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Co-gen study to proceed to second phase<br>

“Our decision is to go on to the next step, and not to stop and throw this in the waste can,” said Barry Baker, who heads the project, following the presentation. “We need to move forward and continue to study this.”

The California-based firm was selected based on its experience with biomass energy generation and forest issues. They began their fact-finding last January.

The study was oriented toward a “fatal flaw” analysis in which consultants looked for issues that would render the project unfeasible. They looked at the amount and long-term availability of fuel, or feedstock, as well as the costs associated with collecting it. They also studied potential sites, permitting issues and costs and performance of available technology.

Overall, Mason said, the outlook for the project is favorable but with a few conditions.

“Is there a long-term supply of feedstock? Yes. Is there viable technology? Yes. Can it be permitted? Yes though the NEPA (National Environmental Policy Act) process would require an additional layer of permitting. Does the market offer viable rates? No,” Mason said.

He explained that the cost for electricity produced with fossil fuels is between 4 and 5 cents per kilowatt hour. Electricity produced with gasified biomass, however, must be sold for between 11 and 14 cents per kilowatt hour for at least 15 years to provide a reasonable return on an investment into a generation facility.

While that posed an obstacle from a purely economic standpoint, Mason said a market would open up if the Arizona Corporation Commission increases the percentage of electricity distributors must buy from renewable sources. The commission is expected decide that question soon.

“Right now, the environmental portfolio standard for renewable energy is at 1.1 percent, and that sunsets in 2012,” Mason said. “We hope that will get up to 10 percent with no termination date.”

The study was funded through grants from the Forest Service and Arizona Public Service. APS’ interest is in finding reliable renewable energy sources in anticipation of an increase in the requirement, while the Forest Service sees the proposal as a cleaner way than controlled burning to eliminate forest waste that poses a wildfire threat. The Sustainable Energy Project, which operates under the Grand Canyon Sanitary District, says the project would also benefit residents by reducing the amount of trash they would have to pay to have hauled to land fills.

“The idea is to develop a way to take our waste and turn it to energy and to do so in a more economical manner (than hauling it away),” Baker said. “It was suggested that we look into gasification and co-generation.”

Most of the fuel will come from thinning projects on the Kaibab National Forest, while the remainder would be comprised of municipal waste and solids left over from treatment of wastewater. The actual estimated breakdown would be 16,000 bone dry tons of ponderosa pine, 6,000 tons of pinion and juniper, 3,180 tons of municipal solid waste and 88 tons of biosolids, said Mason. Total tonnage for the approximately 3-megawatt plant being proposed would be 25,268 annually. Mason said at least twice that is readily available – enough to satisfy lenders considering such projects.

The consultants studied two sites – one on private land near Valle Airport and one on Forest Service land just south and west of Tusayan. Based on factors like land use restrictions, water availability, transportation issues, noise and aesthetics, Mason said “It’s a dead heat between Valle and Tusayan.”

But, while the two parcels were comparable, the local committee decided that the Tusayan site was the more desirable, even though siting on Forest Service land will require another level of permitting and a public National Environmental Policy Act (NEPA) process.

“It would be very easy to push this south over tackling a really difficult process,” Baker said. “But this would be a demonstration project. It’s in a sensitive area bordering a national park, in a small entrance community. We want to show we can take care of our needs with community, government and private entities. It’s a huge challenge but we’re willing to push as hard as we can.”

The infrastructure is also better in Tusayan, where there a supply of reclaimed water and an APS substation that could accept the generated power into the grid without modifications. Baker said to build in Valle would require drilling and upgrades to the APS substation there.

The plant would also be close to land being eyed for a new school some time in the future. Baker said the heat produced in the generation process could be used in that facility, and the plant could provide an educational opportunity for students.

In assessing technology, Mason recommended gasification – a process of using heat to break down materials into synthetic gas consisting of methane, hydrogen and carbon monoxide. This produces fewer emissions and less ash than direct combustion while yielding a more versatile fuel, he said.

The consultants identified 28 possible vendors and sent out requests for proposals. They received 13 back and assessed them based on criteria like proven experience in gasification technologies, cleanliness of the process, efficiency, capital costs and ease of use.

That narrowed the field to two vendors – Biomass Energy Concepts of St. Mary, Pa., and Advanced Concept Technologies in Denver, Colo. Mason recommended ACT’s technology, which uses an internal combustion engine over BEC’s combustion-gasification hybrid.

Overall, ACT’s product required just a little more than half of the 21,000 British Thermal Units (BTUs) needed by BEC’s product to produce a kilowatt hour of electricity.

“We liked that better because of the heat rate,” Mason said.

With this study, Mason said phase 1 of the potential project is complete.

“This document will form the basis of a due-diligence package that you can take to the bank,” he said. “Phase 2 would be seeking a developer and financing while Phase 3 would be the NEPA process.”

According to both Baker and Mason, phase 2 is also exploratory as they look into actual costs and challenges and possible funding sources.

While several agencies, including the Park Service and Coconino County, have an interest in the project, the Forest Service’s commitment will be the key to its success, Mason said.

One factor would the cost to move materials. Because the bulk of forest waste will come from smaller-diameter trees, which are more costly to cut and remove, whoever runs the plant will not be able to do so economically unless the Forest Service provides some help. They would also be asked to enter into 10-year agreements to provide feedstock.

“The Forest Service would have to come to the table,” he said.

Because this would be a pilot or demonstration project – there is nothing like it on federal land – there might be grant money available from the Department of Energy, Mason said.

“DOE provides funding for unique and emerging technologies, there are low interest loans and grants,” Mason said. “There are a number of pots of money.”

Deborah Hill of the Coconino County Board of Supervisors was present, attending for newly-elected supervisor Carl Taylor, who was out of town. She questioned whether federal agencies could be relied on to deliver the money over the long-term.


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