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RUSSELL BIOMASS POWER PLANT
Pre-Construction Development ActivitiesFinal Report for Loan No. GP-05-13, as Amended
Prepared by:Russell Biomass LLC
May 2006
Funded by the Predevelopment Financing Initiative ofThe Renewable Energy Trust Clean Energy Program
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________________________________________________________________________________________________Russell Biomass Power PlantPre-Construction Development ActivitiesFinal ReportPage 2
NOTICE AND ACKNOWLEDGEMENTS
This report was prepared by Russell Biomass LLC in the course of performing work
sponsored by the Renewable Energy Trust (RET), as administered by the Massachusetts
Technology Collaborative (MTC), pursuant to Loan Number GP-05-13, as amended.
The opinions expressed in this report do not necessarily reflect those of MTC or the
Commonwealth of Massachusetts, and reference to any specific product, service, process,
or method does not constitute an implied or expressed recommendation or endorsement
of it.
Further, MTC, the Commonwealth of Massachusetts, and the contractor make no
warranties or representations, expressed or implied, as to the fitness for particular purpose
or merchantability of any product, apparatus, or service, or the usefulness, completeness,
or accuracy of any processes, methods or other information contained, described,
disclosed, or referred to in this report. MTC, the Commonwealth of Massachusetts, and
the contractor make no representation that the use of any product, apparatus, process,
method, or other information will not infringe privately owned rights and will assume no
liability for any loss, injury, or damage directly or indirectly resulting from, or occurring
in connection with, the use of information contained, described, disclosed, or referred toin this report.,
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ABSTRACT
This report describes pre-construction project development activities for a 50 MW
biomass-fired electric generation plant in Russell, Massachusetts. These activities were
funded in part by a loan to the developer, Russell Biomass LLC, from the Massachusetts
Technology Collaborative through the Predevelopment Financing Initiative of the
Renewable Energy Trust Clean Energy Program. The activities described in this report
include public outreach, preliminary plant and site engineering, initiation of the
permitting and transmission line interconnection process, obtaining expressions of
interest from biomass fuel suppliers and prospective power purchasers, and preparation of
a development funding solicitation memorandum. Additional activities funded by an
amendment to the original loan focused on securing power purchase commitments and
key permits and approvals. All activities were completed successfully, and the project is
continuing the power purchase and permitting work.
Key words: biomass, biomass power plant, biomass boiler, biomass fuel supply, public
outreach, permitting, transmission line interconnection, power purchase agreement,
development financing.
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TABLE OF CONTENTS
SUMMARY 5
1.
PROJECT DESCRIPTION AND DEVELOPMENT PLAN 10
2. CARRY OUT PUBLIC OUTREACH PROGRAM 153. PRELIMINARY PLANT ENGINEERING 204. SITE ENGINEERING 235. INITIATE PERMIT APPLICATIONS 256. TRANSMISSION LINE DESIGN 307. FUEL SUPPLY COMMITMENTS 338. POWER SALE OPTIONS 359. PROJECT FINANCIAL VIABILITY AND
DEVELOPMENT FINANCING36
10. INTERCONNECTION STUDY 37
11. DRAFT ENVIRONMENTAL IMPACT REPORT 39
12. AIR DISPERSION MODELING 41
13. NEGOTIATE POWER PURCHASE AGREEMENTS 42
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SUMMARY
This report describes pre-construction project development activities of Russell Biomass
LLC in the development of a 50 MW biomass-fired electric generation plant on 20 acres
of a 70-acre site that is owned by the developers and is located in the town of Russell in
Western Massachusetts. The first stage of development, a feasibility study that helped
assure that no technical or permitting fatal flaws existed, was started in May 2004 and
completed successfully in January 2005.
In the fall of 2004 Russell Biomass applied for a loan to provide partial financing for the
second stage of development, February-June 2005, to finalize plant design and cost
parameters, secure a Special Permit from the Town of Russell, obtain expressions of
interest for biomass fuel supply and power purchase, and obtain financing for project
development. MTC provided a loan of $150,000 to support these activities, and the
developers were required to provide a cash match of at least 25%.
In August 2005 the project applied for additional funding to support third-stage
development work (securing power purchase commitments and remaining permits and
approvals) during the November 2005 January 2006 period. In December MTCapproved an additional loan of $100,000.
The project was successful in meeting the objectives and appears to be technically and
economically viable. The MTC loan played a key role in moving the project forward.
Work is well underway on the third stage of development. The project is on track to
complete pre-construction development activities in mid-2007, and following a 2-year
construction period, to start commercial operation by mid-2009.
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The following tasks were funded by the initial loan:
Task 1: Carry out public outreach program
Task 2: Preliminary plant engineering
Task 3: Site engineering
Task 4: Initiate permit applications
Task 5: Transmission line design
Task 6: Fuel supply commitments
Task 7: Power sale options
Task 8: Project financial viability and development financing
Task 9: Project reporting
The additional loan was used to fund the following work:
Task 10: Interconnection study
Task 11: Draft Environmental Impact Report
Task 12: Air dispersion modeling
Task 13: Negotiate power purchase agreements
This report discusses all of the above tasks. Russell Biomass prepared a similar report on
the tasks funded by the initial loan in September 2005. The discussion of Tasks 1-9 in
the current report is essentially unchanged from the earlier report. A brief summary of
the tasks follows.
