Biomass Utilization and Incentives for Power Generation
This document outlines key improvements and strategies for enhancing biomass utilization in power generation projects. It covers topics such as increasing project size, accessing various power markets, and enhancing federal incentives. The content also discusses thermal customer development and maximizing power sales prices to promote sustainable energy practices.
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Presentation Transcript
Making P-J Biomass Utilization Pencil Tools & Incentives Bill Carlson, Principal Carlson Small Power Consultants P-J Restoration & Utilization Summit December 8, 2010 Las Vegas, NV
Improving the Base Case 10 MW Project, no steam sales $95/MWH electric sales price in 2013 Federal PTC, state sales & property tax reductions 6% Construction, 4% long term debt interest 30% Equity, 15% return Pays $25/BDT for fuel -Chipping/delivery cost of $20 Page 2
Improvement 1 Making Project Bigger 17MW Project could pay $50/BDT for fuel Requires agency vision and cooperation Approx. 7,000 acres/yr Work with local small utility on use of transmission system Page 3
Improvement 2 Increased Power Sales Price Assumed sold to NV Energy at interconnect with MWP or LCPD Duplicate solar carve out in NV RPS for biomass Biomass only bid to support P-J restoration SRP experience Extra REC s for biomass $15/MWH increase raises fuel price to $44 REC s for thermal sales Page 4
Improvement 3 Access to Other Power Markets California market most lucrative in U.S. California utilities have delivery points in Las Vegas area and at Intermountain Power Local utility must value firmness, voltage control, elimination of losses Local sale through Deseret G&T in Ely area Page 5
Improvement 4 Enhanced Federal Incentives Extension of 30% federal grant vs. use of Production Tax Credit Full PTC for biomass vs. current Credit for combined heat and power through federal RPS, Section 48 Tax Credit Biomass definition that allows use of P-J restoration products Page 6
Improvement 5 Develop a Thermal Customer Characteristics of good customer Takes >10% heat rejected from T-G Takes low pressure steam or hot water Has limited seasonality, day of week variations Will be there for long term Has acceptable credit Such a customer raised fuel value to $36/BDT Ore roasting, prison, green industrial park Page 7
Improvement 6 Enhanced Financing Package Federal direct loan best outcome (USDA, RUS) Potential application of New Market Tax Credits (Ely) Nevada allows industrial development revenue bond sales Need to obtain early construction financing Need to drop equity below 30% (20% equity raises fuel price to $36) Any financing package will require ironclad fuel availability Page 8
Conclusion With the status quo, a moderate sized P-J biomass power facility cannot afford to pay full restoration cost, but can contribute above the cost for fuel chipping/transport. Other users or changes needed to approach full restoration cost recovery. Page 9
