Energy from Construction and Demolition Materials. Tim Mobley Honua Power

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2 Energy from Construction and Demolition Materials Tim Mobley Honua Power

3 Agenda Honua Power Honolulu, HI Estimates of U.S. C&D Volume C&D Composition Disposition of C&D Material Project Development Issues Honua Power, continued

4 Honua Power Developed by Honua Technologies Unitek Energy Technologies 12 MW Generation Facility in two 6 MW phases Gasification Technology 450+ Tons Per Day C&D Debris as Feedstock

5 Waste Disposal Regulatory Drivers Only two landfills,one is full. Extension granted for one, the other plans to increase capacity Search for a new site None are Found Tipping fees highest in country Alternative Solutions Honua Power Renewable Energy 1978: PURPA passed. Legislature RPS 15% RE by % by 2020 Transmission and variability issues w/ Wind & Solar Electricity rates highest in country Alternative Solutions RPS Renewable Portfolio Standards RE Renewable Energy

6 Honua Power Project Benefits Community Benefits: 450+ tons of landfill waste materials diverted daily Helps stabilize tipping fees benefiting consumers and contractors Creates about 25 permanent jobs plus 2 years of development and construction jobs Energy source diversification away from fossil fuels and adds to renewable mix Reduces methane emissions which are 20x more potent than carbon Located in Campbell Industrial Park amidst many transmission and distribution resources Utility Benefits: Facility will operate 24 hours a day, seven days a week, providing utility dispatchablelike power Unlike wind and solar, full capacity will be available and count towards RPS Conventional steam turbine provides familiar generation technology and predictable performance

7 C&D Debris in Perspective Universe of Non-Hazardous Wastes Subject to Regulation under Subtitle D of RCRA C&D Debris Municipal solid waste Municipal sludge Industrial nonhaz. process waste Construction & demolition debris Agricultural waste Oil and gas waste Mining waste Auto bodies Trees & brush Building related waste Construction Demolition Renovation Roadway related waste Bridge related waste Landclearing & inert debris waste

8 Estimates of U.S. C&D volume US EPA reports there are ~1800 C&D landfills Volume is difficult to estimate definitions and state level reporting vary significantly Some estimates: Literature study in MA report to 2.8 lbs / day / person times 310 MM = 434 MM to 868 MM lbs / day => yields 2.6 to 5.2 GW Construction Materials Recycling Association estimate is 1,781 MM lbs/day which would yield ~10GW 2004 CA study estimated C&D waste as 22% of waste stream Note: Generation capacity estimates based on 40% combustible and 3 MW generated per 100 tons combustible materials/ day

9 C&D Composition C&D Waste Characterization Study Results (% by weight) DE WI 2003 CA 2005 WA 2002 Average (%) (%) (%) (%) (%) Concrete/ rubble Wood Drywall Roofing Metals Plastics Other Note: Study Completed in May 2008 by DSM Environmental Services Inc. under contract with MassDEP

10 C&D composition % of C&D by Weight

11 C&D Composition Wood only* *Average of C&D Waste Characterization Study Results (% by weight)

12 Disposition of C&D Wood - MA

13 Disposition of C&D Material Clean wood enters market sometimes called the wood basket Biomass burn plants (36 in California alone) Mulch & soil amendments Other uses for wood Typical market issues supply, demand, stability, contracts, codependency Metals Recycle Plastics Recycle or landfill Fines Frequently used for daily cover by landfills Remainder - Landfilled

14 Disposition of C&D MRF process in Hawaii Load sorting Laydown of select loads Bulk pick (e.g. refrigerators)? Bulldozer break down Trommel remove fines Pick line removal of metals, concrete, PVC Coarse shred Final shred with trommel to meet specs

15 Disposition of C&D

16 Disposition of C&D

17 Disposition of C&D

18 Project Development Issues Community perception RPS and tax incentives Fuel supply agreements Conversion technologies CCA Permitting Development cost and timeline Legal expenses Landfills perspective

19 Community Acceptance Hawaii experience to date Community meetings Individual meetings with key community leaders and stakeholders Individual meetings with all elected officials Comments on Honua s environmental assessment What you do not want:

20 Waste Wood in RPS and Qualification for Tax Incentives Hawaii Revised Statutes- definition of renewable energy Biomass, including biomass crops, agricultural and animal residues and wastes, and municipal solid waste; Qualification for grant in lieu of tax credits Open loop biomass Solid wood waste materials, including..manufacturing and construction wood wastes (other than pressure-treated, chemically-treated, or painted wood wastes)..but not including municipal solid waste Trash facilities: A trash facility is a facility, other than a landfill gas facility, that uses municipal solid waste to produce electricity. Definition of MSW para.27 of 42 U.S.C other discarded material, including solid, liquid, semisolid, or contained gaseous material resulting from industrial, commercial, mining, and agricultural operations, and from community activities