Task 1 Russell Biomass initiated a public outreach program in order to ensure broad
public support and maximize the likelihood that the Town of Russell would grant a
Special Permit for the project. The program involved conducting a survey of all Russell
voters to determine what residents thought of the project and developing communications
to respond to resident concerns about the project and highlight project benefits.
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Task 2 The purpose of the preliminary plant engineering task was to expand on the
earlier conceptual design of the power plant, principally the boiler island component,
and finalize the major plant design parameters, e.g., energy/material/water balances and
air emissions and water effluent, and capital and operating costs. This information would
enable Russell Biomass to launch the permitting process and refine the financial
projections. The developers commissioned two boiler manufacturers to develop design
and cost information for a bubbling fluidized bed boiler and an advanced stoker-fired
boiler.
Task 3 The site engineering task involved the completion of a site survey and
preparation of a site plan and other plans required for the Special Permit application. The
developers also undertook an evaluation of alternative wood fuel delivery truck access
routes to the site.
Task 4 The permitting task was focused on obtaining a Special Permit for the project
from the Town of Russell and on documenting the permitting issues associated with the
use of Clean Recycled Wood (CRW) from C&D sources. Russell Biomass prepared and
submitted the Special Permit application and participated in three public hearings held by
the Zoning Board of Appeals and the Planning Board. The boards approved the SpecialPermit at the final hearing, although the developers dropped plans to use CRW because
of strong objections to this fuel from project opponents.
Task 5 The transmission line task involved documenting the regulatory approvals
required for the new 5.2-mile transmission line that will connect the project to the
Northeast Utilities transmission network. The developers prepared to initiate the ISO
New England interconnection process and documented two other approvals that might be
required: the Massachusetts Energy Facilities Siting Board and the Department of
Telecommunications and Energy.
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Task 6 -- The fuel supply task involved obtaining letters of interest from potential wood
fuel suppliers in the region. 35 suppliers responded with a total tonnage approximating 2
x the plants requirements.
Task 7 -- The objective of the power sale options task was to obtain expressions of
interest from prospective power purchasers. The response was positive the capacity of
the project was over-subscribed.
Task 8 Key activities in the financial task were completion of a financial model for the
project and preparation of a development funding solicitation memorandum, to help raise
the funds needed to complete development prior to construction.
Task 9 The objective was to fulfill the MTC project reporting requirements.
Task 10 The purpose of the Interconnection Study task was to undertake the first step of
the ISO New England transmission interconnection process, the Feasibility Study. The
study consisted of a preliminary evaluation of electrical impacts (thermal overload,
voltage limit violations, and short circuit) of the project on the existing transmission
system and a preliminary assessment of the cost of the new transmission line andsubstation.
Task 11 This task involved important early work related to the preparation of the Draft
Environmental Impact Report. The effort focused on selected issues noted in the
Secretary of Environmental Affairs Certificate on the Expanded Environmental
Notification Form.
Task 12 The objective of this task was to prepare a refined air dispersion modeling
report for inclusion in the Major Comprehensive Plan Approval application for the
project.
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Task 13 This task involved developing terms and conditions for the power purchase
agreement and continuing to secure commitments from potential power purchasers.
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Section 1
PROJ ECT DESCRIPTION AND DEVELOPMENT PLAN
PROJ ECT DESCRIPTION
Russell Biomass LLC is developing a base load, 50 MW net biomass-fired (wood fueled)
electric generation plant on 20 acres of a 70-acre site. The site is owned by the developers
and is located in the town of Russell in Western Massachusetts.
About 500,000 tons of biomass fuel, which is comprised of whole tree chips from land
clearing and tree trimming and ground stumps and pallets, will be consumed annually.
According to independent reports there is nine times (9x) the fuel required within a 100-
mile radius of the project, the wood supply area. Prior to commencement of construction
wood supply contracts for all of the wood supply will be in place.
The Russell site, the former site of the Westfield River Paper Company, is a superior one.
The water supply will come from the Westfield River next to the site, and a utility
easement links the site to a 115 kV transmission line approximately five miles away.
Significant site preparation, land clearing, sand and gravel removal and leveling work hasalready been done; 20 acres of level ground will be available for the power plant and
related facilities. The Town of Russell is supportive of the project, which will increase
the towns tax revenues by 20% and provide an average of 50 construction jobs during
the 2-year construction period and 22 permanent plant operating jobs.
The project location maximizes the biomass fuel supply and price benefits. Located in
western Massachusetts, Russell is close to the Springfield metropolitan area and to
Hartford and other metropolitan areas in Connecticut, the New York City metro area and
the Albany-Schenectady area, where significant volumes of land-clearing wood and
pallets are generated and subject to high disposal costs.
