Innovative Natural Resource Solutions, LLC Newsletter, October, 2015
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INRS has been busy in 2015 with exciting work in forest sustainability and wood energy – and a few other areas too!  We hope you enjoy this update.  Please contact us if you would like further information about any of these topics or if we can help you in any way.

The INRS team:

Eric Kingsley
Charles Levesque
Charles Niebling

In This Issue:

1. Mohawk Trail Area Wood Energy Project
2. INRS Authors Wood Supply Reports
3. T-REC Enterprise Fund  
4. Benchmarking Maine's Forest Industry 
5. NY Wood Products Development Council
6. Making Wood Availability Information More Accurate
7. INRS Partners Secure USDA Funding
8. Wood Pellet Co-Fired with Coal?
9. About My Woods
10. Energy Markets, October, 2015

Mohawk Trail Area Wood Energy Project

We were fortunate to recently land a contract with the State of Massachusetts Department of Energy Resources of to conduct a forest resource analysis of the 20 town Mohawk trail region of northwestern Massachusetts. The purpose of this work is fairly simple but the goal is ambitious.  We will determine the extent to which excess low-grade timber resource is available for wood fuel to expand modern wood heating to residential and commercial/institutional building owners in the region.  A high level goal would be to eventually see a wood pellet manufacturing facility locate in the region – assuming the analysis shows that the raw material can be made available in a sustainable manner.  We’ll provide updated info on the results of this work in a future newsletter.
The 20-town northwestern Massachusetts Mohawk trail region

INRS Authors Two New Wood Supply Reports
 

INRS is participating as a team member in the $1.6 million, two year Windham Wood Heat Initiative, a major effort to bring modern wood heat to every school and other municipal and commercial buildings in Windham County, Vermont.  Our role is to evaluate sustainable wood supplies for pellets and chips, and to help develop these supplies to strengthen the link between local forest ownership and management, and heating markets for low grade wood.

INRS has authored two reports as part of this work.  The first, Initial Wood Supply Analysis for the Windham Wood Heat Initiative, looks at forest growth and utilization in a seven county region surrounding (and including) Windham County.  Not surprisingly, the study finds that forest growth greatly exceeds harvest and loss to mortality, by a ratio of nearly 3:1.  Low grade wood resources available on a sustainable basis vastly exceed potential demand for modern wood heating under a range of modeling scenarios.  The second study,  Harnessing Local Wood Supply for the Windham Wood Heat Initiative, evaluates the wood supply chain to develop a local source of semi-dry, refined chips that can be utilized in boilers installed as part of the project.  

T-RECs Enterprise Fund Established to Help Finance Advanced Wood Heating Projects in NH

The U.S. Endowment for Forestry and Communities (Endowment),USDA Forest Service (USFS) and NewHampshire-based Innovative Natural Resource Solutions LLC (INRS) have announced the establishment of the New Hampshire T-RECs Enterprise Fund to provide capital financing for community-scale wood heating projects.
 
The fund has an initial $750,000 investment and will build on New Hampshire's first-in-the-nation Renewable Portfolio Standard (RPS) wood biomass heating incentives.  Under NH's RPS program, building owners can receive thermal renewable energy certificates (T-RECs) based on heat output from qualifying renewable heating systems (wood, solar, geothermal).  The Fund will "pre-purchase" future T-RECs for up to five years and provide project developers with much needed up-front cash to help lower capital cost, thus addressing a major hurdle for switching to modern wood heating systems.  Once the project is built and generating T-RECs, the certificates will be sold by the Endowment to re-capitalize the fund. 
 
The T-RECs Enterprise Fund is accepting applications and expects to begin funding projects in the coming months.  If you are considering switching to modern wood heat, and are looking for funds to offset 10-20% (or more) of your capital cost, contact the Fund today.  The NH Wood Energy Council  has endorsed the fund.

 

Benchmarking Maine’s Forest Industry

Understanding how states compare to one another on objective measurements is critical to informed policy discussions.  INRS recently completed a benchmarking analysis for the State of Maine, providing objective information on how Maine compares to a number of other states with significant pulp and paper manufacturing, including Minnesota, Wisconsin, Georgia and Mississippi.  Areas evaluated include:
  • Fiber availability;
  • Acres (and percentage) of certified land;
  • Industrial electric and natural gas rates;
  • Workforce development; and
  • Taxation.
The benchmarking, released by the Governor’s office, can be viewed here.  
If you are interested in having similar work completed for your state, please contact INRS.  

NY Wood Products Development Council

INRS worked as a contractor for the New York Wood Products Development Council on developing and publishing their annual report.  This group is a public-private board, established by the state’s legislature is the forum where forest landowners, forest industry, state government and other stakeholders work collaboratively to address the challenges and opportunities that face New York’s forestry sector.

This year’s annual report highlights a number of issues where the NY Wood Products Development Council has concerns is focusing efforts, including:
  • Forest parcelization;
  • Supporting the logging workforce;
  • Forest taxation;
  • Integrating wood products into existing state economic development efforts; and
  • Developing export markets for New York hardwoods.
Download the complete report here 

Making Wood Availability Information More Accurate 

 

With funding provided through a grant from the Northeastern States Research Cooperative, INRS has been working with Mark Ducey of the University of New Hampshire to develop data that will make estimating wood availability in the northeastern United States much more accurate.  It will provide more detailed information on things like road accessibility, regulatory restrictions and land conversion that will be useful to the casual and serious researcher.  Expect something to be available by December or so.

