Topic:"Biomass Chp" in M03632

e included a 34 return on equity of 13% for biomass CHP projects, even though the developers of these 1 projects are likely to be seen as less risky than the developers of other COMFIT 2 projects. 3 4 Finally, in-stream tidal projects are...

AI summary The text discusses varying return on equity (RoE) for different COMFIT projects. Biomass CHP projects are assigned a 34% RoE despite lower risk, while in-stream tidal projects, due to high uncertainty, are suggested to have a 15% RoE to compensate for risks.

1 Q. WHAT OTHER ASSUMPTIONS HAVE GONE INTO THE MODEL? 2 A. We have also made assumptions about the cost of acquiring equity and the cost of 3 insurance and land lease payments. We have estimated the cost of acquiring equity at 4 4% of the...

AI summary The model assumes 4% equity acquisition costs, insurance rates ranging from 0.3% (large wind) to 2% (tidal), 2.5% land lease payments for wind, and lower payments for hydro/tidal. Biomass CHP requires no additional land costs. Seaforth Engineering informed hydro/tidal lease estimates.

The Effect of Income Tax Status on COMFIT Rates Re C la so ur ce ss C O M F I T Ra te As in su m g O Ta b le a xa w ne r C O M F I T Ra te As in No su m g a n- Ta b le O xa ne r w % D i f fe re nc e Av er ag e W in d 0 k W 5 ≤ $ 4 6 0 $ 4...

AI summary The document analyzes the impact of income tax status on COMFIT rates, comparing proposed rates for various energy sources (wind, hydro, tidal, biomass CHP) with average rates. It notes that biomass CHP rates are calculated for taxable entities, while others use average rates.

Prepared for: St. Francis Xavier University Antigonish 8 MW Biomass Cogeneration Plant - Feasibility Study Final Report - Revised March 15, 2011

AI summary This document is a final revised feasibility study for the Antigonish 8 MW Biomass Cogeneration Plant, prepared for St. Francis Xavier University in March 2011. It outlines the project's potential and considerations for implementation.

2 BIOMASS

AI summary The section titled 'BIOMASS' introduces the topic of biomass energy, likely discussing its role in Nova Scotia's energy generation and regulatory considerations.

Q. ON WHAT DO YOU BASE YOUR RECOMMENDATION FOR THE COST OF CAPITAL? A. My experience concerning the cost of capital for biomass CHP projects is presented below from two perspectives, (1) market data and (2) a widely-employed theoretical mo...

AI summary The response outlines the basis for the recommendation of the cost of capital for biomass CHP projects, considering both market data and a widely-used theoretical model.

Engineering for 20MW Biomass Plant Owner: Ameresco Federal Solutions - Project Location: Aiken, South Carolina - Project Completion: December 2011 - Project Description: ESI has been selected to perform the engineering for the complete new...

AI summary This document outlines the engineering work for a 20MW biomass plant in Aiken, South Carolina, by ESI for Ameresco Federal Solutions. The project includes the installation of two bubbling fluidized bed boilers and a steam turbine generator, with a complete scope of supply for a cogeneration facility.

Background This study was conducted in order to help the ANSS evaluate the biomass CHP COMFIT rate as proposed by the NSUARB. As part of the initial conceptualization, ESI developed mass and energy balance models at 0.5MW, 2MW, and 5MW for...

AI summary This study was conducted to evaluate the biomass CHP COMFIT rate as proposed by the NSUARB. ESI developed mass and energy balance models for various capacities, and a detailed study of the 2MW facility was chosen based on typical steam requirements for sawmills.

Q. Has ANSS participated in the COMFIT process to date? Yes, members of the ANSS have participated in the process from the Dr. Wheeler-led stakeholder sessions up to and including the technical conferences with Synapse. The ANSS has made t...

AI summary ANSS has participated in the COMFIT process, including stakeholder sessions and technical conferences with Synapse, and has made two written submissions regarding the biomass CHP COMFIT, which are attached as Appendix A and B.

Q. Were there any particular concerns identified by ANSS in its submissions to Synapse in the development of a biomass CHP tariff? A. Yes. We outlined at the outset that current information on capital cost, fuel supply, O&M estimates and o...

AI summary ANSS expressed concerns about the development of a biomass CHP tariff, emphasizing the importance of accurate capital cost, fuel supply, and O&M estimates. They noted that fuel supply risk is the largest risk to CHP plants and plan to conduct an engineering study with a Nova Scotia-based firm to determine generation costs.

Q. What, if any, changes did Mr. Bodington recommend to the CHP biomass model? A. In Mr. Bodington's opinion, the market data does not support debt financing of such a project. He recommends an assumption of 100% equity. In his view, if th...

