Setting up a bioenergy project

Author: Liz Hamilton

Bioenergy can be generated using a variety of technologies and is highly scalable; from domestic wood heaters to industrial-scale combined heat and power (CHP) plants that generate hundreds of megawatts. Because the technology and scale options are so wide, planning and development considerations vary significantly from project to project.

Bioenergy projects are particularly appropriate where:

• Heating and/or cooling, and electrical energy are both needed
• Cheap biomass resources are readily available
• Waste is produced as part of an existing food or fibre-producing enterprise

Identifying biomass resources and availability

The first step in determining a bioenergy project's potential is locating sufficient resources, available at a low enough price. Identifying biomass supply can be one of the most challenging aspects of developing a bioenergy project, but it's critical to its success. For example, woody biomass fuel can account for 80% or more of a bioenergy project's operating costs. For developers and financiers, uncertainty about the security or price of fuel supply may be a major obstacle to development.

It's important to identify:

• The type of fuel source is available
• What quantity of the fuel is available
• How consistent the supply of the fuel is, i.e. how does the supply change with time.
• The energy content of the fuel source (many laboratories can assess the energy and chemical content, and likely emissions from biomass feedstocks)
• The cost of the fuel
• Any security of supply issues — are long-term supply agreements available?
• What, if anything, the biomass resource is currently used for, and potentially competing future uses
• Any potential for substituting one biomass feedstock with another if there's interruption to supply

Know your fuel

It's important to know what fuel you are dealing with and how prices are quoted. Biomass prices are quoted in green tonnes, dry tonnes and bone dry tonnes or even by volume, such as by the cubic metre. A green tonne of biomass fuel may only weigh half of that when bone dry.

Fuel supply chain

A new fuel supply chain may be needed. This depends on the scale of the project, and whether biomass is used to fuel a Biomass Conversion Facility, (BCF) on-site — for example, as part of a food-processing waste stream — or if it needs to come from elsewhere, such as from forest harvesting operations. If it needs to come from off-site sources, a project developer should look into how the biomass crop is produced, harvested, processed, stored, transported and delivered. All have cost implications for the project.

For more on bioenergy value chains, see the reports 'Biomass Energy Production in Australia' - Status, costs and opportunites for major technologies, Stucley et al, (2008) - RIRDC publication No 04/031 and ''Bioenergy from Agriculture in Victoria — The Value Chain', DPI, (2010), Turnbull et al.

Choosing the right site for a biomass conversion facility

Finding the best location for a bioenergy project is also critical to its success. Where a biomass conversion facility (BCF) is proposed for an existing business or industrial site, its design may be dictated by available space, layout and other facilities that contribute to it.

If it's likely to be on a new greenfield site, there are several things to consider:

• Can the heat and/or electrical energy it produces be used on-site, nearby or fed into the power grid. If BCF power is intended for the grid, how easy is it to connect?
• How close is the BCF to an ongoing demand for heating or cooling, and electricity?
• What are the co-generation options? The combined production and use of both heat and electricity helps maximise the energy potential of the biomass and therefore return on investment. For example, tri-generation projects often use the thermal energy generated on-site for cooling   systems such as refrigerators. Industries and buildings that typically use thermal energy for heating and/or cooling include schools, hospitals and food processing industries — they often have central hydronic water-heating systems and/or large refrigeration systems.
• How much space is available relative to the physical size and siting requirements of the plant and its associated buildings?
• What other infrastructure is needed, like power lines, underground cables and fuel storage areas?
• Is there a need to access a source of electricity or gas, or a water supply for example, for anaerobic digesters or gas scrubbing and cooling systems?
• What waste streams, if any, will be generated and how will they be treated, stored and disposed of? Is connection to the sewage system required?

Storage facilities

Storage space may be a significant factor in BCF design, layout and total ground space. Things to consider:

• Whether fuel is processed on-site or bought in.
• How much fuel needs to be stored to ensure continuity of supply?
• Frequency and volume of fuel deliveries.
• Possible seasonal fluctuations in feedstock supply.
• Desired moisture content of fuel.
• The type of fuel, e.g. whether it needs to be stored under cover.
• Potential risks of spontaneous combustion
• Any visual impacts, or dust and odour issues.

Delivery access

This needs consideration and may be affected by:

• Space limitations.
• The type and capacity of fuel delivery trucks and potential impacts on businesses and residents along delivery routes.
• Peak time delivery traffic or seasonal changes.
• Road and bridge weight limitations between the fuel supplier and the BCF site.

An example of woody biomass requirements is the 25 MW Woodland BCF in California, which burns up to 725 tonnes of woody waste each day - around 40 truckfulls.

Disposing of solid or liquid residues

BCF developers need to think about the methods and cost benefits of reusing or disposing of energy production bi-products, such as ash or biosolids from anaerobic digestion. Nearby businesses may have uses for these bi-products and this can help reduce overall running costs, making the project more financially viable. For example, Colac's proposed biodigester will generate heat and electricity, as well as a liquid fertiliser which will be sold to a nearby composting business.

Connecting to the grid

Proximity and connectability to the grid need to be established early in a BCF project's development, unless the electricity it produces stays on-site or goes to a nearby customer sharing the same title of land.

Generators over 5MW may require licensing through the National Electricity Market (NEM) to sell electricity to the grid. This depends on the size of the project and how it's sold.

Power generators need a Grid Connection Agreement if the power is to be sold beyond the BCF’s title boundary. This may mean upgrading the local grid's capability, which may add to BCF set-up and running costs.

