Jobs and biomass market lost with Jonesboro plant cutback

The electricity‑generating biomass plant in Jonesboro that has been owned by Covanta Energy since 2008 will be changing its operating model, resulting in 16 out of about 21 employees losing their positions with the plant. The ripple effect will be felt by many more around the county, including biomass suppliers and contracted support.
Covanta Energy Business Manager Ken Nydam says, "The economics of the biomass industry are challenging. We've made a decision to change from operating 24/7 to dispatch mode." The West Enfield biomass plant, also owned by Covanta Energy, will continue to operate around the clock. "West Enfield has a lower cost structure so that will continue 24/7." Nydam says that the 16 Jonesboro employees have received severance packages as a part of the first phase of the plant's new operating policy.

Dispatch mode based on set price
The company had been discussing the possibility of dispatch mode since last year, Nydam says. There was an unplanned outage when the boiler malfunctioned in September, but Nydam explains that this was not a significant factor in the decision. "BCAP [Biomass Crop Assistance Program] significantly reduced fuel costs, so this justified the economics of running 24/7. This summer electricity prices were robust." However, he says, the shoulder season and forecasting into 2011 finalized the decision to switch to dispatch.
BCAP was started by the US Farm Service Agency as a result of the 2008 Farm Bill. Funding became available in late 2009, and Covanta Jonesboro benefited from BCAP funds for a few months. The program matched payments of up to $45/dry ton or $22.50/green ton for wood used as boiler fuel. Mike Pottle of Perry, a biomass supplier to the plant, says of the BCAP funding, "Maine received $33 million and used it in three months. It was well underfunded."
Biomass suppliers now are on standby, says Pottle. The new mode of operation, dispatch mode, allows the company to set the electricity price that it will accept in order to supply electricity to ISO New England, rather than taking whatever price is current to the plant's generation. However, this means that the plant will only run when the pre‑set price is met.
According to Jeff Jones, manager of rates and regulatory services at Bangor Hydro, "Generally renewable plants are not dispatchable with ISO New England because of peak loads. Wood chip plants either run or do not run." The Jonesboro plant, with its larger generating capacity, may be an exception. He says, "ISO New England would take their bid, and if the market price" is met, they would "dispatch to plants to cover the larger load needs" of the market. He says that Covanta Jonesboro is tied into a transmission line system that was planned to handle fluctuating loads. But in addition, the plant is on a transmission system "that is being upgraded along the coast."
Nydam stresses that the plant will not be moth‑balled. It will have a small crew that will keep the plant ready to react to dispatch. "We're still trying to figure out how to meet the needs of dispatch," he says. The business manager notes that Covanta is still working out whether the plant's crew will be contract, employees or a combination of the two. The dispatch price point has not been finalized.
The electricity generating biomass plant was sold in late 2008 to Covanta Energy Corporation of Covanta Holding Corporation. The Jonesboro plant and its sister plant in West Enfield were formerly co‑owned by Ridgewood Maine LLC and Indeck Energy Services Inc. The plant began commercial operation in 1987, but was shut down from 1995 to 2001 because of conditions in the electric power market. The plant was built to accept forest‑related biomass such as wood chips, bark, tree limbs and tops and mill residue. During full‑time operation the plant utilizes certain types of woody material and spends about $7 million per year on filling that need and about $1 million in annual payroll and benefits. Running recently at 85 to 95% capacity, the plant supplied 23 to 24 megawatts of electricity to ISO New England.

Losing a local biomass market of 250,000 tons
To keep the plant running full‑time, it needed an annual supply of about 250,000 green tons of biomass. In early 2009 about 12 vendors were supplying the plant with woody biomass material from a 60‑mile radius. John Williams, president of the Maine Pulp & Paper Association, explains that in 2008 "energy prices were so high --a lot of biomass plants came on. This created a shortage of waste and low‑quality wood." Biomass plants were buying the same higher quality biomass as the pulp and paper industry. Now oil prices are down, he says, "So I think the biomass industry is going back to more traditional use. Pulp quality is going to pulp, and slash is being used to burn for biomass." Of the Jonesboro plant, he says, "I would think that a stand‑alone biomass plant would have trouble competing in this market."
"It's another blow to Washington County," says Terry Bell, a supplier of biomass to the plant. "We weren't a big supplier, but every lot we cut on had biomass material." Bell is part of an Edmunds family that has kept the 200‑year‑old family farm running and in the family by using its 1,600 acres in a mix including forestry products and organic farming and dairying.
Pottle was a large supplier to the plant and says the change in operation "has hit me hard." In 2009 he supplied the plant with 100,000 green tons and had 14 employees. He began downsizing last fall. This year he supplied about 55,000 green tons and is now down to five employees. "I've told all my logging contractors to stop" until he catches up with his current supply and can see where he stands on the demand side. He notes that last winter a wood cutter was getting $14 a ton and now they are getting $4 to $5 a ton.
Bell explains that having a market for biomass "was a great tool for managing the forests. It [the change in the plant's demand] means we won't be able to thin out the forests as much as we have been." In 2009, of the 500 truckloads that left the farm annually, about 55 went to Covanta Jonesboro. Pottle had many more trucks delivering to the plant and is now delivering to the sister plant in West Enfield. He says his trucks waited in line for six hours to deliver to the other plant. "Right now we're hauling twice as far for the same price." He expects that by mid‑October the biomass suppliers "will be on quotas."
Pottle and Bell both feel that green energy subsidies and tax credits are being directed toward wind and tidal without considering the biomass industry. "I don't understand the State of Maine. We're preaching green," says Pottle. " Last year energy prices dropped and we started losing green credits to wind turbines and tidal, but the subsidy helped." Both understood that the BCAP subsidy was supposed to be for two years. Bell comments, "In today's world, this is our green energy that is in place C subsidies should be used for it."
There will be additional repercussions to the plant's change of operation. Scheduled maintenances will probably be performed with much less frequency. For 24/7 operation, the plant needed scheduled maintenance every six months that involved shutting the plant down for up to two weeks. In addition to the 21 employees, there were another 35 or so contractors who worked on the plant during the two‑week detail. The contractors stayed at Machias‑area hotels and gave a boost to the local economy.