North Eastern and North Central New Mexico Wood Biomass Electric Generating and Biochar Production Facility

Feasibility Assessment and Business Model

Prepared for: Energy Minerals and Natural Resources Department, Energy Conservation and Management Division

Date: 12/31/2018

CONTENTS

Executive Summary ...... vii 1.0 Wood Biomass Resource Assessment, North Central and North Eastern, NM ...... 10 1.1 Site Selection ...... 10 1.2 Feedstock Analysis ...... 14 1.2.1 Timber Harvest Residuals ...... 14 1.2.2 Forest Treatments and Hazardous Fuels Reductions ...... 16 1.2.3 Forest Products Manufacturing Residuals ...... 17 1.2.4 Urban Wood Waste ...... 19 1.2.5 Electrical Transmission and Distribution Rights of Way ...... 20 1.2.6 Total Available Feedstock ...... 21 1.3 Transportation Cost Assessment ...... 21 1.3.1 Forestry Contractors within the Local Industry ...... 21 1.3.2 Forest Residues Transportation Costing Model ...... 22 1.4 Impacts ...... 23 2.0 Electrical Needs in North Central and North Eastern, New Mexico ...... 24 2.1 Background/Overview ...... 24 2.2 Electric Biomass Potential in Rural Electric Cooperatives, Municipal Utilities and Investor Owned Utilities ...... 24 2.2.1 Specific Rural Electric Cooperatives ...... 2 5 2.2.2 Tri-State Generation and Transmission Association ...... 25 2.2.3 Northern New Mexico Distribution Electric Cooperatives ...... 28 2.3 Northern New Mexico’s Municipal Utilities ...... 30 2.3.1 City of Raton/Raton Public Service ...... 3 1 2.3.2 Los Alamos County ...... 31 2.4 New Mexico Investor Owned Utilities ...... 33 2.4.1 PNM ...... 33 2.4.2 Utility Consideration of Biomass; Major Obstacles ...... 36 2.5 Examples of Other Biomass Energy Production in Neighboring States ...... 36 2.5.1 Gypsum, Colorado ...... 36 2.5.2 Fresno, California ...... 37 2.5.3 Arizona ...... 38 2.6 Thermal Biomass Heating ...... 39 3.0 Regional Transmission Lines and Interconnection Potential ...... 41 3.1 Interconnection for a Biomass Electricity Plant ...... 41 3.2 Interconnection Processes ...... 41 3.3 Interconnection Possibilities ...... 42 3.4 Distribution Lines ...... 42

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3.5 Proposed New Transmission ...... 42 4.0 Benefits of Biomass Energy Generation as a Backup to PV Generation Installations ...... 45 4.1 Introduction ...... 45 4.2 Overview of Current PV Capacity ...... 45 4.3 Storage Capacity Needed To Meet Demand When Solar Is Not Productive ...... 50 4.4 Biomass Energy Needed to Meet Demand when solar is not productive ...... 50 4.5 Potential Barriers to Biomass Power Production ...... 51 5.0 Market Potential for Biochar ...... 53 5.1 Biochar production Cost Estimation ...... 53 5.2 Maps showing Sandy Soil Regions ...... 54 5.3 Biochar Properties and Applications ...... 60 5.3.1 Production of Biochar ...... 60 5.3.2 Physical Properties and Characterization of Biochar ...... 60 5.3.3 Chemical Properties and Characterization of Biochar ...... 60 5.4 Biochar Application as Soil Amendment ...... 61 5.4.1 Nutritional Improvements from Biochar Application ...... 61 5.4.2 Water Retaining Improvements from Biochar Application ...... 61 5.4.3 Crop Yield Improvements from Biochar Application ...... 62 5.4.4 Biochar Application Rate ...... 63 5.5 Analysis of biochar impacts by crop type ...... 63 5.6 Potential barriers to biochar application ...... 66 5.7 Potential for other applications of Biochar ...... 67 5.8 Biochar Application and Transportation Cost Analysis ...... 68 5.9 Recommendations ...... 69 6.0 Business Model for 10 MW Biomass to Energy Facility ...... 71 6.1 Biomass Power Generation ...... 71 6.2 Biomass Power Production Technology ...... 73 6.2.1 Direct-fired Biochar Production ...... 74 6.2.2 Co-firing Biochar Production ...... 74 6.2.3 Gasification Biochar Production ...... 74 6.2.4 Biochar Production using Modular systems ...... 74 6.3 Biomass Process Recommendation ...... 7 5 6.3.1 Pyrolysis process ...... 76 6.3.2 Power generation ...... 76 6.3.3 Wood drying ...... 76 6.4 GHG Reduction Estimation ...... 78 6.5 Benefit/Impact of Biomass Generation ...... 80 6.6 Estimated Capital and Operational Expenditures ...... 80

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6.7 Return on Investment ...... 83 6.7.1 Return on Investment of power generation plant from biomass ...... 84 6.8 ROI Sensitivity Analysis ...... 85 7.0 Summary and Recommendations ...... 89 7.1 Major Barriers to Development ...... 89 7.2 Recommendations and Next Steps ...... 89 8.0 References ...... 95 9.0 Appendix ...... 99 Appendix A - Abbreviations and Acronyms ...... 100 Appendix B - New Mexico’s Renewable Requirements ...... 101 Appendix C – US Biomass Power Facilities ...... 103 Appendix D – Biomass Incentives and Policies ...... 107 Appendix E Biomass Incentives and Policies Applicable to New Mexico ...... 109

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Figures Figure 1 Map of Tres Piedras potential facility site with 75-road mile boundary ...... 11 Figure 2 Map of Questa potential facility site with 75-road mile boundary ...... 12 Figure 3 Map of Eagle Nest potential facility site with 75-road mile boundary ...... 13 Figure 4 Tri-State Service Area ...... 27 Figure 5 Tri-State 2017 Demand and Energy Forecast ...... 28 Figure 6 PNM Service Area Map ...... 35 Figure 7 PNM’s Peak Demand Forecast in the 2018 Integrated Resource Plan ...... 36 Figure 8 PNM Transmission Map ...... 44 Figure 9 US Energy Government, Duck Graph ...... 45 Figure 10 Historical and Projected PV Capacity by Sector in the United States ...... 46 Figure 11 Map of Global Horizontal Irradiance and Utility-Scale PV Projects ...... 47 Figure 12 New Mexico Residential Solar Installed Capacity between 2009 and 2016...... 49 Figure 13 New Mexico PV Installation Forecast, (www.seia.org) ...... 49 Figure 14 Areas with sandy soils near possible Tres Piedras location ...... 55 Figure 15 Areas with sandy soils near possible Questa location...... 5 6 Figure 16 Areas with sandy soils near possible Eagle Nest location ...... 57 Figure 17 Sandy Soils in the Española Area ...... 58 Figure 18 Sandy Soils in the Middle Rio Grande Area ...... 59 Figure 19 (a) A photo of biochar sample, (b) SEM image of biochar sample, and (c) chemical composition and functional groups on biochar’s microstructures ...... 67 Figure 20 Biochar products and their applications ...... 68 Figure 21 Sources of electricity generation in the US in 2017 (IEA, 2018) ...... 72 Figure 22 Block flow diagram of power generation and biochar co-production from wood biomass ...... 76 Figure 23 Process flow diagram of biomass power generation system ...... 77 Figure 24 Carbon Cycle of the whole process of biomass power generation, (Yang, Q. et al. 2016) ...... 79 Figure 25 Capital Cost Distribution of 10 MW Biomass Power Generation Facility (total=$52M) ...... 82 Figure 26 Operating Cost Distribution of 10 MW Biomass Power Generation Facility (total=$10.76M) .... 83 Figure 27 Sensitivity of Biomass Price to the ROI ...... 86 Figure 28 Sensitivity of Project Loan to the ROI ...... 86 Figure 29 Sensitivity of Biochar Price to the ROI ...... 87 Figure 30 Sensitivity of Electricity Price to the ROI ...... 87 Figure 31 Sensitivity of Carbon Credit to the ROI ...... 88 Figure 32 Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia (National Research Council 2011) ...... 94

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Tables Table 1 USFS Cut and Sold Volumes by Jurisdiction, 2013-2018* ...... 14 Table 2 Percentage of National Forest within Target Site Boundaries ...... 15 Table 3 Available Timber Harvest Residuals, BDT/Year ...... 15 Table 4 Private Land Timber Harvest Data ...... 16 Table 5 Available Forest Restoration Feedstock within Region, BDT/Year ...... 17 Table 6 Regional Wood Products Manufacturers ...... 18 Table 7 Available Wood Waste Feedstock ...... 20 Table 8 Total Available Feedstock, BDT/Year ...... 21 Table 9 Percent Travel by Road Class, (% Travel) ...... 22 Table 10 Collection Processing and Transport Costs ...... 23 Table 11 The Top 10 States in PV Penetration Rankings in 2017 ...... 48 Table 12 Power Generation Facility Installed Cost and Levelized Cost a ...... 51 Table 13 Summary of Biochar Prices (Campbell R.M. et al. 2018) ...... 54 Table 14 Estimated Value of Corn Yield Increase after Biochar Application ...... 62 Table 15 New Mexico Top Crops by County and Total Acreage ...... 65 Table 16 Biochar Transportation Costs ...... 68 Table 17 Biochar Transportation and Application Costs ...... 69 Table 18 Biochar Purchase, Transportation and Application Costs ...... 69 Table 19 Electricity Generation from Biomass and CAGR ...... 71 Table 20 Overview of Biomass Power Technology ...... 73 Table 21 Biomass Power Technology Feedstock Specifications and Capacity Range of Power System . 75 Table 22 Mass Balance and Energy Calculation of 80,000 BDT/year biomass and Pyrolyzed Products .. 78 Table 23 Annual GHG Emissions of the 10 MW Biomass Power Generation Facility ...... 80 Table 24 Cost Estimation of Main Equipment Unit/Subsystems for 10 MW Biomass Power Facility ...... 81 Table 25 Estimation of Capital Cost of 10 MW Biomass Power Generation Facility ...... 82 Table 26 Estimation of Operating Cost of 10 MW Biomass Power Generation Facility ...... 83 Table 27 An Estimation of Total Annual Cost of 10 MW Biomass Power Generation Facility ...... 84 Table 28 Product Values and Net Income of 10MWe Biomass Power Generation Facility ...... 84 Table 29 Estimation of Annual Net Income and ROI at Different Biochar Prices ...... 85

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EXECUTIVE SUMMARY

With recent devastating forest fires in California, the importance of thinning forests and reducing catastrophic fire risk in New Mexico is highlighted once again. While New Mexico used to have a thriving timber industry, now many sawmills sit empty and there is less economic activity resulting in timber harvest. Forest fire suppression efforts prevent fires but allow for overgrowth in the forests that can eventually fuel even bigger forest fires. Efforts such as the Rio Grande Water Fund, which since 2014 has treated 108,000 acres of forest in New Mexico through thinning, controlled burns and managed natural fires (Rio Grande Water Fund Wildfire and Water Source Protection Annual Report 2018), help fill the gap. However, there remains a large gap between the thinning that is occurring and the optimal amount of thinning necessary to reduce fire risk.

What if there were a way to economically incentivize the removal of low-to-no-value woody biomass from forests, increasing forest health and safety while turning a waste that typically carries disposal costs into a marketable feedstock? In the process, much needed jobs, particularly in rural areas, would be created. The Energy, Minerals and Natural Resources Department (EMNRD) requested this feasibility assessment of one such possibility: using woody biomass to generate electricity in the north central or north eastern portions of New Mexico and to result in biochar that would be used as a soil amendment for sandy agricultural areas. EMNRD further requested that this written report contain a business model for a 10 megawatt (MW) wood biomass electricity generating facility that can produce biochar as a waste product.

The study found that the following benefits would likely result from the proposed plant.

1. Job Creation a. The study found that the proposed 10 MW biomass power generation facility would create 36 direct jobs, as well as additional indirect jobs for forest workers, transportation drivers, and related local vendors. b. The project would increase support of the agriculture and forest product industries by using residues and waste and create an incentive to grow energy- dedicated crops.

2. Provision of a Renewable and Reliable Energy Supply a. Biomass is a renewable source that can be stored in order to generate power whenever there is expected demand; demand often peaks during evening hours when wind and solar generation are not effective.

3. Environmental Gains a. Reduction of catastrophic forest fire risk with the increased thinning of, and waste removal from, overgrown forests. A 2013 report prepared for the New Mexico Department of Economic Development estimated that the total cost of nine fires that occurred in New Mexico from 2009 to 2012 was $1,493,448,880, which averages to $165,938,776 per fire (Impact Data Source, 2013). The costs of firefighting, loss of lives and property losses associated with catastrophic fires all would be reduced.

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b. Increased watershed health resulting in improved water quality and secure supply. Preserved landscapes offer recreational opportunities. c. Reduced greenhouse gas emissions. An argument can be made that carbon released from wood combustion does not add to existing carbon in the atmosphere, as the carbon released during combustion would have been released as a result of forest fire or decomposition. The carbon released from burning wood is also sequestered by the next round of tree growth. If biochar produced by the proposed 10 MW biomass electrical facility is used as a soil amendment, the annual greenhouse gas emissions of the plant would be -19,268 metric tons of CO2. d. Prevention of other emissions tied to the open burning of agricultural and forest waste, such as particulate matter, which are not subject to pollution controls. e. Reduction of solid waste diverted to landfills. f. Prevention and/or reduction of air quality health concerns associated with forest and brush fires.

4. Biochar Advantages a. Biochar added to soil can improve crop yield by improving soil health, holding more water and nutrients. b. Biochar is a feedstock for high-value products such as various composites and activated carbon.

There are no technical barriers to biomass power generation. Indeed, many such plants operate in the U.S., including in California, Colorado and Arizona.

In this report, we identify several challenges to a successful biomass facility, which include the following: 1. A reliable and affordable supply of biomass. We need better estimates of the amount of wood biomass available. 2. Collection, processing and transportation costs at $47.67/bone dry ton (BDT) is significant. 3. Energy use is flat or decreasing in the region. 4. Need long term supply and long-term power contracts in order to provide certainty. 5. No utility has included biomass in their plans, which are developed and approved years in advance, in New Mexico.

A proposed power generation facility of 10 MW is not feasible economically; producing more electricity would reduce the cost per MW and increase the return on investment while not significantly increasing the expenses of the plant. However, a biomass power generation facility with a bigger capacity requires more biomass feedstock than this report has been able to confirm is available, as well as greater demand for electricity than currently exists in New Mexico. A USDA forest inventory suggests there may be sufficient biomass to support an 18 MW plant for 50 years, so further research is warranted into the supply side. With respect to demand, several utilities, including those serving Raton and Los Alamos County, will have to address their long-term electricity needs and supplies in the next few years, which could create opportunity to provide biomass generated power.

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Recommended next steps include conducting a workshop about biomass generation and forming a statewide task force, as well as reviewing incentives and mandates offered in support of biomass power generation in other states and recommending appropriate incentives or mandates for New Mexico. New Mexico could also consider establishing a climate stabilization goal to which biomass power generation could contribute.

This report consists of seven sections. Section 1 assesses woody biomass resources available as a feedstock in the north central and north eastern portions of the state (Task 1). Section 2 analyzes electricity needs and providers in north central and north eastern New Mexico, and also provides an overview of renewable energy requirements in the state, as well as of biomass- to-electricity potential in the state and biomass production in other states (Tasks 3 and 4). Section 2 also lists rural electrical cooperatives in the north central and north eastern areas. Section 3 reviews the processes for interconnection to transmission and distribution lines and the potential for interconnection possibilities (Task 2). Section 4 evaluates the benefits of biomass electricity as a backup to solar generation (Task 5). Next, Section 5 examines the market potential for biochar as a soil amendment for sandy agricultural soils (Task 6). Section 6 sets forth a business model for a 10 MW biomass electricity generating facility that also produces biochar (Task 7). It includes maps indicating where biochar might be beneficial. Finally, Section 7 summarizes the report’s findings and sets forth recommendations for possible next steps.

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1.0 WOOD BIOMASS RESOURCE ASSESSMENT, NORTH CENTRAL AND NORTH EASTERN, NM

1.1 SITE SELECTION

Three potential facility locations were selected based on their proximity to feedstock resources, transmission infrastructure, major transportation networks and regional sawmills. Taken together these locations illustrate geographic advantages and disadvantages of general regions within north central and north eastern New Mexico, which will inform future efforts to develop a detailed facility siting analysis.

The selected sites include the towns of:  Tres Piedras  Questa  Eagle Nest

In order to develop transportation cost and feedstock estimates for the north central and north eastern New Mexico region a 75-road mile boundary was produced for each site outlining accessible feedstock resources within each site. Based on feedback from wood products manufacturers in the region, 75 miles was identified as the maximum distance from which low value products could be hauled profitably.

Figures 1-3 provide maps of the three potential facility locations, highlighting 75-mile transportation distances from each site and National Forest lands.

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Figure 1 Map of Tres Piedras potential facility site with 75-road mile boundary

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Figure 2 Map of Questa potential facility site with 75-road mile boundary

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Figure 3 Map of Eagle Nest potential facility site with 75-road mile boundary

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1.2 FEEDSTOCK ANALYSIS

1.2.1 TIMBER HARVEST RESIDUALS

Timber harvest residuals comprise the byproducts of commercial timber harvesting operations consisting of limbs, tops, bark, needles and unmerchantable logs. Residuals are predominately left on site either by lop and scattering (in which forest materials are cut and distributed on site) or organized into slash piles for pile burning. Depending on the rate of commercial timber operations, harvest residuals have the potential to comprise a significant portion of available feedstock for a biomass to energy facility. Commercial timber harvest rates were estimated for both Forest Service and private lands within 75 road miles of the three proposed facility locations.

The USFS Cut and Sold report was utilized to estimate current timber sale activities on Forest Service lands. The USFS Cut and Sold report provides quarterly values for timber products sold on national forest lands. Timber harvest values were analyzed for the past 5 years from 2013 through 2018. Because data for quarter 4 of 2018 has not been released as of the development of this report, values for quarter 4 2018 were estimated using the average quarter 4 values from 2013 through 2017. Table 1, below, provides an overview of the USFS Cut and Sold volumes for 2013 through 2018 by forest jurisdiction.

Table 1 USFS Cut and Sold Volumes by Jurisdiction, 2013-2018*

Forest Product Sold 2013 2014 2015 2016 2017 2018 Adjusted

Carson National Forest Sawtimber 271 334 275 495 1305 1835 Pulp Wood 0 0 0 6 0 28 Poles 903 491 350 307 335 505 Posts 2 2 4 3 2 3 Total 1176 827 629 810 1642 2370 Santa Fe National Forest Sawtimber 777 925 743 995 2190 2782 Pulp Wood 136 78 0 86 393 54 Poles 836 1443 1254 909 809 1442 Posts 8 14 19 21 12 12 Total 1758 2460 2017 2011 3404 4290 *Million Board Feet/Year

In order to determine the proportion of total timber harvest residuals available to each of the 3 selected facility locations, the percentage of National Forest lands within 75 road miles of each site was identified using Geographic Information System analysis. As timber harvest sites are not evenly distributed across forest service lands, the estimation of available residuals is not entirely reflective of actual on the ground conditions. Timber sale locations were not available to provide a more accurate indication of the amount of forest residuals available to each of the 3 proposed sites.

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Table 2 provides an overview of the percentage of the Carson and Santa Fe National Forests within 75 road miles of each proposed facility location.

Table 2 Percentage of National Forest within Target Site Boundaries

Eagle Average Across Percentage within 75 Road Miles Tres Piedras Questa Nest All Sites Carson National Forest 75% 59% 41% 58%

Santa Fe National Forest 10% 3% 8% 7%

Based on communication with land managers at the Cibola and Santa Fe National Forests, it is expected that cut and sold volumes will increase by 5% by 2020. Two scenarios were developed to account for increased timber sale volumes. The low scenario assumes a 5% increase to the average cut and sold volume of years 2013 through 2018. The high scenario assumes cut and sold volumes will increase by 5% over the adjusted 2018 rate.

The estimation of available residuals from forest sales makes the following assumptions:  The Cibola National Forest was excluded from the residual estimation due to a small proportion of total lands residing within site boundaries (less than 1%.)  Residuals are converted from 1000 board feet (MBF) to BDT at a rate of 0.8 BDT per MBF.  Residual factors are the same for all forest products sold.

Table 3 provides an overview of estimated available timber harvest residuals at each proposed facility location across low and high scenarios.

Table 3 Available Timber Harvest Residuals, BDT/Year

Low Scenario High Scenario National Forest Tres Eagle Tres Eagle Questa Average Questa Average Piedras Nest Piedras Nest Santa Fe 1065 71 106 235 375 94 814 246 Carson 283 829 581 1101 1493 1163 175 1157 Total 1347 900 687 1136 1868 1256 989 1403

Private land owners were surveyed to provide information on timber sales on private ranches. Of the 10 large land owners within the region surveyed 6 provided data informing the feedstock estimation. The majority of landowners surveyed conduct timber sales to support land management objectives including livestock management, wildlife habitat, recreation and forest health. All respondents were located northeast of Taos within the boundaries of the Questa and Eagle Nest sites and outside the boundary of the Tres Piedras Site.

Of note, multiple attempts were made to contact forestry managers at Vermejo Park Ranch. Vermejo employees did not respond to questions regarding the scope and characteristics of timber harvest and fuels treatment activities and the timber harvest and forest treatment estimations do not include data from the ranch. As the second largest contiguous private land

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holding in the United States, Vermejo Park would likely be a significant source of feedstock for a potential biomass facility. Currently Vermejo Park conducts timber sales to Western Wood Products in Cimarron, and low/no value woody biomass is burned in slash piles. It is likely Vermejo Park is better able to quickly expand the rate of fuels treatment activities versus National Forests in the region, and efforts should be made to collect data on current forest management activities at the ranch and pursue obtaining feedstock from this source.

Table 4 details annual timber harvest data in MBF and available harvest residuals in BDT.