AI summary Mr. Bodington recommends 100% equity financing for the CHP biomass project and suggests adjusting the cost of equity to 17.5% if CPI/diesel escalators are the only means to address fuel risk, as market data does not support debt financing.

Example 2 – Increase in Demand Where Supply is Constant A University constructs a biomass CHP plant to provide heat to its campus and generate renewable electricity. At the same time two sawmills within range of the university begin to ope...

AI summary A university and two sawmills construct biomass CHP plants, increasing demand for low-grade wood without additional supply, leading to higher prices. The text argues that requiring a biomass CHP COMFIT participant to guarantee electricity prices for 20 years based on CPI or diesel escalators is similar to NSPI guaranteeing rates based on coal mining costs, which are not directly tied to market prices. The fuel risk for biomass CHP is compared to NSPI's, suggesting a need for similar risk management mechanisms.

Fuel Supply Risk Fuel supply risk is the single largest risk to developers of combined heat and power plants. While many sawmills generate a biomass fuel supply stream as a result of their sawmill operations, a significant portion of the f...

AI summary Fuel supply risk is a major concern for combined heat and power (CHP) plant developers, particularly for sawmills that rely on biomass. Much of the biomass is sold to pulp and paper companies, which can affect a sawmill's ability to secure fuel. Non-forest industry groups may also face significant risks if they must source all their fuel from the Nova Scotia biomass market.

In Closing The Alliance of Nova Scotia Sawmillers is available to provide input into all areas regarding the development of the CHP COMFIT. We would invite Synapse to contact us at any point during the development of the CHP COMFIT for adv...

AI summary The Alliance of Nova Scotia Sawmillers opposes setting a minimum efficiency target for the biomass CHP COMFIT, expressing willingness to provide input and expertise during its development. They request Synapse Energy Economics to contact them for further discussion.

ROE for biomass CHP projects is derived with the assumption that developers will undertake size risk, portfolio risk and development risk. (a) What mechanisms are available to account for fuel risk? Answer: At this point we are considering...

AI summary The document discusses mechanisms to account for fuel risk in biomass CHP projects, including escalating fuel costs in the model, indexing to CPI and diesel fuel prices, and retaining an independent third party to assess actual fuel costs. Each mechanism has its own advantages and disadvantages.

ANSS IR 7. Reference p. 4, Risk Factors (a) Does Synapse assume that proponents developing biomass CHP plants will have project management skills and resources beyond other technology developers for the COMFIT? What is the basis for that a...

AI summary Synapse initially assumed that biomass CHP plant developers would be corporations with strong project management skills, but is reevaluating this assumption after being advised that community-based groups may also develop such projects. Synapse acknowledges that Aboriginal groups, municipalities, universities, and other community groups may construct CHP plants in Nova Scotia.

ANSS IR 11. Reference p.11, (cell B44 and Tax Depreciation Worksheet) - (a) Why is it assumed that biomass CHP plants benefit from accelerated depreciation while other technologies do not? - Answer: The biomass CHP rate was calculated assu...

AI summary The document addresses depreciation assumptions for biomass CHP projects under COMFIT, insurance cost assumptions for COMFIT projects, and the allocation of steam-related costs between host facilities and electric ratepayers. Answers clarify that accelerated depreciation applies to taxable corporations, insurance costs are based on preliminary data, and some steam benefits may be shared with ratepayers.

The Alliance ofNova Scotia SawlnillersOpeningStatell1ent Mr. Chair, Melnbersofthe Board, thank you for opportunity to provide this Opening Statement...The ANSS is a group ofsawmillers in the province of Nova Scotia with an interestin the d...

AI summary The Alliance of Nova Scotia Sawmillers (ANSS) presents an opening statement emphasizing the need for a reasonable rate to support biomass combined heat and power (CHP) projects. They collaborated with ESI Tennessee and Mr. Jeff Bodington to analyze engineering and financing aspects of a small CHP plant in Nova Scotia.

eferred to as "Biomass CHP" or "CHP". - [18] The Regulations also contain the following provisions relating to the generation capacity of various facilities: - 3(1) In the Act and these regulations, "developmental tidal array" means a gene...

AI summary The document outlines regulations related to renewable electricity, including definitions for tidal generation facilities and limitations on biomass and wind power usage. It specifies that no more than 500,000 dry tonnes of primary forest biomass annually may be used for renewable electricity standards, and caps feed-in tariff approvals for small wind power facilities at 5 MW total capacity.

9.0 BIOMASS COMBINED HEAT AND POWER PLANT

AI summary This section discusses the biomass combined heat and power plant, focusing on its role in energy generation and potential impacts on the regulatory landscape.

