6.1a. ERMUSR 11-17-2015 i
Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Troy Adams, P.E. —General Manager
John Dietz—Chair
Al Nadeau—Vice Chair
Daryl Thompson—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
November 17, 2015 6.1a
SUBJECT:
Staff Updates—General Manager
DISCUSSION:
• The Board of Directors of the Minnesota Municipal Power Agency(MMPA)met on
October 27, 2015 in Shakopee, Minnesota.
MMPA's Hometown BioEnergy(HTBE) facility was awarded the municipal Biogas
Project of the Year award by the American Biogas Council. The award was presented to
the Board at the meeting.
In October,the Agency closed on a Power Purchase Agreement(PPA) for an 8 to 10 MW
solar project located in Buffalo, Minnesota.
MMPA also closed on the purchase of land in Shakopee, Minnesota for its distributed
generation project.
• The award winning MMPA HTBE facility was the subject of a critical Star Tribune
article. The article cites facility run statistics suggesting that this facility is a failure
because it runs well below capacity. These stats are completely irrelevant because this
facility was designed to be dispatchable, meaning that it runs when economic conditions
are favorable. The plant was designed to run during peak times and not 24 hours per day.
It is unfortunate that lack of understanding of the industry leads to speculation and
negative press. The article is attached. Also attached is another award this facility was
recognized with a year ago.
It is true,however,that MMPA is working on resolving odor issues related to this plant.
ERMU had similar challenges when our Landfill Gas-to-Electric Power Plant began
operations over a decade ago. We ended up adding a"smog hog"exhaust filter to remove
odor.
• The Field Engineer position included in the 2015 budget for an early first quarter hire has
been on hold. This position was created to supplement skills needed in the Technical
P D W E B E D BY
Page 1 oft NATURE
Reliable Public
Power Provider 5 P O W E R E D T O S ERV E
Services Department and be a direct report to the Technical Services Superintendent.
With the recent retirement and subsequent hire of a Technical Service Superintendent, a
gap analysis of the department skill sets was done. Because of the depth of experience
and skills the new Technical Service Superintendent brings to ERMU, it has been
determined that the Field Engineering position could be scaled back to a GIS/Mapping
Technician. This position has now been posted. The position posting closes on November
13. The hiring process, along with the end of the year holidays,will likely push a start
date to late December or early January.
• We continue to work with MCR, our transmission consultants, on our MISO Attachment
O. Revisions to our Attachment 0 filing should result in significant on-going MISO
revenue.
ATTACHMENT:
• "Elk River Shares in `Biogas Project of the Year' Award: MMPA's `Hometown
BioEnergy' facility in La Sueur wins honors from American Biogas Council"—
Minnesota Municipal Power Agency Press Release—November 2, 2015
• "Slow, stinky start to Le Sueur,Minn., green-energy project"—David Shaffer—
StarTribune.com—October 17, 2015
• "Top Plant: Hometown Bio Energy, Le Sueur,Minesota"—Aaron Larson—
powermag.com—December 1, 2014
INATURE1
Page2of2
Reliable Public 152
Power Provider P OWERED T O S ERV E
220 South Sixth Street Suite 1300 Minneapolis, MN 55402
4vIMPA tel. 612.349.6868 fax. 612.349.6108 www.mmpa.org
Minnesota Municipal Power Agency
Elk River Shares in "Biogas Project of the Year" Award
MMPA's "Hometown BioEnergy"facility in Le Sueur wins honors from
American Biogas Council
November 2, 2015— Elk River is one of the 12 member communities of the
Minnesota Municipal Power Agency (MMPA)that can take pride in the national
recognition awarded to the Agency's Hometown BioEnergy facility in Le Sueur as the
"Biogas Project of the Year" presented by the American Biogas Council.
Based in Washington D.C., the American Biogas Council, a trade association
representing the U.S. biogas industry, is dedicated to creating jobs, environmental
sustainability and energy independence by growing the American biogas industry.
MMPA's Hometown BioEnergy facility uses the anaerobic digestion process to
produce renewable electricity from food processing and agricultural waste. Electricity
generated from methane gas can be dispatched to the local distribution system at times
of highest demand.
According to Steve Schmidt, MMPA chairman and City of Anoka council
member, "We're very proud of this award because it recognizes the innovation built into
Hometown BioEnergy, where we produce methane and store it, ready to burn in our
generators during on-peak hours when the value of the energy is highest."