21 Fuel Supply Agreements Fuel supply agreement and associated issues have been the #1 financing issue Can the facility get liquidated damages in its agreement? What is the strength of the guarantees? What kind of permit contingencies will the supplier insist upon? Plus typical terms Pricing Preparation and Specs Fuel supply agreements for C&D materials vs. biomass More likely to be with a landfill operator or MRF sub-contractor which may have better history, better records and larger volume than many wood haulers Downside is that supplier may have greater market power Difference between Availability and Contractibility there may be a lot of material in a geographic area but how much of that is realistically possible to be tied up in a long term supply agreement

22 Conversion Technologies Incineration/wood fired boiler Lower cost More units in service with better operating history Gasification Perception relation to incineration Air permit may be as gas fired boiler not incinerator Lower expected maintenance costs Residue is a char instead of an ash Potential for other uses of the gas

23 Chromated copper arsenate 2 to 5% of wood in C&D landfills CCA material typically removed but process leaves clean wood Generally regulated by states within EPA guidelines Subjectivity of state regulator

24 Permitting Complex, subjective and varies by geography Honua Power has 22 required permits or approvals Critical permits Environmental Assessment/ Environmental Impact Statement Conditional use/ land use Air permit Solid waste permit Building permit

25 Development Investments and Timing Power purchase agreement 2-5+ years Interconnection study 2 years/ $200K Preliminary engineering to get to fixed price EPC quote 6 months/$300k+ plus internal engineering costs Preparation of Environmental Studies 2 years/$100k+ Permit applications continuous/$100k Feedstock sampling and analysis and for gasification pilot testing 3 months+/$100k

26 Legal Expenses During Development Business set up / structure of agreement Land lease option during development? Tenure / terms PPA financability, economic terms, engineering terms Feedstock agreements - financability, economic terms EPC agreement risk, financability, economic terms Investment agreements Development equity Project equity Project debt O&M agreement - financability, economic terms

27 Landfills Perspective Strong incentive to preserve air space permitting landfills is not getting any easier Opportunity to recover more metals Shredding increases compaction so some value without supplying as fuel But, Sorting is expensive Shredding is expensive Opportunity for energy projects to capture more volume by taking more than just clean wood =>WTE vs biomass issues

28 Mass C&D Issues Palmer Renewable Energy Faciliy 38MW/ ~1,000 tpd Completed environmental review process in 2008 Major Comprehensive Air Plan Approval Application filed on November 20, 2008 with Mass DEP. Supplemental information was supplied on March 25, 2009, May 19, 2009, and June 30, Recently received conditional approval of Air Quality Plan But..Public meetings on use of C&D material for fuel scheduled June 28 and June 30, and RFP released on June 1, 2010 for study

29 Mass C&D Issues Task I: State of the Science and Gap Analysis Report. 1. The types and levels of contaminants commonly found in C&D wood; 2. The most effective options for reducing and mitigating toxics and other contaminants of concern in C&D wood feed stocks; 3. Potential emissions of greenhouse gases and other air pollutants related to combustion or gasification of C&D wood both before and after the application of state of the art air pollution controls; 4. Potential public health impacts, including a comparison with National Ambient Air Quality Standards (NAAQS), MassDEP Air Toxics guidelines, and other equivalent values associated with the combustion and or the gasification of C&D wood; and 5. Development of a standard specification for C&D wood to be used for fuel. Task II: Generic Risk Management develop a generic assessment of the public health and environmental impacts combustion parameters, air pollution and other engineering controls, meteorological data, assumptions about the size and type of the hypothetical facility, receptors, and other factors as necessary. examine risks resulting from the inhalation route of exposure, and will determine whether Massachusetts air quality standards and guidelines, and other equivalent guidance, would be met by the hypothetical facility. Based on the results of Tasks I and II, MassDEP will decide whether to entertain applications for the use of C&D wood as a fuel for the generation of electricity.

30 Honua Development Strategy Secure Sites for Operations Secure Feedstock Select Appropriate Technology Power Purchase Agreement Fixed Price Construction Agreement Permits EA, Air Permit, etc. Financing

31 Conclusions Construction and Demolition Debris is a large part of the nation s waste stream. Project development potentially more complicated than other renewables. Budgeting and planning for development time, expenses and contingencies is essential. There is significant energy content and there are still opportunities to recover this energy and reduce the need to import oil.

32 Tim Mobley