Tuesday, February 27, 2024

Options burning up for heat processors

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Biomass is an energy option more South Island processors are considering as they look to replace coal-fired boilers in response to the Government’s plans to have new instals banned at the end of this year and all phased out by 2037.
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BioEnergy Association NZ chief executive Brian Cox estimates up to 9% of farmland could be committed to biomass for boiler fuel.

Biomass is an energy option more South Island processors are considering as they look to replace coal-fired boilers in response to the Government’s plans to ban their installation at the end of this year and phase them out by 2037.

A recent Energy Efficiency and Conservation Authority (EECA) report found 90% of high temperature boiler operators in Canterbury and Southland prefer biomass to electricity as a coal option due to cost considerations.

The preference signals good news for both woodlot owners and foresters, and for landowners looking to plant some or all their land into trees.

Wood is proving the main biomass fuel source, either as waste timber, wood chips or pellets.

Jonathan Pooch, managing director of DETA energy consultants that led the data survey for the EECA project, says the uptake in use and interest signals the edge of the bell curve, with early adopting companies leading the way.

“It is all growth from here, in that there needs to be a significant uplift of both biomass supply and biomass demand in order for end users to decarbonise in a meaningful way,” Pooch said.

Perhaps surprisingly, given the demand for timber for export, forest biomass is in a competitive position now as a fuel option as energy costs reach a tipping point.

“Right now, you could throw a blanket over your three options in the South Island: coal, forest biomass and electricity,” he said.

“The increase in ETS carbon values is pushing up the price of coal. There are some interesting long-term supply contracts for the electricity market, based on a Tiwai exit scenario.

“And for forestry biomass, with the recent slide in export log values, you would probably be better off supplying lower-grade timber for the local biomass market.” 

The South Island is limited in its coal fuel alternatives, not having geo-thermal sources or piped natural gas available. Electrification can be expensive and subject to some volatility, depending on power prices.

Pooch says it was often thought that if and when Tiwai Point smelter were to shut, there would be sufficient power surplus to meet a shift from coal to electricity.

“But the shortfall between what Tiwai frees up and what is needed is still significant. For South Island demand alone, it is about 700mW. In itself, by closing down it won’t be enough to provide heat for all the boilers in the South Island,” he said.

Supply of biomass fuel varied across the South Island, with Southland and mid-North Canterbury “not too bad”.

“South Canterbury could pose some challenges with some big users there,” he said.

But he says the key issue with biomass right now is not so much lack of supply, as a need for better market aggregation.

“There needs to be a coherent relationship between suppliers and users. There are going to be some users that will be simply too big for one supplier,” he said.

“An aggregator also provides an opportunity for some smaller landowners with biomass such as shelter belts or small woodlots, who will need to be part of some supply side aggregation to grow the supply volume.

“There is a lot of scrambling going on behind the scenes for biomass sources right now, but the level and regularity of the conversations need to increase.”

BioEnergy Association chief executive Brian Cox says his estimates are that on average 6-9% of all farm land could be economically committed to biomass growing.

On flatter country, such as Canterbury, this could include triple-planted shelter belts run as managed crops.

While EECA has worked on estimated demand for biomass, he is currently working on potential supply by region.

He says total demand will also be heavily influenced by the conversion of Huntly power station to biomass, along with transport fuel demand for biofuel.

“We estimate we could probably source 60% of what we would need from existing sources. The other 40% would have to come from somewhere, and farmers could play a role in that,” Cox said.

Nationally, Fonterra is estimated to require three to four million tonnes a year of biomass to replace coal across all its processing plants. Necessary wood supply for this equates to 150,000-200,000ha of forest.

Fonterra head of energy and climate Linda Mulvihill says the company has talked to suppliers across NZ and had confidence in their ability to meet its future energy needs.

Alliance has announced investment in decarbonising its three South Island plants, including a mix of electricity, heat pump technology and waste heat capture. Silver Fern Farms already uses wood chips in plants and received funding for a $2.6 million heat-pump conversion project at its Pareora site.

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