Biomass plant approved
By Megan Rolland
The city entered a 30-year contract Thursday that will bring a wood-burning biomass power plant to Gainesville, promising a future energy supply that is renewable, less subject to the price volatility of fossil fuels and has cleaner emissions.
Already receiving national news media attention for a solar energy initiative, Gainesville Regional Utilities anticipates the biomass power plant will push Gainesville into compliance with even the strictest of regulations in the world regarding carbon emissions and renewable energy sources.
"This recommendation e_SLps is probably one of the biggest decisions since Deerhaven II and will probably be one of the biggest decisions for years to come," said GRU general manager Bob Hunzinger before commissioners unanimously approved the contract with the Boston-based company American Renewables.
Hunzinger said the company, which will build, own and operate the plant, shares a common "passion for the environment and a diverse renewable energy source that makes economic sense."
GRU will buy the full 100 megawatts of energy produced at the plant from American Renewables based on a fixed long-term price.
Gainesville will pay more for that green energy in the beginning.
Beginning when the power plant comes on line at the end of 2013, customers will likely see a 4.3 percent increase in monthly utility bills.
"While this project is going to be a little bit more expensive in the early years, it’s going to be a really good deal in the later years," said Ed Regan, assistant general manager for strategic planing at GRU.
Over the 30-year life of the contract, Regan said the utility will be spending between $212 million and $492 million less than if the utility bought energy off the open market.
For utility ratepayers, that will start looking good in about the year 2019 when the utility bills will level off to a negligible increase and then offer a savings in future years, GRU officials say.
The big variable that will determine how much GRU customers and the city will pay for future energy — and what kind of profits American Renewables will make — are the future regulations and taxes placed on carbon emissions, at least partly in response to global warming concerns.
The larger any future tax on carbon emissions, the more GRU customers will reap benefits from using biomass produced energy.
"It’s hard to believe that the world would let America get by without some sort of carbon constraint," Regan said.
This process actually began in 2003, when GRU decided future energy needs would soon outstrip what the three city-owned power plants could produce.
Initially, the city entertained the idea of a large coal-fired plant, but opposition by city commissioners led to a nationwide search for alternative options.
"It’s easy to forget that that decision was made in a very different political context," Mayor Pegeen Hanrahan said, referring to the time when former President George Bush held office.
In association with the shift also came a shift in leadership at GRU. Commissioners recognized that Hunzinger, who was hired a little more than a year ago, had opened up a door to renewable energy that likely wouldn’t have been possible under previous leadership at GRU.
"I really think that the citizens of Gainesville, Alachua County and Florida for that fact, will look back to this era and your leadership," Commissioner Lauren Poe told commissioners and GRU leaders.
The 100 megawatt plant will be the largest biomass plant in Florida, Regan said.
Fuel for the plant will come mostly from waste wood in the area’s logging industry, however, the plant will also burn urban yard and forest waste and some wood that is ordinarily used for paper production known as pulp wood.
About a million tons of green or "wet" wood will be burned in the plant, and the city has previously adopted strict forestry standards and substantial incentives to ensure that demand doesn’t harm the areas forests and wildlife habitats.
American Renewables — formerly named Nacogdoches — responded to Gainesville’s request for a company to construct a biomass power plant more than a year ago.
In a competitive process, American Renewables was selected, and negotiations began.
"This is all about transitioning to a more sustainable future," Jim Gordon, president of American Renewables said about his company’s decision to invest millions into biomass projects, including Gainesville’s.
No one is certain how much plant construction will cost — likely somewhere between $400 million and $500 million.
"The financial investment climate isn’t so great with major banks collapsing, but we think with the economic stimulus and given the improvements in the market, we are very confident we will fund this project," Gordon said.
The plant is hoping to receive grant monies available for renewable energy projects in the American Recovery and Reinvestment Act.
That substantial benefit, however, comes with a tight deadline, and the plant must be operational by January 2014 to be eligible. The utility rates agreed on by American Renewables and GRU are dependent on American Renewables making that deadline, and could increase if the grant money isn’t received.
Construction on the plant will begin as soon as American Renewables receives the necessary permits from the state — a process that should take about a year.
Gordon emphasized his company’s dedication to using local engineers and contractors for the construction of the plant, which could create as many as 350 temporary job. The plant itself will employ 45 people permanently.
Additionally, the demand for fuel from area timber operations could support an estimated 500 forestry-related jobs.
Megan Rolland can be reached at 338-3104 or firstname.lastname@example.org