Schmidt said energy produced in the facility is distributed directly into the City of
Le Sueur electrical system, and is an important component of MMPA's renewable
energy portfolio—all designed to help MMPA communities meet Minnesota's renewable
energy production requirements.
"This biogas facility, because of its ability to store biogas until it's needed, is an
excellent complement to renewable power generated from wind or solar," he said.
Patrick Serfass, Executive Director of the American Biogas Council said in a
news release announcing the award, "The quality of innovation in the biogas industry is
at a fever pitch today."
Hometown BioEnergy was also was recognized by POWER magazine as a 2014
Top Renewable Plant and was featured on the cover of the December 2014 magazine.
Schmidt said, "The Hometown BioEnergy facility in Le Sueur is an important
factor in MMPA's mission to provide reliable, competitively-priced energy to members,
while meeting renewable energy standards."
153
More information about MMPA is available at www.mmpa.orq. Members include municipal
utilities in Anoka, Arlington, Brownton, Buffalo, Chaska, East Grand Forks, Elk River, Le Sueur,
North St. Paul, Olivia, Shakopee and Winthrop. MMPA's management partner is Avant Energy, a
Minneapolis-based energy management company and an innovative supplier of energy project
development, management, trading, consulting and utility operations services. See more at
www.a vantenergy.corn.
Contact:
Bob Rumpza, Rumpza Consulting, 612-309-3971, bob(a)_rumpzaconsultinq.com
154
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11/13/2015 Slow,stinky start to Le Sueur,Minn.,green-energy project-StarTribune.com
BUSINESS
Slow, stinky start to Le Sueur, Minn.,
green-energy project
The federally subsidized plant is generating less electricity,more
odor.
By David Shaffer(http://www.startribune.com/david-Shaffer/10645931/)Star Tribune
OCTOBER 17,2015—2:00PM
LE SUEUR,Minn.-Nearly two years after going online,an innovative,municipally
owned power plant that burns methane from agricultural waste is generating only a
faction of its promised electricity.
The$45 million plant,built partly with federal aid in this city 50 miles southwest of
Minneapolis,also is producing something its promoters said it wouldn't—stink.
"It is like living next to a giant poop plant,"said Katie Terwedo,the closest neighbor to
the Hometown BioEnergy plant that began operating in late 2013.
Although the plant has steadily increased its power output,it remains well short of its
goal of generating electricity for 12 hours or more per day.In the first three quarters of
2015,it operated at just 12 percent of its capacity,or about three hours per day on
average.
The plant's owner,Minnesota Municipal Power Agency(MMPA),and its operator,
Minneapolis-based Avant Energy,express confidence in the technology.They said that
odors are being addressed and that ramping up to full-scale power generation was
expected to take time.
"We would be very happy to reach 12 hours(of daily power generation]in five or six
years,"said Derick Dahlen,CEO of Avant Energy,which gets an unspecified payment to
operate the plant and collected a share of the$11 million in fees to plan and build it.
i'.
At that pace,the plant would reach its expected generating output around 2020,the
state's deadline for most Minnesota utilities to get 20 percent of their electricity from-
renewable sources.
(http://stmedia.startribune.corn/images/ows_14450291652571
The challenge,executives said,is finding the best mix of agricultural wastes.They're DAVID SHAFFER•STAR TRIBUNE
dumped into tanks called anaerobic digesters,where bacteria produce methane,or The Hometown BioEnergy plant in Le Sueur
natural gas,to run power generators.An innovative feature of the Le Sueur plant is three turns farm and food industry waste into
fabric domes that store methane so that generators can run only when electricity methane to generate electricity.ity.Methane i...
demand is high.
Husks from sweet corn processing are the primary waste"feedstock"for the plant.But
more than 25 agriculture and food industry wastes,from manure to cheese whey,have
been tested with the aim of signing contracts to take the most advantageous,said Kelsey
Dillon,Avant Energy vice president of biopower.
"Our objective is to have as much feedstock diversity as possible,"said Dillon,and each
new waste requires test loads in the anaerobic digester."It was always intended that we
would need a ramp-up as we are bringing in those different feedstocks."
