Welcome to ICN’s emerging markets -

bioenergy seminar

2014 FORMULA 1 ROLEX AUSTRALIAN GRAND PRIX

Thursday 13 March 2014, 9.30am – 11.00am

Don Matthews Executive Director

ICN Victoria

Klaus Baumgartel National Sector Manager –

Clean Energy ICN

Colin Stucley Director – Enecon

Board Member of Bioenergy Australia

Overview of Advanced Biofuels

Presentation at ICN bioenergy meeting, March 2014, by Colin Stucley – Director, Enecon Pty Ltd

Over 40 bioenergy studies, reports & projects since 1998. (Heat, power, liquid fuels, charcoal)

1. Status of biofuels in Australia

2. Advanced biofuels – commercial activities

3. Technology maturity

4. Summary

Structure of this talk

Bioenergy in Australia: Status and Opportunities

Report first issued in 2004 and updated in 2012.

Full report available on BA and Enecon websites.

Australian ethanol production in 2012 From BAA website

World ethanol production statistics, 2011

Country or region Production in 2011 (million litres)

North and central America (excl Canada)

54,508

South America (excl Brazil) 21,843 Brazil 21,094 Europe 4,417 Asia (excl China) 3,368 China 2,100 Canada 1,750 Australia 330 Africa 145 Total 109,562

Australian petrol use: approx. 19,000 Ml/y

Biodiesel: approximate usage in major markets In the United States, diesel consumption in the USA was estimated to be 135 billion litres for the year 2010. Total biodiesel production in 2011 was reported as 4.2 billion litres, or 3% of all diesel used. Total installed capacity for the European Union (EU) was estimated to be 24 billion litres per year in 2010. Actual production was 10 billion litres. EU27 diesel use is approx 250 billion litres/year* suggesting biodiesel is 4% of the total. At the start of 2012 the installed annual biodiesel capacity in Australia was 500 ML. At that time only four of the seven plants were in operation, producing 115 ML of biodiesel from tallow and used cooking oil. Diesel use that year in Australia was approximately 19,000 Ml, suggesting that biodiesel use was 0.6% of the total. * http://www.cmegroup.com/education/files/petromatrix-europe-diesel-market-2013-02-19.pdf

With first gen fuels….we appear to have been left behind

What about advanced generation biofuels?

First generation: Ethanol – sugar and starch

Biodiesel – vegetable oils, animal fats

Advanced generation:

Ethanol from biomass

Hydrocarbons from biomass

Biodiesel from non-food crops

Microalgae

Why make fuels from biomass? • Potentially more profitable than electricity • Low feedstock cost relative to “first gen” fuels

– Palm oil, tallow can cost more than crude oil – Lignocellulosics, minor cost component of finished fuel

• Less competition with food – Residues are widely available (plantations, crops, MSW) – New plantings (e.g. mallees) can complement food

production

Let’s consider the commercial status.....

Ethanol via biomass hydrolysis & fermentation: Beta Renewables

Commercial plant in Italy, began operations in 2012.

50 Ml/year ethanol plus electricity. Straw feed and can also use hardwood.

Ethanol via biomass hydrolysis & fermentation: Abengoa

Commercial plant under construction during 2013, at Hugoton, USA.

1,000 dry tonne per day feed, for 100 Ml/year ethanol plus electricity.

Ethanol via biomass hydrolysis & fermentation: POET

Already active in first gen. fuels. 75 Ml/y commercial plant now under construction in Emmetsburg, USA. Corn stover as feed.

Ethanol via biomass hydrolysis & fermentation: DuPont

80 Ml/y commercial plant now under construction in Iowa, USA. Corn stover as feed.

Ethanol via biomass hydrolysis & fermentation: Granbio

Already active in first gen. fuels. 80 Ml/y commercial plant now under construction in

Brazil. Bagasse as feed.

Ethanol via biomass hydrolysis & fermentation: COFCO

50,000 t/year ethanol, plant under construction in China.

