Assessment of Biomass Energy Opportunities for Red Lake

Assessment of Biomass Energy Opportunities

Assessment of Biomass Energy Opportunities
Red Lake Band of Chippewa Indians
FINAL REPORT
Prepared for:
Red Lake Band of Chippewa Indians
Red Lake, Minnesota
Funding provided by:
U.S. Department of Energy, Tribal Energy program
Prime contract number: DE-FG36-03GO13123
Prepared by:
McNeil Technologies, Inc.
143 Union Blvd., Suite 900
Lakewood, CO 80228
September 30 2005
September 2005 i Red Lake Tribe Biomass Assessment
DISCLAIMER
This report was prepared as an account of work partially sponsored by an agency of the United
States Government. Neither the United States Government, nor any agency thereof, nor any of
their employees, makes any warranty, express or implied, or assumes any legal liability or
responsibility for the accuracy, completeness, or usefulness of any information, apparatus,
product, or process disclosed, or represents that its use would not infringe privately owned rights.
Reference herein to any specific product, process, or service by trade name, trademark,
manufacturer, or otherwise, does not necessarily constitute or imply its endorsement,
recommendation, or favoring by the United States Government, or any agency thereof. The
views and opinions of authors expressed herein do not necessarily state or reflect those of the
United States Government or any agency thereof.
ABSTRACT
A biomass energy feasibility study was conducted for the Red Lake Band of Chippewa Indians.
The resource assessment identified approximately 120,000 green tons produced annually and can
be delivered at a cost of $26-49/green ton to various sites on the reservation. An analysis of the
potential for power generation determined there is a limited market for biomass power, generally
because competing sources of power are more cost-effective. Interestingly the tribal biomass
resource base (i.e., capable of supporting a 5MW power plant) and the tribal power demand are
nearly the same. Tribal thermal demands for space and water heating are significant due to the
long, cold winters. Most of the buildings are heated with propane or fuel oil. There have been
two successful biomass heating applications on the reservation (i.e., Humanities building and
Tribal greenhouse) and one high-profile failure (the High School). No opportunities were
identified for retrofit to accommodate a biomass system. Several new buildings are good
candidates for biomass heating including the new High and Middle School complex and the new
(proposed) greenhouse. An analysis of the market for bedding material derived from Tribal
forestry resources, including a complete financial evaluation for a potential business, suggests
the potential for a small-scale new venture. New technologies, specifically bio-oil, offer some
promise for space heating purposes.
September 2005 ii Red Lake Tribe Biomass Assessment
ACKNOWLEDGMENTS
The U.S. Department of Energy (DOE) funded this study under the auspices of the Tribal Energy
Program. At the U.S. DOE, we would like to thank Ms. Lizana Pierce.
The authors wish to thank several people and organizations for their efforts in support of this
project. These include but are not limited to:
• Robert Lintelmann, Red Lake Tribal Forestry
• Ken McBride, Red Lake Department of Natural Resources
• Jeff Fossen, Red Lake Tribal Forestry
• Pam Marshall and Chris Duffrin, Energy CENTS Coalition
• Mamie Rossbach , Red Lake Tribe
• Tribal Energy Task Force members including:
1. Judy Roy
2. Clifford Hardy
3. Donald May
4. Mamie Rossbach
5. Harlan Beaulieu
6. Jody Beaulieu
7. Sandra King
8. Roger Head
9. Jane Barrett
10. Bob Lintelmann
11. Pam Marshall
12. Ken McBride
13. Michelle Paquin Johnson
14. Pam May
15. Alberta Van Wert
16. Ed Strong
Finally, despite our best efforts at editing and revisions, mistakes may still remain within this
document. Any mistakes or omissions are the sole responsibility of the authors. Any questions or
comments should be addressed to McNeil Technologies Inc., 143 Union Blvd., Suite 900,
Lakewood, CO 80228. McNeil staff members who worked on this project are Scott Haase, Tim
Rooney, Jack Whittier, Angela Crooks and Kristy Moriarty. Energy CENTS Coalition Staff who
worked on the project are Pam Marshall and Chris Duffrin.
September 2005 iii Red Lake Tribe Biomass Assessment
TABLE OF CONTENTS
LIST OF ABBREVIATIONS AND ACRONYMS..................................................................VI
EXECUTIVE SUMMARY .....................................................................................................VIII
1 INTRODUCTION................................................ERROR! BOOKMARK NOT DEFINED.
1.1 PROJECT NEED AND PURPOSE .......................................................................................... 1
1.2 STUDY AREA ................................................................................................................... 1
1.3 PROJECT TEAM ................................................................................................................ 4
1.4 GOALS AND OBJECTIVES.................................................................................................. 4
2 BIOMASS RESOURCE ASSESSMENT ........................................................................... 5
2.1 FOREST RESOURCE CONDITIONS...................................................................................... 5
2.2 FOREST MANAGEMENT PROCESS..................................................................................... 6
2.3 RED LAKE TRIBAL FORESTRY.......................................................................................... 6
2.4 BIOMASS RESOURCE LOCATIONS..................................................................................... 7
2.5 COSTS OF GATHERING AND SUPPLYING BIOMASS FEEDSTOCK ...................................... 17
2.6 FUEL CHARACTERIZATION OF AVAILABLE BIOMASS ..................................................... 18
3 REGIONAL AND LOCAL POWER MARKET ANALYSIS ....................................... 20
3.1 MID-CONTINENT AREA POWER POOL............................................................................ 20
3.2 RED LAKE RESERVATION ELECTRIC SERVICE PROVIDER............................................... 24
3.3 MINNKOTA POWER COOPERATIVE INC. ......................................................................... 26
3.4 OTTER TAIL POWER COMPANY...................................................................................... 27
3.5 RED LAKE TRIBE ELECTRICITY CONSUMPTION.............................................................. 27
3.6 BIOMASS POWER ECONOMIC PROJECTIONS ................................................................... 28
3.7 FUEL CONSUMPTION...................................................................................................... 29
3.8 ECONOMIC ANALYSIS .................................................................................................... 29
4 ASSESSMENT OF BIOMASS HEATING OPPORTUNITIES.................................... 33
4.1 FUEL COST OVERVIEW .................................................................................................. 33
4.2 BIOMASS HEATING HISTORY AT RED LAKE................................................................... 34
4.3 FACILITY IDENTIFICATION AND HEATING LOAD ANALYSIS........................................... 37
4.4 CANDIDATE BIOMASS HEATING OPPORTUNITIES........................................................... 39
5 OVERVIEW OF BIO-BASED PRODUCTS ................................................................... 42
5.1 BIO-OIL.......................................................................................................................... 42
5.2 WOOD-PLASTIC COMPOSITES ........................................................................................ 44
5.3 PELLETS........................................................................................................................ 45
6 FEASIBILITY ANALYSIS OF WOOD SHAVINGS FOR TURKEY BEDDING...... 47
September 2005 iv Red Lake Tribe Biomass Assessment
6.1 BUSINESS OVERVIEW..................................................................................................... 47
6.2 MARKET CHARACTERIZATION....................................................................................... 48
6.3 FINANCIAL ASSUMPTIONS.............................................................................................. 50
6.4 NEXT STEPS ................................................................................................................... 51
7 CONCLUSIONS AND RECOMMENDATIONS............................................................ 54
7.1 CONCLUSIONS................................................................................................................ 54
7.2 RECOMMENDATIONS................................................ ERROR! BOOKMARK NOT DEFINED.
LIST OF TABLES
TABLE 1-1. BREAKDOWN OF RESERVATION LAND AREA...............................................................................................2
TABLE 1-2. FOREST RESOURCES – OVERVIEW OF MAJOR FOREST COVER TYPES ..........................................................3
TABLE 2-1. REGIONAL MARKETS FOR RED LAKE FOREST PRODUCTS............................................................................7
TABLE 2-2. ESTIMATED BIOMASS GENERATION AND AVAILABILITY BASED ON RESERVATION AAC ...........................9
TABLE 2-3. MINNESOTA DNR TIMBER HARVEST ACREAGE – DRAFT AGASSIZ LOWLANDS PLAN ..............................13
TABLE 2-4. BIOMASS GENERATION AND AVAILABILITY FROM STATE LANDS IN THE AGASSIZ LOWLANDS.................13
TABLE 2-5. TIMBER HARVEST BY SPECIES GROUP AND LANDOWNERSHIP FOR FEDERAL, COUNTY/LOCAL, PRIVATE
AND OTHER LANDOWNERS (CUBIC FEET)...........................................................................................................14
TABLE 2-6. ESTIMATED BIOMASS GENERATION AND AVAILABILITY BY SPECIES GROUP AND LANDOWNERSHIP FOR
FEDERAL, COUNTY/LOCAL, PRIVATE AND OTHER LANDOWNERS (GT/YEAR) ...................................................14
TABLE 2-7. TOTAL HARVEST VOLUME, BIOMASS GENERATION AND AVAILABILITY...................................................15
TABLE 2-8. CHEMICAL AND HEATING VALUE PROPERTIES FOR SEVERAL COMMON TREE SPECIES............................18
TABLE 3-1 CATEGORIES OF RESERVES FOR ELECTRICITY SUPPLY ...............................................................................21
TABLE 3-2 BELTRAMI ELECTRIC COOPERATIVE, TOTAL ELECTRICITY SALES BY MONTH, 2003 .................................25
TABLE 3-3 COMPARATIVE RESIDENTIAL ELECTRIC RATES, 2004 ................................................................................26
TABLE 3-4. CALCULATED FUEL CONSUMPTION FOR 5MW STOKER.............................................................................29
TABLE 3-5. ECONOMIC INPUTS FOR PRO FORMA MODEL .............................................................................................30
TABLE 3-6. CAPITAL AND OPERATING COSTS, 5MW BIOMASS STOKER POWER PLANT ..............................................31
TABLE 3-7. LABOR REQUIREMENTS AND COST, 5MW BIOPOWER STOKER..................................................................31
TABLE 3-8. ANALYSIS RESULTS, PRO FORMA MODEL, 5MW BIOMASS POWER PLANT...............................................32
TABLE 4-1. COMPARATIVE COSTS OF REGIONALLY IMPORTANT ENERGY FORMS, 2005..............................................33
TABLE 4-2. MAJOR BUILDINGS AND ANNUAL THERMAL LOADS, RED LAKE BAND OF CHIPPEWA INDIANS ................39
TABLE 6-1. ESTIMATED ANNUAL AVAILABILITY OF BIOMASS FOR MAJOR SPECIES GROUPS ......................................47
TABLE 6-2. TURKEY SALES AND INVENTORY WITHIN 150 MILES OF RED LAKE..........................................................48
TABLE 6-3. TURKEY SALES AND INVENTORY MORE THAN 150 MILES FROM RED LAKE................................................48
TABLE 6-4 WOOD SHAVINGS PER TURKEY..................................................................................................................49
TABLE B-1. GASIFICATION SYSTEM CHARACTERISTICS .............................................................................................5
TABLE F-2. AVERAGE INCOME, JOBS, AND STATE TAXES PER MILLION GALLONS OF ETHANOL PRODUCED.....................6
September 2005 v Red Lake Tribe Biomass Assessment
LIST OF FIGURES
FIGURE 1-1. MAP OF RESERVATION ...............................................................................................................................2
FIGURE 1-2. FOREST COVER TYPES ON THE RESERVATION ............................................................................................4
FIGURE 2-1. TIMBER HARVEST AND ESTIMATED BIOMASS AVAILABILITY BASED ON PAST TRIBAL HARVEST................10
FIGURE 2-2. PAST TIMBER SALES ON MINNESOTA DNR LAND: 1989 - 2001.................................................................11
FIGURE 2-3. AGASSIZ LOWLANDS SUBSECTION OF DNR ADMINISTRATION .................................................................12
FIGURE 2-4. RANGE OF DELIVERED BIOMASS COSTS FOR CLEARCUT AND THINNING PROJECTS ASSUMING HAUL
DISTANCES RANGING FROM 20 TO 80 MILES ......................................................................................................17
FIGURE 3-1. MAP OF NERC REGIONS AND NATIVE AMERICAN LANDS .......................................................................20
FIGURE 3-2 2012 PROJECTED RESERVE MARGIN BY NERC REGION/SUBREGION........................................................22
FIGURE 3-3 MAPP LOAD AND RESOURCE FORECAST ..................................................................................................23
FIGURE 3-4 RESERVATION LOCATIONS RELATIVE TO MAJOR POWER TRANSMISSION LINES.......................................24
FIGURE 3-5 DISTRIBUTION OF ELECTRICITY SALES (KWH), BELTRAMI ELECTRIC COOPERATIVE 2003.......................25
FIGURE 3-6 RED LAKE RESERVATION TOTAL ELECTRIC CONSUMPTION, 2002-2003...................................................28
FIGURE 3-7 RED LAKE RESERVATION COMMERCIAL BUILDING 2002 ELECTRICITY USAGE AND COST .......................28
FIGURE 3-8. DISTRIBUTION OF COSTS, BASE CASE, 5MW BIOMASS POWER PLANT ....................................................32
FIGURE 4-1. COMPARATIVE COSTS OF REGIONALLY IMPORTANT ENERGY FORMS, 2005 ............................................34
FIGURE 4-2. PROPANE COMMERCIAL PRICE HISTORY AND PROJECTIONS TO 2010.......................................................34
FIGURE 4-3. PELLET FUEL HOPPER FOR HUMANITIES BUILDING..................................................................................36
FIGURE 4-4. BIOMASS BOILER AT FORESTRY DIVISION TREE SEEDLING GREENHOUSE, REDBY, MN..........................37
FIGURE 6-1. FIXED AND VARIABLE COSTS FOR PLANT.................................................................................................50
LIST OF APPENDICES
APPENDIX A. COMPARATIVE MINNESOTA RESIDENTIAL ELECTRICITY RATES...............................................................1
APPENDIX B. BIOMASS POWER TECHNOLOGIES .............................................................................................................1
APPENDIX C. BIOMASS HEATING SYSTEM COMPONENTS...............................................................................................1
APPENDIX D. BIOFUELS PRODUCTION..........................................................................................................................1
APPENDIX E. INCENTIVES FOR BIOMASS UTILIZATION...................................................................................................1
APPENDIX F. ENVIRONMENTAL AND SOCIOECONOMIC IMPACTS...................................................................................1
September 2005 vi Red Lake Tribe Biomass Assessment
LIST OF ABBREVIATIONS AND ACRONYMS
AAC annual allowable cut
BD bone-dry, or containing 0% moisture content; also referred to as oven-dry
BFB bubbling fluidized bed
BLM U.S. Bureau of Land Management
Btu British thermal units
CCF hundred cubic feet (ft3)
CF cubic feet (ft3)
CFB circulating fluidized bed
CFR Code of Federal Regulations
CHP combined heat and power
CO carbon monoxide
CO2 carbon dioxide
CRP Conservation Reserve Program
CTIC Conservation Technology Information Center
CVS continuous vegetation survey
DBH diameter breast height
DEQ Department of Environmental Quality
DOE U.S. Department of Energy
DOI U.S. Department of Interior
E10 gasoline containing 10% ethanol by volume
E95 gasoline containing 95% ethanol by volume
EIA U.S. DOE Energy Information Administration
EPA U.S. Environmental Protection Agency
EPACT Energy Policy Act
ETBE ethyl tertiary butyl ether
EVG existing vegetation
GT green tons
H2 hydrogen
HHV higher heating value
IAC indicated annual cut
IFB inclined fluidized bed
kW kilowatt
kWh kilowatt-hour
lb pounds
LHV lower heating value
MBF thousand board feet
MC moisture content
mi2 square miles
MMBF million board feet
MMBtu million British thermal units
MSW Municipal Solid Waste
MTBE methyl tertiary butyl ether
MW megawatt
September 2005 vii Red Lake Tribe Biomass Assessment
MWh megawatt-hour
NASS National Agricultural Statistics Service
N nitrogen
NOx oxides of nitrogen
NRCS Natural Resources Conservation Service
NREL National Renewable Energy Laboratory
OD oven-dry, or containing 0% moisture content; also referred to as bone-dry
ODT oven dry tons
psi pounds per square inch
PURPA Public Utility Regulatory Policy Act
RBEP Regional Biomass Energy Program
REPA Renewable Energy Production Incentive
RFG reformulated gasoline
ROI Return on Investment
SDI Stand Density Index
SOx oxides of sulfur
SSCF simultaneous saccharification and cofermentation
S sulfur
TPA trees per acre
TSI Timber Stand Improvement
TVA Tennessee Valley Authority
U.S. United States of America
USA United States of America
USDA United States Department of Agriculture
USFS United States Forest Service
VOC volatile organic compound
WRBEP Western Regional Biomass Energy Program
wt % weight percent
yr year
September 2005 viii Red Lake Tribe Biomass Assessment
EXECUTIVE SUMMARY
The Assessment of Biomass Energy Opportunities for the Red Lake Band of Chippewa Indians
was funded by the US Department of Energy’s Tribal Energy Program. The purpose of this study
was to examine the feasibility of producing energy or other value added products from the
biomass resources available on the Red Lake Reservation. Research and analysis was conducted
by McNeil Technologies, Inc. and Energy CENTS.
The biomass resources available on the Red Lake Reservation are abundant. Nearly 60% of the
reservation’s 805,093 acres is forested. Most of the trees are located in the area known as the
Diminished Lands (73%). The Ceded Lands comprise 18% and the Northwest Angle contains the
remaining 9% of the Tribal forests. Thirty-four percent of the trees on the reservation are
aspen/birch, and 31% are swamp conifer. The remainder of the forests is comprised of swamp
hardwood, upland hardwood, red and white pine, northern white cedar, upland spruce/fir and
jack pine. Biomass residues were estimated at 38,291 green tons (GT) per year, with an
additional 2,394 GT available from red pine restoration activities.
The tribe currently harvests wood to be used as sawlogs, pulpwood and firewood. Given suitable
market conditions for various end uses, the tribe could use a larger percentage of its forest
resources. The Allowable Annual Cut for the Reservation is approximately 41 million board feet,
but the tribe has typically harvested less than half this amount. The tribe is also reforesting up to
1,000 acres per year with pine, which will ultimately lead to a greater resource base. In addition,
changes in silvicultural practices could increase growth and yield in the forests. It is possible that
additional materials could be available from state, local, private and federal lands in the
surrounding areas. If all biomass generation is included, then 118,642 GT/yr could be available.
The cost to harvest, process and deliver biomass was estimated at $26-49 per GT, depending on
haul distance and rates charged by forest thinning contractors. Wood chips are the least
expensive energy source available in the area, as shown in the table below:
Table ES-1. Comparative Costs of Regionally Important Energy Forms, 2005
Source Units Value Efficiency Btu/unit $/MMBtu
Biomass chips $/wet ton $ 35.00 70% 8,000,000 $ 6.25
Pellets $/ton $ 86.00 75% 16,000,000 $ 7.17
Electricity $/kWh $ 0.03 100% 3,413 $ 8.79
Fuel Oil $/gallon $ 1.78 80% 135,000 $ 16.48
Propane $/gallon $ 1.20 75% 91,600 $ 17.47
Electricity $/kWh $ 0.062 100% 3,413 $ 18.17
Red Lake is part of the Mid-Continent Area Power Pool (MAPP), which provides services to a
large portion of the Midwest, including tribal lands. Since MAPP is currently five percent below
its reserve margin due to increasing growth, it is likely that it will seek to increase the supply of
electricity it can provide. Since nearby regions are also below their excess supply requirements,
September 2005 ix Red Lake Tribe Biomass Assessment
it is anticipated that utilities within MAPP will be seeking to increase their own supplies rather
than import power.
The Tribe currently buys its power from the Beltrami Electric Cooperative, a rural provider.
Based on a survey conducted for this report, Beltrami’s average residential rate is about
$0.062/kWh or approximately 5% lower than regional competitors and 26% lower than the
national average. The Tribe pays $0.054/kWh for its power, and its demand is estimated at 5
MW. Minnkota Power Cooperative is Beltrami's wholesale power provider. Minnkota has plans
to expand its capacity through new construction and power purchase options. Minnkota already
offers an optional green pricing program to its customers, based on wind power in North Dakota.
Discussions with Beltrami and Minnkota reflected a lack of interest in the green power attributes
of Red Lake’s biomass power. Discussions with Beltrami and Minnkota seemed to confirm that
the Redby substation might be able to absorb 5MW of biomass power supplied from Red Lake.
However, McNeil staff learned that the buy-back rates for electricity were $0.02021/kWh for
electricity and $21/kW/yr for capacity.
If 87% of the tribal biomass supply or 60% of the regional supply were used, a 5MW combustion
unit using stoker technology could be supported. Based on these costs and other factors, an
analysis was conducted to determine the economic feasibility of using biomass for electricity
production. The economic analysis performed in the study calculated the levelized cost of
production from biomass at $0.07/kWh. Given that the selling price is only $0.02, Red Lake
would lose $0.05 for every kWh sold to a utility in Minnesota. Even supplying its own power
results in a loss of more than $0.03/kWh. Ultimately, the high cost of gathering and processing
the biomass for fuel makes the power plant unfeasible.
In terms of heating, biomass is often cost competitive with other fuel sources such as propane.
The cost of propane at Red Lake is lower than in other parts of the country, but the Department
of Energy expects prices to continue to rise throughout the country. Red Lake has had mixed
results with attempts to use wood pellets and chips in the past. Although details about the system
are unavailable, there were difficulties with blockages and freezing in the system installed at the
High School. Municipal solid waste pellets were a poor substitute; it was less expensive, but the
smell was not tolerable. In contrast to the High School system, a pellet system in the Humanities
Building has been operating successfully for 10 years but few people are aware of the system. In
order to overcome the reservation’s mixed track record with biomass technology, the study
attempted to find a superior opportunity.
Seven school buildings and 11 other non-residential facilities on the reservation were considered
as possible biomass heating sites. Most of the buildings were not viable sites due to the relatively
low cost of propane and the fact that many of the existing boilers and heating systems are not in
need of repair or replacement.
Although none of the buildings offered a good opportunity, the Middle School may be suitable
depending on future retrofit activities. If the Middle School is not linked to the High School, the
retrofit of its HVAC system may make this building suitable for a biomass system. Similarly, the
greenhouse for the Forestry Department could be a viable site; it would also be an appropriate
location, since the Department of Natural Resources could show leadership in the sustainable use
of forestry resources by setting up a biomass system. Heating the new greenhouse with biomass
should be investigated in further detail.
September 2005 x Red Lake Tribe Biomass Assessment
The study also looked at using forest resources to make products instead of energy. Bio-oil,
wood plastic composites and pellets were considered. It was decided that bio-oil will be
considered in greater detail in a follow-on study. The wood plastic composites could be explored
in more depth, although the markets for these products are relatively new. The market for pellets
is saturated with low-cost suppliers, and it was concluded that this product did not represent a
good opportunity for the Tribe at this time.
The development of a wood shavings operation was analyzed, and financial analysis was
conducted to determine the profitability of selling shavings to turkey farmers in the local area to
use as bedding. Given the existence of established supply relationships, the challenge of selling
this product would be to take market share from existing producers. Since quality cannot be
meaningfully improved for this product, Red Lake would need to gain market share by offering
the shavings at a lower price. The economics of the project do not work for several reasons. The
high capital costs of the equipment and high recurring costs of the wood inputs cannot be
recovered by selling shavings at a lower than market price on such a small scale. It is
recommended that Red Lake consider a higher value-added product, such as shavings for small
pet bedding and/or laboratory animals. These products would also capitalize on the fact that a
high proportion of the tribe’s trees are aspen, which are more highly valued by the small pet and
laboratory animal industries than the turkey farming industry.
There are a variety of end uses for biomass which could help meet the tribe’s economic
development goals. This study demonstrated that biopower is not economically feasible under
the current local market conditions, but thermal applications for biomass may be a cost effective
solution for heating new facilities on the reservation. The feasibility of heating a greenhouse
using biomass resources and the viability of developing a bio-oil product will be explored in a
future report. The development of a wood shavings enterprise deserves further consideration, but
a different target market should be selected (e.g. small pet or laboratory animal bedding).
September 2005 1 Red Lake Tribe Biomass Assessment
1 PROJECT OVERVIEW
The Red Lake Indian Reservation, home to the Red Lake Band of Chippewa Indians (Red Lake)
is located in the northwest corner of Minnesota, about 160 miles from the Canadian border. The
reservation is 1,259 square miles in area. It is rural, containing forests, wetlands, brush and
grasslands, and two large connected freshwater lakes: Upper and Lower Red Lake. Along the
southern shore of the lower lake are the communities of Little Rock, Red Lake and Redby.
Thirty-five miles north, on the peninsula between the two lakes, lies a fourth community,
Ponemah. The scope of the project covers the entire Red Lake Reservation, and will also focus
on potentially available biomass resources from nearby public and privately owned forest lands
within an economic hauling distance of the Reservation.
Red Lake is a “closed” reservation, meaning all of its land is owned in concert by all of its
enrolled tribal members. Its elected government, the Red Lake Tribal Council, is the sole
governing authority on the reservation. The Council is made up of two representatives from each
of the four communities, plus a Treasurer, a Tribal Secretary and a Tribal Chair. Red Lake
Reservation has its own criminal justice system, police force, schools, hospital, and fire
department. The people of Red Lake are Ojibwe Indian. Their community retains its old
language, religion, customs, and traditions while at the same time functioning in modern
America. The population of Red Lake stands at over 7,000. Sixty-five percent of households earn
less than $12,000 a year.
1.1 Project Need and Purpose
The Red Lake logging industry and reforestation projects generate a significant amount of byproduct
fuel wood. Red Lake currently harvests 35,000-40,000 cords of wood each year (78,000-
90,000 tons green weight). There are 20 Red Lake member owner loggers on the reservation,
each of whom employs an average of 3-4 workers. Red Lake Forest Products employs one
person who acts as a broker between loggers and pulp and lumber mills. About 10% of the total
weight harvested is left behind on logging sites. The tribe also reforests as much as 1,000 acres a
year to pine. Current harvest levels are less than half of the allowable annual harvest volume.
The Red Lake Department of Natural Resources Forestry Department relies upon the Forest
Inventory Analysis (performed by the BIA’s Branch of Forest Resource Planning) to determine
the annual allowable harvest volume. Red Lake may also entertain hybrid planting and whole
tree biomass production.
The sustainable use of forest resources on the reservation can help the Red Lake tribe meet its
goals of energy autonomy and economic development. The purpose of this study is to evaluate
the technical and economic feasibility of using Red Lake’s biomass resources for energy
generation or production of other value added products.
1.2 Study Area
Figure 1-1 shows a map of the Red Lake reservation and surroundings. The Diminished Lands
border the large Red Lake, make up the majority of the land area and are home to the majority of
the reservation population. The Ceded Lands consist of noncontiguous parcels north of the
Diminished Lands. The Northwest Angle is located north of the Diminished Lands straddles the
border with Canada. The Ceded Lands and Northwest Angle make up approximately 27% of the
total land area of the reservation and a smaller proportion of total forest land. The entire
September 2005 2 Red Lake Tribe Biomass Assessment
reservation consists of 805,093 acres. The reservation land area is 60% forested. Water covers
230,000 acres, or 29% of the reservation surface area.
Figure 1-1. Map of Reservation
Table 1-1 shows the breakdown of reservation land between wetland forest, non-wetland forest,
non-productive land for the Diminished Lands, Ceded Lands and Northwest Angle.
Approximately half the forested area is made up of wetland forests.
