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Using Biomass to Weather Colorado Winters

Tiny Oak Creek, Colo., faces harsh winters and an ever increasing fossil fuel bill to keep its 600 homes and businesses warm. A newly established wood pellet producer thinks he has a way to cut the town's fuel bill.
By Jerry W. Kram
Some say paradise can be found on Colorado's Western Slope amidst the towering mountain peaks and the clear, cold, rushing mountain rivers. These people tend not to mention the bitterly cold winters and the ever more expensive fuels that have to be trucked over mountain passes to keep homes and businesses warm and cozy. This dependence on fossil fuels is ironic considering the vast biomass resource available in the mountain west.

Tucked away in this slice of heaven is the town of Oak Creek, Colo., just down the road from Steamboat Springs, also known as "Ski Town, USA." Oak Creek, with a population of less than 1,000, is very different from neighboring towns, which are dependent on providing amenities for tourists. Oak Creek was a coal mining town settled in the late 1800s, says Angie Krall, former mayor pro tem of the town. Several high-quality coal veins underlie Routt County, and they drew in a diverse population of immigrants from all over the world. "The town attracted every sort of person you could imagine," she says. "Oak Creek was the ‘diversity town' in the region back then and still is in a lot of ways. You have a lot of third- and fourth-generation folks still living there, which is kind of unique. It's a real blue-collar town that's proud if its coal-mining heritage."

While there is still an active coal mine in the area, by and large the mining industry has been declining in the area since the 1950s. However, that coal mining heritage could play an important role in moving Oak Creek and other small communities to a future where biomass is as important as "king coal."

A Grid of Their Own
Once powered by coal, Oak Creek is kept warm during the frigid mountain winters mostly with propane these days. Not only do the residents face the escalating cost of fossil fuels but also the rising cost of getting that fuel to the community. As energy prices escalate, some residents are turning back to coal. Moving back to coal would have a dramatic impact on the local air quality though as Oak Creek is cloistered in a mountain valley where winter temperature inversions trap smoke and soot in dead-still air.

A turning point came when the town's school decided to replace its decades-old heating system. The coal-fired boiler was nearly 80 years old. The school district decided to replace the boiler with a biomass-based system. The dedication for the new heating system was a big event in Oak Creek and even attracted Colorado Gov. Bill Ritter, who symbolically shoveled the last scoop of coal into the old boiler. "Some of us thought if the high school could do this, why not the town?" Krall says. "The school was using a local source of energy, coal, and moved to a new local source of energy."

Early in its history, Oak Creek generated its own electricity from coal. The municipal utility that distributes power still exists, although it now purchases its electricity from a Nebraska utility, Krall says. The city-owned utility has access to credit and funding that the town itself doesn't. That opens the door for the community to explore options that might not otherwise be open to it.

Out of Crisis, Opportunity
One of the driving forces behind the installation of the biomass boiler at the school was the establishment of a wood fuel pellet plant in nearby Kremmling. Confluence Energy LLC was founded by Mark Mathis and began producing in June 2008. Although the company is new, it is already expanding, and is in the process of adding a third mill that will increase the plant's capacity to 120,000 tons of production per year.

Biomass turned out to be the answer to several thorny problems on the Western Slope, not just high fossil fuel prices. The dominant tree in the region is the Lodgepole pine.

These trees grow rapidly, but have a short life of only 60 to 80 years. Decades of forest fire suppression have allowed the forests around Kremmling to get to the end of the trees' natural life span. An epidemic of pine beetles has swept through the forest, turning green hillsides red and leaving behind mountains of potential fuel for catastrophic fires. "We were trying to make lemonade out lemons," Mathis says. "We wanted to be part of the solution if we could. So we developed the first whole-log pelleting facility in the United States."

While some of the dying trees can be salvaged for lumber, smaller trees and trees that have been dead too long are better suited for wood pellet production, Mathis says. "We grade out all the usable wood for timber and house logs and then we take the rest of it and make renewable energy products out of it."

After working with Oak Creek on its school, Mathis became intrigued with the town's potential for district heating. He had visited many small communities in Germany and Austria that relied on biomass-powered district heating systems and was convinced such an approach could work in the United States. But when he first approached Oak Creek, he was just looking for people who might be interested in heating their individual homes with wood pellets. "We had a town meeting and I wanted to talk about our product and how we could save them money individually on their heating bills," he says. "For some reason I opened my mouth and said I had been to Europe and seen the district heating systems and that might be a viable alternative for them."

