1 Cogeneration in the Forest Products Industry January 2008 by Phil Zirngibl

2 What is Cogeneration? Cogeneration is the production of electrical energy and another form of useful energy, such as heat or steam, through the sequential use of energy. Cogeneration is also often referred to as Combined Heat and Power or “CHP”. Source: US DOE

3 Cogeneration – how much in the U.S.? CHP generation represents 9% of electricity generation capacity in the US. The Forest Products, Chemical and Oil Refining industries combined represent ~90% of the total CHP generation in the U.S. manufacturing sector. The majority of cogeneration in the Forest Products Industry is from renewable fuels (biomass). Source: US DOE, Midwest CHP Center

4 Forest Products Industry Represented primarily by two groups; paper and lumber Meets more than half its energy requirements through highly efficient cogeneration processes. Since 1972:  Has increased energy self-sufficiency from 40 to 60%  Utilizes nearly 85% renewable resources for onsite generation  Reduced total energy usage by 30%  Reduced purchased energy by 53% Source: AF&PA

5 STG = Steam Turbine mechanically coupled to a Generator GTG = Gas Turbine mechanically coupled to a Generator WHRB = Waste Heat Recovery Boiler Combined Cycle GTG = GTG with a WHRB combined with STG Simple Cycle GTG = Stand alone GTG Heat Rate = Amount of fuel (in btu’s) required to generate one Kwh of electricity. Commonly expressed in btu/kwh. Common Cogeneration Terms

6 Types of cogeneration in the Forest Product Industry Source: MECS 1998 Number of facilities with cogeneration Approx 75% of existing cogeneration facilities are in the Paper Products Business

7 Cogeneration from Steam Boilers in Forest Products Plants (paper) Waste Wood Boiler Wood-based biomass High pressure steam Low pressure steam To manufacturing process requirements Generator Green Power Steam Turbine Typical heat rate ~ 4,500 btu/kwh or 76% efficient Recovery Boiler Lignin

8 Typical Coal-fired utility generation Boiler Coal High pressure steam Generator Power Low pressure steam Condenser Steam Turbine Typical heat rate ~ 10,000 btu/kwh or 34% efficient

9 Typical utility Combined Cycle GTG Natural Gas Power Waste Heat Recovery Boiler Generator Low pressure steam Condenser Generator Steam Turbine High pressure steam Gas Turbine Hot Gas Typical heat rate ~ 7,000 btu/kwh or 49% efficient

10 Typical Simple Cycle GTG Natural Gas Power Generator Gas Turbine Hot Gas Exhaust Typical heat rate ~ 12,000 btu/kwh or 28% efficient

11 Typical Heat Rates Typical Heat Rate (btu/kwh) Utility Scale Industrial cogeneration is significantly more efficient that other typical types of commercial electricity generation...

12 Cogeneration – Advantages/Issues Advantages: More efficient than commercial generation despite lack of scale. Potential to increase renewable generation (esp. in Forest Products Industry) Provides a reduction in GHG emissions. Provides advantages of distributed generation (avoids issues w/constrained transmission system). Potential for advantageous tax treatments Continued development supported by provisions of the Energy Independence and Security Act of 2007 Issues: Cogenerated renewable electricity from older installations not valued the same as from newer installations. Cogenerated renewable electricity must be sold to be eligible for Sec 45 Fed Tax Credit. Most recent version of Lieberman-Warner Climate Security Act of 2007 doesn’t recognize value of cogeneration... in fact, penalizes facilities with cogeneration.

13 Green Power Green(Renewable) Power = Brown Power + REC* *REC = Renewable Energy Credit (renewable attributes of Green Power)

State RPS

15 U.S. Electricity Generation by Fuel * Source US DOE Oct ‘07 Total = 4,065 Million MWH/yr

16 Renewable Electricity Generation by type Woody Biomass MSW/LFG Geothermal Wind Solar Total US Electric Generation by Fuel* * Source US DOE Oct ‘07

17 Renewable Electricity Generation from biomass GP generates ~ 8% of the electricity generated from woody biomass in the US... Wood Waste Blk Liquor ~ 8% 38.7 MM MWH/yr Woody Biomass MSW/LFG Geothermal Wind Solar U.S. generation from Woody Biomass GP Generation from Woody Biomass Total US Electric Generation by Fuel* * Source US DOE