9.2 Cost Allocation [153] In preparing the tariff for Biomass CHP, Synapse had to allocate the capital and operating costs between the steam host and electricity generation. They did so as follows: ... So we decided to ensure that biomass...

AI summary The text discusses the allocation of capital and operating costs between the steam host and electricity generation for biomass CHP under the COMFIT program. The approach ensures that biomass facilities are real CHP plants by allocating a large portion of the boiler cost to the steam host.

[176] He added at the hearing: That doesn't alter the fundamental risk profile of a biomass power project. The fundamental risk profile is driven by fuel; having to get it, having to burn it, and all the issues related thereto.... [Transcr...

AI summary The speaker argues that the fundamental risk profile of a biomass power project is primarily driven by fuel-related challenges, such as obtaining and burning the fuel, and associated issues.

[212] ANSS, in its reply submission stated: 30. Likewise, the risk of undue costs being borne by ratepayers is tempered by the reality that only a limited number of CHP Facilities will be likely to participate due to inherent limitations i...

AI summary ANSS argues that the risk of ratepayers bearing undue costs is limited due to the cap on biomass in the Act and Regulations, which restricts the number of CHP Facilities that can participate.

Summary of Engagement B&Co is pleased to provide consulting services to Client concerning biomass-fired power project costs, financing, risks, and revenue requirements (the "Project"). B&Co will complete various tasks, to be requested by a...

AI summary B&Co is providing consulting services to a client regarding a biomass-fired power project in Nova Scotia, including evaluating markets, reviewing materials, and preparing testimony on costs, financing, risks, and revenue requirements.

Nova Scotia Biomass CHP Study Scope of Work Marwood Ltd. in conjunction with The Alliance of Nova Scotia Sawmillers Prepared by Fenton Travis, P.Eng December 13, 2010

AI summary This document outlines the scope of work for a biomass combined heat and power (CHP) study conducted by Marwood Ltd. in collaboration with The Alliance of Nova Scotia Sawmillers, prepared by Fenton Travis, P.Eng, on December 13, 2010.

3.1 Environment The system will be designed to meet all required environmental standards of the province of Nova Scotia for CHP plants of the specified scale.

AI summary The system is designed to meet Nova Scotia's environmental standards for combined heat and power (CHP) plants of the specified scale.

3.3 Fuel Fuel for the plant will be sourced primarily from the debarking of logs and the sawdust generated during the lumber production process from the sawmill. Additional biomass required beyond the supply available at the mill will incl...

AI summary The fuel for the plant will primarily come from debarked logs and sawdust generated during lumber production at the sawmill, with additional woody biomass sourced from the Nova Scotia biomass market. The fuel is expected to have an average moisture content of 50%.

4.5 Deadlines and Communication The deadlines established for this study are of paramount importance as it is likely that the information in the study will be submitted as evidence at the NSUARB rate hearings regarding the establishment of...

AI summary The deadlines for submitting information in the study are critical as the data will be used as evidence in NSUARB rate hearings concerning the biomass CHP COMFIT. Late submissions will not be accepted and are considered of no value.

The final report must be submitted by no later than Monday February 28, 2011. All invoices should be addressed to Marwood Ltd.; Marwood Ltd. PO Box 338 Station "A" Fredericton, NB E3B 4Z9 Canada Invoices and all other correspondence should...

AI summary The document outlines the submission deadline for a final report by February 28, 2011, and provides contact information for Marwood Ltd. related to the Nova Scotia Biomass CHP Study conducted in conjunction with the Alliance of Nova Scotia Sawmillers.

Dear Fenton: Pursuant to our meeting in Orlando last week, this letter is a proposal for ESI Inc. of Tennessee to perform the Nova Scotia Biomass CHP Study (Study) in accordance with your RFQ document dated December 13, 2010. ESI has revie...

AI summary ESI Inc. proposes to perform the Nova Scotia Biomass CHP Study in accordance with the RFQ document. ESI can provide capital cost requirements but needs assistance with land purchase costs and property tax calculations. A preliminary economic model will be developed for sensitivity analysis.

Closing This proposal provides Marwood and the Alliance with the all the specific deliverables and requirements you have outlined in your RFQ. We are confident that ESI can meet the your expectations in the performance of this Study docume...

AI summary ESI Inc. of Tennessee submitted a proposal to Marwood and the Alliance for conducting a feasibility study on 2MW and 5MW biomass-fired CHP plants. Marwood accepted the proposal and expressed enthusiasm about collaborating with ESI on the project.

