Biomass’s Opportunity in Future Power Trend

Wikipedia defines three-dimensional chess as “a complex, dynamic system with many competing entities and interests.” Sounds a lot like following the biomass industry, right? As we know, our industry transcends wholesale power markets by calling upon policymakers—and the public—to recognize the many benefits of generating power from organic materials. So as 2017 draws to a close, it begs the question: Are we winning? If not, what will it take to ensure the long-term stability and growth of biomass power?
Our industry looks at the demise of baseload power (nuclear and coal) and rightly wonders, what does the future hold for everyone but solar, wind and natural gas?

Recent statistics as reported by the Wall Street Journal paint a challenging, sober picture. Power in ERCOT (Electric Reliability Council of Texas) is currently trading at $25 per megawatt-hour—a decade ago, that price was $55. In PJM, part of the eastern connection grid, recent trades settled at $29.23 last year, the lowest trades since 1993. At the same time, demand for electricity is, at best, flat, as more consumers are using smart systems that drive down demand.

The beneficiaries of falling prices are intermittent sources like wind and solar that continue to drive down costs, and also the sourcing of ever-cheapening shale gas. To give you a sense of these trends, it’s notable that in 2016, all new generation in the Southwest Power Pool came from wind, solar and natural gas.

So where does this leave biomass, along with other baseload renewable sources? Energy Secretary Rick Perry’s recent suggestion, now before the Federal Energy Regulatory Commission, is to award baseload power like biomass—with reliable, on-site supplies of fuel—an additional pricing benefit. Some say this is too little too late, given market forces.

A trend that folks in Washington, including us, didn’t see coming is “transport as a service.” Tony Seba, the well-respected thought leader on technology, recently predicted that by 2030, 95 percent of vehicles on the road will be on-demand, autonomous electric vehicles. Many in the automobile industry believe that newborns in America today are never likely to take driver’s education. Imagine Uber and Lyft on steroids.

Where will all this power come from, and what role can we play? Well, for starters, our power qualifies for the federal Renewable Fuel Standard. The RFS promotes biofuels, including renewable electricity from biomass, by awarding tradeable credits. Already, the program has transformed the renewable gas industry, allowing landfills and wastewater treatment plants to get above-market pricing for gas supplied to LNG and CNG fleets.

Biomass may be your grandfather’s energy, but with your help and support, we can also be your granddaughter’s vehicle fuel. We are learning three-dimensional chess, and with any luck, we will win at this game. Onward!


Author: Bob Cleaves
President, Biomass Power Association
[email protected]
www.usabiomass.org