Table 1-1. Breakdown of Reservation Land Area
Area
Wetland
Forests
(Acres)
Non-
Wetland
Forests
(Acres)
Total
Forests
(Acres)
Non-
Productive
(Acres)
Total
Land
(Acres)
% of
Total
Forest
% of
Total
Land
Diminished Lands 117,466 142,635 260,101 158,925 419,026 76% 73%
Ceded Lands 21,680 22,344 44,024 60,738 104,762 13% 18%
Northwest Angle 30,635 8,695 39,330 11,975 51,305 11% 9%
Total 169,781 173,674 343,455 231,638 575,093 100% 100%
% of Total Forest 49% 51% 100% 100% NA NA NA
% of Total Land 30% 30% 60% 40% 100% NA NA
Note: NA = not applicable. Source: Red Lake Forest Management Plan (FMP)
Table 1-2 shows the breakdown of the forest resource on Red Lake land by cover type.
September 2005 3 Red Lake Tribe Biomass Assessment
Table 1-2. Forest Resources – Overview of Major Forest Cover Types
Area
Forested
Acres
% of Total
Diminished Lands
Aspen/Paper Birch 98,710 38%
Red and White Pine 10,364 4%
Swamp Conifer 66,630 26%
Swamp Hardwoods 50,836 20%
Upland Hardwoods 33,561 13%
Total Forested Acres 260,101 100%
Ceded Lands
Aspen/Paper Birch 12,918 29%
Red and White Pine 2,255 5%
Jack Pine 4,055 9%
Swamp Conifer 17,596 40%
Swamp Hardwood 1,727 4%
Upland Spruce/Fir 3,116 7%
Northern White Cedar 2,357 5%
Total Forested Acres 44,024 100%
Northwest Angle
Aspen/Paper Birch 6,720 17%
Swamp Conifer 20,819 53%
Swamp Hardwoods 3,169 8%
Northern White Cedar 6,647 17%
Upland Spruce/Fir 1,975 5%
Total Forested Acres 39,330 100%
Total 343,455 NA
Note: NA = not applicable. Source: Red Lake Forest Management Plan (FMP)
Aspen/paper birch is the most common cover type on forests in the Diminished Lands. Swamp
conifer is the most significant cover type on the Ceded Lands and Northwest Angle lands.
Overall, four cover types, aspen/paper birch, swamp conifer, swamp hardwood and upland
hardwood together make up 90% of the forest cover type on the reservation (Figure 1-2).
September 2005 4 Red Lake Tribe Biomass Assessment
Aspen/Paper
birch, 118,348 ,
34%
Swamp Conifer,
105,045 , 31%
Swamp
Hardwood,
55,732 , 16%
Red and White
Pine, 12,619 ,
4%
Northern White
Cedar, 9,004 ,
3%
Upland
Spruce/fir ,
5,091 , 1%
Jack Pine, 4,055
, 1%
Upland
Hardwood,
33,561 , 10%
Source: Red Lake Forest Management Plan (FMP)
Figure 1-2. Forest Cover Types on the Reservation
1.3 Project Team
The U.S. Department of Energy, Tribal Energy Program provided funding for this effort. For
Red Lake, the project was coordinated by the Department of Natural Resources, Forestry
Program, and the Tribe’s Biomass Energy Task Force. The Tribe Red Lake signed hired McNeil
Technologies, Inc (Denver, Colorado) and Energy CENTS Coalition (located in Minneapolis,
MN) for technical assistance related to this project.
1.4 Goals and Objectives
The goal of the project was to conduct analysis leading to the development of a tribal biomass
enterprise. The project objectives and subsequent accomplishments were:
• Conduct a detailed biomass resource assessment
• Evaluate local and regional utility issues
• Evaluate biomass energy technologies and markets
• Conduct a preliminary biomass facility siting study, focus on power and heating
• Assess social, environmental and economic impacts
• Prepare pro-forma financial analyses
• Conduct a business plan analysis for a biomass enterprise
September 2005 5 Red Lake Tribe Biomass Assessment
2 BIOMASS RESOURCE ASSESSMENT
This section discusses the regional forest resource, forest management planning, forest
management activities and forest products infrastructure in the study area. The study also
presents the data sources, methods and results of the forest biomass resource assessment.
2.1 Forest Resource Conditions
This section summarizes forest resource conditions based on the most recent Forest Management
Plan (FMP) for the reservation. The Red Lake Reservation has a long history of logging, but
significant changes have occurred in the last three decades that have resulted in a reduction in
Annual Allowable Cut (AAC) volumes. In 1980, the AAC for the reservation was approximately
69 million board feet (MMBF) per year. The AAC (based on the indicated annual cut, or IAC)
for 1992 – 2001 for Diminished/Ceded lands and 1991 – 2000 for the Northwest Angle lands
was approximately 41 MMBF, a significant reduction in the amount of timber available on a
sustained basis. The most recent forest management plan for the Red Lake Reservation attributed
reduction in AAC volumes on the Reservation to variety of past disturbances, including:
1) Intensive aspen harvest between 1970 – 1992 on Diminished Reservation lands;
2) Wildfire in aspen on the Diminished lands that reduced availability and growing
stock;
3) Better growth and yield but also increases in mortality for the Ceded and NW Angle;
4) Accelerated harvest in the Northwest Angle in the 1960s that reduced the timber
supply available. Northwest Angle stocking levels in the current measurement period
(1991) now equal stocking levels in 1961;
5) More refined statistical analysis, accounting of cover type acres and calculation of
AAC procedures more accurately define the present AAC;
6) Jack pine has essentially been liquidated from the Diminished lands reducing the
AAC by 158 mbf (1980 CFI) from previously levels; and
7) Massive mortality in the swamp hardwoods cover type on Diminished lands.1
The reductions in AAC reduce the amount of annual timber harvesting available and also suggest
that an array of different silvicultural treatments may be used to improve growth and yield,
reduce mortality and address wildfire issues on the Reservation. Stand improvement activities
may also help even out the age distribution of forest stands in different species groups. This can
help push the forest resource towards a sustainable yield condition, in which each forest stand
age class is represented equally, facilitating stable annual outputs of timber and other forest
products and services.
1 FMP, 67
September 2005 6 Red Lake Tribe Biomass Assessment
2.2 Forest Management Process
It is crucial to understand how the forest management planning process operates at the Red Lake
Reservation if a reliable biomass feedstock supply system is to be developed. The Red Lake
Band holds all tribal lands in common; no individual member owns tribal land. Access to the
Reservation is limited for non-tribal members. The Red Lake Band assumed full management
duties of forest land in 1997. Prior to that time and dating back to the early 1900s, the BIA
directly managed forest management activities on the reservation.2
The forest management system on the reservation is governed by several documents, the first of
which is the Red Lake Band of Chippewa Indians Integrated Resource Management Plan (IRMP
2000), developed by the Red Lake Department of Natural Resources (RLDNR) and the BIA
Branch of Forestry. The RLDNR developed a draft Forest Management Plan (FMP), completed
in December 2002 which addresses issues specific to forest management that are not addressed
in detail in the IRMP. The FMP includes estimates of annual allowable cut volumes based on
1998 re-measurement of continuous forest inventory (CFI) plots that are part of the Red Lake
Forest Inventory Analysis completed in March 2002. The Red Lake Land Use Plan (LUP)
completed in 1999, provides information on fire prevention through forest management and the
use of fire in managing natural resources on the Reservation.
The RLDNR Forestry Program management staff includes an inventory forester, presale forester,
timber sale administration forester, Forest Development Forester, Ceded Lands forester and a
Fire Management Officer, all of whom report to the program director. In addition, a Greenhouse
Manager reports to the Forestry Program Director. A tribal timber policy committee provides
input to forest resource management policy decisions, including setting stumpage prices.
Two forest inventory systems are in place. The CFI plot system consists of 1/5 acre plots that are
re-measured periodically to provide information on forest species composition and tree diameter
distribution. The OPINV system describes forest stand locations. A GIS system links the spatial
and tabular data along with other GIS coverages.
Even-aged silvicultural systems are used primarily, with rotations ranging from 50 years for
aspen to 130 years for red and white pine. Some uneven-aged management systems are used on
hardwood stands. Tribal logging contractors do all the timber harvesting. Felling is conducted
primarily using mechanical shears, and logs are forwarded tree-length to landings using cable or
grapple skidders. Tree-length logs are then cut to l00-inch bolts or trimmed and topped treelength.
Some hardwood timber stand improvement activities are also conducted. A greenhouse
produces 619,000 containerized seedlings/year, mostly pine, in support of reforestation efforts.3
2.3 Red Lake Tribal Forestry
Timber harvesting on the Red Lake Reservation is conducted exclusively by tribal logging
companies, although these companies can subcontract to outside firms to some extent. There are
20 Red Lake member owner loggers on the reservation, each of whom employs an average of 3-
4 workers. Red Lake Forest Products employs one person who acts as a broker between loggers
and pulp and lumber mills. About 10% of the total weight of merchantable timber harvested is
2 SmartWood Certification Report, 6, Must clear release with tribe
3 SmartWood Certification Report, 12, Must clear release with tribe
September 2005 7 Red Lake Tribe Biomass Assessment
left behind on logging sites due to poor species or poor markets. The tribe also reforests as much
as 1,000 acres per year with pine. A significant amount of biomass is generated in the conversion
process to pine. Current harvest levels are less than half of the allowable annual harvest volume.
The Red Lake Department of Natural Resources (RLDNR) Forestry Department relies upon the
Forest Inventory Analysis (performed by the BIA’s Branch of Forest Resource Planning) to
determine the annual allowable harvest volume.
The Red Lake logging industry and reforestation projects produce sawlogs, pulpwood and
firewood. Red Lake currently harvests 35,000-40,000 cords of firewood each year (78,000-
90,000 tons green weight). Table 2-1 shows the major markets for Red Lake forest products. Red
Lake also has a custom homes facility which manufactures pre-fabricated homes. This business
generates wood waste that could be utilized. Red Lake Builders is a construction business on the
Reservation which also generates construction debris and wood removed for home sites and road
construction. Red Lake Forest Products (Tribal sawmill) is currently shut down, however, if that
were to re-open, slab wood, edgings, and planer shavings all could be utilized as biomass. Future
forest products business areas that Red Lake may also entertain include hybrid plantations and
whole tree biomass production.
Table 2-1. Regional Markets for Red Lake Forest Products
Company/User Location Species
Raw Material
from Red Lake End Product
Residential
firewood Reservation
Paper birch, red
maple, burr oak Firewood
35,000 to 45,000
cords/year
Ainsworth Bemidji
Red and white
pine, aspen
Pulpwood,
sawlogs
OSB (535 million sf
3/8" capacity)
specialty products
Potlatch Bemidji Pine, aspen Sawlogs
studs, finger-joint,
dimension lumber
Northwoods
Panelboard Corp. Bemidji Aspen Sawlogs
OSB (440 million sf
3/8" capacity)
Boise Cascade
International
Falls Aspen Pulpwood Office paper
Blandin Papermill Grand Rapids Aspen Pulpwood
Advertising, catalog
& magazine papers
Sappi Cloquet
Red and white
pine Pulpwood
Coated papers
(410,000 tpy
capacity)
International
Paper Sartell Aspen Pulpwood
Coated,
supercalendared
papers (310,000 tpy
capacity)
Source: BIA, Red Lake Forest Inventory Analysis. 22-23
2.4 Biomass Resource Locations
This section describes forest biomass availability from Red Lake tribal forestry, federal
government, state government, county and local government and private landowners.
September 2005 8 Red Lake Tribe Biomass Assessment
2.4.1 Tribal Forest Biomass
Biomass is generated on the Reservation through timber harvesting and forest stand conversion
to red pine. Timber harvest residues include tops and branches and unusable portions of the stem
and dead/damaged trees often referred to as logging slash. Because even-aged management is
common for forest management on the Red Lake reservation, timber harvest residues also
includes trees smaller than commercially viable timber that are removed during the harvest.
Timber harvest locations and volumes vary each year, which makes it difficult to predict harvest
volumes that will be generated. Estimates of annual allowable cut volume provide an upper
bound on the volumes that could be generated from forest management activities, if market
prices are sufficient to make timber harvesting profitable. Actual timber harvest levels on the
Red Lake Reservation have consistently been below annual allowable cut levels. Current and
historical timber harvest levels from the Red Lake Reservation are tracked by the RLDNR using
a mill ticketing system. The mill places a deposit on a timber permit and receives a ticket. When
a log load is received at the mill it is scaled and recorded by ticket number. The mill provides a
record of the wood scaled by ticket number to the RLDNR each week. Estimating biomass
generation based on a range of values for annual timber harvest provides a conservative basis for
estimating forest biomass generation from timber harvest residues.
Biomass yields from forest management depends on a variety of factors, including:
• Diameter distribution of harvested materials;
• Species of harvested materials;
• Technically recoverability of materials (i.e. how much is needed to be left on-site, how
much material is lost during handling and which harvest methods are being used); and
• Economic availability of materials
To estimate timber harvest residue volumes we broke residues into two components: tops,
branches and unmerchantable stem portions of trees harvested; and volumes of unmerchantable
trees removed as a byproduct of even-aged management. We estimated biomass generation from
tops, branches and the unmerchantable portion of logs from timber harvesting using tree volume
equations by Briggs,4 assuming a log diameter at breast height (dbh) of 12 inches and a top
diameter of 4 inches. This log diameter assumption results in estimates of residue volumes as a
proportion of timber harvest that range from 20% for aspen and paper birch and as high as 38%
for spruce/fir forests. Timber harvest volumes were provided by the Red Lake Forest
Management Plan. We compared timber harvest residues generated based on historical timber
harvest levels and biomass based on calculated AAC levels for the reservation. To estimate the
volume of unmerchantable trees removed as a byproduct of management, we multiplied the
average number of acres harvested between 1992 and 2001 from the Red Lake forest
management plan by the volume of tree biomass less than six inches in diameter based on a
query of USFS Forest Inventory & Analysis (FIA) data for counties in the study area.
Biomass generation from red pine restoration has not been measured. However, most red pine
conversion is taking place on previously harvested aspen stands. Therefore, a conservative
estimate may be made by estimating the quantity of material less than six inches dbh remaining
4 Briggs citation
September 2005 9 Red Lake Tribe Biomass Assessment
on aspen stands to calculate the quantity of material per acre that may be recovered. USFS FIA
data showed that this quantity ranges from 1.1 to 2.7 GT per acre, after converting from volume
to weight using an assumed density value of 0.024 GT per cubic foot (average for paper birch,
maple, spruce/fir and pine).
Biomass availability from forest management sites is inherently a site-specific variable. Because
site-specific conditions on the Red Lake reservation for forest management projects cannot be
predicted, we relied on a U.S. Department of Energy evaluation of logging residue availability
throughout the U.S. that took into account slope and other technical variables and economics.
This methodology suggests that on average, approximately 50% of logging residue can be
removed at costs of less than $40 per ton. One issue specific to Red Lake is that timber
harvesting is increasingly occurring in aspen stands that are not easily accessible except in the
winter months, when vehicles can cross frozen ground.
Table 2-2 shows estimated biomass generation and availability, based on AAC levels described
in the Red Lake FMP. Total biomass availability from tribal land is an estimated 38,291 GT per
year, with 94% of the total coming from timber harvest residues and the remainder from red pine
restoration.
Table 2-2. Estimated Biomass Generation and Availability Based on Reservation AAC
Cover Type Acreage Annual
Allowable
Cut (Cords)
Biomass
Generation
(GT/Year)
Biomass
Available
(GT/Year)
Timber Harvest Residues
Diminished Land
Aspen/Birch 98,710 36,625 33,352 16,676
Red & White Pine 10,364 3,253 1,865 932
Swamp Conifer 66,630 11,274 8,796 4,398
Swamp Hardwood 50,836 9,875 9,969 4,984
Upland Hardwood 33,561 1,698 1,714 857
Total Forested Acres 260,101 62,725 55,696 27,848
Non-productive Acres 158,925 NA NA -
Water 230,000 NA NA -
Subtotal Diminished Land 649,026 62,725 55,696 27,848
Ceded Land and Northwest Angle Land
Forested Acres 83,354 17,727 8,205 4,102
Non-Productive Acres 72,713 NA NA -
Subtotal Ceded and Northwest Angle Land 156,067 17,727 8,205 4,102
Biomass < 6 inches dbh NA NA 12,681 6,341
Subtotal Timber Harvest Residues 343,455 80,452 76,582 38,291
Red Pine Restoration NA NA 4,788 2,394
Total 805,093 80,452 81,371 40,685
September 2005 10 Red Lake Tribe Biomass Assessment
Timber harvest residue availability will be lower if actual harvests are lower than AAC values.
Historically, timber harvests have been lower than AAC. In the mid to late 1990s, estimated
biomass availability based on timber harvest residue volumes ranged from 12,300 to 23,800 GT
per year not including biomass volumes less than six inches dbh (Figure 2-1). Including
materials less than six inches dbh and biomass from red pine restoration, total biomass
availability from tribal land between 1995 and 2001 would range from 21,035 to 32,175 GT per
year. The highest annual biomass availability from timber harvest residues was in 1994, 33,400
GT per year, which is similar to estimates of timber harvest residue availability based on AAC
levels. Including materials less than six inches dbh and biomass from red pine restoration would
bring total annual biomass availability from tribal land to 41,775 GT per year.
-
10
20
30
40
50
60
Timber harvest (MMBF/year)
-
5
10
15
20
25
30
35
40
Biomass availability (GT/year)
Timber harvest (MMBF) 15.06 15.50 19.62 18.60 26.29 30.21 33.04 35.90 43.90 52.38 36.80 34.47 36.84 27.73 18.27 19.02
Available biomass (thousand GT) 9.7 10.0 12.7 12.0 17.0 19.5 21.4 23.2 28.4 33.9 23.8 22.3 23.8 17.9 11.8 12.3
Year 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00
Source: Timber harvest data from annual forestry reports, cited in Red Lake FMP, p. 22
Figure 2-1. Timber harvest and estimated biomass availability based on past tribal harvest
Prior to 1992, the AAC level for the reservation was 69 MMBF per year. For the Red Lake FMP
covering 1992 – 2001 the AAC was 41 MMBF per year. Harvest levels were consistently below
this level except for 1993 and 1994.
2.4.2 State Lands
The Minnesota Department of Natural Resources (DNR) sells timber from state-owned forest
land throughout Minnesota. A large number of timber sales from 1989 to 2001 have been
geographically concentrated around the study area (Figure 2-2). A partial list of state forest land
in and near the study area includes:
• Red Lake
• Pine Island
September 2005 11 Red Lake Tribe Biomass Assessment
• Beltrami Island
• Big Fork
• Koochiching
• Northwest Angle
• Lost River
The DNR has adopted a new process for planning forest management projects. Rather than five
to 10 year forest management plans, the DNR is basing management planning on subsections of
its ecosystem classification system (ECS) and identifying stands to be treated over a seven year
planning horizon, allowing for public input in treatment decisions. The Red Lake Reservation
and surrounding area falls within the Agassiz Lowlands subsection (Figure 2-3). The draft plan
for this subsection is in the final stages of preparation. As of January 2004, the planning efforts
focused on identifying and prioritizing stands for treatment and obtaining public input. These
planning data provide the most reliable information on future harvest activities in the region and
thus were used as the basis for estimating biomass generation and availability from state land.
Source: Minnesota DNR, http://www.iic.state.mn.us/finfo/luse/harvest.htm
Figure 2-2. Past timber sales on Minnesota DNR land: 1989 - 2001
September 2005 12 Red Lake Tribe Biomass Assessment
Source: http://www.dnr.state.mn.us/forestry/subsection/agassiz/map.html
Figure 2-3. Agassiz Lowlands subsection of DNR administration
The Agassiz Lowlands do not include material from several state forests south and southeast of
the reservation. However, timber harvesting has focused to a greater extent on areas north of Red
Lake. There is no planning activity in those areas that would support assessment of future harvest
levels that would aid in estimating quantities of timber harvest residues. Additional materials
may be available from some state-owned land in these areas.
The draft plan for the Agassiz Lowlands maintains recent historical timber harvest levels until
2020. After 2020, the management focus changes to preserving the age class structure that will
result from increasing harvest of mature timber stands in several cover types between now and
2020. Therefore the timber harvest acreage from state land is expected to decline following 2020.
September 2005 13 Red Lake Tribe Biomass Assessment
Table 2-3. Minnesota DNR Timber Harvest Acreage – Draft Agassiz Lowlands Plan
Planned Annual Harvest Area (Acres)
Cover Type
Management Pool
(Acres) Until 2010 2011 - 2021 > 2021
Aspen/Balm 227,232 7,200 4,235 1,840
Jack Pine 27,205 680 487 192
Lowland Black Spruce 142,643 1,450 1,336 960
Lowland Tamarack 122,593 721 721 -
We evaluated timber harvest acreage by species and age class provided in the draft Agassiz
Lowlands forest management plan, then coupled those data with USFS FIA data on sawtimber
volume per acre by age class to provide an estimate of annual harvest volume by species and age
class. Then we estimated timber harvest residue generation and availability based on the
conservative assumption that 20% of the volume of timber harvested would become residues. An
estimated 16,212 GT of biomass would be available from state lands in the Agassiz Lowlands
(Table 2-4). The majority would be harvested from mature and over-mature aspen/balm. Some
material is likely to come from older lowland tamarack stands that will be harvested to improve
stand productivity.
Table 2-4. Biomass Generation and Availability from State Lands in the Agassiz Lowlands
Biomass Generation By Age Class (GT/Year)
Species
Group 51-60 61-70
71-
80
81-
90
91-
100
101-
110
111-
120
Total
Generation
(GT/Year)
Total
Availability
(GT/Year)
Aspen/Balm 6,000 16,781 4,647 920 392 - - 28,740 14,370
Jack Pine - 2,552 822 - - - - 3,374 1,687
Lowland
Black Spruce - - - - 8 6 59 73 36
Lowland
Tamarack - - - - - 239 - 239 119
Total 6,000 19,332 5,469 920 400 245 59 32,425 16,212
Additional quantities of material may be available from state-owned lands south of the Agassiz
Lowlands, but the majority of the timber harvested from state lands in the study area historically
has come from the Agassiz Lowlands.
2.4.3 Federal, County & Local Government and Private Lands
The USFS FIA provided estimates of timber removals from federal, county and local
government and private land. The most recent FIA data were from 2002 cycle 12.5 The
Chippewa National Forest is the primary federal timber supplier in the region, though a small
5 Patrick D. Miles. Oct-18-2004. Forest Inventory Mapmaker 1.7. St. Paul, MN: USFS, North Central Research
Station. www.ncrs2.fs.fed.us/4801/fiadb/i Counties: Beltrami, Cass, Clearwater, Hubbard, Itasca, Koochiching,
Lake of the Woods, Mahnomen, Pennington, Polk, Red Lake
September 2005 14 Red Lake Tribe Biomass Assessment
portion of Superior National Forest is in Koochiching County in the study area. To estimate
biomass generation from federal land, we multiplied removals by a residue factor of 20%, a
conservative assumption based on the log volume equations used for tribal and state biomass
estimates. Volumes were converted to weights using density factors for each species group (i.e.,
aspen/paper birch, spruce/fir, pine and maple). Table 2-5 shows removals for the study area for
these landowner classes. More than 35 million cubic feet of timber were removed from
timberland managed by these landowner classes in 2002. County governments in the study area
play a significant role as timber suppliers in the region. A significant amount of timber under
stewardship by counties is owned by the state due to forfeiture for tax reasons. County and local
government removals were nearly nine million cubic feet in 2002.
Table 2-5. Timber Harvest by Species Group and Landownership for Federal,
County/Local, Private and Other Landowners (Cubic Feet)
Species Group Federal County/Local Private Other Total
Aspen 2,488,980 5,676,452 8,830,332 - 16,995,764
Paper Birch 238,379 209,484 1,389,471 - 1,837,334
Jack Pine - 1,088,882 357,785 - 1,446,668
White Spruce - - 1,272,089 - 1,272,089
Red Pine 743,665 - 525,213 - 1,268,879
Hard
Maple/Basswood 510,744 - 1,498,182 - 2,008,925
Mixed Upland
Hardwoods - - 1,633,993 - 1,633,993
Black Ash/American
Elm/Red Maple 257,559 - 1,116,001 - 1,373,560
Other Hardwoods 212,428 1,085,772 1,312,903 - 2,611,103
Other Softwoods - 332,646 502,035 - 834,681
Other - - - 5,277,198 5,277,198
Total 4,451,754 8,393,236 18,438,005 5,277,198 36,560,193
Source: Patrick D. Miles, Forest Inventory Mapmaker 1.7: St. Paul, MN: USFS, North Central Research Station.
www.ncrs2.fs.fed.us/4801/fiadb/i
Table 2-6 shows estimated biomass generation and availability from federal, county/local,
private and other landowners in the study area based on USFS harvest removals in 2002. Total
biomass availability is estimated to be 71,220 GT per year.
Table 2-6. Estimated Biomass Generation and Availability by Species Group and
Landownership for Federal, County/Local, Private and Other Landowners (GT/Year)
Species Group Federal County/Local Private Other Total
Aspen 3,542 40,385 62,823 - 120,915
Paper Birch 339 298 1,977 - 2,614
Jack Pine - 975 320 - 1,296
White Spruce - - 1,551 - 1,551
September 2005 15 Red Lake Tribe Biomass Assessment
Table 2-6. Continued
Species Group Federal County/Local Private Other Total
Red Pine 666 - 470 - 1,137
Hard Maple/Basswood 806 - 2,363 - 3,168.70
Mixed Upland
Hardwoods 406 - 1,760 - 2,167
Other Hardwoods 335 1,713 2,071 - 4,119
Other Softwoods - 298 450 - 748
Other - - - 4,726 4,726
Total Generation 6,094 43,669 73,785 4,726 142,440
Total Availability 3,047 21,834 36,893 2,363 71,220
Private landowners generate the most biomass of these landowners, followed by county and local
government. Federal land and “other” landowners generate small proportions of total biomass.
2.4.4 Summary of Biomass Availability – All Sources
An estimated 118,642 GT of forest biomass per year are available from all landowners in the
study area (Table 2-7). This assumes that tribal foresters meet the AAC level each year. If future
harvest levels are similar to those observed from 1995 through 2001, where tribal timber harvests
were well below total AAC levels, then tribal biomass availability would range from 21,000 to
32,200 GT per year instead of 40,685 GT per year. In this scenario, total availability would range
from approximately 99,000 to 110,000 GT per year rather than 119,000 GT per year.
Table 2-7. Total Harvest Volume, Biomass Generation and Availability
Biomass By Landowner Harvest
Volume
(Thousand
Cubic Feet)
Biomass
Generation
(GT/Year)
Biomass
Available
(GT/Year)
Percent
(%) of
Total
Tribal
Timber Harvesting
Diminished Land 8,029 55,696 27,848 23%
Ceded Land & Northwest Angle 2,269 8,205 4,102 3%
Biomass < 5.5 Inches dbh NA 12,681 6,341 5%
Subtotal - Timber Harvesting 10,298 76,582 38,291 32%
Red Pine Restoration NA 4,788 2,394 2%
Subtotal - Tribal 10,298 81,371 40,685 34%
State NA 32,366 16,183 14%
Federal 4,452 6,094 3,047 3%
County & Local 8,393 43,669 21,834 18%
Private Land 18,438 73,785 36,893 31%
Total 41,581 237,284 118,642 100%
September 2005 16 Red Lake Tribe Biomass Assessment
We believe that both the values in Table 2-7 and estimates based on actual past harvest levels are
conservative estimates of biomass availability because of the assumption of 50% biomass
availability from forest management projects.
Typical harvest methods in the region for small diameter trees are similar to pulpwood
harvesting in Minnesota, with the additional costs of chipping at the forest landing site. Biomass
utilization will require the use of full-tree harvesting systems, in which whole trees (small and
large diameter) are transported to a landing site where they are sorted and processed. Tops and
unmerchantable materials are then chipped at landing sites. Bundling systems are an alternative
to chipping at the landing sites, and can harvest and bundle small diameter unmerchantable trees.
Such systems can also bundle slash at the landing. Tree bundling is less commonly used in the
U.S. than in northern Europe, so it will not be the focus of this discussion.
