Local biofuel producers are looking with nervous anticipation at Genesis Energy's bold decision to trial black pellet tech to sustainably fire a 250MW generator.
Wood pellets are a big industry worldwide, fuelling industrial boilers as companies like Fonterra work to transition away from gas and dirty coal.
But black pellets are pretty much the fusion power of bio-energy – a long-discussed technology that works in small boilers, but hasn't really been supplied and applied successfully at scale.
Black pellets are produced from forestry or timber mill waste placed under high pressure; the resulting pellets store more energy than traditional white pellets, are denser for transportation, burn hotter, and like coal they can be stored outside without concern for moisture.
Slowly they're gaining momentum. Around the world there were at least seven commercial-scale black pellet mills under construction last year – but they faced challenges.
The US South has fast become the world’s largest supplier of these pellets. One of the early movers in wood pellet production was a company called Dixie Pellets in Birmingham Alabama. But as Biomass Magazine reported last year, it had its problems from the start—fibre processing, product quality, product acceptance, even the depth of the Alabama River.
The ownership filed for bankruptcy in spring 2010 and Houston-based Zilkha family purchased the plant at auction. Zilkha Biomass developed technology to produce “black” pellets as a substitute for coal, and by 2015 it was commissioning 275,000 tonnes a year.
But despite unique proprietary technology, the magazine reported late last year that the business had gone downhill, forced to shut down one of its two plants, "another casualty in the journey to make steam explosion and torrefaction pellets profitable". Another venture capital company tried to reboot the operation and, as of late last year, Zilkha Biomass was trying to trade out of bankruptcy.
"We're not saying that we think importing refined wood pellets from the southern US is a viable pathway here. That's for the trial burn, from a technical testing perspective. But moving forward, it needs to be domestically supplied to be viable." – Marc England, Genesis Energy
Another player in the market is Alabama Pellets, which announced plans to invest US$95 million to construct a production facility in Demopolis, with plans to produce 360,000 metric tonnes or pellets a year. And NYSE-listed Enviva Partners, whose black pellet plants have sparked air pollution worries, is investing $175 million in a new wood pellet mill facility in the state.
Back in New Zealand, Genesis Energy filed its half-year result yesterday, and reported to investors that it had secured a supply of black pellets to trial in one of its three big 250 MW coal-and-gas-fired Rankine turbine units at Huntly power plant, on the banks of the Waikato River.
Genesis isn't saying where it's sourcing its steam-exploded black pellets, but chief executive Marc England does tell me that there's a 4000 tonne shipment arriving this month ... from Alabama.
"It's black and looks a bit more like coal," he said. "But it's still a verified renewable, sustainable forestry product. It's easier to grind in the mill. It can get wet when it's stored. It can be stored for longer, and it's got a higher energy density."
Genesis hopes it can extend the life of the Huntly power station out to about 2040 – which is about 10 years further than the company had previously guaranteed. England sees running a Huntly turbine off biomass as a better solution to the dry year problem than pumping water uphill at in the multi-billion dollar Lake Onslow hydro scheme, being investigated by government.
Genesis Chief Executive Marc England says Genesis is committed to effecting change and taking a leadership role in New Zealand’s transition to renewable energy. The future of Huntly is another key workstream in the company’s Future-gen strategy, as they try to replace its coal-powered baseload with renewables.
“Our modelling has shown that in all scenarios, the NZ market will reach 96 to 98 percent renewable generation from the current pipeline of projects, without Lake Onslow.”
Solutions like black pellets could provide backup generation for weeks or months when hydro lakes are low, though the electricity system would also need short period peaking capacity generation that can be turned on quickly to cover sudden shortfalls like the one on August 9 last year, the coldest night of the year when lights and heaters went off through large parts of the Waikato and central North Island.
“We have a high level of confidence that the Rankine units could potentially remain available to the market to 2040 at relatively low capital cost, running on biofuel rather than gas or coal,” England said. “Stepping back, we see a potential opportunity to support of a broader biomass industry in New Zealand to meet demand Huntly and other industrial heat customers.”
