Mohegan Renewable Energy Is Using American Waste Wood to Keep the Lights on in Europe

This article originally appeared in the March 2019 “Infrastructure” print edition of Native Business Magazine.

In business, it’s tempting to see infrastructure as something you just have to work with. You have a factory, or a store, or an office — how do people get to it? How do you move your product? Where do you get your power, and how do you connect to the Internet? If you’re a business owner, you might not have much choice. You get what you get, like a hand dealt to you in a poker game — and it’s probably not going to be a royal flush.

When the Mohegan Holding Company, the non-gaming business arm of the Mohegan Tribe, looked to succeed in sustainable energy, they approached — or ended up approaching — their new business venture from the other perspective. The goal was to maximize the success of a sustainable energy plant; the challenge was to locate a site or sites blessed by the infrastructure gods.

The business, called Mohegan Renewable Energy (MRE), which only came into existence at the end of 2017, added its fifth plant to its operation when it bought a disused pellet-manufacturing facility in Quitman, Mississippi, in November 2018. The Quitman location joins plants in Crossville, Alabama; Jasper, Tennessee; Ligonier, Indiana; and Peebles, Ohio — all under the MRE umbrella. The product that Mohegan Renewable Energy produces is wood pellets, which can be used as fuel in home heating and power generation.

Mohegan Renewable Energy initially sought to sell its pellets from facilities in Indiana and Ohio to the domestic home heating market. But early on, the company found that the heating market was too dependent on a factor beyond their control — the weather. Dissatisfied with the returns, MRE needed a different strategy. Mark Boivin, President and CEO, was brought on board to get MRE out of the home heating market and to shift focus to industrial pellets and selling them overseas. That might seem like a big change, if you’re fixated on an owned brick-and-mortar factory and a local product. Boivin takes a more fluid view, focusing on the end recipient: Where is the best paying customer, and how do we structure our operation to make and deliver what’s needed?

“Businesses are really just supply chains,” says Boivin. “You would not build or invest in a plant unless you had long-term offtake, meaning that path to supply product to a utility. The main thing that a utility wants is certainty of supply. That needs to push back to the way we think about designing our businesses or supply chains.”

In the wood-pellet industry — at least the way MRE is pursuing it — infrastructure is not some abstract element that exists outside the business and must be dealt with as needed. The infrastructure of roads and ports is where MRE’s business lives.

“There are lots of massive wood pellet plants that we have zero interest in,” says Boivin. “And that’s because they’re just in the wrong place.”

As replenishable organic material that is converted to energy, wood pellets are classified as biomass, a term that also includes gas (such as ethanol) made from organic material. There’s not a huge domestic market for wood pellets, but in Europe, thanks to subsidies from greener European governments, demand from utilities is robust.

“When you look at a portfolio of renewables, there’s always onshore wind, offshore wind and solar,” Boivin explains. “Biomass has had a place in the portfolio of renewables in many, many countries, and that number is really growing. The piece of the pie is really dependent upon what’s happening in each of those countries. The main way pellets are used is a displacement for coal. Utilities can do a wholesale conversion, just convert the whole [coal-burning power plant] over to biomass, wood pellets. The reason to do that, to use biomass as your renewable, is that you can store it and ship it to the burner, and you can do that whether or not the wind is blowing or the sun is shining. Until the overall challenge of storing energy from wind and solar is solved, biomass will be an important renewable technology.”

A wood pellet business like MRE’s depends on raw materials that are essentially unwanted, harvesting irregular wood from logging operations, or remnants and sawdust from sawmills. It brings to mind a saying — associated with other Tribes, far removed from the Mohegans’ traditional lands in the northeast: Use every part of the buffalo. The idea is an old one, and not unique even to Tribal people of the Americas. For humans to survive, it’s necessary for us to kill things, whether it’s animals and plants for food or trees for shelter and warmth. But many Indigenous cultures strive to do so respectfully, with a thriftiness and resourcefulness that make full use of the gifts from the natural world. MRE finds a human use for waste wood that might otherwise end up in a landfill. And while wood, like coal, produces CO2 when it burns, the new trees that are planted after harvesting will suck CO2 out of the air as they grow. It is this cycle of burning and replanting — emitting and absorbing carbon — that has earned biomass the “carbon neutral” designation from the U.S. Energy Information Administration.

Selling wood pellets from the American Midwest and south to European customers is about more than the pellets — it’s about transportation. “This is very much a logistics [based] business,” says Steve Wintle, MRE’s vice president of business development. “Any time we seek out a new opportunity, the two biggest items we focus on in terms of siting a location are proximity to the deep-water port that can handle the pellets, and then the local fiber availability in and around a site location — what we refer to as the ‘wood basket.’ You really need both of those to work out well to be able to have an ideal location for the business. You determine a port of export, which is suitable for handling wood pellets, and then work your way back to the plant from there.”

MRE’s first two plants, located in Indiana and Ohio, don’t meet the port requirement — but the plants in Alabama and Tennessee, and the soon-to-be operable plant in Mississippi, all do. “All of that product exports or will export through the port of Mobile, Alabama,” says Wintle. “Ordinarily the port of export has a storage facility that allows for the supply of pellets to be aggregated until enough product is available to load a vessel. And the reason for that storing requirement is the pellets can’t really get wet.” Moving and storing the pellets requires MRE to employ a couple different trucking companies and barge-related services, but Wintle reveals that MRE even gets a break on the shipping logistics of the logistics-based business. “For this existing offtake contract, we actually sell the product FOB Mobile.” In other words, the European customers buy the pellets on the dock in Alabama, and handle the shipping themselves — adventure on the high seas is not part of MRE’s operation.

MRE’s rapid growth has been impressive, and this opportunistic approach is repeatable by design. Find the supply of raw materials, find the deepwater port, and secure a processing plant. But there’s a final element, inherent to renewables, that’s both a hurdle and a point of pride: Sustainable Biomass Program (SBP) certification, which MRE attained in October 2019. It’s an industry-wide standard that was adopted so that buyers, and the governments subsidizing them, can be sure the biomass they’re getting was actually produced from sustainable sources. It establishes a chain of custody for the fiber, to ensure that it was harvested from an appropriate place observing best forestry management practices.

SBP certification is “an absolute requirement,” Boivin says, “and when you talk about the Mohegans, and reverence for the land — you can’t get any more aligned than that.”