Declining Electricity Prices In The Northeast Hinder Biomass Market

In 2015, New Hampshire set a record for biomass use: 2.6 million tons of low-grade wood was converted to electricity. In 2014, biomass accounted for roughly 22 percent of Maine’s total harvest volume. Depending on local markets, biomass represents between 20-30 percent of the harvest volume in the Northeast, which equates to a significant amount […]

In 2015, New Hampshire set a record for biomass use: 2.6 million tons of low-grade wood was converted to electricity. In 2014, biomass accounted for roughly 22 percent of Maine’s total harvest volume. Depending on local markets, biomass represents between 20-30 percent of the harvest volume in the Northeast, which equates to a significant amount of electricity produced from renewable resources grown in local forests.

Biomass power plants are key outlets for low-grade wood, yet many are economically challenged in the region; some have closed altogether, while others hang on by a thread. Biomass electricity—generated either for the larger power grid or for internal use by forest industries—competes economically against other fuels. But with falling prices for natural gas (the most common generation fuel in the Northeast) and limited growth in the electricity market, biomass has struggled to remain competitive as a fuel source.

Biomass electric facilities produce two core products: 1) electricity, which competes directly with every other energy source on the grid, and 2) Renewable Energy Certificates (RECs), which allow a buyer (often a utility company) to claim the purchase of renewable or “green” energy for accountability purposes. Most states in the Northeast now have Renewable Portfolio Standards in place requiring that a percentage of qualified renewable energy be part of the overall electricity mix.

The sale price for both electricity and RECs are important to the operation of biomass facilities, and both are challenged in the current regional market. The trailing 12-month price has dropped from over $80 per megawatt hour (MWH) in the winter of 2014 to $33/MWH for the most recent months.

From Forest2Market: http://blog.forest2market.com/declining-electricity-prices-in-the-northeast-hinder-biomass-market

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