line that has a lower barrier to entry such as firewood and works your way into full operations. How can a project support other local industries, like agriculture (ie: WBRU’s greenhouses).
- Diversification of existing mills and forest infrastructure is significantly less expensive than building new
How does this apply to Crook County?
- If Crook County is interested in a large-scale facility, what groundwork can be done now and who is the best fit to do this work? Who is well-suited to fill LCRI’s role (on the Red Rock Biofuels project)?
- There are several small biomass utilization projects already launched in Crook County (firewood), can we build on these to create a larger, integrated campus? How do we best support these entrepreneurs, and attract more?
- How can Crook County benefit from a nearby torrefaction project in John Day? What are the potential risks?
Possible Next Steps
- Formalize a partnership between the City/County and a non-profit partner to conduct community outreach and engagement
- Complete a feasibility study for an integrated biomass utilization project in Crook County
- Identify interested stakeholders and entrepreneurs in the county
- Research potential equity partnerships to avoid high debt
Nick, why can’t you use federal resources? Is it a Lake County thing?
Nick: The federal funds for biomass are specifically allocated for Red Rock, and policy states that you can’t produce things using federal materials.
Is it possible to use carbon exchanges to subsidize integrated biomass startups?
Bruce: The rules state that carbon and forests are being written out. Wood products store carbon within thin forests, resulting in trees growing faster. Soon there will be carbon credits. We worked on a carbon project in Arizona, and received a large sum of money for these efforts. It’s new and complicated, but we will have a carbon policy soon.
Do you think there will be enough of a market to support more than one Integrated Biomass Campuses in a given area?
Matt: Yes. We think we can replicate our model. Each matrix of products and community will create different businesses. We have talked to Boise Cascades about how their businesses can replicate a sawmill, for example.
Why not a district heating or Combined Heat and Power project in Stevenson or Hood River?
Norm: I think that would be great. In Europe, small communities have a biomass plant to heat the entire town. Although, it would be a challenge at our location in the gorge due to barriers around scenic areas.
Bruce, could you just use the burnt trees along highway 126 for your projects?
Bruce: Post-fire areas are controversial, but there are opportunities with categorical exclusions. The torrefaction process can absolutely use burned material, but I don’t necessarily want to encourage that. As a producer, I don’t want to see that product go to waste. I wish those trees along Highway 126 would have been brought out earlier as those are exactly the kind of tree we want. As those damaged trees are still out there longer, they will gradually start to deteriorate and cannot be used.
Matt, does Wallowa Resources have their own loggers? Where do you buy your logs?
Matt: Currently no, but we want to pursue this. Right now we will take a sale from the Forest Service or make an agreement for buying restoration material from private land owners.
Norman, what are the ecological benefits for an entrepreneur to do this on a large scale? Will they drive realistic profits?
Norman: Yes, that’s why I’m doing this work and you can find more information on my webpage (https://portofskamania.org/wrbiomass/). We started doing research on biochar and we know we can produce about 150 pounds an hour. We think this will make a lot of good money.
Matt, how long did it take to get your project to the point of efficiency?
Matt: I am not sure what the definition of “point of efficiency” is, but it took about 10 years to get to a point to actively start getting our financing down to turn a profit. We are just now starting to pay the banks back.
Nick, how did the county incentivize Red Rock Biofuel to make a contribution to the area?
Nick: I don’t think we were incentivized. I think the town realized the economic benefit, so they were on board from the start.
What level of volume from the national forest in tons per year would be necessary to help make a biomass campus more viable?
Bruce: In term of saw logs, the campus we currently have in John Day can consume 50,000 – 80,000 tons of green fiber. The one you will hear about this afternoon has the capacity to do about 200,000 tons. Prineville has the opportunity to capitalize on moving of product. It is hard to pencil out the ideal volume number.
Nick: I agree that the volume level is dependent on scale.
Norm: 36,000 tons a year of waste material for a 12,000 kilowatt plant size. Our feasibility study said we could scale up to 2 megawatts. This is on average.
Matt: This is largely dependent on economics, not volume. Generally, it comes down to the saw log component.
How many employees do you currently have on site?
Matt: 23 full time employees and 1/3 of them are there from when the saw mill was still in operation. As we spend more money going into the future, we will be creating a lot more jobs.
Norm: We only had 4 employees built into our pro forma to get our projects out. Looking into the future, we are estimating the potential for 16 jobs as we expand and incorporate greenhouses into our projects.
Bruce: We have 100 direct employees. Loggers and truckers are another 100 employees.
Nick, Is the 3 megawatts produced being pushed back to the grid?
Nick: Yes. It is going directly back to the grid on a community scale.
What would you tell the students here in attendance to study in school if they are interested in getting into the biomass industry?
Bruce: Accounting or wood products. We have a shortage of CPAs and the issue of no bids coming in on the Ochoco National Forest.
The Forest Service has to allocate a larger percentage of funding every year to fight fires and now have less capacity to do other work on the forest. How do you all as entrepreneurs buffer this reality and how does it affect your business?
Bruce: We have a horrible system for fighting fires. As most of you know, the dollars come out of the Forest Service’s budget. We need to treat these catastrophic fires the same way we treat huge disasters, and go to FEMA for help.
Nick: One of our main funders is the Forest Service. A lot of our research is geared toward creating healthier forests on a landscape level.
Norm: I think with fighting fires and funding issues, it will be important for the collaboratives and the Forest Service to salvage that resource together. There is value left in the forests after the fires go through.
Matt: I agree with the other responses. One thing we’ve discussed a lot lately is private contractors doing logging when they are not fighting fires. There is a huge workforce for fighting fires. I think that is a huge opportunity for being able to do preventative work on acres in the forest to bring more volume into biomass operations.
Wallowa Resources Community Solutions, Inc.
Lake County Resources Initiative
Wind River Biomass Utility