emerging markets - bioenergy seminar

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1 Welcome to ICN s emerging markets - bioenergy seminar 2014 FORMULA 1 ROLEX AUSTRALIAN GRAND PRIX Thursday 13 March 2014, 9.30am 11.00am

2 Don Matthews Executive Director ICN Victoria

3 Klaus Baumgartel National Sector Manager Clean Energy ICN

4 Colin Stucley Director Enecon Board Member of Bioenergy Australia

5 Overview of Advanced Biofuels Presentation at ICN bioenergy meeting, March 2014, by Colin Stucley Director, Enecon Pty Ltd

6 Over 40 bioenergy studies, reports & projects since (Heat, power, liquid fuels, charcoal)

Full report available on BA and Enecon websites. 1.

7 Structure of this talk Bioenergy in Australia: Status and Opportunities Report first issued in 2004 and updated in Full report available on BA and Enecon websites. 1. Status of biofuels in Australia 2. Advanced biofuels commercial activities 3. Technology maturity 4. Summary

8 Australian ethanol production in 2012 From BAA website

9 World ethanol production statistics, 2011 Country or region Production in 2011 North and central America (excl Canada) (million litres) 54,508 South America (excl Brazil) 21,843 Brazil 21,094 Europe 4,417 Asia (excl China) 3,368 China 2,100 Canada 1,750 Australia 330 Africa 145 Total 109,562 Australian petrol use: approx. 19,000 Ml/y

10 Biodiesel: approximate usage in major markets In the United States, diesel consumption in the USA was estimated to be 135 billion litres for the year Total biodiesel production in 2011 was reported as 4.2 billion litres, or 3% of all diesel used. Total installed capacity for the European Union (EU) was estimated to be 24 billion litres per year in Actual production was 10 billion litres. EU27 diesel use is approx 250 billion litres/year* suggesting biodiesel is 4% of the total. At the start of 2012 the installed annual biodiesel capacity in Australia was 500 ML. At that time only four of the seven plants were in operation, producing 115 ML of biodiesel from tallow and used cooking oil. Diesel use that year in Australia was approximately 19,000 Ml, suggesting that biodiesel use was 0.6% of the total. *

11 With first gen fuels.we appear to have been left behind

12 What about advanced generation biofuels? First generation: Ethanol sugar and starch Biodiesel vegetable oils, animal fats Advanced generation: Ethanol from biomass Hydrocarbons from biomass Biodiesel from non-food crops Microalgae

13 Why make fuels from biomass? Potentially more profitable than electricity Low feedstock cost relative to first gen fuels Palm oil, tallow can cost more than crude oil Lignocellulosics, minor cost component of finished fuel Less competition with food Residues are widely available (plantations, crops, MSW) New plantings (e.g. mallees) can complement food production Let s consider the commercial status...

14 Ethanol via biomass hydrolysis & fermentation: Beta Renewables Commercial plant in Italy, began operations in Ml/year ethanol plus electricity. Straw feed and can also use hardwood.

15 Ethanol via biomass hydrolysis & fermentation: Abengoa Commercial plant under construction during 2013, at Hugoton, USA. 1,000 dry tonne per day feed, for 100 Ml/year ethanol plus electricity.

16 Ethanol via biomass hydrolysis & fermentation: POET Already active in first gen. fuels. 75 Ml/y commercial plant now under construction in Emmetsburg, USA. Corn stover as feed.

17 Ethanol via biomass hydrolysis & fermentation: DuPont 80 Ml/y commercial plant now under construction in Iowa, USA. Corn stover as feed.

18 Ethanol via biomass hydrolysis & fermentation: Granbio Already active in first gen. fuels. 80 Ml/y commercial plant now under construction in Brazil. Bagasse as feed.

19 Ethanol via biomass hydrolysis & fermentation: COFCO 50,000 t/year ethanol, plant under construction in China. Corn stover planned as feed.

20 Ethanol via biomass gasification and fermentation: Ineos Bio Commercial plant, Indian River Fl began operation in Mixed biomass feed for 30 Ml/y of ethanol and 6MW of electricity

21 Ethanol via biomass gasification and methanol: Enerkem Demonstration facility near Montreal 40 Ml/y commercial plant in Edmonton, Canada. MSW as feed. Commissioning is now underway.

