Presented by

Translate

Tuesday, January 25, 2011

Is Wood Really Competitive as an Energy Source?

The answer to that question depends, ironically, in what sense the reader understands the word "competitive."

If you tend to think of these things in technical, engineering terms, and your context is power generation, then you would probably see wood as a less dense source of energy than coal, oil, natural gas, and nuclear power, and wood-based power generation to be less efficient than power generation from those other fuels. This would lead you to conclude that wood is not, from an engineering standpoint, at least, competitive with those other fuel sources. And in the case of power production, at least, you would be correct.



If you are the economist at heart, and you prefer to compare wood usage versus alternative fuels in terms of some common measure, such as BTU's per whatever, your conclusion may change, or it may not. For instance, if you compare wood pellets at 8,200 BTU's per pound, 80% efficiency, and $250 per ton against coal at 13,100 BTU's per pound and 75% efficiency, wood is extremely expensive...the energy equivalent price of coal would be around $370 per ton, whereas the actual price of high BTU coal is only around $73.25 per ton as of January 21st, 2011. So, wood looks very expensive.

But if you compare the same wood pellets to #2 fuel oil at 140,000 BTU's gallon and 80% efficiency, wood looks cheap. That energy equivalent price of that oil would be around $2.15 per gallon; the current price is more than $2.65 per gallon here in the Northeast.

And of course, if you were a conservationist at heart, you would be interested to know whether wood can be competitive if harvesting is limited to sustainable levels. This technical note demonstrates that too much of a good thing, in this case wood co-firing of coal fired power plants, is not sustainable and that if this is the best form of wood energy, then it is again not a really good idea.

And this is just the beginning of the story. Whether wood is competitive as energy is also impacted by the type of energy conversion being made, how any government incentives or subsidies are accounted for (should subsidies count as making a fuel source more competitive?), what the end user's value system is (is carbon footprint relevant, or not?), and how a specific energy project is able to parley any number of these incentives into an optimal project.

The easiest way to say this all, is that wood is a good energy alternative when the right project comes along. Elements that would define the "right project" would include:

* strong user interest in utilizing a local, available wood resource
* attainment of high efficiency conversion standards
* project right-sized for wood harvesting and transportation logistics
* well-defined and committed local forest or wood resource
* etc.

The biggest mistake I see being made in the wood energy discussion is that wood comparisons are usually made in the context of big megawatt power generation, which is absolutely one of wood's weakest potential applications. Much better is the use of wood for heating, with district heating being a great use of wood (because of the utilization of highest efficiency boilers and thermal storage, that is, giant hot water holding tanks), and pellets and fire wood excellent single home alternatives to higher priced heating fuels.

You see, woody biomass as a competitive fuel basically comes down to logistics, and the smaller distance the wood has to travel to its destination as an energy fuel, the better. That is the primary reason large wood energy projects make little or no sense; the amount of wood necessary to fuel a large power or liquid fuel plant would have to come from such a large distance that the economics don't work...and the larger the project, the worse the economics.

That is why, for one thing, we should not be encouraging our elected officials to subsidize the large power companies to build wood-fired power plants, no matter what they say about jobs. The truth is, smaller, more efficient projects produce less expensive energy and far more jobs in the supporting infrastructure. But small projects aren't as politically advantageous on the national scale...unless we have a national vision that includes wood in its best and proper role.

I began this post with the intent of discussing the behavior of the market in constraining wood harvesting at a sustainable level, but one really has to understand the competitiveness of wood energy as an alternative before we can understand how the market constrains its use. We'll get to that next time, I think. :-)

No comments: