No commercial scale torrified wood plants have materialized and there have been a number of failed attempts. That’s changing.
By special correspondent Tim Sklar
One of the primary reasons for all of these failed attempts is that the TW processes that were being considered had not yet been proven to be technologically sound or commercially viable. At best, TW technology providers could only demonstrate viability in pilot plants.
Now, a small, innovative engineering company referred to herein as “this advanced TW technology provider” has patented an advanced woody biomass torrefaction process (“AWBMT”) and is currently participating in its installation in a commercial scale TW plant. It is now believed that this advanced TW technology provider’s AWBMT” process is technologically and commercially viable and the information describing it is worth sharing with others in the biofuels project development community.
What is Torrefaction?
Torrefaction is a process that uses “mild pyrolysis” on woody biomass. The woody biomass is reduced to a char, with only 25% to 33% of the amount of input material used, being driven off as a gas”resulting in a TW yield of between 66% and 75%.
What Makes a Torrefaction Process Technologically Viable?
It is generally believed by those involved in developing TW technology and promoting its commercial application that in order for a torrefaction process to be considered technologically viable-
• It must be capable of running continuously on a 24/7 basis, without leaving VOCs in the end product or released as emissions.
• It must have process controls that are easy to operate requiring a small crew of operators, and minimum maintenance.
• It must employ process controls that are automated enough to be able to continuously maintain temperatures at ranges that will foster complete mild pyrolysis of the woody biomass.
• It must employ process controls that and adjust easily to various mixes of woody biomass being run without adversely impacting on efficiency or quality of the TW produced.
• It must be able to accept feedstock that is of industry standard size not needing special pre-treatment such as pulverization or excess drying.
• It must produce a torrefied material that is uniform and that can also be pelletized or reformed into briquettes.
• It must produce a torrefied material that has sufficiently high heating values, low moisture content and moisture resistance, high transport density and high energy density to become a clean coal substitute.
• It must produce a torrefied material using “dwell times” that are short enough to assure adequate throughput as well as high yield.
In addition, the torrefaction plant should be designed to facilitate scale-up to higher capacity levels at a later date while offering significant economies of scale. In other words, a TW plant with the capacity to produce 20,000 mtpy of TW should not cost twice as much, if scaled up to a capacity of 40,000 mtpy of TW is later undertaken.
What Makes a Torrefaction Process Commercially Viable?
Commercial viability can best be demonstrated by showing that the proposed TW plant can produce bio-coal and sell it at a price that provides an adequate return on equity to the plant owner, and is attractive enough for acquisition by coal users as a coal substitute.
What Has Changed?
This advanced TW technology provider’s AWBMT” process, represents a Major Break Through
The AWBMT technology, is unique in that it has been specifically designed to optimize the use of woody biomass as a feedstock for producing TW It already has undergone extensive testing, producing TW of uniform quality on a continuous basis. This advanced TW technology provider is now participating in construction of the first commercial scale plant using the AWBMT process that will produce 2,500 kg/h (~22,000 tpy) of TW. This advanced TW technology provider’s involvement in this project goes beyond design. They are also conducting technical and economic feasibility studies, providing detailed engineering of equipment and process controls, conducting process modeling, simulation and laboratory analyses, overseeing test trials. They are also planning to participate in procurement, construction and commissioning throughout the construction and commissioning effort.
The AWBMT Process Described
How it Works
In the AWBMT process, torrefaction takes place continuously as woody biomass is fed by conveyor into the top of a torrefaction “tower” and neutral hot gas is introduced at the bottom. This is in contrast to some less efficient torrefaction processes that introduce the woody biomass in batches, where mild pyrolysis occurs in a static environment, with TW being removed after the required dwell time.
In the AWBMT process, woody biomass is dried to remove almost all of its moisture. It is then fed into the top of a torrefaction tower, which is used to facilitate a staged transformation of its three components, cellulose, hemi-cellulose and lignin. As this dried material descends into warmer and warmer zones in the tower, it is provoked by the neutral gas flowing up the tower, and an untangling of light organic substances occur.
