April 16, 2007
Burn, baby, burn | Greenville Steam Co. lives through deregulation — and fuels a town's economy — by learning to love green power
By Taylor Smith
As bad winters go, the winter of 2005-06 was pretty bad in Greenville, where the seasonal economy thrives on snowmobilers who come to town and spend money on everything from gas for their sleds to comfy beds at local motels and B&Bs.
When there's no snow, there are no snowmobilers. Greenville saw just a dusting of snow through most of the winter ˆ not enough to cover the hundreds of miles of trails crisscrossing the Moosehead Lake region.
It could have been much worse. In fact, it would have been downright dismal last winter if it hadn't been for the 80 or so out-of-town workers brought in to overhaul Greenville Steam Company, a biomass electricity generator in Greenville Junction, about a mile and a half outside Greenville. Those workers weren't snowmobilers, but they spent money just the same: motels and B&Bs were booked during the workweek, and local restaurants had plenty of customers. "That was a distinct economic dividend that came at a very good time," says Greenville Town Manger John Simko. "These companies were hurt bad by the lack of snowmobiling. But these guys, dressed in overalls, buying pizzas and beer and whatever, it helped quite a bit."
Those workers were completing a $10 million, full-scale retrofit of Greenville Steam's biomass boiler, which burns wood to create electricity. The work was seen as even better news than just short-term relief for a snowless winter. For starters, the work meant the replacement of a dozen or more full-time jobs at the plant. Greenville Steam's deep-pocketed new owner, Hanover, N.H.-based New Energy Capital, which purchased the Greenville plant in 2005, had undertaken the overhaul of the facility to make it highly efficient and significantly less polluting, while also increasing its generating capacity from 16 to 19 megawatts-per-hour. "We're certainly one of the cleanest wood-burning plants," says Scott Hersey, general manager of Greenville Steam. "Our total package is one of the lowest in the nation, especially for a retrofit."
New Energy Capital, which declined to say how much it paid for the facility, is banking on that cleanliness to help stabilize Greenville Steam by giving it an edge in the highly competitive energy market. Increasingly, states in the northeast are mandating that a certain amount of consumed energy be provided by renewable sources. And because that power typically carries a premium, it opens a market niche for companies like Greenville Steam, which would have a much harder time competing in a deregulated energy market.
The facility these days is primarily sending its renewable electricity through the New England power grid to the Massachusetts market, a state New Energy Capital CEO Scott Brown says is "leading the way in creating a market" for renewable energy.
Brown is confident that the renewable energy market in the northeast ˆ and elsewhere in the country ˆ is healthy and growing. In fact, New Energy Capital has made a big bet on renewable power, spending millions over the past few years assembling a portfolio of renewable energy projects, from a cogeneration plant in California to an ethanol plant in Indiana. Over the next few years, Brown expects New Energy Capital to make additional investments in renewable energy projects in New England. "We see a lot of potential growth in these markets driven by federal and state regulations and rising fossil fuel costs," he says.
Deregulation blues
New Energy Capital completed the retrofit of Greenville Steam in May 2006. And while Brown and Hersey say the plant is still being tweaked to find the proper balance of efficiency and cleanliness, the facility is back to full strength. Greenville Steam currently employs 23, and Hersey says it's burning waste from 40 different sawmills and 30 timber operations at the rate of 25 tons an hour.
That's a change from just a few years ago, when the outlook was bleak for Greenville Steam. Hersey says Norwegian company Hafslund, which operated a number of hydropower and biomass generators in the state, decided to offload Greenville Steam and other holdings in 2000, when Maine deregulated its power market. "The plant was originally built to provide renewable power into the grid, and deregulation didn't recognize, at least economically, any benefits from renewable power," says Hersey. "We were competing against oil, coal, nuclear, natural gas ˆ it was whoever was cheapest. Especially in the beginning, it really diminished the ability to make money. Our whole business plan was kaput."
Part of the problem was that biomass power increasingly was seen as too labor intensive to be cost effective in a deregulated and highly competitive energy market. Workers at Greenville Steam had to coordinate deliveries from trucks laden with tons of sawdust, tips and trunks from mill and logging operations. And all that material had to be shoveled into the boiler and monitored to make sure it burned efficiently. "A 500-megawatt gas plant has the same number of employees as we do," says Hersey. "There's one BTU in an eyedropper of natural gas or a big garbage bag of sawdust. You can guess which one is easier."
