Bailing out renewables

23 March 2004

Pohjolan Voima's bioenergy programme, which recently won an EU award for promotion of renewables, represents a total investment of 620 million euros. Most significant is the new wood energy procurement technology based on baling. By Juha Poikola, PVO

Pohjolan Voima (PVO) is emerging as a significant wood and peat user in Finland. By 2005, PVO's bioenergy programme will use about one third of all the peat and one fourth of solid bio fuels (excluding black liquor) consumed in Finland.

It is characteristic of PVO's investments in CHP that for each separate project the various parties (eg industrial plant, municipality and electric utility) have been brought together to form a workable entity and have invested jointly in order to secure the availability of heat and power at a competitive price.

For new power plants, the proportion of fuel purchased on the market is increasing. For instance, only a third of the fuel needed by Alholmens Kraft is obtained from byproducts produced at the local pulp and saw mill.

Using forest chips

An important part of the PVO bioenergy programme is to increase the use of forest chips, with extensive R&D projects addressing fuel potential, harvesting technology, wood receiving and handling, and combustion. There is room for improvement in the quality and price competitiveness of this fuel source.

When acquiring forest chips, PVO aims for the same economies of scale as with industrial wood procurement. If the competitiveness of forest chips cannot be secured, there will be ever increasing use of peat, which again is contradictory to environmental goals.

The use of biomass is also subject to the risk of fuel non-availability. The harvesting of peat is weather-dependent, and the amounts of bark and sawdust available depend on general levels of industrial activity. The low price levels associated with such fuel render long transport distances impossible, so import of solid bio fuels is not profitable at present.

Experience at three plants illustrates aspects of PVO's experience to date.

Vaskiluodon Voima, Seinäjoki

Seinäjoki is a 300 MWt biofuel fired CFB boiler. It started up in 1990 and produces electricity and heat for the city of Seinäjoki. Initially it used almost 100% peat as a fuel. But the long term plan is to increase the use of wood up to 20%, which is about 400 GWh annually.

Wood use peaked in 1998, at 16%. But after 1998 the demand for wood fuel has increased in its catchment area and the plant has not been able to sustain the increase in wood use. Why?

4 Location

There are lots of good peatlands around the power plant. Peat transportation distances are short and peat is very competitively priced. The plant is not able to afford wood fuel.

4 Lack of a stationary crusher

Use of a mobile crusher is about 1-2 euro/MWh more expensive than having a fixed crusher at the plant site.

4 Limitations on receiving and handling different fuels

With only one receiving station, it is difficult to mix peat and wood to form a homogeneous fuel. To minimise the risk of corrosion and erosion, green forest chips have to be well mixed into the peat.

4 Lack of storage

With wood supply and demand not in balance and fluctuating over the year, the plant needs increased storage to allow it to buy at the best prices.

Kokkolan Voima

Kokkola is a 80 MWt biofuel fired BFB boiler, which started operation in 2001. It is producing electricity and heat for Kokkola city and uses wood and peat in about equal proportions. Fuel procurement is hampered by the fact that the world's biggest biofuel power plant is located just 35 km away. So fuel demand in the area is high. A second problem is that the plant runs for only 7 months in a year as during summer the district heating provided by the plant is not needed.

However, the plant has 70 000 loose cubic meters of storage. So it is able to receive wood during the summer when the demand in the area is lower. It can also make use of the warm summer months to dry the material. A further advantage of this large storage capacity is that the different kinds of wood fuels can be mixed to achieve a homogeneous fuel with stable moisture content.

So fuel procurement for Kokkola is relatively low risk. At the beginning of the heating season it has almost half of its annual wood fuel in storage at the plant site and 100% of its peat requirement is in storage at the peat production site.

Alholmens Kraft, Pietarsaari

Alholmens Kraft is a 600 MWt biofuel fired BFB boiler plant. It also started production in 2001. It produces electricity, steam and heat for the city and for the adjacent paper mill. The annual fuel requirement is about 3-4 TWh, with demand following the electricity market price. As already noted, only a third of the fuel needed is obtained from pulp and sawmill byproducts.

To keep fuel costs as low as possible and to ensure reliability of fuel supply so as to guarantee operation under extreme conditions to meet high electricity demand during cold winter periods, a wide range of fuels was required. To combine the combustion of wood with peat, with coal as a reserve fuel, CFB technology was selected, which also meets strict emissions standards.

A lot of resources went into the design of the forest fuel procurement system. A key decision was to obtain most of the forest fuel with a logging residue bundler, a product developed by Timberjack.

Four years on, this choice of technology has proved to be a success story. The technology has spread all over Finland and export markets have opened up. The breakthrough year was 2002, when 17 machines were sold, while 2003 saw the first machines exported, to Spain, USA and Sweden.

Logging residues have been the mainstay of forest fuel. But today new sources are being used, with stumps and young forest energy wood providing the greatest potential.

The three main critical success factors for Alholmens Kraft forest wood procurement are:

4 Use of a stationary crusher

With a crusher in operation plant is able to buy all sorts of wood fuel: residue bundle; stumps; unchipped loose logging residues; import wood which has to be crushed; bundled agrofuel etc.

The capacity of the Alholmens Kraft crusher, with two 500 kW motors, is 400 loose cubic meters per hour. This allows trucks to unload directly into the crusher without extra waiting time.

For volumes higher than 150 GWh/a, the crusher (supplied by BMH Wood Technology), with an investment cost of 1.55 million euro, is very competitive.

4 Motivation

When bringing a new technology into the forest it must be remembered that energy wood is only a marginal business compared with wood procurement for industrial uses. Today the value of energy wood is about 1% of the value of industry wood. Therefore it is essential that energy wood operations support industry wood procurement. In most cases the same people are involved in both.

Some energy wood procurement technologies have encountered a wide range of problems in the chain from forest to plant: organising the work; machine reliability; bad storage; damage to roads; stones etc. This has meant too much extra work for those involved.

In contrast, baling has proved to be almost a problem free technology, easy to adapt to existing industry wood procurement practices. In particular, the forest contractor needs only one additional machine to start production and the new machine is very similar to the technology the contractor is familiar with.

Also the supervision required is minimal, with forest companies able to use the same GPS-based IT systems they use for energy wood procurement.

It is easy to motivate forest professionals to start producing energy wood when the technology is reliable and easily organised. This motivation has stayed high over the four years since plant start up and the volumes are still rising.

4 Cost effectiveness

Nevertheless, the baling machine is an expensive 'extra' machine in the procurement chain. Is this offset by cost savings in subsequent transport and wood handling?

One thing that makes baling competitive is the possibility of achieving a high utilisation factor, in terms of effective working hours per year, thus lowering the cost of capital.

The baling machine operates as an independent unit and its work is easy to organise. So when the supply of forest cuttings ceases, eg in mid summer, it is still possible to keep working.

Road transport is also very cost effective for energy wood because the same trucks that are used for industry wood can be used and in the Pietarsaari case the relative quantities are such that energy wood is a marginal additional workload for existing trucks and so can be very cost effective. For example, when the sawmill has a stoppage, the released truck capacity can be used for energy wood transportation.

With the right technology you get high volumes and economies of scale further lower costs. With effectively organised work, minimal breakage time, and high annual working hours, the technology has proved to be competitive. The current procurement cost for a logging residue bundle (including crushing) is about 8-10 euro/MWh, depending on transport distance, with a typical cost breakdown as follows (euro): payment to harvester, 0.3; baling, 3.6; forest haulage, 1.3; transport, 2.4; crushing, 1.0; and organisation, 0.4.

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