Wood pellet industry update.

The EROI (Energy Return On "Energy" Invested) of wood is one issue the pellet industry faces, the other is there's simply not enough energy in NZ to produce them.

A quick update on the Genesis plan to transition their Huntly coal fired units from coal to wood pellets.

I originally covered this topic in an article called NZ Energy Transition Pathway - Gas, to Coal, to Wood. For those interested this is a good place to get up to speed with the issue if you haven’t already read it.

The latest on this topic is that Taupo based company Nature’s Flame has abandoned plans to produce torrefied wood pellets commonly known as black pellets, which are considered a substitute for coal, and is now working with Genesis to see if white pellets can be used instead.

What does this mean?

It means they are now proposing a product that is less energy intensive to produce and something they currently have experience with.

What are the implications?

White pellets have a lower energy density than black pellets, due to having a higher water content and lower carbon content by volume. Therefore, larger volumes are required to get the same amount of energy in combustion. They are also harder to handle logistically as they are more susceptible to moisture damage and must be handled carefully to avoid dust loses.

Why are white pellets being proposed?

The official statement is that Nature’s Flame don’t believe that black pellet production is scalable.

My interpretation of this is that it’s too energy intensive in NZ’s energy constrained economy.

White pellets are less energy intensive to produce, and I suspect that Nature’s Flame can’t get the energy they would need to produce black pellets.

Black pellets are touted as a replacement for coal. The manufacturing process for torrefied wood pellets involves drying to less than 15% moisture content then heating them to 250-300 deg C in a low oxygen atmosphere. This increases the energy density to a bit more than half that of coal.

The issue is that torrefaction is an energy intensive process. Black pellets take about 8 GJ of energy per tonne to produce on average when including the full supply chain. The bulk of this energy is for drying and heating.

Black and white pellets

NZ energy constraints

This is where the New Zealand’s current energy constraints come in.

Being conservative and assuming that it takes 6 GJ of energy to produce 1 T of torrefied pellets excluding the energy required to gather and consolidate the feed stock, this is the equivalent of 1,667 KWh of electricity per tonne.

Note that the preferred energy source for drying and heating would typically be natural gas, but we don’t have much of that either.

Remembering that black pellets have about half the energy density of coal so two tonne of wood pellets is required to replace every one tonne of coal.

If Huntly wants to replace even half of the 750,000 tonne of coal estimated to have been burnt last year it would require the forestry products industry to find 1 TWh of electricity to produce the black pellets required.

This is the equivalent of 20% of the annual maximum output of the Waitaki hydro scheme or ~4% of New Zealand’s total electricity generation.

Nature’s Flame simply can’t get this much energy in Taupo and the cost of doing so would be phenomenal.

I suspect the only way forward for the local industry is to use wood pellets to make wood pellets.

The EROI (energy return on “energy” invested) or ECOE (energy cost of energy) of wood pellets when considering the full supply chain and manufacturing process could be as low as 2. Which means for each unit of energy used to produce the pellets you get 1 unit in return.

If you then consume that one unit to produce one unit, by burning wood pellets to produce wood pellets, you are essential spending $1 to make $1 which by any metric is not a viable business.

Conclusion.

There is another company called Foresta Group, out of Australia working with Genesis to supply black pellets from a plant proposed to be built in Kawerau. They are looking at supplying Genesis with 300,000 tonne of black pellets. They too will run into this energetic problem, and I suspect that the enthusiasm for manufacturing in NZ will diminish as a result.

If there is a black pellet industry in New Zealand I expect it to be based on imports out of North America, the same way that Drax power station in the UK sources fuel.

This is because the Canadians have wholesale electricity rates about 1/3 of that in New Zealand and copious amounts of natural gas. They can afford to do it, we can’t.

I hope my calcs are wrong because the people working in the forestry products industry have had a terrible year with plant closures across the upper and central North Island. Seeing Foresta and Nature’s Flame succeed would mean new jobs and some hope.

Physics will have the final say and thermodynamics is a ruthless referee.

Larry