Early questions about plant
The plant,largely funded with municipal-backed bonds and$8 million in federal aid,
has generated controversy from the beginning.
John Schultz,a critic of the plant who is a former member of the Le Sueur City Council
and MMPA board of directors,said he never heard,until now,that the plant would take
many years to reach its power-generation target.
"The implication was that in a very short order it would be a functioning plant,"Schultz
said."They could have put up a solar project for a fraction of the cost and had it running
the first day."
156
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11/13/2015 Slow,stinky start to Le Sueur,Minn.,green-energy project-StarTribune.com
Dahlen said the plant isn't yet generating at 5 cents per kilowatt hour as he has
projected,but is meeting financial goals,which he declined to share.At the projected
price,the plant's electricity would be cheaper than solar,and close to the price of wind
power.
The multiyear ramp-up doesn't worry Steve Schmidt,an Anoka City Council member
and chairman of the MMPA board of directors,who pointed to a 2014"Top Plant"
honor awarded by a power industry trade journal for the innovative approach to biogas.
"We are kind of inventing along the way,"Schmidt said.
Not the first biogas challenge
More than 2,000 biogas plants operate in the United States,mostly at landfills,which
naturally produce methane from the breakdown of waste.Many small plants operate on
farms,turning manure into energy.
Dan Andersen,an assistant professor and extension specialist in the Iowa State
University Agricultural and Biosystems Engineering Department,said designers of
biogas projects often are"very optimistic"about how much methane a digester will
produce.He said he has visited plants,though not Le Sueur's,that get only 50 to 70
percent of the expected output.
"They found that there are some struggles in the day-to-day operation,"Andersen said.
"For the most part the systems are still in operation.They are making energy,maybe it is
a little less than they were hoping for,but they are plugging along."
Most reach 50 percent of their operating capacity in a few months,he added.Yet not all
have been a success.According to the U.S.Department of Agriculture,54 farm-based
projects have been shut down,including nine in Wisconsin.A manure-based plant in
Dane County,Wis.,that leaked liquid waste and emitted stinky hydrogen sulfide paid an
$80,000 state penalty in July,court records show.
Andersen said a plant like Hometown BioEnergy faces more complex challenges because
of its larger size and mixture of wastes.The plant's financial model relies partly on
collecting"tipping fees"for wastes that might otherwise go to landfills.The plant also
aims to profit from the sale of byproducts of the digestion process,including nutrients
that can be applied to farm fields.
But the waste and nutrient markets can be tough,Andersen said.One problem,he said,
is that waste materials often contain water."It costs a lot of money to move water
around,"he added.Ramping up a mixed-waste biogas plant"is as much an economic
management decision as it is something about the technology,"he said.
Although the Hometown BioEnergy plant is large compared with other biogas plants—
8 million watts of output—it's a small part of MMPA's generating capacity,which
includes large natural gas-fired units.In 2014,the biogas plant produced just 03 percent
of the electricity MMPA supplied to the 12 cities that own the power agency.
One of the goals of the project is to meet the state mandate for utilities to get 25 percent
of their electricity from renewable sources by 2025.
MMPA also has a wind farm and scattered wind turbines and is considering solar power
to meet the requirement.
If the biogas plant can't achieve its operating goals,"you have put out a lot of capital to
run the plant a few hours,"said Doug Tiffany,an assistant extension professor in the
University of Minnesota Department of Applied Economics.
If only it didn't stink
Neighbors of the plant would be happy if it didn't stink.
Kena Sheets,who lives and works near the biogas plant,said that driving past it during
one of the intermittent stinky times is"like walking through a sewer."
Last spring,when odors were particularly bad,Terwedo,the closest neighbor,said her
daughter"literally threw up on the back steps"as she walked from the house into the
foul air.
157
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11/13/2015 Slow,stinky start to Le Sueur,Minn.,green-energy project-StarTribune.com
Avant and the Danish supplier of the plant's equipment,Xergi A/S,initially said odor
wouldn't be a problem.After the complaints,the plant did maintenance on a biofilter,
Avant's Dahlen said.
That helped but didn't solve the problem,neighbors say.Terwedo said the odor was so
bad recently that she complained to the Minnesota Pollution Control Agency,which
says it will look into it,but only has jurisdiction if a regulated pollutant was emitted.