Also, exporting electricity to the grid will usually require a Power Purchase Agreement (PPA) with an electricity retailer. This can take many months, so it's worth starting this process as early as possible to avoid delays in the project.

Technology assessment

Choosing the right bioenergy technology can be complex. Bioenergy encompasses a wide range of biomass types and conversion processes and there are many technologies for different scales and levels of commercialisation. What's more, many available, widely promoted technologies and products haven't been independently verified yet.

There's also a wide choice of different technologies, designs and specifications for the same processes, and you may get conflicting recommendations when you start looking into what's best for your project. Matching your biomass feedstocks to the best available technology may require considerable research and, for large projects, expert independent advice.

A good starting point for information on the current status of bioenergy technologies is the IEA Bioenergy report — A Sustainable and Reliable Energy Source , 2010, and the joint RIRDC / Bioenergy report — An Overview of Bioenergy in Australia , 2010.

Feasibility studies

Most bioenergy projects require an initial feasibility study. Matters to consider include:

• The range, availability and security of supply for biomass resources for your project.
• Whether output is used on-site, exported to other users or fed into the grid network. Will the project require a grid connection? If so, what would the likely costs be? Are there neighbouring industries willing to buy heat and/or electricity, and are they willing to enter a long-term purchase agreement?
• Identify the range of processes and technologies you can use to convert biomass into bioenergy.
• Whether this method of bioenergy production the best, most cost-effective use of the resources.
• Whether a risk assessment is necessary.
• The comparative costs of alternative energy sources.
• Site, environmental or social factors that may impact on the projects’ development and affect the project costs.
• The eligibility of the project for grants, tax concessions and other incentives.
• Who the likely financiers/projects investors are.

Community consultation

Depending on the type, size and expected impact of your proposed bioenergy project, community and stakeholder consultation may be a legal requirement. In Victoria, check with Dept of Planning and Community Development and your local government planning authority.

At least some degree of community consultation is a good idea, anyway. During the early stages of project development it helps:

• Improve community and stakeholder understanding of the projects’ aims, benefits and likely impacts.
• Incorporate community ideas and improvements, as well as increase the community's support and sense of ownership for the project.
• Address any concerns early on, especially those that may impact on or even prohibit the projects’ development.

Community consultation will involve engaging with groups and individuals likely to be affected by the new development, such as those living nearby or along biomass delivery routes. The type and scale of community consultation should be :

• Agreed on and started as early in the projects’ development as possible.
• Clearly tailored to the community's needs.
• Appropriate to the scale, type and stage of development.
• Appropriate to the likely level of impact on the community.

Stakeholder consultation is likely to include local government, state regulatory and planning authorities, and community interest and industry groups. Formal approvals are likely to be required from a number of authorities, and it is the developers’ duty to determine their approval requirements.

Economics

Determining your projects’ economic feasibility is likely to be the most critical part of developing your project and should be considered as early in the planning stages as possible.

Determining project costs

The main project costs are likely to include:

• Development costs associated with feasibility studies, planning and design, community consultation, development applications and approvals, and environmental impact assessments.
• Capital expenditure on the procurement of a site, plus construction of the bioenergy plant and its associated infrastructure, such as powerline upgrades and, in the case of electricity generation projects exporting to the grid, a grid connection.
• Procurement of feedstocks. In some cases, feedstocks can provide a source of revenue where there's an existing or future cost put on alternative disposal options for waste feedstocks, such as transport and disposal at a landfill.
• Feedstock delivery — work out the maximum delivery distance, and hence area, that will be viable, (both now and in the future) and determine if ongoing biomass can be sustainably supplied to the BCF from within that area.
• Ongoing operations including administration, maintenance and licensing.

Determining project revenue

Sources of revenue may include:

• Sale of electricity. If electricity is to be sold off site, find out if your project is eligible for Renewable Energy Certificates (RECs).
• Sale of thermal energy for heating and cooling — thermal energy produced from bioenergy isn't currently eligible for RECs.
• Savings from using generated electricity on-site. If some or all of the electricity and/or heat is to be used on-site, then you need to make sure it's at least as cost-effective as the current energy system or alternative energy sources. From time to time, favourable grants and incentives   become available that may make other options e.g. solar hot water or heat exchange systems, more cost effective than bioenergy.
• Savings on waste disposal costs such as landfill.
• Sale of bi-products such as liquid and solid fertilisers.
• Potential future revenue when a price is put on carbon in Australia.

Government grants and other incentives

Eligibility for government grants and incentive programs can help improve your project’s financial viability. This can be very helpful when demonstrating viability to potential investors. These programs often focus on regional and industry development, energy efficiency, climate change mitigation and renewable energy generation.

These programs change frequently, so before applying for financial help, contact the administering department or organisation to find out if the funding criteria are relevant to your proposal, and that funding is still available. 

Legal matters

Some of the legal issues that you will need to consider include:

• Fuel supply contracts, which may need to be long-term, especially for larger projects needing large feedstock supplies, or from a potentially limited source. Waste is only waste if nobody wants it. Today’s low-value waste streams could be tomorrows high-value commodity if new markets and competing end-uses are found for them.
• Liability and penalties for failure to supply feedstocks.
• Grid connection agreements with you local power distributor.
• Power purchase agreements (PPAs) with electricity retailers.
• Registering your generator with the NEM — for generators over 5 MW.
• Licensing and approvals from the DPCD and the Environment Protection Authority.
• Other state and local government environmental and planning approvals.