The high temperature zone at the bottom of the tower taking place is the devolatilization of lignin, the heavy devolatilization and carbonization of cellulose, and the light organic devolatilization of hemi-cellulose
As the time the neutral gas reaches middle of the tower, it has cooled to a temperature that is ideal for supporting mild pyrolysis. At this stage the hemi-cellulose polymers are broken from the cellulose components allowing the depolymerization to be completed. At this mid-range temperatures, depolymerization or torrefaction of hemi-cellulose occurs, as does a light devolatization of the lignin, and cellulose components.
By the time the neutral gas reaches the top of the tower, its temperature have cooled down to a level that is sufficient for drying of the woody biomass before it is fed into the top of the tower. The neutral hot gases that have cooled down as it flows to the top of the tower, are then removed and recycled. By the time the gas exits the tower it is loaded with VOCs that are captured during depolymerization
The TW that is produced migrates to a grid at the bottom of the tower and is continuously removed.. To support a continuous operation, recycling of this neutral gas stream involves clean-up and removal of the VOC’s, reheating the clean gas, and re-injection it into the bottom of the tower.
This advanced TW technology provider explains that in the depolymerisation and devolatilization that takes place in their AWBMT process, the molecular structure of the woody biomass is significantly modified, as light organics are removed and fibers are broken, making the resulting TW very friable (crumbly) and hydrophobic (water resistant). After torrefaction, this advanced TW technology provider claims that little energy content of the woody biomass is lost as the TW produced by their AWBMT process retains 95% of the energy contained in the woody biomass used and the progressive increase in temperature of each particle of biomass allows it to be fully utilized.
What makes AWBMT process unique is its simplicity and efficiency.
Key Benefits Claimed For AWBMT
• AWBMT is a fully developed and operational technology.
• The AWBMT process has been specifically designed for torrefaction of cellulosic biomass and in particular, woody biomass, but it can also handle other lingo-cellulosic materials as wood, bagasse, switch grass, miscanthus, other cellulosic crops and agri-wastes.
• The AWBMT process has no added woody biomass preparation requirements as it uses a standard crushing size (G50) and requires pre-drying to the standard level of ~20%.
• This advanced TW technology provider also offers a low-energy, low-cost solution to meet pre-drying requirements of the AWBMT process.
• The AWBMT process achieves an optimum energy balance and yields because:
– The neutral gas temperature is set to the temperature required to torrify the type of biomass being used.
– The flow rate of the heated neutral gas is adjusted to the flow rate of the torrefied biomass being produced.
– The progressive increase in temperatures that the biomass is subjected to as it progresses from the top to the bottom of the column, facilitates complete torrefaction of each of the key biomass components, thus optimizing yield.
• The AWBMT process is very efficient as the heated neutral gas comes in direct contact with the crushed biomass and there are few moving parts little operator intervention, and no significant purchased power requirements.
• AWBMT can achieve energy self sufficiency by using as little as 4% of the bio-coal being produced to replace purchased fuels that are used to produce neutral hot gas
• The AWBMT process will produce high quality bio-coal on a continuous basis.
• The AWBMT process preserves 95% of the caloric content of the biomass it converts into bio-coal as only VOCs are removed.
• The AWBMT process produces no by-products or waste streams that need further treatment
• Commercial plants using AWBMT technology are designed for continuous operation, are highly automated with a full compliment of process controls and are simple to operate.
• Commercial plants using AWBMT technology can be designed to produce 2,500 kg/h (20,000mt/y) of TW to as much as 10,000 kg/h (80,000 mt/y) of TW.
Even though the first commercial scale bio-coal plant is not fully completed, based on the above attributes this advanced TW technology provider claims for its AWBMT technology, and on all of the detailed design and testing that has been performed to date, there is no reason to believe that this plant will not perform as claimed.
Further, the standard AWBMT torrefaction unit offered by this advanced TW technology provider is well designed, compact and efficient. As they have explained, this “standard unit is capable of producing 40,000 mtpy of bio-coal. It is comprised of four major components that are fully designed, namely: a torrefaction column; a gas loop; a biomass feeding and elevating system; and a bi-coal extraction and cooling system. This unit uses minimal amounts of electricity (40 kWh/ ton TW produced) and ~5% of TW produced to heat the neutral gas. The space requirements are modest, with the 43 meter torrefaction column having a footprint of 110m2 and the other components only 700 m2.