INRS Partners to Secure USDA Funding for Development of National Wood Chip Fuel Quality Standard

Every heating fuel available in the market today that is used on any significant scale is governed by strict quality standards, including heating oil, propane, natural gas, coal, and wood pellets.  Quality standards ensure that buyers of heating fuels know exactly what they are buying, and can know with confidence how the fuel will perform in a boiler, furnace or stove. 
 
Every fuel, that is - except wood chips.  That's about to change.  INRS has partnered with the Biomass Energy Resource Center, the Biomass Thermal Energy Council and the American Society of Agricultural and Biological Engineers to secure $139,000 in funding from the US Department of Agriculture to develop a National Wood Chip Heating Fuel Quality Standard.  The two year project is expected to begin later this fall.  INRS will be responsible for undertaking broad industry and consumer outreach to ensure that the standard is widely endorsed and promoted once completed.  Our partners BERC, BTEC and ASABE will manage the technical aspects of the standard development.   
 
Wood chips are widely utilized in commercial, institutional and industrial boilers across the nation.  As regulators continue to crack down on boiler emissions and urge greater efficiency, a known and widely adopted fuel standard will become more important.

 

Wood Pellets Co-Fired with Coal?

Earlier this year, the federal government released its Clean Power Plan, meant to reduce carbon emissions in electric generation.  A number of facilities currently using coal for generation are now evaluating the potential to co-fire with coal as a way to comply with expected regulations.  INRS’ Eric Kingsley presented at a conference in June on the possible ways this could be an economic opportunity, joining pellet producers, power plant operators, regulators and others to discuss this potential new market.  That presentation, Wood Pellets – Co-Firing with Coal: How to Compensate Generators for the Higher Cost of Generation can be viewed here.  
 

Did you download About My Woods yet?
 


“There are more than 1.3 million apps available today.  Exactly one of these has been designed specifically to help educate and inform woodland owners in Maine, New Hampshire, Vermont and New York.  Want to know the soil type, get watershed information, or see a satellite view of any precise point on your property?  Need help identifying a tree, animal, or invasive plant?  The app can help you with that, and also help you find foresters, landowner organizations, and other forest resources in your area.”
Northern Woodlands Magazine


If you haven’t downloaded this INRS developed app yet, go to the App Store or Play Store or to http://www.aboutmywoods.org to get the free app or to view the “how to” video in case you want to brush up on the full functionality of About My Woods!  We were fortunate to produce this cool tool for the North East State Foresters Association and we have efforts underway to expand it to the whole country!  Don’t have it in your state? Get in touch to find out how we can make it available for where you are from.

This project was funded through a grant from the USDA Forest Service.

Energy Markets, October, 2015

Prices for energy – diesel, electricity, and natural gas – all influence the viability and profitability of biomass energy products. These commodities are used as an input cost or an income stream for many forest products industries. These commodities are tracked in open and transparent markets, and futures markets exist that allow a market-based price outlook and an opportunity to manage price risk.

Electricity

New England electricity prices are highest in the winter, when constrained natural gas capacity in the region increases pricing.  This dynamic, and the cost associated with it, have governors, industries and others promoting a range of solutions – from new gas pipelines to importing energy from Quebec. 
While winter continues to be associated with a spike in electricity pricing, that spike is shrinking.  Power plant operators in the region have been encouraged to take steps to assure availability and reliability, and conservation and efficiency programs are making a very real dent in peak demand.  We still have winter peak in price, but nothing like was seen in 2014.  The futures market* suggests we will continue to see winter spikes, but not at reduced levels (of course, the futures market can be wrong).


So what does this mean for biomass?  For facilities without a power purchase agreement (which describes most facilities in the region), the economics of running a facility require both a strong wholesale electricity market and revenue from Renewable Energy Certificates (RECs).  Under these market conditions, we might expect to see some biomass plants operating at full capacity during the stronger electricity markets of winter and summer, and taking longer downtime during the spring and fall.  Obviously, for suppliers this can create huge challenges, particularly if wood buying stops as well. 
Importantly, the rules for qualifying biomass-generated RECs in Massachusetts are set to change this January, requiring a level of efficiency that current biomass plants can’t meet (and appear to only allow for combined heat and power generation).  For plants that rely exclusively upon REC sales into Massachusetts, it is hard to see how those plants will be able to operate economically after March of this coming winter.


Diesel

The past two years seen a dramatic decline in the price of oil, and diesel has fallen right along with it.  From an average price of $4.01 per gallon in 2014, the current and futures market* suggest an average price of under $2.65 per gallon for 2016.  This should help stabilize trucking costs for forest products industries, and many wood buyers may want to explore opportunities to use the futures market to “lock in” current pricing.  

While the drop in diesel is good news for truckers and those that buy wood, it also means a drop in the cost of heating oil.  While nice for consumers, this makes it harder for biomass heating to gain traction.  A good resource on the cost per MMBTU of a range of fuels – including wood pellets and cordwood – is available from the NH Office of Energy and Planning.

* Note: The future energy prices are based upon existing futures markets and reflect market sentiment, this is not an INRS prediction or a guarantee of future prices (though futures can be used to help a facility manage price risk). All futures prices listed are from the afternoon of October 5, 2015 and may have changed since that reporting.
 
Thanks to Hannah Ellingwood of our staff for putting this newsletter together.
Copyright © 2015 Innovative Natural Resource Solutions, LLC, All rights reserved.


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