Miramar Biomass to Power Economic Feasibility Study - PowerPoint PPT Presentation

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Miramar Biomass to Power Economic Feasibility Study

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Title: Miramar Biomass to Power Economic Feasibility Study


1
Miramar Biomass to Power Economic Feasibility
Study
  • June 23, 2008

2
Agenda
  • Introduction
  • Technology
  • Capital Cost
  • Operating Cost
  • Feedstock
  • Competition
  • Regulatory / Incentive
  • Power Prices
  • Scenarios Modeled
  • Miramar Landfill
  • MCAS Miramar
  • Generic Case
  • Sensitivities
  • Conclusion

3
Introduction
  • Economic Feasibility of Biomass to Power
  • At Miramar landfill
  • At MCAS Miramar
  • At a generic site
  • Participants
  • West Biofuels
  • EnXco
  • UCSD
  • Jacobs School of Engineering
  • Rady School of Management

4
Dual Fluidized Bed Gasification Approach for
Biomass-to-Power
  • Gasification
  • 70 of biomass (volatiles) converted to product
    gas
  • Source for
  • Engine/generators for power applications
  • Conversion to syngas in reformer for ultimate
    conversion to mixed alcohols.
  • Combustion
  • 30 of biomass (char) burned with air to provide
    heat for process

5
Improved Dual-Bed Gasification Process for Biomass
  • Needs No Oxygen
  • Atmospheric Pressure
  • Auto-regeneration of catalyst
  • Extensive Testing on MSW
  • Pyrox Process Japan, MITI
  • 3 units each 150 tons/day
  • 7 year demonstration
  • 1983 -1989

6
Capital Cost Constituents, 3 MW Plant
2.375 MM gensets
6 MM gasification system BOP
7
Comparisons
  • West Biofuels/Enxco
  • Alameda County Investigation

Alameda comparison projects include estimated
costs for site acquisition (this project accounts
for land lease separately), permitting (same
comment)
8
Güssing 2MW Plant Comparison
9
Operating Costs Miramar Landfill
Total Annual Expense 1.13MM
  • Labor
  • 7 FTEs
  • Effective labor rate 10 more than West Biofuels
    Placer County Study
  • Effective man-hours per day 20 less than Placer
    County study
  • Maintenance 7/MWh (parts only) within 2 of
    Placer County Study
  • Equipment Loader, Bull-dozer, etc. (Lease)
  • Land Lease Assume 100,000/year at Miramar
    landfill

10
Feedstock Quality
  • Base Assumptions used in Study
  • Moisture 30
  • Higher Heating Value 7000 BTU/dry lb
  • Ash 5
  • Results of samples from Miramar Landfill

Higher Heating Value (Gross Calorific Value) and
ash content not measured for these samples.
These are representative literature values from
biomass database.
11
Feedstock-Cost Center vs. Revenue Source
  • Miramar Landfill Tipping Fees
  • Green Waste is becoming a valuable commodity
  • 15-20 per ton (3-4 per cubic yard)

12
Urban Green Waste Feedstock Availability
  • Miramar Landfill
  • Currently 100,000 tons/year (Separated and
    processed in the Greenery)
  • Expanding to 150,000 tons/year April 2009
  • Additional 120,000 tons/year that is not
    separated and is thus land filled
  • 95 of what is separated is sold
  • Allied Waste Sycamore Landfill
  • Santee, CA
  • 1.5 of permitted capacity utilized
  • 200,000 tons/year
  • Collectors
  • Agri-service/El Corazon - Oceanside
  • Organic Recycling West, Inc - Otay Mesa
  • Summary
  • Currently Landfilled Supply Over 300,000
    tons/year
  • Our Demand 34,000 tons/year for a 3MW 56,000
    tons/year for a 5MW

13
Feedstock Contracting
  • Alternatives available to Miramar
  • Recent (3/2008) approval to increase permitted
    capacity,
  • Push est. closure out min. 5 years to 2017
  • Competition (3 other parties interested)
  • Other Biomass Gasification Power Companies
  • Conventional Co-Fire plants
  • Existing vs. New Investment
  • Miramar Landfill foresees a Sellers market
  • Anticipated term 1 yr with 1 yr extension
    options
  • Anticipated pricing 15-20/ton
  • Landscapers and Tree Trimmers open to
    alternatives to high cost of disposal

