Energy pellet developments in Australia

1. Energy pellet developments in Australia By Liz Hamilton, Senior Bioenergy Industry Officer Because the current period of high prices will likely be extended as a result of unrest in the Middle East, the lower currency exchange rates for the U.S. dollar and other inflationary pressures, the funding environment for cellulosic ethanol projects will likely improve in 2011 and 2012.  The last time oil prices stayed above $90/barrel was from November 2007-September 2008 (hitting a peak above $133/barrel in June and July 2008). During this period, we also saw a spike in public interest in cellulosic ethanol. (The second factor that will influence progress toward commercial scale cellulosic ethanol produced from wood and wood waste is the governments ability and willingness to fund and expand current loan guarantee programs.   The USDA may have signaled its intention to support cellulosic ethanol with the January announcement of three new loan guarantees totaling $405 million. All of the projects are cellulosic ethanol projects located in the South. Two will use wood as part or all of their feedstock: $250 million went to Coskata to build a plant in Greene County, AL. The plant, when operational, will produce 55 million gallons of ethanol from woody biomass annually. The company currently has a facility in Penn. that has demonstrated commercial viability and produces 100 gallons of ethanol from every ton of feedstock. $75 million went to INEOS New Planet Energy for a plant to be built in Vero Beach, Fla. The plant, when operational, will produce 8 million gallons of cellulosic ethanol and 6 MW of electricity from a variety of waste streams, including wood. Because the current period of high prices will likely be extended as a result of unrest in the Middle East, the lower currency exchange rates for the U.S. dollar and other inflationary pressures, the funding environment for cellulosic ethanol projects will likely improve in 2011 and 2012.  The last time oil prices stayed above $90/barrel was from November 2007-September 2008 (hitting a peak above $133/barrel in June and July 2008). During this period, we also saw a spike in public interest in cellulosic ethanol. (The second factor that will influence progress toward commercial scale cellulosic ethanol produced from wood and wood waste is the governments ability and willingness to fund and expand current loan guarantee programs.   The USDA may have signaled its intention to support cellulosic ethanol with the January announcement of three new loan guarantees totaling $405 million. All of the projects are cellulosic ethanol projects located in the South. Two will use wood as part or all of their feedstock: 

2. Existing wood pellet plants in Australia & NZ Christchurch, Rotorua and Taupo. PHA Woodburn- 3000 tonnes of product annually from softwood. PEA - 250, 000 tonnes capacity – mainly hardwood SEFE – xx tonnes output – native forest and other sawmill sawdust All the pellet plants in Gatton E.C.W.Q.L.D,/ Pelletheaters Australia Woodburn N.S.W ./Scottsdale Hopgrowers Tasmania are similar pellet machines(what go by the name Super Ace & are expected to do up to around 3,000 tonne a year . None of the plants usually achieve this because of fluctuation in supply especially in winter when furnaces require more fuel. All plants have suffered supply problems in the last 5 years due to so many sawmills closing down. Pellet Heaters Aust have concentrated fully fully on there Oz-Pet litter market the last 2 years but are commissioning another pellet machine & intending to process heater pellets for the next winter. Christchurch, Rotorua and Taupo. PHA Woodburn- 3000 tonnes of product annually from softwood. PEA - 250, 000 tonnes capacity – mainly hardwood SEFE – xx tonnes output – native forest and other sawmill sawdust All the pellet plants in Gatton E.C.W.Q.L.D,/ Pelletheaters Australia Woodburn N.S.W ./Scottsdale Hopgrowers Tasmania are similar pellet machines(what go by the name Super Ace & are expected to do up to around 3,000 tonne a year . None of the plants usually achieve this because of fluctuation in supply especially in winter when furnaces require more fuel. All plants have suffered supply problems in the last 5 years due to so many sawmills closing down. Pellet Heaters Aust have concentrated fully fully on there Oz-Pet litter market the last 2 years but are commissioning another pellet machine & intending to process heater pellets for the next winter.