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The developers have strong experience and skills suited to a biomass power plant
development. The team includes a developer, Peter Bos, who previously developed a 45
MW, 450,000 tpy wood fueled biomass plant in Maine; William Hull, a forester who
owns the Russell site, runs a sawmill in Connecticut, and has previous biomass power
plant development experience; Robert Berti and James Dammann, foresters who have
been procuring wood fuel for biomass plants for 20 years; and James Ramsey, a
registered professional engineer and businessman. ARS Group LLC (ARS), owned by
Peter Bos, was the lead developer on the successful 45 MW, 450,000 tons/year Stratton,
Maine, wood fired electric generation plant built in 1989. This successful plant has had
availability consistently in the 95% range.
The developers have assembled a highly qualified team of engineering and consulting
firms, all of which are currently working on the project:
Tighe & Bond, Inc. Permitting, site engineering
Tech Environmental, Inc. Air, noise permitting
Waldron Engineering, Inc. Power plant engineering
Cianbro Corporation/Commonwealth Associates Transmission line engineering
Energy Management Group Power marketing
Financial Management Group LLC Financing, power marketing
Darby OBrien and John Bos & Associates Public outreach
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DEVELOPMENT PLAN
Key activities in the Russell Biomass development work plan are shown in the following
table:
Russell Biomass Power Plant Work Plan
Action 2004 2005 2006 2007 2008 2009
1. Feasibility Review Complete
2. Public Outreach
3. Plant Engineering
4. Site Engineering
5. Permits/Approvals
6. Transmission Line Design/Approval
7. Fuel Supply
8. Power Sales
9. Financial Viability and Financing
10. EPC Firm Selection
11. Construction Loan Close and Funding
12. Construction
13. Operations Planning
14. Plant Startup and Operation
X X
X
X
As shown in the above table, the 3-year pre-construction development period willconclude in mid-2007. Following a two-year construction period, the plant will start
commercial operation in mid-2009.
The first stage of development assuring that no technical or permitting fatal flaws exist
was started in May 2004 and completed successfully in January 2005. The initial
MTC-funded project (February June 2005) was the second stage of development. The
objectives of the project were to:
Finalize the major plant design parameters Secure a Special Permit from the Town of Russell and resolve permitting
issues associated with clean recycled wood
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Confirm the availability and cost of wood fuel supplies and obtain expressionsof interest from suppliers
Confirm the likely price and contract term for power sales and obtainexpressions of interest from power purchasers
Obtain a funding commitment for the remainder of project development up tothe start of construction
The objective of the subsequent MTC loan was to make progress on the critical stage-
three activities of securing power purchase commitments and critical-path permits and
approvals. The project was successful in meeting all objectives, including securing
additional development funding. Work has been initiated on the third stage of
development, securing the remaining permits and approvals.
The following tasks were included in the initial MTC pre-development loan agreement:
Task 1: Carry out public outreach program
Task 2: Preliminary plant engineering
Task 3: Site engineering
Task 4: Initiate permit applicationsTask 5: Transmission line design
Task 6: Fuel supply commitments
Task 7: Power sale options
Task 8: Project financial viability and development financing
Task 9: Project reporting
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Tasks funded under the subsequent MTC loan are as follows:
Task 10: Interconnection study
Task 11: Draft Environmental Impact Report
Task 12: Air dispersion modeling
Task 13: Negotiate power purchase agreements
Objectives and results for each task are discussed in the remaining sections of the report.
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Section 2
CARRY OUT PUBLIC OUTREACH PROGRAM
The community relations between the developers and the town of Russell are excellent.
Hull Forest Products/Westfield Paper Lands has been an exemplary member of the
Russell community since purchasing the land in 2000. The company originally intended
to build a wood manufacturing facility, similar to the Hull Forest Products sawmill in
Connecticut, on the site, and in October 2000 the town granted a Special Permit to
construct the facility.
Changes in the wood products market caused the company to decide not to build a wood
manufacturing facility in Russell. However, Hull Forest Products uses a portion of the
site as a log and pulpwood concentration yard and in 2004 built a 4,000 square foot, two-
story office building and installed a truck weigh scale.
In mid-2004 William Hull formed a development team to investigate the feasibility of
developing a biomass power plant on the Russell site. The developers met with Russell
selectmen in June and December 2004 to describe the project concept and hear about key
issues from the town, and met once with the assessors to discuss property taxes. TheTown of Russell has been supportive of the biomass power plant project from the outset.
The small town (population 1500) lost approximately 125 jobs and substantial tax
revenues when Westfield River Paper Company abandoned the site in 1995. The
proposed power plant, providing 50 construction jobs for 2 years, 22 new permanent
operating jobs, and a 20% increase in the towns property tax revenues, would be a
significant economic development boost for the community.
In addition to supportive Town officials, the developers knew that broad public support
for the project was necessary in order to secure a Special Permit from the Town, a key
approval for the project. The permit application was planned for March 2005, and in
January Russell Biomass engaged consultants John Bos & Associates and Chestnut
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Productions to develop a public outreach program to gain public support for the project.
The public outreach effort involved two tasks:
Conduct a survey of all Russell voters to learn what Russell residents thoughtabout the proposed power plant
Develop effective public communications and education to respond to residentconcerns about the project and highlight project benefits
VOTER SURVEY RESULTS
In January 2005, following a presentation of its proposal to develop a biomass-fired
power plant to the Russell selectmen on December 21, 2004, Russell Biomass
commissioned a survey of all Russell voters to find out, as William Hull wrote in his
survey cover letter, What Russell residents think about our idea. 148 voters out of 987
voters receiving the mail survey responded, a 15% return. This is a high percentage level
of respondents for such a survey. Six questions were asked and answered.
