Economies of scale—in reverse

While the population of Sweden and Michigan are the same, Sweden's geographically bigger, with land mass about equal to California. For the bioeconomy, this translates into a regional rather than countrywide approach.

On Aug. 16, a subset of the Michigan group visited Skelleftea Kraft, a heat and power plant in Hedensbyn that also produces wood pellets (which resemble guinea pig food) that can be burned in stoves to provide heat.

Per Lysedal, plant production manager, explained how heat, power (and soon cooling) was provided to residents and businesses in a 6 kilometer radius around the plant through what's known as district heating.

With district heating, the plant sends heated water through pipes to each building in the town. The hot water circulates through radiators in each room, so different parts of a house or office building can be warmer or cooler as desired. Homes or businesses that live outside the service radius receive delivered bags of wood pellets that are burned for heat.

In the summer, when demand for heat and power is low, the plant puts much of its energy into making pellets that are then stored. In the winter, when heating demands are higher, the plants makes more steam heat.

What's striking about the plant, aside from the concept of district heating (which is relatively uncommon in the United States) is its ability to become more and more profitable by staying the same size, also relatively uncommon in the United States.

"In the United States, business believes that bigger is always better," said Ray Miller, manager of the Upper Peninsula Tree Improvement Center and MSU forestry research director for northern Michigan. "In the case of the Skelleftea plant, the company wouldn't be profitable if it got bigger. It's profitable because it's so efficient at getting the energy out of the wood. It's economy of scale, but in reverse."

Miller found the concept of a coordinated heat/power/pelletizing plant intriguing for the smaller communities that dot the Upper Peninsula and northern lower Michigan.

"Even if district heating weren't implemented for homes because of concern about hook-up costs or replacing gas forced-air furnaces with radiators, it could be piloted in businesses and municipal buildings," he said. "As communities have to replace aging, inefficient power plants, we could test or demonstrate this concept. Right now, many consultants would recommend a huge replacement power plant with a huge price tag, which small communities don't need and can't afford."

The UP and northern Lower Peninsula are home to much of the state's forested land, which makes the coordinated heating plant a natural fit.

"We'd definitely have to do more research and have more conversations," Miller said, "but this is an idea that I think has real possibilities for Michigan."