Avant officials contend that other sources of odor might be to blame."You do run into
those sorts of challenges in an agricultural community with this much food processing,"
said Dillon."It is not easy to tell what you are smelling and where it's coming from."
But neighbors said their noses are not being deceived about the source of the stink.
Sheets said Hometown BioEnergy's odor is"ten times worse than a farmer putting
manure on a field."
Twitter:@ShafferStrib
davidshaffer@startribune.com 612-673-7090 ShafferStrib
158
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Top Plant: Hometown BioEnergy, Le Sueur, Minnesota
Top Plant: Hometown BioEnergy, Le Sueur, Minnesota
12/01/2014 I Aaron Larson
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Using agricultural and food-processing waste products, Hometown BioEnergy is helping the Minnesota Municipal Power Agency meet state-mandated
renewable energy standards while also providing a valuable fertilizer for area farmers and solid biomass as a fuel for other facilities. Courtesy:Avant
159
Energy Inc.
We've all heard the phrase"one man's trash is another man's treasure."Hometown BioEnergy(HTBE)offers a case in point. The plant uses vegetable-
processing waste and livestock manure in an anaerobic digestion process to produce biogas for use in engine generator sets.The agricultural trash is a
real treasure for the company.
Avant Energy Inc.—the energy management company that developed,oversaw construction,and continues to manage operation of the plant for
Minnesota Municipal Power Agency(MMPA)—sees tremendous opportunities to redefine the term"waste."It believes bioenergy can help utilities, large
waste producers,food processors, and communities create value from waste streams and reduce overall energy costs. Its development team supports
clients in the planning,design, and construction of both conventional and renewable power generation facilities.
While some people may think that the plant is utilizing vital resources that could otherwise be used to fertilize area farmland, it actually increases options
for the agricultural industry. Not only does it help manage disposal of the waste, but its biological process also produces a liquid fertilizer—rich in nutrients
such as nitrogen, phosphorus, and potassium—that is then sold back to local farmers to spread on their land. In addition,undigested biomass is dried to
create a solid fuel,which can be sold to other biomass and coal-fired facilities to fuel their boilers.
A Flexible Design
Variety may be the"spice of life,"but it doesn't always make for the best"seasoning"at biomass plants. When dealing with agricultural waste products,
though,variety is also a fact of life. Materials are frequently exposed to weather,which means rain, sun,and wind will all significantly affect moisture
content. If waste is stockpiled for any length of time prior to delivery, quality can degrade. Farm management practices—such as cleaning schedules,herd
size,square footage per animal, and base bedding material—can also affect waste quality.
One of Avant's key objectives when designing the HTBE facility was maintaining flexibility in the allowable feedstocks.Tolerating variety enables the plant
to manage large seasonal changes in waste volumes from suppliers in the region. In addition,it allows the company to accept wastes that become
available on a sporadic basis with fewer operational challenges.
The process begins with feedstock delivery. The mixture of local agricultural and food processing waste includes sweet corn silage,food waste, livestock
waste, and waste oils (all sourced from within a 60-mile radius).The material is transported to HTBE via truck and delivered to the plant's receiving hall.
The biomass is weighed, mixed, and heated in feeding modules to prepare it for the anaerobic digestion process.
"The percentages of each type of material varies; however,on average,the plant sees approximately 50% higher solid wastes and 50% liquid wastes,"
said Kelsey Dillon,vice president BioPower for Avant Energy.
Inside the digesters,bacteria work together in the absence of oxygen to decompose organic material and produce biogas. Biogas typically contains about
55%to 70% methane, 30%to 45% carbon dioxide, and trace amounts of other gases, including sulfur in the form of hydrogen sulfide(H2S).As H2S is
corrosive,it must be removed before combustion.At HTBE,the H2S is removed from the biogas through microbial processes in gas cleaners as the
product leaves the anaerobic digesters.
Three large, white,dome-shaped gasholders—each with a 9,000-cubic-meter capacity—store the biogas for future use in one of four 2-MW Cummins
Power Generation C2000 N6C engine gensets(Figure 1).The onsite gas storage allows dispatch flexibility to provide on-peak electricity, maximizing
revenue potential.The electricity produced is supplied directly to the local distribution system serving the City of Le Sueur.
