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2017 NH Business Energy Education Series: Vol 16 – HB1116 – The PUC Order On Met Metering is Delivered

2017 NH Business Energy Education Series
Aug 14, 2017 8:16 am
Written by Harold Turner
0 Comments

HB1116- The PUC Order On NET METERING is Delivered, …………and now what?

 

Arguably, the biggest legislative battle in 2016 on the energy front in New Hampshire was Net Metering (see Post #5).  That process eventually culminated into the passage of HB1116, which required the New Hampshire Public Utilities Commission (PUC) to issue an order in 2017 on changes to the old law and pricing structures…….which it just did.  Below is a quick outline of the PUC’s order done by the New Hampshire Sustainable Energy Association (NHSEA).

 

Information provided by the NHSEA:

The PUC released their final Order on net metering on Friday, 6/23/17. It is a mix of the two filed settlement proposals, and is generally reasonable and will maintain a strong industry, is good for consumers, and makes positive conclusions about cost-shifting and the benefits of DER, but keep in mind we are still combing through it. Highlights from the Order and listed below. The full Order can be found on the PUC’s website here.

To explain and discuss the Order in greater detail, NHSEA gave a webinar as part of the Local Energy Solutions series on Monday July 3, from noon – 1:00. You can view the free webinar HERE.

 

  1. The new NEM rate begins on September 1, 2017. This date may be later if utilities can’t update their billing systems in time to reflect the new NEM regime. Customers must be given 30 days notice in advance of the new rate start date.  

 

  1. Grandfathering – all existing NEM systems are still grandfathered through 2040.  NEW systems (under new rate) also grandfathered through 2040. 

 

  1. Small systems ≤100 kW are still credited monthly at 100% of retail energy and transmission charges but only 25% of distribution charge; the customer will receive monetary bill credits instead of kWh credits (allowing cash payment if customer moves or annual credit balance exceeds $100)

 

  1. Large systems >100kW are still credited monthly at the default energy rate; bill credits now monetary instead of kWh.

 

  1. All customer-generators must pay non-bypassable charges (system benefits, stranded cost recovery, storm recovery) based on full amount of electricity imports without netting exports.

 

  1. Monthly Netting is maintained to measure net imports/exports – except all non-bypassable charges will be charged on all (gross) imports and will not be credited on any exports.  

 

  1. Value of DER Study: Eversource must perform a marginal cost of service study within twelve months (of Order date) to inform the Value of DER study. Value of DER study will focus on solar and small hydro and use a 10-15 year framework for the analysis. Staff will direct/manage the study, hire a consultant to help perform it, and will begin by convening a workgroup to develop scope of study within two months’ time of this Order.  Note: That meeting to form the workgroup is set for August 16, 2017 at the PUC.

 

  1. Statewide Cap- No new cap was set (so effectively the cap has been removed).

 

  1. Pilots – Four pilot programs are approved, including: Time-of-Use (Eversource and Unitil only), shared bill credits for low/moderate income customers, Real-Time-Pricing for one municipality (Lebanon), and a non-wires alternative pilot.

 

  1. 20% Onsite Use – If a customer-generator uses at least 20% of the system generation onsite, then they can receive the group net metering rates without registering as a group host and going through the GNM protocol with the PUC, etc. 

Practical bill impacts for a customer-generator with solar PV: An example from ReVision Energy (2017 Eversource Electric Rates):

  • Customer Charge (per month): $12.89 (unchanged)
  • Energy Charge (per kWh): 11.17 cents (still 100%)
  • Transmission Charge (per kWh): 2.39 cents (still 100%)
  • Distribution Charge (per kWh): 4.21 cents (now 25% = 1.05 cents)
  • Stranded Cost Recovery Charge (per kWh): 0.032 cents (no netting)
  • System Benefits Charge (per kWh): 0.356 cents (no netting)
  • Electricity Consumption Tax (per kWh): 0.055 cents (repealed in state budget)
  • Current net metering credit value (systems ≤100kw): 18.16 cents (excl. repealed tax)
  • New net metering credit value (≤100kW): 14.61 cents (80% current)
  • Difference = 3.55 cents (20% loss)

 

 Questions in the Order requiring response within 30 days (PUC will facilitate):

  1. Should the subsequent sale of solar array or property on which it is installed entitle the new owner to continue to be net-metered under the grandfathered tariff provisions?
  2. Should the subsequent expansions of/modifications to solar array be entitled to net metering under the grandfathered tariff provisions?