Table 4 Private Land Timber Harvest Data

Target Site Tres Piedras Questa Eagle Nest Timber Timber Timber Timber Timber Timber Available Harvest Harvest Harvest Harvest Harvest Harvest Residuals Average Residuals Average Residuals Average Residuals (MBF/Yr.) (BDT/Yr.) (MBF/Yr.) (BDT/Yr.) (MBF/Yr.) (BDT/Yr.) Total 0 0 800 640 800 640

1.2.2 FOREST TREATMENTS AND HAZARDOUS FUELS REDUCTIONS

Residuals from forest thinning operations comprise the greatest proportion of available feedstock for utilization within a potential biomass to energy facility. Decades of fire suppression has meant that forests throughout north central and north eastern New Mexico have an increased stand density compared to historic rates, increasing the risk of catastrophic wildfire while reducing forest resiliency in the face of drought and disease outbreaks. State, federal, tribal, non-profit and private agencies are taking steps to restore forested lands through prescribed fire and mechanical thinning operations. As with timber harvest residuals, it is assumed that merchantable timber consisting of large diameter forest materials (in excess of 8” in diameter) are adequately processed by current forest contractors. Forest residuals available for utilization consist of limbs and tops which are primarily disposed of onsite through lopping and scattering or pile burning. Additionally, it is assumed that a significant portion of treatment residuals are not able to be utilized due to limited site access. Slopes in excess of 35% have reduced options for feedstock retrieval, as do sites that are in excess of 0.5 miles from roadways. It is assumed that 40% of feedstock resources are not available for utilization.

In order to determine the amount of feedstock available from forest treatment activities, land managers across a wide range of organizations were asked to provide information on the number of acres currently being treated and anticipated future treatment rates.

Table 5 provides an overview of forest treatment acreages and available feedstock by management organization.

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Table 5 Available Forest Restoration Feedstock within Region, BDT/Year

Accessible Source Acres Treated Annually Total Feedstock Feedstock Carson National Forest 3285 22,995 13,797 Santa Fe National Forest 500 3,500 2,100 Rio Castilla Livestock 20 200 120 Association BLM 400 2,800 1,680 Natural Resources 200 140 84 Conservation Service Angel Fire Resort 13 130 78 Taos Ski Valley 25 250 150 Sipapu Ski Resort 24 240 144 NM State Forestry 400 2,800 1,680 (Federal) NM State Forestry 1,200 8,400 5,040 (Private) NM Game and Fish 200 1,400 840 Taos SWCD 25 250 150 Taos Pueblo 30 300 180 Picuris Pueblo 20 200 120 East Rio Arriba SWCD 25 175 105 Total 6,367 43,780 26,268

1.2.3 FOREST PRODUCTS MANUFACTURING RESIDUALS

North central and north east New Mexico are home to a significant number of small-scale wood products manufacturers and sawmills. Residuals refers to any byproducts of sawmill and wood product manufacturing operations, including firewood, chips, peelings, edgings, shavings and sawdust. While there are existing markets for the vast majority of byproducts, unsold residuals can contribute to the potential feedstock available for a biomass to energy facility.

In order to determine the amount of manufacturing residuals available for utilization, this report uses a survey of wood products manufacturers conducted in support of the Sandoval County Biomass Utilization Feasibility Study. Three additional wood products manufacturers within northern New Mexico and southern Colorado were included as part of this study.

Table 6 provides an overview of wood products manufacturers surveyed.

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Table 6 Regional Wood Products Manufacturers

Percentage of Main Products Byproducts Name Byproducts Produced Produced Available for Utilization Vigas, Boards, Latillas, Chips for bedding/landscaping Barela Timber Firewood Composting, Firewood 0% Management Sawdust, Mulch Blanca Forest Firewood, Chips for Pellets, Sawdust, Boards, Vigas 0% Products Inc shavings El Molino Sawmill Boards, Vigas, Latillas Sawdust, Firewood, Edging 20% Groff Lumber Boards, Vigas, Latillas Chips, Sawdust 0% Firewood, Sawdust, Hansen Lumber Co Boards, Firewood 10% shavings(contaminated) J Bridge Sawmill Pellets None 0% Kingdom Timber & Boards, Firewood Sawdust, shavings, Firewood 30% Frame New Mexico Ties and Vigas, Fencing Chips, Peelings, Sawdust 20% Poles Old Wood LLC Flooring, Accents Chips, Firewood, Sawdust 0% Quality Firewood and Boards, Firewood Unknown Unknown Materials Quality Wood Products Boards, Firewood Sawdust, shavings, Firewood 85% & Sawmill Satterwhite Log Specialty Logs Firewood, Chips, Sawdust 0% Homes Silver Dollar Wood Boards, Vigas, Latillas Chips, Firewood, Sawdust, Peelings 0% Products Western Wood Pellets None 0% Products

Of the 14 wood products manufacturers surveyed, five manufacturers have some percentage of byproducts that are not already being utilized. Due to being located 200 miles outside of the target region, byproducts from New Mexico Ties and Poles and El Molino Sawmill were deemed unavailable for utilization. Byproducts from Hansen Lumber Co. were identified as being contaminated with dirt and gravel debris and would likely be cost ineffective to process for utilization. Only two manufacturers within the Chama region were identified as having the potential to provide manufacturing residuals for utilization. Of the 4,000 MBF processed annually by these two manufacturers, 1,004 BDT in residuals is estimated to be produced, of which 771 BDT could be available. This analysis therefore assumes 771 BDT of wood-product manufacturing residuals available for repurposing.

The wood products manufacturer survey included a discussion with the manager of Blanca Forest Products Inc. The Blanca sawmill currently processes between 15,000 and 20,000 MBF annually, of which all residues are sold to existing markets. Despite this the sawmill manager expressed interest in diverting a portion of the estimated 25,000 BDT in residuals produced annually if a biomass to energy facility can compete on price. While manufacturing residual selling prices specific to the north central and north eastern New Mexico area are not available, residue prices for the southwest region range between $8 - $15 per BDT. The Blanca sawmill lies 84 miles from Taos, which was used as a center point to calculate a general transportation cost for the three proposed facility locations. Assuming an 84-mile transportation distance from

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the Blanca sawmill to the center point between the three target sites (Taos), a potential biomass facility could procure manufacturing residuals at a price of $21 - $28 per BDT.

1.2.4 URBAN WOOD WASTE

Urban wood waste constitutes any wood sources produced from residential, commercial or industrial applications necessitating removal and disposal. Major sources include debris from construction and demolition projects, byproducts- from tree trimming efforts, and packaging implements such as pallets. From discussions with managers at the three landfills within the region – Taos Municipal Landfill in Taos, Caja Del Rio Landfill in Santa Fe and the North Eastern New Mexico Regional Landfill in Wagon Mound – it was determined that regional solid waste agencies do not currently sort urban wood waste from component materials such as drywall in any of the identified waste streams.

As a result, wood waste would need to be provided directly from producers who could avoid landfill tipping fees by diverting their waste to a future biomass facility. Based on the New Mexico state average tipping fee of $31.29, an estimated travel distance of 15 miles to a landfill or transfer station and a sorting cost of $15 per BDT, it was determined that it would be cost effective for producers within 80 miles of a potential biomass facility to divert their wood waste from a landfill for use in energy production.

Available wood waste was estimated using a per capita waste generation rate of 280 lbs of solid waste of which 25.2 lbs is wood waste. The population within 80 miles of each of the proposed sites was estimated in order to develop a wood waste feedstock estimate.

While there are no competing uses for urban wood waste within the region, it is assumed that an initial lack of information about the opportunity to divert wood waste to a generation facility would limit the available wood waste supply below the projected amount in the first few years following development.

In order to assess the feasibility of mechanically sorting wood waste entering a proposed biomass facility, information from an active wood waste sorting facility in California was analyzed. Zanker Recycling operates a mechanical waste sorting facility in San Jose, California, processing 68,000 tons of material annually of which 11,000 tons is wood waste. The $6,000,000 facility utilizes a 10-step process to sort waste, diverting 77% of incoming waste from landfilling. Due to the high capital and operating costs of the facility, Zanker Recycling estimates that tipping rates need to be in excess of $64 per ton to operate at a profit. Based on the tipping rate of New Mexico landfills and the high capital cost of developing a mechanical sorting operation, it is not financially feasible to mechanically sort construction and wood waste within the proposed biomass facility.

Therefore, in order to be cost effective, urban wood waste would need to be sorted by hand. Alternatively, increases in tipping fees could make diversion from landfills more attractive; current tipping fees are too low for alternatives to compete economically.

Outside research and feedback from waste management employees resulted in the following assumptions:  On average 9.044% of solid waste consists of construction debris.  On average 2.54% of solid waste consists of other wood sources including tree trimmings.

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 Cost of $6.33 to transport materials to a landfill or transfer station  Per capita waste production rate, 280 lbs per year per person  85% of supplied wood waste is useable within a biomass to energy production facility

Table 7 provides an estimate of the amount of accessible wood waste within each of the proposed facility locations.

Table 7 Available Wood Waste Feedstock

Solid Waste Estimated Population within Wood Waste Location Generated 80-mile radius Generated (BDT) (BDT)

Tres Piedras 56,266 15,754 1,825

Questa 44,786 12,540 1,453 Eagle Nest 56,609 15,850 1,836

Average 52,554 14,715 1,705

1.2.5 ELECTRICAL TRANSMISSION AND DISTRIBUTION RIGHTS OF WAY

Electrical transmission infrastructure requires regular and recurring treatments to remove undergrowth, maintain right-of-way and protect above-ground transmission lines from damage due to falling trees. Clearance of transmission rights of way was identified as a potential source of feedstock for biomass utilization. Feedback from Kit Carson and Mora-San Miguel Electric Cooperatives and the findings of the Wood Waste Utilization Assessment for the Greater Taos, New Mexico Region were utilized to determine the eligibility of transmission infrastructure as a feedstock source.

While regional electric cooperatives maintain over 6,000 miles of transmission infrastructure, a number of factors were identified as inhibiting utilization including:  Insufficient infrastructure to support log or chip trucks;  Home owners maintain rights to forest materials produced adjacent to their properties;  High slope gradients throughout a large proportion of transmission infrastructure;  Large proportion of limited value feedstocks including Scrub Oak and Sagebrush;  Existing market for byproducts such as wood chips.

Due primarily to the utilization of right-of-way wood materials by land owners and limited access to feedstock sources, the amount of currently available feedstock from transmission infrastructure maintenance appears to be minimal.

Assuming 40% of transmission infrastructure within forested lands is accessible, over 75,000 BDT is potentially available for utilization. Additional efforts are needed to identify accessible

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feedstock locations and partner with regional electric cooperatives to secure right-of-way forest materials.

1.2.6 TOTAL AVAILABLE FEEDSTOCK

Table 8 provides an overview of total available feedstock from Timber Harvest and Forest Treatment Residuals, Transmission Right-of-Way, Urban Wood Waste and Manufacturing Residuals potentially available to the three proposed facility locations.

Table 8 Total Available Feedstock, BDT/Year

Total Source Accessible Feedstock Feedstock

Forest Treatments/Hazardous Fuels Residuals 43,780 26,268 Federal Timber Harvest Residuals 1,403 1,403 Private Timber Harvest Residuals 640 640

Transmission Right-of-Way Residuals 0 0 Wood Products Manufacturer Residuals 771 771 Urban Wood Waste 14,715 1,705 Total 61,309 30,787

1.3 TRANSPORTATION COST ASSESSMENT

The transportation cost assessment estimates the costs associated with collecting, processing and transporting feedstock from the forest to a facility. Three resources were utilized to develop the assessment: The Forest Service Forest Residues Transportation Costing Model 7 (FortV), an analysis of road types and distances from 20 sites to each proposed facility, and a survey of forest contractor equipment and capacity produced in support of the Sandoval County Biomass Utilization Feasibility Study.

1.3.1 FORESTRY CONTRACTORS WITHIN THE LOCAL INDUSTRY

Feedback from forest contractors and partners within the forest products manufacturing industry resulted in the following assumptions:  Large-diameter forest materials (in excess of 8” in diameter) can be adequately processed by current manufacturers;  Feedstock would be chipped on site utilizing a disk chipper;  Dirty chip refers to biomass composed of small branches that cannot be debarked and forest residues such as twigs, bark, leaves, and needles, and such materials will be processed through an on-site disk chipper;  The disk chipper will directly feed trucks capable of hauling 19-ton loads, and the trucks will then convey the dirty chip to a wood product manufacturing facility;

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 Due to the density of urban wood waste, feed trucks will be capable of hauling 9-ton loads;  The urban wood waste assessment assumes a sorting cost of $15 per BDT based on feedback from an urban waste wood recycling organization in Albuquerque;  Assumed one-way transportation distance of 50 miles.

1.3.2 FOREST RESIDUES TRANSPORTATION COSTING MODEL

Forest Service Forest Residues Transportation Costing Model 7 (FortV) is a spreadsheet produced by the Forest Operations Research Work Unit in order to estimate the cost of various methods of transporting biomass from feedstock locations to a processing facility. Costs are estimated based on three factors: production, which includes travel times and forest material types, wood product transported, and productivity rates; machine costs, which includes equipment types, maintenance, insurance, and labor rates; and biomass moisture, which impacts the weight and transportation cost of feedstock.

FortV estimates transportation distances using five road classes (Unimproved Forest, Gravel, 2- lane paved, State Highway, and Interstate) and two stages of transport: Stage 1, transportation from the forest to the on-site collection area; and Stage 2, transportation from the on-site collection area to the candidate site location. An assumed distance of two unimproved forest road miles will be required for Stage 1 transportation.

Twenty hypothetical feedstock sites were selected for each of the three proposed facility locations in order to estimate the percentage of travel across each road class. These data were then averaged to estimate road travel across all three target locations. Table 9 presents the percent of total travel across each road class.

Table 9 Percent Travel by Road Class, (% Travel)

Location Forest Road Gravel Road 2 Lane State Highway Freeway Tres Piedras 8% 7% 19% 65% 0% Questa 7% 6% 31% 56% 0% Eagle Nest 7% 4% 27% 61% 0% Average 8% 6% 26% 61% 0%

In order to estimate equipment costs as required in the Forest Residues Transportation Costing Model, a telephone survey of regional forest contractors produced in support of the Sandoval County Biomass Utilization Feasibility Study was utilized. Contractor information was obtained from New Mexico State Forestry’s approved contractor list, the New Mexico Forest Industries Association, and information outlined within the San Juan-Chama Workforce Committee White Paper and the Wood Waste Utilization Assessment for the Greater Taos, New Mexico Region Report. A total of five organizations responded to the survey. Four of the five respondents utilize heavy machinery to remove forest products, and one respondent utilizes only hand-felling methods. One respondent utilizes both hand-felling and heavy machinery. Based on the survey results and on discussions with the regional forest managers, cable boom loaders were selected as the primary Stage 1 loading equipment as input to the Forest Residues Transportation Costing Model.

Fuel prices within the model assumes a cost of $3.22 per gallon of diesel, an average of 2018 values for the Rocky Mountain region. Table 10 presents the estimated cost per BDT of the

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collection, processing and transportation costs for the three sites as a whole. A 50-mile transport distance was used for the transportation and processing cost assessment versus the 75-mile boundary utilized for the feedstock assessment. While 75 miles represents the maximum distance at which forest materials can be effectively delivered, based on a transportation analysis conducted in support of the Sandoval County Biomass Utilization Feasibility Study, it was determined that the majority of trips are within 50 miles from a biomass processing facility. Additionally, it is assumed that the majority of urban wood waste trips would be within 50 miles of a proposed facility. The 50-mile transportation distance utilized within this assessment more accurately reflects the majority of feedstock transportation activities.

Table 10 Collection Processing and Transport Costs

Source Collection, Processing and Transport Cost (50 Mile Transport Distance) ($/BDT) Timber Harvest/Treatment Residuals $47.67 Urban Wood Waste $37.97

1.4 IMPACTS

At current forest management rates available feedstock is a major limiting factor in biomass to energy development. As outlined in this report, it is estimated that only 61,309 BDT/yr of low/no value woody biomass is being produced within the region of which 30,787 BDT/yr is accessible for utilization. The pyrolysis process recommended in Section 6.3 of this report produces biochar as a byproduct and is not the most efficient at directly converting biomass to energy. It is assumed that 60% of forest resources will be converted into energy. A pyrolysis plant is estimated to require an annual rate of 8,000 BDT per MW of power (power being energy output per unit time) producing 8,760 MWh of total energy per year. There are currently sufficient resources to develop a 3.8 MW biomass to energy facility within the region, falling short of the stated 10MW target for this study. The biomass conclusion of our study seems to be inconsistent with the abundance of forest resources within the study area, suggesting more analysis is warranted.

As a reality check, to estimate the total amount of biomass available within the region, a county- level USDA forest inventory data was apportioned to include the percent of each county within the target study region. It is estimated that the region contains 1.8 million acres of forested lands of which 60% could potentially be accessible. Based on these data over 150,000 BDT is potentially available annually for the next 50 years. This would support a 18MW facility within the region. Efforts are needed to supplement the amount of currently available biomass either through increasing the rate of forest treatments and timber sales, procuring a wood product residuals supplier such as Blanca Forest Products Inc., or securing right-of-way-forest materials.

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2.0 ELECTRICAL NEEDS IN NORTH CENTRAL AND NORTH EASTERN, NEW MEXICO

2.1 BACKGROUND/OVERVIEW

Biomass energy can be produced from plants and plant-derived materials including algae, municipal and industrial waste, forest and agriculture residues, food crops, and grass and woody plants. In addition, the methane emissions from landfills can be used as a biomass energy source.

New Mexico’s electrical cooperatives, municipal utilities and investor owned utilities all must comply with New Mexico’s Renewable Portfolio Standard (RPS). Biomass energy development to date and the potential for biomass energy development to meet electricity needs is heavily influenced by public policy and regulations, especially the New Mexico RPS. Therefore, an understanding of the RPS is important; the RPS is discussed in the Appendix hereto.

Biomass produced energy provides a variety of benefits, including:  Reduction of dependence on fossil fuels.  Increased support of the agriculture and forest product industries by using residues and waste, in addition to creating incentive to grow energy-dedicated crops.  Potential reduction of catastrophic forest fires as overgrown forests are thinned and waste is used for energy production.  Potential to reduce greenhouse gas emissions, depending upon the specific source, location and scale. An argument can be made that carbon released from wood combustion does not add to existing carbon in the atmosphere, as the carbon released during combustion would have been released as a result of forest fire or decomposition. The carbon released from burning wood is also sequestered by the next round of tree growth.  Prevention of other emissions tied to the open burning of agricultural and forest waste, such as particulate matter, which are not subject to pollution controls.  Increased watershed health resulting in improved water quality.  Creation of jobs in forest product industries.  Reduction of solid waste diverted to landfills.  Prevention and/or reduction of air quality health concerns associated with forest and brush fires.  Reduced costs of firefighting, loss of lives and property losses associated with catastrophic fire.

2.2 ELECTRIC BIOMASS POTENTIAL IN RURAL ELECTRIC COOPERATIVES, MUNICIPAL UTILITIES AND INVESTOR OWNED UTILITIES

For purposes of determining future electric need, the potential for new generation resources, and electric distribution and transmission delivery possibilities, we had meetings with the following utilities – Tri-State Generation & Transmission Association, Springer Electric Cooperative, Jemez Valley Electric Cooperative, Kit Carson Electric Cooperative, Mora San

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Miguel Electric Cooperative, PNM, Raton Public Service Company and Los Alamos County’s Public Utilities Department.

2.2.1 SPECIFIC RURAL ELECTRIC COOPERATIVES

New Mexico has 15 electric cooperatives that provide electricity to rural residential, business and industrial customers. Rural electric cooperatives typically rely on Generation and Transmission Cooperatives, or individual purchase power agreements, for their energy resources. Rural cooperatives are not-for-profit, member-owned, governed by a board of their members, and not as heavily regulated as New Mexico’s Investor Owned Utilities (IOUs).

There are five rural electric cooperatives in northern New Mexico – Jemez Valley Electric Cooperative (headquartered in Española); Northern Rio Arriba Cooperative, (headquartered in Chama); Kit Carson Electric Cooperative (headquartered in Taos); Springer Electric Cooperative (headquartered in Springer); and Mora-San Miguel Electric Cooperative (headquartered in Mora). Except for Kit Carson Electric Cooperative, the other four cooperatives are all part of the Tri-State Generation and Transmission Association system.

2.2.2 TRI-STATE GENERATION AND TRANSMISSION ASSOCIATION

Tri-State, headquartered in Colorado, provides generation and transmission resources to 43 cooperatives in New Mexico, Colorado, Wyoming, and Nebraska. The Association has 4,252 MW of generation resources available in its portfolio and 5,558 miles of transmission lines throughout its four-state service area.

Tri-State provides generation and transmission services to 11 cooperatives in New Mexico, representing approximately 20 percent of the Association’s total sales. New Mexico’s cooperatives that are part of the Tri-State system have long-term contracts with Tri-State and must purchase 95 percent of their power from the Association. The remaining 5 percent can be owned by Tri-State or the individual distribution cooperative

As a generation and transmission service provider, Tri-State is generally not regulated by the New Mexico Public Regulation Commission (NMPRC) in New Mexico; the NMPRC oversees Tri-State only if special circumstances occur during a proposed increase to their wholesale rates.

Tri-State’s generation mix for its entire system is comprised of 42 percent coal, 19 percent gas; 13 percent renewables (solar and wind); 13 percent hydropower (WAPA allocation, see below for definition); 11 percent Basin (additional coal resources); and two percent oil.

Like many utilities across the United States, Tri-State is retiring coal and adding more renewables and natural gas resources. Tri-State retired its capacity in San Juan Generating Station (SJGS) in New Mexico at the end of 2017 and will retire Nucla Station by the end of 2022 and Craig Station Unit 1 by the end of 2025 (both plants are located in Colorado).

Tri-State has added 475 MW of renewable resources since 2008, and the Association’s members have another 140 MW of local renewable projects in place or under development. At the end of 2017, 30 percent of the energy consumed within the Association came from renewable resources. This percentage includes hydropower from the Western Area Power Administration (WAPA), one of four power marketing administrations within the U.S. Department of Energy, which market and transmit wholesale electricity from multi-use water projects. WAPA

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sells its power to preference customers including federal and state governmental agencies, public utility districts, rural electric cooperatives, public utility districts and Native American tribes.

Though Tri-State’s generation mix is not regulated by the NMPRC in New Mexico, the Association does go through a stakeholder input process on future resource planning, running a variety of scenarios based on various inputs. Tri-State engages in an Integrated Resource Process every four years system-wide and submits its resource plan to the Colorado Public Utilities Commission (PUC), although the plan does not require Commission approval. The plan is updated on an annual basis and biomass has not been considered in the Association’s recent resource plan.

Like many utilities across the country, electricity demand on the Tri-State system is growing slowly, at a rate of approximately one half of a percent each year. The current update to the Colorado PUC indicates that Tri-State will not need any new generation resources until at least 2026, and that system growth from around 2018 to 2037 is expected to average approximately 1.6 percent each year. According to Tri-State management, any future generation resources will most likely include renewable energy, including wind and solar, and natural gas.

Tri-State considered biomass energy as a potential resource at one time. In the 2011 timeframe, Tri-State conducted a study for an option of a combined cycle power plant using pyrolysis from forest waste in Colorado. Multiple challenges led to the project not moving forward including potential air permit challenges, the cost of fuel, the need to add equipment to convert an existing coal plant to biomass, and challenges with the heating value of the fuel, which was determined to be less than fossil fuel resources, thus providing less energy per million BTUs, a standard unit of measurement to denote the amount of heat energy in the fuel.

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Figure 4 Tri-State Service Area

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Figure 5 Tri-State 2017 Demand and Energy Forecast

2.2.3 NORTHERN NEW MEXICO DISTRIBUTION ELECTRIC COOPERATIVES

Several northern New Mexico distribution cooperatives agreed to be interviewed for this analysis including Jemez Valley Electric Cooperative, Springer Electric Cooperative, Kit Carson Electric Cooperative and Mora-San Miguel Electric Cooperative. Northern Rio Arriba Cooperative did not return messages regarding questions pertaining to the study. Research for this study indicates that most distribution cooperatives in the state are not experiencing any significant load growth, and that most are pursuing solar projects in order to add more renewable energy to their mix. 2.2.3.1 Springer Electric Cooperative

Springer Electric Cooperative, located in Springer, NM, serves approximately 3,000 customers/meters in north eastern NM. Communities served by the cooperative include Springer, Wagon Mound, Cimarron, Maxwell and Roy. The cooperative is part of the Tri-State generation and transmission system, which accounts for most of its generation resources. Springer also purchases energy from a 1.7-MW solar site near Springer, assisted by a USDA Rural Development loan, which helps meet their RPS requirement.

The Springer Electric service area has not experienced load growth and is experiencing a slow decline in average usage per customer. This decline has resulted from a variety of factors including energy efficiency and is exacerbated by an approximate seven percent loss in the region’s population. The Cooperative was also impacted by the large forest fire this past summer, which severely affected some of their large customers, including the Philmont Scout Ranch and the Town of Cimarron. Other large customers of the Cooperative include Occidental, which has tried to separate from the Tri-State system in recent years, and Vermejo Park and Bright Burn.

Springer’s manager indicates that they are open to biomass proposals, but the economics must be viable and competitive. Their customer base, which comprises many ranchers, is not as vocal about pushing renewable energy as some other northern NM cooperatives.

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2.2.3.2 Jemez Valley Electric Cooperative

Jemez Valley Electric Cooperative, headquartered in Española, NM, is the largest electric cooperative in New Mexico, serving approximately 34,000 customers in northern/north central New Mexico. Communities served by the Cooperative include Española, Velarde, Chimayo, Cuba, Jemez Pueblo and others.

Jemez Valley is also part of the Tri-State system and like other cooperatives, has been experiencing a declining and/or flat load on both the residential and commercial side of the business. Local government customers and casinos have been reducing usage by participating in more energy efficiency projects. The Cooperative has more than one megawatt in net metered solar distributed generation customers and is planning for approximately four MW of large scale solar on its system in the next few years. Biomass energy has not been considered as a potential resource at this point. 2.2.3.3 Mora-San Miguel Electric Cooperative

Mora-San Miguel Electric Cooperative, headquartered in Mora, NM, serves approximately 11,200 customers in north eastern New Mexico, including communities such as Mora, Pecos, Glorieta, Anton Chico, Guadalupita, Bernal, Watrous and others. Mora-San Miguel is part of the Tri-State Cooperative system and is experiencing little to no load growth, currently averaging growth of approximately .01 percent. The Cooperative currently purchases energy from a 1.5 MW solar facility in the area and distributed generation solar from customers. The Cooperative’s largest customer is the Glorieta Conference Center, and co-op leadership is working to help bring a grocery store into the Mora Valley. A small group of citizens have pushed for establishing a community solar project in the area, similar to the model implemented by Kit Carson Electric Cooperative. 2.2.3.4 Kit Carson Electric Cooperative

Kit Carson Electric Cooperative, headquartered in Taos, NM, serves approximately 29,000 customers in northern NM including customers in Taos, Rio Arriba and Colfax Counties, serving as the second largest electric cooperative in the state.

Kit Carson has a long history with renewable energy, as the Cooperative started to add solar energy to its generation mix in 2002, with solar photovoltaic (PV) on its headquarters office, the UNM Taos campus and KTAO radio station. Kit Carson also has the first community solar project in the state, installed in 2012.

Previously part of the Tri-State system, the Cooperative separated from Tri-State in 2016 through a buy-out agreement and entered into a partnership with Guzman Energy, a third-party power broker, for an all services purchased power agreement, under which all power is purchased from a supplier. That same year, the Kit Carson board voted unanimously to create a plan to achieve the goal of 100% daytime solar by 2022. Guzman has a total of 10 MW of solar PV this year, and the 100% goal will be a total of 35 MW. The cooperative currently has 430 distributed generation customers (2 MW) and has an interest in adding 6 to 8 MW of battery storage as well as purchasing wind on the open market.

Kit Carson is also working with the National Renewable Energy Laboratory on the Solar Energy Innovation Network project, testing smart grid models for renewable integration that will ultimately be shared with other cooperatives around the country. Like other NM utilities, Kit

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Carson’s load demand has been declining as a result of energy efficiency and distributed generation.

Biomass-produced electricity could potentially serve as a firm back-up resource for peak demand during the night when the cooperative’s solar power will not be producing energy. Though biomass has not been seriously considered as a resource for Kit Carson at this point, the Cooperative is participating in a pilot thermal biomass project with the Northern NM College El Rito campus by providing biomass from its crews’ tree-trimming around power lines.

Taos Ski Valley, one of the largest customers served by Kit Carson Electric, has a strong commitment to renewables and sustainability. The Ski Valley is the first major ski resort to become a certified B Corp, a certification that helps ensure that Taos Ski Valley meets the highest standards of verified social and environmental performance, sustainability, public transparency and legal accountability.

The Ski Valley is making multiple efforts to lessen its environmental footprint, including reducing its energy consumption. From 2014 to 2016, the organization reduced its overall energy consumption by 10.9 percent, equating to a reduction of 340 metric tons of greenhouse gas emissions. They made a further commitment to reduce energy consumption by 20 percent from baseline data in 2014 to 2020. This reduction in usage has been achieved through multiple efforts including green building construction, more efficient transportation, energy efficiency upgrades, and more efficient snow making practices.

Taos Ski Valley also has a strong interest in projects that encourage forest health. As part of this commitment, the Valley serves as a member of the Rio Grande Water Fund and carries out treatments in locations within the Rio Grande watershed in northern New Mexico to improve the health of the forest, restore wildlife habitats, reduce fuel for potential wildfires, and protect the watershed.

Chris Staff, a vice president at the Taos Ski Valley, said that the area has not considered biomass energy for thermal or electric generation purposes but is open to supporting efforts in which the Town of Taos or Kit Carson Electric Cooperative would engage. The Ski Valley currently gets natural gas from The Gas Company of New Mexico and electricity from Kit Carson Electric Cooperative.

2.3 NORTHERN NEW MEXICO’S MUNICIPAL UTILITIES

New Mexico has five municipal electric utilities – the Cities of Bloomfield, Gallup, Farmington, and Raton, and Los Alamos County – and two of these, Los Alamos County and the City of Raton, are in northern New Mexico. Municipal utilities are owned and operated by local governments and are typically managed by a director that serves on the leadership team of local government. Municipal utilities in New Mexico are not regulated by the NMPRC but are regulated by city councils, county commissions, area residents, or some combination of the two.

Local government-owned utilities are often considered to have more flexibility because they are locally governed, can make decisions in a more expedited manner, and have resident feedback in their decision-making processes. At the same time, they can be governed by individuals with lesser experience in the energy industry, and turnover of elected officials can impact future decisions. In addition, they typically operate as not- for-profit entities, and are not driven by shareholder returns.

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2.3.1 CITY OF RATON/RATON PUBLIC SERVICE

At one time, the City of Raton was an active railroad, mining, horse racing and ranching community. Around the turn of the 20th century, the town was surrounded by eight coal mines, which employed more than 2,000 area residents. These jobs declined and eventually disappeared as coal-fired steam engines switched to gas, and eastern steel mills that once relied on the region’s high-quality coal moved overseas to China.

Raton Public Service (RPS) powered its service area with a coal-fired power plant for many years, serving the community until 2006 as train service to the plant was eliminated and the cost of transporting coal by truck transportation made continued operation economically infeasible.

RPS has been in existence just short of 100 years and currently serves its 4,300 customers (meters) through an all services purchased power agreement with Houston, Texas wholesale power marketing firm Twin Eagle Services. RPS’ contract with Twin Eagle is through 2023. In 2002, the City built a 7.5 MW gas turbine which experienced equipment failures in 2012, resulting in insurance reimbursement monies. In the summer of 2017, Raton brought a 4.3 MW natural gas turbine online, primarily for use as a back-up, though the unit is currently not used.

For some time, RPS has had 48 MW of electric load demand each year, though the recent closing of the K-Mart store in Raton has reduced this to approximately 44 MW. That closing, combined with the decline of other industries, such as gas and oil production, has resulted in a non-growth forecast for the Utility. The Utility’s board of directors, comprised of two city councilors, the mayor, and three appointees, govern the Utility. According to the Utility’s director, the board is always willing to consider new options, but the cost effectiveness of those options is critical. The Utility will start looking for replacement power again soon, in anticipation of the end of their contract with Twin Eagle in 2023.

Raton Public Service does offer a net metering benefit to distributed generation solar customers and currently has 22 customers participating in the program. The Utility is moving forward on other projects such as a potential smart meter implementation on its system, recently issuing a smarter meter RFP, and planning future public forums on the program.

Like many communities throughout New Mexico, workforce development and employment are a priority. In recent years, several individuals worked with the town and volunteers to form Sustain Raton, a nonprofit. With a donated building and funds, and the State’s blessing, they formed a partnership with Santa Fe Community College (SFCC) and opened The Center for Sustainable Community, where they work with SFCC’s Trades and Advanced Technology Center to offer certificates in greenhouse management, solar energy and more. They are working on dual- credit courses with the high school and offering a computer lab and college counseling to prospective distance-learning students. The hope is to train a local workforce in the skills that might in turn serve to attract new kinds of businesses developing in a “clean energy” economy and help make Raton self-sufficient in food and energy production.

2.3.2 LOS ALAMOS COUNTY

The Los Alamos County (LAC) Public Utilities Department (PUD) provides electric, gas, water and sewer services for County residents and businesses and provides wholesale electric and water services to the Los Alamos National Laboratory (LANL). The PUD currently has approximately 8,500 customers (meters), and averages a demand of 90 MW each year, 80 percent of which is the demand from LANL.

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In 1985, and the Department of Energy formed a power pool through an Electric Coordination Agreement. This allowed the two entities to blend resources. Los Alamos County's current resource mix includes the following:  San Juan Generating Station Unit 4 (coal, 36 MW) (Los Alamos is a co-owner of the San Juan Generating Station and plans to exit the power plant when the proposed remaining units will be shuttered in 2022.)  Laramie River Station entitlement (coal, 10 MW)  El Vado hydroelectric facility (8 MW)  Abiquiu hydroelectric facility (18 MW)  Los Alamos' Western Area Power Administration entitlement (renewable hydropower, 1 MW) (LANL receives 10 MW of WAPA power separately)  Solar PV array on East Jemez landfill site (1 MW)  County transmission arrangements  County purchased power contracts

Several factors are in play that will influence the Department’s future energy resource decisions. First, the County’s agreement with LANL goes through 2025 and the Department’s future resource planning is highly dependent on knowing the future of this relationship. Like other utilities, load growth at the residential level is fairly stagnant, as Los Alamos is landlocked between Forest Service and Department of Energy land. However, LANL predicts having significant future electric load growth, though this growth is highly dependent upon federal monies coming to the Lab. LANL has expressed interest in a combined heat and power facility to meet future needs and currently has a small combustion turbine, mostly acting as a standby generator.

Los Alamos, like many communities throughout the United States, is working towards a cleaner energy future. In 2013, the County’s Board of Public Utilities (BPU) established a goal of being 100 percent carbon neutral by 2040. During that time period, the Board also formed a citizens advisory committee to examine and recommend a definition of carbon neutrality for the County, study and recommend future clean energy generation resources, and study and recommend policy toward distributed generation in the County.

Following the Committee’s final report to the Board in 2015, the Board adopted a Strategic Policy for Electrical Energy Resources and a definition for carbon neutrality, a Strategic Policy for Distributed Energy Resources and a Rate Structure. The BPU also directed the Utilities Manager to schedule and develop a preliminary implementation plan for the five highest priority items from the adopted committee recommendations, to be followed by a completed integrated implementation plan no later than June 2017.

The committee made the following recommendations:  LAC and DOE/LANL pool most electric generating resources through an Energy Coordination Agreement, which expires in 2025, and that the subsequent pooling not dilute existing carbon-neutral resources, particularly the County-owned hydroelectric plants.  Divestiture of coal-burning generating assets – the County’s ownership share in the San Juan Generating Station and, if feasible, the power purchase agreement at the

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Laramie River Station. Divestiture would reduce the Department’s electricity supply by 46 MW.  Consider replacement power sources of nuclear, local firm PV (with use of storage) and market purchases, depending on their availability, reliability, and cost.  Other recommendations included: Policies and rates favoring favor firm and dispatchable energy; rate structures separating consumption and generation; fairly allocating the cost of maintaining the distribution system, recognizing that electricity has different values at different times; and promoting the value of firm solar energy in moving LAC towards zero carbon emissions.

Like other utilities’ planning processes, biomass was not considered or recommended as a future generation resource. As part of its carbon emissions goal, the Public Utilities Department has entered into a contract for an 8-MW small nuclear modular reactor, targeting the 2027/2028 time period for integration. The contract, which they hope to finalize in 2022, has escape clauses if the project does not appear to be feasible.

Given the complexity of the various recommendations, it is expected that plans will continually be reviewed and adjusted as more information, conditions and costs become available.

2.4 NEW MEXICO INVESTOR OWNED UTILITIES

2.4.1 PNM

One New Mexico IOU, PNM, serves part of northern New Mexico including Santa Fe, Las Vegas and Clayton. In addition, PNM owns and operates most major transmission lines in the state.

New Mexico’s largest utility, serving more than half a million customers, has an initial history with biomass and in more recent years, some experience with proposing a biomass plant on their system. In the middle of the 20th century, PNM owned and operated the Prager Power Plant, near 12th Street and I-40 in Albuquerque. The Prager plant used wood chips and refuse material from the American Lumber Company to produce approximately 500 kilowatts of electricity for Albuquerque customers. The plant ultimately closed after the timber industry shrunk and the sawmills in Albuquerque closed.

In 2005, PNM entered into an agreement with a local power developer for a proposed 32-MW biomass plant near Mountainair, NM. The proposed plant experienced some significant challenges, including an initial denial of the air permit by the NM Environment Department, concerns with the longevity of the fuel supply, some residents in the area challenging the project, and financing challenges for the developer that resulted in the project never moving forward. At the time of the proposal, the cost of biomass energy was coming in at a lower price than solar energy. One of the positive results that came out of PNM’s proposal was that a multi- stakeholder group, led by PNM, came up with a set of forest thinning practices for New Mexico that are still recognized by the industry today.

PNM completed its most recent Integrated Resource Plan (IRP), a mandated process in which utilities must plan for the next 20 years of resources to serve customers, last year. The IRP process works to identify the most cost-effective resource mix that would meet the projected electricity demands of customers over the next 20 years, and to develop a four-year action plan that is consistent with that resource mix. This recent IRP was for the time period of 2017 - 2036.

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The major finding of the recent IRP is that PNM proposes, based on economics, retiring PNM’s remaining 497 MW share of SJGS in 2022. SJGS has been the primary source of power for PNM customers since the 1970s. The IRP also proposes that PNM exit its 13 percent share in the Four Corners Power Plant after the coal supply agreement expires in 2031. This action would eliminate all coal-fired generation from PNM’s resource portfolio by 2031, leaving the utility with a portfolio consisting of solar, wind, nuclear, geothermal and natural gas and potentially energy storage resources. According to PNM, biomass energy was not considered in the year-long stakeholder process as no one requested that PNM include a biomass resource in its models.

Part of the IRP process is to run load forecasts for the next 20 years; the company runs forecasts based on low, medium and high growth scenarios. Because of increased pressures from energy efficiency, solar distributed generation systems, and continuing updates in building codes, PNM estimates are low. The high growth scenario for future customer load growth during the IRP time period predicts an average sustained customer growth of 1.4 percent each year.

IRP’s are filed with the NMPRC and go through an “acception” process versus an approval process. The current PNM IRP is being protested by some intervenors and the utility is awaiting a decision from the Commission’s hearing examiner.

As required by the PRC, PNM files a renewable case on an annual basis. Often on a yearly basis, PNM issues “all renewable” RFPs to explore addition of more renewables on its system and evaluate new technologies and costs associated with renewables. PNM’s “all resources” RFP to replace the San Juan Generating Station load had no biomass submissions, and no biomass developers have bid on other PNM RFPs in recent years.

PNM anticipates that its next RFP will be for a 50 MW “community solar” project for Albuquerque business and industrial customers, including a large anticipated purchase from the City of Albuquerque. When PNM evaluates RFP submissions, the company generally looks for resources that help reduce system costs and satisfy legal and regulatory requirements. In addition, proximity to load centers and carbon neutrality are increasingly important factors.

PNM is currently on track to meet the required 20% renewable target by 2020. The company’s approach to meeting the “other” category of the Renewable Portfolio Standard is through a geothermal plant in southwestern New Mexico owned and operated by Cyrq Energy. Due to plant operations difficulties, PNM has not fully met the “other” category target yet. Cyrq Energy is installing new technology to resolve the existing operations issues. Should the geothermal plant not work for some unknown reason, biomass could be a resource consideration going forward.

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Figure 6 PNM Service Area Map

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Figure 7 PNM’s Peak Demand Forecast in the 2018 Integrated Resource Plan

2.4.2 UTILITY CONSIDERATION OF BIOMASS; MAJOR OBSTACLES

The investor owned utilities, cooperatives and municipal systems interviewed for this report indicated that biomass energy was not completely out of the question. However, concerns and suggestions included the following:  Low- to no-load growth occurring, need economic growth in order to consider adding more baseload resources;  No need for baseload resources for some years;  Emissions are of concern; some customers may consider biomass “dirty power”;  The cost of fuel transportation could be prohibitive and could possibly have a negative environmental impact;  There are no strong incentives in place for biomass;  Continuous fuel supply may not be adequate;  Need regulatory consistency and clear direction from the NMPRC on “other resources” such as biomass;  Biomass energy needs to be competitive with the price of natural gas;  Need strong case for carbon neutrality argument for biomass;  Need public policies that help promote benefits of biomass, whether that is tax incentives, or a larger regulatory examination of benefits beyond cost;  The heating value of any biomass product needs to be sufficient when compared to fossil fuels.

2.5 EXAMPLES OF OTHER BIOMASS ENERGY PRODUCTION IN NEIGHBORING STATES

2.5.1 GYPSUM, COLORADO

In 2013, an 11 MW biomass plant went online in Gypsum, Colorado, using wood from beetle- killed trees.

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The plant generates electricity for 10,000 homes and helped Holy Cross Energy reach the state- required goal of acquiring 20 percent of its energy from renewable sources by 2015. Holy Cross has an additional goal of reaching a 70 percent renewable mix by 2030. Eagle Valley Energy developed the $56 million plant, which burns wood trucked in from forest land within a 75-mile radius and wood waste contributed by the Eagle County Landfill.

When the concept of the plant was being developed, some residents expressed concerns about the impact on air quality, while supporters saw the project as a way to increase renewable energy and improve forest health. The biomass facility burns wood to heat water, and the resulting steam powers a turbine, generating electricity. The plant has state-of-the-art pollution control equipment, exceeds all air permit requirements and employs approximately 40 people.

Like many biomass projects, financing was fairly challenging as bankers were cautious about providing capital and were concerned about fuel supply. Eagle Valley overcame those concerns in part because of the volume of beetle kill in the state. In addition, the U.S. Department of Agriculture provided a $40 million loan guarantee. Though online, the project has experienced some challenges including an equipment failure that resulted in a plant fire and some failure to pay property taxes.

Sen. Mark Udall (D-Colorado) was one of the high-profile supporters of the project. During a tour, he called the biomass plant a win-win-win proposition for boosting renewable energy, improving forest health and creating jobs.

2.5.2 FRESNO, CALIFORNIA

Rio Bravo Fresno (RBF) is a 25 MW biomass plant located in Malaga, California, built in 1988 to produce electricity for Pacific Gas and Electric through a long-term Power Purchase Agreement.

