UBC is a month away from opening a $27 million biomass power plant with Nexterra Systems Corp., a local green-tech company. Two of Nexterra’s American projects have ended in failure. Is UBC headed down the same path?
ON OCTOBER 9, 2011, South Carolina’s largest newspaper published a lengthy exposé on an alternative energy power plant at the University of South Carolina (USC).
The plant, which used biomass gasification technology, had been racked by explosions and malfunctions. In March 2011, only four years after opening, it had to be closed down completely. USC is now waiting to recoup its $20 million investment.
UBC is about to open a $27 million biomass power plant in partnership with Nexterra Systems Corp., the same company that supplied the technology to the USC power plant.
Nexterra is a Vancouver-based company that has been lauded in the Canadian media as an international pioneer in alternative energy solutions—but no Canadian media outlet has reported on the USC disaster. And that’s not the only problem Nexterra has had with American universities.
Last June, Nexterra made headlines for signing a $16 million contract with the University of Montana (UM) for a biomass power plant. “This is our fourth university project and it represents a significant milestone as we expand into the higher educational market across North America,” said Jonathan Rhone, the company’s CEO at the time, in an article in The Province.
By December 2011, the UM project had been scrapped by the university. According to the local media, the project met its demise due to concerns over “financial viability, fuel supply, increased pollution and the deteriorating [public] discourse.”
Out of the four university projects mentioned by Rhone in the Province article, two have turned out to be fiascos. The other two are both in British Columbia. One of them, the UBC project, is set to come online in April. At this time, the only successful Nexterra university power plant is at the University of Northern British Columbia (UNBC) in Prince George.
Nexterra also has a handful of smaller biomass power plants operating at non-university locations, including at a Kruger Products factory in New Westminster. These plants seem to have avoided the university projects’ problems.*
For two years, UBC officials have been touting their almost-completed Nexterra power plant, located between the Totem Park and Marine Drive residences, in press releases and newspaper op-eds as an example of UBC’s commitment to being a global leader in green technology. In his town hall last October, President Stephen Toope praised the Nexterra project at length, calling it a complete “winner” for the university.
But considering the problems with the American projects, is the UBC project as trustworthy as we’ve been told? Will it prove to be a success following the UNBC model, or is it a looming financial catastrophe?
• • •
WHEN THE UNIVERSITY of South Carolina officially opened its biomass power plant in December 2007, USC officials were brimming with excitement. According to The State, the South Carolina newspaper that published the exposé on the plant, officials called it “the cat’s meow.”
Biomass technology takes in organic material and turns it into energy. Nexterra has focused on developing biomass gasification systems that take in wood byproduct and turn it into a synthetic gas that can be used to generate heat or electricity.
In other words, Nexterra converts wood chips, tree trimmings and bark into a substitute for natural gas and other fossil fuels.
The USC biomass plant was built by Johnson Controls Inc. (JCI), a Fortune 500 company with a large energy services division. According to The State, there was no competitive bidding process for the construction of the plant; it came as part a comprehensive JCI bid to provide energy services to the university. JCI had never built a biomass plant to the scale of what was promised to USC.
But considering the problems with the American plants, is the UBC project as trustworthy as we’ve been told? Will it prove to be a success following the UNBC model, or is it a looming financial catastrophe?
“We were a young company,” says Mike Scott, who replaced Rhone as Nexterra’s CEO in October 2011. “At the time, Johnson Controls was only willing to have us do a very, very small part of that project.”
JCI used Nexterra’s technology to build the power plant, but according to Scott, the plant’s fuel handling system, boiler, emission control equipment, turbine, water treatment system, controls and the building itself were managed by other groups. Nexterra only supplied the gasification system.
“Unfortunately, that project had a number of challenges,” says Scott.
On June 28, 2009, an explosion in the USC biomass plant blasted a metal panel 60 feet in the air. Documents obtained by The State showed that USC officials described the accident as “potentially lethal.”
“An irrevocable catastrophe may have occurred if a worker or visitor had been in this location,” wrote Thomas Quasney, USC’s associate vice-president for facilities, in an email obtained by The State.
In total, The State obtained 1800 pages of documents about the USC biomass plant in its investigation, much of it through freedom of information requests.
The documents showed that the plant had been shut down more than three dozen times in its four-year lifespan. In one two-year period, the plant was only operational on 98 out of 534 days.
According to The State, “the [June 28] blast underscored what some USC officials privately grumbled about for years: That the plant has been a $20 million disaster, a money pit that was poorly planned and built by a company [JCI] that had never constructed such a cutting-edge ‘green energy’ power plant before.”