 

That was a quick, but enlightening, rehash of the full Order, which you can read here .  I would encourage you to also click on the link HERE and follow the NHSEA webinar to learn more about what it all means to you.  NHSEA has about a 30 minute presentation and another 30 minutes of questions and answers …….both parts will help you out if you want to understand net metering better in New Hampshire going forward.

 

Now, a few of my “business” opinions on what is ………and is not included in the order for the larger system sized “business” consumers:

1) There is no increase or decrease to the electric rates credited for projects >100KW.  Some of you may think that’s a good outcome …………not me.  Going to 101KW doesn’t automatically impact the utility’s distribution system, any more than 100KW did.  Basically, “small” projects got a 25% credit on Distribution System costs and “large” projects got a 0% credit.  The wires won’t know the difference going to from 100 to 101KW.  There are many small PURPA generation projects between 101KW and 5 MW that have been sitting on the utility distribution systems in New Hampshire for decades with no “costs” attributed to the distribution system because of these projects………. and any “costs” to the distribution companies to evaluate the interconnections or physically make the interconnections were paid for by the PURPA generators.

Additionally, small projects got a 100% credit for Transmission costs and large projects got 0% credit.  Going to 101KW doesn’t automatically put you into use of the Transmission system either. Same applies to the much larger PURPA generators unless their power was potentially being “wheeled” by agreement to other utilities outside of the locally connected distribution system via Transmission Lines ……….all of which is on paper since the actual electrons stay on the local system.  New Hampshire distribution companies routinely (daily) “wheel” PURPA project generation output to ISO-NE at no cost.

In fact, a clear case could have been made before the PUC that larger projects were entitled to see credits for some portions of the “wires” chargers too ………..at the very least Transmission cost, but there was no business consumer group at the table making that case! No organized group intervened on behalf of businesses who wanted to self- generate a portion of their electrical load >100KW and use net metering to economically optimize the size of their system ……….. and receive increased off-set credits for their self- generation when it exceeds their own use ( for instance, think about weekend solar generation for most businesses). The 101KW break point from small to large is a completely arbitrary level to change classifications ………..and the subsequent rates that go with it.

Remember, the New Hampshire Electric Co-operative increased their net metering (NEM) credit rates by 25% for projects >100KW over a year ago, while slightly decreasing their small project credit rates.  Take a look at their updated rates HERE. They aren’t regulated by the PUC.  They are “owned” by their members who pay the rates. That same magnitude (25%) of increase could have easily happened at the PUC as well in this order…………. but it didn’t.  Why, because nobody argued for it (NOTE: that is a win for the utilities, not the business consumers).

2) The maximum sized individual net metering project remained the same at 1.0MW (1000KW). Once again, that works for all residential properties, commercial properties, and smaller industrial properties ……..but large industrial companies are S.O.L. (my technical term)!  Again, no one was at the table advocating for the needs of the large industrial consumer to self- generate and lower their operating costs.  If a project was sized at 1001KW, it would not be eligible to net meter at all.

3) The one new (good) provision in the order for large projects deals with the 20% rule for self- consumption (i.e- if you consume >20% of the project’s output, you don’t have to register to act as a group net metering host, but you can function as one).  For properties that can take advantage of this provision, that’s one in the win column for you!

 

In general, think of this new (after September 2017) period of Net Metering as Phase II.  Phase III will come along some time (years) down the road after the pilot projects and studies have been undertaken and completed, and there is more real NH data to go by for future modifications to net metering ……. like real time pricing effects, actual system benefits to DER determined, etc. etc. Meanwhile, let’s hope that someone takes the initiative to increase the allowable project size from 1MW to 5MW during next year’s legislative session so that large industrial consumers can see some meaningful benefits too, because they need more options than they have today for “competitive” energy supplies.

 

2017 NH Business Energy Education Series: Vol 15 – Solar PV Panels, can they help me? Guest Blog by James Hasselbeck of ReVision Energy

2017 NH Business Energy Education Series
Jul 28, 2017 11:12 am
Written by Harold Turner
0 Comments

Solar PV Panels, can they help me reduce my energy costs?