The 4000 tonnes of black pellets is only enough to run a generator for two days – which highlights how critical it would be to establish a local supply. There are several big problems that may yet be insurmountable: getting access to a reliable, sustainable supply of forestry or sawmill waste; competing with international biofuel producers to get it at an affordable price, and of course developing the technology to convert it into pellets.
"The problem is the amount of energy that goes into it is horrendous. On top of that, nobody's really willing to pay any more for it from a customer perspective. So it just doesn't make sense economically." – John Goodwin, Nature's Flame
In total, the world burns about 23 million tonnes of wood pellets a year, mostly white wood pellets, and they're in hot demand. Prices have been rising steadily as more industries seek to decarbonise.
In North Carolina, near Alabama, critics say whole trees are too often used in pellet production, decreasing vital sources of carbon storage that aren’t replenished until trees fully regrow, if ever. Activists have made some headway against the pellet industry in the state, according to Energy News Network, convincing the Democratic administration of Governor Roy Cooper to condemn the international biomass trade in its Clean Energy Plan.
"Globally, it's the same problem," England said. "So we're not saying that we think importing refined wood pellets from the southern US is a viable pathway here. That's for the trial burn, from a technical testing perspective. But moving forward, it needs to be domestically supplied to be viable."
That was met with a mixture of curiosity and resignation by wood pellet producers in New Zealand.
Nature's Flame is a Taupo-based company that is supplying Fonterra with about 40,000 tonnes of white pellets a year, to convert its big coal boiler at Te Awamutu.
General manager John Goodwin was surprised Genesis had opted for black pellets. "It's quite uncommon, and hasn't been proven across the world."
"It modifies the fibre to make it waterproof, by collapsing all the cells where they'd normally suck up water. And it has a little bit more energy rating," he said. "It's actually getting the product that they're going to struggle with, because hundreds of companies around the world have tried it and they've all failed."
If Genesis could access reliable supplies and make it work, though, he acknowledged it would be a more direct substitute for the coal that's been burnt at Huntly.
He left the door cautiously open to producing black pellets New Zealand. "It started in about 2007, and everybody's still keeping an eye on it, but it hasn't gone very far," Goodwin said. "If it can be made to work efficiently, it would be advantageous to a lot of people around the world. But it's got to get there first, and there's no commercial scale out there that's actually doing it."
"These technologies are close to commercialisation but need support to cross to that final step. They have a significant impact on New Zealand’s carbon budget." – Ministry of Primary Industries report
Like green hydrogen (also touted as an alternative to the Lake Onslow pumped hydro storage) there are concerns about how much energy must be used to manufacture black pellets. "The problem is the amount of energy that goes into it is horrendous," says Goodwin. "On top of that, nobody's really willing to pay any more for it from a customer perspective. So it just doesn't make sense economically."
A report last year, by Bio Pacific Partners for the Ministry of Primary Industries, says bio-coke or torrefied pellets are already being pursued internationally – it cites Arcelor Mittal's trials in the Netherlands and in its Canadian steel mill, Cortus Energy's work in Sweden, and more locally, New Zealand Steel's work with CarbonScape to trial their graphite material.
Torrefied pellets are somewhat different to the steam-exploded black pellets that Genesis is importing this month. One uses dry heat to put them under pressure; the other uses steam.
The Bio Pacific report says that for heat or power, torrefied pellets may be preferred in situations with high transportation costs or where rain exposure is significant. "If these factors are not in play, wood pellets are preferred as they do not come with a technology risk."
It recommended the Government accelerate investigation of black pellets or biocoke, and prioritise a full investment analysis. "These technologies are close to commercialisation but need support to cross to that final step. They have a significant impact on New Zealand’s carbon budget."
But it also said the more expensive, energy dense black pellets made more sense for longer shipping distances. "The small and declining size of the market for coal in New Zealand, the availability of satisfactory technologies, and the poor competitiveness of new technologies led to this area being excluded from the analysis and no new technologies candidates are proposed, with the exception of the specific case of coking coal."