In March 2011, the USC biomass plant was shuttered. Fortunately for the university, their contract with JCI guaranteed $2 million per year in energy savings over what USC’s natural gas heating system would have cost. This means that USC will eventually be able to recoup their $20 million investment in the biomass plant.
“It was a bad plant, but a good contract,” said USC’s chief financial officer, Ed Walton, in an interview with The State.
• • •
BRENT SAUDER SAYS he is not worried about what the USC revelations might mean for UBC’s Nexterra plant.
Sauder is the director of strategic partnerships for the UBC Sustainability Initiative. His job is to create partnerships between UBC and third parties to advance UBC’s goals in sustainability and environmental technology.
“The situation [in South Carolina] is that Nexterra only supplied components of the system and somebody else welded them all together,” says Sauder. “The failures occurred in the integration part, not in the component supply.”
At UBC, in contrast, Nexterra is essentially responsible for the whole plant. UBC staff are being trained to eventually take it over, but unlike at USC, there is no intermediary company between Nexterra and the university. However, this also means that there is no performance contract that would refund the cost if the plant fails.
Scott says that Nexterra quickly learned its lesson from what happened at USC.
“When we looked at doing the next project with Johnson Controls…we insisted, and Johnson Controls agreed, that Nexterra should actually provide everything around the system. The scope of our supply increased around six-fold,” says Scott.
This project was at the US Department of Energy’s Oak Ridge National Laboratory—the department’s largest laboratory in the United States and a premier nuclear research site.
“Fortunately, this has resulted in a successful project,” says Scott. “We’ve just completed the performance tests, and as you can imagine…that project underwent an enormous amount of scrutiny after the [USC] challenges.”
But Nexterra still features the USC project on its website with no mention that the plant has been shut down for nearly a year. In Nexterra’s press releases, the most recent of which is dated October 12, 2011, the company’s description says that Nexterra “has successfully supplied commercial gasification systems for projects at the US Department of Energy, University of South Carolina, Dockside Green, Kruger Products, the University of Northern BC and Tolko Industries.”
Why is Nexterra using a failed power plant in its public relations without stating the project’s problems?
“That’s a fair comment,” says Scott. “But it was a commercial success for us, we delivered the system, the plant did run…Our hope and expectation is that we will have the opportunity to go back and fix it for Johnson Controls. With the success we’re having at Oak Ridge National Labs, we hope [we can go back and fix it.]
“We’re not hiding from any of it, and we don’t mean for it to be a representation. Some would say that if we didn’t have it there, that we were trying to hide from the problems. I understand the criticism, but I think you’ll find if you talk to our customers that we’ve been as forthright as possible.”
As it turned out, the full scale of the USC plant’s problems came to light just as another Nexterra project was falling under heavy criticism in Missoula, Montana.
• • •
WHEN THE $16 MILLION University of Montana biomass plant was announced in June, the press coverage portrayed it as a breakthrough for Nexterra.
“After installing systems at the University of BC, the University of Northern BC, and the University of South Carolina, company president Jonathan Rhone sees the Missoula campus contract as a potential stepping stone into a giant North American market,” said a Province article on June 3, 2011.
Shortly after The State published its report on the USC disaster, Missoula’s newspaper, The Missoulian, began a careful examination of the project. The paper’s correspondent on the story was Chelsi Moi.
“I think [the university’s] presentation is what made it controversial,” says Moi. “When they first presented the project, they made it look like a win-win, in-the-bag, great project.”
But when a few environmental groups started pushing the university on some of their claims, particularly around air quality and carbon emissions, university officials had to do some backtracking.
The documents showed that the plant had been shut down more than three dozen times in its four-year lifespan. In one two-year period, the plant was only operational on 98 out of 534 days.
“Missoula’s in a valley,” says Moi, “and has had historically poor air quality. Even a couple of years ago, we were deemed an air stagnation zone, and were forced to clean up our act.”
One of the results was that most city residents were no longer allowed to have wood fireplaces—which is why a large wood-fueled power plant at the university raised ire.
The high carbon emissions and particulate matter released by burning wood are some of the biggest problems that biomass companies have worked to solve. Nexterra claims that its plants have made huge strides in this regard.
Public consultations grew contentious between Missoula residents and university officials. At one point the university was forced to apologize after its vice-president of finance and administration said that project opponents were engaged in “low-level eco-terrorism.”
