Welcome to another edition of the Innovative Natural Resource Solutions, LLC eNewsletter “Solutions”. If there are items you would like to see, or data points that would help you evaluate opportunities, let us know – INRS is committed to

making this newsletter informative and useful.

From the INRS, LLC team

7th Northeast Biomass Heating Expo and Trade Show

Portland Maine is once again the site for this largest biomass heating exposition in the country. The 7th Northeast Biomass Heating Expo will run April 16-18 and take place at the Cumber-land County Civic Center Arena in downtown Portland. A full program of educational workshops and trade show with over 60 vendors is planned. Last year's event drew over 600 people. A bus tour of exemplary pellet and chip heating projects is planned for April 16. Pre-registration is required, and early bird discounts are available if you are a!liated with one of the many co-hosting organizations right up until the event. Come see what the burgeoning modern wood heating industry has to o"er! More info here: http://nebiomassheat.com/

New Hampshire Wood Energy Council

Check out the new Council video at http://www.nhwoodenergycouncil.org/. Know someone in New Hampshire who may be interested in switching their facility from fossil fuel heat to wood fuel heating? Just have them call us at INRS.

INRS continues to provide sta!ng to the NH Wood Energy Council’s work to encourage commercial/institutional facility owners and managers to switch from fossil fuel heating to clean, modern, e!cient wood-fueled heat.

Forest Resources Association

INRS’s Eric Kingsley is serving as coordinator for the Northeast Region of the Forest Resources Association. FRA is a national trade association that works with all aspects of the supply chain – landowners, loggers, truckers and mills. Kingsley is supporting FRA at the regional level by continuing the organi-zation’s monthly Forest Forum, representing the organization at regional meetings, and developing new opportunities for FRA members to learn from and be involved in their organiza-tion. If you would like to receive the invitations to FRA’s month-ly Forest Forum in Maine, email Eric at his FRA address, ekings-ley@forestresources.org.

Legislation/Regulations Impacting Biomass Energy Across Northeast

New Hampshire:Attacks on the state's Renewable Portfolio Standard have been soundly defeated, with the NH Sustainable Energy Association and the NH Timberland Owners Assn leading the advocacy.

New York: The NY Biomass Energy Alliance is introducing both an investment tax credit bill for modern wood heating installations that will provide up to a 30% state income tax credit against the installed capital cost. NYBEA is also supporting a production tax credit bill that adds densi!ed biomass fuels, renewable fuel oil (e.g. pyrolysis oil from wood) and cellulosic ethanol to the state law that currently provides production credits for biodiesel. NYBEA is also pushing municipal !nance reform legisla-tion that will make it easier for NY towns to bond !nance biomass boilers.

Vermont:Major new energy legislation (Renewable Energy Stan-dard and Energy Transformation, or "RESET") is on a fast track for passage that will transform the state's renew-able energy mandates, including a new "energy trans-formation" title that may provide signi!cant new incen-tives for modern wood heating. Renewable Energy Vermont has been integrally involved in the develop-ment of this legislation.

Massachusetts:MA Dept of Energy Resources is developing regula-tions to implement the addition of renewable thermal, including advanced biomass heating technology, to the Alternative Portfolio Standard. The regs are expected to be completed by early fall. The MA Renewable Thermal Coalition and the MA Forest Alliance have led the advocacy for this important new incentive for modern wood heating.

Senator Angus King, Representative Peter Welch Reintroduce BTU Act

Maine US Senator Angus King, and Vermont US Representative Peter Welch, with bi-partisan support in both houses of Congress, have re-introduced the Biomass Thermal Utilization Act of 2015. This legislation adds high e"ciency modern wood heating systems to the array of renewable energy technologies that have long bene!ted from residential and commercial investment tax credits to help reduce the high capital cost. A coalition of over 100 organizations, agencies and businesses, led by the Biomass Thermal Energy Council, is spearheading advocacy. All federal renewable energy tax credits are up for reauthorization in the 114th Congress, so action is expected in the next year.

North East State Foresters Association

if you haven’t downloaded the new About My Woods mobile app for iPhones, iPads, Android phones and tablets, you are really missing something. Go to the App Store or Play Store or to http://www.aboutmywoods.org/ to get the free app or to view the new “how to” video in case you want to brush up on the full functionality of About My Woods!Here’s what some users are saying:

Martha B said “…this is really cool and useful. Why didn’t someone make this app years ago.”

Paul T said “I know that this is made for landowners but as a forestry professional, I can use a lot of About My Woods functions for my work. Bravo!”

And let us know what you think when you use it.

Energy MarketsPrices for energy – diesel, electricity, and natural gas – all in!uence the viability and pro"tability of biomass energy prod-ucts. These commodities are used as an input cost (diesel for biomass fuel production), income stream (wholesale electricity prices), or indicate the position of a competing fuel (natural gas, which often sets the electricity clearing price in New England). These commodities are tracked in open and transparent markets, and futures markets exist that allow a mar-ket-based price outlook and an opportunity to manage price risk.