The RBF plant, which employs 25 people, burns an average of 35 tons of agricultural pruning and urban wood biomass an hour to serve approximately 24,000 homes. The operator spends $2 million for plant maintenance and another $5.5 million in fuel purchases, such as wood and agricultural waste. Fresno sits in the agricultural valley and is near the Sierras, which have been significantly impacted by drought and bark beetle infestation, leaving millions of dead pine trees in the region. The plant operates as a baseload facility, a continuously operating plant, though if it were offline, it has the capability of providing 12 MW of electricity after an approximately 30- minute ramp-up period. The ash byproduct from the plant is used by local dairy farmers to provide bedding for dairy cattle. The ash is high in pH content and helps to prevent the spread of disease among cattle.

Much of the material that currently serves as feedstock for the RBF plant was historically open- burned or put into landfills, resulting in atmospheric pollution, waste of landfill space, and underutilization of renewable resources. The circulating fluidized bed (CFB) boiler technology used at the plant allows for a more complete and efficient burn of the biomass, thus air pollutants are dramatically reduced. The use of biomass at the plant offsets the equivalent of 457,000 barrels of oil annually, providing clean, efficient energy.

The future of the plant was uncertain in the 2015-2016 time period as utilities no longer were going to pay for electricity generation from biomass plants because the fixed price that supported the plants was expiring. Other biomass plants in California had been closed due to expired purchased power agreements. In 2016, Southern California Edison entered into a five- year contract with Rio Bravo.

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Public policy initiatives in California that recognize the benefits of forest health have been an impetus to keeping the biomass industry going in the state. The state Public Utilities Commission required Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric to acquire 50 MW of power through biomass facilities after the governor signed an emergency proclamation in 2015 directing the Commission to ensure that existing biomass plants could reduce the number of dead trees in the Sierras. Governor Brown’s 2015 “Tree Mortality Emergency” proclamation spurred utilities to enter into biomass contracts. Governor Brown also created an interagency Forest Management Task Force that is coordinating a study to identify and assess barriers to wider use of fuels from high-risk areas.

In addition, state legislation required the three investor-owned utilities -- PG&E, Southern Cal Edison, and San Diego Gas & Electric -- to acquire an additional 125 MW from biomass. After the legislation was approved, the power plants entered a competitive bidding process to sell electricity to the utilities. These biomass plants focused on forest waste, which was reportedly sold at premium prices and aimed to generate enough electricity for more than 100,000 homes.

There are an estimated 66 million dead trees in California’s forests, and, according to the U.S. Forest Service, California forests historically maintained 20 to 100 trees per acre, but now average 266.

Many biomass plants in California have closed over the years, due to economic challenges related to the lack of proximity to the fuel, costs related to harvesting and transporting the fuel and uncertainty in fuel supplies. Historically, biomass plants that burned forest waste were either owned by lumber mills or had entered into partnerships with them, but the California timber industry has shrunk. In addition, public agencies such as the U.S. Forest Service have had limited and often decreasing budgets to log and remove dead trees. Finally, the economics of biomass plants are challenging. Solar and wind energy companies employ fewer people and therefore have fewer expenses, and often also benefit from significantly larger tax credits and property tax exemptions.

2.5.3 ARIZONA

Recent public policy discussions about renewables and forest health are heightening the visibility of biomass as a resource in Arizona. A report in Biomass magazine indicated that the Arizona Corporation Commission, the state’s public utilities commission, proposed comprehensive energy reform that includes new clean energy and energy storage targets and also calls for regulated utilities to procure power from biomass sources.

Arizona’s Energy Modernization Plan, introduced by Arizona Corporation Commissioner Andy Tobin earlier this year, calls for 80 percent of Arizona’s electricity to come from clean energy sources by 2050 and sets a goal to deploy 3,000 MW of energy storage by 2030. The plan also aims to require regulated utilities to procure 60 MW of their electricity from biomass. The fuel used to generate the biomass-derived energy would be required to come from high-risk areas and at least 80 percent would be mandated to come from Arizona.

The Commission’s concern about forest health has been an impetus for discussions about biomass energy in the state. The Commission sponsored a biomass energy workshop at the end of 2017 to explore the use of forest bioenergy as a renewable energy source to prevent devastating wildfires in Arizona. In its concerns about forest health, the Commission has cited the nearly 1 million acres of the state’s overgrown forests and the 5.2 million acres burned, 29 lives lost, and more than $162 million spent on wildfires.

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The Commission said that biomass facilities offer a proven solution to helping solve the unhealthy forest problem while providing stable-priced, carbon-neutral energy. In order to start the process of rebuilding healthy and sustainable forests in Arizona, the Commission said that nearly 50,000 forested acres will have to be thinned each year in order to reach the goal of treating 1 million forested acres in the next 20 years. The treatment of 50,000 forested acres each year is estimated to generate enough biomass to support 90 MW of biomass-derived energy annually.

The Salt River Project, a municipal utility serving the Phoenix area, and Arizona Public Service Company, have a purchase power agreement with the Novo Biopower Plant, in Snowflake, Arizona. The 27-MW plant uses forest thinning from the White Mountains and waste recycled paper fibers from an existing newsprint paper mill, which were originally put into a landfill, adjacent to the plant.

Biomass interest is on the rise in Arizona. The Arizona Public Service Company (APS) issued a Request for Proposal this year to supply up to 60 MW of power from forest thinning based biomass, which would comprise about 2 percent of its total baseload power. In addition to the possible addition of new biomass plants, APS is also exploring the concept of converting an existing coal-fired plant to biomass, which is anticipated to reduce the per MW costs.

The Arizona Daily Star also recently reported that Tucson Electric Power Co. (TEPCO), which serves approximately 424,000 customers in southern Arizona, is considering biomass generation from burning wood or other organic matter as a potential resource addition to its system. Citing the need for improving the health of Arizona forests, TEPCO issued a request for information for technologies, costs, environmental benefits, construction requirements and interconnection requirements of forest biomass energy projects.

TEPCO said it anticipates filing a forest biomass proposal with the Arizona Corporation Commission in 2019. The potential biomass project would be part of TEPCO’s goal to deliver at least 30 percent of its power from renewable resources by 2030, doubling the state’s 2025 goal. The majority of the utility’s renewable resources have been coming from wind and solar.

2.6 THERMAL BIOMASS HEATING

Multiple countries, states and institutions are implementing biomass heating systems as part of their carbon reduction strategies. Biomass boilers can replace oil or gas boilers to heat hot water and radiators (or under floor heating). They burn logs, wood chips, wood pellets or other forms of biomass. The most advanced boilers are fully automatic, controlling the amount of fuel and air supplied to the combustion chamber.

Denmark has become a leader in renewable energy and energy reliability. At one time, Denmark imported oil which supplied 92 percent of the country’s energy, but now at least 40 percent of Denmark’s electricity is now from renewables, and the country has a goal of reaching 100 percent by 2035.

As part of the strategy to meet this goal, the country has made strong commitments to wind energy and energy efficiency and become a leader in combined heat and power (CHP). Approximately 12 percent of the country’s power is generated from biomass and organic waste in CHP plants and more than 80 percent of district heating is cogenerated with electricity.

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There are multiple examples of successful biomass heating projects in the United States as well. The National Renewable Energy Laboratory in Golden, Colorado implemented a biomass heating system using wood waste to heat research buildings on its South Table Mountain Campus. The plant initially had a 29 billion Btu annual estimated output (41 billion Btu total natural gas savings due to conversion efficiency of natural gas combustion) and offset 4.8 million pounds of CO2 (or 2,200 metric tons of carbon) each year.

The University of Iowa has partnered with Quaker Oats to burn oat hulls from the local plant in its boiler, and Middlebury College in Vermont implemented a combined heat and power biomass gasification for the campus as part of its carbon neutrality goal. With some funds from the American Recovery Act, the Blue Mountain Hospital in Oregon replaced one of its 1950s crude oil boilers with a wood-pellet boiler -- saving the hospital about $100,000 a year in heating costs.

In New Mexico, the El Rito Campus of Northern New Mexico College is piloting a biomass heating project for its campus. In addition, the Red Willow Farms at Taos Pueblo uses wood burning thermal heat for its greenhouses.

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3.0 REGIONAL TRANSMISSION LINES AND INTERCONNECTION POTENTIAL

3.1 INTERCONNECTION FOR A BIOMASS ELECTRICITY PLANT

A 5- to 10-MW biomass electric plant could be interconnected through possibly the distribution, sub-transmission or transmission system, depending upon the region. The common theme that surfaced after speaking to several transmission experts and electric utilities about the proposed project, is that a definite site and defined project is necessary to really determine line capacity and other issues prior to moving forward. Identifying a definite site sets into motion more detailed system integration studies which are critical for interconnection of resources.

3.2 INTERCONNECTION PROCESSES

Interconnection of electric generating sources to transmission lines is regulated by the Federal Energy Regulatory Commission (FERC), which has rules in place to ensure a transparent and efficient means to interconnect generation resources to the electric power system and to maintain the safety, reliability and power quality of the electric power system.

FERC interconnection rules generally include the administrative procedures and technical standards used to evaluate potential impacts associated with interconnecting a generation resource to the electric power system, as well as the standard contractual agreements stipulating operational and cost responsibilities between the electric utility and the generation resource developer.

Entities that manage transmission lines administer a “queue” for generation resources. Typically, a developer looking to connect a generation resource to a line must submit an interconnection application (requiring a deposit, the amount of which depends on the utility) before the transmission entity/utility assigns a queue position and executes technical review. The review/study typically identifies needed upgrades, cost estimates and a construction schedule for a generation resource. This can ultimately result in the joint signing of an Interconnection Agreement.

Interconnection of electric generating sources to distribution lines is usually governed by state policy and administered by state public utility commissions. This type of interconnection is discussed in Section 3.4.

PNM transmission is subject to FERC jurisdiction, but Tri-State Generation and Transmission Association transmission is not regulated by FERC. However, Tri-State does have a transmission tariff and it has adopted a review process similar to that of the FERC. Both PNM and Tri-State have lines in northern New Mexico and the two entities have a network integration transmission agreement. PNM is the largest owner of transmission, with more than 3,000 miles of transmission statewide, and most PNM transmission lines are 345-kV lines in the central to northwest corridors.

When transmission owners solicit projects for the transmission queue, there are frequently many projects that respond to get in line. However, this does not necessarily result in those projects being developed and coming online; typically, only a small percentage of potential projects actually come to fruition.

The most successful renewable projects in the state have often had their transmission plan in place prior to bidding into utilities’ renewable RFPs. To ascertain whether there is capacity on a

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line, developers often first enter the transmission organization’s process required to get into the queue and proceed through the entire required process. Because of these kinds of interconnection processes, which looks at total transmission capacity minus transmission service contracts, it is almost impossible to determine transmission capacity available on a line. However, it is generally agreed that for New Mexico to develop more renewable energy, especially for export purposes, new transmission will need to be built. For example, the amount of wind energy in place and being developed in the future in eastern New Mexico is impacting PNM’s 345 kV east – west transmission line and transmission to the Four Corners area. PNM is currently proposing a parallel 345 kV line along part of the route to accommodate additional wind energy.

3.3 INTERCONNECTION POSSIBILITIES

Based on where a biomass plant might be in northern New Mexico, there are three possible interconnection options for the utilities identified in this report, including the following:  A connection to a Tri-State line to serve a co-op  A connection to a PNM line to serve PNM  A connection to a Tri-State line that then connects to a PNM line to serve either PNM or to sell to a wider market

The transmission network in the northern New Mexico region, especially around the Taos area, is owned and operated by Tri-State and mostly includes 69 and 115 kV lines. Several of the proposed sites for a biomass plant could possibly interconnect to the 69-kV loop that serves Kit Carson Electric Cooperative. In addition, biomass could be sited in other areas, such as the Cibola National Forest, and be interconnected to the PNM transmission network as a network resource and delivered to an entity such as Kit Carson Electric Cooperative.

3.4 DISTRIBUTION LINES

Connecting a small biomass project to a utility’s distribution system is also a possibility and has the potential to move more quickly through a regulatory system. The NMPRC regulates how generation facilities connect to a utility’s distribution system through Rule 17.9.568, which covers interconnections for qualifying and non-qualifying facilities as large as 10 MW. In addition, each utility has its own connection standards to ensure the safety of the system. There are numerous small renewable facilities connected to distribution systems throughout the state, including PNM’s 10 MW solar plants in northern and southern New Mexico. PNM has more than 11,000 miles of distribution lines in New Mexico, and the rural electric cooperatives operate thousands of miles of lines throughout New Mexico as well. Similar to the transmission process, generation developers must apply and have selected a definite site and a definite project in order to evaluate line capacity and other issues prior to moving forward. Identifying a definite site sets into motion more detailed system integration studies which are critical for interconnection of resources.

3.5 PROPOSED NEW TRANSMISSION

There are also multiple pending transmission projects in New Mexico, including one proposed project in northern New Mexico – the Verde Project -- a proposed merchant transmission line by Hunt Power development that could strengthen the transmission system in northern New Mexico. The proposed Verde Transmission Project would add approximately 30 miles of 345 kV

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transmission line to interconnect PNM’s Ojo substation in southern Rio Arriba County to the existing PNM Norton substation in Santa Fe County, completing a critical transmission loop in northern New Mexico. The project would cross Federal lands administered by the BLM, private lands, and tribal lands in both Rio Arriba and Santa Fe Counties. The line could help relieve congestion, add import and export capabilities system wide and improve access for renewable energy. A system impact study for the project was completed in 2017, which indicated that as much as 672 MW of transmission capacity could occur with the addition of the Verde line and other system enhancements. Activity related to local, state and federal permits for the projects are still ongoing. The Bureau of Land Management has conducted public scoping meetings as part of the National Environmental Policy Act review process. BLM has prepared a draft environmental impact statement (EIS) that will be public in February of 2019 and the project is still undergoing multiple engineering, permitting and rights of way acquisition processes. A final EIS is expected in 9 to 12 months after the draft is released. The Verde project has agreements with all three impacted northern New Mexico tribes and construction of the line is anticipated to start in 2020. Like many proposed transmission projects, the development of the line is facing some public opposition but the agreements with local tribes is a significant step toward moving forward on the project.

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Figure 8 PNM Transmission Map

The Figure above is a 2013 transmission map. Due to Homeland Security rules, utilities no longer share transmission maps. However, no major transmission lines have been built in New Mexico since the date of this map.

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4.0 BENEFITS OF BIOMASS ENERGY GENERATION AS A BACKUP TO PV GENERATION INSTALLATIONS

4.1 INTRODUCTION

One of the major challenges utilities face as they move toward additional renewables such as solar and wind is meeting the peak demand of customers. Most utilities’ peak customer demand, whether in winter or summer, occurs in the early evening when sources such as solar are ramping down and not producing electricity. Baseload resources, such as biomass and geothermal, and storage options, can help meet critical energy needs during this time period. This challenge is now frequently referred to as the “duck curve.” Generally speaking, residential customers contribute toward this peak demand as customers return home and turn on many electricity using devices. Often business and commercial customers use energy during the day. See an energy.gov illustration of this phenomenon below.

Figure 9 US Energy Government, Duck Graph

4.2 OVERVIEW OF CURRENT PV CAPACITY

The utility-scale solar sector has led the overall U.S. solar market in terms of installed capacity since 2012. In 2017, the utility-scale sector accounted for nearly 60% of all new solar capacity, and is expected to maintain its market-leading position for at least another six years. Two-thirds of all states, representing all regions of the country, are now home to one or more utility-scale solar projects (Bolinger M. et al. 2018). Figure 10 illustrates historical and projected PV Capacity

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by Sector (residential, commercial and utility) in the United States, and Figure 11 shows the map of PV projects around the U.S.

At the end of 2017, there was at least 188.5 GW of utility-scale solar power capacity within the interconnection queues across the nation. The 2017 growth within these queues is widely distributed across all regions of the country, but is most pronounced in the up-and-coming Midwest region, which accounts for 27% of the 99.2 GW of new queue capacity. The widening geographic distribution is as clear of a sign as any that the utility-scale market is maturing and expanding outside of its traditional high-insolation comfort zones.

Figure 10 Historical and Projected PV Capacity by Sector in the United States (Data source: GTM/SEIA (2010-2018), LBNL’s “Tracking the Sun” and “Utility-Scale Solar” databases)

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Figure 11 Map of Global Horizontal Irradiance and Utility-Scale PV Projects (Data source: https://emp.lbl.gov/annual-pv-project-additions)

With recent growth, several states have achieved a PV penetration rate of 10% or more, while California has even climbed above 15% of in-state generation. Table 11 lists the top 10 states based on actual PV generation in 2017—for all market segments as well as just utility-scale— divided by total in-state electricity generation (left half of table) and in-state load (right half).

New Mexico ranks number 9. Figure 12 shows the map of clean energy, including solar, in New Mexico (www.emnrd.state.nm.us/ECMD), and Figure 13 illustrates a significant increasing of PV capacity installation (www.seia.org). The following lists some basic facts about New Mexico’s solar energy:  Solar Installed: 771.13 MW (62.27 MW in 2017)  National Ranking: 9th (26th in 2017)  State Homes Powered by Solar: 188,449  Percentage of State’s Electricity from Solar: 4.34%  Total Solar Investment in State: $1,602.90 M ($107.21 M in 2017)  Price Declines: 47% over last 5 years  Growth Projections and Ranking: 766 MW over next 5 years (ranks 22nd)

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Table 11 The Top 10 States in PV Penetration Rankings in 2017

PV generation as a % of in- PV generation as a % of in- state generation state load Utility-Scale Utility-Scale Rank State All PV All PV PV only PV only 1 California 15.20% 10.10% 12.30% 8.10% 2 Hawaii 11.80% 2.00% 12.50% 2.10% 3 Vermont 11.50% 6.20% 4.40% 2.40% 4 Nevada 10.70% 9.70% 11.10% 10.00% 5 Massachusetts 8.10% 3.30% 4.30% 1.80% 6 Utah 6.20% 5.40% 7.50% 6.50% 7 Arizona 5.50% 3.80% 7.40% 5.20% 8 North Carolina 4.40% 4.30% 4.40% 4.30% 9 New Mexico 3.90% 3.30% 5.70% 4.80% 10 New Jersey 3.80% 1.60% 3.90% 1.60% Rest of US 0.50% 0.30% 0.60% 0.30% Total US 1.80% 1.20% 2.00% 1.30%

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Figure 12 New Mexico Residential Solar Installed Capacity between 2009 and 2016 (Data source: http://www.emnrd.state.nm.us/ECMD)

Figure 13 New Mexico PV Installation Forecast, (www.seia.org)

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PV installation is on the rise in New Mexico. For example, Kit Carson Electric Coop currently has 8.5 MW of solar on their grid with 10 MW of solar contracted and ready for development, thus a total of 18.5 MW of solar-generated electricity will soon be distributed to customers in the territory of the Enchanted Circle.

4.3 STORAGE CAPACITY NEEDED TO MEET DEMAND WHEN SOLAR IS NOT PRODUCTIVE

High solar adoption creates a challenge for utilities to balance supply and demand on the grid. This is due to the increased need for electricity generators to quickly ramp up energy production when the sun sets and the contribution from PV falls. Another challenge with high solar adoption is the potential for PV to produce more energy than can be used at one time, called over- generation. This leads system operators to curtail PV generation, reducing its economic and environmental benefits.

Adding battery storage is one way to at least partially restore the value of solar power after the sun sets, and three recent PV + storage PPAs (power purchase agreements) in Nevada (each using 4-hour batteries sized at 25% of PV nameplate capacity) suggest that the incremental PPA price added for storage has fallen to ~$5/MWh, down from ~$15/MWh just a year ago for a similarly configured project. As PV plus battery storage becomes more cost-effective, a number of developers are regularly offering it as a viable upgrade to standalone PV.

4.4 BIOMASS ENERGY NEEDED TO MEET DEMAND WHEN SOLAR IS NOT PRODUCTIVE

Biomass power generation is a possible alternative to solar energy because it addresses some of the main barriers to the extensive utilization of solar energy.  Land Use: Solar radiation has a low energy density relative to other conventional energy sources, and for all but the smallest power applications, therefore, requires a relatively large area to collect an appreciable amount of energy. Typical solar power plant designs require about 5 acres per MW of generating capacity. For example, a 30 MW thin-film PV array would require about 168 acres.  Availability of Transmission: Due to potential transmission constraints, solar project developers will need to evaluate the economic tradeoff of locating where the resource is best versus locating nearer to loads where transmission constraints are less likely.  High cost of solar technologies compared with conventional energy.  Strong dependency on sunshine, which is affected by both weather and the daily cycle of time.  Irregularity of the supply of energy at the level requested in a given moment.

A biomass power generation facility is able to follow general rules of peak demand:  Power generation and transmission capacity must be sufficient to meet peak demand for electricity.  Power systems must have adequate flexibility to address variability and uncertainty in demand (load) and generation resources. The biomass power generation facility could be designed so that the electricity output is adjustable to meet demand during ‘rush-hour’ because the process input (feedstock stream) could be flexible.

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 Power systems must be able to maintain steady frequency: The part of electricity generation in the facility is a well-established technology and equipment, which can produce electricity with steady frequency for 24/7, assuming adequate supply of feedstock.  Power systems must be able to maintain voltage within an acceptable range (see above)

There are a number of biomass power generation facilities in operation in the U.S. (see appendix table). Some of them, in particular those that are owned by electricity companies, are operated in such a way that the electricity output is flexible enough to meet peak demand during times when PV generation is not sufficient. There are no technical barriers to utilizing biomass power generation to meet peak demand in terms of biomass thermal conversion, including pyrolysis, and electricity transmission to the grid. When PV is unable to provide electricity to the grid, the biomass power generation could be the backup.

As of 2017, the Solar Energy Industries Association reports that a total of 771.13 MW of solar has been installed in New Mexico. EMNRD estimates that of that, about 721-671 MW is utility- scale PV; we do not know how many of these utility-scale MW are located northern and northeastern New Mexico. This proposed 10 MW biomass power generation could be used as a backup to PV generation when PV is unable to supply power to the grid. Table 12 below compares the cost of PV, PV plus storage and biomass power generation.