Full-tree yarding is compatible with even-aged management, which represents the majority of
the harvesting in Minnesota and on the reservation. A comprehensive logging survey of
silvicultural systems in Minnesota in 1992 showed that overall, 92% of the harvest volume was
done by clearcutting; of that total, 52% was clearcutting areas greater than 5 acres and 40% was
clearcutting with standing residuals.6 Loggers reported felling mostly by feller buncher in aspen
and northern pine, whereas central hardwoods are mostly felled by chainsaw. Grapple skidding is
predominant in aspen and northern pine, while cable skidding is more common in central
hardwoods. An additional logger survey in 2004 supported the predominance of feller buncher
felling coupled with cable and grapple skidders.7 Full-tree harvesting using mechanical felling
with transport by cable and/or grapple skidding is the norm for tribal loggers on the Red Lake
reservation. Tribal loggers use the Minnesota BMPS (the MFRC’s “Voluntary Site-Level
Guidelines”) as standards for harvesting. However, full-tree yarding is not the predominant
practice for all landowners. Statewide, about one-third of the volume is topped and limbed at the
landing site for aspen and northern pine, while almost all hardwoods are topped and limbed at
the point of felling. Approximately 82% of all log bucking for aspen and 72% of bucking for
northern pine is done at a roadside landing. For central hardwoods, an estimated 40% of bucking
is done at the felling location and 52% is done at a roadside landing.
The most significant issues with collecting and processing forest biomass for energy or other
value-added product manufacturing are associated with changes in operations required to collect
the materials and cost. Costs are discussed in the subsequent section. Tribal forestry operations
are not likely to require significant changes because current systems can easily be adapted to
chipping biomass materials at the landing site. Logging on federal, state, county/local or private
land may require more changes because tops and branches are more often left on-site. Logging
on aspen and pine is the most compatible with using full-tree harvest systems.
6 Minnesota Environmental Quality Board, Maintaining Productivity and the Forest Resource Base, Table A,
December 1992, http://www.iic.state.mn.us/download/geis/product/ekrose_app.pdf
7 Blandin Foundation, Survey of Minnesota Logging Operators in 2004, December 21, 2004,
http://www.blandinfoundation.org/html/documents/2004%20Logger%20Survey%20Report_Final.pdf
September 2005 17 Red Lake Tribe Biomass Assessment
2.5 Costs of Gathering and Supplying Biomass Feedstock
Costs for collecting, processing and supplying biomass vary with biomass yield, tree size,
harvest method, skid distance and transportation distance. Recent harvest cost modeling efforts
for Minnesota that modeled the impact of these and other variables on harvest costs showed
logging costs at the landing that range from $16 to $32 per cord ($7 to $14 per GT assuming 2.3
GT/cord) for even-aged management and $23 to $43 per cord ($10 to $19 per GT assuming 2.3
GT/cord) for thinning.8 This does not include the cost of chipping and transportation. These
estimates employed the harvesting cost component of the RXWRITE Prescription Writer. The
harvesting cost modeling was coupled with additional modeling efforts that calculated transport
costs and transport costs to one of six market centers located in the state. The choice of allocating
harvest volumes to specific market areas was based on cost-effectiveness. Transportation cost
assumptions were $0.15 per cord-mile plus $4.75 per cord handling.
To estimate delivered costs, we assumed chipping costs of $6 to $12 per GT based on published
sources of chipping and grinding costs. Adapting these costs to the current study area and
assuming haul distances up to 80 miles provided the range of delivered biomass costs in Figure
2-4. Average delivered biomass costs range from $23 to $27 per GT for clearcuts depending on
the haul distance. Variation in harvest and chipping costs can widen that cost range to $16 to $33
per GT depending on the site. Costs for biomass from thinning average from $35 to $39 per GT.
However, variation in harvest and chipping costs can widen that range to $26 to $49 per GT.
-
10
20
30
40
50
60
Haul distance (miles)
Delivered cost ($/GT)
Clearcut 23 24 26 27
Thinning 35 37 38 39
20 40 60 80
Figure 2-4. Range of Delivered Biomass Costs for Clearcut and Thinning Projects
Assuming Haul Distances Ranging from 20 to 80 Miles
8 Minnesota Environmental Quality Board, Maintaining Productivity and the Forest Resource Base, Table A,
December 1992, http://www.iic.state.mn.us/download/geis/product/ekrose_app.pdf. Note: adjusted from 1992
values to 2005 assuming 3% inflation rate.
September 2005 18 Red Lake Tribe Biomass Assessment
For biomass generated as a byproduct of other harvesting operations, removal of other biomass
products can help subsidize the cost of biomass removal, since a portion of the costs can be
attributed to the harvest of the higher value-added material. The extent to which other operations
would cover biomass removal costs depends on the operator, but the cost would have to be
sufficient to provide a profit incentive for the operator. The biomass chipping and transportation
costs alone would range from $10 to $20 per GT.
2.6 Fuel Characterization of Available Biomass
There are a wide variety of published chemical property data available for biomass. This section
presents published information available for some common tree species in the study area. There
are no testing data available for a variety of species in the area including tamarack, many swamp
conifers, many swamp hardwoods and others. A main reason is that there has been little regional
effort to utilize these species for energy or fuels. For these species, it would be advisable to
perform ultimate and proximate analysis, heating value analysis and ash analysis prior to usage.
The amount of usable thermal energy that can be obtained from fuel is known as the higher
heating value (HHV). HHV is interchangeable with the following terms: heat content, energy
content, latent heat, latent energy, and the heat of combustion. The practical heating value of
biomass, as received, varies considerably due to differences in the ash-forming mineral and fuel
moisture content. Table 2-8 provides chemical and heating value properties for several common
tree species based on dry biomass. Forest biomass moisture content typically varies from 40 to
60% by weight (wet basis), and can be higher, especially if exposed to precipitation.
Table 2-8. Chemical And Heating Value Properties For Several Common Tree Species
Species
Fixed
C Volatiles Ash C H O N S HHV
wt % wt % wt % wt % wt % wt % wt % wt % kJ/g Btu/lb
Aspen 30.1 65.8 4.1 NA NA NA NA NA 20.41 8,960
Beech NA NA 0.65 51.64 6.26 41.45 0 0 20.38 8,947
Birch NA NA 0.29 49.85 6.72 42.54 0.1 0.5 20.06 8,806
Douglas-
Fir 17.7 81.5 0.8 52.3 6.3 40.5 0.1 0 21.05 9,241
Hickory NA NA 0.73 47.67 6.49 43.11 0 0 20.17 8,855
Maple NA NA 1.35 50.64 6.02 41.74 0.25 0 19.96 8,762
Ponderosa
Pine 17.17 82.54 0.29 49.25 5.99 44.36 0.06 0.03 20.02 8,789
Poplar NA NA 0.65 51.64 6.26 41.45 0 0 20.75 9,109
Red Alder 12.5 87.1 0.4 49.55 6.06 43.78 0.13 0.07 19.3 8,473
Redwood 16.1 83.5 0.4 53.5 5.9 40.3 0.1 0 21.03 9,232
Spruce NA NA 0.77 51.06 5.75 42.29 0.11 0.01 19.97 8,767
Western
Hemlock 15.2 84.8 2.2 50.4 5.8 41.1 0.1 0.1 20.05 8,802
White Fir 16.58 83.17 0.25 49 5.98 44.75 0.05 0.01 19.95 8,758
White Oak 17.2 81.28 1.52 49.48 5.38 43.13 0.35 0.01 19.42 8,525
Notes: wt % = percent of dry matter weight, C= carbon, H= hydrogen, O= oxygen, N= nitrogen, S = sulfur, kJ =
kiloujoules, g = grams, lb = pounds, Btu = British thermal units
Sources: WoodGas, http://www.woodgas.com/proximat.htm except birch and spruce, source: Hermann Hofbauer,
University of Technology - Vienna, Institute of Chemical Engineering, Fuel and Environmental Technology,
Biobib: A database for biofuels, Vienna, Austria, http://www.vt.tuwien.ac.at/biobib/wood.html
September 2005 19 Red Lake Tribe Biomass Assessment
Analysis of alkali content can also indicate the likelihood that a given fuel may cause boiler
slagging and fouling. The value pounds of alkali per million Btu (lb/MMBtu) can be used as an
indicator to estimate the risk of boiler slagging and fouling problems. Research indicates that
biomass fuels with alkali contents below 0.4 lb/MMBtu are not likely to cause slagging
problems.9 Consequently, biomass feedstocks with high alkalinity are often blended with other
fuels to reduce alkali concentrations and control fouling and slagging problems.
9 T.R. Miles, et al. Alkali Deposits Found in Biomass Boilers, Vol. II, Sandia National Laboratory and National
Renewable Energy Laboratory, NREL/TP-433-8142 and SAND96-8225, February 1996, 198-200.
September 2005 20 Red Lake Tribe Biomass Assessment
3 REGIONAL AND LOCAL POWER MARKET ANALYSIS
One of the options for biomass utilization is the production of electricity. In this section we
provide a brief overview of regional electricity utility considerations. We depict the Mid-
Continent Area Planning Pool infrastructure, supply / demand balance and reserve conditions.
We then provide a profile of the local electricity supplier (Beltrami Electric Cooperative) and
finally we characterize electricity demand on the Red Lake Reservation. The focus is to assess
the market potential for a new biopower facility in or around the Red Lake Reservation using
tribal resources.
3.1 Mid-Continent Area Power Pool
The Red Lake Reservation falls within the jurisdiction of the Mid-Continent Area Power Pool
(MAPP), which is an association of electric utilities and other electric industry participants.
MAPP was organized in 1972 for the purpose of pooling generation and transmission. MAPP is a
voluntary association of electric utilities who do business in the Upper Midwest. Its 107
members are investor-owned utilities, cooperatives, municipals, public power districts, a power
marketing agency, power marketers, Regulatory Agencies, and independent power producers.
The MAPP organization performs three core functions: it is a Reliability Council, responsible for
the safety and reliability of the bulk electric system, under the North American Electric
Reliability Council (NERC); a regional transmission group, responsible for facilitating open
access of the transmission system; and a power and energy market, where MAPP Members and
non-members may buy and sell electricity.
MAPP was created to safeguard the region's bulk electric system. One of its main responsibilities
is protecting the electric power network, commonly referred to as the grid, in the following states
and provinces: Minnesota, Nebraska, North Dakota Manitoba, Saskatchewan, and parts of
Wisconsin, Montana, Iowa and South Dakota. MAPP also has members in Kansas and Missouri.
Figure 3-1 provides a geographical overview of all of the power planning organizations in North
America including MAPP, plus a general location of tribal reservation boundaries. MAPP covers
a large swath of the upper Midwest and includes several tribes.
Figure 3-1. Map of NERC Regions and Native American Lands
September 2005 21 Red Lake Tribe Biomass Assessment
3.1.1 Reserve Margin
North American Electric Reliability Council (NERC) regions are expected to attain levels of
supply assurance to maintain the integrity of electricity supply to consumers. A key aspect of the
supply assurance provision is the concept of reserve margin. There are many forms of electricity
reserves (see Table 3-1). For planning purposes, utilities have historically attempted to maintain
reserve margins around 15-17%. Utilities typically forecast demand and supply scenarios, often
looking to the future for 20 years or more. When reserve margins drop below 15%, the utility
often looks for additional supplies, either through contractual purchases or by construction of a
new power plant(s).
Table 3-1 Categories of Reserves for Electricity Supply
Reserve
Category Description
Operating
That capability above firm system demand required to provide for regulation,
load forecasting error, equipment forced and scheduled outages, and local area
protection.
Spinning Unloaded generation, which is synchronized and ready to serve additional
demand. It consists of Regulating Reserve and Contingency Reserve.
Regulating An amount of spinning reserve responsive to Automatic Generation Control,
which is sufficient to provide normal regulating margin.
Contingency
An additional amount of operating reserve sufficient to reduce Area Control
Error to zero in ten minutes following loss of generating capacity, which
would result from the most severe single contingency. At least 50% of this
operating reserve shall be Spinning Reserve, which will automatically respond
to frequency deviation.
Nonspinning
That operating reserve not connected to the system but capable of serving
demand within a specific time, or Interruptible Demand that can be removed
from the system in a specified time. Interruptible Demand may be included in
the Nonspinning Reserve provided that it can be removed from service within
ten minutes.
Planning
The difference between a Control Area's expected annual peak capability and
its expected annual peak demand expressed as a percentage of the annual peak
demand.
As illustrated in Figure 3-2, reserve margins for 2012 are projected for all of the NERC regions
and sub-regions in North America. The horizontal red line drawn across the figure represents the
historic 15% reserve margin that many utilities use for planning purposes. Thirteen regions are
below or just at 15% for the year 2012, including MAPP at approximately 10%. The fivepercentage
point difference suggests, if MAPP is to maintain a 15% reserve, then there will be
the need for additional supply brought into the region. It can reasonably be expected that utilities
within MAPP will be searching for new power supplies. Individual utilities will either attempt to
obtain their own supplies or form alliances with other utilities.
September 2005 22 Red Lake Tribe Biomass Assessment
Clearly one option is to import supplies from other NERC regions with reserves in excess of the
15% guideline. In this case, most of the regions with substantial reserve margins are located a
great distance from MAPP and therefore it is unlikely imports of large amounts of electricity,
beyond current imports, are likely.
2012 Projected Reserve Margin by NERC Region/Subregion
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Southern
Virginia Carolinas Reliability Agreement
Mid Atlantic Area Council
Southeastern Electric Reliability Council
Ontario
Mid Continent Area Power Pool
Entergy
Tennessee Valley Authority
California
Southwest Power Pool Inc
Rocky Mountain Power Area
Arizona New Mexico Southern Nevada
Electric Reliability Council of Texas Inc
New England
Prince Edward Island
Western Electricity Coordinating Council
Florida Reliability Coordinating Council
Northeast Power Coordinating Council
Canada
Northeast Power Coordinating Council
Mid Continent Area Power Pool Canada
East Central Area Reliability Coordination
Mid America Interconnected Network Inc
New York
Western Electricity Coordinating Council
Mexico
Quebec
Western Electricity Coordinating Council
Canada
Northwest Powerpool
Nova Scotia Power Corp
New Brunswick Electric Power
Commission
2010 Forecast Reserve Margin %
Figure 3-2 2012 Projected Reserve Margin by NERC Region/Subregion10
Additional detail to supplement Figure 3-2 is provided in Figure 3-3. Figure 3-3 illustrates the
effect of demand growth exceeding capacity growth, leading to a decline in reserve margin. By
2012 the reserve margin is forecast to be approximately 10%, considerably less than historic
operating conditions.
While a decline in the reserve margin is ostensibly an indication of the potential for new capacity
additions, it is also reasonable to assume that MAPP has performed calculations to provide
assurance that a 10% reserve margin may be acceptable. We are aware of a gradual relaxation of
the 15% “rule of thumb” for reserve margins, due both to sophisticated modeling as well as the
continued growth of electricity sales outside of traditional boundaries.
10 Power Development and Reservation Lands, Spatial Approaches to Finding Opportunity, Energy Velocity
presentation to Council of Energy Resource Tribes, May 6, 2004.
September 2005 23 Red Lake Tribe Biomass Assessment
MAPP Load and Resource Forecast
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
Load and Resources MW
0%
5%
10%
15%
20%
25%
Reserve Margin %
Summer Planned Capacity Resources MW
Summer Net Internal Demand
Reserve Margin %
Figure 3-3 MAPP Load and Resource Forecast11
Another important consideration for a large power plant is access to transmission lines. As
illustrated in Figure 3-4, major power transmission lines cross a small portion of the Red Lake
reservation, specifically to the north and east of the Diminished lands and through the Ceded
lands. While it is interesting to note the proximity of the 500kv line, it is not anticipated that this
line will be important to Red Lake. Because biomass resources probably constrain power plant
size to less than 10MW, it is likely that existing distribution lines can accommodate the load.
11 Power Development and Reservation Lands, Spatial Approaches to Finding Opportunity, Energy Velocity
presentation to Council of Energy Resource Tribes, May 6, 2004
September 2005 24 Red Lake Tribe Biomass Assessment
Figure 3-4 Reservation Locations Relative to Major Power Transmission Lines12
3.2 Red Lake Reservation Electric Service Provider
The Red Lake Reservation and all of the tribal members currently purchase power from the local
rural electric cooperative, Beltrami Electric Cooperative, Inc. (Beltrami). According to the 2000
Minnesota Utility Data Book, Beltrami had almost 17,000 electric customers in 2000 of which
almost 14,000 were farms. Almost 2,000 electric customers were non-farm residential and just
under 1,000 were commercial. Beltrami had no industrial customers.13
Beltrami is a distribution cooperative with approximately 14,500 members providing service
over a 3,000 square mile area. The electric distribution system is comprised of 1,2000 miles of
overhead line and over 1,700 miles of underground line.14 Minnkota Power Cooperative is
Beltrami’s wholesale power provider.15 Electricity usage for all Beltrami customers is shown in
Table 3-2 for 2003.16
12 Power Development and Reservation Lands, Spatial Approaches to Finding Opportunity, Energy Velocity
presentation to Council of Energy Resource Tribes, May 6, 2004
13 2000 Minnesota Utility Data Book, Table 5, page 29.
14 www.beltramielectric.com/About%20BEC.htm, accessed December 8, 2003.
15 www.beltramielectric.com/load_management_program.htm, accessed December 8, 2003.
16 USDA Financial and Statistical Report, 2004, Beltrami Electric Cooperative.
September 2005 25 Red Lake Tribe Biomass Assessment
Table 3-2 Beltrami Electric Cooperative, Total Electricity Sales by Month, 2003
0
10,000
20,000
30,000
40,000
50,000
60,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month
MWh/month
As shown in Table 3-2, the utility experiences peak consumption during winter months. The load
factor is approximately 53%, reasonably typical for a rural electric utility with a high level of
residential sales (see Figure 3-5). 17
Residential
62%
Gen. Comm.
6%
Irrigation
0%
Lg. Comm.
9%
Resi. Season
1%
REA resale
2%
PSH
0%
Other resale
20%
Figure 3-5 Distribution of Electricity Sales (kWh), Beltrami Electric Cooperative 2003
We performed a brief survey of 29 of the utilities in Minnesota to assess the relative position of
Beltrami residential rates. Beltrami’s average residential rate is about $0.062/kWh or
approximately 5% lower than regional competitors and 26% lower than the national average (see
Table 3-3). Our complete results are provided in Appendix A.
17 Load factor refers to the ratio of average-to-peak day use calculated over a specific period of time, such as a day,
month, or year.
September 2005 26 Red Lake Tribe Biomass Assessment
Table 3-3 Comparative Residential Electric Rates, 2004
Category $/kWh
Beltrami $ 0.062
MN avg.* $ 0.065
National avg. $ 0.084
* this study
3.3 Minnkota Power Cooperative Inc.
The Minnkota-associated systems are a regional association of 25 electrical suppliers serving
more than 114,000 customers in a 34,500 square-mile area in northwestern Minnesota and
eastern North Dakota. They include 11 distribution cooperatives, 12 municipal utilities, a power
agency, and a generation and transmission cooperative. Beltrami is a member of Minnkota.
The primary source of power supply is the Milton R. Young facility located at the mine mouth in
Center, North Dakota. Two units comprise this lignite-fired installation, Unit #1 -- 250 MW and
Unit #2 -- 455 MW. Minnkota is a winter peaking utility with a 2.2% annual growth forecast.
Over the next decade, Minnkota will satisfy increasing demand by purchase of options the firm
holds in Square Butte power plant.18 By 2009, Square Butte will provide an additional 95 MW of
baseload capacity. Additional “supply” up to 340 MW will be obtained by reliance upon
interruptible load control measures. Finally, the supply will be augmented by purchases of
hydroelectricity from Manitoba Hydro for both peaking and firm requirements.
The Minnkota Messenger, a publication from Minnkota, provides some insight into the long-term
plans for the utility.19 Minnkota is pursuing the construction of a new facility by 2015. The firm
estimates that it requires approximately seven years for planning, permitting and building a new
plant. Talks are currently under way with Basin Electric Power Cooperative and Montana-
Dakota Utilities about a possible joint venture. Another possibility is a third generating unit at
the Milton R. Young Station. That project could involve constructing a 250-500 MW lignitefired
generator at the existing site.
3.3.1 Minnkota and Green Power
Minnkota Power offers its customers the opportunity to subscribe to the Infinity Wind Energy
program whereby subscribers pay an extra $2.50 for each 100-kWh block of wind power. This
premium is billed monthly. The wind project is located in North Dakota and the turbines are
capable of producing an estimated combined annual output of 5 million kWh.20
3.3.2 Meeting with Beltrami and Minnkota
On June 16, 2004, a representative from McNeil attended a meeting with Mr. Roger Spiry,
General Manager of Beltrami, and Mr. Wally Lang, Vice President for Transmission with
Minnkota. The purpose of the meeting was to discuss renewable energy/biomass power, Red
18 Minnesota Public Utilities Commission, Staff Briefing Papers, April 3, 2003. Regarding Minnkota Power
Cooperative and Northern Municipal Power Agency, 2002 Integrated Resource Plan.
19 Minnkota Messenger, May/June 2004, annual meeting report, page 2.
20 www.beltramielectric.com/Infinity%20Wind%20Energy.htm, accessed December 8, 2003.
September 2005 27 Red Lake Tribe Biomass Assessment
Lake tribal interests, and the potential for small-scale generation, including access to
transmission lines, on the reservation.
Based on the discussions in the meeting, it was apparent neither Mr. Spiry nor Mr. Lang have
given much consideration to new power supply from biomass. While neither individual is tasked
with resource planning, they are generally aware of corporate initiatives. Both Beltrami and
Minnkota are not required to participate in renewable portfolio standards. The general
impression was that the firm was meeting its environmental objectives with the Infinity Wind
Energy program and through its purchase of 5MW of biopower through Otter Tail (see the
following section).
At the time of the meeting, McNeil personnel were confident of supply sufficient to fuel a 5MW
biopower facility, therefore the meeting focused on a small-scale facility. There was considerable
discussion of available transmission capacity at the Redby substation. At this point in time and
absent a detailed study (estimated cost by Minnkota of $5-10,000 by Minnkota representatives),
the collective understanding was there was sufficient capacity at the Redby substation to
effectively absorb the supply.
Mr. Spiry provided the “buy-back” rates for Minnkota under the provisions of the Minnesota
small power production statute. Beltrami will purchase electricity for $0.02021/kWh and
capacity for $21/kW/yr.
3.4 Otter Tail Power Company
Otter Tail Power Company serves about 127,000 customers in 423 communities in Minnesota,
North Dakota, and South Dakota. The firm is headquartered in Fergus Falls, New Mexico and
has an office in Bemidji, Minnesota and is active in the local community. Peak demand in 2003
was 668,703 kilowatts. Total generating capability was 696,380 kilowatts. The firm employs
approximately 700 people.
Otter Tail presently purchases approximately 12.5MW of biopower from the Potlatch
Corporation OSB facility in Bemidji, MN. Half of the power is then re-sold to Minnkota. We had
two conversations with Otter Tail regarding additional purchases of biopower and while they
indicated a general interest in further purchases, they did not believe the economics would be
sufficiently attractive to allow them to integrate into their power supply mix.
3.5 Red Lake Tribe Electricity Consumption
Between June 2002 – June 2003, the tribe used 47.6 million kWh. Total tribal peak demand is
not known but a simple calculation suggests the demand is approximately 5MW. Total
expenditures for electricity during this time frame were $2.6 million.21 The average rate is
approximately $0.054/kWh. Monthly energy usage is shown in Figure 3-6. Electricity demand
peaks in the winter.
21 Red Lake Reservation Biomass Energy and Biobased Product Feasibility Study Proposal in response to DOE
solicitation Number DE-PS36-036093002, p.4.
September 2005 28 Red Lake Tribe Biomass Assessment
0
1,000
2,000
3,000
4,000
5,000
6,000
Jun-
02
Jul-
02
Aug-
02
Sep-
02
Oct-
02
Nov-
02
Dec-
02
Jan-
03
Feb-
03
Mar-
03
Apr-
03
May-
03
Jun-
03
MWh
Figure 3-6 Red Lake Reservation Total Electric Consumption, 2002-2003
The largest commercial users on the reservation include the Tribal Council building, the Red
Lake Casino, and the BIA agency office. Energy usage in 2002 for the three facilities is
illustrated in Figure 3-7. The casino electric usage is about $100,000 per year while the other two
facilities are considerably less at around $5,000 - $10,000/year.
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
Jan
Mar
May
Jul
Sep
Nov
Month
kWh/month
Tribal Council Building
Red Lake Casino
BIA agency office
Figure 3-7 Red Lake Reservation Commercial Building 2002 Electricity Usage and Cost22
3.6 Biomass Power Economic Projections
Biomass power is often a relatively expensive form of electricity. The fuel is usually several
times more expensive than its major solid fuel competitor, coal, and biomass fuel also has higher
22 E-mail from Pam Marshall, Energy Cents Coalition, December 16, 2003.
September 2005 29 Red Lake Tribe Biomass Assessment
moisture content and lower energy content than coal. Furthermore, capital costs for biomass
systems are also more expensive than coal units, primarily because coal plants tend to be quite
large and thus capture economies of scale not available to biomass power facilities.
For this report, we have prepared hypothetical pro forma economic calculations for several sizes
of biomass facilities to present a general overview of the delivered cost of electricity. The
economic model is from the perspective of a private developer.
3.7 Fuel Consumption
As shown in Table 3-4, we have performed a straightforward estimate of the fuel consumption
(demand) requirements for a 5MW combustion unit (stoker technology). Annual demand is
calculated to be approximately 43,000 dry tons per year (or approximately 72,000 wet tons/year).
The biomass demand, using only timber harvest residue, represents 87% of the Tribal available
supply and approximately 60% of the regional available supply. While it is clear the region has
supply to satisfy demand, it is unlikely that a larger facility could be supported using only
available timber harvest residues..
Table 3-4. Calculated Fuel Consumption for 5MW Biopower Stoker
Category Units
5-MW Stoker
Capacity kW 5,000
Capacity Factor % 85%
Energy content Btu/dry lb 8640
Moisture Content % 40%
Energy content Btu/wet lb 5184
Consumption wet lb/hr 19,290
Consumption Btu/hr 100,000,000
Heat Rate Btu/kWh 20,000
Efficiency % 17%
Consumption dry tons/hr 5.8
Consumption dry tons/yr 43,090
3.8 Economic Analysis
We have employed a pro forma model to determine the financial attractiveness of an investment
in a biopower facility. The pro forma model simulates revenues and costs for the project horizon
with the intent to determine annual cash flows. In this manner we calculate a net present value to
allow us to understand if an investment is a worthy consideration by the Tribe.
3.8.1 Economic Inputs
The economic analysis employs a number of assumptions regarding economic considerations
involved in a Tribal investment. Table 3-5 provides the major inputs regarding taxes,
inflation/escalation rates, interest rates, incentives such as green tags, and buy/sell rates for
electricity.
September 2005 30 Red Lake Tribe Biomass Assessment
Table 3-5. Economic Inputs for Pro Forma Model
Category Units Value
Income Tax Rate % 0
Electricity Escalation Rate % 0
General Inflation/Escalation Rate % 2.8
Loan Interest/Discount Rate % 6
Down Payment on Loan % 10
Depreciation Method MACRS
Loan Repayment Term years 20
Debt Coverage Ratio 1.4
Project Life years 25
Salvage Value % 5
Annual Plant Insurance $/year 15,000
Annual Letter of Credit Basis Points 50
Loan issuance fee % 0.01
Operators/Management Fee $/month 0.0
Fuel tax credit $/green ton 0.00
Production Tax Credit (10 yrs.) $/kWh 0.018
Green Tag (5 yrs.) $/kWh 0.025
Energy $/kWh 0.02021
Capacity $/kW/month 21.00
3.8.2 Capital and Operating Costs
A 5MW biomass power facility is estimated to cost approximately $12.7 million dollars (see
Table 3-6). The equipment represents about ½ of the total installed costs, with the balance in
engineering, interconnection with the utility grid, permitting, and actual construction. Fixed
costs, dominated by labor costs, are estimated to be $87.21/kW-yr. and are detailed in Table 3-7.