1 Undertaking U-11: Provide a suggested formula for a reopener of the biomass tariff. 2 Response U-11: 3 Calculation and Methodology of Biomass Fuel Cost Adjustment 4 For biomass combined heat and power (CHP) plants, the initial base bioma...

AI summary The response to Undertaking U-11 outlines a formula for adjusting the biomass fuel cost in a reopener of the biomass tariff. The formula involves calculating the Adjusted Biomass Market Price based on total cost and energy delivered to Approved CHP Plants, with adjustments made every two years using a weighted index of the Consumer Price Index and diesel fuel index.

1 Reporting Requirements - Each Approved CHP Plant must agree to supply to the NSUARB specific information regarding2 - each load of Market Biomass purchased. This information would include the following items:3 - 1. Weight of biomass expr...

AI summary The document outlines reporting requirements for Approved CHP Plants, specifying the information they must provide to the NSUARB, including biomass weight, moisture content, cost, and energy content, with reports due by the 15th of the following month.

11 Illustration of Reporting by an Approved CHP Plant - 12 A biomass CHP plant receives a delivery of 25 green tons of biomass from the market at a price - 13 of $925 ($37/green ton) and its moisture content is measured to be 50%. A calcul...

AI summary This section illustrates how a biomass CHP plant calculates the energy content of biomass deliveries based on moisture content, using a formula to determine bone dry tons and converting that to MMbtu. The report is submitted to the NSUARB.

• Significant Issues and Ouestion There have been significant changes from the initial draft tariffs circulated by Synapse with respect to Biomass CHP and the final tariff. ANSS and other Intervenors had the opportunity to ask IRs on the i...

AI summary The text discusses concerns raised by ANSS regarding the final biomass CHP tariff, including reliance on outdated data and lack of current evidence supporting financial assumptions. ANSS plans to provide expert evidence on capital costs and financing, while noting insufficient time for review and discussion of Synapse's final model.

• Adjournment Request With respect to the adjournment, this request is not made lightly. However, from the perspective ofthe ANSS, it is more important to get the tariffs right than get them done quickly. All ofthese projects will take som...

AI summary The ANSS requests an adjournment of the hearing to allow for more time to discuss and refine tariff assumptions with Synapse and to address concerns regarding the proposed particulate matter standard for the Biomass CHP COMFIT. The request emphasizes the need for accuracy over speed and highlights the complexity of the issues involved.

encourage the owners of potential biomass COMFIT projects to scrap useful equipment to become electricity generators. In cross-examination of the Alliance panel, Mr. Travis seemed to agree with this: ...There's other issues that come into...

AI summary The text discusses concerns about the proposed biomass COMFIT rate and its potential impact on owners of existing equipment, with a focus on whether ratepayers should subsidize the replacement of useful equipment. Mr. Travis argues that ratepayers should not be asked to pay extra to incentivize the scrapping of functional equipment, while Synapse's approach to cost allocation is defended as appropriate for new facilities.

Internal Rate of Return 63. Synapse lacked an evidentiary basis or a specific methodology for recommending a 13% cost of equity for Biomass CHP. Reliance appears largely to be placed on the unnamed U.S. investment banker: & lt;sup>35 Trans...

AI summary Synapse's recommendation of a 13% cost of equity for Biomass CHP lacks an evidentiary basis or methodology, relying instead on an unnamed U.S. investment banker. The banker suggested 8% debt for projects with managed fuel cost risk but indicated higher rates for projects with less risk mitigation.

ANSS Fuel Reset Mechanism Lessens Ratepayer Risk - 5. The EAC also expresses concern that ratepayers will be "burdened" by a COMFIT biomass fuel adjustment escalator. - 6. There is, indeed, a risk associated with biomass costs. With the Sy...

AI summary The EAC is concerned that ratepayers may be burdened by a COMFIT biomass fuel adjustment escalator. The ANSS biennial fuel cost reset mechanism is seen as less risky for ratepayers, as it allows for rate adjustments based on biomass price fluctuations. In contrast, the Synapse proposal places the initial risk of escalating fuel costs on the CHP Facility, potentially leading to project failure and loss of RES energy.

The Regulations Do Not Mandate That Incremental Costs Only Be Recoverable in the Tariff - 20. The Province suggests that allocation of 100% of the steam costs to the host and incremental costs only for electricity generation in biomass CHP...

AI summary The Province argues that allocating 100% of steam costs to the host and incremental costs only for electricity generation in biomass CHP projects aligns with the Regulations. ANSS agrees that CHP facilities produce both heat and power but emphasizes that they are not designed for 24/7 operation. The Province also suggests that Synapse’s cost allocation is more appropriate for new facilities, but ANSS argues that existing steam hosts are not suitable for high-pressure CHP and that a punitive cost allocation is unnecessary.