Table 12 Power Generation Facility Installed Cost and Levelized Cost a

Technology Cost Component Cost/ Cost Range PV-utility installed price (2017), $/W-AC* 1.90 - 2.70 b PV-utility operating cost (2017), $/MWh 6.30 - 12.1 Solar PV-utility levelized PPA price, 2017, $/MWh 41.4 PV + storage PPA (2016-2017), $/MWh 5.00 - 15.00 Biomass Power Installed Price, $/W-AC 3.00 - 4.00 c Biomass Power (average) Biomass power levelized energy cost, 80 - 150 $/MWh 10 MW Biomass Facility Installed Price, 5.20 d Biomass Power (projection $/W-AC in this report) 10 MW Biomass Facility Operating cost, 122.77 $/MWh *W-AC is a power unit, watt as AC (alternating current) a Data sources: www.wbdg.org and emp.lbl.gov b PV installed average cost was $6.21/W-AC between 2007-2009. It dropped a lot in the last 10 years because of technology development and applications stimulated by incentives and policies. c Biomass power currently has higher installed and operating costs. Those cost would be reduced when (i) advance technologies are developed, (ii) more facilities are built in US with financial incentives and policies, and (iii) bioproducts such as biochar are sold to different customers. d This installed cost of 10 MW facility is expected to drop to less than $4.00/W-AC when the facility is scaled up to 30 MW.

4.5 POTENTIAL BARRIERS TO BIOMASS POWER PRODUCTION

Barriers to biomass power generation include:

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 Constant long-term supply of biomass (type, quantity, price) to the facility and storage of biomass sufficient for at least one month of biomass consumption.  Close interaction with local power company (such as PNM) in order to transmit power produced to the grid.  Long-term contract with power companies with a reasonable electricity price to the grid.  Lack of government policy supporting the use of biomass power. One of the reasons, California is the top state in the U.S. for biomass power is that California has provided incentives and tax cuts to incentivize biomass energy.  Lack of information dissemination and consumer awareness about bioenergy.  Difficulty overcoming established energy systems, including difficulty introducing innovative energy systems, particularly for biomass energy, because of technological lock-in, electricity markets designed for centralized power plants and market control by established generators (connected to grids).  Inadequate financing options for bioenergy projects.  Inadequate workforce skills and training in bioenergy associated technologies.  Lack of stakeholder/community participation in biomass energy choices.  High initial project cost.  Lack of credibility: Implicit endorsements include utility bioenergy programs and government tax credits.

Additional detail about some of these barriers is provided above in Sections 1 and 2.

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5.0 MARKET POTENTIAL FOR BIOCHAR

5.1 BIOCHAR PRODUCTION COST ESTIMATION

Biochar has been generated from a range of biomass such as woods, agricultural and organic waste. The most common method to produce biochar is pyrolysis, which is the thermochemical decomposition of biomass at a temperature between 350-700 °C in the absence of oxygen (University of Washington 2013; Liu W-J, et al. 2015; Novotny, E.H. et al. 2015; Nelissen V. et al. 2015; Agegnehu G. et al. 2017; Lei Z.L., et al. 2018).

The cost of biochar is directly related to the cost of the feedstock, collection and transportation cost, the processing method of the feedstock in use, and the value of any co-products. The U.S. Biochar Initiative reported the broad cost of biochar as $500/ton in 2013 (http://biochar- us.org/biochar-basics). In 2014, International Biochar Initiative (IBI) found 56 pure biochar products on the marketplace and 33 blends, with the average wholesale price for pure biochar at $1,880/ton and the average retail price for pure biochar at $2,800/ton. Companies reported volumes of biochar sales were quite small, a total of 7,457 metric tons (MT) (SusBizPros, 2017).

Table 13 lists the biochar pricing used in previous studies (Campbell R.M. et al. 2018). It shows that the biochar price varies dramatically: prices for biochar worldwide were found to vary between $80/ton and $13,480/ton. However, these prices do not distinguish between wholesale and retail prices, which are likely to diverge substantially, and it is unclear what types of post- conversion processing enhancements may have been applied to high value-added biochar for expensive applications such as catalysts or supercapacitors. For soil amendments, the biochar price listed in Table 13 is between $96/ton and $508/ton and the average price for biochar is $302/ton.

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Table 13 Summary of Biochar Prices (Campbell R.M. et al. 2018)

Biochar Price Type of Study Description ($/Ton) Economic analysis of biochar as soil Assumed selling price based on production 96.13 amendment costs Economic analysis of biochar as soil Assumed selling price based on energy 126.01 amendment content and price of coal Net cost to produce, deliver, and spread Cost-benefit analysis of biochar as soil 196.69 biochar on fields. Includes electricity sales amendment and renewable energy credits Cost-benefit analysis of biochar as soil 213.67 Cost of applied biochar to cropland amendment Techno-economic analysis of biochar Assumed selling price based on “upper limit 258.06 and methanol production of biochar for soil amendment in the US ” Economic analysis of biochar production 285.06 Cost of applied biochar to cropland and use as soil amendment Economic analysis of biochar as soil Assumed selling priced based on 387.53 amendment production costs Economic analysis of biochar as soil 508.58 Assumed selling price amendment Economic analysis of biochar and bio-oil 651.99 Assumed selling price production

Survey of biochar sellers 2,062.61 Unblended, wholesale, Global

Survey of biochar sellers 2,512.40 Unblended, wholesale or retail, U.S.

5.2 MAPS SHOWING SANDY SOIL REGIONS

The following three maps show areas with sandy soils near the three selected potential sites of a biomass-to-energy facility. The areas are limited to where it likely would be economically feasible to transport biochar for use as a soil amendment. However, additional analysis is necessary in order to determine which parts of the identified sandy soil areas are used for crops, as well as the particular crops grown. Higher value crops may benefit enough from biochar application that transportation to greater distances would be economically feasible. At this stage, we do not have enough information to reach conclusions and we recommend additional study.

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Figure 14 Areas with sandy soils near possible Tres Piedras location

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Figure 15 Areas with sandy soils near possible Questa location

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Figure 16 Areas with sandy soils near possible Eagle Nest location

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The following two maps show areas of sandy soils in the Española and Middle Rio Grande area because both areas produce higher value crops.

Figure 17 Sandy Soils in the Española Area

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Figure 18 Sandy Soils in the Middle Rio Grande Area

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5.3 BIOCHAR PROPERTIES AND APPLICATIONS

5.3.1 PRODUCTION OF BIOCHAR

In a pyrolysis process, biomass is thermochemically decomposed at a temperature between 350-700 °C in the absence of oxygen. The decomposition process releases volatile species, while the carbon-rich solid, non-volatiles are collected as biochar. A portion of the gas-phase volatiles condenses into dark brown, viscous liquid phase termed bio-oil, and the remaining low molecular weight volatile compounds (e.g., CO, CO2, H2, CH4 and light hydrocarbons) remain in the gas phase called “non-condensable” gas (or biogas). The physical process and chemical reactions occurring in pyrolysis are very complex and depend on the reactor conditions, heating rate, and the nature of the biomass. Depending on pyrolysis reaction condition, biochar yield varies from 20% to 35%.

5.3.2 PHYSICAL PROPERTIES AND CHARACTERIZATION OF BIOCHAR

Biochar samples enriched in carbon contain several cracks and holes formed because of the evolution of volatile matter during carbonization. The extent of devolatilization has a significant effect on the characteristics of the produced biochar. As known, higher volatile matter release produces biochar with lower densities, higher porosities and significantly different pore structure.

5.3.3 CHEMICAL PROPERTIES AND CHARACTERIZATION OF BIOCHAR

Biochar can be generated by pyrolysis of pure biomass components (cellulose, hemicelluloses or lignin) and whole biomass; it is theorized that lignin would undergo partial decomposition and hemicellulose and cellulose would undergo a series of thermal homolysis, hydrolysis, dehydration, and molecular rearrangement reactions to form a polymerized aromatic structure.

High-temperature biochar tends to have greater concentrations of condensed aromatic carbon, while biochar produced by lower temperature pyrolysis may contain remnants of biopolymers. From a chemical composition point of view, biochar obtained at high heating rates are characterized by high oxygen content and low calorific value, probably as a result of the relatively short particle residence time. Usually, the carbon content of a typical biochar is in the range of 45−60 wt. %, the hydrogen content 2−5 wt. %, and the oxygen content about 10−20%. Figure 19 shows a statistical chemical composition of biochar from biomass. With an increase of temperature, more lighter components are decomposed, resulting in less content of hydrogen (H) and oxygen (O) in biochar.

The ash content of biochar depends substantially on the feedstock. Generally, softwood biochar tends to have low ash content; hardwood biochar has intermediate ash content. Low-ash biochar is also used in metallurgy and as a feedstock for production of activated carbon, which has many uses, such as an adsorbent to remove odorants from airstreams and both organic and inorganic contaminants from waste-water streams. The majority of feedstock available within the north central and north eastern New Mexico region consist of softwoods such as ponderosa pine, Douglass fir and pinion-juniper. Biochar produced from these sources would have a low ash content promoting expanded uses for biochar and biochar derived products versus hardwood feedstock sources.

Many properties of biochar are significantly influenced by the chemisorption of oxygen onto the carbon surface. Oxygen in the surface oxides can be found in the form of various surface organic functional groups. The surface functional groups are mainly derived from the activation

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process, precursor, heat treatment, and post chemical treatment. Some studies already demonstrated that the surface functional groups anchored on/with carbon were found to be responsible for the variety in catalytic and physicochemical properties of the matter considered.

Depending on the application of biochar, a premium biochar with optimized chemical and physical properties could be obtained by tuning up pyrolysis operating conditions (temperature, reaction time, etc.)

5.4 BIOCHAR APPLICATION AS SOIL AMENDMENT

Biochar has many potential applications. In this project, we focus on soil amendments because many of New Mexico’s sandy soil lands are deficient in soil organic matter due to the effects of wind and water erosion.

The effects of biochar on soils are generally related to the improvement of critical soil properties (e.g., nutrient availability, microbial activity and carbon stocks). Since biochar provides a carbon source that undergoes minimal microbial degradation, the accumulation of this persistent pool of carbon within the soil can improve soil structure, water holding capacity and nutrient cycling. Additionally, biochar has a protective effect for other sources of carbon within the soil and has been reported to decrease the mineralization rate of both native soil organic carbon and fresh inputs of carbon such as raw residues.

Plant uptake of key nutrients and increase in yield significantly increased in response to biochar application, particularly when in the presence of added nutrients.

5.4.1 NUTRITIONAL IMPROVEMENTS FROM BIOCHAR APPLICATION

Biochar application has been shown by a wide range of studies to have significant impacts on several soil quality parameters. Positive impacts of biochar amendment on soils include but are not limited to: increasing soil capacity to sorb plant nutrients, reducing leaching losses of nutrients and decreasing soil compaction, which is favorable for root growth and water permeability potentially increasing plant available water retention and crop yields. Additionally, biochar application has been shown to increase microbial activity. This increased activity allows the soils to produce and maintain NO3-N as well as solubilize phosphorous and micronutrients.

Biochar is high in base metals (Ca, Mg, Na) and therefore tends to be alkaline in nature (depending on the feedstock it can be upwards of pH 9). Biochar also tends to have higher electrical conductivity (EC) when compared to sandy soils. Care must be taken with the application of biochar as too high a rate can create a saline condition. Under saline conditions plant roots have a difficult time (takes more energy) drawing water into the plant. Plants may become stunted or dehydrate even when enough water is present. When using biochar, soil testing is recommended to ensure optimal crop conditions are maintained.

5.4.2 WATER RETAINING IMPROVEMENTS FROM BIOCHAR APPLICATION

Soil-water storage is often the most limiting factor to crop production in the arid Southwest. It has been reported that up to a 20% increase in water holding potential is possible in sandy soils with a reduced impact within loam or clay soils. As the proportion of clay within a soil structure increases biochar effects on moisture retention decrease. Biochar feedstock plays a major role in the biochar ability to help retain moisture. Feedstock with high silica content (such as biochar produced from a forest feedstock) tend to be able to help retain soil moisture. Forest feedstock

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within the western United States tends to have a high silica content compared to eastern forest feedstocks promoting increased soil moisture retention. Biochar has the potential to be effectively used as a water retention device on municipal golf courses. Element C6 a company based out of California has successfully utilized a compost biochar mix on two golf courses in San Diego achieving water reductions of 20% and 30%. We can use this data point as a rudimentary launching point to develop a very general estimate potential water savings across New Mexico’s 83 golf courses (Golf New Mexico, 2015, http://www.golfnewmexico.com/pages/map.html), but we caveat this calculation with a reminder that many of our golf courses irrigate with treated effluent, and they are not contributing to withdrawals of fresh water from our aquifers and rivers. Our assumptions are as follows:

 Golf courses vary significantly in size, but the average course has about 75 acres of maintained turf;  New Mexico golf courses use anywhere from less than 100 acre-feet (32,500,000 gallons) to more than 500 acre-feet per year (New Mexico Water Use by Categories, 2010, Technical Report 54, New Mexico Office of the State Engineer, p.37). For this estimate, we assume that New Mexico golf courses each use an average of 250 acre-feet per year.

Thus, total water usage by New Mexico’s golf courses is 81,250,000 gallons per year. An average savings of 25% would be 20,312,500 gallons per year. Based on the City of Santa Fe’s 2017 water rate of $6.06/1000 gallons, the annual savings after the application of a compost- biochar mix on the maintained turf at all 83 of New Mexico’s golf courses would approximate $123.093.75, or $19.77/acre of maintained turf.

5.4.3 CROP YIELD IMPROVEMENTS FROM BIOCHAR APPLICATION

Along with improved soil health, increased crop yield is generally reported with application of biochar to soils. However, many of the published experiments are highly variable and dependent on many factors, mainly the initial soil properties and conditions and biochar characteristics. Positive crop and biomass yield were found for biochar produced from wood, paper pulp, wood chips and poultry litter. In some studies corn yield was improved up to 140%, cowpea by 100%, while radishes grown with poultry litter biochar yielded a 96% increase.

As an example, Table 14 shows corn yield (30% increased, Nelissen V. et al. 2015) when 20 ton/hectare (8 ton/acre) application of biochar from a 10 MW biomass power generation facility (24,000 ton/a biochar production).

Table 14 Estimated Value of Corn Yield Increase after Biochar Application

Biochar, ton 24,000 Application rate, ton/acre 8 Application area, acres 3000 Corn yield increased, % 30.0% Corn yield increased, bushels 180,000 Corn price, $/bushel $3.50 Corn value increased, $ $630,000

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Table 14 does not include the capital cost of the biochar, which at $250/ton, and at 8 tons/acre, is $2,000. In the example summarized in Table 14, the cost of treating 3,000 acres with 24,000 tons of biochar is $6,000,000. The return-on-investment, assuming no reductions in crop yield in out-years, is nine and a half years. To break even in one year – a necessity in a high-risk, low- margin activity such as agriculture – the cost of biochar would have to be kept within the $5- 10/ton range, with the cost of transportation adding an average of $20/ton to from the power plant to its destination.

5.4.4 BIOCHAR APPLICATION RATE

The recommended application rates of biochar as a soil amendment are quite variable and depend on soil types and crops. Additionally, biochar feedstock materials vary widely in their characteristics (e.g., pH, nutrient levels, ash content) which also influence application rates. Since biochar does not appreciably decompose in soil, a single application can provide positive effects over several growing seasons in the field, as is not usually the case for conventional fertilizers. While much remains to be established, a onetime application of 8 tons/acre to a typical field crop seems reasonable to achieve the marginal benefits reported above. However, most biochar materials, unless blended with nutrient rich materials, do not substitute for conventional fertilizer, so adding biochar without necessary amounts of nitrogen (N), phosphorus (P) and potassium (K) should not be expected to provide improvements to crop yield.

Biochar from woody materials is typically a soil enhancer, enhancing the pH and soil water retention, resulting in improved crop yields.

While applying biochar as soil amendments, biochar can also be mixed with other fertilizer ingredients (N,P,K or composts) so that it can then be used to substitute for fertilizer. These substitutes could be produced for specific crops, such as potato, peanuts, corn, etc. Further research is needed to determine the optimal biochar application with a focus on strategies to reduce the quantities of biochar required to deliver desired benefits may drive down the ultimate cost of the application. If the goal is to deliver economically viable biochar, strategies focused on high value crops that require high levels of fertilizer application may prove more fruitful.

Long-term field research focusing on an optimal combination of nutrient use, water use, carbon sequestration, avoided greenhouse gas emissions, and changes in soil quality and crop productivity is needed before large-scale biochar application to soils are to become practical.

5.5 ANALYSIS OF BIOCHAR IMPACTS BY CROP TYPE

Biochar from biomass pyrolysis has been widely studied due to its ability to increase carbon sequestration, reduce greenhouse gas emissions, and enhance both crop growth and soil quality. Agegnehu G. et al. (2017) have reviewed the role of biochar and biochar-compost in improving soil quality and crop performance. The following crops were tested in greenhouse/pot and/or field:  Cereal crop  Horticultural crops  Legumes  Grasses/pasture

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For New Mexico sandy soils, we need to identify what type of crops are best to use the biochar from wood biomass pyrolysis process for (1) improvement of soil nutrition, (1) retention of soil water, (3) increase of crop yield, (4) reduction of greenhouse gas (GHG) emissions.

Table 15 summarizes, by county and acreage, New Mexico’s top crops. Livestock is the largest contributor to New Mexico’s agricultural economy, and forage and silage for livestock is its largest crop. (https://www.nass.usda.gov/Publications/AgCensus/2012/Online_Resources/County_Profiles/N ew_Mexico/index.php).

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Table 15 New Mexico Top Crops by County and Total Acreage

County Hay Fruit Vegetabl Nut Grains All Other Crops (acres) Trees es trees (incl. (acres) (acres) (acres) (acres) animal feed, seed, and silage) (acres) San Juan 35,950 - 8,224 - D D – beans Rio Arriba 19,975 580 352 - 130 - Taos 11,553 94 76 - - D – nursery stock crops Union 10,217 - - - 16,384 - Colfax 7,690 D - - - D – nursery stock crops Harding D - - - D - McKinley 719 - 216 - - - Sandoval 5,903 77 253 - - 68 – grapes Los Alamos - - - - - D - Mora 4,755 33 21 D 37- nursery stock crops Quay 2,833 - - - 10,231 - Cibola 381 53 33 - - - Santa Fe 3,459 122 287 - D San 3,120 - 23 - D D - soybeans Bernalillo 4,053 71 164 - 84 D - grapes, Valencia 18,921 - 0 472 1,546 - Torrance 11,351 - - - 10,891 D - sod Guadalupe 1,239 - 24 - - - Curry 27,405 - - - 59,156 - DeBaca 6,561 21 959 D – nursery stock crops Catron 346 4 11 42 - - Socorro 13,029 - - - 4,186 - Lincoln D 196 - 144 - - Otero 2,191 351 1,488 D – pistachios Chaves 32,739 - - 2,974 14,402 2,102 - cotton Roosevelt 25,828 - - - 31,155 - Luna 7,415 4,119 - - 2,680 1998 - cotton Sierra 6,277 1,894 - - 1,779 D - cotton Grant 3,474 52 22 8 - 25 - grapes Hidalgo 5,392 - D - - D - cotton Dona Ana 25,254 - 6,714 28,729 7,807 7,745 - cotton Eddy 27,558 4,830 4,453 5,305 - cotton Lea 16,892 11,020 19,589 - cotton Total 372,249 3,448 16,420 38,679 176,779 130 – fruits 29,769 - cotton D – not disclosed, to protect the privacy of the one producer in the County.

Given the current range in biochar costs per ton (Table 13), we assume for the purpose of this first-cut analysis that that the benefit of applying biochar to forage, grain and cotton crops is far

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less than the cost, rendering it an economically questionable proposition absent a further analysis that estimates the value of increased soil moisture-holding capacity and possible ground water recharge, as well as that of soil carbon sequestration.

However, New Mexico’s farmers also produce 23,867 acres of high-value crops consisting of fruits, vegetables, and nuts (primarily pecans), and biochar might prove to be tremendously cost-effective for some, if not all, of these crops. We recommend that the Department conduct a cost-benefit analysis to determine whether some or all of New Mexico’s high-value crops would benefit from biochar.

5.6 POTENTIAL BARRIERS TO BIOCHAR APPLICATION

While there are many benefits of biochar use, there are also a number of problems that need to be addressed if the full potential of biochar is to be realized.  Consistency: In traditional market analysis terms, to grow the biochar market and industry, there needs to be consistency in what consumers see and understand in the end product aimed at specific uses. In marketing lingo, biochar needs consistent product attributes for a customer to anticipate the real benefits. Individual producers can, and are, building their businesses on the basis of individual success and personal credibility. This strategy may be effective for one-on-one relationships and a monopoly, but not for a multidimensional industry with many players seeking to expand.  Standardization: A voluntary standard for biochar has been developed by the International Biochar Initiative (IBI) with producer input. However, as the industry has grown, there has been criticism that some components of the standard, including required testing, are unnecessary and that implementation is too costly. A frequently heard criticism to the IBI standard is that IBI requires too much information of relatively minor importance for most end users, resulting in reduction of the broad adoption of the voluntary standard.  Feedstocks: Constant and stable of feedstock supply is important to the quality of biochar produced in installed biomass power generation facility. Variation of feedstock sources (type, mixing, etc.) could affect the final quality of biochar to be applied to filed.  Customer Needs: The most critical outreach needed to expand biochar’s customer base is for the attributes identified in both research and field experience to be connected to the benefits customers are seeking. We need to identify the following: o Who needs biochar? o What are the requirements on biochar for field applications? o What type of the crops have the most added-value to customers? o What R&D efforts are needed in order to expand the biochar market?  Biochar price: it is critical to the profit of the plant’s customers, the expanding of biochar applications, and finally the economics of the biomass power generation facility. We recommend further evaluation of the break-even price point for biochar application in different sectors of the agricultural industry, and for biochar demand (including not only amounts, but also quality) across all commercial and industrial sectors within the state and beyond.

