Wood-to-Energy Market News

From the October 2010 Forest2Fuel newsletter.

After months of halting progress in wood-to-energy markets, two companies have announced significant contract milestones. These advancements help strengthen the argument for biomass energy at a time when economic uncertainty continues to hamper investment in as yet unproven technology and government agencies propose standards that could place wood-burning plants in financial hardship.

BlueFire
Advanced biofuels technology loan guarantee programs (offered by the USDA and DOE) require that biofuels projects finalize credit worthy contracts in three areas before loan guarantees will be approved. BlueFire Renewables’ planned Fulton, MS cellulosic ethanol plant has become the first facility to meet these requirements.

At the beginning of October, BlueFire completed its Engineering, Procurement and Construction (EPC) contract with Wanzek Construction, which is owned by MasTec, Inc. For a fixed amount of $296 million, Wanzek Construction will engineer and build the cellulosic ethanol plant. This figure includes the construction of a $100 million biomass power facility onsite.

Less than a month earlier, BlueFire entered a fifteen year off-take agreement with Tenaska Biofuels. BlueFire also signed a 15-year contract with Cooper Marine and Timberland for biomass procurement that provides wood chips, wood waste and small branches from their four wood chip mills in Alabama and Mississippi.

“Having recently announced off-take and feedstock agreements for our Fulton, Miss. plant, BlueFire Renewables has now satisfied all stated requirements to move forward on an agreement with either the DOE or USDA for a loan guarantee to complete financing of the project,” stated Arnold Klann, CEO of BlueFire.

Santee Cooper
In the effort to increase the percentage of renewable energy available to their customers, the board of directors at Santee Cooper has signed contracts with two wood-based renewable energy suppliers with current or planned South Carolina facilities. The two contracts combined provide Santee Cooper with an additional 95 MW of renewable energy.

Providing 50MW, the 15-year power purchase agreement with Domtar acquires energy from the recent addition of a wood-burning generator at its Bennettsville, SC pulp and paper mill. The generator was installed to provide steam from wood waste for the paper making process. The contract still must be approved by Domtar’s board of directors, but there appears to be no foreseeable complications to its acceptance.

To garner the remaining 45 MW, Santee Cooper signed a 30-year contract with Southeast Renewable Energy (SRE) to purchase all power generated from three 15 MW wood-burning power plants which will come online starting in late 2012 or early 2013. Two of the three facilities will be located in Dorchester and Kershaw Counties, SC while the third location has yet to be announced. Each of the three facilities will cost approximately $50 million and provide twenty full-time jobs for the local economy.

This contract is also very significant for SRE. As Raine Cotton, president and CEO of SRE, puts it, “Securing a power purchase agreement is the most important part of the planning and development stage for the biomass industry. If you don’t have an off-take, you can’t build a biomass plant.”

“These contracts significantly increase the amount of renewable power Santee Cooper can provide to our customers and signify our continuing commitment to environmental stewardship and economic development in our state,” said Lonnie Carter, president and CEO of Santee Cooper.

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