In November, a letter signed by 45 concerned residents—including members of UM’s heating plant staff—asked the university’s Board of Regents to reconsider the project.
“The regents made a decision based on information that was not current,” said one of the letter-writers, John Snively, as quoted by The Missoulian. “It’s clear the university doesn’t want to hear from us. The people who are making the decisions at the university don’t feel we have the technical expertise or have valid reasons for interceding in this, never mind that it will cost us all more money and create more pollution.”
But Scott notes that Nexterra obtained all the permits it needed from health authorities to build the plant.
“I think there was a couple of action groups that were opposed to the project,” says Scott, “and they continued to challenge the administration on the basis of emissions…but the administration had a hard time getting out the message that the system they were proposing is the cleanest biomass system that you can get. The state authorities recognized that it would be the cleanest biomass system in the state of Montana.”
One of the action groups opposed to the biomass plant was the Wildwest Institute, an organization focused on forest and wildlife issues. Its executive director, Matthew Koehler, led the charge on challenging the university’s claims about the benefits of the project.
“We had started raising questions about this for about nine months, and we were all but ignored by the university and the press,” says Koehler. “And then we found a bunch of stuff in open-record searches…and you know, it didn’t require too much sleuthing. It just required critical thinking skills to pore through documents.”
Koehler has been a dedicated skeptic of biomass power plants for years. He says he would support small-scale biomass in some instances, but essentially objects to the idea of, as he puts it, “cutting down forests and then burning them to solve global climate change.”
To this, biomass proponents argue that most biomass projects only involve burning the wood industry’s byproduct that would otherwise be waste. Yet Koehler was able to find problems in UM’s plans for fuel supply.
“UM had made this claim that they were going to get this fuel for [a certain price], and then they put out this bid, and nobody bid,” says Koehler. “And then…the university was saying the fuel dealers were going to have to chip [wood] offsite and truck in the fuel, about three chip trucks full a day.” But fuel dealers did not have the storage space to be able to guarantee a steady flow of chip supply.
“So then at the last minute, the university said, ‘Well, we’ll just invest a quarter of a million dollars and chip on site,’” says Koehler. “Okay, so we’re going to run an industrial wood-chipper in the middle of campus?”
On December 2, 2011, UM suspended the biomass project indefinitely. The official reason was that natural gas prices had fallen so far that it was no longer in the university’s financial interests to install an expensive biomass power plant.
“They’ve said that they will revisit the project again in 2012,” says Scott. “If natural gas prices don’t increase, or there’s not a change in the economic and green imperatives for the university, then I think it will be on hold until there’s a change. It’s just unfortunate that the macro energy environment turned on us. I think it would have been a fantastic project.”
• • •
THERE ARE MANY significant differences between the plant being installed at UBC and the failed projects at USC and UM.
Perhaps the most important is that UBC is less focused on biomass as a potentially cheaper alternative to natural gas, and more on the research and development aspect of the facility. As with USC, the biomass project at UM had an energy services company building the plant as part of an energy supply contract to the university. At UBC, the plant will be entirely university-operated.
“With biomass, here was an opportunity to try something new,” said Sauder, UBC Sustainability Initiative’s director of strategic partnerships. “And it could contribute to the heat and power as required by the university, and use technology grown in British Columbia.”
The UBC plant will include a laboratory onsite and university researchers will conduct extensive research with the technology.
UBC was also greatly helped by government subsidies and grants; about 70 per cent of the plant’s $27 million capital cost is covered by these funds.
The biomass plant being built at UBC is a new generation of Nexterra’s technology. “In the first generation of our systems, we took that syngas [the synthetic gas produced from the wood fuel] and burned it to produce steam,” says Scott. “That gas in its untreated form isn’t suitable for firing into internal combustion engines. And so what we’ve done…is developed a system for cleaning up the gas to make it suitable.”
Nexterra’s system at UBC will be able to fire that synthetic gas into an engine developed by General Electric. The engine will then be capable of producing heat and electricity for the campus.
“The system at UBC will be first of its kind built by us,” says Scott. “There have been a number of failed attempts, mostly in Europe, to do what we’re trying to do. Many of those projects in Europe have not met the commercial requirements of a combined heat and gas system. But we’ve done nearly 3000 hours of testing at our product development centre in Kamloops…and the UBC project will be the first commercial-scale demonstration of this technology.”
Two of the major criticisms of the UM project were air quality and fuel supply; both of those appear to be comprehensively addressed at UBC.