160
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1.Green energy.Four Cummins Power t;ener at on engine gen IA on the b;ogas to generate electricity for the IOC"ll distribution systein Courtesy Ajuot Energy Inc.
Heat recovery is another important part of the process.Cooling water from the engine water jackets is the main source of reclaimed energy.The heated
water is fed into an insulated storage tank and then used in the gas cleaner,feeding module,electric generation, and in-floor heating systems.
HTBE also recovers energy from the engine exhaust,which is used by the post-digestion system. By utilizing the heat recovery system, HTBE believes it
extracts every ounce of value possible from its process.The heat is supplied to the plant's belt dryer,thereby reducing the moisture content of the solid by-
product.This makes it more valuable as a renewable solid fuel for combustion offsite in biomass and coal-fired burners. It is also safe to reuse the
separated solids as a bedding material for livestock in place of more expensive sawdust and wood shavings.
Although the plant's 8-MW capacity may seem small compared to the average utility power plant, it is one of the largest facilities of its kind.The plant is
permitted to process up to 45,000 dry tons of waste per year.
A Community Asset
Developing a power plant of any type comes with challenges. For HTBE, the technology is not particularly familiar to most people in the U.S., so its first
challenge was educating the community about the project.
Avant wanted local residents to understand that a facility of this kind is a long-term asset. HTBE provides important benefits to the local community by
collecting and processing local wastes, and creating a renewable source of electricity that flows directly into the host community's power system. The
company shared project information with the public early on in the development phase. It hosted meetings with community leaders,held open houses for
local residents,and offered regular construction updates.
In addition,Avant placed an emphasis on hiring locally.Although the plant only has seven permanent employees, local contractors, businesses,farmers,
and other area residents all contributed to construction and startup in various ways,and continue to support operational activities.The plant also uses
some seasonal employees.
A Rapid Timeline
Minnesota winters offer a multitude of challenges,especially for construction companies. Nonetheless,the project broke ground in December 2012 with a
one-year goal for completion.
"The aggressive construction schedule for the plant was a significant challenge, but we worked weekends and long hours.We also had good management
161
and strategies in place to complete the project in the one year timeframe,"Dillon said.
Avant managed the construction, hiring a variety of firms to perform mechanical,electrical, structural,and building work.Xergi A/S—a Denmark-based
company that designs and builds biogas plants—delivered the anaerobic digestion technology,and Barr Engineering Co. provided engineering support for
the project. Biomass loading began in October 2013 and operations commenced on schedule two months later.
"As is the case with all power plants in a northern climate, especially an extreme climate like Minnesota,freeze protection is always a key priority.We
started operation last winter during one of the coldest on record, but worked to successfully solve what can be very pesky freeze problems,"said Benjamin
Simmons, asset manager for HTBE.
Enthusiasm for Renewables
Minnesota was a logical location for designing and building HTBE. The state has one of the nation's most aggressive renewable energy standards,
requiring all utilities to generate at least 25% of their electricity from renewable energy sources by 2025.
Wind is the clear leader in the state's renewable portfolio. It produced 15.7%of the in-state generation in 2013, placing Minnesota fifth nationally based on
production percentages.Given the state's latitude, many people may be surprised to learn that Minnesota has annual solar radiation similar to parts of
Florida and Texas, but that potential remains largely untapped. In 2013, however,the Minnesota Legislature passed an omnibus energy bill requiring
public utilities to generate 1.5%of their energy from the sun,so solar is likely to gain some ground in the future.
But agriculture remains one of the state's largest industries,so a plant that utilizes farm waste is a natural fit. HTBE filled that niche, and its success could
lead to development of similar plants elsewhere. For utilities mandated to meet renewable energy standards, biogas's dispatch flexibility offers clear
advantages over wind and solar resources.
"We see strong potential for more BioPower plants and are pursuing project opportunities throughout the country. BioPower is an especially attractive
renewable option due to its reliable and dispatchable nature, but BioPower is also more complex than wind or solar and requires more logistical
coordination during development and operations.Areas with large amounts of food or agricultural waste and a local utility with a renewable appetite make
good candidates for BioPower,"said Dillon.
As a unique waste solution for rural areas and a reliable renewable energy resource, HTBE is the worthy recipient of a POWER Top Plant award. ■
—Aaron Larson is a POWER associate editor(@POWERmagazine, @AaronL_Power).
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