April 30, 2009

100 Torrefaction Geeks in the Same Room!

The International BioMass Conference is this week in Portland Oregon.

At a breakout session over 200 Torrefaction Geeks sat glued to the presentations by Integrow, Bepex and Pellet/Briquette manufacturers.

Kevin Grotheim from Bepex gave an excellent update on thier research and provided much needed specific numbers to help our understanding of torrefaction. (of course I kept wondering if he should change his name to GroTherm).

Contact me if you want all the data, but the most interesting to me was the capital cost they are projecting:

15 Million to 25 Million for a plant with a capacity of 100Ktons to 150 Ktons per year. Thats $ 1,000 per ton of capacity. That's not too bad, especially for the first version of the project.

Walt Dickenson of Integro Earthfuels gave a clear, realistic overview of why torrefaction is ideal for co-firing. Integro is now targeting year end for their plant.

Everyone at the conference commented on the need for Cap&Trade to add at least $ 20 per ton of value for the models to work. Coal price volatility is the killer. Hard to shoot at a moving target.

Yet I think the industry is not focusing hard enough on getting the capital cost down through really creative engineering. Bepex's work is quite encouraging. Topell was often mentioned as the lead horse in the global race.

Great conference by the way. Ya'll come!

April 12, 2009

Close.... But we need $ 500K per ton hour of Capacity

The drop in the price of coal has gotten the attention of everyone following Torrefaction .

From an investment viewpoint, part of  the challenge with Torrefaction is the sheer number of variables involved; price of feedstock, price-to-compare for delivered coal, impact of Carbon Credits, and what the cost of processing equipment will be.

When you stack probabilities on top of probabilities, the percentages are not your friend.  

When coal prices were above $ 120 a short ton, Torrefacton made economic sense without Carbon Credits with plenty of headroom for increases in feedstock prices, and a wide range of prices for equipment and operating costs.

Now that coal is way down we've rerun a lot of numbers (I'll share you the geeky probability trees) but the result is pretty clear.  

We Need the Price of Torrefaction Equipment to be $ 500,000 per ton hour of capacity for Torrefactoin to develop pre Carbon Credits. This is the price at which an investor can reasonably take the gamble on the ups and downs of coal prices and the other variables.

Unfortunately, this is about twice the low end of the range of prices we're getting.  When we have greater clarity on Carbon Credits, the industry may be able to afford higher equipment prices. Carbon Credit clarity is the case in Europe right now and Torrefaction makes great economic sense for biomass serving that market. So maybe Torrefaction will develop for the export market first (just as Green Circle is exporting the pelletized woody biomass from Florida.

However reaching the magic number of $ 500K per ton hour of capacity is quite achievable and a much closer putt than .50 cents (installed) per watt of solar energy, or $ 500 per kw (installed) for Wind.  Not that these are bad technologies -- they're not and we support all renewables in a multi-technology strategy to get us to 20% renewable;  but here's the point:

Biomass, and Torrefaction in particular are a shorter putt.  Reaching $ 500 per Ton Hour of Capacity is just not that far off, and the industry develops at that price because that price can support all the variabilities in other inputs.

Lets go sink that putt.