New England went into this past winter with serious concerns about the ability to generate su!cient electricity for the region at a reasonable price. Increased demand, retirement of older generation units (coal and nuclear) and constraints on the ability to get natural gas into the region has everyone bracing for a winter of brutal electricity pricing. This fear – very real and based on the region’s experience in the winter of 2013 – 2014 – had governors, industries and others promoting a range of solutions – from new gas pipelines to importing energy from Quebec. Despite the cold winter, those fears seem to have been exaggerated. Power plant operators in the region were encouraged to take steps to assure availability and reliability, and conservation and e!ciency programs are making a dent in demand. We still had a winter peak in price, but nothing like last winter, and nothing like what was feared. The futures market* suggests we will continue to see winter spikes, but not at the level of 2013-2014 (of course, the futures market can be wrong).

So what does this mean for biomass? For facilities without a power purchase agreement (which describes most facili-ties in the region), the economics of running a facility require both a strong wholesale electricity market and revenue from Renewable Energy Certi"cates. Under these market conditions, we might expect to see some biomass plants operating at full capacity during the stronger electricity markets of winter and summer, and taking longer downtime during the spring and fall. Obviously, for suppliers this can create huge challenges, particularly if wood buying stops as well.

Diesel

The past months have seen a dramatic decline in the price of oil, and diesel has fallen right along with it. From an average price of $4.01 per gallon in 2014, the current and futures market* suggest an average price of under $3.00 per gallon for 2015. INRS estimates that – on average – 2.1 gallons of diesel are use in the harvesting, processing and transport of one ton of biomass. As a result, a drop of $1.00 in diesel prices should result in a drop of about $2.00 in the price of delivered biomass – assuming no other market forces. (Of course, there are other market forces at work; nothing is this simple.)

While the drop in diesel is good news, it also means a drop in the cost of heating oil. While good news for consumers, this makes it harder for biomass heating to gain traction. Biomass heating – pellets, chips, and cordwood – remains an attractive #nancial option when compared to oil and propane, but the drop in oil prices has certainly shrunk that di"erential. A good resource on the cost per MMBTU of a range of fuels – including wood pellets and cordwood – is available from the NH O!ce of Energy and Planning.

Natural Gas

Natural gas is critical to understanding electricity pricing in New England. (Note: Natural gas prices are reported as wholesale prices at Henry Hub. Like electricity sales to an end user, the wholesale price of the underlying commod-ity is only one component of what a consumer pays, but is the most volatile.) As discussed in previous newslet-ters, infrastructure constraints at the “Algonquin Gate” and other points where natural gas enters New England can have serious short-term and seasonal impacts on delivered prices. E"orts are allegedly underway to address this by adding new natural gas pipeline capacity in the region, but under a fastest-case scenario is still years away.

The fact that those constraints did not have the impact that was feared may have slowed the rush to develop infrastructure solutions – or at least the political willing-ness to have ratepayers accept the cost of infrastructure development. The constraints remain – that is real – what is in question is what are the best ways to address the issue (options include but are not limited to new natural gas plants, new power import from Canada, e!ciency and conservation, new renewable generation in the region, or a combination of the above) and who will pay.

Since reaching a low of under $2.00 per MMBTU in 2012, natural gas prices have been on an upward trend, show-ing a peak at $6.00 in February 2014. Prices have declined somewhat steadily since then, and market sentiment* suggests that wholesale natural gas will level o" and stay at about $3.00 through the coming year – but New England’s infrastructure constraints may make this irrelevant to the prices we see.

* Note: The future energy prices are based upon existing futures markets and re!ect market sentiment, this is not an INRS prediction or a guarantee of future prices (though futures can be used to help a facility manage price risk). All futures prices

listed are from the afternoon of March 6, 2015 and may have changed since that reporting.

Thermal Renewable Energy Certi!cates INRS has partnered with Wilson Engineering Services to represent a number of schools, hospitals and businesses in the sale of Thermal Renewable Energy Certi#cates (T-RECs). T-RECs are generated when facilities use a renew-able resource – for example wood chips or pellets – to generate heat. In New Hampshire, the state’s Renewable Portfolio Standard requires electricity providers to purchase T-RECs, using a mechanism similar to the REC market renewable electricity generators use. INRS and Wilson Engineering are currently helping several institutions navigate this complex market, and getting them money to support operations and/or pay down capital cost of their biomass installations. While T-RECs are currently only available to New Hampshire facilities, other states in the region are considering or developing similar programs. Read more about this service here.

Maine Pulp MarketsEric Kingsley recently authored “The State of Pulpwood in the State of Maine”, an article for The Northern Logger. Maine has seen signi#cant changes in pulp markets over the past year – including permanent mill closures, a mill bankruptcy / sale / restart, and signi#cant new investment. While these changes have certainly shifted markets – and left some suppliers and landowners without payment - Maine remains a strong, diverse and dynamic market for pulpwood. You can read the entire article here.

North East State Foresters Association shows where to buy local lumber in Maine, New Hampshire, Vermont and New York

INRS has helped the North East State Foresters Association (NEFA) develop a series of 4 publications – one for each state – that provides information on where you can buy locally manufactured lumber from local mills in the 4-state region. Check them out at http://www.nefain-fo.org/publications.html.

Another great set of publications to be released in the next month are version of the Economic Importance of the Forests of Connecticut, Massachusetts and Rhode Island publications to match the series produced for Maine, New Hampshire, Vermont and New York. INRS has led the research and development of these publication, working in concert with the state foresters of Southern New England: Chris Martin – Connecticut; Peter Church – Massachusetts; and Bruce Payton –Rhode Island.