Guest Blog by James Hasselbeck, New Hampshire Operations Manager for ReVision Energy

Business is booming in New Hampshire. We have the lowest unemployment rate in the country.  These jobs run the gamut from healthcare, government, education and, among others, skilled manufacturing and industry. This influx of industry has brought with it a concern from both business leaders and politicians that the cost of electricity in New Hampshire is prohibitively high, inhibiting potential economic growth in our state. While, on average, utility electric rates trend on the high end in New Hampshire, photovoltaic solar energy is a solution which is often forgotten or discounted, even though it provide reliable and cost-effective electricity to businesses, municipalities and residences across the state, in addition to diversifying energy sources and reducing transmission costs for all New Hampshire ratepayers.  

Our state’s solar industry has grown rapidly over the past decade. According to the Solar Energy Industrial Association (SEIA), there were more than 1,184 full-time New Hampshire jobs focused on solar in 2016 and more than 9,000 residents generating their home electricity with reliable, renewable energy on a daily basis.  A concrete example of this growth is Revision Energy, which has expanded from two guys operating with a pickup truck and garage in 2003 to a company with around 170 full-time employees and five locations throughout New England in 2017.  Solar is not just for homeowners, however. More and more businesses and municipalities are recognizing the substantial economic and social benefits of a solar energy system.

ReVision Energy and many other solar development companies have partnered with New Hampshire business and municipalities to install over 20 megawatts of photovoltaic solar energy capacity in 2016 alone. That’s over 70,000 solar panels in the Granite State! According to the Environmental Protection Agency’s greenhouse gas equivalency calculator, these solar installations are equivalent to offsetting nearly two million gallons of gasoline consumption or the carbon sequestered by nearly 17,000 acres of forest, each and every year. Aside from the significant environmental benefits, there is the real and vital economic benefit to the companies who invest in solar power, providing millions of dollars statewide in annual energy savings with no negative impact on utility ratepayers.

From an individual business perspective, the capital budget savings a photovoltaic system can provide are substantial. According to the US Department of Energy and US Energy Information Administration, commercial electricity rates in New Hampshire average 12.36 cents/kWh, and industrial rates average 11.82 cents/kWh. On average, the 40-year cost of energy from a photovoltaic solar system is less than $0.03/kWh, more than 75% savings from utility prices if they remain flat over the next four decades. If history is our guide, we can continue to expect utility electricity prices to increase, making solar energy systems even more economically attractive as future electricity rates rise.

How can solar provide such meaningful capital expense savings? An excellent question and one ReVision Energy commercial design representatives often hear. The primary misconception is, “Solar doesn’t work in New Hampshire,” which is unequivocally false.  The key factor in solar electricity generation is latitude. While we here in New Hampshire are blessed (some may say cursed!) with an alpine environment and latitude of 43 degrees, so is Germany at 51 degrees—a full 8 degrees farther north. A more accurate comparison is the French Riviera, well-known for sunbathing celebrities, which shares our 43-degree latitude.  In 2016, Germany was able to achieve 90%+ of the country’s electricity usage with renewables, where in New Hampshire we stand at less than 2%. So, we can be confident that our geography, climate and location is not our barrier to solar generation, but instead legislative policy and customer education.

Solar energy is a proven electricity generation resource in New Hampshire utilizing equipment with 25-year warranties to provide a safe and reliable energy investment. Factor in federal tax benefits (30% of project cost), tax depreciation incentives (20-30% of project value) and cash rebates from the NH Public Utilities Commission valued at up to 25% of the project cost. In short, the economics are extremely attractive, with commercial projects typically becoming cash flow positive in 4-6 years and receiving significant tax advantages along the way.  With no moving parts and minimal maintenance, a solar energy system can easily have a 40-year lifespan, essentially providing 34 years of free, carbon-neutral electricity.

Aside from immediate savings, solar energy systems provide significant value to businesses that are budgeting for energy-intensive operations.  While the deregulation of the state’s utility market has allowed for energy supply companies to provide competitive rates, they are, ultimately, subject to the variable utility market.  A solar energy system can eliminate that risk and variability and provide 40 years of reliable and bankable electricity expense costs that any CFO would appreciate.

A ReVision Energy customer, Mr. David Greer, CEO of Wirebelt Company of America in Londonderry, states, “Manufacturing companies have many cost centers, and electricity can be a large cost. Generating 40% of our own energy is like a huge relief valve. It is a cost center we no longer worry about, no matter what the electric utilities do with prices.”  Mr. Greer and Wirebelt, a fourth generation family-owned, ISO 14001 certified facility, has utilized solar as a method to reduce local operational costs in a competitive manufacturing environment.