3. Plantation Energy Australia PEA is Australia’s only industrial scale Densified Biomass Fuel (DBF) pellet manufacturer – using plantation residues. Currently, one DBF plant in Albany, WA – 250,000 tonnes/yr; one plant planned for Heywood & one in Mt. Gambier. Global demand for pellets exceeded 12mil tonnes in2009- expected to top 30-60 mill tonnes by 2015 two different sources. Wood pellet exports from the US and Canada to Europe reached 1.6 million tons in 2010, a doubling of shipments in just two years, reports the North American Wood Fiber Review New 4 yr supply deal with Mitsui company worth > $70 million - the largest deal of its kind in Asia. Plantation Energy Australia Pty Ltd, Australia’s largest manufacturer and exporter of energy wood pellets, announced on 19 November a four-year supply agreement with one of Japan’s largest trading companies, Mitsui & Co. The agreement is worth over $70 million and is the largest of its kind in Japan in terms of volume and value. Under the terms of the agreement Plantation Energy will manufacture and export wood pellets from their first of several planned pellet manufacturing facilities. Their first plant is operating in Albany, Western Australia. The agreement provides a secondary market to Plantation Energy’s existing European business. Wood pellets are presently used extensively in Europe, with a major application being co-firing with coal in large utility boilers. Global demand for pellets exceedes 12 million tonnes per annum and is expected to exceed 30 million tonnes by 2015. Earlier this year, fellow Bioenergy Australia member, Delta Electricity launched an integrated oil mallee-wood pellet-co-firing project in New South Wales (see the June issue of the Bioenergy Australia Newsletter).Global demand for pellets exceeded 12mil tonnes in2009- expected to top 30-60 mill tonnes by 2015 two different sources. Wood pellet exports from the US and Canada to Europe reached 1.6 million tons in 2010, a doubling of shipments in just two years, reports the North American Wood Fiber Review New 4 yr supply deal with Mitsui company worth > $70 million - the largest deal of its kind in Asia. Plantation Energy Australia Pty Ltd, Australia’s largest manufacturer and exporter of energy wood pellets, announced on 19 November a four-year supply agreement with one of Japan’s largest trading companies, Mitsui & Co. The agreement is worth over $70 million and is the largest of its kind in Japan in terms of volume and value. Under the terms of the agreement Plantation Energy will manufacture and export wood pellets from their first of several planned pellet manufacturing facilities. Their first plant is operating in Albany, Western Australia. The agreement provides a secondary market to Plantation Energy’s existing European business. Wood pellets are presently used extensively in Europe, with a major application being co-firing with coal in large utility boilers. Global demand for pellets exceedes 12 million tonnes per annum and is expected to exceed 30 million tonnes by 2015. Earlier this year, fellow Bioenergy Australia member, Delta Electricity launched an integrated oil mallee-wood pellet-co-firing project in New South Wales (see the June issue of the Bioenergy Australia Newsletter).

4. Pellet Heaters Australia - Woodburn, NSW 3000 tonnes/yr “Super Ace” pellet machine capacity. Producing wood pellet fuel and spill absorbents.. Using plantation softwood. Focus on animal bedding/litter pellets, (Oz-Pet) for last 2 years. Currently commissioning another machine for energy pellets. Manufactures and ships premium quality packaged wood pellet fuel to customers all over Australia & Asia. All the pellet plants in Gatton E.C.W.Q.L.D,/ Pelletheaters Australia Woodburn N.S.W ./are similar pellet machines(what go by the name Super Ace & are expected to do up to around 3,000 tonne a year . None of the plants usually achieve this because of fluctuation in supply especially in winter when furnaces require more fuel. All plants have suffered supply problems in the last 5 years due to so many sawmills closing down. Pellet Heaters Aust have concentrated fully on there All the pellet plants in Gatton E.C.W.Q.L.D,/ Pelletheaters Australia Woodburn N.S.W ./are similar pellet machines(what go by the name Super Ace & are expected to do up to around 3,000 tonne a year . None of the plants usually achieve this because of fluctuation in supply especially in winter when furnaces require more fuel. All plants have suffered supply problems in the last 5 years due to so many sawmills closing down. Pellet Heaters Aust have concentrated fully on there

5. East Coast Woodshavings - Gatton, QLD. Producing a range of wood shaving and sawdust products. Have a 3,000 tonne/yr capacity “Super Ace” pellet machine. Mainly focussed on producing animal bedding/litter pellets. All the pellet plants in Gatton E.C.W.Q.L.D,/ Pelletheaters Australia Woodburn N.S.W ./are similar pellet machines(what go by the name Super Ace & are expected to do up to around 3,000 tonne a year . None of the plants usually achieve this because of fluctuation in supply especially in winter when furnaces require more fuel. All plants have suffered supply problems in the last 5 years due to so many sawmills closing down. Pellet Heaters Aust have concentrated fully on there All the pellet plants in Gatton E.C.W.Q.L.D,/ Pelletheaters Australia Woodburn N.S.W ./are similar pellet machines(what go by the name Super Ace & are expected to do up to around 3,000 tonne a year . None of the plants usually achieve this because of fluctuation in supply especially in winter when furnaces require more fuel. All plants have suffered supply problems in the last 5 years due to so many sawmills closing down. Pellet Heaters Aust have concentrated fully on there