TW Produced by the AWBMT process Is Suited for Coal Co-firing.
This advanced TW technology provider has indicated that their bio-coal is ideal for the coal fired utility user as it is CO2 neutral and has a high energy density, low moisture content (less that 1%), and it is hydrophobic and homogeneous, producing little ash and no heavy metals. They claim that the bio-coal is easy to grind and pelletize, (with a Hardgrove Grindability index of ~50). If the bio-coal is to be transported, it is often bagged or shipped in containers as pellets. As shown below in the energetic density comparisons, this advanced TW technology provider’s Bio-coal has high heating values and energy densities that are comparable to most utility steam coal. As a consequence, unlike other wood based fuels, it can be co-fired in a coal bio-coal mix or substituted for coal using the same feeding systems. Because bio-coal is virtually dry and much denser than other wood based fuels, significant transport savings can be expected when shipping in bulk.
Commercial Viability of the AWBMT process Is expected
As was previously articulated, in order for a TW plant to be commercially viable, it has to be demonstrated that such a plant can be expected to produce bio-coal and sell it at a price that provides an adequate return on equity to the plant owner, and is attractive enough for acquisition by coal users as a coal substitute.
Because no standard sized TW plant using the AWBMT process is up and running, the approach taken was to use metrics made available by this advanced TW technology provider for a hypothetical 40,000 mtpy “Standard” plant and cost estimates based on analyses we had previously made for TW plants using similar technology.
The following is a description of assumptions made, results obtained and conclusions reached regarding such a plant’s commercial viability.
The estimated ~$6.3 million in capital costs needed to build and install a “Standard” advanced TW technology provider plant, were made by combining cost estimates for each major component namely- the biomass pre-treatment and drying equipment, the torrefaction ”column”, the thermal recycling loop, and the TW recovery and pelletizing systems. Each of these component estimates were based on using capital costs that had previously been obtained for similar types of components used by competing TW plants of similar size.
It was estimated that 70% of these costs could be borrowed at 6% over 15 years at an annual amount of ~$450,000 or $11.25/mt TW.
Depreciation & Amortization
The useful life of the plant is expected to be 15 years with annual depreciation and amortization of ~$524,000.
Land Lease Costs
The footprint provided by this advanced TW technology provider for one of their standard plants and additional estimates for storage, handling and transport infrastructure areas suggested that~21,000 ft2 of land area would be needed at an estimated annual lease cost of ~$200,000.
Woody Biomass Costs
100,000 mtpy of woody biomass was estimated to be needed to produce 40,000 mtpy of TW based on using woody biomass with 50% moisture and shrinkage in torrefaction of 20% (i.e. 100,000 gmtpy x 50% x 80% = 40,000 mtpy of TW). Assuming that a 50:50 mix of wood waste and pulp wood chips were to be used, based on recent supply contracts in South Carolina a current average price of $31.50/gmt was assumed, resulting in an annual cost of woody biomass used of~$3.2 million
Plant Operating Costs
Assuming a 3 shift operation with five operators per shift, and 2 in plant management and maintenance, direct payroll was estimated at~$440,000 per year or $11 per mt of TW. Power used to operate the plant was based on using 4% of the TW produced. When the cost of other utilities was added, the total power and utilities were estimated to cost $7 per mt of TW. S,G&A was estimated at 15% of direct payroll, When land lease costs are included, total plant operating costs are estimated at $24.85 per mt of TW
TW Pellet Costs
Based on the above cost estimates, the cost to produce TW pellets delivered to Charleston SC the most likely the port of embarkation (POE) is estimated to be $103.60 per mt of TW, comprising of $78.75 per for biomass used and $24.85 per mt for the value added in converting it to TW. This compares favorably to the price being realized for thermal coal for export that is currently selling for $130.40 CIF ARA or ~$90.00 POE Charleston.
