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April 14, 2017





Biomass firm seeks changes to agreement
by Lora Whelan


     Three months after restarting operations of two biomass energy plants in Jonesboro and West Enfield owned since October 2016 by Stored Solar LLC and previously owned by Covanta Energy, Stored Solar has shut down the Jonesboro plant and filed a request with the Maine Public Utilities Commission (MPUC) to amend an agreement it has for utilizing a biomass industry recovery incentive program.
     After its January start, the Jonesboro plant was shut down in mid‑March "due to a lack of biomass feedstock," states Stored Solar Vice President William Harrington in a March 27 letter to the MPUC. Stored Solar's letter was in response to a March 22 MPUC letter requesting an update on the company's operations and financial status of the two plants because of an agreement between Stored Solar and Central Maine Power (CMP) that utilizes state incentives to run the plants.
      The future of biomass in the state has been of concern, given the decline in the pulp-and-paper industry and the changes to the renewable energy credit marketplace that put stand‑alone biomass generators at a disadvantage to other renewable energy sources such as wind and solar, explains Dana Doran, executive director of the Professional Logging Contractors of Maine. Doran's organization "spent a lot of time working on policy over the winter of 2015‑2016" to stabilize the biomass market, he notes, with the outcome being enactment of a bill, An Act to Establish a Process for the Procurement of Biomass Resources. The bill, after debate and amendments, was passed with bipartisan support from the legislature and the governor. As described by the MPUC, the act allows $13.4 million to be used to pay above‑market costs to biomass energy producers in the state in exchange for certain described in‑state benefits.
      In December 2016 the MPUC approved a contract between CMP and Stored Solar with a term of two years and with an established above‑market price of $13.40 per MWh to be paid by CMP to Stored Solar through monthly payments. The MPUC is able to adjust contract payments if Stored Solar "does not provide its required in‑state benefits." To ensure that funds are available to make any adjustment, Stored Solar is required to post credit support quarterly so that the in‑state benefits are reviewed at the end of each of the two contract years and "there is adequate security to cover any adjustment to the contract payments."
      Terms of the agreement's in‑state benefits obligate Stored Solar to create in the first year 42 in‑plant full‑time equivalent jobs, purchase 500,000 tons of in‑state biomass and spend $2.5 million on capital expenditures. In the second year of the agreement Stored Solar would follow the first year but without the capital expenditure requirement. As of March 24, the company had purchased 112,317 tons of biomass, hired 44 employees and paid $500,000 towards engineering and materials for facilities improvements.
Biomass supply contracts and forest health
      In his March 27 letter to the MPUC general counsel, Harrington explains that the West Enfield plant is operating at about 20 megawatts but that the Jonesboro plant was operating at only six megawatts. He states that an invoicing dispute with some biomass suppliers has since been resolved. Harrington also notes that because "a few biomass suppliers failed to honor their contractual commitments," Stored Solar was driven to pay prices for biomass that were 30% to 35% above the contracted price. The result, he writes, "created uncertainty around future operations, which in turn severely hindered Store Solar's ability to attract investors and lenders for its efforts to revitalize Maine's bio‑economy. Investors will not invest if it's unclear whether the suppliers will honor their commitments."
     Stored Solar's letter lists actions taken, including the signing in November 2016 of 10‑year biomass supply agreements with Maine‑based biomass supply companies. Harrington and other company representatives have not responded to requests for interviews or comments about the contracts. While Doran could not comment about the specifics of the Stored Solar contracts, he explains that he does not know of any contracts between biomass suppliers and biomass energy plants other than the ones described by Stored Solar. He says that generally relationships are set up but with no long‑standing contract in place because the market "fluctuates by supply and demand." However, he says, contractors have fixed costs that do not change with the markets, such as trucking and production. "Because of the abundant supply, the price came down, but the challenge is that the fixed costs don't go down." He adds, "Contracts haven't really worked because contractors can't deliver at a loss. Long‑term contracts are next to impossible."
     Bob Bell of Edmunds, who was in the biomass supply market for years but sold his chipper in 2016 because the "industry was up in the air," says that the biomass industry is in a "pretty sad state of affairs." He adds, "It's still a buyer's market with what they're buying chips for, and that's dependent on electricity prices. So they need low costs for chips, which makes it hard for the seller." Doran confirms that there has been about a 10% drop in the logging workforce over the last year with people like Bell, with a long history in the industry, either downsizing, parking their equipment or getting out.
      In Maine there are almost 18 million acres of actively managed forest, says Doran. From the silviculture perspective, a reduction in biomass use "absolutely has an impact." It promotes regeneration, and without its use regeneration of the forest slows down. It also can lead to an imbalance in forest harvests. Doran states, "We don't want to promote just saw logs." Bell says, "We need to manage for logs, for timber, for dimensional lumber. We need to create forests for higher quality wood, but we also need to clean out the lower quality wood" that can be used as chips for heat and electricity generation but could also be studied by the University of Maine research divisions.
Filing to amend MPUC agreement
      On March 28 Stored Solar filed a request with the MPUC to amend the incentive agreement. The company requests that CMP stop payments to Stored Solar; that Stored Solar reimburse all funds received from CMP since January; that CMP reimburses the cash deposit posted by Stored Solar, listed in the company's March 27 letter as $1.157 million; that Stored Solar submit its annual report on in‑state benefits as per the contract; and that CMP pays Stored Solar based on its performance and not in advance.
Comments on the request were being accepted through April 5, with Stored Solar able to provide responses until April 12. Doran wrote that his organization urges the MPUC to preserve the original agreement. Alteration after only three months since the agreement's terms began "would seriously undermine the intent and integrity of the process that produced it." Changes would "erode safeguards and also raise the possibility of biomass suppliers potentially being paid lower than market prices -- thereby reducing their viability, which the legislation was designed to enhance -- on a regular basis since payments would not be predicated upon any subsidy."
     Addressing the statement by Stored Solar in its March 27 letter to the MPUC that there had been an invoicing dispute with some of its biomass suppliers, Doran wrote, "If this issue is not completely resolved before an amendment was made, or if a similar issue presented itself at some point during the term of the new agreement, there would be no opportunity for review/recourse until the end of the 12‑month term, which is not in keeping with the enabling legislation or in the best interest of the taxpayers and contributing suppliers."
     Central Maine Power, while expressing its neutral stance on the matter, did state its concern about the timing of Stored Solar's proposed amendment. "CMP's belief has generally been that maintaining the integrity of the commission's bid processes would seem to be of paramount importance." However, CMP continues that the proposed amendments "are of less concern" because they do not "present new or additional risk to CMP or the [state's] general fund from which the payments arise."