The final question Do the benefits (of the Russell Biomass Project) outweigh your
concerns captures the overall positive response to the survey. In the survey 98 of 125 or78% of the responses to this question said yes. See chart below.
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The two charts below reflect the residents views as to the Project benefits and concerns.
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PUBLIC COMMUNICATIONS AND EDUCATION
Following the survey and immediately prior to the first Special Permit hearing in April
2005, Russell Biomass published a 4-page newspaper supplement in the Country Journal,
the local weekly newspaper serving Russell and other communities, entitled Why a
Biomass Power Plant for Russell? The supplement, developed by the outreach
consultants, included a description and frequently asked questions about the project, voter
survey results, a brief explanation of biomass energy, and a timeline of industrial activity
at the Russell project site (which reminded residents that the site had a 100+-year history
of industrial operations prior to the closing of the Westfield River Paper Company in
1995).
The three Special Permit hearings (April, May and June) afforded the developers an
excellent opportunity to respond to citizen concerns and communicate the benefits of the
project. At least 3 of the five developers and two Tighe & Bond managers attended each
meeting. Considerable effort was spent between meetings preparing responses to
questions, mainly related to project impacts (e.g., truck traffic, visual) from the Zoning
Board of Appeals and the Planning Board.
The hearings were challenging. Just prior to the second and third hearings, the
developers were warned that well-organized opposition groups would attempt to delay or
stop the project with damaging assertions about project impacts. Preparing for these
interventions at the last minute was demanding. The public outreach consultants were
helpful in crafting responses to the anticipated challenge.
As part of its effort to inform Russell citizens about the planned development, 10 days
prior to the third hearing Russell Biomass arranged for approximately 30 residents to visit
the 17 MW Pinetree biomass power plant in Westminster, MA. The Russell group was
given a guided tour of the Pinetree facility and attended a technical presentation by the
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plant manager. Based on participant feedback following the trip, this tour gave the
residents a better sense of what it would be like to have such a facility in Russell.
Throughout the hearings the developers were open and responsive to the concerns of the
citizens, and in the end the Town approved the permit, affirming the positive response
from the voter survey. The public outreach effort was essential to this successful
outcome.
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Section 3
PRELIMINARY PLANT ENGINEERING
The Russell Biomass Power Plant will consist of a complete fuel receiving and handling
system, a single bubbling fluidized bed boiler, a single condensing turbine, a cooling
system utilizing water from the nearby Westfield River, air and water quality control
systems, backup fuel oil capability, and essential auxiliaries typical of a stand-alone
power generating station. Design net station output will be 50 MW; the annual energy
production net of parasitic load will be 381 million kWh See the site plan below:
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As part of the Feasibility Study undertaken during the second half of 2004, the
developers commissioned Waldron Engineering, power plant engineers, to perform
conceptual design development engineering work for the power plant, based on 20, 40
and 50 MW configurations. Only the bubbling fluidized bed boiler technology was
evaluated because the Massachusetts Renewable Portfolio Standard (RPS) regulations
exclude stoker-fired boilers from RPS qualification. By the start of the MTC-funded
project (Feb 2005), the developers had decided on a 50 MW facility. The potential
biomass supply in the region appeared sufficient to support a plant of this size, and the
lower unit capital and operating costs were essential to the projects financial viability.
The objective of the Preliminary Plant Engineering task was to expand on the earlier
conceptual design of the power plant, principally the boiler island component, and
finalize the major plant design parameters, i.e., energy/material/water balances, process
flow diagrams, air emissions and water effluent, and capital and operating costs. With
this information Russell Biomass would be able to launch the permitting process and
refine the financial projections.
Early in this engineering effort Waldron Engineering found that the boiler manufacturers
were unable/unwilling to undertake at their own expense the significant additionalengineering effort necessary to refine the design and costing of the boiler and emissions
control systems. So the developers commissioned Babcock & Wilcox to undertake a paid
feasibility study and budgetary cost analysis of the best bubbling fluidized bed
boiler/emission control technology suitable for the project, based on boiler functional
requirements, e.g. 450,000 lb/hr of steam, and emissions targets, e.g., 0.075 lb/MMBtu
NOx.
At about the same time DOER issued favorable Advisory Rulings for two retrofit projects
involving advanced stoker-fired boilers and indicated that it might propose modifying
the RPS regulations to remove the stoker exclusion. Although outside the scope of the
study as initially planned, the developers and Waldron asked Babcock Power, Inc., a
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stoker boiler manufacturer, to develop design and cost information for a stoker-fired
boiler, in parallel with the B&W fluidized bed design effort.
In May B&W and Babcock Power submitted their preliminary boiler/emissions system
designs and cost estimates. Both biomass boiler technologies can meet all emissions
control targets. Both recommended selective catalytic NOx reduction (SCR) emissions
control systems to meet the NOx emissions target.