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5.7 POTENTIAL FOR OTHER APPLICATIONS OF BIOCHAR

As discussed above, biochar is a carbon-rich, fine-grained, porous substance, but it can also contain some oxygen and hydrogen. In the figure below, biochar scanning electron microscope (SEM) images of biochar microstructures, and chemical composition and functional groups on the surface of these microstructures are shown. The functional groups include phenol, carboxyl, ketone, lactol, lactone, etc., which offer a great opportunity for modifying biochar for difference applications.

Figure 19 (a) A photo of biochar sample, (b) SEM image of biochar sample, and (c) chemical composition and functional groups on biochar’s microstructures

It has a high porosity and surface area, high chemical stability, and is cost effective. Besides the intrinsic nature of the biomass feedstock, pyrolysis process conditions could greatly affect the biochar quality and determine its resultant properties. Biochar contains a high quantity of minerals and functional groups anchored on the surface, which make it suitable for soil remediation and with some functionalization, modification and doping can be converted into functional materials, for applications in catalysis, energy storage and conversion, and environmental protection. By surveying the potential market of biochar from biomass in nearby regions, biochar products with pretreatment, activation/modification, graphitization, and their applications are shown in Figure 20.

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Figure 20 Biochar products and their applications

5.8 BIOCHAR APPLICATION AND TRANSPORTATION COST ANALYSIS

In order to assess the economic impact of biochar application for agricultural use, transportation and total application costs were estimated for the Española, Alamosa, Albuquerque and Las Cruces regions. It is assumed that biochar would be transported from Taos a central point between the three proposed facility locations. Transportation costs were estimated using FortV, using a biochar bulk density of 0.28 to 0.48 g/cm3, 35 – 60 tons of biochar can be transported per truckload. Table 16 provides an overview of the estimated costs of transporting biochar to various locations throughout the region.

Table 16 Biochar Transportation Costs

Transportation Transportation Transportation Destination Distance Cost Low Cost High (Miles) ($/BDT) ($/BDT) Taos to Española 47 $2.58 $4.42 Taos to Alamosa 90 $4.71 $7.99 Taos to Albuquerque 133 $6.37 $10.92 Taos to Las Cruces 343 $15.27 $26.17

Application costs are impacted by a number of environmental factors such as acreage treated and slope along with application methods and access to equipment. Using compost application

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as a fill in for biochar it is estimated that biochar can be applied at a cost of $100 per acre. Based on the 8 tons/acre application rate assumed in section 5.44 of this report, total transportation and application costs were estimated for the Alamosa, Española, Albuquerque and Las Cruces regions.

Table 17 Biochar Transportation and Application Costs

Transportation Transportation Average Cost Application and and ($/BDT) Destination Cost Application Application ($/BDT) Cost Low Cost High ($/BDT) ($/BDT) Taos to Española $12.5 $15.08 $16.92 $16.00 Taos to Alamosa $12.5 $17.21 $20.49 $18.85 Taos to Albuquerque $12.5 $18.87 $23.42 $21.15 Taos to Las Cruces $12.5 $27.77 $38.67 $33.22

Based on the low bulk density of biochar it is estimated that transportation costs would be minimal across the state. Biochar application and transport would likely not contribute significantly to the total cost of biochar utilization for agricultural applications. Using the United States Biochar Initiative average biochar selling price of $250 per ton, the total application cost of biochar for agriculture can be estimated. An average of the low and high transportation scenarios was used to estimate biochar purchases, transportation and application costs in price per BDT and acre. Table 18 details estimated biochar purchase, transportation and application costs in BDT and acres assuming an application rate of 8 tons/acre.

Table 18 Biochar Purchase, Transportation and Application Costs

End Cost Estimation in BDT End Cost Estimation in Acres Destination ($/BDT) ($/Acre) Taos to Española $266.00 $2,128.00 Taos to Alamosa $268.85 $2,150.80 Taos to Albuquerque $271.15 $2,169.16 Taos to Las Cruces $283.22 $2,265.76

As shown in Table 18 proximity to a biochar production facility does not significantly impact the total cost of biochar utilization. As a whole biochar application represents a significant financial investment, additional efforts will need to be made to determine if the agricultural productivity benefits of biochar outweigh the high upfront investment.

5.9 RECOMMENDATIONS

 Conduct a cost-benefit analysis to determine whether some or all of New Mexico’s high-value crops would benefit from biochar.  Conduct a literature review and discussions with biochar researchers in New Mexico (e.g., Dr. Catherine Brewer at New Mexico State University) to forecast

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the consistency and quality of biochar produced at the type of power plant proposed for northern New Mexico. If the consistency and quality are believed to be sufficiently high, then it could have enough economic value to make transportation costs over longer distance feasible. For example, biochar used for remediation of environmental conditions (e.g., mine reclamation) is bagged and sold retail and may be transported for use to other parts of the country.  Research and develop proposals for legislation to be pursued at the state level to economically incentivize the development of biomass-fueled power plants and the utilization of biochar. Because of the high up-front cost of the facility that would produce biochar, any incentives and credits from government would give a strong boost to the project and encourage the use of bioenergy, create jobs, and ultimately enhance he development of local/state economics. The State of California enacted legislation, Senate Bill 771, to create a Biomass Development Program. The goal of this program, and its companion Energy Technology Advancement Program, Public Energy Research Program, and the state’s renewable energy programs, was to “address the critical but solvable technical issues and to provide long-term support, funding or seed money to accelerate the development of sustainable emerging biomass technologies” (California Energy Commission, https://www.energy.ca.gov/biomass/biomass.html). One of the most effective stimulants for California’s biomass-to-power industry was providing price support (1.5 cents/kWh) for biomass power (The Status of Biomass Power Generation in California, G. Morris, Green Power Institute, and NREL, Boulder, CO, July 31, 2003).

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6.0 BUSINESS MODEL FOR 10 MW BIOMASS TO ENERGY FACILITY

6.1 BIOMASS POWER GENERATION

Power generation from biomass provides the world an increasing portion of energy supply. Table 19 lists the electricity generation from biomass in the world and in a few countries where bioenergy grows significantly (IEA, 2015). As shown, China has the most growth rate (22.2%), while US has a slow growth rate. The average growth rate of the world is around 9.6%

Although the compound annual growth rate (CAGR) is slow in the U.S., biomass is still a major renewable energy source, particularly with respect to heat generation. As shown in Figure 21, it is currently a minimal source of electricity in the United States. Figure 21 also shows, however, that the development of biomass power generation is comparable to other renewable energy sources such as solar and geothermal. The data from Biomass Power Association shows that 125 biomass power facilities are operating in 29 states and total capacity is 3,611 MW (for details, see Appendix C). California, Florida, New Hampshire, Maine and Washington are the leading states. New Mexico currently has no biomass power facility.

Table 19 Electricity Generation from Biomass and CAGR

2011 2012 2013 2014 2015 2016 2017 CAGR China 34 36 59 73 87 101 114 22.2% Japan 18 22 24 26 28 30 32 9.6% Brazil 22 28 24 26 28 30 32 8.9% United States 61 67 69 72 75 78 80 4.9% Germany 37 35 37 38 39 41 42 2.1% World 308 352 387 421 457 494 532 9.6%

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Figure 21 Sources of electricity generation in the US in 2017 (IEA, 2018)

Conversion of biomass to energy can proceed along three main pathways: thermochemical, biochemical, and physicochemical. Currently, all three pathways are utilized to various extents.

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6.2 BIOMASS POWER PRODUCTION TECHNOLOGY

Biomass power technologies convert renewable biomass fuels to heat and electricity using processes similar to that used with fossil fuels. After hydropower and wind, more electricity is generated from biomass, including landfill gas and municipal solid waste, than any other renewable energy resource in the United States. A key attribute of biomass is its availability upon demand – the energy is stored within the biomass until it is needed.

There are four primary classes of biopower systems: direct-fired, co-fired, gasification, and modular systems. An overview of biomass power technology is listed in Table 20.

Table 20 Overview of Biomass Power Technology

Primary Primary Energy Technology Biomass Conversion Final Energy Energy Conversion Category Technology Products Form Technology Direct Stove/Furnace Heat Heat exchanger Hot air, hot water combustion Direct Pile burners Heat, Steam Steam turbine Electricity combustion Direct Stoker grate boilers Heat, Steam Steam turbine Electricity combustion Direct Suspension boilers: Air spreader Heat, Steam Steam turbine Electricity combustion stoker or cyclonic Direct Fluidized-bed combustor FB – Heat, Steam Steam turbine Electricity combustion bubbling CFB circulating Direct Co-firing in coal-fired boilers Heat, Steam Steam turbine Electricity combustion (several types) Low Btu Combustion boiler Process heat or Gasification Updraft, counter current fixed bed producer + steam generator heat plus (atmospheric) gas and turbine electricity Low Btu Gasification Spark engine Downdraft, moving bed producer Power, electricity (atmospheric) (combustion) gas medium Btu Gasification Burn gas in boiler CFB dual vessel producer Electricity (atmospheric) w/ Steam Turbine gas Low or Gasification medium Btu Burn gas in boiler Co-firing in CFB gasifiers Electricity (atmospheric) producer Steam Turbine gas Cook stoves and Pyrolysis Kiln or reactor Biochar Heat furnaces Synthetic Diesel engines, Pyrolysis units (for slow, fast or Power, Pyrolysis fuel oil, gas boiler/turbine, flash pyrolysis) electricity, heat and biochar furnace

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6.2.1 DIRECT-FIRED BIOCHAR PRODUCTION

In a biopower plant, the biomass fuel is burned in a boiler to produce high-pressure steam. This steam is introduced into a steam turbine, where it flows over a series of aerodynamic turbine blades, causing the turbine to rotate. The turbine is connected to an electric generator, so as the steam flow causes the turbine to rotate, the electric generator turns and electricity is produced.

Most of today's biopower plants are direct-fired systems that are similar to most fossil-fuel fired power plants. Biomass power boilers are typically in the 20-50 MW range, compared to coal- fired plants in the 100-1500 MW range. The small capacity plants tend to be lower in efficiency because of economic trade-offs; efficiency-enhancing equipment cannot pay for itself in small plants. Although techniques exist to push biomass steam generation efficiency over 40%, actual plant efficiencies are often in the low 20% range.

6.2.2 CO-FIRING BIOCHAR PRODUCTION

Co-firing involves substituting biomass for a portion of coal in an existing power plant furnace. It is the most economic near-term option for introducing new biomass power generation. Because much of the existing power plant equipment can be used without major modifications, co-firing is far less expensive than building a new biopower plant. Compared to the coal it replaces, biomass reduces sulfur dioxide, nitrogen oxides, and other air emissions. After "tuning" the boiler for peak performance, there is little or no loss in efficiency from adding biomass. This allows the energy in biomass to be converted to electricity with the high efficiency (in the 33- 37% range) of a modern coal-fired power plant.

6.2.3 GASIFICATION BIOCHAR PRODUCTION

This process is operated by heating biomass in an environment where the solid biomass breaks down to form a flammable gas. The biogas can be cleaned and filtered to remove problem chemical compounds. The gas can be used in more efficient power generation systems called combined-cycles, which combine gas turbines and steam turbines to produce electricity. The efficiency of these systems can reach 60%.

6.2.4 BIOCHAR PRODUCTION USING MODULAR SYSTEMS

The same technologies mentioned above are applied, but on a smaller scale that is more applicable to villages, farms, and small industry. These systems are now under development and could be most useful in remote areas where biomass is abundant and electricity is scarce. There are many opportunities for these systems in developing countries.

Biomass power technology requires difference specifications of feedstock (type, size, moisture) and the resulting power system also varies in a different range for best and economic performance. Table 21 lists biomass power technology feedstock specifications and capacity range of power system.

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Table 21 Biomass Power Technology Feedstock Specifications and Capacity Range of Power System

Biomass Moisture Capacity Conversion Feedstock Size Requirements Content Range Technology solid wood, pressed logs, wood Limited by stove size Stove/Furnace 10-30% 15 kWt chips and pellets and opening Virtually any kind of wood residues Limited by grate size Pile burners or agricultural residues except wood <65% 4-110 MW and feed opening flour Pile burner fed Sawdust, non-stringy bark, with underfired 0,24-2 in 10-30% 4-110 MW shavings, chips, hog fuel stocker Sawdust, non-stringy bark, Stoker grate shavings, end cuts, chips, chip 0.25-2 in 10-50% 20-50 MW boilers rejects, hog fuel Suspension Wood flour, sander dust, and boilers: Air 0.04-0.06 in <20% 1.5-30 MW processed sawdust, shavings spreader stoker Suspension Sawdust. Non-stringy bark, 0.25-2 in <15% <30 MW boilers: cyclonic shavings, flour, sander dust Fluidized-bed Low alkali content fuels, mostly combustor FB – wood residues or peat no flour or <2 in <60% 20-300 MW bubbling CFB stringy materials circulating Co-firing: Sawdust, non-stringy bark, Up to 1500 pulverized coal <0.25 in <25% shavings, flour, sander dust MW boiler Co-firing: Sawdust, non-stringy bark, <0.5 in 10-50% 40-1150 MW cyclones shavings, flour, sander dust Co-firing: stokers, Sawdust, non-stringy bark, < 3 in 10-50% <50 MW fluidized bed shavings, flour, hog fuel Updraft, counter Chipped wood or hog fuel, rice hulls, 5-90 MWt + current 0.24-4 in <20% dried sewage sludge <12 MW fixed bed Downdraft, Wood chips, pellets, wood scrapes, <2 in <15% 25-100 kW moving bed nut shells Circulating Most wood and chipped agricultural Fluidized Bed residues but no flour or stringy 0.25-2 in 10-50% 5-10 MW dual vessel materials Variety of wood and agricultural Pyrolysis 0.04-0.25 in <10% 2.5-30 MW resources

6.3 BIOMASS PROCESS RECOMMENDATION

A wide range of process and routes are available for power generation from biomass. We consider the following factors in this project: (1) biomass type and supply; (2) co-production of biochar with high quality for soil amendment and other potential applications; and (3) capacity of power generation (10 MW).

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We recommend the pyrolysis process for the thermochemical conversion of wood biomass. Pyrolysis is an emerging technology, wherein biomass is converted to liquids, gases and char — liquid fuels being the main target. Power generation using this technology is essentially the use of pyrolytic gases and oils for the gas turbine integrated into a combined cycle. Figure 22 illustrates biomass pyrolysis plant, burner, power generation plant for biochar production, electricity generation, and a drying unit which uses the low value heat from power generation to remove excess moisture from wood biomass.

Figure 22 Block flow diagram of power generation and biochar co-production from wood biomass

6.3.1 PYROLYSIS PROCESS

Biomass with low moisture (<10%, as a general requirement) is introduced to the ‘pyrolysis plant’ where biomass is thermochemically decomposed into gases (bio-gas) and liquids (bio- oils) and the residual solid is then cooled-down as ‘biochar’. The pyrolysis process is heated by natural gas or the electricity generated by the ‘power plant’ (see below). Theoretically, 1.2 MJ/kg-wood biomass (6.7% of total enthalpy or energy density of wood biomass, 8500 btu/lb) is needed for the pyrolysis. (Enthalpy is “the energy required to raise biomass from room temperature to the reaction temperature and convert the solid biomass into the reaction products of gas, liquids, and char.” Daugaard & Brown, 2003.)

6.3.2 POWER GENERATION

The bio-gas and bio-oils from the pyrolysis are condensed and then fed to a burner. Alternatively, the biogas could be also used to heat the pyrolysis reactor when natural gas is not available or costs too high to connect to the facility. The energy released from the burner is used to produce steam (steam turbine), which drives a stream generator for electricity. The electricity will be sent to the grid and power the whole biomass power generation facility.

6.3.3 WOOD DRYING

Wood biomass harvested in forests is down-sized to about 2 inches, then dried to less 15% moisture by using the residual heating from steam turbine. The dried wood (low moisture wood) is then fed to the pyrolysis process.

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The wood biomass chips (2”) are dried by using the residual heat from the plant (see Figure below). Thus, operating costs and resulting return on investment (ROI) analyses do not include the drying cost; the cost of sizing the wood is included in the feedstock costs. If instead a stand- alone natural gas dryer is installed, the natural gas cost is around $13.66/BDT to dry wood from 50% to 15% moisture (industrial natural gas price in NM: $3.50 per thousand cubic feet and drying efficiency: 60%).

A process flow diagram in Figure 23 illustrates the integration of pyrolysis process with a power generation and wood drying from heat recovery of steam turbine.

The pyrolyzed products included biogas, bio-oils and biochar. Part of the biogas will be used to heat the pyrolysis process when natural gas is not available on-site. The rest of biogas could be burned for power generation. The major energy source of the power generation is from burning the bio-oils. The solid residual is so-called ‘biochar’. The condensed water from the pyrolysis process and from drying wood biomass feedstock could be used as water supply to the facility after cleaning/filtration treatment. It is important to note that in producing biochar, a large portion of energy from the wood is preserved in the biochar, as opposed to using a combustion process, which would use all possible energy from the wood and would not produce biochar as a byproduct.

Table 22 summarizes mass balance and energy calculation of the pyrolysis process for 80,000 BDT wood biomass and its pyrolyzed products. The basic data in column #3 and the energy density of biomass and pyrolyzed products (biogas, bio-oils, biochar) were from this literature (Mohan, D. et. al, 2006). As shown in Table 18, the total energy of the pyrolyzed bio-oils is about 17.0 MW for a biomass supply of 80,000 BDT/year. The pyrolyzed bio-oils from this biomass supply should be enough to generate 10MW electricity.

Figure 23 Process flow diagram of biomass power generation system

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Table 22 Mass Balance and Energy Calculation of 80,000 BDT/year biomass and Pyrolyzed Products

Mass Calculation Energy Calculation

Mass, Mass, Energy Energy, kWh/BDT In/Out Component MW/year lb ton/Year density, btu/lb. btu -biomass Wood 85.0 80,000 8,500 722,500 4,978.9 45.5 Input Water 15.0 14,118 – – – – subtotal 100.0 94,118 – 722,500 4,978.9 45.5 water 10.0 9,412 – – – – bio-gas 44.5 41,882 430 19,135 131.9 1.2 Output bio-oil 20.0 18,824 13,500 270,000 1,860.6 17.0 biochar 25.5 24,000 13,000 331,500 2,284.4 20.9 subtotal 100.0 94,118 – 620,635 4,276.9 39.1

6.4 GHG REDUCTION ESTIMATION

Products generated from biomass pyrolysis offer options for alleviating GHG emissions and for providing realistic options in mitigating coal combustion particulate matter emissions as the generated heat and electricity act to substitute for coal combustion in small-sized industrial boilers. GHG emission levels have essential implications for the biomass-based pyrolysis system and play an integral role in project design and decision making.

Two principle methods are usually used for calculating GHG emissions: Input–Output Method, and Life Cycle Assessment (LCA) (Yang Q., et al. 2016, Thakui; A., et al., 2014). Yang et. al (2016) has combined Input–Output Method and LCA to quantify GHG (including CO2, CH4 and N2O) emissions of a biomass-based pyrolysis system. The Input–Output Method acts to ensure integrity of analysis, while LCA calculates individual system component GHG emissions. Calculations of GHG emissions include the collection and transportation of biomass raw materials and the construction of the plant and biomass pyrolysis processes.

System GHG emissions generally consist partially of direct emissions and partially of indirect emissions. Direct GHG emissions, the GHG released due to combustion of biogas, wood tar (bio-oils), and biochar (if necessary), are assumed as net zero since the GHG released is captured by photosynthesis in the biomass growth process. Greenhouse gas is discharged indirectly as a result of activities such as the construction of buildings, the manufacture of equipment, the generation of electricity etc. The carbon cycle encompassing the entire system is illustrated in Figure 24.

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Figure 24 Carbon Cycle of the whole process of biomass power generation, (Yang, Q. et al. 2016)

Yang et. al (2016) found that if all generated biochar was burned for energy, the GHG emissions intensity of the studied plant (~16.6 MW of electricity) would be 0.0155 kg-CO2-eq/MJ, a lower level among the GHG intensity spectrum of biomass thermal conversion systems. However, if all biochar is returned to the field, the net GHG emissions intensity would be negative, evaluated as -0.0611 kg-CO2-eq/MJ. Production of biochar by the pyrolysis system generates a significant effect on GHG reduction.

Since the biomass power generation process and system capacity is similar to the one for this project, the GHG intensity were used to estimation the GHG emissions for the 10 MW biomass power generation facility where thermal fast pyrolysis process is proposed. Table 23 gives the estimation of GHG emissions on two scenarios: (1) biochar from the pyrolysis is not used for soil amendments; and (2) biochar is used for soil amendments only. It shows that annual GHG emissions are <5,000 MT-CO2 (1 metric ton = 1.102 US ton) for the 10 MW biomass power generation facility. If the biochar produced from the facility is used for soil amendment to improve sandy oil in New Mexico, the total annual GHG emissions are -19,268 MT-CO2, a negative CO2 emission. A net-zero GHG emissions for the 10 MW biomass power generation facility could be reached by applying about 25% of produced biochar to the sandy soil fields.