In addition to material financial advantages, photovoltaic solar systems can also provide social and marketing benefits in a competitive business environment. Annette Lee and Nicole Carrier, co-founders of Throwback Brewery in North Hampton, saw both financial and consumer value in partnering with ReVisionEnergy on the installation of a 48kW array, which offsets approximately half of the brewery’s annual electricity usage and provides a visible and tangible differentiating factor from their competitors.

Many of us enjoy a tasty, craft-brewed beer. But a growing percentage of consumers are looking to spend their dollars with businesses that are making a tangible commitment toward social responsibility. This is also true for major retailers and buyers who are looking to realize new sustainability purchasing targets. Solar energy systems do just that in a highly-visible and authentic manner, while also providing significant financial benefits to businesses owners.

This, of course, is reliant on reliable and forward-thinking legislative action in our state.  While solar electric incentives are attractive, they are also uncertain in New Hampshire’s legislative environment. To continue the unprecedented job growth and commercial and industrial electricity savings, we require clear and deliberate legislative leadership.

There is another common misconception about solar energy, that it is dependent on government subsidies to be cost-effective. While the existing federal and state incentives improve the economics, that is not unique to solar as an energy resource. Conventional fossil fuel energy resources historically have received and continue to received billions of dollars annually in government incentives. Because solar energy is a long-term investment, long-term and forward-thinking legislative policies are important to the continued growth and success of our state’s renewable energy industry. New Hampshire has in place a 10-year energy strategy that focuses on modernizing the grid, energy efficiency measures, fuel diversity and choice and transportation options. We need our leaders to act on this strategic plan so all residents and business can share in the success of a clean energy transition, keeping our state pristine while providing the economic development opportunity we know is there. When dollars stay in the local economy, everyone benefits.  

Because of the rapid increase in solar demand and limited state funds in New Hampshire, the state rebate is currently on hold while the Public Utilities Commission (PUC) determines the amount of funds available for the new fiscal year that began July 1. ReVision Energy is cautiously optimistic that full or partial rebates will be available for projects under contract by September 1. In the event rebate funds are reduced, it will somewhat extend the payback period, though larger, commercial projects will still generate five- or six-figure savings and provide the least-expensive, long-term rate of electricity available while greatly reducing the reliance on fossil fuels.

In June, the PUC issued a long-awaited ruling on solar net energy metering (NEM). The rule is a compromise which resolves uncertainty around the Granite State’s solar energy policy, and reinforces the basic argument of solar advocates—that solar generates value for the grid well above wholesale rates – as well as calling for important pilot projects which will help regulators design future solar policy so that the market sends accurate price signals to ensure that distributed energy resources, such as solar electricity, continue to be deployed in a way that saves everyone money and also reduces pollution.

Solar electric systems in New Hampshire provide a unique opportunity for business to achieve the coveted triple bottom line: people, planet and profit. New Hampshire businesses who invest in solar can realize an immediate benefit to the people, with employees and customers who see their differentiating value in powering their operations with reliable, renewable energy. They see an intrinsic value to the planet in the positive environmental benefits via carbon reduction and distributed generation of a renewable energy resource. And, not insignificantly, profit in which a solar energy system in New Hampshire can provide important capital budget savings. ReVision Energy, a Certified Benefit corporation with locations in New Hampshire, Maine and Massachusetts, welcomes the opportunity to answer any questions. Learn more at revisionenergy.com.

James Hasselbeck, New Hampshire Operations Manager

603-679-1777
jamesh@revisionenergy.com

 

Throwback Brewery

Wirebelt Company  Rooftop Solar Array w/ReVision Energy electrician

 

2017 NH Business Energy Education Series: Vol 14 – What are “emerging technologies”, and can they help me?

2017 NH Business Energy Education Series
Jul 12, 2017 2:24 pm
Written by Harold Turner
0 Comments

What are “emerging technologies”, and can they help me? Answer: Depends on your age, and yes they can! Let’s face it, a lot of technological changes have occurred in the past 50 years of my working lifetime.  Consequently, your perspective on “emerging technologies” depends on your age.  It’s easy today to look at buildings (for example) that were built 50 years ago and mutter the words “What were they thinking?“, because of what you know to be true today.  However, a great deal of that “change” has come from both real time emerging technology and higher costs for energy products (electricity & fuels).  The miracle of the Free Market: the ebb and flow of supply and demand can produce amazing results.  Sometimes progressive thinkers invent things before we can dream them up, and once invented, we want them immediately.  Sometimes WE are the ones who clamor for answers and inventors respond with the solutions.  When it comes to producing energy and using energy, for the most part, change has evolved over the past fifty years more slowly than in other industries due to the “disruptive” nature of the commodity market changes …..as well as the governmental shift from monopolized markets to regulated markets to unregulated markets. We are all still waiting for the free, perpetual energy machine to reach the market!  And yes, from time to time we see “government” stepping in with programs or incentives to push us in a particular direction…………. or regulate us in such a way to accomplish the same thing.