Thermal Coal and TW Price Outlook
By year 2013, it is hoped that a TW plant will be in operation. And due to increased coal use in China and Japan, coal is expected to increase to 146.52/mt at an average of 6% per year. Adjusting for BTU differentials in coal (12,500 BTUs/mt) to TW (11,500 BTU’s/mt), TW prices could increase to $134.80/mt CIF ARA. In addition carbon taxes charged to coal users in five EU countries are estimated to have a combined average of $75.80 per mt of CO2. If TW were used in lieu of thermal coal this amount could be saved. And if one-half of this saving were used by utilities to support the TW supplier, an additional $37.50/ mt would be realized.
The Bottom Line-The Good Prospects for Commercial Viability
As shown in the following P&L Summary, if one of this advanced TW technology provider’s Standard TW plants is up and running in South Carolina and if the price and cost estimates materialize as estimated, a $13.46 per MT after-tax profit could be realized on sale of 40,000 mtpy of TW to EU utilities. The net cash flow generated could be ~$950,000 per year and an average return on investment could be a respectable 15.3% with a return on equity of 51.2%.
Putting TW Plant Project Development on the “Fast-Track”
In order to successfully develop a TW plant there are certain basic ingredients that have to be in evidence before proceeding and others that have to be obtained before such a project can be completed. In order to complete such a project on time and on budget, time tested project management tools should be used. The following discussion are based in part on lessons learned from our 3 year effort to develop a TW plant in Georgetown County, SC and in part on what now needs to be done to complete its development. The issues and ideas discussed are believed to be common to all projects of this type. It is hoped that in discussing our project development experience, others can make use of some of information and ideas presented, when they embark on development of similar projects.
Basic Ingredients for Developing a TW Plant in South Carolina
Adequate Available Supplies of Woody Biomass
The supply of woody biomass that will be needed is being obtained from one of the project sponsors, a woody biomass procurement consortium. This consortium now operates in 16 counties of South Carolina, where 4.6 million acres of timberland are available for harvesting. Recent studies indicate that the annual amount of timber to be harvested from this “wood basket” could average ~40.5 million gt. In addition there is 5 million tons of wood waste that can also be recovered. If only wood waste is to be converted into TW, this data suggests that 50 “standard size” TW plants could be supplied. We are only planning to build one such plant that would use 100,000 gtpy of woody biomass. So it seems that there is an abundant supply to meet our needs.
The Supply Woody Biomass Needed Will be Secured by Contract
The woody biomass consortium requires each participating wood procurement firm to guarantee availability of woody biomass they have agreed to provide, or pay the consortium for any excess cost incurred if they ail to meet their ongoing requirement. Each participant is required to be sound enough financially to meet their obligations to the consortium.
Stable Prices Paid for Woody Biomass to be built Into Supply Contracts
Prices charged the consortium for wood chips and wood waste consist of base prices negotiated at the outset of the contract and adjusted over the life of the supply contract by applying standard industry cost adjustment indices that are compiled by a third-party indexing firm. Prices charged for TW will reflect pass though of these increased costs.
A Market for 40,000 mtpy of TW to be Produced Has Been Identified
A number of power utilities in the EU that use thermal coal and are subject to carbon taxes on CO2 emissions have been testing TW as a blend stock. Many have completed testing of TW are in a position to procure supplies from TW producers that can meet their specifications. Individuals in many of the firms who will be participating as founders, sponsors or key parties-in-interest to our project have worked with a number of these utilities and identification of those that are potential buyers of TW is not expected to be a problem. And with only 40,000 mtpy of TW to sell, the proposed South Carolina plant should have an easy time pre-selling all of its production.
A New Domestic Market for TW is Also Likely
US power plants that use thermal coal will continue to face coal price increases as a result of increased demand for coal in China, Japan. This is leading to diminution of their clean-dark spreads (i.e. the profit for turning coal into power) and prospects for some form of carbon tax will certainly cause further diminution. This should lead to creating a new market for TW produced domestically and a TW plant in South Carolina is well positioned to meet this need.
Realization of TW Prices That Are Adequate and Stable
Our preliminary analysis of the economics of producing TW, indicates that TW plant projects will not need government price supports to be commercially viable. For instance, there will not be a need for a Federal blenders tax credit similar to the one given blenders of E10 gasoline and B5 diesel fuel. Likewise TW prices need not to be propped up by taxing carbon emissions from fossil fuels. Also not needed would be government sponsored “entitlements” schemes such as a cap and trade or a Renewable Information Number (RIN) option program.
