As Concord Steam, the company that provided steam heating to government facilities and other area buildings in Concord, prepares to cease operations as early as next spring, proponents of biomass (usually plant matter burned as fuel) say it will have negative impacts on the local economy. But those who switch from steam will be paying half the price for heat from natural gas.
Profit and loss
Steam heat in Concord is created by fueling a boiler plant, mostly with wood, and piping the evaporated water through underground conduits directly to nearby buildings serviced by the plant which are outfitted with internal steam pipes.
There are a number of advantages to burning wood. It’s friendlier on the environment compared to fossil fuels and it’s a cheaper fuel on the wholesale market. But to Concord Steam president Peter Bloomfield, the main thing is helping out the local logging industry.
“The benefit [of] a project like ours is the money that’s put into the local economy,” Bloomfield said.
Bloomfield said he spends about $1.5 million each year on local wood.
That’s money local logging companies won’t be getting from Concord Steam after next year.
That would be the likely outcome, Bloomfield said, of the sale of Concord Steam to Liberty Utilities for $1.9 million pending approval from state regulators. Under the deal, Concord Steam would shut down by as soon as May 2017.
He said shuttering the steam plant and transitioning everything to natural gas-fueled heating would send dollars out of state to import the gas, whereas the biomass from lumber waste is purchased from loggers in New Hampshire.
For loggers closer to central New Hampshire, they’ll need to adapt to losing Concord Steam as a customer by spending more money on diesel fuel and personnel to haul the biomass to plants 40 to 50 miles away, according to Hunter Carbee of North Country Procurement.
Most of the biomass burning plants are up north; the closest are Eversource’s Schiller Station in Newington and the Bridgewater Power facility in Bridgewater.
There’s also an opportunity cost to this as loggers who used to be able to make a couple trips in a day may not be able to make both trips in the same day.
And Carbee says this is just yet another setback in an already contracting industry reeling from the loss of New England paper mills over the past decade.
Some of those changes have been in just the past year or two as paper mills in Maine have either shut down, cut their capacity in half or stopped using biomass to fuel their factories, according to New Hampshire Timberland Owners Association director Jasen Stock.
That makes it a particular bad time to lose a customer and Stock said it will have immediate impacts.
“What that means is … maybe I slow down producing, I shrink the size of my crew, I scramble and try to find some place else to sell my chips to,” Stock said.
And it may have an impact on forest management as well, since this low grade wood stock will either get cut down and left behind as loggers try to get access to higher quality wood, or they’ll drive past the unwanted trees.
“It’s like weeding your garden and … pulling out all your nice plants and leaving the weeds behind,” Stock said.
Even though wood chips were cheaper than the natural gas Concord Steam would purchase, usually to bolster their output on the coldest days of winter, consumer bills will go down by 50 percent under the new natural gas system, according to Liberty Utilities spokesperson John Shore.
“It’s a pretty significant savings that will help to offset any upfront costs that those customers are going to have to come up with to make the conversion,” Shore said.
After the change pays for itself, those savings continue with no apparent end in sight, thanks to very low natural gas prices.
“So that’s going to be a budget windfall for all of those customers,” Shore said.
But if wood was cheaper than natural gas on the wholesale market, why are consumers paying twice as much for it from Concord Steam?
Bloomfield said that on a BTU-basis (British thermal units), wood produces the same heat as natural gas for a fraction of the cost. The problems that drove up consumer prices have to do with an aging and inefficient delivery system and the costs associated with maintaining the 78-year-old facility.
“Nevertheless, it made [more] sense for us to continue to burn wood here than it did to burn gas because the raw cost of the wood chip that we burn ... was less expensive than the natural gas,” Bloomfield said.
Bloomfield had hoped the state would take up a plan to invest in the steam plant through a $20 million 20-year lease that would pay for the boiler and delivery system upgrades needed to make Concord Steam more efficient and subsequently offer prices competitive to natural gas. In addition, under this plan, Concord Steam would have doubled how much wood they’d buy from loggers, which would have injected $3 million annually into the local timber industry.
But the state passed on the proposal and began plans to switch everything to natural gas by 2019. At that point, Concord Steam would lose 40 percent of its customer base in one fell swoop and would be effectively out of business.
Department of Administrative Services Commissioner Vicki Quiram said the state made a financial analysis, which considered Bloomfield’s efficiency upgrades.
“The financial analysis has shown for many years that we can save a lot of money by switching to natural gas,” Quiram said.
But Quiram said the impact on the local logging industry was not specifically considered in the analysis. She said the state values biofuel energy and points to the new wood-fired steam boiler at the Health Department building that’s been running for three months now. The state contracted with a single wood provider and is using more efficient “bowl chips” instead of lumber waste.
The sale of Concord Steam to Liberty reportedly caught the state off guard, Quiram said, and the estimated cost for the state to upgrade all its government buildings for the switch to gas is about the same, up front, as it would have cost to do Bloomfield’s lease plan. But the current state capital budget didn’t set that money aside, which has left officials scrambling.
“We are working on how to pay for it,” Quiram said.
The state still has to get engineers to review each building and come up with a plan of action.
“They’ll have a couple of different options,” Shore said.
Shore said the internal pipework is old and inefficient so while the state may choose to continue heating with steam, but with boilers fired by gas, they might get more bang for their buck if they upgrade to something like forced hot water or forced hot air.
Michael Connors, the deputy commissioner of Administrative Services, says most buildings will likely continue with steam pipes or switch to forced hot water. But in a few smaller buildings, like garages, laundry facilities and a wood shop, forced hot air may be more appropriate.