Corn stover planned as feed.

Ethanol via biomass gasification and fermentation: Ineos Bio

Commercial plant, Indian River Fl – began operation in 2012.

Mixed biomass feed for 30 Ml/y of ethanol and 6MW of electricity

Ethanol via biomass gasification and methanol: Enerkem

40 Ml/y commercial plant in Edmonton, Canada. MSW as feed. Commissioning is now underway.

Demonstration facility near Montreal

Gasoline via biomass gasification and methanol

Wood as feed: • Haldor Topsoe • Andritz Carbona • GTI Demo plant commenced operations in Illinois USA, mid 2013.

Natural gas: Commercial process for natural gas to methanol to gasoline since the 1980s.

Fast pyrolysis of biomass then upgrading: KiOR

500 dry ton/day commercial prototype is being operated in USA. Makes “Drop in” hydrocarbons. Feed is southern yellow pine.

Fast pyrolysis & upgrading: Envergent

Ensyn: Commercial-scale pyrolysis plants (up to 100 TPD) operated for more than 20 years. Wood residues as feed.

Envergent: joint venture with UOP: upgrading bio-oil through to “drop in” hydrocarbon

fuels. Building demo plant in Hawaii for operation in 2014.

Fast pyrolysis & upgrading: IFPEN/Axens & Dynamotive

100 TPD 200 TPD

Commercial plants for fast pyrolysis in Canada. Multiple wood feeds

Upgrading to hydrocarbon transport fuels demonstrated in 2009. IFPEn & Axens working in France to commercialise upgrading technology.

Biomass to fuels at commercial scale: Product Pathway Feed Feed scale (dry tonne/year)

Ethanol enzyme hydrolysis straw, wood 150,000 to > 300,000

Ethanol gasification & fermentation wood ~ 150,000

Ethanol gasification & catalysis MSW ~ 100,000

Hydrocarbons pyrolysis & upgrading wood 50,000 – 150,000

Commercial for other feeds but not for biomass yet:

Hydrocarbons gasification & FT or MTG wood up to > 600,000

A growing resource of commercial expertise…

But are they economic? Can we get better at making biofuels?

Competitive fuel costs expected

Organisation A$/litre (petrol equiv.) Feed NREL 0.85 Corn Stover

KiOR 0.68 Southern Pine

IFPEn/Dynamotive 0.47 – 0.85 Various (to US$130/dry ton)

Recent discussions with two other groups with commercial scale plants overseas indicates they can achieve competitive fuel prices now.

Published data

Confidential data

Pursuit of lower costs: “learning by doing”

Novozyme - enzyme costs coming down

Fast pyrolysis - productivity improvements

“In early 2009, yields were in the 17 gallons per ton range, but have improved to 67 at the present time and are targeted to reach the high 80s by 2014 en route to an eventual target of 92 gallons per ton.”

http://www.biofuelsdigest.com/bdigest/2012/08/16/no-eeyores-for-kior/

What does this mean for Australia?

Multiple advanced biofuel technologies are starting commercial operation overseas. Can we utilise them in Australia?

1. Technologies de-risked overseas = lower costs for capital here

2. Technology: pilot, demo, commercial, engineering package

3. Scale important for feedstock supply

4. Significant opportunities for local construction /operation

5. Where to now? Commercial feeds and technologies are available.

Can we secure fuel contracts? Can we secure funds for showcase

commercial projects?

Bioenergy Australia

• National association

• Membership: Industry, government, research

• Focus on knowledge sharing and as an information forum (not a lobby group)

• National conference each year

• Hoping to run breakfast meetings in Melbourne

• Bioenergyaustralia.org.au

Thank you – questions?

Colin Stucley, Director - Enecon Pty Ltd

Suite 5, 651 Canterbury Rd, Surrey Hills, Vic. 3127 Tel. (61 3) 9895 1250 www.enecon.com.au

Klaus Baumgartel National Sector Manager –

Clean Energy ICN

Joshua Smith Engineering Delivery Manager

Parsons Brinckerhoff

Biomass Power Plants – An Introduction ICN Networking Event: Emerging Markets - Bioenergy

13 March 2014

Who We Are…..