New Energy Capital wasn't scared off by the labor needs at Greenville Steam. In fact, Brown says the workforce was one of the main attractions when New Energy Capital began eyeing the plant in 2004. "There was a good team in place, and we really liked Scott Hersey," he says. "You're not just taking gas out of a pipeline. A good team is critical to the good operation of a biomass plant."
While 23 jobs may not sound like much, it's a big deal in a place like Greenville. Hersey says the average wage at Greenville Steam is $35,000 a year ˆ well above the county average of $30,780 reported by the U.S. Census Bureau in 2003. John Simko, the town manager, agrees that it's a big deal, saying the high wages are a "positive" for the town. All told, he says, Greenville Steam has been a positive addition to the town of Greenville, and hasn't resulted in the furor that other biomass facilities have caused around Maine. Take Athens, where residents last year engaged in a bitter fight to keep Massachusetts-based GenPower LLC from building a biomass generator in town. In fact, Simko says one of the most common complaints from Greenville residents has to do with the facility's lights, which stay on all night long.
When Greenville Steam first came online in 1986, Simko says it was a "big shot in the arm" for the town, which had never had a major manufacturing plant. In the mid 1990s, Greenville Steam donated land around its facility to the town, paving the way for what's become the Greenville Industrial Park, home to what Simko says is a handful of thriving businesses, including log-home manufacturer Moosehead Cedar Log Homes and Pepin Associates, an aerospace research-and-development firm. "It all comes back to Greenville Steam," he says. "They made it possible to have an industrial park, and the industrial park has made it possible to attract these companies."
Hersey, a 20-plus-year veteran of Greenville Steam, is acutely aware of the role the plant plays in its local community. As such, he's banking on New Energy Capital's operating philosophy to help guide Greenville Steam through what's sure to be a fast-changing energy market during the next few years. And one thing's for sure: without the shift to more efficient renewable energy, Greenville Steam would have been up a creek. "Without that premium that we're getting for the renewable energy credits, it wouldn't be economically feasible," says Hersey. "That made the difference between running the plant and not."
When there's no snow, there are no snowmobilers. Greenville saw just a dusting of snow through most of the winter ˆ not enough to cover the hundreds of miles of trails crisscrossing the Moosehead Lake region.
It could have been much worse. In fact, it would have been downright dismal last winter if it hadn't been for the 80 or so out-of-town workers brought in to overhaul Greenville Steam Company, a biomass electricity generator in Greenville Junction, about a mile and a half outside Greenville. Those workers weren't snowmobilers, but they spent money just the same: motels and B&Bs were booked during the workweek, and local restaurants had plenty of customers. "That was a distinct economic dividend that came at a very good time," says Greenville Town Manger John Simko. "These companies were hurt bad by the lack of snowmobiling. But these guys, dressed in overalls, buying pizzas and beer and whatever, it helped quite a bit."
Those workers were completing a $10 million, full-scale retrofit of Greenville Steam's biomass boiler, which burns wood to create electricity. The work was seen as even better news than just short-term relief for a snowless winter. For starters, the work meant the replacement of a dozen or more full-time jobs at the plant. Greenville Steam's deep-pocketed new owner, Hanover, N.H.-based New Energy Capital, which purchased the Greenville plant in 2005, had undertaken the overhaul of the facility to make it highly efficient and significantly less polluting, while also increasing its generating capacity from 16 to 19 megawatts-per-hour. "We're certainly one of the cleanest wood-burning plants," says Scott Hersey, general manager of Greenville Steam. "Our total package is one of the lowest in the nation, especially for a retrofit."
New Energy Capital, which declined to say how much it paid for the facility, is banking on that cleanliness to help stabilize Greenville Steam by giving it an edge in the highly competitive energy market. Increasingly, states in the northeast are mandating that a certain amount of consumed energy be provided by renewable sources. And because that power typically carries a premium, it opens a market niche for companies like Greenville Steam, which would have a much harder time competing in a deregulated energy market.