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Table 23 Annual GHG Emissions of the 10 MW Biomass Power Generation Facility

GHG Capacity GHG Intensity Scenarios Emissions (MWe) (kg-CO2-eq/MJ) (MT-CO2) 10 Biochar is not for soil amendment 0.0155 4,888

10 Biochar is for soil amendment only -0.0611 -19,268

6.5 BENEFIT/IMPACT OF BIOMASS GENERATION

Biomass has many advantages over fossil fuels due to reduction of the amount of carbon emissions. The main benefits of biomass include the following:  The benefit of biomass generation from forest wood is that biomass is a renewable source or energy. With a finite amount of fossil fuels available for energy development, woody biomass’s ability to regenerate over time is a distinct advantage. Despite this, in the arid southwest, slow growth rates place a cap on the rate at which biomass fuels can be utilized sustainably. If a widespread wood industry is to be established within the region, care must be taken to quantify and monitor biomass as a finite resource while anticipating regeneration across a historic timeframe.  Biomass helps climate change by reducing GHG: Biomass helps reduce the amount of GHG that give more impact to global warming and climate change. The biomass emissions level is far smaller compared to fossil fuels. The GHG emissions are negative for 10 MW biomass power generation facility if all biochar is considered to apply to field as soil amendments.  Biomass power generation creates jobs and develops economies in New Mexico: The proposed 10 MW biomass power generation facility will create 36 direct jobs and potentially additional indirect jobs such as in forest workers, transportation drivers, and related local vendors.  Biomass power generation provides power when wind and solar are not effective, during evening hours when there is often peak demand.  Biochar, the byproduct of the biomass power generation, may improve sandy soils nutrition, water retention, and crop yields, which has the potential to benefit local farmers and maybe promote environmental restoration if any in New Mexico.

6.6 ESTIMATED CAPITAL AND OPERATIONAL EXPENDITURES

Main Equipment units: To generate electricity from wood biomass, the following main equipment units are required:  Pyrolizer: Pyrolyzing wood biomass and generate biogas and bio-oils for electricity generation. Biochar is the solid residual in the pyrolysis process.  Condensers: Pyrolyzed biogas and bio-oils are condensed before feeding to burner to generate steam.  Burner/Steam generator.  Power generator.

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 Heat exchanger (small): Recover heat from steam turbine.  Heat exchanger (large): Recover heat from biochar pyrolysis process.  Wood dryer: The recovered heat is used to dry biomass feedstock to 15%wt.  Wood pretreatment subsystem (grinder/screener): The dried wood is down-sized to 2”. It also includes biomass receiving, storing and feeding.  Others (gas cleaning, etc.): To meet EPA and/or local emission permits, the emission from the burner has to be cleaned before venting to a stack.

Table 24 lists the cost estimation of each unit/subsystem. It should be noted that the electricity transformer to the grid is not included.

Table 24 Cost Estimation of Main Equipment Unit/Subsystems for 10 MW Biomass Power Facility

Equipment Capacity/Size Unit Price Qty Cost Pyrolizer 300 ton/day $8,000,000 1 $8,000,000 Condensers $200,000 2 $400,000 Burner/Steam generator 40 ton/h $3,000,000 1 $3,000,000 Power generator 10 MW $2,000,000 1 $2,000,000 Heat exchanger (small) $100,000 1 $100,000 Heat exchanger (large) $200,000 1 $200,000 Wood dryer $500,000 1 $500,000 Wood pretreatment subsystem $3,000,000 1 $3,000,000 Others (gas cleaning, etc.) $1,000,000 $1,000,000 Subtotal $18,200,000

The total cost of main equipment units/subsystem is $18.2 M for the 10 MW biomass power generation facility. From this cost, other capital costs (e.g., construction & installation, piping and instrumentation, electrical, civil structures, roads, analytical/control labs, engineering, contractor fee, and contingency) can be estimated (see Table 25). The total capital cost (CAPEX) is $52.0 M. Each contribution to the CAPEX is shown in Figure 25. The major CAPEX is the main equipment units/subsystems, 35%, while the 2nd largest part of the CAPEX is the construction & equipment installation, 15%. A 10% contingency is added to the CAPEX.

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Table 25 Estimation of Capital Cost of 10 MW Biomass Power Generation Facility

Item Cost Distribution Equipment $18.2 M 35.0% Construction & Installation $7.8 M 15.0% Piping & Instrumentation $6.24 M 12.0% Electrical $2.6 M 5.0% Building, Roads, Labs $4.16 M 8.0% Engineering $5.2 M 10.0% Contractor Fee $2.6 M 5.0% Contingency $5.2 M 10.0% Total $52.0 M 100.0%

Figure 25 Capital Cost Distribution of 10 MW Biomass Power Generation Facility (total=$52M)

The operating cost (OPEX) includes the following elements:  Biomass feedstock: The cost of wood biomass is $60.00/BDT. Annual cost is $4.8M.  Labor and benefits: The facility will need 18 full time (2-shift) operators, manager, lab support technician. Totally, 36 full-time jobs are required. All costs of labor and benefits are $2.7M annually.  Administrative cost: It includes insurance, permits, land lease.  Utilities: It includes natural gas (if any), water, electricity (supplied by its own, but the cost is accounted for the OPEX).

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 Maintenance: The cost of maintaining and/or replacement of equipment and auxiliary units in good conditions. It was estimated to be 3% of CAPEX.

The OPEX is listed in Table 26. As shown, the main contribution is the biomass feedstock, 44.6% (see Figure 26). Thus, the price of biomass feedstock is sensitive to the economics of the power facility. If wood biomass could be supplied from other sources such as solid waste management at $30/BDT, the OPEX could reduce about 20%.

Table 26 Estimation of Operating Cost of 10 MW Biomass Power Generation Facility

Item Cost Distribution Biomass feedstock $4.8 M 44.6% Labor + benefits $2.7 M 25.1% Administrative $0.6 M 5.6% Utilities $1.1 M 10.2% Maintenance $1.56 M 14.5% Total $10.76 M 100.0%

Figure 26 Operating Cost Distribution of 10 MW Biomass Power Generation Facility (total=$10.76M)

6.7 RETURN ON INVESTMENT

Table 27 gives an estimation of total annual cost of the 10 MW biomass power generation facility. By assuming total project loan is $52 M with 6.0% annual percentage rate (APR) for 20 years, the total cost is $15,255,528, as shown in the table detail below.

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Table 27 An Estimation of Total Annual Cost of 10 MW Biomass Power Generation Facility

Loan $52,000,000

APR 6.00%

Number of years 20

Monthly loan payment* $372,544

Yearly loan payment $4,470,528

Yearly OPEX $10,755,000

Total cost $15,225,528

* This payment includes both interest and principal.

6.7.1 RETURN ON INVESTMENT OF POWER GENERATION PLANT FROM BIOMASS

Based on previous estimation, a unit price of electricity, biochar, GHG emission reduction (carbon credit) were used to calculate the ROI, as shown in Table 28.

Table 28 Product Values and Net Income of 10MWe Biomass Power Generation Facility

Product Unit Price Qty. Value Electricity, MWh $60.00 87,600 $5,256,000 Biochar, ton $600.00 24,000 $14,400,000 GHG emission reduction, ton $20 19,230 $384,600 Total Value $20,040,600 Total Cost $15,225,528 Yearly Net Income $4,815,072

The yearly net income is estimated to be $4,815,832 and ROI is 32% when biochar price is $600/ton.

The biochar price is critical to the ROI of the biomass power generation facility. With those assumptions listed in these two tables, biochar break-even price is $400/ton. IBI suggests the biochar price is $500/ton. With this assumption, the yearly net income is $2,415,832 and the ROI is about 16%. Table 29 gives an estimation of annual net incomes and ROIs when biochar price varies from $200/ton to $600/ton.

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Table 29 Estimation of Annual Net Income and ROI at Different Biochar Prices

Biochar price Annual Net Income ($M) ROI (%) ($/ton) 200 (4,784,168) -31% 300 (2,384,168) -16% 400 15,832 0% 450 1,215,832 8% 500 2,415,832 16% 550 3,615,832 24% 600 4,815,832 32%

6.8 ROI SENSITIVITY ANALYSIS

The following factors are considered for economic sensitivity analysis. Wood biomass price and project loan are the cost of the biomass power generation facility. When the biomass price or APR drops, the ROI would be increased. On the other hand, the biochar price, electricity price and carbon credit are the products of the biomass power generation facility. It should be noted that the value of crop yield from biochar application is not yet considered in these sensitivity analyses.  Wood biomass price, $/BDT  Project load APR, %  Biochar price, $/ton  Electricity price (sale price to the grid, $/MWh)

 Carbon Credit, $/ton-CO2

The following figures show the sensitivity of biomass price and project loan to ROI, respectively. As can be seen, the biomass price is much more sensitive (about three times) to ROI than project loan APR. Therefore, controlling the biomass feedstock price is essential to the ROI.

Forest biomass in northern New Mexico region typically needs more transportation, resulting in a difficulty in reducing biomass price. It might be possible the biomass price could be lowered if a long-term (such as 20-yr) contract is signed with local and/regional suppliers. Alternative options to reduce the biomass price are: (1) collecting wood biomass from solid waste management, and (2) using agriculture biomass waste. However, agricultural biomass is different from wood biomass, so the operating conditions of the pyrolysis process would need to be optimized and the quality of biochar would need to be reexamined for soil amendments.

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Figure 27 Sensitivity of Biomass Price to the ROI

Figure 28 Sensitivity of Project Loan to the ROI

The following 3 figures give the sensitivity of the biochar price, electricity price (sale price to the grid) and carbon credit to ROI, respectively. It is shown that the order of sensitivity to the ROI is:

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biochar price > electricity price > carbon credit. Compared to biomass price and project loan, the biochar price and the electricity price are more sensitive to ROI.

Figure 29 Sensitivity of Biochar Price to the ROI

Figure 30 Sensitivity of Electricity Price to the ROI

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Figure 31 Sensitivity of Carbon Credit to the ROI

Among of these analyzed factors, biochar is the most sensitive to the ROI. Therefore, developing value-added products from biochar is also critical to the ROI. As shown in Section 6, the biochar price for soil amendments varies from $200-500/ton, and the average is $300/ton. However, biochar-derived products such as activated carbon (a highly absorbent form of carbon used for purification), industrial sorbents, catalysts, energy storage media have a much higher price (up to $3-5$/lb.) (Liu W-J, et al, 2015), which provides a great potential to reap higher value from the biochar from pyrolysis process and further to benefit the 10 MW biomass power generation facility for long-term operation.

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7.0 SUMMARY AND RECOMMENDATIONS

7.1 MAJOR BARRIERS TO DEVELOPMENT

From the survey, current technology and data analysis in the report, the following major barriers currently exist for the development of biomass power generation in northern and north eastern New Mexico:  Long-term wood biomass supply from the study’s areas is not secure or certain.  Electricity demand is slowing, not growing, due in part to conservation efforts and efficiency improvements.  Utilities lean toward solar and wind production when adding renewable sources to their generation systems. Connecting to a transmission or distribution system requires utility support.  The capacity of the proposed power generation facility (10 MW) is not feasible, economically; producing more electricity would increase ROI while not significantly increasing the expenses of the plant.  However, a biomass power generation facility with a bigger capacity requires more biomass feedstock and even greater demand for electricity, neither of which are consistent with current conditions.  Biochar price is less the break-even price analyzed in the report. More biochar- derived products with higher values could be developed for other environmental and industrial applications.  As soil amendments, biochar needs an acceptable standard for applying to fields.  Crop(s) with more value need to be identified for the application of biochar to sandy soil in New Mexico.  There is a lack of governmental incentives or policies to support biomass energy and related applications (soil amendments).

Even if the major barriers exist for the currently proposed biomass power generation facility, there are options to overcome the barriers (see the recommendations below). Given the benefits of succeeding, we suggest continuing to work on such options in detail for bringing biomass energy to New Mexico in the near future.

7.2 RECOMMENDATIONS AND NEXT STEPS

 Scale up the facility and alternative biomass conversion technology Although it is counter-intuitive, given the noted lack of demand for electricity and lack of certainty about sufficient amounts of feedstock, to suggest a larger facility, the small size of the proposed 10MW facility makes it untenably expensive to construct. From the business model in Section 6, the installation cost is about $5,200/kW, which is much higher than costs for either PV-utility or other biomass power generation facilities with bigger capacity ($1,000-$4,000/kW). To reduce the installation cost and increase the economics of the facility, the 10 MW biomass power generation facility should be scaled up to a bigger facility, for example, to 30 MW, which has been proven to be an economic size for biomass power generation facility. For a quick estimation, the installation cost could be reduced to $2,500-$3,000/kW. We would need to

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further develop a new business model for a 30 MW (or bigger) biomass power generation facility. It is likely that policy changes would be necessary to create demand within New Mexico for this additional amount of electricity, whether through incentives or mandates.

Fast pyrolysis process was proposed for this report. For a larger facility in the north central or north eastern New Mexico areas, it would be necessary to either access much more of the biomass in area forests – again most likely through either incentives or mandates emanating from some level of government – or to add a supply of non-wood biomass (see below) including agricultural waste, and/or other solid wastes. For those non-wood solid biomass, combustion or gasification technology would be a better choice than pyrolysis because of the variation of biomass composition. Of course, the quality of biochar from these technologies will be also different. A further study is needed to gather all information and estimate detail CAPEX and OPEX for such bigger power generation facility from wood and non-wood biomasses.  Supply of biomass feedstocks

From the analysis in Section 1, the total wood biomass available in the studied area is 30,787 BDT/year, less than the required biomass supply (80,000 BDT/year) for the 10 MW power generation facility proposed in this report (250,000 tons biomass will be required for a 30 MW biomass power generation facility). We need further efforts to do the following:  Survey areas outside the 75-mile radius for wood biomass supply;  Survey areas/forests in nearby states (Colorado, Arizona, Utah) for wood biomass supply;  Expand the scale of forest management operations within the region;  Access new markets for forest products such as manufacturing residues, urban wood waste and transmission sourced biomass;  Within the studied areas, survey the availability of other biomass resources, such as agricultural wastes, solid wastes, etc. For example, New Mexico collected about 3.1 million tons of solid waste in 2013, and 47.2% (~1.5 million tons) was biomass-based solids (yard trimmings, wood, paper/paperboard).

These surveys will map all biomass supply in the studied area, cost, and predict a long-term biomass supply for a bigger power generation facility. Non-wood biomass not only provides a great potential for a long-term supply of biomass power generation facility, but brings benefits to the environment (reduction of landfills and resulting contamination).

In addition, we need to identify ways to incentivize increased thinning in forests, resulting in greater feedstock supply. Ways to increase the wood waste diverted from landfills and to be able to utilize the woody biomass resulting from utility rights-of-way also should be explored. Of course, any incentives have to be economically feasible for the ultimate project.  Biochar break-even price

The biochar break-even price was estimated to be around $400/ton without considering the value of crops increased. We need to identify what type of crops are best to use the biochar from wood biomass pyrolysis process for (1) improvement of soil nutrition, (1) retention of soil water, (3) increase of crop yield, (4) reduction of GHG emissions. More research is needed to identify high-value crops and the type of biochar that works best on them in order to increase the value of biochar.

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Another way to increase the value of biochar produced would be to identify higher value crops that could be grown in New Mexico and incentivize their growth.  Biochar-derived products and applications

As discussed in Section 5, biochar contains a high quantity of minerals and functional groups anchored on the surface, which make it suitable for functionalization, modification and doping and can be converted into functional materials in composites, catalysis, energy storage and environmental remediation. Those biochar-derived products would offset the cost of biomass power generation facility and could make biochar profitable.  Governmental incentives and policy to support biomass energy and biochar as soil amendments:

Many national, state, and local policies and incentives encourage woody biomass production and utilization. As show in Appendix D, 13 federal incentives and policies currently exist for biomass production and utilization, while 490 biomass incentives and policies exist at the state and local level.

In New Mexico, there are nine state biomass-related financial incentive programs and regulatory policies; in addition, 13 federal programs are available (Appendix E). The leading two states are Oregon with 19 and California with 18; New Mexico with its nine ranks as #27.

The following state programs and federal loan program are the best fit for the biomass power generation facility proposed in this report if agricultural biomass is considered as one of the biomass feedstocks. For program details, visit http://programs.dsireusa.org/.

Alternative Energy Product Manufacturers Tax Credit

Initiated in 2006 and expanded in 2011, the Alternative Energy Product Manufacturers Tax Credit allows New Mexico manufacturers of alternative energy products and components (including biomass products and components) to receive a tax credit on qualified purchases made after July 1, 2006. The total amount of the credit is not to exceed 5% of the taxpayer’s qualified expenditures and the taxpayer must employ at least one new full-time employee for every $4,500,000 of expenditures up to $30,000,000 and at least one new full-time employee for every $1,000,000 of expenditures over $30,000,000. The Alternative Energy Product Manufacturers Tax Credit would likely apply to biomass to energy equipment and could help reduce the costs of development. Efforts should be made to qualify eligible purchases’ and factor the impact of the tax credit into future biomass implementation.

Biomass Equipment & Materials Compensating Tax Deduction

The Biomass Equipment and Materials Qualifying Tax Deduction is analogous to the renewable energy equipment sales tax exemptions available in other states. Manufacturers can deduct the value of biomass equipment and materials used in the processing of biopower or bio-based products in determining the amount of compensating tax due. New Mexico’s 5.125% compensating tax is an excise tax levied on organizations utilizing tangible property within the state. Compensating tax deductions do not need to be reported to the NM Taxation and Revenue Department, and utilization of this deduction would likely provide limited cost savings to biomass to energy developers within the region.

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Clean Energy Revenue Bond Program

As of April 2005, the New Mexico’s Energy Efficiency and Renewable Energy Bonding act authorizes up to $20,000,000 in bonds to finance energy efficiency and renewable energy measures within state government and school district buildings. While the revenue bond does not support standalone biomass to energy projects, the bond could be used to facilitate combined heat and power projects taking place within state government and school facilities. If combined heat and power initiatives are further pursued, the clean energy revenue bond program could help support the initial cost of development.

U.S. Department of Energy - Loan Guarantee Program

Section 1703 of Title XVII of the Energy Policy Act (EPAct) of 2005 authorizes the Department of Energy (DOE) to issue loan guarantees for projects with high technology risks that "avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases; and employ new or significantly improved technologies as compared to commercial technologies in service in the United States.” The loans encourage the early implementation of new energy products or technologies. If a proposed biomass facility were to utilize new technologies, the DOE loan guarantee program could provide a source of funding for development. Up to $3 billion in loan guarantees are available through an open application process to businesses developing electricity generation or distribution technologies. Efforts should be made to identify current and upcoming biomass to electricity technologies which could qualify for DOE loan guarantees.

Comparing these benefits to biomass incentives and policies in California, New Mexico could increase support for biomass energy development by adding the following to current programs:  Green Power Purchasing: A city or the state pays a little more to purchase electricity from the biomass power generation facility, particularly at peak-demand.  Public Benefits Fund: Collect a "public goods charge” on ratepayer electricity use to create public benefits funds for renewable energy, energy efficiency, research, development & demonstration, and commercialization.  Industry Recruitment/Support: Establish a Sales & Use Tax exclusion for eligible projects on property utilized for the design, manufacture, production of energy and bio-based products from biomass sources (wood and non-wood).  Strong clean and renewable portfolio standards: New Mexico’s current renewable energy standard requires investor-owned utilities meet approximately 20 percent of their sales with renewable energy and requires co-ops to meet a 10 percent standard by 2020. New Mexico also still has a 2009 energy conservation building code (the latest code, from 2018, saves another 25 percent or more) and utility energy efficiency programs in the state are well behind neighboring states. After 2020, New Mexico’s energy course is yet to be set. Stronger clean and renewable energy standards (particularly for bioenergy) that significantly boost renewable energy and cut energy waste in New Mexico over the next decade are the smartest path forward for the state (www.nrdc.org). Efforts should be made to promote biomass as a key component of meeting the NM renewable portfolio standard.  Require utilities to purchase biomass energy: Biomass energy has been developed and has survived in California because of policy direction and incentives from the

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state. California required utilities to purchase first 50 MW (through its Public Utilities Commission) and then 125 MW (via legislation) from biomass facilities in that state.  Provide price supports (such as California’s 1.5 cents/kWh) for biomass power in order to stimulate development.  Create a Biomass Development Program to provide long-term support, funding or seed money to accelerate the development of sustainable emerging biomass technologies.  Renewable Market Adjusting Tariff (ReMAT): Require all investor-owned utilities and publicly-owned utilities in New Mexico to make a standard ReMAT available to their customers to help the utilities meet the New Mexico’s RPS.

As a first step toward policy change, we recommend holding a workshop, as the Arizona Corporation Commission did in 2017, about biomass generation. We recommend as a further step forming a statewide task force that focuses on biomass economic development opportunities and makes policy recommendations to the legislature. We would suggest including entities such as New Mexico Economic Development Department, regional Councils of Governments, State Forestry, the Rocky Mountain Youth Corps, Taos and Picuris Pueblos, and the U.S. Department of Agriculture.  Think beyond electricity production because demand is slowing and utilities are leaning toward solar and wind.

Perhaps creation of energy districts through which combined heat and power are provided could achieve the benefits of increased forest thinning and job creation. Options to serve a campus such as Northern New Mexico’s El Rito Campus or the courthouse, school and other facilities in Mora could be explored. Several smaller options may achieve the desired goals while being more feasible to develop and more easily supported by utilities and public entities alike. USDA rural development programs could provide 0% interest loans for biomass cooperatives and payments for biofuels producers.

As climate change continues to affect our environment, the risks of catastrophic fires will only increase.

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Figure 32 Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia (National Research Council 2011)

This short-term project is an important first step toward finding ways to mitigate such fires in north central and north eastern New Mexico. The project has identified several avenues to pursue in developing a project or projects to address fire risk and create jobs.

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8.0 REFERENCES

Adelante Consulting 2018, “Sandoval County Biomass Utilization Feasibility Study”, December, 2018.

Agegnehu G. et al. 2017. “The role of biochar and biochar-compost in improving soil quality and crop performance: A review”, 2017, Applied Soil Ecology 119, 156.

Awad Y. M. et al. 2011. “Effects of polyacrylamide, biopolymer, and biochar on decomposition of soil organic matter and plant residues as determined by 14C and enzyme activities, European Journal of Biology”, 2012, 48, 1.

Bolinger M., et al. 2018. Utility-Scale Solar – Empirical Trends in Project Technology, Cost, Performance, and PPA Pricing in the United States, Ed. 2018.

Bradley J. and Sammons J. 2012. “Sipapu Ski and Summer Resort Master Development Plan,” April 2012.

Buckman Road Recycling 2018, “Taos Municipal Landfill and NC Regional Landfill, phone correspondence with author”, November 20, 2018.

