Building Big in British Columbia

Two firms with long histories of investment in alternative energy are partners in a Canadian biomass power venture.
By Bruce Dorminey | February 24, 2016

Nestled where the Nicola and Coldwater rivers join, Merritt, British Columbia, is the first major community along phase one of the Coquihalla Highway, which serves as a portal to all other major highways to the B.C. interior.

Lying 450 miles northeast of Merritt is district municipality Fort St. James, which rests on the shore of Stuart Lake in the Omineca Country. Forestry is a leading economic contributor in each of these small communities, which are in the process of becoming homes to twin biomass power plants.

Canadian investment fund Fengate Real Asset Investments and Veolia North America are in the latter stages of completing the two 40-MW power facilities, projects that could further interest in wood residues, roadside debris and sawmill waste as viable feedstocks.

The pair of $235 million, biomass-fired electricity generation facilities will generate power for B.C. Hydro under 30-year power purchase agreements (PPA). The Fort St. James facility may become operational as soon as July, with the Merritt facility coming online by late this year. Upon completion, the two plants will be among the largest woody biomass energy plants in North America.

Veolia will operate the facilities under an operations and maintenance contract, while also securing a steady supply of biomass for each of the plants, material that will be supplied by local partners. The facilities are being designed and constructed by Iberdrola Energy Projects Canada Corp. under an EPC contract. Each facility is expected to consume some 200,000 dry tons of biomass, mostly sawmill waste, and each generate more than 285,000 megawatt-hours to power more than 40,000 homes for a year. 

The projects were initiated after Veolia and Fengate won a public tender offer by B.C. Hydro for construction and operation of the two plants, along with a PPA. Debt financing of $180 million for each facility was secured from five banks, with the partnership expected to generate some $800 million in revenue over a 30-year period.

“These 40-MW plants will generate continuously, but that still makes up less than 1 percent of B.C. Hydro’s total power output on any given day,” says Fadi Oubari, vice president and head of development and western operations at Veolia Canada. Oubari says there are no differences between the two plants other than their wood yards, and they are the same for a reason: to optimize operation costs.

At Fort St. James, which is roughly 75 percent complete, there are three biomass silos, whereas at Merritt, there is a fuel yard of biomass piles, says Brandon Tracey, Fengate Canada’s manager of power and utilities.  Merritt is about 80 percent of the way done, he notes.  

At Merritt, construction around the boiler is moving along, Tracey says. The conveyors that will move the raw feedstock into the plant are about two-thirds of the way finished. The steam turbine building is constructed and the offices are up, he says, and a lot of the major equipment is on-site, but piping and electrical connections are yet to be made. 

As Oubari is only too aware, these are complex, time-consuming projects.  “We have a lot of biomass projects in Europe and these are our first two in North America,” he says.

Perhaps the biggest challenge and variable is in securing and managing the feedstock itself, from collection to getting it to the boiler. 

Forest to Fuel
Once raw material arrives by truck at the facility, Oubari says it is exposed to magnets to ensure that it is metal-free, as metals wreak havoc on the plant’s state-of-the-art Siemens boilers. The wood is then analyzed for moisture and goes into a sieve that captures chips that are too large to be processed in the boiler. These “overs” go into a bin and are later recrushed into smaller chips, according to Oubari.

The right-sized material is conveyed into an FSE grate stoker boiler and burned to produce high-pressure steam that expands into a Siemens condensing steam turbine that generates up to 40 MW. A small amount of the generated power is used to meet the plant’s needs, but the lion’s share is sent to the B.C. Hydro grid at substations only a few kilometers from each plant. 

Once the steam has expanded, it is sent through air-cooled condensers and re-liquefied, and then circulated back into the boiler. Oubari points out the closed-circuit nature of the process, in that it requires only a limited amount of water that is recirculated; there are no cooling towers and few chemicals involved. Fuel gases are treated in an electrostatic precipitator to remove fly ash as it goes through the plants’ fuel exhaust stacks, he adds.

In all, the plants will directly or indirectly create some 160 new jobs over the course of the projects’ three decades of operation, during which power will be purchased by B.C. Hydro at a standard offer price of $109 per MWh. “Our job has been to make sure this plant has enough biomass for the duration of this PPA and that we’re going to be able to generate power at the price B.C. Hydro is willing to pay,” said Oubari.