6. Scottsdale Hop Growers - Scottsdale, Tasmania Australia’s first wood pellet producer. Also have a “Super Ace” pellet machine. Can produce up to 3,000 tonne/year. Producing both animal litter and energy pellets from plantation pine residue. More to be revealed by Mervyn Jones talk….. All the pellet plants in Gatton E.C.W.Q.L.D,/ Pelletheaters Australia Woodburn N.S.W ./are similar pellet machines(what go by the name Super Ace & are expected to do up to around 3,000 tonne a year . None of the plants usually achieve this because of fluctuation in supply especially in winter when furnaces require more fuel. All plants have suffered supply problems in the last 5 years due to so many sawmills closing down. Pellet Heaters Aust have concentrated fully on there All the pellet plants in Gatton E.C.W.Q.L.D,/ Pelletheaters Australia Woodburn N.S.W ./are similar pellet machines(what go by the name Super Ace & are expected to do up to around 3,000 tonne a year . None of the plants usually achieve this because of fluctuation in supply especially in winter when furnaces require more fuel. All plants have suffered supply problems in the last 5 years due to so many sawmills closing down. Pellet Heaters Aust have concentrated fully on there

7. South Eastern Fibre Exporters – SEFE - Eden

8. Other wood pellet plant proposals

9. Wood pellet project proposals in Victoria

10. New Royal Children’s Hospital - Melbourne Aim to be Australia’s greenest hospital & reduce GHG’s by 45%. Various energy efficiency measures include a recently installed 600 kW, 90% efficient, wood boiler to help heat ~ 10% of hospital. Capital cost of around $700,000 to install. Will use 10,040 t/yr pellets, initially sourced from PEA, Albany. Building of the new RCH has incorporated a 600 kilowatt wood boiler to help heat the hospital, using 10,040 tonnes/yr of pellets = 52 x 20 tonnes/wk. Energy efficient measures incl. an on-site gas trigeneration power plant, solar panels & a biomass boiler to reduce GHG’s by 45%. No grants, extra jobs possibly in the supply chain. investigating other sources of pellets but not enough to base an industry around. Building of the new RCH has incorporated a 600 kilowatt wood boiler to help heat the hospital, using 10,040 tonnes/yr of pellets = 52 x 20 tonnes/wk. Energy efficient measures incl. an on-site gas trigeneration power plant, solar panels & a biomass boiler to reduce GHG’s by 45%. No grants, extra jobs possibly in the supply chain. investigating other sources of pellets but not enough to base an industry around.

11. Wood to energy project proposals interstate  Spirit west - 250,000 tonnes/annum of forest residue to produce base load power from FPC. Spirit west - 250,000 tonnes/annum of forest residue to produce base load power from FPC.

12. Grants, incentives for woody biomass projects in Victoria Regional Development Victoria – (RDV) Regional Growth Fund www.rdv.vic.gov.au/regional-growth-fund Aim is to strengthen productive potential of regional Victoria: $1 billion over 8 years to 4 sub-programs : - Growing & sustaining regional jobs & industries - Transforming & transitioning local economies. - Building strategic tourism and cultural assets. - Energy for the regions (natural gas extension)

13. Grants, incentives for woody biomass projects in Victoria RDV: Developing Stronger Regions Program www.rdv.vic.gov.au/business-and-industry-programs/developing-stronger-regions Support for studies, such as a feasibility study, a demand study or a business case to enable prospective applicants to investigate the technical &/or economic viability of a project.

14. Grants, incentives for woody biomass projects in Victoria Dept. of Treasury & Finance Greening Govt Buildings Program www.procurement.vic.gov.au/CA2575BA0001417C/pages/state-contracts-energy-performance-contracting-epc-services * Projects must deliver cost savings to govt buildings * Simple payback period of 7 years maximum

15. Grants, incentives for woody biomass projects Dept. Primary Industries Energy Saver Incentive – (previously VEET) www.dpi.vic.gov.au/energy/environment-and-community/energy-efficiency/energy-saver-incentive-scheme Being reviewed & expanded to support energy efficiency among small to medium enterprises doubled GHG abatement. The new target will commence on 1 January 2012 to 2014. DPI is now consulting on new activity categories to support the expansion of the scheme beyond households to businesses. Closing date for submissions for a new activity category: 9/1/12

16. Grants, incentives for woody biomass projects in Victoria * Many other POTENTIAL new funding through state and federal sources – often changing. * VBN is up dating the bioenergy grants and incentives document – almost completed.

