Success Story
Release No.STELPRD4009942
, May 04, 2011 --

Outline Of Need

In 2007, Rough and Ready Lumber Company, located in Cave Junction, Oregon, wanted to increase their output of dried, ready-for-market lumber. Their kilns, however, were powered by a 35-year-old boiler that was not up to the job.

How Rural Development Helped

Company owner Link Phillippi applied for and was awarded a $500,000 grant and a $2.3 million loan guarantee through USDA Rural Development’s Rural Energy for America Program (REAP) to replace the old boiler with a new cogeneration system.

The total cost of the project amounted to $6 million. In addition to the assistance provided through REAP, the cost was further offset by a State of Oregon $1.675 million Business Energy Tax Credit. Another $1.7 million will be paid by the Energy Trust of Oregon at a rate of $42 per megawatt-hour as the company produces power over the first five years of production.

The Results

In early 2008, the new system was up and running. It is fueled by the mill’s residual materials, such as sawdust and bark, as well as woody debris sourced from logging and forest stewardship activities. The company’s added boiler capacity and additional dry kilns significantly increased their ability to dry lumber. “We’re producing 50 percent more dry lumber and we’ve gone from one to four full-time positions at the plant,” Phillippi said.

It is also estimated that the project has resulted in an additional seven to ten jobs through contract harvest and forest stewardship.

In addition to powering the kilns, the new system also converts the heat it produces into electricity for the local utility. In all, the system generates and provides 1.5 megawatts for the grid—enough to power 1,000 homes.

“Since it’s renewable energy, we are able to sell 100 percent of this power to the utility for a premium price,” Phillippi explained. “Then, we buy back what we need at a lesser rate.”

With REAP assistance, along with the State of Oregon’s Business Energy Tax Credit and the Energy Trust of Oregon’s renewable program, the payback time for the project is only four to five years, compared to a 15-year payback without these programs.

“We wouldn’t have gotten this off the ground without the assistance,” Phillippi said. “For a company this size, it would have been a tough project to pay off, but with the USDA and state programs, it was doable.”

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