14
Competition (SD-based gasification of green waste)
  • Bull Moose, LLC
  • Capacity 20MW
  • Customer SDGE (20 yr contract)
  • On-stream December 2008 (est.)
  • Location Close Proximity (lt1 mi.) from Organic
    Recycling West
  • 60MM investment from Morgan Stanley
  • Envirepel
  • Customer SDGE
  • Under contract 16.5MW (Vista, Ramona landfill
    and Los Coyotes Indian reservation)
  • Bid (2007) 240MW (including 90MW in Fallbrook)
  • Allied Waste Industries Strategic Partner
  • Overview of emissions testing posted on website

15
Regulatory Requirements
  • Focus on emissions (also water and land)
  • Federal (gt10 tons/yr of regulated pollutant)
  • Clean Air Act
  • New Source Review
  • State (Regulator gt50MW)
  • Local (Regulator lt50MW)
  • Air Pollution Control Districts
  • Authority to Construct
  • Authority to Operate
  • Air Quality Management Districts
  • Regulatory Critical Path 6 mo to gt3 year

16
Credits/Incentives Federal Government
  • Statutes
  • Public Utilities Regulatory Policies Act (PURPA)
    - 1978
  • Energy Policy Act 1992, 2005
  • Incentives
  • Accelerated Depreciation
  • Production Tax Credit
  • 5 years at 0.01/KWh

17
Credits/Incentives State Government
  • State Renewable Portfolio Standards (RPS)
  • Existing Renewable Facilities Program
  • Emerging Renewables Program (solar, wind,
    nuclear, fuel cell)
  • New Renewable Facilities Program
  • Available to utilities (or other retail sellers)
    to support the RPS program
  • RPS standards
  • 20 by 2010
  • 33 by 2020 (proposed)
  • Lack of Eligibility
  • Current focus on solar and wind

18
Credits/Incentives Voluntary Markets
  • Renewable Energy Credits
  • Nominal value in CA
  • Due to more demanding RPS
  • Volatile ? Risk
  • Carbon Credits
  • Immature market / Different Standards
  • Issue of Additionality
  • Difficult and costly to establish
  • However, UCSD research supports 50 GHG reduction
    using this technology vs. landfill gas

19
Example Power Customer-SCE
  • Feed-in Tariff for Small Renewable Generators (lt
    20MW)
  • Relinquish Green Attributes to Retail Seller

20
Scenarios and Sensitivities
21
Other Financial Assumptions(unless otherwise
noted)
  • Operating
  • 93 onstream (uptime)
  • Capital
  • Engine/Generator 750/KW
  • Heat Recovery 150/KW
  • Probabilistic Variables
  • Normal Distribtuions
  • Variables
  • Capital Costs
  • Higher Heating Value
  • Natural Gas
  • Financial
  • Cost of equity 20
  • Cost of debt 5
  • Leverage 50
  • Depreciation 5-yr MACRS
  • Construction Period 9 months
  • Project Life 20 years
  • No perpetuity
  • Inflation 2.1

22
Case 1 West Miramar Landfill
  • Assumptions
  • 15/ton feedstock
  • Power sales at 98.4/MWh
  • No waste heat sales
  • 100,000/yr. Land Lease
  • 93 onstream

23
Case 1 Miramar Landfill (3MW)
Forecast Current LAC of Electrical Energy
(/MW)
Cumulative Chart
10,000 Trials
9,901 Displayed
1.000
10000
Mean
.750
.500
98.4/MWh
.250
.000
0
107.4899
113.3427
119.1955
125.0483
130.9011
/MWh
  • Not Feasible at Feed-in Power Price
  • Economically feasible if there is a
    commercial/industrial customer willing to pay
    premium prices

24
Case 2 MCAS Miramar
  • Assumptions
  • 20/ton feedstock
  • Power sales at 100/MWh
  • No waste heat sales
  • 50,000/yr. Land Lease
  • 93 onstream

