Biomass Feasibility Project Final Report - Xcel Energy

NGPP
EPS/Beck assigned its PPA to NGPP in early 2003. NSP’s petition for approval of the reassignment
explained that NGPP intended to abandon the Whole Tree Energy scheme and burn
conventional chipped wood from tree plantations (Xcel Energy, 2003). They also planned move
the facility’s location to Waseca. NGPP pursued the Waseca plan through 2003; but found that
rights to land in the Waseca area cost more than anticipated, and that landowners wanted
higher lease payments for tree plantations than the developers could afford. By early 2004
NGPP discussing with the cities of Virginia and Hibbing the best way to transfer the PPA to them
(Xcel Energy, 2004). In the ensuing months the legislature reduced the size of the mandate to
110 MW while encouraging NGPP to reduce its project to 35 MW. In early 2004 the PUC put
consideration of the docket on hold until negotiations to transfer ownership of the PPA to the
cities of Virginia and Hibbing were completed.
Laurentian Energy Authority
In February of 2004 the Hibbing Public Utilities were pondering the long term future of their power
generation facilities. All options were on the table, from closing them to installing natural gas
combustion turbines. Among the options was a partnership with NGPP, then stymied in its
biomass project in Waseca. ("Projects Wait", 2004b) By Mid-April of that year the cities of Virginia
and Hibbing had agreed to enter into a joint venture to replace their aging coal boilers with
wood boilers ("Public Utilities Meeting", 2004a), and by late April the cities were lobbying the
state legislature to fund their project (Swanson, 2004). After exploring their options, NGP Power
transferred their interest in NGPP Minnesota Biomass, LLC to the Laurentian Energy Authority.
NGPP then announced it would abandon the project in Waseca and fulfill their contract by
leasing and retrofitting the Laurentian Energy Authority’s coal fired boilers. The cities formed the
Laurentian Energy Authority to develop the project and eventually purchased NGPP to eliminate
the complications of working with a third party.
The Laurentian project involved replacing coal fired boilers used by each city’s district heating
system with boilers that would eventually burn “closed loop biomass” in the form of plantation
grown hybrid poplars. Until the poplar plantations become available, the cities will burn logging
residues and other wood wastes. They anticipate that by the end of the 20 year PPA, more than
half of the plant’s fuel will have come from plantations. Besides powering each city’s district
heating system, the two projects will generate a combined 35 MW of biomass boiler for Xcel
Energy, which finally will fulfill the 1994 Prairie Island Mandate. Since the two plants are in the
cities’ business districts, the wood fuel will be received and processed in a rural wood yard
between the two.
The Laurentian Energy Authority’s projects came to fruition quite quickly after the second
amendment to the PPA was approved in August of 2005. In October of that year a contract for
the construction of the new boilers was announced ("Foster Wheeler", 2005). Construction was
completed and power generation had begun at the Laurentian Energy Authority in December
of 2006 (“Biomass generation”, 2006).
In previous years the facility has been the recipient of funding from the federal government. The
funding has included:
• A grant of $250,000 from the U.S. Department of Agriculture to fund the harvest of timber
from 180 acres within Superior National Forest. ("Rep. Oberstar", 2005)
• A grant of $1,200,000 from the U.S. Department of Energy to study potential wood
resources and the effects of using “forest waste products for biomass burning projects at
the Virginia and Hibbing public utilities.” ("Grant Will Help", 2006)
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Identifying Effective Biomass Strategies:
Quantifying Minnesota’s Resources and Evaluating Future Opportunities