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Pacific BioEnergy: Pellet fuel pioneer thrives through efficiency

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Energy-efficiency upgrades boost position in fast-paced, global industry

Managing growth is a challenge – especially when you're innovating quickly in a globally emerging industrial sector. For Pacific BioEnergy, a pioneer in producing wood pellet fuel, the challenge was made easier by focusing on energy efficiency, with the help of BC Hydro.

The first wood pellet facility in Canada, Pacific BioEnergy (PBE) was established in 1994 in Prince George, B.C. At that time, the main demand came from the "bag market" – retail supply for homeowners with pellet fuel home heating systems. But the rise of international action to mitigate climate change led to a dramatic shift in demand.

Carbon-neutral demand

"Wood-based pellet fuel is considered a coal replacement that's carbon neutral, and it's part of the climate change initiative that a lot of European countries are putting into place," says Brad Bennett, Pacific BioEnergy's Vice-President of Operations. "Since 2002, that's really where the growth has come."

What makes pellet fuel carbon neutral? Unlike burning coal, which releases carbon long-sequestered out of the earth's atmosphere, the burning of wood only releases carbon that was recently absorbed and trapped by the tree – representing a sustainable cycling of carbon, rather than a net atmospheric increase.

By 2007, the company was producing about 170,000 tonnes of wood pellets per year – up from about 30,000 per year in its early days – with all of it headed to the European power utility market as a replacement for coal.

In 2010, a strategic partnership with a major European energy supplier resulted in a 10-year contract and a $24-million expansion of PBE's facilities, bringing the company's annual production to 350,000 tonnes per year.

Challenges with supply

While demand was increasing, PBE faced flux in its supply chain too. With building and housing markets hit by recession, demand for B.C. wood products dropped, reducing the availability of PBE's traditional input material – sawdust and shavings from sawmills.

"All of a sudden, boom! – we had the market, we had the ships showing up, but we didn't have any product to fill them," remembers Bennett. "So we had to find an alternative."

The huge stands of pine beetle killed wood afforded a new opportunity, but Bennett says this fibre created new challenges too. "It comes in a bigger particle size, which requires more horsepower to break it down, and there's a different moisture content and a certain energy usage to dry it," he says. "It was a whole learning curve."

As PBE handled growth and production shifts, it had a helping hand from BC Hydro.

"We use a lot of power," says Bennett. "We grind material to a smaller size and a lot of the systems we use are air driven systems, so there's significant horsepower blowing material through drying systems and conveying it throughout the plant.

"Then there's the pelletizers themselves; they compress the wood through a series of dies and each one has a series of 400 hp motors. Then there are conveyors and loading systems; our electricity usage is quite high."

Tim Knoop (left) and Brad Bennett (right), Pacific BioEnergy.

Analysis, incentives, and 5.3 GWh of savings

"BC Hydro essentially grabbed us by the hand and said, 'Looking at your facility, we think you can find significant savings in energy by digging deeper and really analyzing what you're doing as a business' – from the type of raw material that we buy down to how we ramp our plants up and down, to the types of equipment that we're purchasing, and so on," says Bennett.

The company hired an energy manager and conducted a New Plant Energy Study with support from BC Hydro, and made use of a project incentive of more than $1 million as they scaled up.

"We started in the engineering stage of the facility itself and then recognized that BC Hydro could assist in certain areas with certain pieces of equipment, so it was an iterative process," says Bennett. "Being aware [that incentives were available] allowed us to think about it as we went through the selection process, and therefore make the right choices.

"It helped us over the hump in a lot of cases, rationalizing pieces of equipment that would not have traditionally been rationalized on a normal capital ROI basis, and led to some real savings on power usage. Again, it goes back to helping us understand our plant and our process better: where and how power is used throughout our process and how we could minimize that power usage, and make a more effective plant in the end."

The energy efficiency measures implemented through collaboration with BC Hydro are calculated to save Pacific BioEnergy 5.3 GWh of electricity annually. And Bennett says the company's work on efficiency continues.

"The energy manager program has opened our eyes to other opportunities that we're exploring, that probably we wouldn't have seen normally, when you're busy every day and quite often don't have the opportunity to dig down. And it ultimately brings our cost down too, so we're pretty thrilled by that. It's been a great project."

Efficiency and competitiveness

With worldwide demand for wood pellets currently at 10-12 million tonnes per year, and expected to reach 40 million tonnes per year by 2020 in Europe alone, Pacific BioEnergy has plenty of opportunity to continue its growth.

Bennett says their work on energy efficiency to date has positioned them to continue to compete effectively in this fast-paced global industry.

"BC Hydro helped us understand our business at a much deeper level than we did before," comments Bennett. "Through the Power Smart program we were able to make wiser choices, that under conventional thinking would have been difficult to make. We're more effective, not only just in how we use power, but in running the facility in general, being more efficient in how we run it, and making more money, frankly."

"BC Hydro has been a good partner. I mean that sincerely; they've really been a good partner."