The plant has received a Metro Vancouver air quality management permit, but Sauder says the air quality restrictions will go above and beyond the district requirements. The university will have researchers on site monitoring the emissions continuously. Sauder also authored a 78-page environmental assessment.
“The strictest [air quality standards] we could find in the US is the San Joaquin Valley, and we’re going to be stricter than that,” says Sauder.
Scott also points to the success of the UNBC biomass plant, where third-party studies concluded in August 2011 that the plant’s emission quality was “as good as, or better than, natural gas.”
The UBC plant’s fuel supply will come from a Langley-based company, Cloverdale Fuel, that specializes in “wood byproducts brokering and transport.” Cloverdale already supplies a Nexterra biomass plant at a Kruger Products mill in New Westminster.
The City of Vancouver has signed a memorandum of understanding to provide 5000 tonnes of municipal tree trimmings annually to the UBC fuel supply. Sauder estimates this will cover about 20 per cent of the fuel; the rest will come from Cloverdale’s suppliers. The fuel will be prepared at Cloverdale according to UBC-ordered standards, and then trucked to the university in two to three truckloads per day.
Jens Wieting, the forests and climate campaigner for Sierra Club BC, says that there is a lot of local supply for wood waste right now, though he cautions that this may change when pine beetle-damaged wood is used up.
“At some point there is a big risk of…not having resources in the future,” says Wieting. “Because of the pine beetle and the increasing number of forest fires, and lack of reforestation, we have to expect that there will be less timber available in the near future. That’s a concern for any project. A very careful study is required in terms of long term supply.”
The biomass plant itself used cross-laminated timber in its construction, a low-carbon alternative for steel and concrete. “It will be the first industrial building in North America built with cross-laminated timber,” says Sauder.
“I’m quite proud of what we’re doing,” says Scott. “It’s made-in-BC technology that the university is taking a leadership role on, and I’m quite happy that we’re taking biomass energy to the next level. I’m confident it’s going to work.”
• • •
IF UBC’S BIOMASS plant works as well as the university and Nexterra are promising, it will be a mutually beneficial project. Nexterra gets to test and develop its technology at a commercial scale, UBC researchers get first-hand experience with experimental clean energy production, and the campus will have up to six per cent of its electricity and 25 per cent of its heating steam produced by the project.
But biomass skeptics find it hard to trust these claims. The slick presentations given by universities and company executives often ignore any risks of the project.
“It’s like the Simpsons episode from a few years ago, when the monorail salesman came to Springfield,” says Koehler. “[University executives] generally know jack squat about biomass. But they go to some conference and they get the presentation, and they go ‘Oh wow, that’s neat.’”
Furthermore, the media often can’t be relied on for critical coverage; most articles on biomass technology are indistinguishable from company press releases.
Koehler worries about the reliance the biomass industry has on the vast quantities of money governments have made available for alternative energy projects.
“This biomass stuff cannot pencil out without massive subsidies,” says Koehler. “But biomass proponents seem to be very much true believers in their cause, and they freak out whenever anyone wants to question the economics or the environmental impact of their project.”
The media often can’t be relied on for critical coverage; most articles on biomass technology are indistinguishable from company press releases.
Not all environmental groups are of the same mind about biomass. In Nova Scotia, the Ecology Action Network has organized protests against government plans to ramp up biomass production for the electricity grid, out of concern for depleted forest ecosystems. But in BC, there has been very little pushback against biomass.
The Sierra Club, for example, takes a cautious line but generally supports biomass. “The key questions are: what type of biomass [fuel]? And where does it come from? Is it local, or does it need to be shipped in from far away?” says Wieting. “Waste is generally better than something grown specifically for the use of biomass.”
Wieting also encourages caution over claims of carbon neutrality with wood biomass plants, because it depends heavily on how fast the removed trees grow back.
UBC officials, for now, are excited about the project’s potential and eager to discuss it. In the past two years numerous op-eds have appeared in the Vancouver Sun by UBC professors and executives, extolling UBC’s commitment to clean technology and highlighting the Nexterra project in particular.
“This is the university as a leader,” says Sauder. “People see these goals for sustainability…and they say, ‘Well that’s cool, but how are we going to get there?’ To have the tools to demonstrate the path forward is very important. It’s a neat opportunity for UBC to show how to do these things at a city scale.”
The plant is slated to open in April.
*Correction: This paragraph and another one later in the story originally referred to problems at American “plants.” As there was no plant ever built at Montana, that was technically not correct. The paragraph has been changed to read “projects.”