On the energy supply side, we have seen dramatic swings in the pricing, origins (location), and extraction methods for crude oil.  Natural gas, once almost an afterthought, is now a global commodity with the expectation of large volumes of liquefied natural gas (LNG) to be exported around the globe from the US….. due to recently developed fracking extraction technology.  Massive sized wind turbine farms dot the landscape all over the globe, as do its sister renewable energy technology, solar PV farms.  Behind the meter PV systems are growing like wildfire on residential, commercial, and industrial rooftops all around the world. Nuclear energy, once the expected salvation for “cheap” electrical energy in the 1960’s, became politically impossible to site after numerous concerns for safety and health in the US….. but due to recent R&D capital infusions by wealthy entrepreneurs, may make a comeback in the future if it can compete financially.  Also away from the heavy environmental regulations of the US, hydropower energy has continued to expand to provide fossil fuel free electricity to millions of people around the globe, many of whom never had any electricity before.  Coal, once a staple of both fuel and electricity production, is now a dirty word in the American culture, and devoid of a cost effective “clean technology” scrub, may be discontinued completely in another 25 years in the US ………with coal exports headed outside the US to more emerging economies.  Once only known for building materials and firewood, trees have turned into Biomass (wood chips) used for both generating electricity and running boilers for heat and process steam……. not to mention processed wood pellets for stoves and boilers. Geothermal energy, used mostly in relatively smaller scale applications so far, has enormous potential for larger use.  Fuel cells, creating both electrical and thermal energy are in use already and will continue to expand as the technology and pricing continue to change.  Throw in new battery storage technology for storing excess energy (mainly from full run renewable generators like wind and PV), and the energy world continues to evolve. All of this has happened in the last 50 years with the cycle of “change” getting faster.

On the consumption side, we have witnessed a continuous education of the users of energy over the past 50 years to “conserve” or use less of all of these energy commodities. Cars, trucks, buses, homes, factories, office buildings, etc ………all using less fuel and/or electricity today.  Some of this change is driven by “government”, but a great deal is also driven by a combination of economics and societal change.  It is no longer acceptable to “waste” energy if the same task or product can be done more efficiently.  Entrepreneurs and product developers understand these dynamics, and the pace of “efficiency” changes has increased dramatically over the past 20 years.  Talk to a typical millennial and you will find they know no other mantra ………and they are just now entering into the front end of their highest earnings/spending years.  Government has assisted along side that trend line as well.  Industry is beginning to see a price flattening of the energy supply side of fuels and electricity on a regional basis, and there are significant regional differences based upon the costs of production of these commodities on a regional basis.  The further away from the source, the higher the “transportation” costs are going to be ……….in addition to any government taxes, fees, or policy costs that are regionally or locally applied.  Clearly, the costs for the transmission and distribution of electricity in the ISO-NE territory are on the rise in a largely monopolized industry……. and those costs will increase even more if outside security threats force greater “hardening” of our electrical grid system ………. leading to even more, smaller distributed energy resources (DER) to reduce the risks. Hint: You will be reading more about “microgrids” as time goes forward.  What is the risk to your company if the grid you are connected to goes down for any length of time?

If, as a business, you exhaust your ability through competition to lower the commodity pricing of your energy, you are left with five basic options:

  • Move/expand your operations to a lower cost region of the country or the world
  • Take actions to use less energy and/or less “peak” priced energy where you already are located
  • Do nothing, and pass the costs on to your buyers (if you can)
  • Do nothing, and pass the costs on to your shareholders (if you dare)
  • Become a direct participant (purchaser) of electricity in ISO-NE

We have certainly witnessed these options, or combinations of these options, play out in New Hampshire and expect to see more of that in the future.  That assumes (see Blog Post #12) that government continues to fail to provide any creative solutions on the industrial electrical rate relief front.