California Energy Commission, https://www.energy.ca.gov/biomass/biomass.html

Campbell R.M. et al. 2018. “Financial viability of biofuel and biochar production from forest biomass in the face of market price volatility and uncertainty”, 2018, Applied Energy 230, 330.

Defra Landfill Restrictions Team 2011, “Wood Waste: A Short Review of Research,” Department for Environment, Food and Rural Affairs”, July 2011.

ECMD 2018. “New Mexico Renewable Energy Storage Working Group Meeting Notes”, April 2018.

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9.0 APPENDIX

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APPENDIX A - ABBREVIATIONS AND ACRONYMS

APR Annual percentage rate APS Arizona Public Service Company BDT Bone Dry Ton BLM Bureau of Land Management BPU Los Alamos County's Board of Public Utilities BTU British Thermal Unit CAGR Compound annual growth rate CAPEX Capital expense CFB Circulating fluidized bed CHP Combined heat and power DOE Department of Energy EIS Environmental Impact Statement EMNRD The Energy, Minerals and Natural Resources Department EPA Environmental Protection Agency FERC Federal Energy Regulatory Commission GHG Greenhouse gases IBI International Biochar Initiative IOU New Mexico’s Investor Owned Utilities IRP Integrated Resource Plan kWh Kilowatt hour LAC Los Alamos County LANL Los Alamos National Laboratory LCA Life Cycle Assessment MBF Million Board Feet MT Metric tons MW Megawatt MWe Megawatt electric NMED New Mexico Environment Department NMPRC New Mexico Public Regulation Commission OPEX operating cost ORNL Oak Ridge National Laboratory PPA Power purchase agreements PUC Public utilities commission PUD Los Alamos County Public Utilities Department RBF Rio Bravo Fresno RCT reasonable cost threshold REC Renewable energy certificate ReMAT Renewable Market Adjusting Tariff RFP Request for proposal ROI Return on investment RPS New Mexico’s Renewable Portfolio Standard SEM scanning electron microscope SFCC Santa Fe Community College SJGS San Juan Generating Station SWCD Soil and water conservation district TEPCO Tucson Electric Power Co. TWh Tera watt hour UNM University of New Mexico USDA United States Department of Agriculture USFS United States Forest Service WAPA Western Area Power Administration

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APPENDIX B - NEW MEXICO’S RENEWABLE REQUIREMENTS

B.1 NEW MEXICO’S RENEWABLE PORTFOLIO STANDARD (RPS)

The RPS was initially passed as SB 43 in 2004 and signed into law by Governor Bill Richardson. The current RPS requires IOUs to generate 15 percent of their total retail sales from renewable energy for years 2015 through 2019, and 20 percent by 2020. New Mexico’s rural electric cooperatives are required to generate 5 percent of retail sales from renewable sources starting in 2015, increasing by 1 percent each year, to 10 percent of total retail sales. Municipal electric utilities are not subject to New Mexico’s Renewable Portfolio Standard.

New Mexico law defines renewable energy as electric energy generated by low- or zero- emissions generation technology with substantial long-term production potential. This includes the following sources:  Solar  Wind  Geothermal  Hydropower facilities (brought in service after July 1, 2007)  Fuel cells that are not fossil fueled  Biomass resources, such as agriculture or animal waste, small diameter timber, salt cedar, and other phreatophyte or woody vegetation removed from river basins or watersheds in New Mexico, landfill gas, and anaerobically digested waste biomass.  Electric distribution cooperatives may count energy produced by geothermal heat pumps

Renewable energy does not include electric energy generated from fossil fuels or nuclear facilities.

B.2 CARVE-OUTS

In August 2007, the New Mexico Public Regulation Commission (NMPRC) issued an order and rules requiring IOUs to meet their renewable targets through a "fully diversified renewable energy portfolio.” The following carve-outs were established:  30 percent wind energy  20 percent solar  5 percent “other” which can include resources like biomass and geothermal  1.5 percent distributed generation renewable energy technologies (2011 – 2014), which rose to three percent in 2015. (Distributed generation renewable energy resources used to meet other RPS requirements cannot also be counted for this distributed requirement.)

Utilities are excused from the diversification targets should costs of achieving them raise the cost of electricity by more than 2 percent or if the targets cannot be accomplished without impairing system reliability.

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B.3 COST MITIGATION MEASURES

B.3.1 Investor-Owned Utilities

This RPS compliance requirement is impacted by several factors. First, provisions in current law limit the potential cost of complying with the RPS. In any given year, if the cost to procure renewable energy is greater than the reasonable cost threshold (RCT), a public utility may reduce its procurement down to the RCT percentage level (currently at 3 percent).

A large customer cap is also in place which limits the amount of renewable energy that is developed or purchased. For non-governmental customers who consume more than 10 million kilowatt-hours (kWh) per year, renewable energy procurement is limited so as not to exceed either 2 percent of the customer’s annual electric charges or $99,000, whichever is less. After January 1, 2012, the $99,000 limit is inflation-adjusted by the amount of the cumulative change in the Consumer Price Index, Urban between January 1, 2011, and January 1 of the procurement plan year. B.3.2 Electric Cooperatives

The cost threshold for New Mexico’s rural electric cooperatives is one percent of its gross receipts from business transacted in New Mexico for the preceding calendar year, and cooperatives are not required to incur RPS compliance costs above this level.

In addition, SB 418 established a “renewable energy and conservation fee” to support programs or projects to promote the use of renewable energy, load management, or energy efficiency. Distribution cooperatives may collect a renewable energy and conservation customer fee of no more than one percent of a customer’s bill, not to exceed $75,000 annually from any single customer. B.3.3 Compliance

Utilities document compliance with the RPS using renewable energy certificates (RECs) registered with the Western Renewable Energy Generation System. A REC represents all the environmental attributes from one kWh of electricity generated from a renewable energy resource. RECs that are not used for compliance, sold, or otherwise transferred may be carried forward for up to four years.

IOU’s must submit a renewable procurement plan to the NMPRC on an annual basis for the upcoming two years. This procurement plan describes the procurement and generation of renewable energy for the upcoming plan year and suggests procurement plan for the following year. The NMPRC order approving the procurement plan only reflects the procurement for the upcoming plan year, however. IOUs are also required to submit an annual renewable energy portfolio report on the previous calendar year, describing actual retail sales and subsequent reductions due to RCT, large customers, or exempt customers as well as actual procurement. Electric cooperatives must submit an annual report to the NMPRC on their purchases and generation of renewable energy during the preceding calendar year.

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APPENDIX C – US BIOMASS POWER FACILITIES

Index Name Owner City State MW AL-1 Westervelt Westervelt Renewable Energy Moundville Alabama 22.0 AR-1 Warren Potlach Warren Arkansas 8.7 AZ-1 Snowflake White Mountain Novo BioPower Snowflake Arizona 24.0 CA-1 Weed Cogen Roseburg Forest Products Weed California 10.0 CA-10 Honey Lake Power Greenleaf Wendel California 30.0 CA-11 Sierra Pacific Quincy Sierra Pacific Industries Inc. Quincy California 27.0 Facility CA-12 Wadham Energy Enpower Corp Williams California 26.5 CA-13 DTE Woodland Biomass DTE Energy Woodland California 25.0 Power CA-14 Sierra Pacific Lincoln Sierra Pacific Industries Inc. Lincoln California 18.0 Facility CA-15 Rio Bravo Rocklin IHI/No. American Power Group Rocklin California 25.0 CA-16 DTE Stockton, LLC DTE Energy Stockton California 45.0 CA-17 Tracy Biomass Plant Greenleaf Tracy California 21.5 CA-18 IHI Chinese Station Covanta/IHI Power Jamestown California 20.0 CA-19 Sierra Pacific Sonora Sierra Pacific Industries Sonora California 3.5 Facility CA-2 Burney Forest Power Burney Forest Power Burney California 31.0 CA-20 Global Ampersand Akeida Capital Chowchilla California 12.5 CA-21 Global Ampersand Akeida Capital El Nido California 12.5 CA-22 Rio Bravo Fresno IHI/No. American Power Group Fresno California 25.0 CA-23 Covanta Delano Covanta Energy Delano California 50.0 CA-24 DTE Mt. Poso DTE Energy Bakersfield California 44.0 Cogeneration CA-25 Desert View Power Greenleaf Mecca California 47.0 CA-3 Sierra Pacific Burney Sierra Pacific Industries Inc. Burney California 20.0 Facility CA-4 DG Fairhaven Power EWP Renewable Corp. Eureka California 18.0 CA-5 Eel River Power Eel River Power Scotia California 28.0 CA-6 Collins Pine Company Collins Company Chester California 12.0 CA-7 Wheelabrator Wheelabrator Energy Co. Inc. Anderson California 58.0 CA-8 Sierra Pacific Anderson Sierra Pacific Industries Inc. Anderson California 5.0 Facility CA-9 Shasta Renewable Shasta Renewable Resources Anderson California 10.0 Resources CO-1 Eagle Valley Clean Energy Evergreen Clean Energy Gypsum Colorado 11.5 CT-1 ReEnergy Sterling ReEnergy Holdings Sterling Connecticut 30.0 CT-2 Plainfield Renewable Greenleaf Power Plainfield Connecticut 37.5 Energy FL-1 International Paper International Paper Co. Pensacola Florida 83.0 Pensacola FL-10 US Sugar US Sugar Bryant Florida 20

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Index Name Owner City State MW FL-11 Okeelanta 1 Florida Crystals South Bay Florida 70 FL-12 Okeelanta 2 Florida Crystals South Bay Florida 50 FL-2 Panama City Stone Container Corp. Panama City Florida 20 FL-3 Telogia Power LLC Green Hunter Energy Telogia Florida 14 FL-4 Jefferson Power Jefferson Power LLC Monticello Florida 8.5 FL-5 Buckeye Florida Biomass Buckeye Florida Ltd. Partners Perry Florida 25 FL-6 Fernandina Mill Rayonier Fernandina Florida 22.5 Beach FL-7 Gainesville Renewable Gainesville Regional Utilities Gainesville Florida 102.5 Energy Corp.

FL-8 Brooksville Power Plant CEMEX Brooksville Florida 75 FL-9 Ridge Generating Station Wheelabrator Auburndale Florida 39.6 GA-1 Multitrade Rabun Gap Multititrade Rabun Gap Rabun Gap Georgia 17 GA-2 Greenway Renewable Rollcast Energy LaGrange Georgia 50 Power GA-3 Piedmont Power Atlantic Power Barnesville Georgia 55 GA-4 Macon Mill Graphic Packaging Macon Georgia 40 HI-1 Olokele Olokele Sugar Co. Maui Hawaii 29 HI-2 Green Energy Team Green Energy Team LLC Koloa Hawaii 7.5 IA-1 BFC Gas and Electric BFC Gas and Electric Cedar Rapids Iowa 6 Companies LLC ID-1 Plummer Cogen Stimson Lumber Company Plummer Idaho 5 ID-2 New Meadows Tamarack Energy New Meadows Idaho 4.5 IL-1 Eastern Illinois University Eastern Illinois University Charleston Illinois 2.1 LA-1 Baton Rouge Agrilectric Power Partners Ltd Lake Charles Louisiana 13.5 LA-2 Jeanerette Jeanerette Sugar Jeanerette Louisiana 2 MA-1 Pinetree Power Fitchburg GDF Suez Westminster Massachusetts 18 Inc. ME-1 ReEnergy Fort Fairfield ReEnergy Holdings Fort Fairfield Maine 37 ME-2 ReEnergy Ashland ReEnergy Holdings Ashland Maine 39 ME-3 Stored Solar West Enfield Stored Solar J&WE LLC West Enfield Maine 24.5 ME-4 ReEnergy Stratton ReEnergy Holdings Stratton Maine 48 ME-5 Stored Solar Jonesboro Stored Solar J&WE LLC Jonesboro Maine 24.5 ME-6 ReEnergy Livermore Falls ReEnergy Holdings Livermore Maine 39 Falls MI-1 L’Anse Warden Biomass L’Anse Warden Electric Co. LLC L’Anse Michigan 19.8 Plant MI-2 Hillman Power Co. Fortistar Hillman Michigan 17 MI-3 Viking Energy of Lincoln GDF Suez Lincoln Michigan 18 MI-4 Grayling Generating CMS Enterprises/Decker Grayling Michigan 36.2 Station Energy/Fortistar

MI-5 Cadillac Renewable Atlantic Power Cadillac Michigan 39.6 Energy MI-6 Viking Energy of McBain GDF Suez McBain Michigan 17 MI-7 Genesee Power Station CMS Enterprises/Fortistar Flint Michigan 35

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Index Name Owner City State MW MN-1 Potlach Corp Potlach Corp Bemidji Minnesota 10 MN-2 Hibbing Hibbing Public Utilities Hibbing Minnesota 13.5 Commission MN-3 City of Virginia City of Virginia Virginia Minnesota 8 MN-4 Rapids Energy Center Minnesota Power Inc. Grand Rapids Minnesota 26.5 MN-5 Duluth M.L. Hibbard Department of Duluth Minnesota 7 Public Utilities

MN-6 Bayport Alan King Bayport Minnesota 6 MN-7 Fibrominn Biomass Power Fibrominn LLC Benson Minnesota 55 Plant

MN-8 St. Paul St. Paul District Heating St. Paul Minnesota 25 MO-1 University of Missouri University of Missouri Columbia Missouri 10 MT-1 Stoltze Land & Lumber Stoltze Land & Lumber Columbia Falls Montana 2.5 NC-1 Craven County Wood Decker Energy New Bern North Carolina 48 Beach International/CMS Enterprises

NC-2 Coastal Carolina Clean ReEnergy Holdings Kenansville North Carolina 30 Power NH-1 Berlin Burgess BioPower Berlin New Hampshire 75 NH-2 Pinetree Power GDF Suez Bethlehem New Hampshire 20 NH-3 DG Whitefield EWP Renewable Corp. Whitefield New Hampshire 15 NH-4 Pinetree Power Tamworth GDF Tamworth New Hampshire 20 Suez NH-5 Bridgewater Power LP Bridgewater Power Co. LP Bridgewater New Hampshire 15 NH-6 Indeck Alexandria Energy Indeck Energy-Alexandria, LLC Alexandria New Hampshire 15 Ctr. NH-7 Concord Steam Concord Steam Concord New Hampshire 5 NH-8 Schiller Station PSNH Portsmouth New Hampshire 50 NH-9 Springfield Power EWP Renewable Corp. Springfield New Hampshire 16 NY-1 ReEnergy Black River ReEnergy Holdings Black River New York 60 NY-2 ReEnergy Lyonsdale ReEnergy Holdings Lyonsdale New York 22 NY-3 Niagara Generation LLC U.S. Renewables Group Niagara Falls New York 26 OR-1 Evergreen BioPower LLC Evergreen BioPower Co. Lyons Oregon 10 OR-2 Warm Springs Tribe Warm Springs Tribe Madras Oregon 5 OR-3 Seneca Sustainable Seneca Sustainable Energy Eugene Oregon 18.8 Energy OR-4 Roseburg Forest Products Roseburg Forest Products Dillard Oregon 40 OR-5 Douglas County Lumber Douglas County Lumber Co. Winchester Oregon 6.5 Co. OR-6 Rough & Ready Rough & Ready Lumber Co. Cave Junction Oregon 1.5 OR-7 Biomass One Biomass One LP White City Oregon 30 PA-1 Koppers Susquehanna Koppers Inc., Susquehanna Montgomery Pennsylvania 7.5 Plant PA-2 Spring Grove P.H. Glatfelder Spring Grove Pennsylvania 24 SC-1 Savannah River Ameresco/DOE Aiken South Carolina 20 SC-2 Pinelands Biomass EDF Renewable Energy Dorchester South Carolina 17.8

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Index Name Owner City State MW SC-3 Pinelands Biomass EDF Renewable Energy Allendale South Carolina 17.8 TX-1 Snider Industries Snider Industries Marshall Texas 3 TX-2 Nacogdoches Power Southern Power Nacogdoches Texas 100 TX-3 Aspen Power Akeida Capital Management Lufkin Texas 50 VA-1 Pittsylvania Power Station Dominion Virginia Energy Hurt Virginia 83.1 VA-2 Altavista Power Station Dominion Virginia Energy Altavista Virginia 50 VA-3 Hopewell Power Station Dominion Virginia Energy Hopewell Virginia 51 VA-4 South Boston Energy Northern Va. Elect Co-op South Boston Virginia 50 Project VA-5 Southampton Power Dominion Virginia Energy Franklin Virginia 51 Station VA-6 Virginia City Hybrid Dominion Virginia Energy Virginia City Virginia 117 Energy Ctr. VT-1 Joseph C McNeil City of Burlington Electric Burlington Vermont 50 Generating Station

VT-2 Ryegate Power Station GDF Suez East Ryegate Vermont 20 WA-1 Port Angeles Mill Nippon Paper Industries Port Angeles Washington 20 WA-2 Hampton Affiliates Hampton Affiliates Darrington Washington 7 WA-3 Kettle Falls Avista Kettle Falls Washington 47 WA-4 Sierra Pacific Burlington Sierra Pacific Industries Inc. Burlington Washington 20 WA-5 Vaagen Brother Lumber Vaagen Brother Lumber Colville Washington 5 WA-6 Sierra Pacific Aberdeen Sierra Pacific Industries Inc. Aberdeen Washington 12 WA-7 Simpson Tacoma Simpson Tacoma Kraft Tacoma Washington 50 WI-1 Bay Front Power Plant Xcel Energy Ashland Wisconsin 73 WI-2 DTE Stoneman DTE Energy Cassville Wisconsin 40

Total 3611.0 (*source data: http://www.usabiomass.org/)

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APPENDIX D – BIOMASS INCENTIVES AND POLICIES

Overview of Biomass Incentives and Policies in Federal, State/Territory

# of Policies & State/ Territory Incentives Alabama 7 Alaska 6 Arizona 16 Arkansas 4 California 18 Colorado 15 Connecticut 14 Delaware 5 District of Columbia 5 Federal 13 Federated States of Micronesia 1 Florida 6 Georgia 4 Guam 2 Hawaii 9 Idaho 6 Illinois 8 Indiana 8 Iowa 6 Kansas 5 Kentucky 7 Louisiana 4 Maine 9 Maryland 18 Massachusetts 15 Michigan 16 Minnesota 13 Mississippi 4 Missouri 9 Montana 9 N. Mariana Islands 2 Nebraska 8 Nevada 11 New Hampshire 8 New Jersey 11 New Mexico 9

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# of Policies & State/ Territory Incentives New York 17 North Carolina 9 North Dakota 3 Ohio 10 Oklahoma 5 Oregon 19 Pennsylvania 17 Puerto Rico 6 Rhode Island 10 South Carolina 10 South Dakota 5 Tennessee 2 Texas 16 Utah 11 Vermont 14 Virgin Islands 1 Virginia 12 Washington 9 West Virginia 2 Wisconsin 12 Wyoming 2 Total 503 Source: programs.dsireusa.org

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APPENDIX E BIOMASS INCENTIVES AND POLICIES APPLICABLE TO NEW MEXICO

Incentive Program State/ Incentive Incentive Last Name Territory Category Type Created Updated Interconnection Regulatory NM Interconnection 8/15/2008 8/24/2017 Standards Policy Mandatory Regulatory Mandatory Utility Green NM Utility Green 1/16/2003 8/17/2017 Policy Power Option Power Option Regulatory NM Net Metering 1/1/2000 5/31/2017 Net Metering Policy Alternative Energy Industry Financial Product Manufacturers NM Recruitment/Su 5/25/2007 5/25/2017 Incentive Tax Credit pport Financial Clean Energy Revenue NM Bond Program 4/29/2005 5/25/2017 Bond Program Incentive Agricultural Biomass Financial Personal Tax Income Tax Credit NM 12/14/2010 3/22/2017 Incentive Credit (Personal) Agricultural Biomass Financial Corporate Tax Income Tax Credit NM 12/14/2010 3/22/2017 Incentive Credit (Corporate) Biomass Equipment & Materials Financial Sales Tax NM 4/29/2005 11/8/2016 Compensating Tax Incentive Incentive Deduction Renewables Regulatory Renewable Portfolio NM Portfolio 12/19/2002 11/2/2016 Policy Standard Standard Qualified Energy Financial Conservation Bonds US Loan Program 10/23/2008 8/22/2018 Incentive (QECBs) USDA - Rural Energy for America Program Financial US Loan Program 4/9/2003 8/21/2018 (REAP) Loan Incentive Guarantees USDA - Rural Energy Financial for America Program US Grant Program 4/9/2003 8/21/2018 Incentive (REAP) Grants Modified Accelerated Financial Corporate Cost-Recovery System US 3/15/2002 8/21/2018 Incentive Depreciation (MACRS) Green Power Regulatory Green Power Purchasing Goal for US 2/19/2004 8/21/2018 Policy Purchasing Federal Government Financial Clean Renewable US Loan Program 5/2/2006 8/15/2018 Energy Bonds (CREBs) Incentive Renewable Electricity Financial Corporate Tax Production Tax Credit US 3/11/2002 2/28/2018 Incentive Credit (PTC) Tribal Energy Program Financial US Grant Program 5/1/2003 3/3/2017 Grant Incentive

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Incentive Program State/ Incentive Incentive Last Name Territory Category Type Created Updated Financial USDA - Biorefinery US Loan Program 10/4/2012 3/3/2017 Assistance Program Incentive U.S. Department of Financial Energy - Loan US Loan Program 9/12/2008 8/18/2016 Incentive Guarantee Program Interconnection Regulatory Standards for Small US Interconnection 10/30/2007 7/27/2016 Policy Generators Financial USDA - High Energy US Grant Program 9/27/2010 6/9/2016 Cost Grant Program Incentive USDA - Repowering Financial Assistance Biorefinery US Grant Program 10/8/2012 3/18/2016 Incentive Program Source: programs.dsireusa.org

Of course, any business could also avail itself of any standard business incentives for which it qualified, such as investment tax credits, local or state incentives for job creation, or depreciation of assets for tax purposes.

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