World's Largest Wood-Pellet Factory To Be Built in GA

RWE Innogy announced plans to build a factory to produce biomass pellets in the southern part of the US state of Georgia. The plant will have an annual production capacity of 750,000 tons, making it the biggest and most modern of its type in the world.

The project will be carried out in collaboration with BMC Management AB, which specialises in the development of biomass manufacturing solutions and is based in Sweden. The pellets will be used in pure biomass power plants as well as for the co-firing of coal and biomass. The pellets plant is due to take up operation in 2011. The total investment volume amounts to approximately EUR 120 million.

Dr. Leonhard Birnbaum, Member of the Executive Board of RWE AG said: “Through this investment, RWE has taken a strategically important step towards safeguarding the supply basis for the constantly growing biomass market in Europe. This is because we will be unable to achieve the targets for reducing CO2 emissions in Germany and Europe without biomass. But the European wood market will not be able to satisfy the demand in this fast growing sector on its own."

The biomass pellets will initially be burnt in the existing power plants of Amer in the Netherlands, where currently already up to 30% of the hard coal has been replaced by solid biomass, mainly wood pellets. The considerable volumes of biomass from Georgia will also help achieve a goal of expanding this cofiring to up to 50%. The CO2 reductions achieved will be of a corresponding level. The two power plant units belong to Essent, which RWE took on as a result of the partnership both companies entered in September 2009. They have a total installed capacity of 1,245 MW of electricity as well as 600 MW of thermal. They generate electricity for the equivalent of three million households.

In the coming years, the use of the biomass pellets is to be extended to other pure biomass power plants and also to conventional power plant sites in the Netherlands (e.g. Eemshaven power plant, which is currently under construction), Germany, Italy and the UK.

Forests in Georgia provide enough wood to sustainably produce the pellets, the company said. Around 1.5 million metric tons of fresh wood are needed each year to produce 750,000 tonnes of pellets. Unlike Europe, the US have a huge growth surplus of wood that is not used. This is particularly true in the Georgia region, from which numerous paper and pulp companies have withdrawn over the past decade, thus further reducing the demand for wood. Wood growth is currently ahead of consumption in Georgia.

Dr. Hans Bünting, Member of the Board of Directors of RWE Innogy stated: “Through this new plant, RWE will be able to secure a supply of biomass at stable and competitive prices. Due to the large surplus available, wood is much cheaper in the US than in Europe with its restricted wood land availability. Furthermore, Georgia is a region where forest management is being carried out in a sustainable manner–this fully meets our strict criteria for the production of biomass.”

The pellets are to be shipped to Europe from the port of Savannah. A long-term transport contract has been concluded with one of the world’s largest shipping companies in the dry goods sector, Dampskibselskabet NORDEN A/S, Denmark.

Europe remains RWE Innogy´s core market, because it is the company´s goal to reduce the CO2 position of the RWE Group as a whole. As long as the US is not part of the CO2 emissions trading scheme, RWE will not–due to strategic reasons–invest in power generation capacity from renewables in the US.