September 2005 31 Red Lake Tribe Biomass Assessment
Table 3-6. Capital and Operating Costs, 5MW Biomass Stoker Power Plant
Category Units 5-MW Stoker
Equipment $ $ 6,364,918
Engineering+Interconnect $ $ 1,862,086
Permitting/contingency $ $ 499,626
Sitework+construction $ $ 3,970,442
Capital Cost $ $ 12,697,072
Capital Cost $/kW $ 2,539
Fixed Cost $/kW-yr. $ 87.21
Variable cost $/kWh $ 0.003
Table 3-7. Labor Requirements and Cost, 5MW Biopower Stoker
Category
5-MW Stoker
Plant Manager (#) 1
Deputy (#) 0
Operators (#) 7
Fuel Handling (#) 0
Maintenance (#) 1
Administration (#) 0.25
No. of Employees 9.25
Total payroll $323,000
Benefits $113,050
Annual payroll $436,050
kW 5,000
$/kW-yr $87.21
3.8.3 Results
We performed two analyses. The first is a base case analysis in which all of the input values are
assumed to be the most conservative. By conservative we refer to the absence of any subsidies,
the lack of provision of incentives, and utility buy-back rates that reflect current market
conditions. The Net Present Value (NPV) for the base case is quite poor, a negative $295 million
while for the “optimistic” case the NPV is a positive $85 million.
The base case is negative for a simple reason, the levelized cost of production is calculated to be
$0.07/kWh and the selling price is $0.02/kWh. Thus for each kWh sold, there is a loss of about
$0.05/kWh. Clearly one cannot sell at less than the cost of production.
September 2005 32 Red Lake Tribe Biomass Assessment
Table 3-8. Analysis Results, Pro Forma Model, 5MW Biopower Stoker
Category Units Base Optimistic
Capital Cost $ $ 12,697,072 $ 6,374,032
Fuel Cost $/BDT $30.00 $15.00
PTC $/kWh $0.000 $0.009
Green Tag $/kWh $0.000 $0.025
Selling Price $/kWh $0.020 $0.040
Levelized Cost $/kWh $0.070 $0.046
NPV $ ($295,230,467) $85,633,150
For the optimistic case, we have assumed capital costs are reduced in half. This may be possible
if the Tribe were to receive a grant for 50% of the costs. Similarly, we assumed a 50% reduction
in fuel costs, perhaps available if there is a subsidy for removal of timber harvest residues. We
also assumed the Production Tax Credit and the Green Tag would be available to the Tribe.
Finally, we increased the selling price to $0.04/kWh. The levelized cost of production drops
because of the drop in the price of the fuel. Because of the combination of the incentives and the
increased selling price, the NPV is positive due to the difference between the combined selling
price and the levelized cost.
Figure 3-8 provides illustrative information regarding the distribution of the costs for operating a
biopower facility. With fuel representing approximately ½ of operating costs, it is clear that it is
essential to minimize fuel costs for profitable operations.
Debt
28%
Water
2%
Fuel
49%
Fixed
17%
Variable
4%
Figure 3-8. Distribution of Costs, Base Case, 5MW Biopower Stoker
September 2005 33 Red Lake Tribe Biomass Assessment
4 ASSESSMENT OF BIOMASS HEATING OPPORTUNITIES
4.1 Fuel Cost Overview
Propane and fuel oil are the predominant fuels used for space and water heating for institutional
and commercial buildings on the Red Lake reservation. There are various suppliers in Beltrami
County that provide competitively priced energy. Propane prices tend to be lower than national
averages, in part because the tribe purchases in bulk.
Biomass heating or thermal applications have merit because the delivered cost of energy is often
cost-competitive with other energy forms. It is important to compare energy forms on an
equivalent basis. We have performed calculations to compare energy costs on a $/MMBtu
($/million Btu) basis in order to facilitate comparisons among alternatives. As shown in Table
4-1 and Figure 4-1, wood pellets and biomass chips are the least expensive form of delivered
energy for heating. Note the wide disparity in electricity costs. The low rate reflects the off-peak
heating rate associated with thermal storage units. The higher rate reflects the residential service
rate in effect at Beltrami. Perhaps most importantly, the cost of the predominant energy forms on
the reservation, propane and fuel oil, are significantly higher than the biomass costs.
Table 4-1. Comparative Costs of Regionally Important Energy Forms, 200523
Source Units Value Efficiency Btu/unit $/MMBtu
Biomass chips $/wet ton $ 35.00 70% 8,000,000 $ 6.25
Pellets $/ton $ 86.00 75% 16,000,000 $ 7.17
Electricity $/kWh $ 0.03 100% 3,413 $ 8.79
Propane $/gallon $ 1.20 85% 91,600 $ 15.41
Fuel Oil $/gallon $ 1.78 80% 135,000 $ 16.48
Electricity $/kWh $ 0.062 100% 3,413 $ 18.17
23 Pellet prices are derived from current prices paid by the Red Lake Tribe to Valley Forest Resource (Marcel, MN)
for pellets delivered to the Humanities Center. Biomass chip prices are from this study. Propane prices reflect a brief
survey of three Bemidji, MN suppliers plus an average of propane prices paid by the Red Lake High School and
Middle School. Fuel oil prices reflect a brief survey of heating oil suppliers in Bemidji, MN in May of 2005.
Electricity prices reflect current retail rates for Beltrami Electric Cooperative for residential service, with and
without off peak pricing programs.
September 2005 34 Red Lake Tribe Biomass Assessment
$6.25 $7.17
$8.79
$16.48
$17.47 $18.17
$-
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
Biomass
chips
Pellets Electricity Fuel Oil Propane Electricity
$/MMBtu
Figure 4-1. Comparative Costs of Regionally Important Energy Forms, 2005
Propane is a major fuel source on the Reservation, indeed for the surveyed buildings it is the
predominant source. Propane is generally priced competitively at Red Lake, especially with
regard to national prices. However, there is considerable upward pressure on propane prices.
Figure 4-2 illustrates price trends for commercial customers on a national basis. The important
consideration is the upward slope indicating continued real price increases forecasted by US
DOE over the next ten years.
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
1990 1995 2000 2005 2010 2015
Year
$/gallon
Figure 4-2. Propane Commercial Price History and Projections to 201024
4.2 Biomass Heating History at Red Lake
Over the past 10-15 years at least four non-residential buildings have had biomass heating
systems installed. The High School in Red Lake had a biomass chip/Municipal Solid Waste
24 US Department of Energy, Energy Information Administration, Petroleum Marketing Monthly, January 2005.
September 2005 35 Red Lake Tribe Biomass Assessment
(MSW) system, the Ponemah Elementary School had a biomass system, the Forestry Division
operates a biomass-heated greenhouse and the Humanities Center presently has a bulk wood
pellet system. The history of biomass usage is mixed and represents a challenge for increased use
of biomass on the reservation.
The High School system was removed within the last several years due to the poor performance.
McNeil personnel were not able to inspect any of the system because it had been removed and
therefore the boiler manufacturer, feed handling system, and associated machinery are not
known. The system was originally designed to utilize wood chips and was subsequently modified
to accept MSW pellets. Both chips and MSW pellets were obtained within a 100 mile radius.
According to maintenance staff at the High School, the wood chip system had a poor feed supply
technology or configuration. The chips would bind together in cold weather thereby causing a
blockage and insufficient fuel supply to the boiler. While this is a common biomass fuel handling
issue, many cold weather operators have successfully addressed this issue with thoughtful
solutions.
Further, the wood chips would freeze on the supply line sensors, thereby sending misleading
signals to the control system. In many instances operating staff were not aware if there was
sufficient supply due to the inaccurate sensor readings. Additionally, the baghouse did not seem
to capture the particulate matter as there were several reports of ash being deposited on the cars
in the adjacent parking lot leading to complaints about the “dirty” conditions at the school.
The High School had a performance contract with GE Systems. The performance contract
provides for remote monitoring of the boiler at the High School. When the sensors would report
misleading fuel conditions, maintenance personnel would be called to the site via the GE
operations center, often after normal work hours. Over the course of several heating seasons, it
became apparent the overtime charges associated with the off-hours calls was exceeding the
dollar savings associated with biomass use. Also, maintenance staff expressed annoyance with
the degree of effort required to maintain the biomass system in “satisfactory” operating
condition.
The biomass supply at the High School was apparently problematic. According to several
individuals, the supply of chips was highly variable and of uneven quality. Our understanding is
the local loggers do not have many chippers and they found the supply of chips to the High
School to be only marginally profitable, especially in comparison with the provision of pulp logs.
MSW pellets were substituted for wood chips, apparently because the MSW pellets were less
expensive and the supply more reliable. The MSW pellets seemed to have better handling
properties than the wood chips but the smell associated with their combustion was
overwhelming. Again according to maintenance personnel, the complaints from students,
teachers, administrators, and adjoining building occupants were considerable. We are not certain
when the biomass system was removed but it was replaced with a propane system within the past
five years. The maintenance personnel are pleased with the operation of the propane system.
Although we have less information, a similar tale was relayed to us regarding the Ponemah
Elementary School. In this case the biomass system was operated for less than 3 months,
necessitating considerable “emergency” retrofit costs. From our understanding, the elementary
school system suffered from unreliable fuel supply, poor and uneven fuel quality, and numerous
maintenance problems during its short life.
September 2005 36 Red Lake Tribe Biomass Assessment
Conversely, the Humanities Building has a bulk wood pellet system that is the primary heating
unit for the building. This system has been in operation for at least ten years and the maintenance
personnel report a high level of satisfaction with the unit. Aside from normal operating
maintenance, there have been no problems with the system. Ash disposal is accomplished by
dumping approximately three, 55-gallon barrels of ash per winter in the local landfill. A photo of
the pellet fuel hopper is shown in Figure 4-3.
Figure 4-3. Pellet Fuel Hopper for Humanities Building
Similarly, the Department of Natural Resources, Forestry Division, has operated a small
greenhouse for production of tree seedlings for many years. The primary heating source is a
biomass boiler (see Figure 4-4). The biomass system consumes approximately 125-150 cords of
wood per year, all derived from Tribal lands. Hot water is provided to a slab heating system to
maintain interior temperatures of approximately 70ºF.
September 2005 37 Red Lake Tribe Biomass Assessment
Figure 4-4. Biomass Boiler at Forestry Division Tree Seedling Greenhouse, Redby, MN
Based on our site inspection trip, it was apparent there is a disconnect between the biomass
history at the schools and at the Humanities Building or Greenhouse. While there was a poor
experience at the High School that many people were aware of, there was a noticeable lack of
awareness that the Humanities Building even had a pellet system let alone a successful
installation with a superb operating history. Similarly, the greenhouse system is not well-known
and is responsible for considerable annual cost savings allowing for a successful operation
selling tree seedlings. For biomass proponents, it would be advisable to “advertise” the success
of the existing biomass heating system, both from a cost-saving as well as an operational
perspective.
4.3 Facility Identification and Heating Load Analysis
Major thermal loads at Red Lake are represented by seven (7) school buildings and eleven (11)
other larger, non-residential facilities (see Table 4-2). In cooperation with the Energy Task Force
and the EnegyCents Coalition, we have assembled overview data on each of the facilities.
4.3.1 School Facilities
There are approximately 440,000 sq. ft. of building space associated with the schools. The
largest two users are the High School and the Middle School. As shown in Table 4-2, some of
the schools are energy efficient and some waste energy. The schools with the lowest
kBtu/sq.ft./yr (kBtu refers to 1,000 Btu). are the most efficient, if one assumes all uses are nearly
equivalent which they are not. The Early Childhood facility is the most efficient building but the
September 2005 38 Red Lake Tribe Biomass Assessment
figure is a bit misleading in that the energy requirements are reduced relative to some of the
other facilities because the building is not used as much as others. The Middle School is the least
efficient building and is slated for major reconstruction along with the High School.
4.3.2 Other Red Lake Buildings
For non-school buildings, the hospital represents the largest thermal user. The hospital requires
24X7 energy input for space and water heating plus required ventilation rates for health
concerns. Thus it is not surprising that the energy consumption is high relative to the other
buildings. However the hospital is well-managed from an energy perspective, the boilers are
relatively new and there are no obvious solid fuel biomass heating opportunities. There may be
reason to consider using bio-oil for replacement of the heating oil. That topic is discussed in
another section.
Energy use at the greenhouse is intense on a Btu/sq.ft. basis, especially when compared with
other tribal buildings. The reason for the high usage is the simple consideration is the R-value of
the double polyethylene covering is quite low relative to other buildings. Because of the need for
light transmission to foster plant growth, it is necessary to use a clear covering with high energy
consequences. Thus it is particularly notable that the wood boiler saves, relative to oil, over
$20,000/year.
September 2005 39 Red Lake Tribe Biomass Assessment
Table 4-2. Major Buildings and Annual Thermal Loads, Red Lake Band of Chippewa
Indians
Building Sq. Ft.
Primary
Heating
Fuel
MMBtu/year kBtu/sq.ft./yr.
Schools
RL Middle School 77,544 Oil 7,534 97
Ponemah Elementary 59,344 Propane 2,230 38
RL High School 128,515 Propane 7,515 58
RL Elementary 89,956 Propane 4,386 49
Administration 10,451 0 0
RL Bus Garage 12,600 Oil 0 0
Early Childhood 60,860 Propane 2,622 43
Sub-Total, schools 439,270 N/A 24,287 55
Other
Elderly Maintenance 960 Propane 61 63
Gaming Admin Office 3,020 Propane 144 48
Hospital 105,804 Oil 14,122 133
Humanities 49,519 Pellets 1,789 36
Ponemah Ambulance
Station 2,400 Propane 130 54
Red Lake CAP 1,800 Oil 95 53
Red Lake Day Care 3,200 Propane 154 48
Redby Center 17,884 Oil 234 13
Redby Store 2,328 Oil 196 84
Tribal Council 11,107 Propane 1,403 126
Tribal Greenhouse 6,272
Biomass /
oil 2,250 359
sub-total, other 204,294 N/A 20,578 101
4.4 Candidate Biomass Heating Opportunities
Our approach for identifying candidate biomass installations at the buildings is straightforward.
We use the following criteria to screen facilities to determine if the building is a logical
candidate for more in-depth analysis.
• Buildings with high heating bills. Larger facilities, typically over 50,000 square feet. The
size rationale is predicated on the consideration that it is important to capture economies
of scale associated with a new installation.
• Buildings with existing boilers and circulating hot water or steam systems. We have a
strong preference for hot water systems because state laws generally require personnel
with special certification for operation of a steam system.
• Current condition and age of existing boilers. New or well-maintained boilers are rarely
candidates for retrofit.
September 2005 40 Red Lake Tribe Biomass Assessment
• Future construction plans. We look for the opportunity to piggyback because a standalone
project is often more difficult to economically justify. We especially look for
construction plans that include expansion or renovation of the HVAC system.
Based on the mixed prior history of biomass utilization on the Reservation and the concerns
expressed by maintenance staff over operational issues with biomass systems, we believe for
biomass to be successful there must be a superior opportunity. Opposition, or even lack of
support, from key maintenance personnel is a certain recipe for a poor experience with a new
heating system. Therefore our application of the criteria for recommending a building for retrofit
was especially rigorous. For a variety of reasons explained below, none of the existing buildings
offers excellent or even good opportunities for retrofit to a biomass heating system. The Middle
School may be a candidate, depending upon how future construction / retrofit is planned.
4.4.1 Heating Bills
Red Lake has a frigid climate (heating degree days of approximately 10,474 at International
Falls, MN) and consequently high heating bills. Also, there are several school buildings that
exceed our 50,000 sq. ft. threshold. We found competitive propane prices on the Reservation.
While the delivered price of propane is about 60% higher than pellets ($7.17 - $11.50 / MMBtu),
the propane price is far less than national averages. However, propane is largely an unregulated
market, subject to considerable price fluctuation with a trend towards higher prices.
4.4.2 Existing Heating System
The existing building stock has a variety of hot water, steam and forced air systems. Several of
the buildings, particularly the middle school, appear to be possible candidates because of the age
of the system. However, most of the buildings are either new (less than five years old) or have
new and/or well-maintained heating equipment that is not in need of replacement. This is
especially true at the High School, the elementary school, and the early childhood facility.
4.4.3 Future Construction Plans
We identified two planned construction efforts. The first building is the High School / Middle
School complex and involves major renovation of the two structures. According to the project
Architecture and Engineers, the DLR Group, an $18 million effort is in late planning stages for
the renovated facilities, including a central boiler plant for the heating requirements.25 At this
point propane is the preferred heating fuel. We have had one, brief conversation with the project
team regarding biomass energy. The project team is mindful of the poor experience with biomass
systems at Red Lake schools and members of the team have had a difficult experience with
biomass at another school in Rice Lake, WI. At this writing the project team has not shown an
inclination to consider biomass as a heating source although they have agreed to review the
material in this report.
The second building is the proposed greenhouse for the Forestry Department. This greenhouse
will be used for growing seedlings for reforestation efforts. The greenhouse will be
approximately 1 acre and will be comprised of three separate buildings. For two reasons it is an
ideal candidate for a biomass system. First, it is a new facility and thus retrofit costs will not be
25 Personal communication, Mr. Troy Miller, DLR Group, June 2005,
September 2005 41 Red Lake Tribe Biomass Assessment
incurred. The absence of retrofit costs, including spacing considerations for a storage lot, will go
a long way towards making the project cost-competitive with propane or oil systems. Indeed, it is
likely a new system will be much less expensive than a retrofit system and thus the preferred
approach to heating the building.
The second reason is a bit symbolic, it is important for the Natural Resources Department to
show leadership in the sustainable use of forestry resources on the reservation. With the use of a
biomass heating system, the timber harvest residues can be profitably used on the reservation to
satisfy heating demand at the greenhouse. Appendix C provides additional information about
biomass heating systems.
September 2005 42 Red Lake Tribe Biomass Assessment
5 OVERVIEW OF BIO-BASED PRODUCTS
A range of bio-based products were considered as possible manufacturing and economic
development opportunities. Due to the rural nature and agricultural output of the region, the
majority of time and research was spent on animal bedding. Other novel technologies to produce
bio-oil and wood-plastic composites were evaluated but are semi-commercial and require
considerable capital for production. Using pellets for heating purposes was not considered indepth,
since this product is already available at a low price in the area. Below is a summary of
findings for bio-oil, wood plastic composites and pellets.
5.1 Bio-oil
Bio-oils have a variety of applications which are being introduced to the market through precommercial
demonstration projects. The primary use has been as a boiler fuel, either for heat or
electricity. Bio-oil has also been used to replace fuel oil. The oils can be used to produce
hydrogen, organic fertilizers, flavor chemicals, and fuel additives.
Bio-oil is manufactured through a process called pyrolysis. Pyrolysis is the irreversible, thermal
degradation of organic matter to produce gas, liquid and char products. Pyrolysis occurs at lower
temperatures than combustion or gasification without an oxidizing agent. Controlling the
temperature and reaction rate determines product composition. Research and development in
pyrolysis focuses on maximizing liquid (bio-oil) yields due to the ability to transport and store
liquid fuels. Fast pyrolysis yields 75% bio-oil and occurs around 932°F at a high reaction rate,
short residence time with 1 bar pressure. Rapid cooling or quenching condenses pyrolysis vapors
into bio-oil.
The most common pyrolysis reactor types are fluidized beds. Biomass enters the fluid bed
reactor where parameters are controlled to maximize desired product. Char particles are removed
by cyclones and liquid is recovered by condensation or coalescence. Characteristics of various
reactors are listed below:
Bubbling Fluidized Bed:
• Good Temperature Control
• Char removal by entrainment or injection and separated by cyclones
• Scalable
• Particle size <2mm
Circulating Fluidized Bed:
• Good Temperature Control
• Char removed by cyclones
• Can handle high volume of feedstock
• Particle size <6mm
• Complex hydrodynamics
September 2005 43 Red Lake Tribe Biomass Assessment
The predominant bio-oil reactor manufacturers are Dynamotive, Ensyn and Renewable Oil
International. Dynamotive’s fast pyrolysis technique is termed BioTherm and utilizes a bubbling
fluidized bed reactor. Ensyn’s process is Rapid Thermal Processing (RTP) and the reactor type is
a circulating fluidized bed. Ensyn has several reactors in commercial operation. Renewable Oil
International’s fast pyrolysis reactor is a linear system that does not require a gas stream to
fluidize an inert material; rather, the reactions occur in an indirectly heated auger.
There are several storage issues associated with bio-oil. Due to the acidic properties, all storage
materials must be made from stainless steel or another durable metal. Viscosity increases over
time due to the multitude of components that compose bio-oil. Aldehydes, alcohols and acids
react to form larger molecules. Adding a solvent such as ethanol or methanol alleviates these
issues and allows bio-oil storage up to six months.26
Limited tests on industrial size boilers in Finland found corrosion occurred at a quicker rate than
use of conventional heating oils. Current commercial boilers are likely able to operate on
pyrolysis oil, however, burners must be adjusted or replaced with anti-corrosive parts and further
testing is required to determine likely operation characteristics.
Bio-oil is a complex mixture of oxygenated hydrocarbons with high acidic and water content.
Due to its chemical and physical properties, bio-oil cannot be blended with petroleum products
without modification. In comparison with petroleum oils, bio-oil contains minimal or no sulfur
and more oxygen leading to increased combustion efficiencies reducing overall emissions in
heating or other energy uses. Viscosity increases overtime while volatility decreases. Phase
separation, char deposits and gumming may also be problematic during storage. Bio-oils can be
upgraded to reduce aforementioned risks. Techniques include filtrating out char particles,
emulsifying with hydrocarbons, applying solvent, reacting with ethanol or other alcohols, or
catalytic deoxygenation.
Most researchers consider bio-oil as a replacement for fuel oil #6 although the heating value is
less than half that of petroleum #6.27 Minnesota used 52.6 million gallons of residential fuel oils
#5 and #6 in 2002. Minnesota consumption of #2 fuel oil was 732.628 million gallons in 2002
and Dynamotive conversion processes produce a bio-oil similar to fuel oil #2 for use as a turbine
fuel .
Bio-oil costs 10-100% more than conventional fossil fuels.28 Limited testing restricts consumer
knowledge or likelihood of use. The issues associated with storing and utilizing bio-oil in
conventional boilers limit market interest.
There are two commercial biomass pyrolysis installations in the US. Both are located in
Wisconsin using Ensyn technology with a combined capacity of 90 dry tons per day. These
systems produce liquid smoke used in food flavoring products such as barbeque sauce.
Dynamotive announced on July 21, 2004 that construction is in the final phases for the West
Lorne Cogeneration plant located at Erie Flooring and Wood Products Corporation in Ontario.
This system will pyrolyze waste wood produced by the flooring company into electricity using a
26 Telephone interview with , Stefan Czernik, NREL, Biomass Pyrolysis Representative USA, September 2, 2004.
27 Ibid.
28 S. Czernik, “Review of Fast Pyrolysis of Biomass”, NREL, 2002.
September 2005 44 Red Lake Tribe Biomass Assessment
Dynamotive reactor and an Orenda gas turbine.29 The plant will use 100 tons of waste wood daily
to produce 70 tons of bio-oil, 20 tons of char and 10 tons of non-condensable gas. Electric
capacity will be 2.5 MW utilizing 50 tons of bio-oil daily to meet demand at the plant.
5.2 Wood-Plastic Composites
Wood plastic composites (WPC) are a new family of thermoplastics. Recycled plastics and wood
wastes are combined to provide durable and affordable products. These products are substitutes
for wood in applications such as siding, fencing, molding, pallets, etc.
The composites are formed by compounding wood flour or other natural fibers into a
thermoplastic resin with additives such as coupling agents, UV stabilizers, pigments, fire
retardants or other additives to increase performance. Compounded materials can be extruded
through a twin (most often used) or single-screw extruder into a final, usable form or processed
into pellets for future processing. Processing temperatures rarely exceed 302 °F allowing high
reaction rates without high energy consumption. Wood fiber present in composites ranges
between 30-65%. Injection molding requires wood fiber to be concentrated prior to injection.
A pelletized feedstock enables a manufacturer to produce several WPC products from the same
input. In addition to extrusion, pellets can be reformed in injection or compression molding to
produce complicated shapes. The extrusion process consists of heating and compressing
premixed raw ingredients. Shaping is accomplished by extrusion dies and cooling of the product
in addition to downstream cutting, embossing, sanding and other processes.
The University of Maine has developed Woodtruder, a counter-rotating twin-screw extruder that
optimizes WPC production by separating wood feeding and drying from polymer melting until a
further point in the process. Selection of WPC machinery is dependent on the nature of the wood
fibers, additives used and end-use of product.
Wood flour is the most common raw material in WPCs. It is finely ground wood cellulose from
sawdust, planar shavings, sanding dust and scraps. The wood flour is obtained by passing wood
wastes through mesh in a hammer mill. Wood flour has also been produced from pine needles,
maple, oak and bamboo. Thermoplastic resins used in WPC production must by processed at
temperatures below 3,632 °F. The most common feedstocks are PVC, polypropylene and
polyethylene (the least expensive option). Virgin or recycled thermoplastics can be utilized in the
production process cresting an excellent market for recycled.
Forestry slash and wood wastes have been used as a WPC feedstock in limited volumes at P&M
signs under the trade name AllTree. John Hunt of the USDA Forest Products National
Laboratory is analyzing forestry residues for use in solid wood and pressed-wood fiber
composites to develop fiberboard and I-beams. He also mentioned that the laboratory has also
developed a playground flooring material made of polymers and wood chips and expects to
comply with the Americans with Disabilities Act. Research is also being conducted on
converting residues into composites for use in the packaging and furniture industries.
Trex, a leading wood plastic composite manufacturer, experienced sales of over $200 million in
2003. 30 The company's primary customer is the construction industry, which uses the material
29 http://www.dynamotive.com/news/newsreleases/040721.html, last visited September 2, 2004
30 F. Maine, “Wood-Plastic Composites – Challenges and Opportunities”, PSA Composites, March 2004.
September 2005 45 Red Lake Tribe Biomass Assessment
for decking. Other key manufacturers include Crane’s TimberTech, US Plastic Lumber, AERT,
Louisiana-Pacific, Nexwood, CertainTeed and Correct Deck. Emerging markets for wood plastic
composites including railing, fencing, windows and doors. Although not yet commercial, wood
plastic composite prototypes for siding are being tested and the North American siding market is
estimated at $8 billion 4. Over the past 5 years, the wood plastic composite industry has
experienced growth of 100% per year 31. The market for North America and Europe is estimated
to reach $2 billion by 2007. 32
WPCs exhibit superior physical, chemical and mechanical properties when compared with
conventional wood construction materials. They are more weather resistant enabling their use in
a wider range of climates. There is low risk of thermal linear expansion and warping. The
increased resistance to moisture reduces decay, swelling and risk of fungal build-up.
Additional benefits of WPCs over traditional PVC-U are as follows:
• Dimensional stability
• Greater elasticity means there is no need for reinforcement
• High impact resistance
• Low flame spread
• Excellent screw and nail retention
• High slip resistance
• Recyclable
• Produced from waste wood and recycled plastics
• Broad range of finishes can be applied to tailor appearance
• Competitively priced
5.3 Pellets
Pellets are formed by drying, milling, extruding and applying pressure to densify biomass
material. Pelletizing machines extrude biomass fines through a die at high pressures to increase
density. The combination of high temperature and pressure breaks down the elasticity of the
biomass producing pellets with a greater density than the original feedstock. Pellets are passed
through a screen to ensure proper sizing.
