A renewed interest in burning wood to produce electricity is prompting papermaker concerns the increased demand could lead to higher pulp prices or market shortages.
The more biomass plants that are built to satisfy the state’s renewable-energy goals, the more demand there will be for Wisconsin wood that paper mills and lumberyards buy, said Earl Gustafson, vice president of energy, forestry and human resources for the Wisconsin Paper Council.
Biomass generation is a new player in the wood market, Gustafson said, and state officials do not know if Wisconsin forests can produce enough wood to satisfy demand from new plants.
“There is discussion that maybe some state agencies will have a role to play in assessing biomass availability,” he said, “measuring how much is out there, both in the short term and the long term.”
The paper council opposes Northern States Power Co.’s proposed $58.1 million biomass power plant in Ashland. Yet the council supports We Energies’ proposed $250 million plant in Rothschild because it will burn mostly wood waste, such as branches, that papermakers don’t buy.
Gale Klappa, We Energies chairman, president and chief executive officer, said he knows about the paper industry’s concerns, which is one reason the company partnered with papermaker Domtar Corp.
We Energies will build its plant next to Domtar’s Rothschild paper mill and will buy wood for the generators through the mill, Klappa said. The 50-megawatt power plant will need 500,000 tons of wood a year, compared with the 800,000 tons Domtar buys to make paper, he said.
We Energies studied the forest within 75 miles of the new plant, Klappa said, and decided there is enough wood to meet new demand without increasing costs for paper mills.
“It won’t unduly affect the market,” he said.
Although the We Energies plant does not raise red flags, Gustafson said, most of the information is sketchy about supply versus new demand. A government agency must step in to create solid supply numbers so regulators and companies will know the true effect of new demand for renewable power, he said.
And that goes beyond new power plants to include companies that would produce wood pellets for home furnaces, Gustafson said.
“That’s a concern that needs to be looked at,” he said, “because there are other biomass projects in the works here.”
We Energies, which on Tuesday announced plans for the biomass plant, will request project approval from the Public Service Commission of Wisconsin in 2010 and plans to finish building the plant in the first half of 2013. The PSC is considering Northern States Power plant in Ashland.