25
Case 2 MCAS Miramar
Forecast Current LAC of Electrical Energy
(/MW)
Cumulative Chart
10,000 Trials
9,927 Displayed
1.000
10000
Mean
.750
.500
98.4/MWh
.250
.000
0
111.7101
118.1710
124.6320
131.0930
137.5539
/MWh
  • Not Feasible under preliminary investigations
  • No need for waste heat

26
Case 3 Generic 3MW Site
  • Generic Location
  • Likely not San Diego County
  • 2/ton feedstock
  • Power sales at 98.4/MWh
  • No waste heat sales
  • 30,000/yr. Land Lease
  • 93 onstream
  • 65 Leverage (9 WACC)
  • Or with 50 leverage, need
  • Heat sales 1.5/MMBtu, or
  • Larger plant
  • to meet cost of capital

27
Case 3 General Cogen Revenue Sensitivity
  • Base Case No waste heat sales
  • 50 heat recovery approx. 4900 KW
  • 150/KW in capital for heat recovery
  • Significant financial upside
  • Opportunities
  • Landfills/Transfer Stations in close proximity to
    industrial plants
  • 4.5/MMBtu approx 0.03/KWh

3MW plant, 2/ton feedstock, 5-yr MACRS, 50
leverage, 93 onstream
28
Case 3 General Operating Sensitivities
  • 5/ton 0.005/KWh
  • Negative Cost (Tipping Fee) Possible
  • Imputed value of extending landfill life captured
    in tipping fee

3MW plant, 5-yr MACRS, 50 leverage, no waste
heat
29
Case 3 General Operating Sensitivities
  • Aggressive Base Case 93
  • Significant Downside Possible

3MW plant, 5-yr MACRS, 50 leverage, no waste
heat
30
Case 3 General Financing Sensitivities
  • Base case assumes 5 debt cost at 50 leverage
  • Returns much more sensitive to leverage than debt
    cost

3MW plant, 2/ton feedstock, no waste heat , 93
onstream
31
Case 3 General Plant Sizing Sensitivity
  • Capital Cost
  • Gasifier scales by the square root of the ratio
    of the capacity
  • Engine Generator Set and Heat Recovery Scale
    Linearly
  • Some Operating Costs Scale Linearly
  • Maintenance
  • Consumables
  • Utilities
  • Other operating costs remain unchanged
  • Labor

Additional Study Required Emissions Testing
  • 3MW to 5MW 0.025/KWh

5-yr MACRS, 50 leverage, 2/ton feedstock, no
waste heat , 93 onstream
32
Feasible Project (3MW) Many Criteria will need
to be met
  • Low to no cost feedstock
  • Or ability to capture imputed income of extending
    landfill life
  • Good revenue sources
  • High power price and/or "Green Attribute" revenue
  • Waste Heat Sales
  • Operational Excellence - 90 onstream or better
  • Supporting Financials
  • 5 yr MACRS depreciation
  • Production tax credits
  • Leverage

And/Or Scale to gt5 MW plant
33
Conclusion
Generic Case includes 65 Leverage
34
Conclusion
  • Siting facility at Miramar Landfill is not
    feasible
  • Economically
  • 3MW is justified only if customer is willing to
    pay premium price
  • 5MW may be justified (in theory)
  • Other Factors
  • No long term contract for feedstock available
  • Height restrictions on landfill
  • Marine Corp Air Station Miramar has potential
  • Lack of waste heat revenue potential makes this
    undesirable
  • Other Locations may be more conducive
  • Lower cost, more reliable feedstock costs
  • Potential for waste heat revenue
  • Example Northern California

35
Public Policy Implications
  • Federal
  • Continuation of tax subsidies
  • 5-year accelerated depreciation
  • Continuation of Production Tax Credit
  • State
  • Future Amendments to AB 939 - allow gt10 of
    diversion waste streams to go to transformational
    uses (i.e. power)
  • Local
  • Current San Diego pricing and contracting terms
    will not encourage new investment
  • Feedstock costs anticipated at 15-20/ton
  • 1-year contracts with 1-year options to extend
  • New diversion will aid in compliance with 50
    diversion by 2000 target set by AB 939 (current
    (1996) estimate diversion 47)

36
Thank You
  • Questions?
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