What may be needed in the way of providing adequate and stable TW prices could probably be achieved as part of contract negotiations between TW buyers and sellers. Manufacturers of TW from woody biomass will need protection from swings in prices being realized in the international and domestic markets for thermal coal. At the least, buyers of TW should share some risk by guaranteeing a floor price to the TW producer to keep the producer whole. For instance, the projected earnings statement included above, the total cost of TW delivered to ARA ports was $143.60/mt. Debt Service was estimated to cost of $11.25/mt. Combined they would provide a “Floor Price” of $154.85/mt, to be should be “guaranteed, by the buyer, if coal prices drop, on a BTU adjusted basis to fall below this $154.85 floor price for TW.
Use of a Viable Technology and a Cost Effective Process
Based on this advanced TW technology provider’s story, plans to use their AWBMT process will be seriously considered. Of course, a due diligence inquiry will have to be made, and this advanced TW technology provider will have to share with us their validation of claims made as well as process metrics and costs they are using in the commercial scale TW plant project that is underway. But as previously stated, it does appear that their AWBMT process is viable and we expect that a pre-feasibility study of building a Standard TW plant using this process will solidify these beliefs.
Ingredients Still Needed
Commitments for Obtaining Adequate Investment Capital
It is envisioned that Government Programs for providing grants, loans and loan guarantees will no longer be available. For example, it has been learned that the USDoE Loan Guarantee Program is not taking on additional commitments in biofuels projects and their funding is being scaled back.
Likewise, a project of this size ($6 million to $10 million) will be of little interest to investment bankers or even institutional investors. Because the use of AWBMT process is being built into the price paid by project owners to this advanced TW technology provider, in lieu of a series of royalty payments, the project will be of little interest to VC firms or IPO houses. Those that may want to invest will be private equity funds, and affinity investors. Affinity investors could be those that have a direct economic interest as suppliers of equipment, services, and raw materials, and those that are in a position to resell or use the TW produced.
Local individual investors may want to participate as shareholders, as will the founders who have contributed time and resourced to the project’s development.
Lenders could come from those that specialize in capital leases as well as banks that participate with US Government export agencies, such as the Export/Import Bank and OPIC, especially if equipment to be used can be fabricated here in the US.
Demonstrated Cash Flow Potential for providing adequate Debt Coverage and for Generating RoE and to attract Private Equity
Needed is a feasibility study that is based on specific project designs and detailed engineering, as well as cost estimates from knowledgeable EPC contractors, detailed marketing studies and detailed implementation schedules and sets of pro-forma projections. Sensitivity tests will then be used to quantify risks. Business plans will then have to be developed and supporting documentation packaged into an information memoranda format, that can then be used to obtain letters of interest and preliminary memoranda of understanding. Seed money will have to be raised from founders to cover costs of consultants, attorneys, and consulting engineers, prior to obtaining hard commitments from other potential investors. Of course, lenders are expected to commit last.
Project Management Issues
Detailed Planning and Use of Advanced Management Tools
Good project management starts with thorough project planning followed by project control systems designed to keep projects on track and on budget. In a complex undertaking such as building a TW plant, Critical Path Method (CPM) networks ought to be used to establish meaningful projections through the construction period and through ramp-up. CPM is not only used to assist project managers to make mid-course changed in task assignments to avoid schedule slippage, and costly delays. CPM can also be used to fast-track completion, by concentrating resources in shortening completion times of critical tasks. Our plan is to use such tools so that the proposed TW plant will be completed and in production in 2 years.
Major Impediments and Ways to Overcome Them
The major impediment to completing the project could be having inadequate financing during construction and ramp up, if unforeseen delays affect liquidity. Project sponsors and EPC contractors can avoid Costly delays could be avoided if contractors post performance bond and if meaningful incentives are offered to finish ahead of schedule.
“Ready to Go”
The picture portrayed should convince those that plan to build TW plants that the time is now. Our project sponsors and project development team are preparing to demonstrate this shortly. We promise to share information on progress made.
For more information: Sklar Inc