Biomass cogeneration scheme solves waste disposal for Australian wood company

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An Australian wood products manufacturer has turned its waste disposal problem into a renewable fuel for a cogeneration scheme which now supplies steam, power and energy on site. Tracey Colley reports.

Big River Timbers (BRT) is an Australian family owned company located at Grafton, in north eastern New South Wales. It produces rotary veneers, plywood and other structural panels, producing approximately 20,000à‚ m3 of plywood annually, which accounts for about 87% of its total production. The waste wood chip is stockpiled at the front of the property, and on several occasions wastewater run-off from the wood waste piles, which typically contains wood tannins, had run off site. Excess wood chip from the production process was, in the past, transported off site to the nearby Harwood Sugar Mill Cogeneration scheme to be used as fuel, or exported overseas via Brisbane or Newcastle for paper production. According to the Australian Greenhouse Office, once biomass is transported more than 50 km for combustion in electricity production it becomes financially unviable, largely due to the vast quantities of cheap coal available in Australia.

BRT looked into the possibility of installing an on-site cogeneration plant, but the initial investigation indicated that the project was not economically viable due to the high capital cost of the unit and the relatively low electricity costs prevalent in Australia at the time. In 2000 the BRT plant needed a new boiler, and although cogeneration was still economically unviable, the company decided to spend some extra money on design to leave a future cogeneration option open. The new wood waste fired boiler purchased in 2001 has reserve capacity and the capability to be upgraded to produce higher pressure steam than was currently being used in the production process. The 500 kW biomass-fired cogeneration project was a long time coming and was finally fully operational in April 2007, after a ten-year evolution.

During the early 2000s, electricity prices started to rise steadily, and by the end of 2004 had exceeded the price levels prior to deregulation of the electricity supply industry. It was this exposure to rising electricity prices relative to the sale price of the primary product, Formply, which prompted a renewed interest in the cogeneration project.


Wood chips ” from waste disposal problem to renewable fuel
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Coincidentally, at the same time the Forest Industry in the State was being restructured, with additional forest areas being transferred into National Parks where they would no longer be accessible to forestry operations. Part of this Regional Forestry Agreements process included a sweetener for the industries and related communities that would be adversely affected by this, in the form of the Forest Industry Structural Adjustment Package (FISAP). BRT applied for and was successful in obtaining a grant through this programme for approximately 20% of the capital cost of the project, which amounted to more than AUS $360,000 (€215,180).


Figure 1. Proposal development timeline
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The cogeneration plant assists in solving a local environmental issue for the site. By utilizing the wood waste in the cogeneration plant, the amount of waste stockpiled on site is minimized as is the amount of water used to manage the waste stockpiles. The cogeneration plant will effectively reduce the need for these large stockpiles, which will improve the general appearance of the plant area.

Jim Bindon, Managing Director of Big River Timbers said: ‘What makes this project attractive is not only the economic saving and solid payback, but the positive environmental contribution, both in terms of waste utilization and renewable energy production.’

Technology details

The fuel used is mill waste and wood chip, which are all generated on site as a by-product of the manufacturing processes, such as green veneer (random pieces, over trim and the residual core of the log) and plywood offcuts.

High pressure steam (3800 kPa) is used on site for a log steaming process where logs from the forest are steamed, then peeled. The pressure is then reduced for various other processes, such as drying the wood veneers and as the heat transfer medium for drying in the plywood presses. Processes operate 24à‚ hours a day for 5 days per week, with the occasional Saturday shift to match outstanding orders as required.

The cogeneration project means that the site can use process waste to produce steam in a steam engine. High pressure steam (35 bar and 244à‚ºC) is produced in the boiler and directed to the steam engine, where electricity is generated. The steam leaving the steam engine is of a sufficiently high pressure and temperature (1.5 bar and 127à‚ºC) still to be used in the factory.

The cogeneration plant operates at the same time as the process i.e. 24 hours a day for 5 days per week. In the event of a grid failure, the plant can continue to operate by shutting down the veneer peeling and drying process but continuing to operate the plywood process.

In the late 1990s the Engineering Manager, Leigh Morley, visited the Ligna fair in Germany where he encountered the Spilling engine company. The final plant configuration is a 500 kW Spilling steam engine, with an installed cost of AUS $1.84 million (€1.1 million). This included the steam driven generator, condensing tower, electrical switchgear, construction, upgrading of existing factory pipework and upgrade to boiler ancillaries (pumps, controls and safety equipment). Some of the aspects of the Spilling engine which suited the BRT application were its optimum power efficiency at full and partial load due to volumetric control, low feed-water treatment requirements, simple operation, insensitivity to variable steam flow rates and ability to be maintained in-house ” this is particularly important given the regional location of the BRT site.

The unit has been operating as expected, producing approximately 350 kW on average with a peak of approximately 425 kW, averaging 18à‚ MWh per month. The plant had some issues with water carry over from the boiler into the cogen unit during the early operations, but this has since been rectified. This equates to about 19 tonnes CO2 saved per month, based on the current emission factor of 1.06 kg CO2/kWh for NSW electricity.

Feasibility of power export

Considerable effort was expended during the feasibility stage in recording steam flows throughout a production day, to ensure that the cogeneration plant would meet the process heating needs. Part of the study looked at the pros and cons of steam engines compared to steam turbines for this application. As the steam requirement of the process can vary, it was discovered that although steam turbines were capable of achieving higher efficiencies under ideal circumstances, they would not respond as well to the varying steam rates as would a steam engine.

The feasibility study investigated capital costs and performance characteristics for a number of different brands and technologies based on the actual steam flow rates, to ensure that the most economic solution for the BRT plant was selected, within BRT’s required financial hurdle rate. The scheme allows for electricity to be exported back to the grid in the event that on-site generation exceeds on-site electricity use. On average, the cogeneration unit provides 40%”50% of the mill’s electricity needs.