Aside from than moving away to another region, becoming an ISO-NE participant, or doing nothing, the last option is to cut commodity use.  Most of those (cutting consumption) options require the use of your own capital, and installing new technology.  Be sure that you have exhausted your ability to cut supply costs through competition, even if that also requires bringing in a third party buyer like a Freedom Energy Logistics type company (Blog Post #10) to accomplish it …. or going directly to ISO-NE as a direct purchaser. We have already talked about undertaking an internal energy plan (Blog post #8): and incorporating energy efficiency (Blog post #9): and using alternative fuels like Biomass (Blog post #13) from Froling Energy.  The most unpopular thing I have to tell any industrial operation is, quite frankly, the need to get past the normal criteria for internal paybacks of 18-24 months for use of your own capital when doing some energy improvements………understanding that its a tough sell for Wall Street.

Private Equity held companies have more flexibility to take (investment) actions that are “out of the box”, as do closely held and/or family held enterprises.  Whatever capital intensive changes you do make, they are likely to give you financial benefits for the next 20-25 years, or sometimes longer.  That is a decision only you can make.  If I had any magic energy bullets to give you ………I probably wouldn’t be writing this blog for you today because I would be way too busy spending my $$millions or playing golf or both!  Cheers………. HT!

Smartflower Plus

2017 NH Business Energy Education Series: Vol 13 – Biomass Heating Comes of Age By Jim Van Valkenburgh

2017 NH Business Energy Education Series
Jun 27, 2017 1:06 pm
Written by Harold Turner
0 Comments

Biomass Heating Comes of Age: Not Just Woodchips & Cordwood Anymore

Guest Blog By Jim Van Valkenburgh, VP Sales & Marketing at Froling Energy in Peterborough, NH

The use of Biomass as a heating fuel has a long history in New England but it seems to be under-appreciated by the general public.  Solar arrays that are popping up all over our region are getting a lot of attention lately but Biomass is still providing more kilowatts of energy than all of the Solar system combined.  Those are kilowatts of both heat and electricity derived from wood in power plants, boiler systems, plus wood and pellet stoves in countless homes.

The people of Froling Energy are happy to be a part of the modern wood heat movement that has so positively impacted the economies of broad rural areas of New England.  Having a new paying market for low grade wood is very important to loggers due to the shutting down of numerous paper mills and wood fired power plants.  We believe that much more can be done with Biomass for heating all kinds of buildings and this will have real, positive economic impacts on our region.

Froling Energy has focused on the technology of biomass boilers for almost 10 years and has accumulated a long list of happy customers who, all together, are no longer burning over 1 million gallons of fuel oil each year.

As with most businesses, technology and innovation have made significant improvements in the biomass industry.  It may surprise many that most of this development has happened in Austria.  Twenty years ago the Austrian government made a commitment to convert a large percentage of their energy use to biomass.  Today, modern biomass heating systems are commonplace in large and small buildings and Austrian boilers are the most advanced in the world:  clean burning, fully automated and very reliable.  As a result, they dominate the US biomass market.

Observing what is happening in Austria now allows one to gaze about 10 years into the future of the US biomass market. What can we see there?    Today their biomass market is divided up fairly evenly among 3 distinct biomass fuels:  Green Chips, Dry Chips and Pellets.

  1. GREEN (not dry) WOOD CHIPS began the movement of the automated central heating of buildings using biomass.
  2. PDCs—Precision Dry Wood Chips have come along to fill the wide gap in cost and adaptability between Green Chips and Pellets.
  3. WOOD PELLETS were an important new fuel starting about 2005:  a versatile, simple to use fuel that is easy to transport and deliver.

You may be asking, “What about woodstoves?”  Our industry is focused on fully automatic, self feeding central boiler systems.  Any devices that are manually loaded, like a wood stove, chunk wood boiler or pellet stove, are not considered in this discussion.

The US central biomass heating market is split between Green Chips and Wood Pellets.  Dry Chips account for less than 1% here.  (Froling Energy is looking to change that—read on.)   Let’s look at the two extremes of the market that have taken hold in the US:  Boilers that burn Wood Pellets and very large boilers burning Green Chips.

 

GREEN WOOD CHIP BOILER SYSTEMS

Green Chip systems make the most financial sense for organizations that are BIG fuel users.  There are many successful installations of large green chip boiler systems on rural campuses and public schools in Vermont, New Hampshire, Massachusetts and New York.  Green chip boiler systems tend to be most common in situations where they are offsetting 100,000 gallons of fuel oil or more per year.

