Economic and Policy Context of Woody Biomass Utilization for Electric Power
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Transcript of Economic and Policy Context of Woody Biomass Utilization for Electric Power
Economic and Policy Context of Woody Biomass
Utilization for Electric Power
Healthy Landscapes, Thriving Communities Bioenergy and Wood
Products ConferenceJanuary 21, 2004 – Denver
Dr. Mark Nechodom, US Forest Service Pacific Southwest Research Station
Mapping the Biomass Territory
With grateful acknowledgements to Bob Shleser
A Pricing Problem?
5.37.5
11.42
15.22
0
2
4
6
8
10
12
14
16
Cen
ts p
er k
ilow
att-
ho
ur
Wholesale Power(CA 2002)
Cost of BiomassGeneration
(Nechodom & Mason2003)
EnvironmentalBenefits & Potential
Income (Morris1999; Nechodom &
TSS)
Env/Soc Benefitsand Avoided Losses
(ShamelesslyHypothetical)
Huh…?!
Costs From Forest to Bus Bar = 7.5¢/kWh
Capital Amortization/ROI (.5)
Transportation (1.6)
Processing (.8)
Collection (.6)
Harvest (1.2)
Operation and Maintenance (2.8)
Sources: Nechodom, Mason & Hartsough in press; TSS Consultants Unpubl.
2002 Wholesale price (5.3)
Landfill (1.9)
CH4 (7.52)
Capacity Payments (2.0)
Forest Thinning (.13)
Hydrocarbons (1.1)
CO2 (-.23)
SOx (.01)
NOx (.13)
PM-10 (.71)
CO (.15)
Sources: Morris 1999; Nechodom & TSS (unpubl)
(Based
on
Califo
rnia
Wh
ole
sale
Mark
ets
, 2002)Potential Income and Avoided Costs
(public benefits) = 18.7 cents/kWh
Potential Income and Avoided Costs (public benefits) = 18.7 cents/kWh
CO (.15)
PM-10 (.71)
NOx (.13)
SOx (.01)
CO2 (-.23)
Hydrocarbons (1.1)
Forest Thinning (.13)
Capacity Payments (2.0)
CH4 (7.52)
Landfill (1.9)
2002 Wholesale price (5.3)
Sources: Morris 1999; Nechodom & TSS (unpubl)
(Based
on
Califo
rnia
Wh
ole
sale
Mark
ets
, 2002)
Huh…?!
Environmental and Social Impacts and Costs of Wildfire: At What Price?
Timber lossesWatershed damageWater treatmentTourism and recreationAmenity valuesWildlife habitatDisaster relief costsLost jobs and wages
Rehabilitation and restoration costsTransportation (movement of goods and services)Human health Evacuation and displacement Cultural and archeological sites
The Forest Thinning Problem:
1. How much does it cost?
2. How much do I get in return?
3. How do we calculate risk?
4. What is “it”?
1. (what is the level of public investment?)
2. (who benefits? who pays?
3. (what if we don’t invest?)
4. (what exactly are you planning to do out there?)
“Creating” Renewable Energy Markets
1. Public Goods Funds: taken off the top of ratepayer bills; allocated by govt or utility
2. Renewable Portfolio Standards: require the market (suppliers and consumers) to respond
3. Green Power Pricing: connecting demand (consumers) to supply (e.g., biomass plants)
4. Subsidies: transfers financial resources from taxpayers to ratepayers
Renewable Energy “Public Goods Funds”
$127 mil.
RI: $10 mil
MA: $332 mil
CT: $275 mil
NJ: $271 mil.
$85 mil.
$80 mil.
$32 mil.
$94 mil.
$1890 mil.
$40 mil.
$95 mil.
$10 mil.
$234 mil.• 16 states with
renewable funds• $4.3 billion to be
collected through 2012
DE: $11 mil.
$20 mil.
Source: Lawrence Berkeley National Laboratory
States with Renewable Portfolio Standards
WI: 2.2% by 2011
IA: 105 MW
MN: 825 MW by 2012
NV: 15% in 2013
TX: 2,880 MW by 2009
PA: varies by utilityNJ: 6.5% by 2012
CT: 13% by 2009
MA: 4% new by 2009
ME: 30% by 2000
NM: 10% by 2011
AZ: 1.1% by 2007
• 13 states• ~33% of total U.S.
load covered
Source: LBL, NREL, author
CA: 20% by 2017
Almost half of US electricity customers have access to a green power product
Policy-Level Support
MOU on Biomass Utilization – USDA, DOE, DOI – Signed June 16, 2003Healthy Forest Restoration Act (HR 1904 – Title II: Biomass)Increased policy-level interest in translating forest investments into cost-savings and revenues