The installed cost of the bubbling fluidized bed boiler is approximately 15% higher than
that of the stoker. Bubbling bed operating costs are also estimated to be higher than
stoker.
The main advantage of fluidized bed vs. stoker is its ability to handle a wider range of
biomass fuels (e.g., containing dirt, tramp metals) without fouling or damage. Because of
this operational advantage, and in light of the uncertainty of stoker eligibility for
Massachusetts RPS qualification, Russell Biomass will proceed with the bubbling
fluidized bed design. The preliminary design effort of Waldron/B&W generated
sufficiently detailed design information to allow the project to begin preparing permit
applications. The refined capital and operating cost data has been incorporated in thefinancial projections used in the development funding and power purchase solicitations.
In its Advisory Ruling for Russell Biomass, DOER found that the project meets the
eligibility criteria for biomass-fueled new renewable generation units and thus would
qualify under the RPS program.
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Section 4
SITE ENGINEERING
The 70-acre industrial zoned site in Russell is a superior one. It is located on the east side
of town, across the Westfield River and is reasonably isolated from the main residential
area. Site preparation work since purchase in 2000 has included contamination surveys,
metals scrapping, building and gravel removal and extensive soil remediation activities
conducted under the oversight of Tighe & Bond. Approximately 20 acres of level ground
will be used for the power plant and related facilities.
The site has deeded water rights to the Westfield River, which will be the source for
cooling water for the biomass plant. And the existing utility easement will allow the
completion of a new 5.2 mile transmission line interconnecting the project to the
Northeast Utilities electric transmission grid.
The original objectives of the Site Engineering task were for Tighe & Bond to complete a
survey of the site and to prepare a preliminary site plan showing the arrangement of the
power plant and fuel storage and handling system. The site plan is shown on page 17.
Significant additional site engineering work was required for the Town of Russell Special
Permit application, which was submitted in March 2005. The application, prepared by
Tighe & Bond, included a site demolition plan, a grading and utility plan, drainage
analysis and a stormwater management plan, and an erosion control plan.
During the preparation of the Special Permit application, the developers realized the need
to evaluate alternative means of delivering biomass fuel to the site. Main Street in
Russell is the only current truck access to the site, and the biomass truck traffic will add
significantly to traffic on Main Street; but this added traffic will still be similar in volume
to the traffic on Main Street when the Westfield River Paper Company was operating
prior to 1995. Tighe & Bond evaluated alternative access routes to the site from two
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locations along Route 20, both involving new road construction and one requiring a new
bridge across the Westfield River. The river crossing alternative was found to be
prohibitively costly. Further, communication with the Massachusetts Department of
Environmental Protection wetlands section indicated that this alternative would be almost
impossible to permit under the Wetlands Protection Act, primarily because the project
already has a viable access to the site via Main Street. The second alternative access
route was found to be infeasible due to landowner unwillingness at the time to sell the
land required for the route.
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Section 5
INITIATE PERMIT APPLICATIONS
A biomass power plant is subject to federal, state and local permitting requirements. In
2004 the developers engaged Tighe & Bond and Tech Environmental to identify the
required permits and regulatory approvals and associated costs and timelines for the
power plant. They performed preliminary air pollution modeling and conducted a fatal
flaw analysis for early identification of critical permitting issues. The air pollution
modeling indicated that the Russell plant will be in compliance with all applicable air
quality standards. There are no technical or permitting fatal flaws for a plant size up to
50 MW. The permits and approvals for the project are listed on the following page:
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Town of Russell Zoning Board of Appeals and Planning
Board
Special Permit
Massachusetts Environmental Policy Act (MEPA),
Massachusetts Executive Office of Environmental Affairs
Environmental Notification Form
and Environmental Impact Report
Major Comprehensive Plan, MA Department of
Environmental Protection (DEP)
Air and noise permits
Beneficial Use Determination (DEP) Approval to burn clean recycled
wood and dispose of ash
Water Management Act (DEP) Permit to withdraw water from
Westfield River
Surface Water Discharge (DEP) Permit to discharge to river
NPDES Industrial Discharge (EPA) Permit to discharge to river
NPDES Storm water Discharge (EPA) Permit for storm water runoff from
site
Wetlands/Riverfront Protection Act (DEP) Permit to modify existing water
intake structure
Spill Prevention (EPA) Fuel oil tank permit
Massachusetts Historical Commission Historical/archaeological sitereview
Industrial Holding Tank (DEP) Permit for blowdown tank
Stack Registration (FAA) Stack approval
Sewer Connection (Town of Russell) Plant sanitary sewer approval
The developers decided that the primary objective of the Initiate Permit Applications task
would be securing the Special Permit from the Town of Russell. It was consideredimportant to confirm and lock in the towns commitment to the project as soon as
possible, before committing the significant funds and time required for the major
environmental permits.
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While no other permit applications were planned for the first half of 2005, the developers
intended to hold informal scoping meetings with DEP and MEPA, to provide information
on the project and gain an understanding of the key permitting processes.