Pelletizing machinery is based on animal feed pelletizers but require die modification. A
pelletizer typically consists of a circular die with holes for pellet forming. The inside of the die
contains compressions wheels that force the feedstock into the die holes. Pellet presses require
specific moisture content and particle size for optimal performance.
Pellets have low moisture content when compared with cord wood or chips leading to efficient
performance. The heating value is approximately 350,000 Btu per cubic foot of pellets whereas
31 “Wood Plastic Composites – a New Opportunity”, Tangram Technology, UK, March 29, 2004.
32 M. Babu, G. Srikanth, S. Biswas, “Thermoplastic Composites – Technology & Business Opportunities”, TIFAC,
June 2004.
September 2005 46 Red Lake Tribe Biomass Assessment
cord wood is between 70,000-90,000 Btu for the same increment. Particulate emissions are 1.2
grams per hour -- well bellow the EPA wood burning limit of 7.2 grams.
Standards for pellet manufacturing have been established by the Pellet Fuels Institute and are
displayed in Table 6-1. There are two pellet grades, premium and standard, determined by their
ash content. Premium pellets make up 95% of the market and contain less than 1% ash. This type
is manufactured from hardwoods or sawdust. Standard pellets may contain up to 3% ash and may
be made from bark or agricultural residues. This pellet type can only be utilized in industrial
equipment or stoves designed to handle higher ash content.
Table 6-1-Pellet Manufacturing Standards
Characteristic Standard
Chlorides minimum 40 lbs/ft3
Dimensions
maximum length 11/2"
diameter 1/4"-5 1/16"
Fines <.5% by weight through 1/8" screen
Chlorides <300 ppm
Source: Fuel Pellets Institute
There are 60 mills manufacturing pellets producing approximately 680,000 tons annually.33 The
Pellet Fuels Institute reports 2004 sales of 872,779 tons of pellets in the United States. North
American figures for 2004 are 956,000 tons representing a 6.4% increase over the previous
heating year. The central region, which includes Minnesota, had pellet sales of 67,175 tons in
2004. The central region saw a 55% increase in pellet sales between the 2002-2003 and 2003-
2004 heating seasons.
There are 23 manufacturers of pellet stoves and 67,000 units were sold in 2004. There are more
than 600,000 pellet-burning stoves and fireplaces in use in North America. A 40 lb pellet bag
provides 24 hours of continuous heat and a typical household will utilize 100-150 bags during
winter.
The Red Lake Tribe currently obtains pellets for a boiler at an excellent rate of $80/ton
delivered. If the competitive environment in Minnesota changes in the future, the Tribe may
want to conduct additional analysis to determine whether pellets represent a viable economic
undertaking. At the present time, it would be difficult to compete based on the low prices offered
by the existing companies.
33 Pellet Fuels Institute, Pellet Heat Facts Information Sheet, www.pelletheat.org
September 2005 47 Red Lake Tribe Biomass Assessment
6 BUISNESS PLAN ANALYSIS OF WOOD SHAVINGS FOR TURKEY BEDDING
McNeil Technologies assessed the potential for the Red Lake Tribe to manufacture and sell
wood shavings to be used as turkey bedding. We considered shavings for turkey bedding as a
possible product due to the fact that the tribe has forest resources on the reservation which could
easily be delivered to an on-site processing facility. In addition, Red Lake is located near several
large-scale turkey farmers who could be potential purchasers of the product. However, there are
several challenges which make this a challenging business prospect. For this reason, we did not
develop a formal business plan for this opportunity. All of the data presented in this chapter are
backed up by detailed Excel spreadsheet analyses.
6.1 Product Overview
Wood shavings are produced by passing logs lengthwise through a shaving mill, which cuts the
wood into thin shavings. Depending on the intended end-use, shavings may also be passed
through a drying operation to kill bacteria and prevent mildew. Shaving mills can process wood
that is 2-24 inches in diameter.
Wood shavings are useful as animal bedding for a variety of livestock, laboratory animals and
small pets. Shavings have excellent absorbent properties and are softer than other types of
bedding. Pine is currently the dominant tree species used for animal bedding, due to the fact that
it is the least expensive wood and is relatively clean. Cedar and aspen are other popular wood
types. Based on information from the biomass resource assessment (Chapter 2 of this report),
aspen is the most likely feedstock for a shavings operation.
Our analysis assumes that biomass materials from current harvests on the reservation are being
used in existing business operations (e.g. firewood). If we subtract out these materials, there
should be an adequate supply of wood for a shavings business assuming harvesting practices are
held constant or increased. Table 6-1 shows preliminary estimates of biomass availability based
on estimated annual allowable cut (AAC) levels less average annual harvest. The harvest levels
for the Diminished lands are the annual average for 1981 to 1992, while for Ceded and
Northwest Angle Lands the data were from 1974 to 1992.
Table 6-1. Estimated Annual Availability of Biomass for Major Species Groups
Resource Type Size/Quality Of Material
Biomass
Available
(Cords)
Aspen
Much in younger age classes - some
larger logs but access not easy 8,753
Swamp conifer
Consists of black spruce, tamarack,
balsam fir and white spruce primarily 7,843
Swamp hardwood Primarily black ash 4,596
Aspen from red pine conversion
Quality varies in residual stands - size
ranging from 2 to 8 inches dbh 2,394
Total 23,587
Note: Aspen, swamp conifer and hardwood estimates based on 2002 Red Lake Forest Inventory & AAC
calculations. Aspen from red pine conversion estimated based on volume of wood in trees less than 6
inches dbh from USFS Forest Inventory & Analysis.
September 2005 48 Red Lake Tribe Biomass Assessment
Due to Minnesota’s high volume of turkey farms (it is the largest producer in the US), this
analysis focuses on wood shavings produced for turkey bedding. Since shavings for turkey are
sold by the truckload, no packaging equipment or related labor is required. A wood shavings
operation can be relatively small, employing a laborer, a manager/laborer and a part-time driver.
6.2 Market Characterization
According to statistics from the US Department of Agriculture 250 turkey farmers raised 46.5
million birds in the state of Minnesota in 2004. Table 6-2 shows that 11,616,567 turkeys were
sold in the counties surrounding Red Lake. The numbers were actually greater than this, since
some counties within the 150-mile did not disclose statistics on turkeys: Red Lake, Wadena,
Kittson, Mahnomen, Marshall, Norman, Pennington, Hubbard, and Lake of Woods.
Table 6-2. Turkey Sales and Inventory Within 150 Miles of Red Lake
Approximate
Distance (miles)
County # Farms # Turkey # Farms # Turkey
Beltrami 5 32 10 36 30
Becker 18 1,064,605 21 307,722 100
Clay 6 371,034 8 80,038 150
Clearwater 4 4 14 71 42
Morrison 23 3,395,977 31 1,183,373 140
Ottertail 17 2,857,570 31 907,471 130
Polk 3 22 5 14 110
Roseau 12 872,000 9 271,502 100
Todd 17 3,055,249 24 804,625 150
Totals 105 11,616,493 153 3,554,852
sales inventory
An additional 23 million turkeys were sold in the largest producing counties located 150-250
miles away from Red Lake. Table 6-3 displays quantity and approximate distance data for
Minnesota’s largest turkey producing counties.
Table 6-3. Turkey sales and inventory more than 150 miles from Red Lake
Approximate
Distance (miles)
County # Farms # Turkey # Farms # Turkey
Kandiyohi 16 6,512,003 15 2,178,806 220
Meeker 13 2,960,158 17 1,115,898 233
Morrison 23 3,395,977 31 1,183,373 157
stearns 32 4,598,129 32 1,437,090 185
swift 7 4,438,688 9 1,574,289 215
Renville 3 1,562,400 7 630,436 250
Totals 94 23,467,355 111 8,119,892
sales inventory
Source: USDA NASS 2002, http://www.nass.usda.gov/census/census02/volume1/mn/st27_2_013.pdf
Wood shavings are a common and desired material for turkey bedding. According to the former
President of the Minnesota Turkey Growers Association, Greg Langmo, shavings are the most
September 2005 49 Red Lake Tribe Biomass Assessment
frequently used and best quality turkey bedding material in Minnesota.34 In a survey of
Minnesota Turkey Growers Association members (done for this study), 28 of 32 respondents
used wood shavings as their predominant source of bedding. Only three respondents used
primarily sunflower hulls, and only one respondent used hay. Eighteen of the respondents used
wood shavings as well as other types of bedding, such as sunflower hulls, saw dust and hay.
Farmers typically buy shavings in loads of 150 cubic yards. Shavings are also sold by the ton and
by varying truckload sizes, costing $8.55/yd3 on average. Based on these figures, each turkey
requires .0216 yds3 of bedding. Table 6-4 summarizes this data.
Table 6-4 Wood Shavings per Turkey
Farm Yd3/Bird Price/Yd3 Total Yd3/Year
Flann Turkeys .014 $9.13 3,000
Glen Klaphake
Turkeys
.06 $9.33 2,700
Gorton Turkeys .012 $8.67 6,000
Hill River Farms .0222 $7.56 2,002
Jennie O Food .0163 $8.64 2,850
Kersting Poultry
Farms, LLC
.0198 $8.54 2,770
Olson Farms .0133 $5.90 667
P&J Turkeys N/A $8.99 2,937
Swan River Farm
and M&N Turkeys
N/A $9.02 2,549
T& J Turkeys .015 $9.67 6,000
Averages .0216 $8.55 3,148
It seems unlikely that consumption habits will change. According to the survey conducted for
this report, wood shavings were chosen because they were considered to be the most effective
bedding material. Absorbency was the most important qualitative factor for many respondents.
Farmers also liked the fact that wood shavings pack down less than other bedding. A study of
bedding derived from wood, particularly aspen, yielded limited bacterial growth when compared
with straw and sunflower hull bedding. Bacterial growth is impacted by particle size, with larger
shavings exhibiting fewer bacterial colonies.35
34 Greg Langmo, turkey farm owner, former president of Minnesota Turkey Growers Association (320) 693-0226
35 R. Bey, J. Reneau, R. Famsworth, “The Role of Bedding Management in Udder Health”, University of Minnesota,
St. Paul.
September 2005 50 Red Lake Tribe Biomass Assessment
Wood preference was not a critical factor. Twenty one respondents listed pine as their top
choice, and 11 said that the tree type does not matter. Six respondents also listed cedar as an
option they would consider and four respondents listed aspen as a preference. It is possible that
answers were influenced by prices for the different types of wood. Cost was listed as a key
consideration for about a third of the respondents.
When asked whether they would be interested in using wood chips as opposed to wood shavings,
20 respondents said definitely not, and 11 said they would consider chips if they were dry
enough and not too coarse, and only one respondent would be interested in using them.
Substitutes do not seem to be a threat, despite their lower costs. Sunflower hulls can be
purchased for $20-30/ton, however, few farmers are using them. In some cases, the hulls were
received free of charge. Sunflower, wild rice and corn hulls are not as absorbent and result in
more time and expense in barn cleaning.
6.3 Financial Assumptions
The start-up costs of a wood shavings operation are significant. Figure 6-1 shows the breakdown
of fixed and variable costs. A shaving mill and dryer are required to make shavings that are
suitable for poultry bedding. The wood must be dried so that it has a moisture content of less
than 12% for poultry. The installed cost of this equipment is estimated at $289,000. A front end
loader is needed to move the chips into a trailer and unload them at the client site. This adds
approximately $100,000 to the cost. A used truck and trailer for making deliveries can be
purchased for roughly $90,000. We have assumed no building will be purchased to house the
equipment or that the old sawmill building could be made available for the business. Shavings
could be made as orders are placed and stored in the trailer.
Cost Breakdown
Other
Fixed
Costs
18%
Shaving
Mill and
Dryer
45%
Truck &
Trailer
11%
Variable
Costs
(Wood)
24%
Figure 6-1. Fixed and Variable Costs for Plant
September 2005 51 Red Lake Tribe Biomass Assessment
Variable costs are dominated almost entirely by wood inputs. In order to produce 60,000 cubic
yards of product, the shavings mill would need to purchase 3,600 cords of wood at an assumed
cost of $201,560 (approximately $56/cord delivered). This production target is based on
capturing 20% of the local market (i.e. within 150 miles). This calculation is based on turkey
sales as well as inventories (15 million turkeys in the area), since the total number represents the
bedding required for a year. Note that this is an ambitious sales target, since it involves taking
market share from established shavings suppliers.
In order to obtain market share, Red Lake will need to offer its customers a price break (since
there is no practical way to differentiate the product on the basis of quality). The tribe may be
able to encourage customers to switch shavings suppliers by offering the product at a price of
$6.22 (10% below the going market rate before shipping is included), plus shipping at
$1.75/mile. The resulting delivered price would be $7.93/cubic yard.
In order to break into the market, Red Lake would need to make personal introductions through
phone calls, farm visits and/or introductions facilitated by the local farm bureaus. It is unlikely
that the Tribe could succeed in markets beyond a 150-mile radius, due to the fact that the
increased travel distance would raise costs for consumers – making the product less competitive.
Despite this challenge, the Tribe could query potential customers at more remote locations; it is
possible that some farmers are paying too much and Red Lake could make a better offer – even
when factoring in the added distance.
Under the business analysis, revenues from shavings sales would be $335,700 per year, assuming
sales of 60,000 cubic yards. Some revenues could also be realized through profits on
transportation: approximately $110,000 after the cost of gasoline is taken into account. However,
these revenues are insufficient to offset the cost of production with wood at $56/cord.
Due to the limited size of the local market and the fact that pricing must be competitive, the
business is not financially viable. However, if prices for some of the inputs changed, the Tribe
might be able to realize a profit. The price of wood is $56/cord, delivered to the shaving site
(based on data from the Tribe’s harvesting operations). At $56/cord, the NPV of the project is
negative: -$326,595. However, if the Tribe could obtain wood for $35/cord, the NPV would be
positive: $277,228. This is an unlikely scenario since current prices range from $50-$75/cord.
6.4 Next Steps
Producing shavings exclusively for turkey farms is not a viable business. However, the per unit
price of small pet bedding and laboratory animal bedding is much higher. It is possible that these
higher selling prices could make up for long distance transportation costs and packaging costs
associated with packaging the product for different end users. The Tribe could also capitalize on
the fact that it has a high volume of aspen trees, which are the preferred type of bedding for
smaller animals. The tribe should maximize the value of its resources by obtaining the highest
possible value for each species of tree. The wood shavings market for turkey does not
differentiate between pine and aspen in a meaningful way.
In addition to turkey bedding, there are many other end use markets for wood shavings. The most
promising markets appear to be for small pets and laboratory animals. An overview of these
markets is provided, although more research would be needed to investigate the costs and
possible revenues from these market segments.
Small Pet Market
September 2005 52 Red Lake Tribe Biomass Assessment
The market for pet products is large, and it is growing. The American Pet Products
Manufacturers Association (APPMA) 2003/2004 National Pet Owner Survey found that
Americans own 16.8 million small animal pets, 17.3 million birds and 9 million reptiles. Total
spending for pets was estimated at $34.3 billion with supplies and medical expenditures of $7.9
billion (this figure includes expenses for bedding).
An APPMA survey found that 86% of small pet owners purchased litter and bedding products in
1996. Small pet bedding products are most often purchased at discount stores followed by
hardware/garden stores, pet stores and grocery stores. Cedar bedding is the most readily
available product, with a price range between $2.50-3.50 for 1,500 cubic inches. Kiln dried pine
bedding was available at discount stores for $5.00-6.00.
Aspen is considered the best bedding for small animals, although pine and cedar dominate the
market for pet products.36 There may also be the potential for cottonwood and less aromatic
softwoods (spruce and fir) to penetrate the market.37
There are three aspen bedding companies supplying large retailers (including Wal-Mart and
Petsmart). Green Pet of Conrad, Iowa produces Aspen Supreme Pellets retailing for $6.99 per ten
pound bag. Kaytree of Chilton, Wisconsin sells aspen bedding for $7.69 per 3,200 cubic inch
bag. Sunseed of Bowling Green, Ohio provides shredded aspen bedding retailing for $6.09 for
3000 presspak.
Small animal bedding would require bagging machinery since it is not sold in bulk as is the case
for livestock bedding. However, as a higher quality product sold at a higher price, bagged
shavings can be sold to a wider market. SBS Shavings ships its bagged shavings products up to
500 miles. SBS Shavings also noted that the company was not able to keep up with market
demand.38
Laboratory Animals
Aspen is the most common wood used for laboratory animal bedding. An important distinction
is that neither cedar nor pine are used for research animals since these woods emit aromatic
hydrocarbons that can contribute to respiratory diseases.39 The University of Minnesota
purchases aspen shavings from five providers. The primary supplier is Harlan Teklad from
Madison, Wisconsin. Harlan Teklad is the largest laboratory research animal diet and bedding
provider. The primary campus and largest laboratories are located in Minneapolis, approximately
five hours away from Red Lake. Bemidji State University is located near Red Lake and also has
some laboratory facilities. However, Bemidji State's needs for animal bedding are minimal.
Hardwood trees other than aspen can be used if they are debarked; particles must be dried at a
high temperature to remove moisture and kill bacteria. Reclaimed virgin wood pulp can be used,
since it does not contain news print or similar waste materials. Corncobs can also be used to
make laboratory animal bedding. The woody-ring portion is used to make 1/4" and 1/8"
36 Ibid. p. 6.
37 Mackes p. 13.
38 Interviewed with Glen Barrow on October 14, 2004.
39 Kurt Mackes and Dennis Lynch, “The Use of Wood Shavings and Sawdust as Bedding and Litter for Small Pet
Mammals in Colorado,” Department of Forest Sciences, Colorado State University, September 28, 1999, p. 4.
September 2005 53 Red Lake Tribe Biomass Assessment
products, and the pith and chaff are made into a pelleted product. Cotton fiber is used in cage
liners.
Similar to the small pet bedding market, aspen bedding for laboratory animals sells at an average
price $7.00-9.00 per bag.40 Given the limited number of laboratories and lack of sales
opportunities in the area, Red Lake would need to develop a sales network on a national scale or
work with a distributor to find customers in this somewhat limited market segment. It is likely
that Red Lake would need to identify additional target markets for shavings (such as the small
pet market) rather than replying solely on sales to laboratories.
Livestock
The US Department of Agriculture statistics for 2002 count 28,448 dairy cattle on 354 farms in
Minnesota (in 12 surrounding counties). Typical wood shaving or chip bedding requirements for
livestock are 12.5 lbs/1000 lbs live animal weight changed once a week.41 There were also 8,917
horses on 1,428 farms in the 12 surrounding counties.
However, shavings are rarely used for beef cattle. Straw, newspaper and sawdust are more
common, according to Howard Person of the University of Minnesota Extension Service.
Bedding for livestock is sold in bulk amounts and generally receives lower prices when
compared with laboratory or small animal bedding.
40 K. Mackes, D. Lynch, “The Use of Wood Shavings and Sawdust as Bedding and Litter for Small Pet Mammals in
Colorado”, CSU Department of Forest Sciences, September 28, 1999.
41 Beef Cattle Housing and Feedlot Facilities, Saskatchewan Agriculture, Food and Rural Revitalization, March
2004.
September 2005 54 Red Lake Tribe Biomass Assessment
7 CONCLUSIONS AND RECOMMENDATIONS
This section summarizes conclusions and recommendations drawn from the results of the
resource, technology, and economic analysis.
7.1 Conclusions
This section summarizes conclusions and recommendations drawn from the results of the
resource, technology, and economic analysis.
7.1.1 Biomass Resources / Costs
Total biomass availability for energy use is estimated to be 118,642 GT per year from tribal,
federal, state, county/local government and tribal land (Table 7-1).
Table 7-1. Total Harvest Volume, Biomass Generation and Availability
Biomass By Landowner Harvest Volume
(Thousand Cubic
Feet)
Biomass
Generation
(GT/Year)
Biomass
Available
(GT/Year)
Percent
(%) of
Total
Tribal
Timber Harvesting 10,298 76,582 38,291 32%
Red Pine Restoration NA 4,788 2,394 2%
Subtotal - Tribal 10,298 81,371 40,685 34%
State NA 32,366 16,183 14%
Federal 4,452 6,094 3,047 3%
County & Local 8,393 43,669 21,834 18%
Private Land 18,438 73,785 36,893 31%
Total 41,581 237,284 118,642 100%
Estimated biomass availability from tribal land assumes that the harvest levels are at the annual
allowable cut (AAC) level of 80,452 cords specified in the 2002 Red Lake Forest Inventory
Analysis. A reduction in the AAC would reduce the amount of biomass available from tribal
lands. Also, if as in the past, past harvest levels are well below the AAC level, biomass
availability will be lower. Based on harvest levels from 1995 to 2001, availability would range
from 21,000 to 32,200 GT per year instead of 40,685 GT. Total availability would range from
99,000 to 110,000 GT.
However, the values in Table 7-1 and estimates based on past harvest levels are conservative
estimates of biomass availability because of the assumption of 50% biomass availability from
forest management. This provides a substantial buffer for technical limitations, shifts in
allowable cut volumes and annual variability in harvest volumes.
Estimated delivered biomass costs, including collection, forwarding, chipping and transport
depended on the forest management prescription. For clearcuts, average delivered costs ranged
from $23 to 27 per GT depending on the hauling distance. Average costs for biomass from
uneven-aged management ranged from $35 to $39 per GT. Costs for biomass generated as a
byproduct of other harvesting activities include chipping and hauling costs, and range from $10
to $20 per GT.
In addition to overall biomass availability for energy, we investigated the potential to harvest and
utilize aspen and underutilized species such as swamp conifer swamp hardwoods for the
September 2005 55 Red Lake Tribe Biomass Assessment
production of shavings for animal bedding. We estimated that 23,587 cords of material could be
produced each year for a potential shavings operation. The cost to a potential tribal shavings
operation would be $56 per cord based on tribal harvest operations, but regionally costs vary
from $50 to as much as $75 per cord.
7.1.2 Electricity and Power markets
o Red Lake is served by Beltrami Electric Cooperative which is a member of
Minnkota Power Cooperative. The Red Lake Reservation falls within the
jurisdiction of the Mid-Continent Area Power Pool (MAPP).
o Electricity demand continues to grow within the MAPP region. Reserve margins
are falling indicating a need for additional power plants.
o Integrated Resource Plans (IRP’s) prepared for Minnkota and other regional
electricity suppliers include significant additions to power supplies over the next
decade but only limited inclusion of renewables. Renewable energy purchases
identified in the IRP’s are focused predominantly on wind power, biopower is not
selected as a preferred resource.
o The regional purchase price for electricity from Qualified Facilities is
approximately $0.02/kWh, a very low price that precludes many self-generation
projects.
o The Red Lake Reservation composite residential rate for electricity is
$0.062/kWh or approximately 5% lower than regional competitors and 26% lower
than the national average.
o The composite peak demand for the Red Lake Reservation is approximately
5MW which is also the available capacity at the Redby substation owned and
operated by Beltrami.
o A 5MW biopower facility, located at the site of the old sawmill and fueled with
wood from the reservation has unfavorable economic projections. The calculated
levelized cost of producing electricity is $0.07/kWh. Given a selling price of
$0.02/kWh, the plant would never make money.
o Sensitivity analyses on the assumptions for the 5MW plant indicate that there
would need to be implausible changes in underlying inputs to achieve economic
viability.
7.1.3 Biomass Heating
o Biomass chips are the least cost fuel on the Red Lake Reservation.
o There has been a mixed history of biomass space heating performance on large
facilities at Red Lake. The High School heating system performed poorly and was
removed. The Humanities Center and the Forestry greenhouse have been
successfully and economically heated with wood pellets and chunk wood,
respectively, for many years.
September 2005 56 Red Lake Tribe Biomass Assessment
o The majority of the larger facilities at Red Lake use either propane or fuel oil as
their heating energy. In general, many of the facilities are new and in good
operating condition.
o The newly proposed High School / Middle School complex is an ideal candidate
for a biomass heating system due to the large annual load and the consideration
that the building has not been built or even specified. A new building offers the
opportunity to plan for the biomass system at the outset.
o Heating bills at the various schools do not appear to be a concern to the Tribe
because the state of Minnesota pays a substantial fraction of the operating cost for
the facility. Thus the motivation to utilize the least-cost technology does not
reside at the Tribe.
o A new greenhouse to grow tree seedlings for reforestation efforts is a prime
candidate for a biomass heating system.
7.1.4 Alternative Fuels
o Bio-oil produced from woody biomass via a pyrolysis process has growing
significance on a national basis and Red Lake may be able to capture some of the
promise. The attractive proposition is the combination of major heating loads
(primarily the hospital) coupled with the resource base and the emerging
technology.
o The production of wood pellets is possible but not a viable outlet for Red Lake
because there are many pellet producers in the general region and their existing
capacity exceeds demand. Red Lake does not have a compelling advantage that
would foster market entry into wood pellet production.
7.1.5 Wood Shavings/Animal Bedding
o Based on the resource assessment, wood is available for use in additional tribal
business enterprises. Pieces and logs that are 2-24 inches in diameter can be made
into wood shavings and passed through a dryer to produce a final product. Due to
Red Lake’s remote location and the proximity of several turkey farms, we
evaluated the potential to produce wood shavings to supply turkey bedding within
a 150-mile radius of the reservation.
o A financial model was developed to determine whether the costs of selling to 20%
of the local market would be sufficiently profitably to justify investing in the new
business venture. It was learned that even selling to 20% of the market -- which
would be a significant challenge in an environment with long-established buyerseller
relationships – the tribe would not be able to earn a reasonable return on its
investment.
September 2005 57 Red Lake Tribe Biomass Assessment
7.2 Recommendations
Two clear choices for additional biomass development emerged from this study. First, biomass
heating has considerable merit for several buildings. It is recommended that the Tribe perform
detailed feasibility analyses of heating the High School / Middle School campus. This facility
could be a showcase opportunity for Red Lake. The Tribe could provide 100% of renewable fuel
for the facility for the duration of the building life as well as provide jobs and income for Tribal
members.
A similar recommendation is made for heating the proposed tree seedling greenhouse. While the
greenhouse would not have the scale as the High School / Middle School complex, the DNR can
promote the integrated nature of resource management by treating acres on the Reservation and
utilizing the by-product of the treatment process. Because wood chips are the least expensive
heating option on the Reservation, the DNR will save operating funds relative other heating
sources. Funds have been made available to Red Lake Tribe from the Bureau of Indian Affairs
for the detailed analysis of peak and annual heating loads at the proposed greenhouse.
The final recommendation is to continue to explore the feasibility of utilization of bio-oils for
thermal applications. As heating oil prices continue to increase, Red Lake may be wellpositioned
to capitalize on provision of renewable energy to Tribal as well as federal facilities.
Because federal facilities are required to secure an increasing portion of their energy from
renewable sources, the Tribe may benefit from both its resource base as well as its proximity to a
number of large federal installations. Funds have been made available to Red Lake Tribe from
the Bureau of Indian Affairs for the detailed analysis of bio-oil opportunities.
Wood Shavings
It appears that manufacturing wholesale shavings for the livestock bedding market is not a good
opportunity. The Tribe may wish to consider developing a high quality animal bedding product
which would be sold to different market segments. Buyers of small pet bedding and laboratory
animal bedding are willing to pay a premium for aspen – unlike turkey farmers, who need to
keep costs low. It is likely that the higher selling price obtainable on these markets would
compensate for any additional costs associated with packaging, transportation and commissions
paid to wholesalers. The shavings analysis conducted under this study could be expanded to
include an assessment of the bagged shaving wholesale and retail markets.
September 2005 A-1 Red Lake Tribe Biomass Assessment
Appendix A. Comparative Minnesota Residential Electricity Rates42
42 Rates were calculated on a hypothetical 1,000kWh/month load for the “basic” residential service absent taxes,
surcharges, monthly fees and incentive plans.
