Exemplifying the trend, in Virginia Enviva announced the signing of a long-term wood pellet supply contract with Electrabel, a subsidiary of GDF SUEZ Group, one of the largest utilities in the world.

Under the contract, Enviva, a subsidiary of Intrinergy Holdings LP, will supply 480,000 metric tons of wood pellets annually to Electrabel’s biomass power generating facilities in Belgium. Intrinergy is a portfolio company of Riverstone Holdings LLC’s most recent renewable and alternative energy fund. That’s enough to supply more than 150,000 homes with biomass-based power.

The economics on biomass are interesting. At 4000 KWh per tonne and $105 per ton for oven-dry wood chips, the raw cost for power (excluding capital costs, overhead and profit) are in the 3-cent range per KWh, far worse than coal but far better than most solar and wind options for the Europeans. Of course, biofuels processors who can realize up to 135 gallons per ton from selected woods can generate even higher yields, but the capital costs for biofuels can be daunting compared to the relatively well-understood art of co-firing biomass with coal. Outlook for biomass: bullish.

“With demand for renewable fuel increasing worldwide, the U.S. biomass market is poised for tremendous growth.  Enviva is excited to be at the nexus of this growth by matching U.S.-based resources with major power producers around the world,” said Enviva Chairman and Chief Executive Officer John Keppler.  “We are pleased that Electrabel has joined Enviva’s growing base of utility customers committed to reducing CO2 emissions over the coming years.”
Enviva will supply the wood pellets from its expanding manufacturing base of production facilities in the Southeastern U.S., home to some of the world’s most abundant and most sustainably managed wood baskets. Enviva’s environmental, safety, and forestry staff are at the forefront of best practices in sustainable harvesting, and they ensure that all of the company’s biomass resources are procured according to internationally recognized third party certification standards. http://www.envivapellets.com

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The plant is expected to open power in Q2 2011 and use will use non-contaminated biomass.