RUSSELL SPECIAL PERMIT
The Special Permit application was prepared by Tighe & Bond and submitted to the
Russell Zoning Board of Appeals on March 1, 2005. A joint public hearing on the
project before the Zoning Board and the Planning Board (for Site Plan Approval) was set
for April 4. Town By-Laws required the boards to make a final determination on the
project within 90 days of the first hearing, i.e., by July 1. Two additional hearings, on
May 17 and June 28, were required to address the concerns of board members and the
public.
The major areas of concern were: fuel truck traffic on Main Street and at the plant site,
air emissions, noise, visual impact of the stack, and hours of operation. At the conclusion
of each of the first two hearings, the boards requested that Russell Biomass develop
additional information, mostly related to these impacts, for submission to the boards prior
to the following meeting.
The greatest challenge to the project came during the final hearing from a well organized
opposition group that objected to the planned use of clean recycled wood (CRW) from
C&D sources. The objection centered on the adverse health effects associated with air
emissions containing lead and other metals that may be present in small amounts in
CRW. The opponents were supported by two New Hampshire residents, from Hinsdale
and Hopkinton, where CRW use in power facilities is a current and hotly-contested issue,
especially with the recently enacted New Hampshire one-year moratorium on the burning
of wood from C&D sources. The opponents argued for a delay in the Special Permit
process to allow further study of the C&D issue and other project impacts. (The
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developers would have to agree to a delay, as the statutory 90-day review period was at
an end.)
During the hearing the developers, having previously determined that the plant would be
viable without CRW from the C&D waste stream, agreed not to use CRW until and
unless the town specifically approved its use. The developers did not agree to a delay in
the Special Permit process. Both boards then voted to approve the Special Permit at the
conclusion of the hearing.
CLEAN RECY CLED WOOD (CRW) FROM C&D SOURCES
While Russell Biomass ultimately agreed to give up CRW as a fuel source, during the
course of the project the developers were able to develop a better understanding of the
permitting issues associated with the use of this material as a power plant fuel. The
developers and engineering consultants met twice with DEP to discuss CRW issues, and
Tech Environmental conducted a literature search and file reviews of air permits at the
New Hampshire Department of Environmental Services and Maine Department of
Environmental Protection, to document metals content in CRW and in the air emissions
and ash resulting from CRW combustion.
Nearly all of the lead and other metals in CRW wind up in the combustion ash; the small
quantities of metals that go up the stack are expected to result in ambient concentrations
that are within current environmental standards. Chlorine contained in CRW could
necessitate the inclusion of a limestone injection system in the boiler to neutralize the
HCl.
Although to date no Massachusetts power plant has applied to DEP for approval to burn
CRW, the principal regulatory control of CRW would be the Beneficial Use
Determination (BUD) process of DEP. DEP would use the BUD process to approve
individual CRW suppliers to the power plant and to regulate the disposal of ash from
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biomass combustion. Each CRW supplier, whether located in or out of state, must obtain
a BUD in order to change the classification of its materials from solid waste to fuel.
Likewise, Russell Biomass would need a BUD for ash disposal. DEP has established
lead concentration limits for ash, the lowest of which allows land application.
Increasingly costly disposal options for higher lead concentrations include: sanitary
landfill cover, disposal in sanitary landfill and disposal as hazardous waste. It would be
to the projects financial advantage for DEP to determine that the ash could be land
applied, rather than requiring disposal as a hazardous waste.
Russell Biomass would need to evaluate the metals content of CRW sources, and
determine the CRW percentage in the fuel mix that would result in the optimum balance
between CRW quality and cost and ash disposal cost. The developers have obtained
information on metals content from some prospective CRW suppliers, but at this point no
further analysis is planned in light of the developers agreement with the Town not to
burn CRW.
(See Section 11 for an update on the MEPA approval process.)
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Section 6
TRANSMISSION LINE DESIGN
Northeast Utilities owns an easement that extends southeast from the power plant site to
their 115 KV transmission line approximately five miles away. The figure below shows
the easement and likely connection point to the transmission line. Following preliminary
discussions with Northeast Utilities and ISO New England, the developers believe that
they will be able to obtain an agreement to erect a transmission line connecting the power
plant site with their transmission system. Northeast Utilities would eventually own the
new transmission line, but Russell Biomass would be responsible for permitting, design
and construction of the line.
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The original objective of the Transmission Line Design task was to start the ISO New
England Interconnection Process for Large Generators (greater than 5 MW). This
process, which is designed to ensure compatibility between the new generating facility
and the existing electric transmission system, would result in an Interconnection
Agreement among Russell Biomass, ISO and Northeast Utilities.
The 15-month ISO process, which is initiated by submitting an Interconnection Request
for A Large Generating Facility, consists of 3 major steps: Feasibility Study, System
Impact Study and Facility Study. The developers had planned to submit the
Interconnection Request and start the Feasibility Study. However, it was not until late in
the project that sufficient data was available to complete the Request, and a draft
Interconnection Request was submitted for ISO review in early July.
