Utilities, pellet producers discuss important issues at WPAC 2015

By Katie Fletcher | November 10, 2015

The Wood Pellet Association of Canada conference held last week in Halifax, Nova Scotia, hosted a power panel uniquely composed of both pellet producers and utilities sharing viewpoints on a variety of subjects.

This year, Drax Power, Groupe Savoie, Pinnacle Renewable Energy Inc., Ontario Power Generation and Scotia Atlantic Biomass were represented on the panel. Discussions ranged from fiber sustainability to the logistics of pellet shipping and the future of federal funding for renewables in the U.K.

Deborah Keedy, head of procurement with Drax Group plc, shared her perspective from the U.K. on the continuation of federal incentives for biomass. She said that in regards to contracts for differences (CfD), where the U.K. is today looks like a cliff edge. “I think the government is going to reflect on what they are going to do to meet their renewable targets,” Keedy said. “Today, it is all about cost, they are working out what they need to do to prevent an over spend.”

She added that as more coal-firing units come off the system more thermal generation will be needed to balance the system, and that the government will, again, address what they need to do. “I think that is an opportunity for biomass, and they will look at extending it.” Keedy referred to extending the 2027 expiration date of fixed Renewable Obligation Certificates under the U.K.’s Renewable Obligation.

“From our point of view, in 2027, it would mean that if we don’t have the full subsidy or any subsidy, potentially, we would still be running at some point, it might just be peaking—it might be we are providing that system power when it’s expected to peak,” Keedy explained. “It looks like a cliff edge, but there are already other projects that extend beyond that, and I think there is still quite a bit of time before 2027.”

Vaughan Bassett, vice president of sales and logistics with Pinnacle, shared his thoughts from a producer point of view. “I think this is a big concern,” he said. “We get to a cliff edge at the end of 2027 and there is a whole bunch of uncertainty of how biomass subsidies will be thereafter.”

Bassett adds that he believes somewhere in the U.K. legislation’s thinking was the idea that funding could be provided for a while as a means to narrow the fuel price gap. “As we look at our industry now, the coal price is going to have to come up a lot for that to happen,” Bassett said. “I don’t think we as pellet manufacturers have the resources, energy inputs, cost inputs to get the price of pellets down.”

Going forward Bassett believes the industry needs to reflect on what can be done to trim back costs, so that “we can hopefully provide a fuel source that stands on its own two feet and doesn’t require subsidies, but it’s going to be a tough burden.”

Keedy said that Drax provides a huge amount of flexibility on the national grid. She believes biomass is providing that flexibility and extending the life of Drax. “If we don’t have more biomass or thermal generation as a part of the mix, we’ll start to see real problems on the system,” she said.

Keedy provided the example of a recent notification of inadequate system margin or NISM. Prior to this month, the last time a NISM was issued was in 2012. “It’s a major outage, and they need to ask people to produce more or take demand off the system,” she said. “It’s the kind of thing if we start to see more of that happening there will be problems.”

Gordon Murray with WPAC expressed concern over the narrow capacity margin, asking Keedy, “If there are any big surges like that, if you don’t have enough generation, how are you going to respond?” He said, “The one thing that makes me nervous is when the new conservative government came in earlier this year, they took the levy control framework away, the RO grandfathering away; they don’t seem to understand the concept of system costs.”

Murray questioned how Drax can continue to invest in biomass with the uncertainty. Keedy responded by saying things will change. “They will recognize that biomass is a very neat solution to fit in with the wind and solar to give us what we need, which is renewable and flexible power.”

Rebiere believes that as producers they should be thinking about diversification of fiber sourcing and what additional markets exist, such as the industrial U.S. market.

One question that was asked of the panel is if Canada has a logistical role, or if it would be appropriate, for the country to serve the U.S. Bassett believes Canada could play a role in helping with the development of specification. “We have lots of experience in cofiring around the world that would be useful to the Americans,” he said. “There is a lot that we can do, but the lobbying itself will require American companies and American associations.”

Brent Boyko, director of biomass business development with OPG, said that they held an event on National Bioenergy Day in October at their Thunder Bay Generation Station, which has been converted from coal to use advanced biomass pellets. “We use it as a showcase—it’s something we celebrate in Ontario,” he said. “Doors are open, the policy climate is right.”

Safety was amongst other topics addressed by the panel. “There are two key things: people and activities,” Rebiere said. “We talk about the fact that we can make all of the equipment safe and we can evolve the procedures, but if we’re not changing the behavior, an incident can happen at any time.”

She added that it has to be a complete culture change. Keedy said that Drax strives to have a zero dust environment, which just isn’t achievable. “I think the one thing we have drilled to our staff is that dust is the enemy,” she said. “Our actual equipment we have is state of the art, but, ultimately, it’s the people who operate it that make all of the difference.”

A lengthy discussion on sustainability came up during the talk, including the Sustainable Biomass Partnership. Boyko candidly said, if you don’t follow sustainability criteria, it’s a nonstarter. From the U.K. perspective, Keedy said she doesn’t believe the government has a good understanding of forestry or forestry management, although, she does believe the SBP—being industry led and working with producer groups—will provide transparency and give the government a lot more comfort.

Rebiere said that, initially, the industry may have looked at the SBP as another requirement, another onerous task to go through with audits. However, “I think it’s an excellent tool for us to help increase awareness of our industry, provide that consistency and common platform,” she said. “The SBP is a great start to the industry, I also would like it to be a global initiative. I think that this platform and framework could go around the world eventually.”

One of the last questions asked was about pellet shipments. Earlier this year, the first Panamax-sized vessel sailed to Drax. “The important thing about this game is one size doesn’t fit all, we need big but we also need small,” Keedy said. “We need small to facilitate trading between other utilities and other users, because not everyone has a deep-water port or the capability that we do.”

Bassett said that with the Panamax size, Pinnacle saw an opportunity for a vessel that was being underutilized in the pellet industry. However, nearly all of the vessels were not equipped with the necessary fire suppressant and other requirements for the feedstock to be carried overseas. Bassett and others worked to get the restriction lifted and succeeded. “Now we have a port, the available tonnage to carry it and that’s all going to start in 2017 when the formal restriction gets lifted,” he said. “What we found with the trial shipment to Drax this year is it is so much easier to load and discharge a Panamax.”

An overarching theme of communication and education of the benefits of wood pellets emerged. Pinnacle created a video found on the company’s website to help get the message out. “I think it’s that kind of thing, making our industry easier understood to others and getting the message out to others that it’s not just fuel, it’s fuel with benefits,” Bassett said.

Click here for more information about the content at this year’s conference, and here for coverage of the port and plant tours that were part of the pre-conference events.