While a fresh cut log would be nearly impossible to light in a wood stove or fireplace, fresh wood chips burn well in a green chip boiler.  That is because the chips go from wet to dry fairly quickly as they enter and pass through the boiler.  By the time they make it to the fire grate, the heat of the boiler has driven out the moisture so that they burn very well.

Green wood chip boiler systems have evolved nicely to be quite well automated and reliable, but they are only economically viable for heating campuses and other large multiple building complexes.  This is due to the large infrastructure costs required to purchase and install the large scale material handling and boiler systems.  Big green chip boilers are typically fired up around Thanksgiving and run straight through until about the first day of Spring.  They modulate their output, adjusting to a heat load like a pellet boiler, but they don’t turn off and cannot turn low enough for the intermittent loads of fall and spring.

A ton of Green chips is significantly less costly than a ton of Pellets to buy (75% less+), however nearly twice as many tons are required to generate the same amount of heat.  That’s because green chips contain between 40% and 55% water by weight.  Part of the heat from the burning chips is used up when that water is boiled off inside the boiler.

Burning Green Chips brings with it a number of other costly requirements:  Large volumes of Green chips need to be stored under cover, usually in large boiler buildings with deep concrete pits and “live floor” material handling systems operated by complex hydraulics and connected to big augers and belt conveyors that move the chips into the boiler.   These buildings must have large garage doors that 18 wheel trucks frequently dump their loads into.  Particulate matter in flue gas is a concern for all biomass boilers and green chip boilers tend to need expensive Electrostatic Percipitators and/or other expensive devices in order to pass local clean air regulations.

Green chips need to be purchased from reliable suppliers—not just low bidders.  This cheaper, rougher, and more basic fuel simply requires more monitoring by a trained staff.  Green chips must be managed well by technicians to prevent mold growth and freeze-ups.

Maintenance staff must also keep their eyes on the big, complex green chip mechanical systems.

 

WOOD PELLET FIRED BOILER SYSTEMS

The earliest “fully automatic” pellet boilers from Europe were first imported to the US in 1997.   Initially it seemed that these boilers were ready for commercial use and many were installed.  Unfortunately they required too much manpower to keep them running reliably.  They could run for a few days without attention but once a week cleanings were mandatory and daily check ups proved to be good practice.  “Burn-backs” occasionally happened where the fire in the firebox would migrate through augers into the pellet feed system, creating a dangerous situation.  Improvements were needed.

Around 2010 (when Froling Energy got into the business) a new generation of fully automated pellet boilers began to be imported from Austria by OkoFEN and Froeling.   The systems proved to be much more reliable so sales grew steadily with the help of a couple of solid US distributors.  With boilers ranging from 40,000 to 200,000 BTU/hour, a wide range of residences and small commercial buildings like town halls, churches and small schools installed systems. Staging 2 or more of them together was an effective way to get more firepower.

Sales were good and as time passed Froling Energy got into progressively larger installations.  We went from installing fairly small boilers in homes and small offices to multiple boilers that could heat large areas.  In the past few years we are installing biomass boilers with outputs of one to three million BTUs as a matter of course. New England Wood Pellet in Jaffrey had established itself as a reliable supplier of bulk wood pellets at a steady price.  Times were good.  The price of oil was averaging $3 a gallon and people were looking for options to oil.  Wood pellet boilers had become a least cost, viable alternative.

Why did people buy pellet boilers?  We found that fuel cost savings drove most of these purchases.  Anyone with green leanings will be happy that a viable biomass option was available but if the savings of a fuel switch didn’t pay for themselves in less than 10 years it was unlikely that a project would go forward.

We discovered that larger pellet boiler systems typically pencil out better than small ones.  If more fuel is being offset you get more savings.  And if you add in an old, failing oil boiler and/or a leaking 10,000 gallon oil tank, an investment in a biomass boiler system has a better return on investment than any conventional options.  Within a few years we were installing one and two million BTU/hour pellet boiler systems in schools and commercial businesses.

Things were going well in the biomass boiler business for Froling Energy.  Customer systems were not without problems but we pushed through, learning all the way, building a solid customer base.  Froling Energy has focused on customer satisfaction since day one—fixing troublesome boilers and always working to make things right.

 

A NEW FUEL IN THE US:  PDCs—SEMI-DRY WOOD CHIPS

Back in Austria and in much of northern Europe where the biomass heating market is mature a third fuel has evolved.  Pellets are a perfect refined fuel for small boilers and green chips are the least cost fuel for big fuel users–but at a time today of $2 per gallon oil, neither of these systems pencils out very well in terms of Return on Investment.  PDCs have changed that, especially in the medium to large boiler market.  PDCs (precision dry wood chips) are green wood chips that are chipped down to a smaller size and then dried down to 25% moisture content.  They are made under quality control standards that result in a more consistent product—similar to wood pellets.