• Part of the Balfour Beatty Group (UK based firm) • Active in development, design, construction and management of

infrastructure assets (Power, Water, Mining, Transport, Oil & Gas) • Over 50,000 employees globally • 1,500 employees in Australia • Operations in over 80 countries • Revenue – GBP 11 billion

Biomass Power Plants

• A sustainable power generation solution • Advantages - renewable fuels and carbon neutral production • Disadvantages - large land areas and water volumes • Cogeneration - becoming more prevalent globally • Biomass power supplements ‘conventional’ (11% of global power)

Biomass versus conventional

• Coal and gas fired are well known – Technologies – Controls + operation

• Renewable fuels introduce risks

– Bagasse (sugar cane), grape marc – Wood chip, almond husk

• Fuel inconsistencies (specification) • Fuel supply risks (sustainability) • Stockpiling areas significant • Material selection / compatibility

Business case – does it stack up? • Business case

– Proposed site(s) – Fuel supply/availability and transport costs – Plant construction costs – location, resources – Operational costs (fixed and variable) – Power Purchase Agreements – Infrastructure (construction phase, transmission) – Concept design development – Investors/funding

• Approvals

– Environmental Impact Studies – Local government approvals – Relevant statutory approvals

Contracts • EPC (Engineerng, Procurement & Construction)

– most common in power plant delivery – provides certainty to owner/investors – majority of risk resides with contractor – defined scope, schedule and price

• Delay and performance guarantees – liquidated damages – typically capped at 20% - 30% of contract value – commensurate with lost revenue

Procurement • Vendor Selection Critical

– relevant experience with technology and fuels – demonstrable track record

• Equipment Costs – relatively significant (boiler, STG, fuel handling, condenser) – offshore fabrication is most cost effective – significant potential FX risk, duties, taxes

• Quality risks – production and fabrication (standards, workmanship etc.) – independent inspections offshore

• Vendor accountability – B2B head contract conditions is challenging – risk will be priced!

Construction + Commissioning • Suitably qualified tradespersons – 100+ at peak for 30MW plant

– fitters, electricians, operators, riggers, welders … – specialist trades (HV, rotating machinery, boiler, turbine etc.)

• Significant construction activities (10 storey building stack height) • Remote areas require accommodation during construction • Multiple contractors = Site congestion + safety risks

– Strong safety protocols and management – Contractor training and inductions

• Local and system wide • Performance acceptance testing • Handover to operations and

maintenance

Construction + Commissioning

Boiler house under construction – 44MW Biomass Plant Lockerbie, Scotland – 480kt fuel pa

Construction + Commissioning

Biomass Plant commissioned in 2008 (Scotland)

Operations and Maintenance • Specialist tradespersons required to operate and maintain (ticketed). • Ongoing safety, statutory training – operators are typically highly skilled • Additional skilled and specialised labour to support regular activities

(fuel supply, plant shuts etc.). • O&M typically 24/7 operation (3 shifts – 4 shifts) • Fuel cartage and stockpiling ongoing 24/7

Summary • Brief introduction to delivering biomass power plants • Growing global trends in Biomass Power Generation • EPC contracts are preferred by owners/investors

– Risk profile to owners • A number of significant project delivery risks that require sound

management • Sustainable fuel supply and procurement of compatible kit are

significant risks and should be managed accordingly

This image cannot currently be displayed.

Josh Smith

Engineering Delivery Manager Parsons Brinckerhoff

jo1smith@pb.com.au

Klaus Baumgartel National Sector Manager –

Clean Energy ICN

Thank you emerging markets –

bioenergy seminar

2014 FORMULA 1 ROLEX AUSTRALIAN GRAND PRIX

Friday 14 March 2014, 9.30am – 11.00am