Renewable Energy Generation

About Telogia Power, LLC Designed and constructed by the General Electric Company at a cost of $12,000,000 the 14 megawatt Timber Energy Resources, Inc. renewable energy plant was the first Qualifying Facility of its type operated in Florida. Supply all of the training (off-line and on-line) Over its operating life the Telogia asset has changed hands seven (7) times and is now owned and operated by CQ Inc. of Blairsville, Pennsylvania. Single boiler / Single Turbine – Generator alignment with Best Available Air Control Technology comprising a Cyclone Separator in combination with an Electrostatic Precipitator. The plant is in substantial compliance and on the emissions side of the equation operates at between 33% and 50% of the regulatory threshold.

About Telogia Power, LLC (cont’d.) Base biomass fuels include bark, green chips, sander dust, sawdust, hogged fuel from land clearing acitivities, yard waste and peanut hulls. Alternate fuels comprise mixed non-recyclable fibers, suitable manufacutring residues, confidential documents and off-specification commodity wastes. Alternate fuels are shredded and then densified into a cube at a dedicated Paper Processing Facility preparatory to combustion with the biomass fuels. Telogia Power, LLC purchases all of its biomass fuels (for between $3.00 and $12.00 per ton depending on quality) and is paid to destroy alternate fuels at tipping fees ranging from $5.00 to $15.00 per ton. Overall fuel consumption averages approximately 200,000 tons annually. The current mix of materials combusted for renewable energy generation at Telogia comprises 90% biomass fuel and 10% alternate materials

What it takes to make power CASE 1 – With the present mix of fuels comprising bark, green chips, hogged fuel, yard wastes, sander dust, sawdust and non-recyclable fibers it takes 2.2 tons of fuel to produce One (1) megawatt hour of electrical energy. CASE 2 – By eliminating the use of lower-end fuels such as yard wastes and hogged fuels (from land clearing activities etc.) fuels consumption drops from 2.2 tons per megawatt to 1.75 tons per megawatt hour produced. Average fuel costs in CASE 1 – are approximately $8.50 per ton meaning that fuel costs per megawatt hour produced are $18.70. Average fuel cost in CASE 2 – are approximately $12.00 per ton meaning that fuel costs per megawatt hour produced are $21.00.

What it takes to make power (cont’d.) On the average, annual fuel costs, labor, salaries, along with fixed and variable expenses for the Telogia plant totals approximately $3,860,000 which equates to a production cost of $41.06 per megawatt hour. Absent any Federal Production Credits, Telogia Power, LLC sells its net electrical generation for an all-in price of $43.00 per megawatt hour for total annual revenues of approximately $4,000,000 meaning that the only way to increase profit is to reduce fuel costs via tipping fees / avoided costs from accepting alternate fuels at Telogia. Managing the “Business of the Operation” in the current market environment has become of equal importance to administrating the “Operation of the Business.”

What are the Pros and Cons There has been no meaningful development of biomass-to-energy facilities in Florida over the last decade due largely to the absence of Federal and State incentives and enabling legislation that would serve to sponsor what presently amounts to the “tight spark gap” business opportunity. In short, some pioneers left but very few new settlers. Most recent tax and production credit legislation is seen as an incentive for developing new biomass-to-energy capacity and not necessarily to sustain existing generation facilities. Combusting a carbon neutral fuel in preference over conventional fossil fuels absolutely reduces greenhouse emissions.

What are the Pros and Cons (cont’d.) Biomass fuel utilization makes good sense, whereas landfilling a fuel source does not. Estimates are that as much as 75% of the available renewable fuel sources in Florida are actually never used in renewable energy applications. Monitor and control new development. Too great a concentration of new facilities could serve to outpace the fuel shed availability ina given region, thus driving production prices up as the “fuel harvesting” radius increases.

What needs to be done for the common good Approve “bankable” Power Purchase Agreements. Green Energy can cost more to produce therefore Utilities should receive regulatory compensation that enables them to pay more to acquire it if necessary. Can the Florida Public Service Commission be the facilitator that levels the playing field as it applies to environmental benefit versus public benefit? Encourage greater flexibility and cooperation at the regulatory level to stimulate industry growth. Most permits and/or petitions still take years to acquire in Florida. The aim is not to circumvent the issues, more to view the biomass-to-energy industry as part of the solution, not part of the problem.

What needs to be done for the cmmon good (cont’d.) Legislate the controlled supplemental combustion of select Florida-generated treated wood wastes at Florida biomass-to-energy facilities rather than sending to Alabama and the Carolinas for disposal. Available tipping fees would significantly reduce overall fuel costs at participating facilities, while in parallel handling a Florida waste management problem in Florida. Sponsor legislation to place meaningful subsidies behind the United States Forestry Service’s Clean Forests Program. Apalachicola, Ocala and Osceola National Forests are named in the program but due to the expense involved do not participate in generating any renewable fuels for use at this juncture.

What needs to be done for the common good (cont’d.) Sponsor “real time” research and development and subsidize energy crop farming to stabilize biomass fuel availability. Most renewable energy facilities are at the mercy of the economy. Slow production or demand at the Pulp and Paper Mill is often the precursor to limited fuel availability at the power plant as Chip Mills and Sawmills likewise slow or halt production. Lets up the ante now!

Contact Information David E. (Ted) Hill President CQ Specialty Materials Group 12063 Cranefoot Court Jacksonville, Florida 32223 Tel: (904) 292-9980 Cell: (904) 866-1570 E Mail: david.hill13@comcast.net