# Presentation: 302234

## Economic and Policy Context of Woody Biomass Utilization for Electric Power

- Healthy Landscapes, Thriving Communities  Bioenergy and Wood Products Conference
- January 21, 2004 – Denver

- Dr. Mark Nechodom, US Forest Service
- Pacific Southwest Research Station

## Mapping the Biomass Territory

- With grateful acknowledgements to Bob Shleser

## Slide 3

## Slide 4

## A Pricing Problem?

- Huh...?!

## Costs From Forest to Bus Bar = 7.5¢/kWh

- Sources:  Nechodom, Mason & Hartsough *in press; *TSS Consultants* Unpubl.*

**Notes:**
Cost Centers
Cents/kWhr
Harvest
1.2
Collection
0.6
Processing
0.8
Transportation
1.6
Capital Amortization/ROI
0.5
Operation and Maintenance
2.8
Total
7.5
Subtotal Feedstock
4.2

## Potential Income and Avoided Costs (public benefits) = 18.7 cents/kWh

- Sources:  Morris 1999; Nechodom & TSS (unpubl)

**(**_**Based on California Wholesale Markets,  2002**_**)**

**Notes:**
Benefits/Income
Cents/kWhr
Capacity Payments
2
Current average price of power from CA IOUs
5.3
SOx
0.01
NOx
0.13
PM-10
0.71
CO
0.15
CH4
7.52
non-methane HCs
1.1
CO2
-0.23
Landfill
1.9
Forest Thinning
0.13
18.72
Subtotal Environmental Benefits
11.42

## Potential Income and Avoided Costs (public benefits) = 18.7 cents/kWh

- Sources:  Morris 1999; Nechodom & TSS (unpubl)

**(**_**Based on California Wholesale Markets,  2002**_**)**

- Huh...?!

**Notes:**
Benefits/Income
Cents/kWhr
Capacity Payments
2
Current average price of power from CA IOUs
5.3
SOx
0.01
NOx
0.13
PM-10
0.71
CO
0.15
CH4
7.52
non-methane HCs
1.1
CO2
-0.23
Landfill
1.9
Forest Thinning
0.13
18.72
Subtotal Environmental Benefits
11.42

## Environmental and Social Impacts and Costs of Wildfire: At What Price?

- Timber losses
- Watershed damage
- Water treatment
- Tourism and recreation
- Amenity values
- Wildlife habitat
- Disaster relief costs
- Lost jobs and wages

- Rehabilitation and restoration costs
- Transportation (movement of goods and services)
- Human health
- Evacuation and displacement
- Cultural and archeological sites

## The Forest Thinning Problem:

- How much does it cost?
- How much do _**I**_ get in return?
- How do we calculate risk?
- What is “_it_”?

- (what is the level of public investment?)
- (who benefits? who pays?
- (what if we don’t invest?)
- (what exactly are you planning to do out there?)

## “Creating” Renewable Energy Markets

- _Public Goods Funds:_  taken off the top of ratepayer bills; allocated by govt or utility
- _Renewable Portfolio Standards:_  require the market (suppliers and consumers) to respond
- _Green Power Pricing:_  connecting demand (consumers) to supply (e.g., biomass plants)
- _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 utility**

**NJ: 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

**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, 2003
- Healthy Forest Restoration Act (HR 1904 – Title II: Biomass)
- Increased policy-level interest in translating forest investments into cost-savings and revenues