[Forest_Biomass] Bend news article

[WEEKS Kevin]

Forest Biomass News members-

Bend Bulletin article about biomass tax credits in central Oregon. Board of Forestry member/facilitator Cal Mukumoto is quoted.

Kevin Weeks, ODF Agency Affairs / Private Forests Division (503) 945-7427

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For biomass projects in the region, 'tax credits help a lot'

By Kate Ramsayer<mailto:kramsayer at bendbulletin.com> / The Bulletin, October 07. 2008

Companies hoping to generate more power from burning wood got a bonus last week as Congress attached an extension of federal tax credits for renewable energy production to the bailout bill.

But before construction starts on biomass power plants in Central Oregon, project officials are working to clear other obstacles - including financing to build the projects and a sufficient, affordable supply of fuel to spin the turbines and generate power.

The federal tax credit "gives a penny per kilowatt produced for the first 10 years, and that's really important for many of these projects, important for renewable energy," said Cal Mukumoto, project manager for the expansion of the biomass facility on the Warm Springs Indian Reservation. "The tax credits help a lot; they push this thing over the top."

The Warm Springs project involves building a $50 million, 20-megawatt power plant that can provide steam and electricity to the lumber mill next door, as well as put 15.8 megawatts into the grid - enough power for about 12,000 homes.

The tribes had been considering the expansion of the existing biomass plant since 2004, and officials had originally hoped to have it up and running in late 2008. Uncertainty over whether Congress would extend the tax credits originally delayed the financing for the project. Now, uncertainty in the credit market is delaying the financing, he said, but there are still some financial institutions interested in the project.

"We're still working on financing," he said. "We were moving along at a good clip, and then the credit markets went out from underneath us."

The goal is to get the financing in order and the plant constructed and online by the end of 2010, he said.

Elsewhere in Central Oregon, Silvan Power has proposed building biomass power plants in La Pine and Prineville.

Company officials told The Bulletin earlier this fall that the La Pine project is on hold because of permitting issues, but the company is still working on a proposed 20-megawatt Prineville facility.

While the Warm Springs project has an agreement with neighboring federal land management agencies stating that the agencies will put up a certain amount of potential biomass fuel for sale within a certain radius, Silvan doesn't have that kind of agreement.

Silvan has been talking with the U.S. Forest Service and Bureau of Land Management about where it will get the wood to fuel the power plant, said Debbie Norton, district manager with the Prineville BLM.

"I think we're all interested in making it happen for the community," she said.

She thinks that there's enough fuel out there to power a biomass plant, but it's a question of whether the company can afford to truck the small woody material to the facility.

The BLM has been working on a plan for the Cline Buttes area outside of Redmond, and there's a lot of small trees and woody material that could come out of that, she said. But she doesn't know whether it would make economic sense for Silvan to haul that material from Redmond to Prineville. And if the company wants junipers, there are plenty that need to be thinned out for ecological benefits near Prineville, she said.

Officials with Silvan did not return calls for comment Monday.

"It's more complicated to get the wood than you might think," said Scott Cooper, Crook County judge. While there are many juniper trees on private lands that should be cut to improve ecosystem health, there's often no easy access to those trees, he said.

But the county is supportive of the project, he added, since it's a way for the private sector to reduce some of the fire risk on nearby land.

Biomass projects can be good for the environment because they use a fuel that isn't natural gas or coal, and they can also help provide financial incentives for timber projects that would make forests healthier and less drought-stressed, said Mark Kendall, senior policy analyst with the Oregon Department of Energy.

"If we can thin some of these forests that are overly dense, we'll end up with more resilient forests," he said.

Mukumoto said that improving forest health is one of the tribes' goals in expanding the biomass plant.

But the state agency is recommending that projects be relatively small - under 20 megawatts, Kendall said. Both of the proposed plants would be this size.

"Then we don't put huge stress and strain on infrastructure, and you're not reaching too far," Kendall said.

And the state also encourages companies to not focus just on power production, but to tie it to something else. That could be anything from using the steam to dry lumber, to using some of the small woody material to produce posts and poles.

If the Prineville project is only to generate electricity, "that makes their business plan a little more tough," Kendall said. But there is talk about developing other businesses near the biomass plant that would use its steam, he said, which would make sense.

Another factor adding to the economics of biomass plants is that the Pacific Northwest has relatively cheap electricity, said Phil Chang, with the Central Oregon Intergovernmental Council. And since companies have to compete with those prices, they often can only afford to truck fuel from nearby forests or sites.

"The economics are so tight on these things that you really need a whole bunch of stars to come into alignment," he said. "It's not easy to make these projects happen."

He's been involved in analyses of the economics of biomass and said that one way to use the small woody material more cost effective is to use it to generate heat in a boiler system in large buildings like hospitals or schools - something the Sisters School Board will be considering later this winter.

"We've been trying to reorient people's attention and have them start to think about biomass heat," he said.

Kate Ramsayer can be reached at 541-617-7811 or kramsayer at bendbulletin.com.

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