22 Gasoline via biomass gasification and methanol Natural gas: Commercial process for natural gas to methanol to gasoline since the 1980s. Wood as feed: Haldor Topsoe Andritz Carbona GTI Demo plant commenced operations in Illinois USA, mid 2013.

23 Fast pyrolysis of biomass then upgrading: KiOR 500 dry ton/day commercial prototype is being operated in USA. Makes Drop in hydrocarbons. Feed is southern yellow pine.

24 Fast pyrolysis & upgrading: Envergent Ensyn: Commercial-scale pyrolysis plants (up to 100 TPD) operated for more than 20 years. Wood residues as feed. Envergent: joint venture with UOP: upgrading bio-oil through to drop in hydrocarbon fuels. Building demo plant in Hawaii for operation in 2014.

Multiple wood feeds 100 TPD 200 TPD Upgrading to hydrocarbon

25 Fast pyrolysis & upgrading: IFPEN/Axens & Dynamotive Commercial plants for fast pyrolysis in Canada. Multiple wood feeds 100 TPD 200 TPD Upgrading to hydrocarbon transport fuels demonstrated in IFPEn & Axens working in France to commercialise upgrading technology.

26 Biomass to fuels at commercial scale: Product Pathway Feed Feed scale (dry tonne/year) Ethanol enzyme hydrolysis straw, wood 150,000 to > 300,000 Ethanol gasification & fermentation wood ~ 150,000 Ethanol gasification & catalysis MSW ~ 100,000 Hydrocarbons pyrolysis & upgrading wood 50, ,000 Commercial for other feeds but not for biomass yet: Hydrocarbons gasification & FT or MTG wood up to > 600,000 A growing resource of commercial expertise But are they economic? Can we get better at making biofuels?

27 Competitive fuel costs expected Published data Organisation A$/litre (petrol equiv.) Feed NREL 0.85 Corn Stover KiOR 0.68 Southern Pine IFPEn/Dynamotive Various (to US$130/dry ton) Confidential data Recent discussions with two other groups with commercial scale plants overseas indicates they can achieve competitive fuel prices now.

28 Pursuit of lower costs: learning by doing

29 Novozyme - enzyme costs coming down

30 Fast pyrolysis - productivity improvements In early 2009, yields were in the 17 gallons per ton range, but have improved to 67 at the present time and are targeted to reach the high 80s by 2014 en route to an eventual target of 92 gallons per ton.

31 What does this mean for Australia? Multiple advanced biofuel technologies are starting commercial operation overseas. Can we utilise them in Australia? 1. Technologies de-risked overseas = lower costs for capital here 2. Technology: pilot, demo, commercial, engineering package 3. Scale important for feedstock supply 4. Significant opportunities for local construction /operation 5. Where to now? Commercial feeds and technologies are available. Can we secure fuel contracts? Can we secure funds for showcase commercial projects?

32 Bioenergy Australia National association Membership: Industry, government, research Focus on knowledge sharing and as an information forum (not a lobby group) National conference each year Hoping to run breakfast meetings in Melbourne Bioenergyaustralia.org.au

33 Colin Stucley, Director - Enecon Pty Ltd Suite 5, 651 Canterbury Rd, Surrey Hills, Vic Tel. (61 3) Thank you questions?

34 Klaus Baumgartel National Sector Manager Clean Energy ICN

35 Joshua Smith Engineering Delivery Manager Parsons Brinckerhoff

36 Biomass Power Plants An Introduction ICN Networking Event: Emerging Markets - Bioenergy 13 March 2014

37 Who We Are.. Part of the Balfour Beatty Group (UK based firm) Active in development, design, construction and management of infrastructure assets (Power, Water, Mining, Transport, Oil & Gas) Over 50,000 employees globally 1,500 employees in Australia Operations in over 80 countries Revenue GBP 11 billion