Another benefit of the consistent electricity generation is the potential for reduction in peak demand charges, which can account for a substantial proportion of the total site electricity bill. However, actual operating experience has been mixed, and BRT would advise other sites considering cogeneration to proceed with caution if considering including this factor in their economic feasibility study. For this to work, it would require a renegotiation of the electricity supply contract to reflect that cogeneration units will not be 100% available, while recognizing the other benefits of cogeneration. There are now eight electricity retailers operating in the NSW market and as retailers do not obtain some of the key benefits of cogeneration (but rather network owners do), this market failure ” a disconnect between the true value of cogeneration and the value the host site can obtain for it ” is likely to continue.

Renewable energy certificates

As the plant is using biomass from sustainably managed forests, it qualifies for Renewable Energy Certificates (REC) as part of the Federal Government’s Mandatory Renewable Energy Target (MRET). The overall contribution of RECs to the economics of the project is minimal.

Engineer Manager Leigh Morley says ‘In the case of small-scale generation schemes RECs are the icing on the cake. The largest saving comes about through offsetting electricity purchased from the grid, where you are offsetting retail priced electricity. When you export to the grid, you will only be paid the wholesale price’.

The RECs were valued at AUS $40/MWh during the project evaluation and, unfortunately, the price dipped down to almost half that value during the early stages of the project’s operation.

The financial expectations for the project at the time of construction were that it would exceed a 10.2% internal rate of return (IRR) and have a payback period of 6.2 years, which means that, from the company’s perspective, it was only marginally economical. If RECs returned from 2.5 cents to 3.5 cents, the IRR would improve to 11.9% and the payback period would drop slightly to 5.8 years. The long-term strategic value of cogeneration, together with the environmental benefits, were seen as significant, so the project was approved despite its marginal nature.

Thankfully, the REC market has since recovered, and is now above the value used in the initial economic feasibility study.

Operational experience

The project was commissioned in February 2007 and fully operational by April, so has had a whole year of production. The plant has achieved the projected rate of return, and the log steaming process, which uses the post-engine steam, has benefited from the upgraded control system. Boiler loads have become more stable and the boiler system has, therefore, become easier to manage. Neither of these two points was included in the economic evaluation, and so constitutes an additional financial benefit to the site.

On the downside, there were initially problems with water carry over and condensation in the main high-pressure steam line, which took about six months to eliminate. This resulted in some damage to the cogeneration unit, process downtime and the cogeneration unit not meeting targets for the initial operating period. Since the problem was identified and remedied, it has not recurred and the cogeneration unit has been performing as predicted in the feasibility study.

Perhaps the most significant change since project commissioning has been an external factor ” the electricity prices currently on offer in the market have risen another 40% compared to the figures used in the project evaluation. This could bode well for future biomass projects based on residues from sustainably managed forestry operations, although at present there is still a need for support for the upfront capital costs.


Spilling steam engine
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On the downside again, the failure to achieve a reduction in demand charges has been a disappointment which is not likely to be remedied in the near future. This issue will require regulatory reform to be fully addressed. The BRT plant was sized to be sub-export, so that it only meets a part of the plant’s electricity needs.

If larger-sized plants utilizing wood waste from renewable sources were to be built in this industry, allowing export of renewable power to the grid, ideally plants would also be given a premium price for the power, perhaps through a feed-in tariff which reflects the total system benefits of cogeneration or at least a premium rate for power exported during the electricity network system peaks (summer afternoons), basically a ‘reverse’ critical peak pricing arrangement.

Summary

The timber industry as a whole may yet follow the lead of Big River Timbers ” biomass power production is viewed as the next logical step in value adding.

Jim Bindon, Managing Director commented: ‘We believe that we’ve got an obligation to try to utilize the resource that we use to its absolute maximum and I think the timber industry has been long criticized for not utilizing its waste stream as well as it could. Our view is that generating power is probably the best way to utilize that waste’.

Despite the initial hiccups, with the lower-than-expected REC price and initial operational glitches, the project is now performing technically as predicted and a number of the economic indicators have improved since the economic feasibility study, so what must have seemed like a gamble at the time has turned out to be a wise investment for the future of BRT.


Tracey Colley is with Sustaining Australia, Stockton, New South Wales, Australia
e-mail: traceycolley@optusnet.com.au


Big River Timbers

The company has achieved chain of custody (CoC) certification under the Australian Forest Certification (AFS) Scheme, which provides purchasers with an internationally recognized assurance that the products are produced through sustainable forest management.

All of the timbers processed by BRT are sourced from sustainably managed hardwood and softwood plantations and regrowth hardwood forests which are regulated by the State Government. This management system permits the extraction of only the annual incremental growth of the forest, which ensures that the log supply is not only renewable but also sustainable over the long term.

Recent process upgrades, such as laser-guided saw systems, have been designed specifically to reduce process waste levels. To allow for smaller log diameters, BRT installed a new lathe system with smaller spindles and a core drive to maximize the amount of veneer obtained from each log.

BRT has been supplying timber products to the Australian market for over 100 years and is Australia’s leading supplier of formply and formwork products to the heavy construction industry. In 2003, it exported 200 tonnes of formply that was used to build a bridge across the Panama Canal ” an example of the strong overseas demand for the product due to its strength and durability. Hardwood Formply can be reused up to 80 times, compared with local Asian products which can be reused only three to six times.

BRT has invested heavily in value-adding, which is reflected in the fact that it employs 2.5 times as many people per log when compared with traditional sawmilling operations. It produces eucalypt flooring and has developed a number of value-added products which utilize thin veneers ” these are peeled off logs in the rotary veneer plant and maximize the yield from each log.

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