PDCs are 35% less costly than wood pellets and can be delivered by a blower truck through a 5” diameter pipe.  That’s a significant difference.  The usual way of delivering any kind of wood chips is by a live floor truck.  Being able to blow them into a silo cuts the infrastructure costs by $150,000.  Not having to construct a building containing storage pits with live floor material handling systems saves at least that much money again.  Not having to maintain all that extra equipment saves a lot in man hours over the years.

PDC boiler systems are a hybrid that costs about 10% more than a similar pellet only system.  The biggest differences from a pellet system are the size of the silos and the mechanics of the material handling system that brings fuel from the storage silo to the boiler.  Pellets flow like water while PDCs (and Green Chips) stack up.  If pellets are drawn out from the bottom, pellets from above flow downwards.  If chips are pulled from the bottom, the upper chips just stay in place.  Force must be applied to make them move.  The most common and least cost method is a rotary extraction device or “sweeper arm” which moves under the pile, pushing chips into an auger channel below everything.  From there, rigid augers move the PDCs directly into the boiler.

Most European pellet boilers over 500,000 BTU/hr can burn either pellets or PDCs.   If a system is built to handle PDCs, it can also burn wood pellets as a “back up fuel”.  However a system that’s built for pellets is not able to move PDCs.

Who manufactures PDCs?  Froling Energy makes and delivers them in blower trucks to multiple customer sites.  One other company in New Hampshire makes a semi-dry wood chip and delivers them in live floor trucks.  We expect others to join into this market as it expands.

 

FUEL COMPARISONS

Price per ton of each of these three important biomass fuels is surprisingly different.  But don’t be fooled by price per ton because increased cost is due to increased value to the customer, which is added by levels of processing.  To replace 10,000 gallons of fuel oil you would need 83 tons of pellets, 107 tons of PDCs or 162 tons of green chips.   All three are sourced from the same wood material. Water content and size/shape are the biggest variables which impact the ease of handling, delivery methods, and stability on site.

 

THERMAL RECS

What are Thermal RECs?  Renewable Energy Certificates.  RECs are bought by power companies who are required by each state’s Renewable Portfolio Standards to generate fixed percentages of their delivered power from renewable sources.  Solar RECs are quite commonly understood as one of the key factors to making practical the generation of electricity with solar photovoltaic arrays.  Where solar systems create RECs by generating megawatts of electricity, biomass boilers create Thermal RECs based on the net amount of heat they produce.

New Hampshire was the first state to authorize Thermal RECs.  Today, NH Thermal RECs can be sold for between $12 and $25 each.    Thermal RECs are only available in New Hampshire at this time but Massachusetts is making plans to offer them in 2018.

Burning one ton of pellets can generate about 4 T-RECs while a ton of PDCs generates about 3 and Green Chips generate about 2 per ton.  (These are rounded estimates.  Each situation will vary.)

 

PDCS REVITALIZE A DIFFICULT MARKET

In recent years where the price of oil has pushed below $2 a gallon, the availability of PDCs with a net cost of about 80 cents a gallon of oil have kept our crews busy.  Wood pellet systems have lost momentum.  As a result, most of the new boiler systems that we have installed lately have been set up to burn PDCs.

PDCs make a biomass boiler system a much better investment and have the potential to add growth and stability to the low grade wood market in New England.  Our most recent PDC Boiler projects include the Merrimack County Jail in Boscawen, NH, Plymouth Regional High School in Plymouth, NH, a third PDC boiler room at Whelen Engineering in Charlestown, NH and the Applegate Housing Project in Bennington, VT.  This summer our crews remain very busy doing boiler installations.  We see a bright future in this industry so long as we keep advancing the technology.

 

Download a PDF of this blog post here: http://bit.ly/2tcoiNk

Download a PDF of Froling Project – Merrimack County Department of Corrections here: http://bit.ly/2sJLH8q

Download a PDF of Froling Project –Whelen Engineering Boiler System #3 Burning PDCs: http://bit.ly/2rUNkNF

590 Hancock Rd

Peterborough, NH  03458

603-924-1001

FrolingEnergy.com

Jim@FrolingEnergy.com

 

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