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June 10, 2013 By Mackinnon Lawrence, principal research analyst, Navigant Research    Recent data released by the Energy Information Administration (EIA) paints a cloudy picture for electricity produced from biomass — or biopower — in the United States.   According to EIA, total net electricity generation from wood biomass reached 37.54 TWh in 2012, increasing less than 0.2 percent over 2011 totals (37.45 TWh).  Relative to wood biomass production, electricity produced from waste biomass jumped to 20.03 TWh in 2012, representing a 4.2 percent increase over 2011 totals (19.22 TWh). Both segments trail growth rates observed among competing renewable technologies like wind and solar. Installed biopower capacity across Europe is nearly four times that of the U.S. and, according to Navigant Research forecasts, electricity generation from biomass in the region is expected to reach nearly 300 TWh by 2020 under an aggressive scenario. Sluggish expansion in the U.S. belies biopower’s potential as a renewable source of baseload power production.  Dedicated large-scale facilities — defined as power stations with installed capacity in excess of 50 MW — for a time, were hailed as potential cornerstone players in emerging renewable energy portfolios. Using either wood biomass or the biogenic fraction of municipal solid waste (MSW), these facilities have substantial potential. Waiting for Harvest Proponents point to a range of potential biomass sources across the country that could support broader scale-up efforts. The thinning of forests across the Western U.S. produces an abundance of fuel while reducing the threat of wildfires, a danger that has ravaged many Western states in recent years. Pine beetle infestation across the Rocky Mountain region has led to efforts to identify potential markets for millions of acres of dead timber. ______________________________ The biopower industry must galvanize support in Washington despite a checkered public image. ____ _______________________ Despite the availability of this fuel at no cost, save for the expense of aggregating and collecting it, access has proven to be logistically challenging. Much of this biomass is located on federal land, which under existing federal regulations and protected by a complex patchwork of laws designed to support broader conservation efforts. The hard-to-harvest nature of these resources, which are scattered across millions of acres of variable terrain, also prevents their aggregation at a price point that can simultaneously pay for the service while also competing with incumbent fossil fuel resources. Beyond logistical challenges associated with feedstock aggregation, challenging economic conditions have also led to anemic growth in recent years. Shale gas, in particular, has emerged as a cheap and abundant source of fuel for baseload power generation across the U.S., and could serve as a bridge fuel for renewable power generation technologies, just as a slew of coal-fired plants are scheduled to sunset or shutter operations due to tightening emissions regulations under proposed Environmental Protection Agency (EPA) regulations. Meanwhile, the logistics associated with collecting, aggregating, transporting and processing biomass feedstock drive up the cost of biopower production considerably. Based on the National Renewable Energy Laboratory’s transparent levelized cost of electricity (LCOE) database, dedicated biopower facilities operations and maintenance (O&M) costs are on average 40 percent to 240 percent more expensive than natural gas. Project developers indicate that biopower facility economics decline rapidly once feedstock is sourced beyond 50 miles. Combined with a lack of 24/7 applications for heat c-produced at biopower facilities, the cost of unsubsidized electricity generation from biomass can be prohibitive.   Greener Pastures While larger dedicated biopower facilities face significant headwinds, a number of biopower-related opportunities are beginning to materialize across the United States. Growing demand for biomass that has been compressed, or “densified” to support aggressive bioenergy targets across the European Union, is driving a boom in the pellet production capacity in the U.S. Southeast.  Unlike the Western U.S., much of this forest cover sits on private land and is already harvested for commercial purposes by a well-established lumber industry.  Supporting biopower stations of more than 100 MW across the European Union, European utilities such as RWE and Drax have vertically integrated their operations by owning and operating pellet production facilities in Georgia and Louisiana. United States pellet production is expected to expand from three million tons in 2009 to 10 million tons by 2015. Integrated biorefineries, which are primarily designed to produce advanced biofuels and biochemicals, represent a potential growth area for electricity production from biomass as well.  First-of-a-kind facilities have recently commenced production providing electricity for onsite consumption and export to the grid. Under an optimistic scenario, Navigant Research forecasts that nearly 5 GW of new cogeneration capacity at biorefineries could come online by 2020 in the United States.  This represents an eleven-fold expansion over installed generation capacity in 2012 (465 MW). To realize potential growth in these segments, the biopower industry must galvanize support in Washington despite a checkered public image. Scrutiny over emissions, sustainability, and deforestation has led to the cancellation of projects in several states and made policymakers reluctant to extend the incentives needed to support industry growth. Ultimately, biopower’s future in the U.S. remains promising, but for now the sector lacks the right mix of incentives and market signals to drive faster expansion. About the Author Mackinnon Lawrence is a principal research analyst contributing to Navigant Research’s Smart Energy practice, with a focus on advanced biofuels and bioenergy. Lawrence has extensive experience as an attorney, consultant, and analyst with deep expertise on topics ranging from environmental policy and international affairs to clean energy. Continue reading →