“A Green Future”
A state-funded, $250 million project at the University of Wisconsin-Madison aims to convert a coal-fired power plant on campus to one that primarily burns biomass such as tree trimmings and crops, ideally becoming a model for how the state can reduce its carbon output and its dependence on fossil fuels.
But the massive venture – accounting for nearly one-fifth of the state’s capital budget during the 2009-’11 budget period – faces considerable hurdles. Among them:
∙ Up front construction costs will be higher than other alternatives that were considered.
∙ No infrastructure exists to process the eclectic mix of fuels the plant would burn.
∙ The plant’s surplus electricity will be sold into a regional market already awash in excess power.
The plant, built in the 1950s, is being converted in response to a Sierra Club lawsuit over air pollution, which prompted an agreement by state officials to limit coal use at the facility. In 2008, Gov. Jim Doyle pledged to stop burning coal there altogether. In its place, beginning in 2013 the state plans to rely heavily on biomass, collected from local sources, to generate electricity and steam to heat and cool much of the 42,000-student campus.
But in betting on biomass, officials rejected the two cheapest construction alternatives.
A 2008 consultant’s report concluded that construction costs for either coal or natural gas were roughly half the cost of biomass.
The least-expensive option would have been to continue to burn coal by installing state-of-the-art pollution-control equipment.
Natural gas would have been the next cheapest option. It scored the highest overall when judged on environmental, economic and reliability grounds.
Instead, officials picked a two-fuel strategy of biomass and natural gas, with 60% of the power on an average day expected to come from biomass.
The projects supporters see biomass as Wisconsin’s most promising source of renewable power. It can be burned continuously, making it more reliable than wind and solar. And because of the economic benefits that will accrue to farmers and other local suppliers, state officials believe biomass power plants can help stimulate the market for homegrown fuels.
“We are not just building a power plant,” said David Helbach, a former utility executive and administrator of the Division of State Facilities. “We are trying to jump-start the biofuels market.”
The project, still in the planning stages, will be funded by taxpayers and with student fees. The Doyle administration’s decision to go with a more expensive technology comes as state government is facing a deficit of more than $2 billion in the next two-year budget starting in mid-2011, according to the Legislative Fiscal Bureau.
The Public Service Commission reviews most power plant proposals by utilities, and costs are closely scrutinized. But the university doesn’t need PSC approval because the school isn’t a utility. Instead, officials are relying on the expertise of consultants and state personnel.
The plant is being reviewed by the state Building Commission, which oversees state-funded construction programs. The Democrat-controlled panel is chaired by the governor and includes members of the Legislature. The commission has approved $25 million to date, and additional approvals will be required before work begins later this year.
Rep. Phil Montgomery (R-Ashwaubenon) said the UW plant should be scrutinized as rigorously as public utilities.
“Is this the least-cost alternative?” asked Montgomery, former chairman of the Assembly Energy and Utilities Committee.
The Doyle administration counters that the cost of energy projects must be looked at over the long haul. In this case, it says the plant fits in with broader efforts to build a green economy and reduce spending on out-of-state sources of energy. Wisconsin spends nearly $20 billion annually on fossil fuels produced elsewhere.
“When you get off coal, you create local jobs,” said David Jenkins, director of commercialization and market development with the state office of Energy Independence. “That’s never been more important in my lifetime than it is right now.”
Global warming considerations are also a factor because coal and natural gas produce more carbon than biomass. If the federal government puts caps on the carbon dioxide emitted from fossil fuels, biomass gets more attractive.
“The goal is to reduce our carbon footprint,” Helbach said. “Obviously there is a risk for us: We may very well be spending more to reduce our carbon footprint.”
Fuel expenses also figure heavily into costs of a power plant over its lifetime. State consultants concluded that natural gas will cost more than biomass, making the new plant cheaper in the long run.
But predicting energy prices is difficult. The biomass market is in its infancy, and experts say prices are heavily dictated by local supplies. Independent economist Mark Jenner, who edits Burning Bio News, says biomass prices “are bound to go up over time” as demand for biomass grows.
Still uncertain is what exactly will be burned at the campus plant. Officials will spend the next few years scouring the local landscape for suitable material. Options include wood chips, pelletized paper, wood waste, agricultural crops, yard waste and old tires.
“We think there is enough biomass to run the plant,” said Troy Runge, director of the Wisconsin Bioenergy Initiative at UW.
Finding adequate supplies would be easier for other biomass plants planned for northern Wisconsin, the heart of the timber industry, he said. “But we think there are a lot of opportunities here,” Runge said.
Experts say that a rule of thumb is that biomass facilities should be within 50 to 75 miles of their fuel source.
Madison Gas & Electric Co. experimented in the 1990s with burning paper and switchgrass at its own coal plant near the Capitol. More recently, the utility rejected biomass as too costly and difficult to acquire. It will turn to natural gas after it stops burning coal next year.
“We continue to look at alternative fuels for the plant, including biomass,” utility spokesman Steve Kraus said. “But to date we still haven’t been able to find the quantity, the consistency, and a product that’s economical to burn there.”
Alliant Energy Corp., also based in Madison, wanted to use biomass and coal at a plant in southwestern Wisconsin, but state regulators rejected the plan because it was costly and they worried about higher greenhouse gas emissions from coal.
Alliant is still bullish on biomass but says there is no infrastructure to deliver and process the bulky materials into fuels – and no system to establish prices.
“I applaud the state’s efforts,” said Bill Johnson, Alliant’s project manager for biomass markets. “It’s not going to be inexpensive, but I don’t think any new ventures are.”
A special challenge for the UW project is that it’s located in the heart of Madison. Also, the campus site is small, so officials are hoping to work with a third party – perhaps a farm cooperative – that will stockpile material and then ship daily trainloads downtown.
That’s a concern for residents who live near campus, including Steve Hiniker.
Hiniker is executive director of 1000 Friends of Wisconsin, an environmental group, and formerly led a utility watchdog group.
He praised Doyle’s decision to stop burning coal, especially since he and his daughter suffer from asthma. But he worries about a sharp increase in truck and train traffic.
“Biomass plants are great, but everything has its price, and in a tightly confined urban area, maybe a different fuel choice would work better,” he said. “In any case, we’ll all be breathing easier because the coal will be gone.”
When fully operational in 2013, the new plant will produce about three times as much power as it does today. Excess electricity will be sold to MG&E.
But the utility raised concerns about the project in public testimony last year, saying surplus power will go into a regional market that already has excess capacity.
Demand for power is down because of the slow economy, and We Energies’ new power plant in Oak Creek, co-owned by MG&E, will add more supply to the region, said Paul Vanderbloemen, executive director of rates and federal regulation at MG&E. “We have ample capacity in the state,” he said.
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