During the project the developers learned that two additional approvalsmightbe required
for the transmission line: Massachusetts Energy Facilities Siting Board (EFSB) and
Department of Telecommunications and Energy (DTE). Each approval involves a costly
and lengthy adjudicatory process. Each would take approximately 12 months and could
not be started before the completion of the ISO Feasibility Study and some additional
transmission line design work. The ISO process was already on the project critical path;if EFSB and/or DTE approval were required as well, 3-6 months would be added to the
project timeline. In light of the possibility that EFSB and DTE mightnothave
jurisdiction over the Russell Biomass transmission line, the developers devoted
considerable time and effort to making this case and attempting to gain concurrence from
the agencies.
EFSB has jurisdiction over transmission facilities as follows:
A new transmission line of 69 KV or more and a length of more than 1 mileon a new transmission corridor
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A new transmission line of 115 KV or more which is 10 miles or more inlength on an existing transmission corridor
Northeast Utilities had a transmission line in the proposed Russell Biomass corridor until
the early 1980s, when the line was decommissioned and ultimately removed. So the
developers made the case to EFSB that the corridor is existing and EFSB would not
have jurisdiction since the line is less than 10 miles in length. Unfortunately, because the
corridor has been inactive for more than 20 years, few indications of the previous use
remain, and after observing the route EFSB determined the corridor to be new, not
existing. While it would be desirable for the new line to be 115 KV, the project is
considering a voltage less than 69 KV in order to avoid EFSB jurisdiction.
If EFSB has jurisdiction, a likely simultaneous DTE review is not expected to have a
significant additional impact on the project. The DTE approval process is similar to
EFSBs and could be accomplished at little additional time and cost (beyond the time and
cost for EFSB approval).
(See Section 10 for an update on transmission line activities.)
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Section 7
FUEL SUPPLY COMMITMENTS
Within a 100-mile radius of Russell there is a supply of approximately 9 times the
roughly 500,000 tons of biomass fuel that will be consumed annually. Fuel will include
whole tree chips from land clearing, road side tree trimming and power line maintenance,
and ground stumps and pallets. The western Massachusetts site location is close to the
Springfield metropolitan area, Hartford and other metropolitan areas in Connecticut, the
New York City metropolitan area, and the Albany/Schenectady area, where significant
volumes of biomass waste are generated and subject to high disposal costs.
North Country Procurement (NCP) of New Hampshire has committed to supplying the
entire fuel volume to the Russell plant. NCP, incorporated in 1986, procures wood fuel
for six wood fired generating stations in New Hampshire, Vermont, and Massachusetts
with a combined annual consumption of approximately 1,200,000 tons.
As a first step in executing its commitment, NCP obtained letters of interest from 35
potential New England and New York fuel suppliers for more than 900,000 TPY starting
in 2009. This represents 1.8 x the plants fuel requirement. (See the table on the followingpage.) The project has not assumed any Clean Recycled Wood or paper cubes in its fuel
mix.
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MA CT NY NH Total
1 Whole tree chips 165,790 242,166 59,250 - 467,206
2 Municipal Wood 33,500 65,360 12,500 - 111,360
3 Stump Grindings 88,500 123,200 16,000 - 227,700
4 Pallet wood 23,500 43,800 8,000 20,000 95,300
5 Other 2,000 12,000 1,000 - 15,000
Total LOI's to date 313,290 486,526 96,750 20,000 916,566
Requirement 500,000
Coverage 1.8 x
Tonnage of Fuel Represented by Letters of Interest
by Type of Fuel and by State
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Section 8
POWER SALE OPTIONS
The Project expects to sign a power purchase agreement for the balance of the power
plant output with a power marketer, or directly with large purchasers. The timing and
conditions for moving ahead with soliciting power purchase agreements are positive
because of load growth, the maturing of existing contracts that have gone to term, lost
contracts due to bankruptcies of merchant development companies, the prospect for
continuing high oil and natural gas prices, and the elimination of excess capacity in
NEPOOL.
Following discussions with a number of potential customers, Russell Biomass and its
consultants Energy Management Group and Financial Management Group developed a
power purchase solicitation package that included a detailed description of the project
and proposed power pricing and other terms and conditions. The package was submitted
to prospective power purchasers on July 15. Purchasers were asked to send a non-
binding indication of interest (for capacity and term of contract) by July 29 and a non-
binding commitment to the proposed terms and conditions by September 15. The initial
indications of interest are promising potential demand from responding customersexceeds the 50 MW capacity of the Russell plant.
(See Section 13 for an update on the status of power purchase agreements.)
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Section 9
PROJ ECT FINANCIAL VIABIL ITY AND
DEVELOPMENT FINANCING
The objectives of this task were to update the project financial model, incorporate the
resultant financial projections in a development financing solicitation memorandum, and
approach investors to secure a commitment to fund the remainder of project development
up to the start of construction.
Financial Management Group created a sophisticated financial model for the project and
incorporated the latest cost and revenue assumptions coming out of the other project
tasks. The developers established a financial structure for the project following
discussions with prospective debt and equity investors. The projected return on equity
appeared likely to attract equity investors to the project.
The financing requirement for the developers was to raise the several million dollars
necessary to complete development prior to construction. Most equity investors are not
interested in the higher risk (and higher return) development funding, so the challenge
was identifying prospective development funders. Financial Management Groupprepared a development financing solicitation memorandum, which was distributed to a
number of investors. Russell Biomass met with six potential development funders in
June, and discussions are continuing with three of those. The developers are optimistic
about obtaining the funding necessary to complete development.
