New report reveals negative community and financial impacts of bioenergy boom

(Pelham, MA) The Partnership for Policy Integrity (PFPI) released a report today examining problems and impacts of biomass power plants built in recent years. The release coincides with “National Bioenergy Day,” in which the biomass power industry typically touts bioenergy as providing benefits to localities.  The report, The Bioenergy Boom from the Federal Stimulus: Outcomes and Lessons, provides a reality check for policymakers considering biomass power as a way to increase renewable energy generation.

PFPI studied the fate of 25 biomass power plants that received at least $10 million dollars in federal stimulus funding between 2009 and 2014. The report documents problems that have plagued these plants and led in many cases to cost overruns, air and water violations, early closures, lawsuits, and inflated costs for taxpayers and ratepayers.

The number of new biomass power plants constructed in the US has surged in recent years, in part due to the availability of federal grants for renewable energy projects through the 2009 economic stimulus package, the American Recovery and Reinvestment Act (ARRA). Grants to biomass power plants were made under a program that converted the Investment Tax Credit (ITC), given for up to 30% of the construction cost of certain qualifying renewable energy projects, into a cash grant. The program paid out $1.062 billion to bioenergy projects, of which the top 25 plants received $856.7 million.

Of the top 25 bioenergy recipients of federal stimulus funding, PFPI documented that at least:

• 13 of the plants received additional state and federal grants and loans, in some cases exceeding the stimulus grant;
• 5 of the plants entered into long term power purchase agreements requiring ratepayers to pay above market prices for their electricity; and,
• 7 were closed, idled, or partially idled, largely due to their inability to compete with less expensive electricity from wind or natural gas - even with hefty subsidies.

In addition to their financial challenges, many of the biomass power plants posed health and environmental hazards in their communities. Of the 25 plants profiled, PFPI found that at least:

• 5 plants had fires;
• 5 exceeded their air pollution emissions limits;
• 5 caused nuisances or unhealthy conditions due to noise, dust, odors, and air pollution;
• 4 had unusually large emissions of nitrogen oxides (NO_x) and sulfur dioxide (SO₂);
• 9 were allowed to burn potentially contaminated fuels; and,
• 17 had violated federal clean air and/or clean water laws.

“The bioenergy industry has hoodwinked policymakers across the country into supporting these polluting, expensive and inefficient woodburning power plants,” said Dr. Mary S. Booth, PFPI’s director. “Ultimately it’s the people who live in these communities that have to pay, through inflated rates, higher taxes, and impacts on their health and quality of life. The lesson for any community considering hosting a biomass power plant is simple: buyer beware.”
The report includes snapshot profiles of all 25 plants. While some of the plants have performed as expected, many had less than stellar track records.  Two of the largest and most expensive plants profiled offer cautionary tales that local officials should heed, according to Booth.

• The 102.5 MW Deerhaven Renewable Energy Station in Gainesville, Florida cost $500 million to build and received a federal Investment Tax Credit (ITC) grant of $116.8 million. Gainesville Renewable Utilities (GRU), the city-owned utility, entered into a 30-year $2.1 billion power purchase agreement (PPA) with the original plant owners, committing ratepayers to a minimum $70 million a year, regardless of whether the plant produced power. As soon as the plant came on line in 2013, residents began complaining about noise and odors. The plant was placed in “stand-by” mode because natural gas was cheaper, remaining mostly idle for four years. Finally, to get out of the contract, the city bought the plant for $750 million - $250 million more than it had cost to build. The original owner, Gainesville Renewable Energy Center (GREC), has been engaged in multiple court battles with the city and with its local wood supplier over contract issues. Problems continue to plague the plant, which had a fire in February 2018.
• The 75 MW Burgess BioPower plant in Berlin, New Hampshire, cost $274 million to build and received at least $153.1 million in federal loans, grants, and tax credits. In addition, the state Public Utilities Commission approved a 20-year PPA between Burgess BioPower and Eversource, NH’s largest electric utility, in which Eversource would pay Burgess up to $100 million more in overmarket costs than if the electricity were purchased on the open market. Costs were passed along to ratepayers. However, the overmarket costs are now expected to exceed $100 million as early as 2019, only five years after the plant began operation. In 2018, New Hampshire passed a law allowing the contract to continue up to three years after the $100 million cap is hit – essentially writing a blank check to Burgess BioPower paid for by NH ratepayers. Ratepayers are not the only people who have been duped. The SEC sued the original developer, Laidlaw Energy Group, for misleading investors about the prospects and financial conditions of the company, and settled out of court.

The full report is available here.  Below is a list of the plants profiled in the report, listed alphabetically by state.

Facilities Profiled in the Report