MARQUETTE, Mich.—Northern Michigan University has received board approval to proceed with construction of a $16.4 million combined heat and power renewable energy plant and to address $800,000 in long-term maintenance at the existing Ripley Heating Plant.

The new biomass plant will reduce annual energy costs by producing up to 88 percent of the campus steam consumption currently supplied by burning fossil fuel at Ripley. It will also produce up to 15 percent of the university’s electricity needs, reducing the amount it has to purchase from Marquette Board of Light and Power. The plant will be fueled by wood chips and wood byproducts from the Upper Peninsula. The Ripley plant relies primarily on natural gas, with fuel oil as a backup. It will be used to meet peak steam demand.

“This will create greater fuel flexibility so the university is protected from volatility in gas pricing,” said Art Gischia, associate vice president for business and auxiliary services. “If you’re locked into one source, there’s no protection. We have established that there’s ample wood in the wood shed to fuel the plant’s operation. If for some reason the price of wood goes up and natural gas goes down, we can look at adjusting for that. This gives us the flexibility we’re looking for. The project will also reduce the carbon footprint of the Ripley plant by about 85 percent.”

Johnson Controls, which has done performance contracting on campus to reduce energy costs, worked with NMU to design the plant and will oversee the project.

“Johnson Controls will guarantee the plant meets annual positive cash flow and return on investment for 20 years net of debt retirement,” said Gischia. “If the plant output doesn’t produce the projected savings, JC will pay the difference. At the end of the 20-year period, the university owns the plant and the debt is retired. It’s better to proceed now rather than later because finance costs continue to be competitive and material prices are being affected globally by the earthquake in Japan and overall global demand for construction materials.”

Site preparation could begin as early as this fall, with construction slated for completion in April 2013. The project will be funded by internal or bond proceeds paid back through the guaranteed operational cost savings. It also will address several long-term maintenance issues in the existing plant, including burner replacement on a boiler for higher efficiency, the installation of a fire suppression system throughout the existing facility and the replacement of the original water softeners and brine system.