(The developers were eventually successful in obtaining additional development
funding.)
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Section 10
INTERCONNECTION STUDY
The project submitted the Interconnection Request for a Large Generating Facility to ISO
New England in August 2005. The request contained a description of the proposed
transmission line route, the point of interconnection with the Northeast Utilities system in
Westfield and technical information on the generating facility. In September ISO New
England held a Scoping Meeting on the project to review the ISO interconnection
process, resolve issues related to the Interconnection Request and discuss the scope of the
Feasibility Study, the first step in the process. Participants included representatives of the
project, ISO and Northeast Utilities. One important item of discussion was the voltage of
the new transmission line. Northeast Utilities expressed a strong preference for 115 KV.
While the project was considering a lower voltage (see Section 6), the developers
eventually agreed to the 115 KV configuration.
In October the project submitted the scoping parameters for the Feasibility Study, and the
Feasibility Study Agreement was executed by ISO New England, the project and
Northeast Utilities in November. According to the agreement the study would provide
the following:
Preliminary identification of any circuit breaker or other facility short circuitcapability limits exceeded as a result of the interconnection
Preliminary identification of any thermal overload or voltage limit violationsresulting from the interconnection
Preliminary review of grounding requirements and electric system protection Preliminary description and estimated cost of facilities required to
interconnect the proposed facility to the transmission system
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ISO engaged a consultant to conduct a load flow analysis and identify thermal overload
and voltage issues. Northeast Utilities was responsible for the short circuit and facility
cost analyses.
The consultant had completed much of the load flow analysis by the end of the MTC-
funded project. In a progress review on January 16, the consultant reported the
preliminary finding of the study: under certain outage conditions the project appears to
worsen the overload on two existing transmission lines. However, the overload appeared
to be relatively insignificant, with minimal upgrade cost implications for the project.
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Section 11
DRAFT ENVIRONMENTAL IMPACT REPORT
In September 2005 the project submitted an Expanded Environmental Notification Form
(EENF) to the Massachusetts Secretary of Environmental Affairs. The EENF is the first
step in the Massachusetts Environmental Policy Act (MEPA) approval process, one of
the key approvals required for the project.
On October 31, 2005 the Secretary of Environmental Affairs issued a Certificate on the
EENF, which prescribed the content of the Draft Environmental Impact Report (DEIR)
for the project see the following list of sections for the DEIR:
Project Description and Permitting Alternatives Land Alteration & Stormwater Rare Species Wetlands Waterways Westfield River Impacts Energy/Air Solid and Hazardous Waste Historic Resources Construction Period Impacts Mitigation Response to Comments
Russell Biomass and its consultant Tighe & Bond commenced work on the DEIR in
December 2005 and expect to complete the document in August 2006. Following is a
summary of work on the DEIR during December and January.
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This early DEIR activity focused on two important issues raised in the Certificate:
potential impacts on state-listed rare species and water withdrawal and discharge impacts
on the Westfield River. Following is a summary of progress through January.
Rare Species Impacts
The Certificate stated that the Massachusetts Natural Heritage and Endangered Species
Program (NHESP) had indicated that the project has the potential to result in a take of
state-listed rare species in the vicinity of Mount Tekoa, as a result of the proposed
clearing for the transmission line in this area. In December project representatives met
with NHESP to discuss rare species concerns. Russell Biomass and Northeast Utilities
met in January to begin a discussion of transmission line routing alternatives that would
address the NHESP concerns.
Water Withdrawal and Discharge Impacts on the Westfield River
Tighe & Bond evaluated the water withdrawal and discharge impacts of the power plant
on the Westfield River. Peak withdrawal will be 885,000 gallons per day, which
represents 0.2% of the average annual river flow, 1.3% of the average August flow, andapproximately 4% of the 7Q10 flow (the average flow over the lowest 7-day period in the
previous 10 years). Water discharge is estimated to cause a river temperature increase of
less than 1 degree F.
Russell Biomass and Tighe & Bond met with representatives of the Massachusetts
Department of Environmental Protection (DEP) and Department of Fisheries and
Wildlife in December to present reports on project impacts on the river and aquatic life.
The agency representatives acknowledged that the anticipated withdrawal and discharge
impacts appear to be relatively minor.
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Section 12
AIR DISPERSION MODELING
The project submitted the Major Comprehensive Plan Approval Application, dealing with
air emissions and noise impacts, to DEP in September 2005. The application included a
report on air quality dispersion modeling by Tech Environmental, a consultant to the
project. This report, based on conservative screening dispersion modeling, demonstrated
that the project will not have an adverse effect on air quality.
The MTC-funded work involved subsequently performingrefineddispersion modeling to
more precisely quantify the air quality effects of the project. The following is taken from
the Executive Summary of Tech Environmentals report: The refined air quality
dispersion modeling further demonstrates that the maximum air concentrations from the
Project will safely comply with the NAAQS [National Ambient Air Quality Standards]
for criteria pollutants and with the Massachusetts TELs [Threshold Effects Exposure
Limits] and AALs [Allowable Ambient Limits] for non-criteria pollutants.
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