The facility these days is primarily sending its renewable electricity through the New England power grid to the Massachusetts market, a state New Energy Capital CEO Scott Brown says is "leading the way in creating a market" for renewable energy.
Brown is confident that the renewable energy market in the northeast ˆ and elsewhere in the country ˆ is healthy and growing. In fact, New Energy Capital has made a big bet on renewable power, spending millions over the past few years assembling a portfolio of renewable energy projects, from a cogeneration plant in California to an ethanol plant in Indiana. Over the next few years, Brown expects New Energy Capital to make additional investments in renewable energy projects in New England. "We see a lot of potential growth in these markets driven by federal and state regulations and rising fossil fuel costs," he says.
Deregulation blues
New Energy Capital completed the retrofit of Greenville Steam in May 2006. And while Brown and Hersey say the plant is still being tweaked to find the proper balance of efficiency and cleanliness, the facility is back to full strength. Greenville Steam currently employs 23, and Hersey says it's burning waste from 40 different sawmills and 30 timber operations at the rate of 25 tons an hour.
That's a change from just a few years ago, when the outlook was bleak for Greenville Steam. Hersey says Norwegian company Hafslund, which operated a number of hydropower and biomass generators in the state, decided to offload Greenville Steam and other holdings in 2000, when Maine deregulated its power market. "The plant was originally built to provide renewable power into the grid, and deregulation didn't recognize, at least economically, any benefits from renewable power," says Hersey. "We were competing against oil, coal, nuclear, natural gas ˆ it was whoever was cheapest. Especially in the beginning, it really diminished the ability to make money. Our whole business plan was kaput."
Part of the problem was that biomass power increasingly was seen as too labor intensive to be cost effective in a deregulated and highly competitive energy market. Workers at Greenville Steam had to coordinate deliveries from trucks laden with tons of sawdust, tips and trunks from mill and logging operations. And all that material had to be shoveled into the boiler and monitored to make sure it burned efficiently. "A 500-megawatt gas plant has the same number of employees as we do," says Hersey. "There's one BTU in an eyedropper of natural gas or a big garbage bag of sawdust. You can guess which one is easier."
New Energy Capital wasn't scared off by the labor needs at Greenville Steam. In fact, Brown says the workforce was one of the main attractions when New Energy Capital began eyeing the plant in 2004. "There was a good team in place, and we really liked Scott Hersey," he says. "You're not just taking gas out of a pipeline. A good team is critical to the good operation of a biomass plant."
While 23 jobs may not sound like much, it's a big deal in a place like Greenville. Hersey says the average wage at Greenville Steam is $35,000 a year ˆ well above the county average of $30,780 reported by the U.S. Census Bureau in 2003. John Simko, the town manager, agrees that it's a big deal, saying the high wages are a "positive" for the town. All told, he says, Greenville Steam has been a positive addition to the town of Greenville, and hasn't resulted in the furor that other biomass facilities have caused around Maine. Take Athens, where residents last year engaged in a bitter fight to keep Massachusetts-based GenPower LLC from building a biomass generator in town. In fact, Simko says one of the most common complaints from Greenville residents has to do with the facility's lights, which stay on all night long.
When Greenville Steam first came online in 1986, Simko says it was a "big shot in the arm" for the town, which had never had a major manufacturing plant. In the mid 1990s, Greenville Steam donated land around its facility to the town, paving the way for what's become the Greenville Industrial Park, home to what Simko says is a handful of thriving businesses, including log-home manufacturer Moosehead Cedar Log Homes and Pepin Associates, an aerospace research-and-development firm. "It all comes back to Greenville Steam," he says. "They made it possible to have an industrial park, and the industrial park has made it possible to attract these companies."
Hersey, a 20-plus-year veteran of Greenville Steam, is acutely aware of the role the plant plays in its local community. As such, he's banking on New Energy Capital's operating philosophy to help guide Greenville Steam through what's sure to be a fast-changing energy market during the next few years. And one thing's for sure: without the shift to more efficient renewable energy, Greenville Steam would have been up a creek. "Without that premium that we're getting for the renewable energy credits, it wouldn't be economically feasible," says Hersey. "That made the difference between running the plant and not."
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