October 2001 - Logging and Sawmilling Journal -

With higher energy costs, wood residue power generation is proving viable in projects across the country.

Anexus is defined as the point at which everything comes together. If the $55-million thermal power generating plant being constructed by Boralex Inc in Senneterre, Quebec is any indication, the use of wood residue as a feedstock for power generation in Canada is now at that point. A combination of recent events has brought about more favourable conditions for the use of wood residue in power generation.

While they have eased since earlier this year, higher costs for natural gas and electricity are the major forces that have levelled the playing field between generating power using traditional and well-utilized fuels, such as water, coal, natural gas and uranium, and using alternative fuels such as wood residue. Conditions are particularly favourable in remote areas where large wood waste stockpiles currently exist, either from sawmills or pulp mills, and where the cost of power from traditional sources can be very high. The cost of natural gas has risen because of its reputation as a low emission fuel.

Electricity price increases are a consequence of widespread increased power demand in North America, driven by the information age. The more "wired" society becomes, the greater the demand for electricity to power those communication tools. The trend toward deregulation of the electrical industry in North America has also brought both turmoil and opportunity to the electrical industry, if the brown outs in California are any indication.

The most glaring Canadian example of electrical industry turmoil is Alberta, where the cost of power at one point more than doubled for some medium size sawmills. The price increases on natural gas have added another half million dollars per year to the power bills of some mills. "My suspicion is that we will probably see a good half dozen biomass projects announced across Alberta over the next year or so," says Neil Shelly, director of environmental affairs for the Alberta Forest Products Association. However, the trend toward power generation using wood residue is a national phenomenon. For example, the Domtar sawmill in White River, Ontario is already benefitting from its partnership with private power producer Drayton Valley Power.

Domtar's White River, Ontario operation has a partnership with Drayton Valley Power for a 7.5 megawatt plant that consumes 450 tonnes of wood residue a day. A portion of the power is sold to Domtar, with the balance sold to Ontario Hydro.

A 7.5-megawatt power plant consumes 450 tonnes of wood residue per day from a stockpile located at Domtar's mill site. A portion of the generated power is sold back to Domtar and the rest is sold to Ontario Hydro. As part of its green energy commitment, BC Hydro has announced a 25-megawatt electrical generating facility situated on the Lytton Lumber Ltd sawmill site, which would primarily use wood waste as its feedstock.

Constructing the power plant will also improve air quality in the region by displacing the mill's beehive burner, currently used to burn wood waste. The project has received permitting approval from the Nicola Thompson Regional District and, when operational, will create employment for 28 people. BC Hydro is currently finalizing a key principles agreement and electrical purchase agreement with independent power producer Lytton Power Inc, which is seeking financing for the project.

There is also considerable interest in thermal power generation using wood residue in Canada's second largest forest products manufacturing province. Quebec private power producer Boralex Inc owns various types of power plants in Canada, the US and France. It began investing in wood residue power generating plants in 1998 and the company now owns seven thermal power generating plants using wood residue as the feedstock. Two are in Quebec and five are in the American northeast.

These plants now represent two-thirds of the company's total power generating capacity. In addition to its 28-megawatt power plant in the Lac St Jean area north of Quebec City at Dolbeau and a new 34-megawatt plant near Val D'Or in northwestern Quebec at Senneterre, it recently purchased two thermal power generating facilities using wood residue feedstock in Maine. "Our motivation was certainly to try to upgrade the use of bark, which in most cases was landfilled," says Yves Rheault, Boralex vice-chairman and vice-president of business development.

In addition to the costs of landfilling itself, forestry companies have also faced considerable additional costs in transporting the wood waste to landfills. Boralex Inc is focused on larger thermal power generation plants. Its criteria for constructing new installations or investing in existing power plants are feedstock availability, close proximity to the wood waste stockpile, coincidental use of steam heat produced from the thermal power generation process in a co-generation application and cost effective connection to the provincial or state power transmission grid.

Rheault says that about 200,000 tonnes of wood residue is required annually for a 20-megawatt power plant. He adds that Boralex is definitely in growth mode given current market conditions. "We would certainly be interested in looking at potential projects in Ontario, Alberta and British Columbia-no doubt about that," he says. The federal government has also recognized the potential of wood residue in thermal power generation and has even stepped up to the plate with a financial incentive program through Natural Resources Canada.

The Renewable Energy Deployment Initiative (REDI) aims to help business and industry purchase certain types of solar and biomass heating systems. Eligible businesses and corporations will qualify for a contribution of 25 per cent of the purchase and installation costs of a system, to a maximum of $80,000. This program is good news for small sawmills that face the prospect of installing stand-alone power generators, which are looking at substantial capital equipment costs.

It's estimated that a 50 million board feet per year sawmill wanting to construct an on-site generator capable of producing 2.5 megawatts of power faces a capital cost of $4 to $5 million. In addition to the privately-owned and operated power plant located in White River, another good example of a remote community gaining substantial benefit from burning wood residue is the north-central Quebec community of Ouje-Bougoumou.

The community's 750 Cree residents have been displaced at least six times in recent memory because mining companies have had the annoying habit of finding something worthwhile to exploit right beneath their communities. According to Ouje-Bougoumou community advisor Paul Wertman, the group ended up living in squalid conditions on the edge of highways. It took 10 years of negotiation and planning, but in the early 1990s they finally established a permanent village.

With the village's remote location, though, its residents faced horrendous hydro utility bills to heat their homes. However, the area had an abundance of wood residue being stockpiled at several local sawmills. They were under considerable government pressure to make use of this massive amount of wood waste. "For many years, village residents passed by the Barrette-Chapais sawmill and its growing mountain of sawdust," says Wertman. "Given the Cree conservation philosophy, it seemed like such a waste and they always wondered if there was something that could be done with it."

When it came time to plan the village, the community did some research and discovered the existence of heat generating systems based on burning wood residue. With an investment of $2.5 million, they installed a system that generates enough energy to heat 150 residential units, public administration buildings, a school, clinic, business centre and a church. The federal government made a minor financial contribution of between $50,000 and $100,000 to the project, but has been even more helpful with ongoing advice. Wertman says the system is fairly easy to operate and provides employment for three people.

He adds that without this project, residents would have ended up paying twice as much for their hydro compared to what they pay now. Furthermore, the money residents save in heating their homes stays in the community. "With capital costs paid for, the only thing we need to cover in the way of rates are the operating expenditures," says Wertman. "We're in a position where we can control and even reduce the rates, based on operating expenses." See sidebar on page 22.

The community trucks its wood waste fuel from the Barrette-Chapais sawmill 25 kilometres away and during peak use will consume two truckloads a day. Until recently, the wood waste was free. Now, the community pays a nominal fee, because a private power generation company has set down roots in the area and pays for its wood waste fuel.

Wertman says he feels this type of heat generating system has plenty of potential for other remote communities, even if it means chipping their own wood. Alberta forestry consultant Don McMillan concludes that companies interested in generating power and/or heat using wood residue should ensure they investigate options before going ahead with a project. "It is not a simple solution by any means, and you need specific expertise in the field to marry the right technology with the right fuel source," he says. "But is the technology there? Yes, most definitely, and it is proven."

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