September 2005 A-2 Red Lake Tribe Biomass Assessment
# Utility Residential
Rate Ownership
1 Ada Public Utilities $ 0.047 Municipal
2 Agralite Electric Cooperative
3 Alexandria Light and Power $ 0.061 Municipal
4 Allete (MN Power) $ 0.044 IOU
5 Alliant Energy (Interstate Power and Light) $ 0.087 IOU
6 Arrowhead Electric Cooperative
7 Austin Utilities
8 Barnesville $ 0.063 Municipal
9 Beltrami Electric $ 0.062 Cooperative
10 Brainerd $ 0.059 Municipal
11 Connexus $ 0.070 Cooperative
12 Cooperative Alliance Partners Cooperative
13 Cooperative Light and Power Cooperative
14 Crow Wing Power Cooperative
15 Dakota Electric $ 0.076 Cooperative
16 Detroit Lakes $ 0.055 Municipal
17 East Central Energy $ 0.075 Cooperative
18 East Grand Forks $ 0.069 Municipal
19 Fairmont Public Utilities $ 0.080 Municipal
20 Fosston Public Utilities $ 0.059 Municipal
21 Hibbing Public Utilities
22 Hutchinson Utilities Commission
23 Lake Country Power $ 0.074 Cooperative
24 Moorhead Public Service $ 0.050 Municipal
25 Mountain Iron $ 0.063 Municipal
26 New Ulm $ 0.073 Municipal
27 Otter Tail Power $ 0.067 IOU
28 Rochester Public Utilities $ 0.075 Municipal
29 Xcel Energy $ 0.069 IOU
Average $ 0.065
September 2005 B-1 Red Lake Tribe Biomass Assessment
Appendix B. Biomass Power Technologies
September 2005 B-2 Red Lake Tribe Biomass Assessment
TECHNOLOGY OVERVIEW
Direct combustion systems are by far the most common biomass fired technologies employed
today. The major types are the circulating fluidized bed (CFB) units, bubbling fluidized bed
(BFB) units, inclined fluidized bed (IFB) units and stoker fired units.
Gasification units are widely believed to hold great promise for future development and several
firms are presently deploying small units. In general, gasification technology allows for fuel
flexibility and increased efficiency gains. However at the present time there are a limited number
of installed gasifiers and thus the technology cannot be considered commercial.
Combustion Technologies
Spreader-Stoker Fired Boilers
Stokers currently used today in wood fired applications fall into two major categories, the aircooled
traveling grate and water-cooled stationary grate. With both of these types of stokers, the
wood fuel is distributed across the width of the grate with metering bins on the front wall of the
boiler. The fuel is then uniformly distributed over the depth of the grate by air swept spouts. Saw
dust and other fines in the fuel are burned in suspension, while larger particles drop to the grate
and are dried and burned directly on the grate surface. Heated low-pressure combustion air is
evenly distributed through the grate surface to promote fuel drying and provide the primary
source of combustion air. To further aid the combustion process, high-pressure over fire air ports
are used above the grate to provide turbulence and thorough mixing of the unburned combustion
gases with air.
With the traveling stoker, the grate travels from the rear of the boiler to the front with fuel being
fed across the depth of the furnace to the rear wall. Ash travels to the front edge of the grate and
falls into a pit. This design requires additional maintenance due to the high temperatures that the
grate bars are exposed to and the abrasive nature of the wood ash due to the high silica content.
The stationary water-cooled grate is typified by the Detroit Hydro-Grate stoker. With this design,
the grate bars are attached to a water-cooled tubular grid and the grate is sloped at a slight angle
(approx. 6-8 degrees) and is periodically vibrated to assist the movement of the burning fuel and
ash down the grate towards the ash pit. The advantage of a water-cooled grate is the reduced
maintenance from the minimum of moving parts. Care must be taken in operation not to permit
an ash pit fire. This will result in overheating and failure of the water supply tubes feeding the
grate’s support grid.
Both of these two types of stokers are commercially proven technologies that are highly flexible
in the choices of fuels that can be burned, alone or in combination. Turndown and response to
rapid load swings with little or no change in steam temperature or pressure are also very good.
Steaming capacities of these units range in size from a steam flow of 40,000 to 700,000 lbs/hr.
Circulating Fluidized Bed Boilers (CFB)
The application of wood fired CFB units has generally been limited to waste wood products that
are significantly drier than biomass from the forest. Typically CFBs use fuels such as demolition
wood waste and mill residues but they can be easily designed to fire higher moisture wood fuels,
September 2005 B-3 Red Lake Tribe Biomass Assessment
alone or in combination with solid fuels.
In a CFB unit, fuel is fed into the lower part of the furnace where the fuel mixes with the
fluidized bed where the solids are maintained at 1,500 to 1,600 degrees Fahrenheit (F). The fuel
introduced to the bed is quickly heated until it reaches ignition temperature. As the fuel burns,
the size is reduced to a point where the particles are entrained by the upward flow of combustion
gases. Larger particles are removed from the gas stream before it reaches the convection surfaces
of the unit by use of a cyclone or particle collector beams and they are returned to the bed for
further burnout and size reduction.
The advantages of a CFB unit are the ability to burn lower grade fuels at reduced temperatures
and excess air without loss of combustion efficiency. In addition to the reduced NOx and SOx
emissions that are inherent with a CFB, these units can burn high fouling fuels without the
normally associated operating problems due to the reduced combustion temperatures. CFB units
will suffer from bed sintering from firing fuels that have high alkali metal content.43 This will
result in higher fouling of the bed tube surfaces and excessive above bed burning that will
increase furnace exit gas temperatures and superheater fouling. Units equipped with refractory
lined cyclones will also have high refractory maintenance requirements due to the abrasive
nature of the ash.
Bubbling Fluidized Bed Boilers (BFB)
The application of wood fired BFB units is much more wide spread than the CFB units. Due to
their ability to burn high moisture, low Btu fuels they have been uniquely suited to the needs of
the pulp and paper industry to burn biomass, wood waste and bark commonly produced in large
quantities at a pulp mill. These units have been used fairly extensively in this application with
capacities ranging from a steam flow of 25,000 lbs/hr up to 600,000 lbs/hr.
The fuel feeding and combustion process for a BFB unit is very similar to that of a CFB except
that the bed is only partially fluidized and the burning fuel is not entrained in the combustion gas
flow and it remains in the bed.
The advantage of a BFB unit is its ability to burn difficult low grade wet fuels. The thermal
inertia of the bed and the mechanical action of the sand and ash to break down the fuel particles
make a BFB unit insensitive to fuel variations. Unlike a CFB unit, a BFB unit utilizes a noncirculating
bed in the furnace bottom that is made up of sand. The wood ash and a small amount
of sand are removed through a drain opening in the floor of the furnace to control the bed level.
The sand acts as a thermal reservoir and it mechanically breaks down the size of the fuel to
facilitate combustion. BFB units do suffer from the same bed sintering problems as the CFB, but
due to the partially fluidized bed the sintering problems can be much worse and can result in
high sand consumption rates due to the high bed drain rates.
Inclined Fluidized Bed Boilers (IFB)
The Inclined Fluidized Bed (IFB) technology combines aspects of the inclined grate and
fluidized bed technologies. Unlike most other technologies that mechanically agitate the fuel
43 Bed sintering is caused from chemicals or minerals in the fuel that reduce the ash softening temperature and cause
large conglomerations of bed material that restrict the bed drains or closes them off completely requiring the unit to
be shut down and the bed material manually removed from the unit. In addition, sintering causes loss of bed
fluidization and reduces combustion efficiency.
September 2005 B-4 Red Lake Tribe Biomass Assessment
during combustion, the IFB uses an entirely different concept for performing this function. With
the IFB technology, the fuel is fed onto an inclined grate assembly via a feed ram where
controlled combustion takes place. Combustion air is provided to each portion of the grate from a
combustion air fan through slots in the grate assembly.
The IFB grate utilizes hollow tubes to form the steps on the grate. Each of the tubes is equipped
with a number of small nozzles that provide a passage from the tubes to the fuel bed on the grate.
The tubes are connected to a common fan that recycles a portion of the exhaust gas. This gas is
introduced into the fuel bed as short pressure pulses, controlled by valves on an intermittent
basis, providing a burst of energy into the fuel bed. These pulses result in highly efficient
agitation of the fuel. The fuel is pneumatically mixed in lieu of a mechanical means, thereby
providing efficient oxidation of the fuel.
This technology uses fewer moving parts, which reduces both the equipment capital costs and
the maintenance costs. IFB grates are new and have not as yet been utilized in an industrial wood
fired application although pilot scale testing has been very successful.
Gasification
Biomass can be converted to synthesis gas, which consists primarily of carbon monoxide (CO),
carbon dioxide (CO2), and hydrogen (H2), via the gasification process. Gasification technology
has been under intensive development for the last two decades. Large-scale demonstration
facilities have been tested and commercial units are in operation worldwide. Producer gas has
been used in reciprocating engine-generator sets to generate electricity. Gas impurities have
prevented the use of producer gas from gasification systems in gas turbines. Gasification coupled
with the production of a higher value liquid fuel is another ongoing area of research, with several
pre-commercial technologies that are capable of producing ethanol or other alcohol fuels and
bio-crude, a fuel that could be used as heating oil or in low-speed diesel engines. Bio-crude can
not be used in transportation applications without further refining into a biodiesel product.
Biomass gasification systems offer several advantages over direct combustion systems.
Gasification reduces corrosion compared to direct combustion because of the lower temperatures
in the gases. Gasifiers can convert the energy content of a feedstock to hot combustible gases at
85 to 90% thermal efficiency. Also, the fuel throughput/unit area is greater for gasification than
combustion, which means that smaller gasification units can process the same amount of fuel as
larger combustion units. In addition, approximately 80% of the usable energy is in the form of
chemical energy in the gas. A final advantage is that, if desired, the materials that cause slagging
can be removed at relatively high temperatures through a gas clean-up process. These last two
statements imply that the gas can be cleaned-up and used at higher temperatures without
significant loss of sensible heat, although the costs to do so can be considerable. 44,45
Gasification can occur in one of two ways. The first method simply adds the fuel to a fixed bed,
a process used in both updraft and downdraft gasification. The second gasification method
44 R.D. Rutherford, Calvin B. Parnell and Wayne A. Lepori, Cyclone Design for Fluidized Bed Biomass Gasifiers.
ASAE Paper no. 84-3598, 1984.
45 C.B. Parnell, W.A. LePori, and S.C. Capareda, “Converting Cotton Gin Trash into Usable Energy,” Proceedings
of the 1991 Beltwide Cotton Conference, 1991, 969-972.
September 2005 B-5 Red Lake Tribe Biomass Assessment
utilizes the fluidized bed approach. Both systems require the feedstock to be relatively dry prior
to gasification. Table B-2 lists some of the characteristics of gasification systems.
Table B-2. Gasification system characteristics
Combustion
process Capital costs Operating
costs
Combustion
temperature
(degrees F)
Fuel MC (%) Comments
Fixed Bed
Updraft
Low -
Medium
(Not
Available) 1,950 - 2,650 < 40 A,D,F
Downdraft
Medium -
High
Medium -
High Not Available < 30 A,B,C,D,F
Fluidized Bed
Medium -
High
Medium -
High <1,400 < 50 A,B,E
A = Multiple fuels can be used, B = Clean gas product, C = Feedstock in pellet form, D = Particle size
limitations, E = High fuel throughput, F = Alkalis in fuel material must be considered
Feedstock requirements and power output
Feedstock requirements for a biomass power facility are dependent upon the capacity of the
facility and, to a lesser extent, the efficiency of a specific technology. Dramatic reductions in
demand, on a normalized basis, are achievable with increased size of the facility. A small direct
combustion (stoker) power plant, on the order of five MW, has a much higher heat rate than a
larger facility. Indeed the larger plant may be approximately 50% more efficient than the smaller
installation. The major reason for the higher efficiencies at larger sizes is the increased
temperature and pressure that can be economically accommodated in the big facilities to supply
larger turbines.
It is interesting to note the difference between a calculated heat rate (shown in Figure ) and
reported heat rates from operating facilities (see Figure ). In practice heat rates appear to be
better than what one would calculate from a heat/mass balance perspective. However the actual
results mask differing combustion technologies, varying fuels, plant age, and potential
differences in operator practices including data reporting.
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0
5,000
10,000
15,000
20,000
25,000
30,000
0 10 20 30 40 50 60
Capacity (MW)
Heat Rate (Btu/kWh)
Figure B-1 Representative efficiencies, biomass power direct combustion
0
5,000
10,000
15,000
20,000
25,000
0 20 40 60 80 100
Capacity
Heat Rate (Btu/kWh)
Figure B-2 Reported heat rate for 20 operating biomass plants46
Plant efficiency, fuel characteristics, and operating schedules dictate fuel consumption. As
illustrated in both Figure and Figure , fuel consumption is approximately 15 GT/hour for a small
facility and roughly 90 GT/hour for a 50MW facility.
46 George Wiltsee, Lessons Learned from Existing Biomass Power Plants, Golden, Colorado: NREL/SR-570-26946,
December 2000.
September 2005 B-7 Red Lake Tribe Biomass Assessment
0
10
20
30
40
50
60
70
80
90
100
0 10 20 30 40 50 60
Capacity (MW)
Fuel Input wet tons/hour)
Figure B-3 Calculated biomass fuel consumption as a function of capacity and heat rate,
direct combustion
0
20
40
60
80
100
120
140
160
0 20 40 60 80 100
Capacity (MW)
Fuel Input wet tons/hour)
Figure B-4 Biomass fuel consumption based on 20 operating facilities47
Fuel characteristics greatly affect the combustion process and therefore the decision process for
choosing combustion technologies. The most common problems associated with the direct
combustion of wood are boiler slagging and fouling, erosion and corrosion, combustion
instability, and particulate carryover. Fuel characteristics that should be analyzed include heating
value, MC, ash content, sodium and potassium quantities, particle size distribution, ash fusion
temperature and sulfur content.
47 George Wiltsee.
September 2005 B-8 Red Lake Tribe Biomass Assessment
Physical fuel characteristics, such as density and particle size, affect combustion as well as
material handling considerations. Changes in fuel density could cause combustion to occur in the
wrong place in the boiler, upsetting the heat transfer scheme and therefore the boiler efficiency.
September 2005 C-1 Red Lake Tribe Biomass Assessment
Appendix C. Biomass Heating System Components
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Biomass System Components
This appendix provides information on various biomass heating system components that may be
applicable for Red Lake applications. Even though we do not recommend current retrofit of any
particular building on the reservation to a biomass system, it is important to have appropriate
information on technologies and costs associated with the various system elements.
Three separate vendors of biomass combustion systems were contacted and asked to provide
information on their systems and estimates of system price including installation and
commissioning. Vendors A and B have many years of experience with the design, fabrication,
and installation of conventional wood-chip combustion systems and Vendor C designs and
installs wood pellet combustion systems. Here, a description of the main components and how
they function is presented. Figure C-1 shows a representative diagram of the overall wood
handling and combustion system.
The main system components are comprised of the following:
• fuel storage,
• fuel feed,
• burner-fuel combustion,
• boiler,
• fans,
• stack cyclone,
• water feed and return subsystem – pumps, tanks, supply line, fittings inside building,
• electronic controls, and
• supply piping (ditch plus pipe)
Figure C-1 Representative process flow diagram
wood chip fuel
and storage
combustion and
boiler
auger system
stack,
cyclone, and
induced
draft fan
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Figure C-2 shows a possible layout of a biomass plant building and gives the reader an overall
idea of how the component equipment is configured.
Figure C-2. Representative traveling auger building configurations
STORAGE VOLUME REQUIREMENTS
At the institutional or commercial level of heating activity, adequate storage is critical. If storage
is too small, truck deliveries are too frequent, resulting in undesirable traffic and increased
hauling costs. Furthermore, increased monitoring subtracts from the automatic and self sufficient
aspects when compared with other heating systems, such as propane, fuel oil, or natural gas. If
the storage is too large, it reflects in greater under-roof facility and equipment costs. A rule of
thumb is to allow 3-5 days under-roof storage of biomass fuel for maximum use, peak loading
conditions. Typically this means taking the peak firing fuel consumption and calculating the
storage at that rate over 3-5 days. This ensures that during the coldest heating season the system
can run full fire over a long holiday weekend or over an entire work week. The following
formula was used to determine storage volume.
Vol = qpeak / H / Ds / eta x 27 x 24 x nday
where qpeak = 1M Btu/hr, the peak design heat load
Conveyor belt
Fuel Storage Area Traveling auger Burner Boiler
Stack cyclone
Fuel
delivery hot
water
outflow
and
return
September 2005 C-4 Red Lake Tribe Biomass Assessment
H = 5,000 Btu/lbm, average wood heating value
Ds = 480 lbm/yd3, typical fuel aggregate storage density (this can vary from
450 to 500, depending on fuel type and moisture)
eta = .7, typical overall wood-fired combustion (compared to .8 for gas-fired
systems)
27 = conversion from yd3 to ftY
24 = conversion to 24 hour (1 day) consumption
nday = 5, number of days chosen for unattended full system use
= 1,920 ft3
The following describes individual components and is a combination of (mostly) Vendor A and
some Vendor B descriptions plus McNeil modifications where needed.48
WEDGE FLOOR STORAGE
The 12 ft. wide x 20 ft. deep x 8 ft high side wall 1,920 cubic foot wedge floor receiving system
is designed to receive and store the wood fuel and feed the required amount to the boiler system.
The entire system operates automatically with the combustion control processor. The unit is
fabricated from heavy gauge steel plate for years of continuous use. The special shaped custom
fabricated tapered sectional box beams are one of the design features that makes this system rigid
and stable, allowing the use of standard design hydraulic cylinders, low power pumps, and a
modular floor design (see Figure C-3).
The wedge flights are electrically fusion welded to a heavy wall square tube for strength and low
operating weight. These tubes ride in self lubricating precision bored bronze bushings at each
end and a special polymer compound along the entire length. These features provide lubrication
and rigidity. The wood fuel is loaded at one end of the floor and pulled to the discharge auger at
the other end. Each ram assembly pulls material forward in sequence until all the rams are
forward then each is cycled back to pick up more material. The operation continually moves the
wood pile forward into the discharge auger. This type of system has proven to be reliable for a
wide range of wood material. At the time of installations, the wedge floor arrives in two or three
sections and is reassembled on site. After the final hydraulic connections to individual cylinders
are made, and the power pack turned on, the system is ready. These types of systems are preassembled
and run in the vendor’s shop minimize startup problems.
48 McNeil does not promote any specific design or technology and uses specific equipment or processes only as
representative of good design and operational practices.
September 2005 C-5 Red Lake Tribe Biomass Assessment
Figure C-3. Wedge Floor Storage
TRAVELING AUGER ON STORAGE FLOOR
The alternate design to the wedge floor is the traveling auger method, used by Vendor B and one
that also has many years of design use, particularly in New England. The beam-mounted,
automated traveling auger system transfers wood fuel laterally from the storage area and moves
it onto a conveyor belt for delivery to the boiler. The traveling auger is typically 10 – 15 ft long
and 6-8 in diameter and sits approximately 6 in above the concrete floor of the storage area.
Figure C-4 shows the storage area – the auger is underneath the wood chip pile. Figure shows
the motor-driven side of the auger and wood chips falling onto the conveyor. The conveyor has
an open pan design that provides extra capacity and reduced belt friction for lower power
requirements.
Figure C-4. Representative Slab Floor Storage
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Figure C-5. Representative Traveling auger and Conveyor
Belt wheels stabilize conveyor movement and their bearings are precision, long-life, sealed, and
able to be greased for trouble-free, continuous duty. Galvanized steel, bolt-together conveyor
sections resist rust and the formed frame is heavy-gauge steel for durability. All conveyors have
convenient adjustment for belt tension and tracking. The conveyor delivers the wood chips to the
metering bin that in turn delivers the fuel to the stoker auger at the firebox.
TRANSFER SCREW AUGER
The transfer screw auger is a large, industrial duty screw auger that is designed for the transfer of
large amounts of wood chips (see Figure C-6). The U-Trough design, along with the proper
speed control and drive system, eliminates any bridging of chips.
Figure C-6. Transfer Screw Auger
FUEL SUPPLY, SUMMARY
In summary, there are many types of biomass-fueled systems available in the United States and
Canada. It is strongly recommended that a fully automated system, such as those described in
this report, be selected. Typically, adding a biomass system requires several hours per week of
O&M that is normally not associated with conventional gas-fired heating systems. O&M would
in all likelihood be borne by the school’s maintenance personnel and a fully automated system
would require the least additional labor and time - and for small systems keeping the O&M costs
September 2005 C-7 Red Lake Tribe Biomass Assessment
at a minimum is crucial so that all of the savings associated with fuel cost differences (propane
vs wood) can be obtained. For small systems, there is a sensitivity in fuel savings to the
burdened O&M costs. Semi-automated systems, on the other hand, cost somewhat less but can
require considerably more weekly labor to run, particularly in the winter when wood fuel must
be fed into the system very regularly. The 5+ day running time on a full fuel supply for the
automatic systems discussed in this report is based on peak winter requirements and will be
much longer in the off-peak heating system, so personnel requirements will be kept at a
minimum.
TRANSITION AND DROP TUBE
The connecting transition from the transfer screw auger and the drop tube to the stoker are
constructed from heavy gauge structural steel sheet and plate, and can withstand hard use in a
continuous feed environment. A neoprene bladed rotary air lock is mounted to the top of each
stoker. This airlock design passes over-sized fuel “chunks” without jamming. A two horsepower
TEFC high efficiency motor moves an industrial gear reducer that drives the airlock and infeed
screw, which meters material to the firebox combustion area. The stoker is controlled by the PLC
to feed the boiler fuel material as needed. “Off the shelf” Honeywell & Danfoss type temperature
switches and water control valves along the stokers prevent a back fire condition by spraying
water into the stoker tube upon detection of potential combustion in the stoker tube.
Figure C-7. Stoker and Airlock
PRECAST 3,100ºF REFRACTORY FACE COMBUSTION CHAMBER
The combustion chamber (or firebox) is custom manufactured for each customer and is complete
and ready on-site for installation (see Figure ). Typical total system installation time is on the
order of 3 to 5 days. The wood fuel designed fireboxes are constructed with a large gasification
area to completely combust the fuel. The fuel is burned on a sloped floor grate area to produce a
high quantity of wood gases whose combustion is a major component of the overall heat
produced. This design allows for more of the wood ash to remain out of the air stream, which
greatly helps in reducing particulate emission and increases combustion efficiency since 2/3rd of
the available heat energy is in the combustion of the wood gas. An efficient system is designed to
closely monitor the combustion through process time, temperature, and turbulence. Oversized
September 2005 C-8 Red Lake Tribe Biomass Assessment
combustion volume allows for large gasification turbulence area in the secondary combustion
area of the boiler vessel and the over-fire air control system takes advantage of the turbulence
and helps reduce emissions. High quality cast refractory is used in the firebox and has proven
track record of long service life. The fire boxes also have a double skin design which first
preheats the combustion air and also makes the fire box skin cool to the touch.
Figure C-8. Combustor
30 HP BOILER (1.0M BTU/HR)
The 30 Hp 15 psi design hot water boiler vessel has 206 square feet of heating surface and
delivers the hot water, with a delivery temperature of 160-180ºF (see Figure ). The fire tube
design wood-fired boiler vessel has been manufactured and used in Canada and the U.S. for
almost 100 years. This series of vessels is designed exclusively as a wood-fired vessel and is not
converted from any other fuel-designed system. This design philosophy has yielded a good
reputation for craftsmanship and dependability. The boilers have approximately 7 square feet of
heating surface per horsepower, which is a conservative value in the industry, and provides the
customer with a vessel that will make the rated output continually with varying fuel quality. This
also allows a more gentle boiler load which adds longevity to the system and allows for some
growth in demand without having to replace or continually update the system.
September 2005 C-9 Red Lake Tribe Biomass Assessment
Figure C-9. Boiler
Figure C-10. Integrated Combustor/Boiler Configuration
UNDER FIRE AIR (UFA) & OVER FIRE AIR (OFA) FAN ASSEMBLY
The UFA system is a radial blade draft fan. The drive portion of the system consists of a TEFC,
high efficiency type motor and high quality sheaves and belts. This fan system pushes preheated
combustion air through the fuel pile aiding in combustion of high moisture wood (see Figure C-
11).
September 2005 C-10 Red Lake Tribe Biomass Assessment
Figure C-11. Under fire fan assembly
The OFA system is a radial blade draft fan. The drive portion of the system also consists of a
TEFC, high efficiency type motor and high quality sheaves and belts. This fan system adds
preheated combustion air to the wood gas (gasification) section of the fire box allowing complete
combustion of the wood fuel and transferring the maximum Btu’s to the boiler vessel (see Figure
C-12).
Figure C-12. Over fire fan assembly
EXHAUST BREECHING
The exhaust breeching connects the boiler vessel to the particulate collector assembly or stack
cyclone. This breeching is constructed of heavy gauge steel and bracing designed to withstand
the high heat in this area. The breeching is primed and painted with two coats of heat resistant
paint.
PARTICULATE COLLECTION
September 2005 C-11 Red Lake Tribe Biomass Assessment
This system has a high efficiency 3 tube particulate collector. This is a 3 tube multi-cyclone
separator designed to efficiently remove the excess fly ash in the exhaust stream. The collectors
use a special “bell shaped” inlet design that eliminates the sharp edge gas inlet condition and
thereby reduces turbulence in the inlet vane. Removing turbulence increases the energy available
to impart centrifugal force to the dust particles. This greatly improves collection efficiency. Inlet
vanes have an airfoil cross-section which also increases efficiency over uniform thickness
designs. The airfoil-designed inlet vane area results in 50 percent larger openings for gas and
dust passage greatly reducing collector plugging. The inlet vanes are independently removable
for easy maintenance and low down time. These collectors are constructed of heavy gauge steel
plate and angle iron. The collector tubes are precision rolled and fitted into each collector and
receive high temperature primer and two coats of heat resistant paint.
INDUCED DRAFT FAN SYSTEM
The induced draft fan is a large radial blade high temperature draft fan. The drive portion of the
system consists of a TEFC, high efficiency type motor and high quality sheaves and belts. This
system pulls a variable draft through the fire box and boiler depending upon heat demand.
EXHAUST STACK
The exhaust stack is connected to the discharge side of the draft fan and channels the exhaust
gases to the outside environment. Stacks are typically constructed from heavy gauge steel and
need to be sized correctly for proper back pressure and dispersion characteristics in the system.
If they are too small in diameter too much back pressure will develop, causing increased horse
power draw on the induced draft system. If their length is too short, the proper exhaust dispersion
will not develop resulting in a possibly unsafe work environment. Total length from ground
level will be approximately 20-25 ft. with an internal diameter of 12-14 in. Exhaust stacks are
primed and painted with two coats of heat resistant paint (see Figure C-13).
Figure C-13. Representative Exhaust Stack
BOILER CONTROL SYSTEM
Operation of all mechanical parts of the plant are dependent on the control management system.
There have been great strides made in boiler combustion control techniques as part of industrySeptember
2005 C-12 Red Lake Tribe Biomass Assessment
wide practices to correctly, reliably, and efficiently run an entire system. These control
management systems can monitor plant conditions off site and can be configured to control offsite
if necessary. A PC configured for this application can be connected to the PLC and used to
modify the programming. By using variable frequency drives on all the combustion fans the
system is controlled and adjusted continually to maximize efficiency and minimize emissions.
The control panel is powered by a single source of power and contains off -the-shelf starters and
variable frequency drives for the electric motors.
