Neville Auton, who runs his own consultancy business and also works part-time for the Dunedin City Council, says wood waste from council-owned City Forest plantations could be processed at the plant and used to heat council facilities, commercial buildings and homes.
The plant would allow Dunedin to provide for much of its own energy needs as well as becoming an energy exporter, he said this week.
"My idea is conceptual at this stage," Mr Auton said.
"A detailed feasibility study and economic impact study would be needed. But it all starts to fit together if you look at it correctly."
While new to New Zealand, torrefaction plants operated in many other parts of the world, he said.
Next month, while holidaying in Europe, Mr Auton will visit torrefaction plants and buildings in Germany, Austria and France which use torrefied biomass heating systems.
He believed the cost of building a torrefaction plant would be many millions.
The cost could be met by private investors, a co-operative of potential users, or a combination of the two.
A locally produced heating fuel would cushion Dunedin from price rises for heating fuels, such as diesel and lpg, which were mainly imported, he said.
Wood was a renewable resource, unlike fossil fuels which would run out eventually.
Also, because of its low moisture content, burning torrefied wood had less effect on the environment.
Mr Auton said a plant would create jobs in Dunedin. There was also the potential for the University of Otago, Otago Polytechnic and local businesses to become involved in the design and manufacture of torrefied wood heating systems.
"My vision is for Dunedin to become a centre for excellence in this [technology]."
The city council could become a "keystone customer" for the plant, he said.
The council ran an lpg boiler which piped heat to many central city facilities, including the council offices, Moray Pl library, Dunedin Centre, Regent Theatre, Dunedin Public Art Gallery, Wall St mall and Moana Pool.
The cost of lpg had quadrupled in the past three years and lpg now cost between $800,000 and $1 million a year, he said.
His idea was for the council to install a torrefied wood boiler to heat water which would then be piped to heat council buildings.
The existing boiler would be converted to diesel and run as a back-up system only.
While there would be a capital cost, there would be savings in the long run, he said.
"If we could spend $500,000 a year on heating our facilities, instead of a million, the savings would add up quickly. The cost of lpg is ... already following an upward curve and the price is never going to go down."
There was also potential for a large central city boiler system supplying the council and non-council customers now using other means of heating such as coal, diesel, lpg, air-dried wood chips, wood pellets or electricity.
City Forests spokesman Kent Chalmers said this week the company had about 11,500ha of forests within 70km of Dunedin and ample supplies of waste wood.
Some waste wood was sold to be processed into fibreboard and some was sold as firewood, but most was left on the ground.
Supplying a torrefaction plant would be a "good result for us", he said, because it would increase revenue and use an otherwise waste resource.
Wenita also had large forestry plantings close to Dunedin, Mr Chalmers said.
"The concept is good. The issue is who would pay for a plant, and it wouldn't be City Forests ... But if someone can build a robust business case for a plant, I'm enthusiastic. It seems hard to think that with all the waste wood around we couldn't make this work."
