From timber to wood chips to district heating: Production of biomass has begun at Tofte in Norway, marking the first step towards a new renewable business for Statkraft.
The demand for supplies of biomass to a growing number of district heating plants makes wood chip production good business, while plans for biofuel production at Tofte are under further development.
In late August 2015 the cargo ship "Minerva" arrived at Tofte fully loaded with timber.
A week later, the rented wood chip machine, one of the largest of its kind in the world, started work on turning a total of 4.000 tons of huge logs into tiny wood chips to be shipped to a district heating customer in Denmark. Local timber companies also deliver logs directly to Tofte by lorry.
Production of biomass represents the first step on the way to a new renewable activity for Statkraft.
"The old plant in Tofte is well suited for producing biomass," says Chris Moore, head of biomass trading in Statkraft.
Statkraft and Swedish Södra are planning production of second-generation liquid biofuel from forest-based biomass in Tofte.
The two companies have signed a letter of intent to form the production company Silva Green Fuel. The agreement also involved Statkraft buying the industrial area in Tofte from Södra.
The agreement gave the head of biomass trading in Statkraft, Chris Moore, an opportunity. Based at Statkraft's London office, Moore and his team have been trading in biomass for some time now and know the industry well.
"A biomass plant will not be ready until early 2020, but Tofte has a deep water quay, conveyor belts, building stock and suitable infrastructure for handling large quantities of timber," says Moore.
"At the same time, there is a surplus of timber in Scandinavia and a need for biomass to supply a growing number of district heating plants."
"This is our first attempt at something which we believe can become a very profitable business for Statkraft. We are testing it now, but everything looks promising, and we have plans for a more permanent wood chipping and timber operation based in Tofte by next year," says Moore.
"Northern European power utilities are already showing a lot of interest in obtaining renewable biomass from Statkraft's operation in Tofte."
> Statkraft will produce biomass at the industrial area at Tofte, where the former cornerstone company and cellulose factory were situated.
> In future, some of the biomass will be used by Silva Green Fuel, which was formed in the winter of 2014. The company is owned 51 per cent by Statkraft and 49 per cent by Södra Cell, and will produce biofuel.
> The biomass currently produced in Tofte is being used for district heating.
Initially, the plan is to serve the Scandinavian market, but biomass trading is highly international, and a port as easily accessible as Tofte makes it easy to reach other markets too.
In addition to Chris Moore, the biomass team includes Tiago Thomaz, Ian Roche, Liz Warren, Michael Schoenig and Bernhard Rost.
"Our biomass team is a very international group comprising a Swede, Dane, German, Portuguese, Australian, and an Englishman," says Moore.
"Our customers definitely see our international trading culture as an advantage."
This Statkraft 'inSIGHT' video shows the first loading of timber and production of wood chips at Tofte, Norway, in August 2015. The biomass was later shipped to Denmark to be used in a district heating plant. The video has Norwegian voice-over and English subtitles. (Drone photographing: Stian Fjeldstad)
More than half the heating needs of Sweden, Denmark and Finland is covered by district heating, and Norway's consumption of district heating has almost doubled over the past 10 years. But what is district heating? And why has it become so popular?
District heating is an energy system where heat is produced in one place and used in another. Heated water is distributed from a central production plant to homes, businesses and other buildings via underground pipes. The hot water is used to heat buildings through in-floor heating or radiators, and to heat tap water. The spent water is then returned to the central plant for reheating.
Because district heating is an energy system that is reliable and competitive in price, and provides a good indoor climate, a growing number of customers want to replace polluting oil-fired heating systems with a more climate friendly alternative.
"District heating is an important contribution to achieving local and national climate targets," says Nicklas Kilstam, head of Bio Norden in District Heating in Statkraft.
The use of district heating is the largest contributing factor to reduced CO2 emissions in Sweden, where 270 of the country's 290 municipalities are offered district heating. However, it is the type of energy source used to heat the circulated water that determines how climate friendly a district heating system actually is.
"First and foremost, Statkraft uses waste and biofuels such as wood chip and by-products which the sawmill industry would otherwise have discarded," says Kilstam.
"District heating is therefore a climate friendly alternative for homes and other buildings."
"Fossil energy sources are only used as peak load under extremely cold weather conditions," he says. "The fact that production of district heating can make use of different fuel types provides customer benefits in the form of stable, flexible and affordable heat supply."
Statkraft has 11 district heating production plants in Norway, spread throughout the country from Harstad in the north to Moss in the south, as well as four plants in Sweden. Two biomass power plants in Germany generate electricity; one of them also generates district heating, which is supplied to a local customer.
"Cold winters create a demand for heat. That is why district heating has particularly caught on in northern and eastern Europe," says Kilstam.
Because building a production plant and distribution grid is a costly business, Statkraft can only supply district heating to areas with a certain housing density and demand. However, the distribution grids do cover large parts of the cities where Statkraft currently produces district heating. For example, more than 30 per cent of Trondheim's heating needs is met by district heating.
The growing demand for district heating makes it a priority area for Statkraft. In Norway, a new production plant and district heating grid is currently under construction in Moss and is due for completion in 2016. Extensive developments are also underway in Namsos and Trondheim.
"Our ambition is to become one of the most profitable players in the Nordic heating market," says Kilstam.
Text about Tofte: Tone Dahle
Text about district heating: Heidi Bruvik Sæther
Photos: Tone Dahle, Eivind Bull-Hansen
The articles have also been published in Statkraft's magazine People & Power no. 3/2015
The surplus timber in Scandinavia combined with the demand for biomass makes for good business.
Statkraft's internal magazine People & Power brings interesting stories about the energy sector and the company's business activities. Some of the feature articles in the magazine are presented here on the Stories web page.
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