17. Pellet Information Resources International overview of standards for pellets - Evaluation of raw materials and raw material potentials - Quality and properties of pellets- Technical evaluation of the pellet production process and logistic aspects of pellet supply - Safety and health aspects for pellets during storage, handling and transportation - Technological evaluation of pellet furnace technologies and future developments - Economic and ecological evaluation of the pellet production process- Economic and ecological evaluation of pellet use in small-scale furnaces in the residential sector- Overview of international pellet markets and market developments - International case studies for the use of pellets for energy generation - Latest trends concerning research and development in the pellet sector International overview of standards for pellets - Evaluation of raw materials and raw material potentials - Quality and properties of pellets- Technical evaluation of the pellet production process and logistic aspects of pellet supply - Safety and health aspects for pellets during storage, handling and transportation - Technological evaluation of pellet furnace technologies and future developments - Economic and ecological evaluation of the pellet production process- Economic and ecological evaluation of pellet use in small-scale furnaces in the residential sector- Overview of international pellet markets and market developments - International case studies for the use of pellets for energy generation - Latest trends concerning research and development in the pellet sector

18. Conclusion * Growing activity around Australia in the area of pellet production & woody biomass to bioenergy projects. * Plenty of groups considering setting up in the pellet making industry – both wood and agricultural residue pellets. * But will new projects proponents use technologies that require energy pellets??? Maybe chips or directly blown in sawdust or agricultural residues will be preferred & cheaper! * Most projects developments include some factors of: - large thermal energy needs. - cheap, free or problematic waste biomass to be disposed of. - current reliance on expensive heating alternatives, eg. LPG , electricity, diesel, briquettes.

19. Thank you Liz.hamilton@dpi.vic.gov.au Senior Bioenergy Industry Officer Department of Primary Industries, Victoria Prepared feedstock (<10% moisture and 1-2 mm particle size) is fed into the bubbling fluid-bed reactor, which is heated to 450–500 °C in the absence of oxygen. This is lower than conventional pyrolysis systems and, therefore, has the benefit of higher overall energy conversion efficiency. The feedstock flashes and vaporizes like throwing droplets of water onto a hot frying pan. The resulting gases pass into a cyclone where solid particles, char, are extracted. The gases enter a quench tower where they are quickly cooled using BioOil already made in the process. The BioOil condenses and falls into the product tank, while non-condensable gases are returned to the reactor to maintain process heating. The entire reaction from injection to quenching takes only two seconds. One Hundred Percent of the feedstock is utilized in the process to produce BioOil and char. As the non-condensable gases are used as energy to run the process, nothing is wasted and no waste is produced. The uncondensed, flammable gases are re-circulated to fuel approximately 75% of the energy needed by the pyrolysis process. Three products are produced: BioOil (60-75% by weight), char (15-20% wt.) and non-condensable gases (10-20% wt.). Yields vary depending on the feedstock composition. BioOil and char are commercial products and non-condensable gases are recycled and supply a major part of the energy required by the process. No waste is produced in the Dynamotive process. A fourth product, BioOil Plus, can be produced by adding back the separated char into the BioOil, in a finely ground form of about 8 microns in size. There are a multitude of  biomass sources that are compatible with the Fast Pyrolysis process, where over 100 different types of feedstock have been tested. These include hard and soft woods, and cellulosic biomass from other plants and agricultural residues. Dynamotive does not use any food crops as a feedstock eliminating the “Food or Fuel” dilemma inherent of many other biofuel operations such as ethanol.Prepared feedstock (<10% moisture and 1-2 mm particle size) is fed into the bubbling fluid-bed reactor, which is heated to 450–500 °C in the absence of oxygen. This is lower than conventional pyrolysis systems and, therefore, has the benefit of higher overall energy conversion efficiency. The feedstock flashes and vaporizes like throwing droplets of water onto a hot frying pan. The resulting gases pass into a cyclone where solid particles, char, are extracted. The gases enter a quench tower where they are quickly cooled using BioOil already made in the process. The BioOil condenses and falls into the product tank, while non-condensable gases are returned to the reactor to maintain process heating. The entire reaction from injection to quenching takes only two seconds. One Hundred Percent of the feedstock is utilized in the process to produce BioOil and char. As the non-condensable gases are used as energy to run the process, nothing is wasted and no waste is produced. The uncondensed, flammable gases are re-circulated to fuel approximately 75% of the energy needed by the pyrolysis process. Three products are produced: BioOil (60-75% by weight), char (15-20% wt.) and non-condensable gases (10-20% wt.). Yields vary depending on the feedstock composition. BioOil and char are commercial products and non-condensable gases are recycled and supply a major part of the energy required by the process. No waste is produced in the Dynamotive process. A fourth product, BioOil Plus, can be produced by adding back the separated char into the BioOil, in a finely ground form of about 8 microns in size. There are a multitude of  biomass sources that are compatible with the Fast Pyrolysis process, where over 100 different types of feedstock have been tested. These include hard and soft woods, and cellulosic biomass from other plants and agricultural residues. Dynamotive does not use any food crops as a feedstock eliminating the “Food or Fuel” dilemma inherent of many other biofuel operations such as ethanol.