38 Biomass Power Plants A sustainable power generation solution Advantages - renewable fuels and carbon neutral production Disadvantages - large land areas and water volumes Cogeneration - becoming more prevalent globally Biomass power supplements conventional (11% of global power)

Biomass versus conventional Coal and gas fired are

Renewable fuels introduce risks Bagasse (sugar cane),

inconsistencies (specification) Fuel supply risks

39 Biomass versus conventional Coal and gas fired are well known Technologies Controls + operation Renewable fuels introduce risks Bagasse (sugar cane), grape marc Wood chip, almond husk Fuel inconsistencies (specification) Fuel supply risks (sustainability) Stockpiling areas significant Material selection / compatibility

location, resources Operational costs (fixed and variable) Power Purchase Agreements Infrastructure

40 Business case does it stack up? Business case Proposed site(s) Fuel supply/availability and transport costs Plant construction costs location, resources Operational costs (fixed and variable) Power Purchase Agreements Infrastructure (construction phase, transmission) Concept design development Investors/funding Approvals Environmental Impact Studies Local government approvals Relevant statutory approvals

Contracts EPC (Engineerng, Procurement & Construction) most common in power plant delivery provides certainty to owner/investors majority of risk resides with

41 Contracts EPC (Engineerng, Procurement & Construction) most common in power plant delivery provides certainty to owner/investors majority of risk resides with contractor defined scope, schedule and price Delay and performance guarantees liquidated damages typically capped at 20% - 30% of contract value commensurate with lost revenue

Procurement Vendor Selection Critical relevant experience with technology and fuels demonstrable track record Equipment Costs relatively significant (boiler, STG, fuel handling, condenser) offshore

42 Procurement Vendor Selection Critical relevant experience with technology and fuels demonstrable track record Equipment Costs relatively significant (boiler, STG, fuel handling, condenser) offshore fabrication is most cost effective significant potential FX risk, duties, taxes Quality risks production and fabrication (standards, workmanship etc.) independent inspections offshore Vendor accountability B2B head contract conditions is challenging risk will be priced!

Construction + Commissioning Suitably qualified tradespersons 100+ at peak for 30MW plant fitters, electricians, operators, riggers, welders specialist trades (HV, rotating machinery, boiler, turbine

43 Construction + Commissioning Suitably qualified tradespersons 100+ at peak for 30MW plant fitters, electricians, operators, riggers, welders specialist trades (HV, rotating machinery, boiler, turbine etc.) Significant construction activities (10 storey building stack height) Remote areas require accommodation during construction Multiple contractors = Site congestion + safety risks Strong safety protocols and management Contractor training and inductions Local and system wide Performance acceptance testing Handover to operations and maintenance

44 Construction + Commissioning Boiler house under construction 44MW Biomass Plant Lockerbie, Scotland 480kt fuel pa

45 Construction + Commissioning Biomass Plant commissioned in 2008 (Scotland)

46 Operations and Maintenance Specialist tradespersons required to operate and maintain (ticketed). Ongoing safety, statutory training operators are typically highly skilled Additional skilled and specialised labour to support regular activities (fuel supply, plant shuts etc.). O&M typically 24/7 operation (3 shifts 4 shifts) Fuel cartage and stockpiling ongoing 24/7

47 Summary Brief introduction to delivering biomass power plants Growing global trends in Biomass Power Generation EPC contracts are preferred by owners/investors Risk profile to owners A number of significant project delivery risks that require sound management Sustainable fuel supply and procurement of compatible kit are significant risks and should be managed accordingly

48 This image cannot currently be displayed. Josh Smith Engineering Delivery Manager Parsons Brinckerhoff

49 Klaus Baumgartel National Sector Manager Clean Energy ICN

50 Thank you emerging markets bioenergy seminar 2014 FORMULA 1 ROLEX AUSTRALIAN GRAND PRIX Friday 14 March 2014, 9.30am 11.00am

Commercial developments with advanced biofuels

Commercial developments with advanced biofuels Presentation at Bioenergy Australia VBN Meeting 23 May 2014, by Colin Stucley Director, Enecon Pty Ltd Over 40 bioenergy studies, reports & projects since