Whole Tree Energy “I can see the whole project going’ south when we meet with th
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Whole Tree Energy
“I can see the whole project going’ south when we meet with the community groups,” contended Jeb Boskirk, director or licensing and environmental affairs at a Midwest power utility. “These are school teachers, students, bankers, hunters, shopkeepers, machinists, and housewives. Very few economists or tech heads are going to be there, Dave. And we’ll be lucky if there’s no orchestrated counterpoint by some citizen group—it could be tree huggers, no-growth reverts, or just a well-oiled “Not in My Back Yard” group. We’ve got to do our homework, sure. But we’re going to need lots of help from you to make this fly.”
David Ostlie, founder and president of Energy Performance Systems, Inc. knew that Jeb Boskirk was right. Jeb was skilled in the vital process of securing land, working with state licensing agencies and EPA approval boards, as well as surviving the local hearings and town meetings, all prerequisites to bring a new power plant into being. Ostlie believed in the promise of electricity from burning wood, and more than two decades of test and research had supported his theory. But now he was close to bringing his patented Whole Tree Energy (WTE) system on line in a real 100-megawatt (MW) power plant—power for nearly 100,000 people. He needed to review again the role he and his tiny company would have to play in this complex marketing environment to make WTE happen.
Background
Since Thomas Edison found carbon to be a suitable filament and invented the first practical lightbulb, civilization’s appetite for electric power has expanded relentlessly. Most of this demand has been answered by power plants that burn coal, oil, or natural gas. Although research continues to show advances, currently very little electric power is generated from solar, wind, and geothermal energy. The construction of nuclear power facilities in the United States has virtually ground to a halt.
Biomass fuels are immense ubiquitous, clean, and, in most cases, cost-effective sources of energy. Utilities have substantial and—with further R&D—growing opportunities to exploit this resource.
Biomass fuels are the energy resources in living things and their waste products. The greatest supply of biomass energy lies in natural forests. Other sources include wood residue and agricultural by-products. For example, wood chips are frequently burned at small power plants owned by paper companies and sawmills. Ethanol is economically produced from corn. The energy from animal waste and grasses has also been studied.
What we call fossil fuels—coal, oil and natural gas—are in essence prehistoric biomass. The difference is fossil fuel deposits are depleted by extraction; biomass fuels are renewable. In addition, biomass fuels yield fewer emissions. Burning trees, for example, emits carbon dioxide (CO2), but no more than what the trees have absorbed from the environment during their growth. Fossil fuels emit CO2 that hasn’t been in the atmosphere for eons. Furthermore, although many coal-fired power plants require expensive equipment to control emissions of sulfur dioxide (SO2), wood and grasses release very low levels of SO2 that are sometimes barely measurable. Wood also has an advantage over coal in the release of very low levels of nitrogen oxides (NOx).
Despite the promise of biomass fuels, many obstacles currently limit their viability. Power plants are constrained to small-scale operations, thermal efficiencies need to be improved, fuel delivery systems need to be developed, overall economic viability needs to demonstrated, and the public needs significantly more education about both the promise and limits.
Full-Tree Energy
David Ostlie’s inspiration for the WTE concept began in 1978 when he built his house in a new woodland development in central Minnesota. On cold winter mornings the smoke from each new home’s fireplace or wood-burning stove was sometimes enough to make one choke. Ostlie set out to build a high-energy, smokeless wood burner. A former iron worker then employed by Northern States Power (NSP), Oslie built a chest freezer-sized unit that he installed and tested in a storage area beneath his garage. He used the same wood cleared for the driveways throughout his neighborhood, but dried it more thoroughly than his neighbors’ woodpiles. As a result, Ostlie’s device generated such high temperatures that the wood burned completely and gave off a clear, virtually soot less exhaust.
In a 1993 interview, Ostlie recalled his thinking that led him to start a company and begin the long road of concept drawings, slide presentations, and component testing: “Having some knowledge of the electric power industry, I knew that the few existing wood-burning power plants used chipped or shredded wood. I was also aware that the process of breaking wood down to this size is expensive. Being able to avoid these costs would be a great advantage.
The videotape companion to this case details the concept of WTE. To recap the key elements,
Tree plantations of fast-growing hybrid hardwoods provide a harvest in seven years. A 400-MW plant serving a 50-mile radius would require about 3 percent of this acreage for plantations—most likely marginal farmland, with some receiving subsidies to be taken from the production of food crops.
Trees are efficiently cut and transported to the plant site.
Within a large fiberglass dome whole trees are stacked in cross-hatch fashion upwards of 100 (30m) by a large crane.
Waste heat from the plant is piped into the dome to dry the stack for 30 days, removing over 65 percent of the trees’ moisture and allowing a cleaner, more efficient burn.
Trees are conveyed from the dome to the nearby boiler wall, where they are cut to fit, approximately 28 feet (8.5m).
A ram pushes the pile of trees 12 to 16 feet high into a charge pit; then another ram pushes it into the furnace.