Co‑generation possibilities

     Stored Solar, owned by Capergy US, which is owned by Capergy SA, a French company, has partnered with Synthesis Venture Fund Partners on an initiative that could bring additional businesses to the county through the Maine Born Global Challenge. The goal is to locate industries at the Jonesboro and West Enfield plants that can utilize the excess waste heat produced from electricity generation.
     If stand‑alone biomass electricity generating plants, such as the two owned by Stored Solar, are able to create co‑generation utilization envisioned by the Maine Born Global Challenge, they could meet the new requirements of the renewable energy credit marketplace.
     Doran and Bell agree that the vision for co‑generation utilization could be a win for all involved. Doran states, "We agree with the sentiment of creating higher utilization and efficiency at stand‑alone plants with greenhouses, sawmills, any business that uses heat." He adds, "And that is driving legislative recommendations made last year" for future bills. Bell hopes Stored Solar is successful. "They have big ideas."
     Synthesis Venture Fund Partners representative Jimmy Massaad had initially expressed an interest in setting up an interview to discuss the Maine Born Global Challenge and Stored Solar's co‑generation plans but did not respond to follow‑up inquiries. A Synthesis press release published in Biomass Magazine states that, as of April 6, the first Born Global Innovation Challenge has "resulted in 56 applicants and 14 companies continuing through prequalification and due diligence." On the Synthesis website companies listed as "prequalified" include Core BioFuel, NuFuels, Phytonix, Ark Power Dynamics, Visolis and others.




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