FITTINGS, CONNECTIONS, PIPING, EXISTING HYDRONICS
This section briefly discusses equipment outside of the plant building. Once the
approximately160ºF hot water from the boiler leaves the plant building, it is pumped through the
buried 3 inch insulated steel. Typical insulation is polytherm or exotherm (with fiberglass),
though there are many pipe insulation products on the market. There is much detail in fittings
and connections that is beyond the scope of this report. Embedded in the approximate $145/ft
cost of the pipe, insulation, and trenching is 30% for fittings, valves, and connections that a
conventional plumbing company would need for system installation.
Figure C-14. Representative Buried Pipe Installation and Dimensions
backfill 24 in, typ
insulation
Supply,160ºF
Typical ditch cross section -
with supply and return insulated hot water pipe
24 in, typ.
30 in, typ
Pipe – approx. 3 in diameter
Pipe with insulation – approx. 8 in diameter
Return, 140ºF
September 2005 C-1 Red Lake Tribe Biomass Assessment
Appendix D. Biofuels Production
September 2005 C-2 Red Lake Tribe Biomass Assessment
Ethanol
Minnesota is the only state to mandate the use of ethanol and biodiesel. The state pays 11 to 20
cents per gallon to ethanol facilities with a capacity of less than 15 million gallons per year.
Several technologies can convert cellulose feedstocks into ethanol including the following:
• Concentrated acid hydrolysis,
• Dilute acid hydrolysis,
• Enzymatic hydrolysis and
• Biomass gasification and fermentation.
Concentrated acid hydrolysis
This process is based on concentrated acid decrystallization of cellulose followed by dilute acid
hydrolysis to sugars at near theoretical yields. Separation of acid from sugars, acid recovery, and
acid reconcentration are critical unit operations. Fermentation converts sugars to ethanol.
A flow diagram, shown in Figure D-1 is one example of how a process based on concentrated
acid might be configured. The heart of the process is the decrystallization followed by dilute acid
hydrolysis. The original Peoria process, developed by USDA researchers in World War II and a
modified version proposed by Purdue, carry out dilute acid pretreatment to separate the
hemicellulose before decrystallization.49 The biomass would then be dried to concentrate the acid
absorbed in the biomass prior to addition of concentrated sulfuric acid. Purdue proposed
recycling sulfuric acid by taking the dilute acid/water stream from the hydrolysis reactor and
using it in the hemicellulose pretreatment step.
In Arkenol's process, decrystallization is carried out by adding 70%-77% sulfuric acid to
biomass that has been dried to 10% moisture. Acid is added at a ratio of 1.25:1 (acid: cellulose +
hemicellulose), and temperature is controlled at less than 50 degrees Celsius (C). Adding water
to dilute the acid to 20%-30% and heating at 100 degrees C for an hour results in the release of
sugars. The gel from this reactor is pressed to remove an acid/sugar product stream. Residual
solids are subjected to a second hydrolysis step. The use of a chromatographic column to achieve
a high yield and separation of acid and sugar is a crucial improvement in the process that was
first introduced by the Tennessee Valley Authority (TVA) and researchers at the University of
Southern Mississippi. The fermentation converts both the xylose and the glucose to ethanol at
theoretical yields of 85% and 92%, respectively. A triple effect evaporator is required to
reconcentrate the acid. Arkenol claims that sugar recovery in the acid/sugar separation column is
at least 98%, and acid lost in the sugar stream is not more than 3%.50
49 Ibid
50 Ibid
September 2005 C-3 Red Lake Tribe Biomass Assessment
Figure D-1. Example process flow, concentrated acid hydrolysis
The concentrated sulfuric acid process has been commercialized in the past, particularly in the
former Soviet Union and Japan. However, these processes were only successful during times of
national crisis, when economic competitiveness of ethanol production could be ignored.
Conventional wisdom in the literature suggests that the Peoria and TVA processes cannot be
economical because of the high volumes of acid required. Improvements in acid sugar separation
and recovery have opened the door for commercial application. Two companies in the United
States, Arkenol and Masada Resources Group, are currently working with DOE and NREL to
commercialize this technology by taking advantage of niche opportunities involving the use of
biomass as a means of mitigating waste disposal or other environmental problems.
Dilute acid hydrolysis
Dilute acid hydrolysis of biomass is, by far, the oldest technology for converting biomass to
ethanol. Hydrolysis occurs in two stages to maximize sugar yields from the hemicellulose and
cellulose fractions of biomass. The first stage is operated under milder conditions to hydrolyze
hemicellulose, while the second stage is optimized to hydrolyze the more resistant cellulose
fraction. Liquid hydrolyzates are recovered from each stage, neutralized, and fermented to
ethanol.
While a variety of reactor designs have been evaluated, the percolation reactors originally
developed at the turn of the century are still the most reliable (see Figure D-2). Though more
limited in yield than the percolation reactor, continuous co-current pulping reactors have been
proven at industrial scale. NREL recently reported results for a dilute acid hydrolysis of
softwoods in which the conditions of the reactors were as follows:
• Stage 1: 0.7% sulfuric acid, 190 degrees C, and a 3-minute residence time
• Stage 2: 0.4% sulfuric acid, 215 degrees C, and a 3-minute residence time
September 2005 C-4 Red Lake Tribe Biomass Assessment
Figure D-2. Example process flow, dilute acid hydrolysis
These bench scale tests confirmed the potential to achieve yields of 89% for mannose, 82% for
galactose and 50% for glucose. Fermentation with Saccharomyces cerevisiae achieved ethanol
conversion of 90% of the theoretical yield.
There is quite a bit of industrial experience with the dilute acid process. Germany, Japan, and
Russia have operated dilute acid hydrolysis percolation plants off and on over the past 50 years.
However, these percolation designs would not survive in a competitive market situation.
Enzymatic hydrolysis
The first application of enzymes to wood hydrolysis in an ethanol process was to simply replace
the cellulose acid hydrolysis step with a cellulase enzyme hydrolysis step. This is called separate
hydrolysis and fermentation. The most important process improvement made for the enzymatic
hydrolysis of biomass was the introduction of simultaneous saccharification and fermentation
(SSF), as patented by Gulf Oil Company and the University of Arkansas. This new process
scheme reduced the number of reactors involved by eliminating the separate hydrolysis reactor
and, more importantly, avoiding the problem of product inhibition associated with enzymes. In
the SSF process scheme, cellulase enzyme and fermenting microbes are combined. As sugars are
produced by the enzymes, the fermentative organisms convert them to ethanol. The SSF process
has, more recently, been improved to include the cofermentation of multiple sugar substrates.
This new variant of SSF, known as SSCF for Simultaneous Saccharification and
CoFermentation, is shown schematically in Figure D-3.
.
September 2005 C-5 Red Lake Tribe Biomass Assessment
Figure D-3. Enzyme process configured for simultaneous saccharification and
cofermentation (SSCF)
Cellulase enzymes are already commercially available for a variety of applications. Most of these
applications do not involve extensive hydrolysis of cellulose. For example, the textile industry
applications for cellulases require less than 1% hydrolysis. Ethanol production, by contrast,
requires nearly complete hydrolysis. In addition, most of the commercial applications for
cellulase enzymes represent higher value markets than the fuel market. For these reasons, there is
quite a large leap from today's cellulase enzyme industry to the fuel ethanol industry. DOE’s
partners in commercialization of near-term ethanol technology are choosing to begin with acid
hydrolysis technologies because of the high cost of cellulase enzymes. U.S. DOE Biofuels
Program researchers see the current high cost of cellulase enzymes as the key barrier to
economical production of bioethanol from lignocellulosic material, the Biofuels Program has
been working with the two largest global enzyme producers, Genencor International and
Novozymes Biotech Incorporated. The objective of this collaboration is to achieve a tenfold
reduction in the cost of these enzymes.
In Canada, Iogen Corporation is currently completing construction on the first commercial scaleup
cellulose ethanol plant in the world, using an enzymatic process. The plant is already
producing fermentable sugars from 50 tons of wheat straw in 900 lb bale form per week, and is
finishing construction on its distillation towers, which should be operational in 2004.51
Biomass Gasification and Fermentation
A gasification system may be employed in conjunction with fermentation technology to produce
ethanol. After gasification (see 0), anaerobic bacteria such as Clostridium ljungdahlii are used to
convert the CO, CO2, and H2 into ethanol. Higher rates are obtained because the process is
limited by the transfer of gas into the liquid phase instead of the rate of substrate uptake by the
bacteria. Marc Rappaport is developing the ethanol project that is proposed in La Grande. His
firm plans to use gasification to produce power and later add a system to produce ethanol from
the gas. Currently the firm owns an industrial site outside of town and is working on project
financing.
Feedstock Requirements and Yield
51 Tania Glithero, Iogen Corporation, personal communication with Tim Rooney, McNeil Technologies, Inc.,
November 21, 2003. More information on Iogen Corporation can be obtained on-line: http://www.iogen.ca.
September 2005 C-6 Red Lake Tribe Biomass Assessment
The quantity of feedstock required by an ethanol conversion facility is primarily determined by
the size of the facility and the ethanol yield/ton of feedstock. Different conversion technologies
have different yields and are at different stages of commercial development. The relationship
between yield and feedstock requirement is linear. Figure D-4 illustrates the relationship for four
different ethanol yields from 50 to 100 gallons/ton of feedstock and for facilities with capacities
up to 60 millions gallons/year. To get some perspective on the quantity of feedstock required, a
large pulp mill requires 2,000 tons of feedstock/day or 730,000 tons/year. That quantity of
feedstock could produce between 36 and 73 million gallons of ethanol as yield increased from 50
to 100 gallons/ton.
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
0 10 20 30 40 50 60
Plant Capacity, Million Gallons per year
Feedstock Requirement, BDT/yr
Yield in gallons per ton
80
70
60
50
Figure D-4. Ethanol yield and feedstock relationship
The cost of converting cellulose materials to ethanol is determined by three main cost elements;
feedstock, capital, and operating. Capital costs include both costs for equipment, engineering,
installation, and financing. Operating cost elements include maintenance and operating labor,
marketing, utilities and chemicals, and maintenance supplies. Chemical process industries, like
ethanol, are known to have economies of scale. Capital and operating costs/gallon of capacity
decline as the capacity increases. Figure D-5 shows the capital cost/gallon of production,
assuming a capital recovery factor of 20%. This illustrates the dramatic increase in capital cost
per gallon when facility size drops below 10 million gallons/year. The capital cost data for
facilities 20 million gallons and larger came from the California Energy Commission report52 and
the Merrick report53 provided data for facilities less than 20 million gallons.
52 California Energy Commission, Evaluation of Biomass-to-Ethanol Fuel Potential in California, Sacramento
California: California Energy Commission, December 1999
53 Merrick & Company, Alaska Softwood to Ethanol Feasibility Study, Aurora, Colorado, 1999
September 2005 C-7 Red Lake Tribe Biomass Assessment
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
0 10 20 30 40 50 60 70
Million Gallons Annual Capacity
Capital Costs, Dollars per gallon annual capacity
Figure D-5. Economies of scale for cellulose ethanol facilities
The optimum plant size will depend on the relationships between capital cost, feedstock cost and
operating costs. Figure D-6 shows these relationships using data from the CEC report. The
volumes correspond to facilities sized 20, 30, 40, and 60 million gallons of annual capacity. The
feedstock costs were assumed to be from forest residues with a subsidized cost of $30/ODT.
Yields were assumed to be 77 gallons/ton and maintenance cost of $0.15/gallon. The figure
shows that capital costs/gallon decrease and feedstock costs/ton increase as the plant size
increases and more material is needed. The shape of these curves will change for each facility
depending on supply costs, conversion yields, and operating and maintenance costs. However, in
most cases there will be an economic optimum where the production costs are at a minimum.
0 .0 0
0 .2 0
0 .4 0
0 .6 0
0 .8 0
1.0 0
1.2 0
0 10 20 30 40 50 60 70
Plant Capacit y, M illion Gallons per year
Tot al Cost
Capital Cost
Feedstock Cost
Figure D-6. Ethanol production costs
September 2005 C-8 Red Lake Tribe Biomass Assessment
Siting Requirements
Make-up water estimates depend on the conversion technology. NREL estimated water
requirements for their enzymatic processes and the approximate relationship is: Gallons/min = 12
x ethanol capacity in million gallons/yr. For example a 50 million gallon/yr facility would
require 600 gallons/minute of make-up water. Wastewater discharge depends on what
technologies are employed. The trend in the design of cellulose ethanol facilities is to have zero
discharge. All wastewater is reprocessed and used within the facility. The solids from the
wastewater treatment are sent to the biomass boiler. Merrick & Company investigated
wastewater disposal options and provided a detailed report.54 Larger cellulose ethanol facilities
are assumed to generate power in excess of their needs and sell the surplus. Power needs are
therefore minimal and only required for cold start conditions.
Ethanol can only be economically transported long distances by pipeline, rail, or ship. An
ethanol conversion site will require on-site storage sufficient to store 15 days of feedstock,
assuming that most residues are to be stored off-site at the supply locations. At the candidate
capacity approximately 60,000 tons of residues are collected so roughly 2,500 tons would be
stored at the conversion facility. If the bale is 16 inches wide, 16 inches high and 48 inches long
and weighs 64 lb then the storage capacity/acre of land is 871 tons. This area includes space for
access and handling. Thus, about three acres of land would be required to store 15 days worth of
field residues.
54 Merrick & Company, Wastewater Treatment Options for the Biomass-to-Ethanol Process, NREL Subcontract
AXE-8-18020-01 Final Report, Aurora, CO, October 1998.
September 2005 E-1 Red Lake Tribe Biomass Assessment
Appendix E. Incentives for Biomass Utilization
September 2005 E-2 Red Lake Tribe Biomass Assessment
RENEWABLE ENERGY POLICIES IN MINNESOTA
There are a variety of policies which encourage renewable energy production in Minnesota,
including specific measures for biomass. The policies listed below were current as of September
2004.
Voluntary Renewable Portfolio Standard
In 2001 and 2003, Minnesota established voluntary targets for electric utilities to generate or
procure a percentage of power from renewable energy technologies. By 2005, at least 1% of
power should come from renewables. This amount should increase by 1% per year, reaching
10% in 2015. At least 0.5% of electricity should come from biomass sources by 2005, and 1%
should come from biomass by 2010. The requirement that all hydrogen be generated from
renewable sources by 2010 could also boost the usage of biomass.
The Minnesota Public Utilities Commission is also authorized to establish a credit trading
program to help utilities comply with the targets. Utilities are required to develop formal plans
detailing how they will meet the 10% renewables objective.55
Prairie Island Bill
The 1994 “Prairie Island Bill” required Xcel to acquire 125 MW of closed-loop biomass
generation from farm sources. This bill was later amended to encompass other types of biomass.
To meet this mandate, Xcel agreed to buy 25 MW of waste-wood generation from St. Paul
Cogeneration, 50 MW from EPS/Beck for whole-tree generation, and Fibrominn for 50 MW of
poultry litter generation.
In 2003, the mandate was reduced to 110 MW and adjustments were made to the strategy for
meeting the biomass target. Among the changes, the Commission required Xcel to enter into a
PPA with Itasca as part of an effort to meet the renewable energy objectives outside of the
biomass mandate.
In amendments to Minnesota Statute 216B.2424, Xcel was required to enter into a PPA for 10-20
MW of bioenergy capacity at an all-inclusive price not to exceed $55 per MWh. Since the
passage of this legislation, Xcel and Itasca have been attempting to negotiate a biomass power
purchase agreement.
Minnesota enacted legislation in May 2003 requiring Xcel to pay $16 million annually into the
Renewable Development Fund (RDF). This will continue as long as Xcel Energy’s Prairie Island
plant is in operation. The RDF originated in 1994 as an outcome of 1994 legislation concerning
spent fuel storage at the Prairie Island nuclear power plant.
In 2001, the RDF selected 19 research projects to receive $16 million in funding. The second
funding cycle began in the fall of 2003 and will split funding between renewable energy
generation projects and research and development.56
Cogeneration and Small Power Production
55 http://www.dsireusa.org/library/includes/incentive2.cfm
56 http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=MN09R&state=…
September 2005 E-3 Red Lake Tribe Biomass Assessment
Minnesota has also enacted a cogeneration and small power production statute with the express
purpose of encouraging cogeneration and small power production consistent with protection of
the ratepayers and the public (Chapter 216B, section 164). The section applies to all Minnesota
electric utilities, including cooperative electric associations and municipal electric utilities. The
law requires the utility to which the qualifying facility is interconnected to purchase all energy
and capacity made available by the qualifying facility and such capacity and energy shall be
purchased at full avoided cost. Such full avoided cost shall be established as the utility’s least
cost renewable energy facility or the bid of a competing supplier of a least cost renewable energy
facility, whichever is lower. If the host utility does not wish to purchase the power, or if the
qualifying facility requests, the host utility shall provide wheeling or exchange agreements
wherever practicable to sell the qualifying facility’s output to any other Minnesota utility
planning expansion of its generation. The qualifying facility would then be paid at the full
avoided cost of the utility actually receiving the output. The host utility is required to provide an
interconnection, although the cost of that interconnection would in all likelihood be the
qualifying facility’s responsibility.57
Net Energy Billing
Net energy billing has been established by Minnesota Statute and is available only to qualifying
facilities with capacity of less than 40 kW that choose not to offer electric power for sale on
either a time-of-day or a simultaneous purchase and sale basis. In such a case, the utility is
required to bill the qualifying facility for the excess of energy according to the utility’s
applicable retail rate schedule.58
Itasca Power Biomass Project
The Northome Biomass Plant, located in the Northome Industrial Park, Northome, Minnesota, is
a 15 MW biomass plant capable of providing steam, hot water, pressurized hot water,
compressed air, chilling and cooling directly to future commercial users at the industrial park.
Itasca Power Company signed a power purchase agreement with Great River Energy, a
wholesale energy provider to 29 member cooperatives in Minnesota and Wisconsin.59
Construction of the plant required Great Energy to build approximately 11 miles of 69-kV
transmission from an existing substation near Alvwood, Minnesota to the vicinity of Northome.
North Itasca Electric Cooperative, located in Bigfork, Minnesota, will provide transmission
distribution services to the facility.60
Complaint Against Beltrami Electric Cooperative
In January 2002, the Energy CENTS Coalition, a non-profit that promotes affordable utility
service for low-income Minnesotans, filed a complaint against Beltrami at the Minnesota Public
Utilities Commission (PUC) alleging that Beltrami had engaged in unfair and illegal practices.
Generally cooperatives are not subject to the same level of government scrutiny as investor-
57 Minnesota Statutes, Chapter 216B, Section 164 “Cogeneration and small power production.”
58 Minnesota Rules, Chapter 7835, 7835.3300 Net Energy Billing Rate.
59 Itasca Power Company, www.itascapower.com, accessed December 15, 2003. Great River Energy,
www.greatriverenergy.com/HTML/company/com.html, accessed December 15, 2003.
60 ‘Great River Energy supports wood waste plant near Northome,” Press Release, Great River Energy, May 5,
1999, www.greatriverenergy.com/HTML/press/pres_99_wasteplant.html, accessed December 15, 2003.
September 2005 E-4 Red Lake Tribe Biomass Assessment
owned utilities before the PUC, but Energy CENTS argued that state laws governing service
standards to apply to cooperatives. The PUC agreed and ordered an investigation into the Energy
CENTS complaint. Beltrami allegedly cut off service even when low-income individuals were
working to become current on their payments, charged high fees for service reconnection, and
installed “service limiters” (devices that allow electricity to only flow for a half-hour at a time)
on a disproportionate number of homes on the Red Lake Reservation.61
The complaint is still ongoing at the PUC. The initial complaint was filed January 23, 2002. An
Order Asserting Jurisdiction and Directing the Department to Investigate was issued by the PUC
on April 25, 2002. An Investigation Report was provided to the PUC on August 18, 2003 and
briefing papers have been filed.62
FEDERAL BIOPOWER INCENTIVES
Healthy Forests Restoration Act of 2003 (signed into law on December 3, 2003)63
Title II – Biomass
(1) Findings; Definitions
The House bill contains Congressional findings that that show high risk of wildfires across many
acres due to the accumulation of heavy fuel loads from insect infestations and disease, and
defines the terms: Biomass, Person, Preferred Community, and Secretary Concerned. (Sections
201, 202)
The Senate amendment has comparable provisions with minor differences. (Sections 201, 202)
(2) Grants to Improve the Commercial Value of Forest Biomass; Reporting requirement
The House bill establishes biomass commercial use and value-added grant programs to benefit
anyone who owns or operates a facility to produce energy from biomass, as well as a monitoring
program for participants, while complying with existing endangered species protections;
authorizes appropriations of $25,000,000 for fiscal years 2004 to 2008; and requires that the
Secretary concerned submit a report of the grant programs no later than October 1, 2010.
(Sections 203, 204)
The Senate amendment has a comparable amendment with minor differences. (Sections 203,
204)
With respect to sections 201 and 202 of the House bill and sections 203 and 204 of the Senate
amendment, the Conference substitute adopts an amendment that authorizes the Secretary to
provide biomass purchase grants to owners and operators of biomass facilities that use such
materials for production of wood-based products or other commercial purposes. (Section 203)
(3) Improved Biomass Use Research Program
61 Kokmen, Lelya, “Lights Out: Residents of the Red Lake Indian Reservation fight the power company,” City
Pages, www.citypages.com/databank/23/1116/article10338.asp, accessed December 8, 2003.
62 Case File Control Sheet, Docket No. E103/C-02-105, www.puc.state.mn.us/docs/log_files/02-105.htm, accessed
December 8, 2003.
63 http://capwiz.com/wwipo/webreturn/?url=http://thomas.loc.gov/cgi-bin/bdquery/z?d108:h.r.1904:
September 2005 E-5 Red Lake Tribe Biomass Assessment
The Senate amendment amends the Biomass Research and Development Act of 2000 by adding
a silviculture component to the program. (Section 205)
The House has no provision on this subject.
The Conference substitute adopts the Senate provision. (Section 201)
(4) Rural Revitalization Through Forestry
The Senate amendment establishes a program to facilitate small business use of biomass and
authorizes appropriations of $5,000,000 for fiscal years 2004 to 2008 to carry out the program.
The program is established by amending the Food, Agriculture, Conservation, and Trade Act of
1990. (Section 206)
The House bill has no provision on this subject
The Conference substitute adopts the Senate provision. (Section 202)
Section 45 - Renewable Energy Production Tax Credit
Taxpayers are allowed a credit of 1.5 ¢/kWh for electricity generated from "closed-loop
biomass" projects under Section 45 of the Internal Revenue Code. In the fall of 1999, Congress
amended Section 45 to let more facilities take advantage of the 1.5 ¢/kWh tax credit. The new
rule extends the "placed-in-service" date for qualifying facilities to 2002 and includes poultry
waste as a qualifying energy resource. Under this rule, qualifying facilities are defined as wind,
closed-loop biomass, and poultry waste facilities. These plants will be eligible for the 1.5 ¢/kWh
tax credit if they are placed in service before January 1, 2002. The previous rule required
facilities to be placed in service before June 30, 1999 and did not include poultry waste as an
acceptable energy resource.
The federal energy bills currently (as of September 2003) passed by the House and Senate
includes a provision that would open the biomass credit to allow existing and new biomass plants
to claim the credit for using biomass resources such as forest thinnings and mill residues. The
bills are presently in conference committee.
Renewable Energy Production Incentive (REPI)
Additional information on REPI can be found at: http://www.eere.energy.gov/power/repi.html
Section 1212 of the 1992 Energy Policy Act allows DOE to make payments of 1.5 ¢/kWh,
adjusted annually for inflation, for electricity generated and sold by qualifying facilities. Eligible
electric production facilities are those owned by State and local government entities (such as
municipal utilities) and not-for-profit electric cooperatives that started operations between
October 1, 1993 and September 30, 2003. Qualifying facilities are eligible for annual incentive
payments of 1.5 cents/kilowatt-hour expressed in 1993 dollars and indexed for inflation for the
first ten year period of their operation, subject to the availability of annual appropriations in each
Federal fiscal year of operation.
Criteria for qualifying facilities and application procedures are contained in the rulemaking for
this program. Qualifying facilities must use solar, wind, geothermal (with certain restrictions as
contained in the rulemaking), or biomass (except for municipal solid waste combustion)
generation technologies. The production incentive authorizes direct payments to project owners
from annual congressional appropriations. Payment depends on availability of funds.
September 2005 E-6 Red Lake Tribe Biomass Assessment
The regulations for the administration of the REPI program are contained in Title 10 to the Code
of Federal Regulations, Part 451 (10 CFR 451). The final rulemaking, which contains clarifying
supplementary information, is contained in 60 CFR 36959
Renewable resources are divided into two tiers: Tier 1 includes wind, solar and closed loop
biomass and Tier 2 includes “open loop” biomass such as landfill gas, digester gas and plant
waste material. Tier 1 projects receive incentive payments first before any payments are made to
Tier 2 projects. Over the past several years, there has not been sufficient money appropriated by
Congress to fully fund all of the Tier 2 requests made against the program. In 2002, only 7% of
the total credit requested by Tier 2 projects was paid.
Although the REPI is comparable in amount to the Section 45 production tax credit,
congressional appropriations have not been adequate to fully fund payments to qualifying
facilities. Because of this uncertainty, developers have been cautious in counting on REPI
payments when assessing project economics and have regarded REPI payments more as a
"bonus." The incentive expires September 30, 2013.
FEDERAL ETHANOL INCENTIVES
The Clean Air Act of 1970 authorized the EPA to promulgate regulations regarding the quality
of conventional fuels. In 1990, the Act was amended to include establishing air quality standards
related to vehicle emissions. The EPA subsequently established the National Ambient Air
Quality Standards covering carbon monoxide, nitrogen oxides, particulate matter, ozone and
lead. Urban areas were required to use cleaner burning fuels if they did not meet the minimum
clean air standards. This can be achieved by adding oxygen to gasoline, which improves
combustion efficiency; ethanol contains 35% oxygen. Substituting regular fuel with ethanol
results in a reduction of carbon monoxide, volatile organic compounds and nitrogen oxides.
State oxygenated fuels programs have been developed in response to the national Clean Air Act
Amendments of 1990. According to a recent study, “The majority of the increase in ethanol
demand in the past 10 years has resulted from these programs. Since 1990, the nation’s ethanol
production capacity has more than doubled from 850 million gallons/year to 1.779 billion gallons
in total production capacity in 1999.”64
If an area was classified as non-attainment of ozone, it was required to use reformulated gasoline
to lower volatile organic compounds. Mixing ethanol with gasoline increases the volatility of the
fuel, releasing more VOCs. However, the EPA recently ruled that the CO reduction benefits
outweigh the increased VOC emissions.
The fuel additive methyl tertiary butyl ether (MTBE) is being phased out in California, which
could increase demand for ethanol. If ethanol were to fully replace MTBE, the demand for
ethanol in California could reach 550 million gallons/year.65 However, the oxygen requirement in
64 Angela Graf (Bryan & Bryan, Inc.) and Tom Koehler (Celilo Group), Oregon Cellulose-Ethanol Study: An
Evaluation of the Potential for Ethanol Production in Oregon Using Cellulose-Based Feedstocks, Portland, Oregon:
Oregon Department of Energy, June 2000, 71.
65Angela Graf (Bryan & Bryan, Inc.) and Tom Koehler (Celilo Group), 5.
September 2005 E-7 Red Lake Tribe Biomass Assessment
gasoline may be eliminated instead, since California is seeking an exemption from the
oxygenated fuel requirement.
Federal Excise Tax Exemption for Gasohol
The Energy Tax Act of 1978 established a tax exemption of 5.4 cents/gallon for blends of 10-
percent grade ethanol (or 54 cents/gallon of pure ethanol. Blends of less than 10% ethanol (7.7%
and 5.7%) are prorated. These credits to fuel blenders will sunset in 2007, declining to 5.2 cents
in 2001, 5.2 cents in 2003, and 5.1 cents in 2005. An income tax credit of 54 cents/gallon was
also introduced, and this credit can be applied to the manufacture of ETBE.