For large biomass plants, it’s not so easy to find a 30-year resource, says Taraneh Sowlati, a professor and expert in woody biomass supply chain management at the University of British Columbia in Vancouver.

Gauging Supply
At least part of the impetus for B.C. Hydro’s tender offer was prompted by the government of British Columbia’s efforts to get rid of dead trees decimated by the mountain pine beetle, according to Oubari. Dead trees create a fire hazard that most foresters would like to see alleviated, and many believe it makes sense to remove and use the dead and dying wood.  Lodgepole pine is most affected by the beetle, and if it’s not disposed of within a few years, it cannot even be used for pulp. 

And, as Sowlati points out, once a tree is dead, the beetles will move to another healthy tree and kill that one as well. Thus, if a plant relies on residues and chips from trees killed by the beetle, Sowlati says, the maximum feedstock it could supply may only be five or 10 years. So, while beetle kill is a good start for a large plant’s multidecade needed fuel supply, it hardly represents a resource panacea.


But Oubari remains bullish on woody biomass, if only because of its renewable benefits. “We are using a fuel that has [heretofore] been burned as waste, and then we are displacing energy created by coal-fired plants,” he says.

But that doesn’t mean that North America is ready to fund woody biomass power plants in the same way that it has solar and wind. Oubari points out that Europe is definitely ahead in woody biomass energy, especially in France and Scandinavia. 

“Europe has bought into the notion of going to greener fuels and is in the process of mixing wood with coal or replacing coal with wood entirely,” says Dan Parrent, regional biomass coordinator with the U.S. Forest Service in Anchorage, Alaska. “It’s not all economic in Europe, some of it is socially driven.”

It’s a tougher sell in North America. For example, in Alaska, coal-burning plants are still economically viable in a way that woody biomass isn’t, says Parrent.  And in coal-rich states like Wyoming, West Virginia and Pennsylvania, the same logic applies.

Bankers see the fuel procurement as a big risk, Oubari contends.  And he notes that it’s challenging to find a one-stop shop that can put the project together—manage fuel procurement, engineering, construction and operation. “We are this one-stop shop, and that’s why we have been successful in biomass,” he says.  “Veolia has been successful because we can manage all the components of a project.”

U.S. investors are wary of woody biomass projects that don’t involve an experienced operator. “Most of the time, these projects are promoted by someone who is generating the waste, but has no experience putting together a complex biomass project,” Oubari says.     

Parrent agrees, noting that large steam power plants are mostly fueled by natural gas or coal. “Right now, those fuels are very inexpensive relative to wood,” he says.

Since Veolia and Fengate have a locked-in PPA, the partners say fluctuations in the price of more conventional energy commodities, such as natural gas, oil and coal, will have little impact on their operating revenue.  Even so, the economics of the larger energy markets can still have an impact on decisions to construct woody biomass plants. Sowlati says the economics of woody biomass electricity plants can vary greatly from region to region and each case, because woody biomass plants depend on a ready supply of woodchips and residues within an acceptable distance of the site itself. 

Parrent says for a 40-MW plant, suppliers will likely need to reach out beyond a 100-mile radius to obtain the necessary woody biomass. “That’s a long way to ship wood; you can ship a lot more Btus shipping coal per unit of weight,” he says.

Even so, there may be other ways to economize on operating costs as Veolia is demonstrating.  For example, ashes created by the boilers can also generate marginal revenue via use in farming, silviculture and in the case of the lighter fly ash, as an additive in cement, says John Turner, Veolia’s vice president of operations for British Columbia.

Veolia is constructing three deepwater wells in the Fort St. James area, Turner adds, and water needed for the Merritt facility will come from the city of Merritt itself. Any wastewater that emerges from the facility will be clean, he says.

Neither partner seems to be dissuaded from working with each other again, if a new woody biomass opportunity arises. Both Veolia and Fengate say that they would welcome the development of similar wood biomass energy projects. “Our relationship has been good, but projects like this are pretty unique,” Tracey says.

Oubari adds that he and his partners are betting that a combination of the recent beetle kill and a healthy logging industry in north central British Columbia will keep these two new plants sufficiently fueled for the next three decades.

Author: Bruce Dorminey
Science Journalist/Author
brucedorminey@gmail.com
Twitter:@bdorminey