Mathis put together some preliminary financial numbers for a follow-up meeting with the community. "They decided that it was attractive enough that we should pursue it," he adds.

Still a Dream
Oak Creek has a number of advantages that lend itself toward a district heating solution. First, having its own municipal utility gives the town an operational home for the project, not to mention access to credit and grants. Second, the 400 to 600 homes and businesses in the community are clustered together tightly, reminding Krall more of a European village than an American town. Finally, it has a nearby source of reasonably priced fuel. Most of the town's streets are gravel, so no pavement would have to be torn up to install the pipes to carry hot water to peoples' homes. "There are four or five things that make this kind of system work for Oak Creek that other areas don't have," Mathis says.

These advantages may not be enough to make creating a district heating system practical, Mathis warns. Oak Creek and Confluence Energy are still conducting feasibility studies to make sure the project's price tag is within the community's reach. "We need to get a really tight focus on what it is going to cost to get five miles of pipe put into the ground," he says. "We also need to know how big the pipe will have to be, how deep it needs to go, how we would go about plumbing each individual house and how that would be handled."

Even if the price isn't too high, there are other roadblocks that could derail the project. A primary concern is the level of community adoption of the project. Mathis says at least 75 percent of the homes and businesses would need to agree to switch to district heating for the project to be worthwhile. "We can lay in the biomass system, that's no problem," he says. "But how do you incentivize and put the funding together to get a big enough take on this thing? You can put in all of the infrastructure you want, but there is a cost to retrofit each house for that kind of a system. How do we get our arms around that piece of it?"

Mathis says his company has some experience in the financial markets that makes him believe that the local utility could create a rebate system for customers who retrofit their homes. That cost would be incorporated into the utility's debt structure. "So customers would get most of their costs paid for," he says. "There might be a little bit of cost they have to absorb, depending on how cumbersome it is to retrofit their home. Every house is different."

The project isn't far enough along and no decisions have been made about what kind of technology would be used for the biomass burner. Mathis says his company will be able to provide the community pellets, sawdust or wood chips, depending on what technology is chosen. "We want to be that fuel provider at the end of the day," Mathis says. "However, we haven't gotten far enough along yet to decide what is going to make the most sustainable, long-term sense. In Europe I saw all those fuels being used, but transportation becomes an issue, sustainability becomes an issue and how much hassle each town wants to take on. Pellets have advantages, but they are going to be a little more costly than a dried chip."

While the opportunity for Confluence Energy is speculative at this time, the company is devoting resources to work with Oak Creek. Mathis says the company has brought on a project manager to work on the system and hopes to have firmer numbers to present to the community in a few months. "At some point, it will start costing some dollars and Oak Creek will have to pay a little money to take a serious look at this thing," Mathis says. "We are trying to help them out to find out if it is even worth trying to do the feasibility piece of it. We should be able to put a scoping number on this thing to say, ‘this makes sense.'"

While there could be roadblocks ahead, Mathis remains enthusiastic. "We know we can put funding together for a plant like this over a 20-year period, so I can't possibly imagine that we can't make it work," he says. "It's unfathomable to me and I am willing to pony up and get the right pricing on the fuel. This is something that this country needs to do. Oak Creek can be a wonderful example of what this country can be doing to solve its energy needs."

In Mathis' best case scenario, Oak Creek residents could be enjoying biomass-powered central heating by 2010.

A Bright, Warm Future?
If Oak Creek decides to pursue biomass energy, there are other options for the community on the horizon, which Krall says could really benefit the town in the long run. "We own our own grid and there is great potential in firing that with electricity from biomass," Krall says. "It is interesting that Oak Creeks' high [electrical]use time is winter. But in the Midwest, the peak time is in the summer when everyone is running their air conditioners. My dream for Oak Creek is to improve its enterprise so we can get more money in to fund our general fund."

Sales and property tax revenue often don't cover Oak Creek's general fund expenses. This has made the town reluctant to allow developers to do projects in the town, fearing more development could overtax existing facilities. "We fear we don't have enough money to cover the impacts on the infrastructure," Krall says. "We're not sure if people would move here, and if they do, if they would spend their money in Oak Creek. Many of the smaller communities around here are bedroom communities and the money is spent in Steamboat."

Biomass could be the stabilizing force that would give Oak Creek the financial base that would allow it to grow in addition to providing relief from excessive energy prices for residents. "It's a way that we could really create a business opportunity for ourselves, while cutting peoples' heating costs," Krall says. BIO

Jerry W. Kram is a Biomass Magazine staff writer. Reach him at jkram@bbiinternational.com or (701) 738-4920.
 

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