CONCLUSION - 29. The ANSS urges the Board to accept its recommended biomass CHP rate and fuel cost reset mechanism. The mechanism, as proposed, provides the best assurance that customers will not be overcharged should biomass prices drop a...

AI summary The ANSS recommends the Board accept its proposed biomass CHP rate and fuel cost reset mechanism, arguing it prevents overcharging customers if biomass prices drop. Intervenors suggest a 'conservative' approach but have not identified overstated assumptions. The ANSS also notes that limited CHP participation will mitigate risk to ratepayers.

9.0 BIOMASS COMBINED HEAT AND POWER PLANT

AI summary This section of the document discusses the biomass combined heat and power plant, focusing on its role in energy generation and regulatory considerations.

following comments were made: Scale. At 8 MW (7 MW net) electrical output, the specific capital cost is high. This plant will cost approximately $4,500,000 per 1 MW electrical output. Larger biomass plants can be built for $1.5 - $2.0 mill...

AI summary The text discusses the high specific capital cost of a small biomass CHP plant at 8 MW (7 MW net) with a cost of approximately $4,500,000 per 1 MW electrical output, compared to larger plants costing $1.5 - $2.0 million per MW. The Board explored the ability to construct small MW CHP plants.

[176] He added at the hearing: That doesn't alter the fundamental risk profile of a biomass power project. The fundamental risk profile is driven by fuel; having to get it, having to burn it, and all the issues related thereto.... [Transcr...

AI summary The speaker argues that the fundamental risk profile of a biomass power project is primarily driven by fuel-related challenges, including procurement and combustion issues.

9.6 Overall Findings - Biomass CHP

AI summary The section 'Overall Findings - Biomass CHP' discusses the evaluation of biomass combined heat and power (CHP) projects, including their cost-effectiveness, environmental benefits, and role in Nova Scotia's energy strategy.

[212] ANSS, in its reply submission stated: 30. Likewise, the risk of undue costs being borne by ratepayers is tempered by the reality that only a limited number of CHP Facilities will be likely to participate due to inherent limitations i...

AI summary ANSS argues that the risk of ratepayers bearing undue costs is limited due to the expected low participation of CHP facilities, constrained by system limitations and a biomass cap in the Act and Regulations.

ENERGY PAYMENT The tariff for biomass combined heat and power plant projects consists of an energy payment only, undifferentiated by time of generation. The energy payment in will be $175 per MWh from January 1, 2012 through December 31, 2...

AI summary The energy payment for biomass combined heat and power plant projects is set at $175 per MWh for 2012, comprising a $75 fuel component and a $100 non-fuel component. The rate may be adjusted over time through specified mechanisms.

ENERGY PAYMENT The tariff for biomass combined heat and power plant projects consists of an energy payment only, undifferentiated by time of generation. The energy payment in will be $175 per MWh from January 1, 2012 through December 31, 2...

AI summary The energy payment for biomass combined heat and power plant projects is set at $175 per MWh for 2012, divided into a $75 fuel component and a $100 non-fuel component. The rate may be adjusted over time through specified mechanisms.

clause (4) of the Biomass Combined Heat and Power Projects Terms and Conditions: Nova Scotia Power has reviewed the proposed revised wording submitted by the NSDOE in its August 19, 2011 submission. Nova Scotia Power notes that metering sy...

AI summary Nova Scotia Power has reviewed the NSDOE's proposed revised wording for clause (4) of the Biomass Combined Heat and Power Projects Terms and Conditions. They argue that real-time metering systems are not generally in place and would be costly to implement, while also raising confidentiality concerns regarding data sharing with COMFIT proponents.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS inputs, is it appropriate to consider the cost of putting 1 a plant on the ground in practice or in theory? 2 MR. COUTURE: It's necessary to 3 consider the costs that a real project would inc...

AI summary The discussion centers on the challenges of obtaining debt financing for biomass CHP projects, citing factors such as project size, inexperience, fuel volatility, grid connection delays, and reliability concerns. The witness acknowledges these challenges but suggests that while debt may be available, it would likely come with more stringent terms.

- DICTUM DIGITAL INC. CERTIFIED COURT REPORTERS MR. OUTHOUSE: Fair enough. Those are 1 NSUARB-BRD-E-R.10 Page 1191 all my questions. 19 ground up without any pre-established infrastructure. 20 Whereas in biomass you're going to have some m...

AI summary The discussion highlights differences in infrastructure requirements between biomass and other energy projects, noting that biomass projects may leverage existing infrastructure while others require starting from scratch. This suggests a need for case-by-case consideration in project planning.