Motor fuels are otherwise taxed at 18.3 cents/gallon, so this tax break should help ethanol be
more cost competitive and increase demand. The DOE Energy Information Administration (EIA)
predicted that an extension of the tax exemption would increase the ethanol production capacity
from grain and cellulose biomass to 2.8 billion gallons/year.66 Current ethanol production
capacity is actually 2.9 billion gallons/year.67
Under the Crude Oil Windfall Profits Action of 1980, it became possible to receive an income
tax credit instead of the excise tax forgiveness. The blender must have a tax liability to which the
credit can be applied.
A 10-cent/gallon tax credit was established under the Budget Reconciliation Act of 1990 to
encourage the development of new ethanol production facilities. Plants with an annual
production capacity of 30 million gallons or less are eligible to deduct 10 cents/gallon from the
first 15 million gallons produced annually. This small producer tax credit is scheduled to end
December 31, 2007.
In 1992, the Energy Policy Act (EPACT) required government and private fleets (having 20 or
more vehicles in metropolitan areas with more than 250,000 people) to include alternative fuel
vehicles in their fleets. The requirement ranges from 30% to 90% of fleet vehicles. The
requirement may be met by using fuels containing at least 85% alcohol by volume. Other
possibilities include: natural gas, propane, hydrogen, liquid fuels from coal, and electricity.
Deductions for Clean-Fuel Vehicles and Refueling Property
Individuals and businesses are eligible for tax deductions of $2,000 for cars and up to $50,000
for certain types of trucks and vans. The deduction will be gradually phased out by 2005.
Property used to store or dispense clean fuel is deductible up to $100,000.68
Corporate Alcohol Fuel Credit
Businesses that sell or use alcohol fuels or fuel blends may qualify for an income tax credit.
Credits range from $.3926 to $0.60/gallon, depending on the proof and type of alcohol. 69
66 Angela Graf (Bryan & Bryan, Inc.) and Tom Koehler (Celilo Group), 9.
67 Renewable Fuels Association, U.S. Fuel Ethanol Production Capacity,
http://www.ethanolrfa.org/eth_prod_fac.html
68North Carolina Solar Center, DSIRE: Incentives by State,
http://www.ies.ncsu.edu/dsire/library/includes/incentive2.cfm?Incentive_Code=US30F&State=Federal¤tpage
id=1
September 2005 E-8 Red Lake Tribe Biomass Assessment
Accelerated Depreciation
Certain equipment in an electric generating plant that uses biomass for fuel qualifies for
accelerated depreciation over five years, provided the plant is a "qualifying facility" as defined
by the Public Utility Regulatory Policy Act (PURPA).70
OTHER INCENTIVES
Renewable Energy Certificates
Renewable Energy Certificates (RECs) represent the non-electricity attributes, particularly the
environmental benefits, of renewable energy generation. RECs are sold to people and
organizations with an interest in supporting the development of new renewable capacity. RECs
are also used in several states as a means for utilities to comply with Renewable Portfolio
Standards. Project developers can sell RECs as a way to help qualify for financing or reduce
project costs.
Sulfur Dioxide Emission Allowances
The Clean Air Act Amendments of 1990 includes incentives to reduce sulfur dioxide (SO2)
emissions. Public utilities may receive one emission allowance for each ton of SO2 avoided
through efficiency or renewable energy projects. The emission allowance program includes the
conservation and renewable energy reserve, which is a bonus pool of emission allowances to
reward utilities for new renewable energy projects. Utilities may reduce SO2 emissions by
curtailing generation from facilities that emit SO2 if the curtailments are offset by efficiency or
renewable energy projects.
The program of SO2 emission allowances is an incentive for the development of renewable
energy projects, including biomass energy projects. Fuel-switching is one way for utilities to
reduce SO2 emissions at coal-fired power plants. At generating facilities using high-sulfur coal,
co-firing with biomass can reduce SO2 emissions.
Carbon Offsets
Under section 1605 (B) of the Energy Policy Act of 1992, public utilities may voluntarily report
actions undertaken to reduce or sequester greenhouse gas emissions. Industry participants in the
U.S. Climate Challenge Program, sponsored by the U.S. EPA, have made non-binding
commitments to reduce or sequester these emissions. The Chicago Climate Exchange facilitates
a voluntary trading of carbon dioxide credits.
Special Depreciation Rules for Biomass Energy Facilities
Short depreciation lives are available for certain biomass energy facilities. A five-year tax life
applies to property qualifying as a "small power production facility," which includes facilities
that produce electricity from biomass and have a capacity of 80 megawatts or less. A seven-year
69North Carolina Solar Center,
http://www.ies.ncsu.edu/dsire/library/includes/incentive2.cfm?Incentive_Code=US30F&State=Federal¤tpage
id=1
70 U.S. Department of Energy, Energy Efficiency & Renewable Energy, Biopower Program, Biopower – Policy –
Federal Tax Credits, http://www.eere.energy.gov/biopower/policy/po_ftc.htm#ftc1
September 2005 E-9 Red Lake Tribe Biomass Assessment
tax life applies to property used in the conversion of solid waste and biomass into a solid, liquid
or gaseous fuel.
Tax-Exempt Financing
Assuming that the facility has more than 10% private business use, a biomass project can qualify
for tax-exempt financing if it fits into one of two categories: 1) the project supplies gas or
electricity to an area no larger than two contiguous counties or one city and a contiguous county;
or 2) the facility is a solid waste disposal facility.71
PROGRAMS FOR PROMOTING BIOMASS AND BIOFUELS
The federal government supports the advancement of biobased products and bioenergy in order
to further the goals of strengthening farm income, creating new jobs in rural communities,
enhancing energy security and reducing pollution. The goal is to triple the use of biobased
products by 2010.72 The USDA and the U.S. DOE sponsor programs to support research and
development, commercialization, and public education efforts. Moreover, programs have been
developed to provide technical and financial assistance for producers of bioenergy products.
USDA budgeted $268 million in 2001 for its Biobased Products and Bioenergy Initiative. Under
this umbrella program, the Commodity Credit Corporation made incentive payments available to
encourage the production of fuel grade ethanol and biodiesel from grain; $100 million was
budgeted for 2000 and $150 million for 2001. Payments are based on bioenergy production
increases from eligible commodities. To qualify, companies must produce and sell ethanol
commercially and be in good standing with the EPA. Raw materials must be grown in the United
States for the purpose of producing fuel grade ethanol or biodiesel. Eligible commodities for
2001 included: barley, corn, grain sorghum, oats, rice, wheat, soybeans, sunflower seed, canola,
crambe, rapeseed, safflower, sesame seed, flaxseed, mustard seed, and cellulosic crops.73
In April, a Memorandum of Agreement was signed between USDA and Colson Services Corp, a
subsidiary of JP Morgan Chase Bank. This agreement expands the scope of the Biobased
Products program, enabling investors to purchase certificates for guaranteed portions of Rural
Development business loans.
An additional $10 million is available through USDA’s Value-Added Agricultural Product
Market Development Grants program.74 However, it is necessary to draft a regulation to govern
the program before funds can be awarded.
Note that there are a handful of programs that broadly support the development of rural
businesses. Fiscal year 2003 funding for the Rural Business-Cooperative Service is as follows:
71 U.S. Department of Energy, Energy Efficiency & Renewable Energy, Biopower Program.
72 Liquid Fuels from Biomass: North America, Impact of Non-Technical Barriers on Implementation, (S&T)2
Consultants, Inc., Canada, September 15, 2000, 44.
73 Farm Service Agency, Commodity Credit Corporation Announces Bioenergy Program Sign-up, Release 1654.00,
http://www.fsa.usda.gov/pas/news/releases/2000/11/1654.htm
74 USDA Rural Business Cooperative Services, Value-added Producer Grants,
http://www.rurdev.usda.gov/rbs/coops/vadg.htm.
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• Business and Industry Guaranteed - $900 million plus $309 million carryover
• Intermediary Re-lending Program - $40 million
• Rural Business Enterprise Grant - $47.99 million
• Rural Economic Development Loan - $15 million
• Rural Economic Development Grant - $4 million
• Rural Business Opportunity Grant - $4 million75
Loan guarantees for biomass conversion into bioenergy are available under the Business and
Industry Guaranteed Loan Program. The objective is to create employment in rural areas by
expanding the lending capacity of commercial lenders. Up to 90% of a loan made by a
commercial lender can be guaranteed, and the maximum loan size is $25 million.76
The Intermediary Relending Program provides financing to business facilities and community
development projects through intermediaries. The Intermediaries establish revolving loan funds
for this purpose.77
The Rural Business Enterprise Grant program provides funds to public bodies, nonprofits, and
Indian Tribal groups to finance small business enterprises in “urbanizing areas” outside cities
with populations of over 50,000. Grant funds are not provided directly to the business.78
Rural Economic Development Loans can be provided at zero% interest to electric and telephone
utilities. The utility must re-lend the money at zero% interest to a third-party for the purpose of
job creation. Priority is given to areas with populations of less than 2,500 people.
Rural Economic Development Grants are available for rural economic development purposes.
Grants are provided to electric and telephone utilities and are used to establish revolving funds.
The utility must contribute 20% of the funding for each grant administered.79
The Rural Business Opportunity Grant program seeks to promote sustainable economic
development in rural communities with exceptional needs. Grants cover the costs of economic
planning, technical assistance for rural businesses, and training for rural entrepreneurs or
economic development officials.80
75 USDA Rural Business Cooperative Services, Business Programs,
http://www.rurdev.usda.gov/rbs/busp/bprogs.htm.
76 USDA Rural Business Cooperative Services, Business & Industry Guaranteed Loans,
http://www.rurdev.usda.gov/rbs/busp/b&I_gar.htm.
77 USDA Rural Business Cooperative Services, Intermediary Relending Program,
http://www.rurdev.usda.gov/rbs/busp/irp.htm.
78 USDA Rural Business Cooperative Services, Rural Business Enterprise Grants,
http://www.rurdev.usda.gov/rbs/busp/rbeg.htm.
79 USDA Rural Business Cooperative Services, Rural Economic Development Grants,
http://www.rurdev.usda.gov/rbs/busp/redg.htm.
80 USDA Rural Business Cooperative Services, Rural Business Opportunity Grants,
http://www.rurdev.usda.gov/rbs/busp/rbog.htm.
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The USDA Climate Change Technology Initiative seeks to develop and demonstrate
technologies that reduce greenhouse gas emissions from agriculture and forestry. It is expected
that $9.5 million will go to the Forest Service to do research on small diameter and short-rotation
trees, and $4.5 million will go to the Agricultural Research Service to support biomass
conversion technology development.81
USDA’s Renewable Energy Systems and Energy Efficiency Improvements programs assist
farmers, ranchers and rural small businesses in developing renewable energy systems and
making energy efficiency improvements to their operations. Grant funding is available in the
amount of $23 million for projects that derive energy from wind, solar, biomass, geothermal or
hydrogen.82
The USDA manages several programs designed to increase the use of agricultural crops as
feedstocks for biofuels. The Bioenergy and Energy Alternatives Program (under the Agricultural
Research Service) conducts research in ethanol, biodiesel, energy alternatives for rural practices
and energy crops. Emphasis is on developing or modifying technologies, developing energy
crops and improving process economics.83
The USDA Cooperative State Research, Education and Extension Service (CSREES) advances
research and development in new uses for industrial crops and products through its Agricultural
Materials program, National Research Initiative, Small Business Innovation Research Program,
and other activities. Areas of interest include paints and coatings from new crops, fuels and
lubricants, new fibers, natural rubber, and biobased polymers from vegetable oils, proteins and
starches.84
The Department of Energy sponsors the Regional Biomass Energy Program (RBEP). This
program seeks to increase the production and use of bioenergy resources. It supports information
dissemination and demonstration projects which might foster the creation of new industries and
jobs.”85 There is a network of regional offices throughout the United States. Each RBEP region
conducts activities in two areas. Cooperative initiatives are pursued, through which the state
government matches local opportunities with resources to address area-specific problems. This
provides the opportunity to integrate the work of energy, forestry, air quality and other officials.
Region-wide technical projects are also pursued to address issues common to the majority of
member states. Cooperation and cost sharing occurs amongst participating states, private
industry, trade associations, private farm owners, universities, and other federal agencies.
The Clean Cities Program fosters the development of a sustainable alternative fuels market
through the public/private partnerships formed around the country. It includes initiatives such as:
81 Liquid Fuels from Biomass: North America, Impact of Non-Technical Barriers on Implementation, (S&T)2
Consultants, Inc., Canada, September 15, 2000, 45.
82 USDA, Veneman Announces $44 Million in Grants for Renewable Energy Initiatives,
http://www.usda.gov/news/releases/2003/04/0111.htm.
83 USDA, Biobased Products and Bioenergy Coordinating Council (BBCC), BBCC Member Agencies,
http://www.ars.usda.gov/bbcc/USDA_BBCC.htm.
84 USDA CSREES, http://www.reeusda.gov/
85 U.S. DOE Office of Transportation Technologies, What is the Regional Biomass Energy Program,
http://www.ott.doe.gov/rbep/what.html.
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the purchase of alternative fuel vehicles; vehicle demonstrations; infrastructure development; the
reduction of greenhouse gas emissions through increased use of renewable fuels and advanced
vehicle technology, and the development of Clean Cities organizations.
The Biomass Research and Development Initiative is a joint endeavor of several agencies,
headed by DOE and USDA. The purpose of the initiative is to develop a comprehensive national
strategy that includes research, development, and private sector incentives to “stimulate the
creation and early adoption of technologies needed to make biobased products and bioenergy
cost-competitive in national and international markets.”86 The initiative was started under an
Executive Order of the Clinton Administration in support of the goal of tripling U.S. use of
biobased products and bio-energy by 2010.
The Healthy Forests Initiative, initiated by the Bush Administration in 2002 seeks to:
• Significantly step up efforts to prevent the damage caused by catastrophic wildfires by
reducing unnecessary regulatory obstacles that hinder active forest management;
• Work with Congress to expedite procedures for forest thinning and restoration projects;
and Fulfill the promise of the 1994 Northwest Forest Plan to ensure the sustainable forest
management and appropriate timber production.87
The BLM is developing a program in support of the National Energy Policy, the National Fire
Plan and the President’s Healthy Forests Initiative to use the thinnings as biomass feedstock.
The Forest Service, private forestry groups, non-profits, states and universities are cooperating
under the Small Diameter Utilization Program. The objective is to provide information in areas
such as technology transfer, logging systems, forest products and manufacturing, biomass and
marketing.88
The Economic Action Program provided a range of assistance to rural communities. Program
areas included: fuel reduction and utilization projects; bioenergy feasibility studies; wood
product utilization and market feasibility studies; support to modify or develop long-range fuels
hazard reduction; and community economic development planning that expands and diversifies
the use of forest products. More than 1,070 projects were completed in FY 2002. In addition, the
86 U.S. Office of the White House, Executive Memorandum – Subject: Biobased Products and Bioenergy, August
12, 1999, http://www.bioproducts-bioenergy.gov/about/ememo.asp.
87 U.S. Office of the White House, Healthy Forests Initiative, http://www.whitehouse.gov/infocus/healthyforests/.
88 National Fire Plan, accessed September, 2003, http://www.fireplan.gov/reports/perf_rpt_2002/9-16.pdf.
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Forest Products Laboratory Technology Marketing Unit obtained $2 million to encourage the use
of small diameter material and low-valued trees.89
89 National Fire Plan, accessed September, 2003, http://www.fireplan.gov/reports/perf_rpt_2002/1-6.pdf
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Appendix F. Environmental and Socioeconomic Impacts
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Environmental and Socioeconomic Impacts
There are a variety of technologies used to process biomass and convert it into energy. Each
application has different impacts on the local community, the economy and the natural
environment. For example, using biomass in a power plant is different than using it to produce
ethanol. Therefore, we will briefly examine the major positive and negative consequences of
both biomass power as well as biofuels. The economic viability of using biomass is largely
determined by policy barriers and incentives, which are also described in this section.
Air Quality Improvement
Biomass energy has several benefits compared to alternative forms of power generation --
primarily due reduced air pollution and improved watershed management. In addition to
displacing more polluting forms of energy, biomass energy is an environmentally preferable
means of utilizing forest thinnings from forest fire mitigation treatments. Although air pollution
emissions will vary by feedstock, operating characteristics and emission control technology, the
use of biomass power has a generally positive impact on air quality.
In terms of sulfur, biomass contains 0.05 to 0.20 wt % sulfur on a dry basis and has a higher
heating value at about 8,500 Btu/lb. This compares with coal at 2-3 wt % sulfur on a dry basis.
NOx emissions are usually lower for biomass than for coal, due to lower fuel nitrogen content
and the higher volatile fraction of biomass versus coal. However, this difference may not have
much influence on the selection of the technology (i.e., coal or biomass) as the compliance costs
are relatively insignificant given the small difference in NOx emissions.
Some argue that biomass is “CO2 neutral” because the plants or trees used as inputs absorb
carbon dioxide from the atmosphere while they are growing and release it into the atmosphere
when burned. In practice the picture is more complicated. Other carbon flows are involved in the
picture, including CO2 emissions associated with fuel use in harvesting, processing, and
transportation operations that diminish the effectiveness of biomass energy use as a CO2
sequestration strategy. Vehicle use creates carbon monoxide, hydrocarbons, nitrous oxides,
carbon dioxide and particulate matter. Although a biomass plant has lower net CO2 emissions
than a fossil plant, it is also certain that biomass power generation is not a net zero CO2 process.
Due to the air emissions created from burning biomass, the US Environmental Protection
Agency (USEPA) has established guidelines for siting biomass power facilities. In many cases,
data specific to a particular wood-burning appliance are not readily available. In such cases, the
USEPA provides emissions factors that can be used to estimate emissions from wood-fired
boilers as part of efforts to estimate effects of specific combustion sources and determine
applicability of relevant permitting programs. The document “Air Pollution Emission Factors, 5th
Edition, Volume I for Stationary Point and Area Sources,” or AP-42 Emissions Factors, lists
emissions factors for combustion systems that use mechanical particulate collection devices for
emissions controls.90 Emissions factors are specified in terms of pounds of emittent per million
90 U.S. EPA Technology Transfer Network, Air Pollution Emission Factors, 5th Edition, Volume I for Stationary
Point and Area Sources, http://www.epa.gov/ttn/chief/ap42/index.html
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Btu (lb/MMBtu) of fuel burned. The table below shows the emission factors specified in AP-42.
These factors are neither emissions limits nor standards.91
Table F-1. U.S. EPA AP-42 emission factors for wood boilers
Emissions factors
Pollutants (lb emittent/
MMBtu fuel input)
Total Particulates* 0.22-0.3
Oxides of Nitrogen 0.49
Carbon Monoxide 0.6
Total Organic 0.06
Sulfur oxides 0.025
Source: U.S. EPA AP42 http://www.epa.gov/ttn/chief/ap42/ch13/
* Emission factors for systems utilizing mechanical particulate collection devices
Ethanol Plant Emissions
Because no cellulose ethanol facilities exist, data on air emissions is limited to studies that have
modeled expected results. It is likely that emittent pollutant levels will be similar to or less than
biomass power facilities. Indeed, the capture of CO2 may be more likely due to the confined
nature of the fermentation process thereby allowing for more cost-efficient CO2 recovery.
Avoided Emissions
In addition to reducing emissions from burning fossil fuels, forest thinning may help prevent
emissions from forest fires. Recent work conducted by the Canadian Forest Service indicates
forest fires emit substantial quantities of CO2 as well as methane, carbon monoxide, NOx,
particulate matter and other trace gases.92 As a result, fires impact not only carbon sequestration
but emit greenhouse gases.93 The magnitude of the emissions is noteworthy. The Canadian study
found that direct carbon emissions by forest fires ranged from 2 to 75% of CO2 emissions from
all Canadian sources, averaging 18% of the country’s total CO2 emissions.
Scientists at the National Center for Atmospheric Research (NCAR) have found that as much as
"... 800 tons (more than 19 times the amount the EPA estimates is emitted annually from U.S.
power plants) of mercury previously deposited on leaves, grasses, twigs, and other forest
91 U.S. EPA, Introduction to AP-42, Volume I, Fifth Edition, Washington, DC. January 1995,
http://www.epa.gov/ttn/chief/ap42/c00s00.pdf, 2
92 B.D. Amiro, et al, “Direct Carbon Emissions from Canadian Forest Fires, 1959-1999,” Canadian Journal of
Forest Research, 31, 512-525.
93 General Bioenergy, Bioenergy Update, September 2003, Vol. 5, No. 9.
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vegetation around the world may be re-emitted into the atmosphere each year as the result of
forest fires and the burning of other vegetation."94
Mercury and other toxic materials are emitted whether a fire is low intensity or high intensity,
but considerably more is emitted in a catastrophic fire because more vegetation is burned.
Thinning can reduce the extent and intensity of wildfire, therefore reducing forest fuel consumed
and any resulting emissions of toxic materials.
Biomass power generation may provide air quality benefits in rural settings where forest fuels
reduction activities result in open-burning of piled biomass. Burning biomass in a controlled
environment can reduce smoke and particulate matter emissions by 95% to 99% over open
burning. The overall impacts of biomass combustion on ambient air quality, taking into account
potential benefits associated with reduction in open burning, may be a positive factor in the
permitting process for a biomass plant.
Watershed Benefits
Fuels management practices can help preserve the quantity and quality of water resources.
Reducing the risk of catastrophic wildfire prevents long-term impacts on riparian area water
quality associated with increased debris and sedimentation. Wildfire removes vegetation and
exposes mineral soils, which decreases the ability of soil to absorb water. This contributes to the
potential for massive soil movements and mudslides following wildfires; it also affects soil
productivity for years to come.
Forest thinning improves forest aesthetics and prevents forest stands from becoming overly
dense. Excessive forest density can restrict the amount of water yield from forests to riparian
areas and reservoirs, in addition to limiting forest productivity and diversity in flora and fauna.
In socioeconomic terms, excessive forest density can impact the availability of water,
sustainability of timber production and recreational opportunities associated with streams and
lakes.
Economic Benefits
Economic benefits of either a biomass power facility or an ethanol plant result from feedstock
handling and processing activities, plant construction and operation, and product marketing. All
contribute income to the economy, due primarily to employment. In this section we discuss the
following topics: job creation, tax revenue, and insurance implications for biomass utilization.
Fiscal policies and incentives are discussed in Appendix B.
Employment
Biomass benefits include creation and retention of local jobs in a rural economy. For each MW
of installed capacity, six people are employed to maintain the plant and operate the biomass
supply infrastructure.95
94 “Mercury and the Forest,” Forest Products Equipment, February 2002, 10.
95 For California bio-power facilities, in 2003, there are 3,600 direct jobs that support 588MW of capacity.
California Biomass Energy Alliance, Benefits of California’s Biomass Renewable Energy,
http://www.calbiomass.org/technical4.htm .
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For a cellulose ethanol facility, the levels of employment are not as well documented because of
the lack of data. In this report we provide an estimate of direct employment by comparing the
corn ethanol industry and the biomass power supply industry to a potential cellulose ethanol
facility. For the purposes of the employment estimate it is assumed the plant has a capacity of 15
million gallons/year and the feedstock requirements are 600,000 GT/yr (yield of 25 gallons/GT).
Based on experience with corn-based facilities, we assume it will require 30 people to operate
a15 million gallon/year cellulose ethanol facility. Additional staff are required to support the fuel
infrastructure. For fuel processing and delivery, a 6-person crew can deliver approximately six
full chip vans/day (this includes felling, skidding, chipping, and three daily round trips/driver).
At 23 GT/van and assuming a daily consumption of about 1,640 GT for a 15 million gallon/year
facility, then the direct jobs associated with feedstock supply would be about 70 depending upon
the level of mechanization and the travel distance. Thus total direct employment at the plant and
for fuel supply would be on the order of 100 jobs for a 15 million gallon/year facility. Note that
our approach does not include jobs associated with sale and distribution of ethanol.
For comparative purposes, the California Energy Commission estimates that 1,600 direct jobs
would be created to support a cellulose ethanol industry producing 200 million gallons/year.96 On
a job/gallon basis, a 15 million gallon capacity plant would create approximately 120 jobs, which
could include marketing and other functions.
Tax Revenue
Economic impacts from biomass power facilities and ethanol plants can be assessed in terms of
the immediate effects associated with construction of a facility and the long-term impacts
attributable to operations. From a socio-economic point of view, these impacts are characterized
in terms of employment, income and taxes paid. Further, a multiplier effect creates additional
jobs, income and taxes in the local community to support those who are working in the ethanol
or power sector. The indirect effects, and are important and are a key aspect of economic impact
analysis.
Furthermore, many of the expenditures of a specific project will “leak” away from the immediate
area. Examples of leakages include purchases of equipment, fuel, and specialized services in
areas outside the vicinity of the construction area.
Construction-related impacts include income to personnel working on the project, taxes on
wages of various personnel associated with engineering, procurement and construction of the
plant, as well as property taxes on new equipment. Typically the short-term impacts are
considerable and may result in both individual/corporate economic gain and community
economic loss and displacement. While the gain is straightforward to measure, the community
loss may be more difficult to estimate. Community loss is largely a function of impacts on local
services (e.g., schools, health care, public safety, transportation infrastructure) as well as
opportunity losses foregone by the new facility.
Long-term impacts tend to be much higher than immediate impacts if the business is a
sustainable operation. Two separate revenue streams dominate economic impacts. The first is the
purchase of biomass and the subsequent re-sale of the product, either electricity or ethanol. In
96 California Energy Commission, Costs and Benefits of a Biomass to Ethanol Production Industry in California,
P500-01-002, March 2001.
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each case the direct costs and revenues are taxable events that can be modeled with some
precision. The other significant impact is the taxable income of the wages for personnel
associated with biomass processing and plant operations. Finally, the multiplier effect is marked
but varies from site to site due to the specific circumstances of each project.
Results for ethanol economic impact analysis suggest net positive gains associated with a
cellulose ethanol facility.97 In this study a hypothetical 10 million gallon/year facility constructed
in five separate states results in the impacts presented in Table F-3.
Table F-3. Average income, jobs, and state taxes per million gallons of ethanol produced98
Category Value
Gross
Income $919,000
Jobs 14
State taxes $53,000
Net
Income $889,000
Jobs 14
State taxes $51,000
Insurance Impacts
It is difficult to say with certainty the effect wildfires have on property insurance rates. While it
is clear the industry factors in the risk associated with a wildfire, it is also clear there are more
important factors such as a site’s proximity to firefighting resources and historical claims for a
geographic area versus proximity to overstocked forests. According to a State Farm Insurance
spokesman, “Insurance rates are based on historic trends of 10 to 15 years. So far we haven’t had
97 Resource Systems Group, Economic Impact of Fuel Ethanol Facilities in the Northeast States, Washington, DC:
Northeast Regional Biomass Program, December 2000, http://www.nrbp.org/
98 Resource Systems Group, 21.
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enough history with wildfires to determine a trend” (in reference to the impacts of increasing
wildfire activity in the wildland-urban interface).99
Currently, there is no talk of reduced rates for properties that clear combustible vegetation from
near structures to create a “defensible space” that reduces the risk of damage, but there is talk
that insurance companies will raise the rates or drop coverage for homeowners who do not create
defensible space, or place moratoriums on new policies in fire prone areas.
99 James Dietrich and Laura Lewis. “Homeowner Insurance Rates Will Increase Independent of
Wildfire Costs,” Southwest Colorado Fire Information Clearinghouse, accessed September 15, 2003,
http://southwestcoloradofires.org/articles/article16.htm.
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Appendix G. Equipment Quote from Jackson Lumber Harvester
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September 2005 G-3 Red Lake Tribe Biomass Assessment
September 2005 G-4 Red Lake Tribe Biomass Assessment
September 2005 G-5 Red Lake Tribe Biomass Assessment