Biomass Feasibility Project Final Report - Xcel Energy

Difficulties in Permitting
Biomass projects also have run into problems in permitting and approvals, again because of
their novelty. In the case of Fibrominn, the Minnesota Pollution Control Agency required much
more information on emissions rates than the developers expected. This kept the project on
hold for a long time. PCA needed the data because there is no dataset that regulators can
draw on to model emissions from turkey litter. Project developers should anticipate that the
permitting process for novel technologies may take longer than permitting for well-characterized
technologies.
Response to Permitting Difficulties
These difficulties will lessen as regulators gain more experience with biomass projects and data
available from biomass projects increases. As biomass power moves from an experimental
technology to one with standardized designs, databases generalized from them will become
available to regulators. The MPCA is acting to build its ability to deal with the permitting of
biomass facilities.
Defining Biomass Power Plants as Waste Combustors
Waste combustors present a particular issue in permitting. Because the definition of waste in
state rules may apply to certain biomass feedstocks, biomass power plants could be subject to
standards more stringent than those that apply to traditional power plants.
Two ways to avoid waste combustor requirements
To date, biomass developers have addressed that problem by applying for a variance from the
Minnesota Waste Combustor Rule. A second way to avoid Waste Combustor standards is to
apply for a case-specific Beneficial Use Determination. The granting of a variance or a
Beneficial Use Determination serves to clarify only the applicability of the rules governing waste
combustors, not the need to satisfy other air emissions permitting requirements.
The MPCA has proposed language that would specifically exempt facilities combusting biomass
feedstocks from the state’s Waste Combustor rules. The proposed rule change would
specifically apply to facilities burning forestry residues, wood mill residues, agricultural residues,
dedicated energy crops, finished agricultural products, urban wood wastes, and poultry litter.
High Transaction Costs
The relatively small scale of bio-power facilities makes transaction costs disproportionately high.
Regardless of scale, power plants require engineering studies for design and constructing and
contractual arrangements for connecting to the grid and agreeing upon satisfactory rate
agreements. Rates depend partly on the avoided generation, transmission, distribution, and
emissions costs of the utility. Since those costs are not uniform throughout the state, establishing
a reasonable estimate may entail substantial study.
Not only are the costs of such studies high relative to the output of small power generators, the
question of who pays their cost is an issue, at least for biomass power plants larger than 10 MW.
That is the upper size limit to qualify for PUC’s generic interconnection and operating tariffs for
distributed power generation in Minnesota (PUC, 2004). For plants under 10 MW, the generic
tariffs dictate who pays for studies, how much those studies cost, and how rates and credits will
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Identifying Effective Biomass Strategies:
Quantifying Minnesota’s Resources and Evaluating Future Opportunities