The slightly oversized boiler promotes high heat release and complete combustion.
The time line in Exhibit 1 summarizes the research that has gone into the WTE system. Ostlie sometimes wonders just how much more has to be demonstrated before a power utility will commence to build a commercial plant, and he wonders at what stage of the purchase process and what constituency he should direct his limited marketing resources.
At most power companies, the decision process to bring a new plant on line is lengthy and complex. Capacity planners play a key initiating role in the process. Their job is to forecast energy demand for the market served and check the adequacy of current plant capacity. Demand is analyzed for base demand as well as peak demands, such as when air conditioners run flat out to cope with stifling summer temperature. In these two areas, WTE is relatively attractive for base load service; natural gas plants serve peak loads.
Capacity planners typically evaluate the options by first specifying the resources for each alternative site, technology, and array of base loaders and peakers by calculating equivalent costs (e.g., dollars per kilowatt-hour). Optimization programs support the process of structuring the problem and allow sensitivity analysis on the sequencing of options, the impact of delays, input costs, and more.
An executive committee reviews the recommendations from capacity planning. Financial criteria and market service standards are tightly applied, and the environmental and political dimensions of the recommendation are fully considered. The utility’s Licensing and Environmental Affairs staff will then seek to obtain EPA and state licensing agency approval, acquire the needed property, and interface with local governments and community groups.
Questions:
What can Whole Tree Energy do to move their project forward?
What marketing tools would be beneficial to utilize in this situation?
Exhibit 1 WTE Time Line Early 1980s Ostlie tests a clean wood-burning unit beneath his garage. It leaves no cinders and provides a clear exhaust. Ostlie convinces NSP to scale up the design to explore its commercial viability. Osltie works in cooperation with St. John's University in Collegeville, MN. Using St. Johns 1.6-MW boiler and 4-foot-long sections of dried trees, Ostlie reaches 2,400 F, besting the temperatures typical of the superheat cycles at the largest coal-fired plants. Converting one of its coal-fired boilers for 10 MW, NSP tests the WTE output capacity and emissions over a 100-hour period. Output efficiency of 30 percent of capacity is the criterion for success at utility scale. Ostlie achieves a rate of 90 percent and maintains an average output of 6-7 MW over the test. EPA reports the lowest measures of NOx emissions of any solid fuel in the United States. SO2 and particulate emissions are also removal systems com mon at coal-burning plants. NSP puts the WTE project on hold. Ostlie leaves the company, takes his patent, and forms a new company called Energy Performance Systems, Inc. (EPS). EPRI releasas its own study of biomass fuel, which shows the attractiveness of combustion of fast-growing tree crops. In Aurora, MN (pop. 3,000), EPS and EPRI join in a demonstration project to harvest, transport, stack, dry, and combust 3,000 tons of whole trees. Standard logging trucks each bring about 25 tons to the site. A tower crane and remote control grapple pile the trees more than 100 feet high on a base 30 feet square. The pile is stable, and the 30-day drying period reduces moisture content to 20 percent. Combustion tests are favorable, with one experiment producing a wood-burning world record of 4.2 million Btu per hour per square foot. (Compare to a coal-fired boiler's heat release rate of about 2 million Btu per hour per square foot.) NSP and Wisconsin Power & Light approach EPRI and EPS to explore the feasibility of building a WTE plant. EPRI releases computer models for evaluating biomass power technologies, saying WTE shows "the potential for improved cost and performance relative to the existing technologies." Cost and thermal efficiency estimates are provided, but the report states, Since neither the advanced wood gasification nor the WTE technologies have reached maturity nor been commercialized, utilities should use the estimates for these advanced systems with caution." The Minnesota Department of Natural Resources continues to monitor a 1995 planting of 1,000 acres of fast-growing, hybrid poplar trees. 1986 1991 1992 1995 1997Explanation / Answer
1) The whole tree energy (WTE) should move its project by effective managerial implications like tools from project management. It must utilize the social cost benefit analysis of its project then takes a decision for move. It might be beneficial to find out the strategic factors in the external market. It should also try to focus in developing the alternative source of business from clean and renewable energy like solar, natural gas, water, wind and ocean. To make its position better in the energy industry, it should do a survey and accordingly diversified its line of business. The issues must be taken into consideration from different stakeholders. It will be a better idea to reanalyze the current market as well the business environment in which it is operating.
2) WTE should try to adopt the following marketing strategies for its business development ,
a) It should try to adopt aggressive marketing strategies with focus to position its brand name as supporting to green marketing.
b) It can initiate some CSR campaigns in those territories where society needs a lot for such activities.
c) It can use TV commercials, News paper advertising etc, for promoting its new business offerings.
d) It can also formulate tagline based on its past performance and key benefits delivery for the customers.
e) It might use such logo which has innovation in terms of environmental protection.
f) It should show to its customers that how it is promoting clean, green and eco-friendly energy business.
g) In house marketing efforts must be enhanced so that word of mouth publicity can be achieved.
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