HomeMy WebLinkAboutMcGrath Preliminary Fesability Assessment for High Efficiency Low Emission Wood Heating AWEDTG 06-04-2008Preliminary Feasibility Assessment for High
Efficiency, Low Emission Wood Heating
In McGrath, Alaska
Prepared for:
Joe Banghart and Dave Shelborne
Iditarod Area School District
And
Natalie Baumgartner
City of McGrath
Prepared by:
Daniel Parrent,
Wood Utilization Specialist
Juneau Economic Development Council
Submitted June 4, 2008
Notice
This Preliminary Feasibility Assessment for High Efficiency, Low Emission Wood Heating was prepared by
Daniel Parrent, Wood Utilization Specialist, Juneau Economic Development Council for Joe Banghart and
Dave Shelborne (Iditarod Area School District) and Natalie Baumgartner (City of McGrath) McGrath, AK. This
report does not necessarily represent the views of the Juneau Economic Development Council (JEDC).
JEDC, its Board, employees, contractors, and subcontractors make no warranty, express or implied, and
assume no legal liability for the information in this report; nor does any party represent that the use of this
information will not infringe upon privately owned rights. This report has not been approved or disapproved by
JEDC nor has JEDC passed upon the accuracy or adequacy of the information in this report.
Funding for this report was provided by USDA Forest Service, Alaska Region,
Office of State and Private Forestry
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Table of Contents
Abstract
Section 1. Executive Summary
1.1 Goals and Objectives
1.2 Evaluation Criteria, Project Scale, Operating Standards, General Observations
1.3 Assessment Summary and Recommended Actions
1.3.1 IASD Administration Building
1.3.2 IASD McGrath School
1.3.3 Captain Snow Center
Section 2. Evaluation Criteria, Implementation, Wood Heating Systems
2.1 Evaluation Criteria
2.2 Successful Implementation
2.3 Classes of Wood Heating Systems
Section 3. The Nature of Wood Fuels
3.1 Wood Fuel Forms and Current Utilization
3.2 Heating Value of Wood
Section 4. Wood-Fueled Heating Systems
4.1 Low Efficiency High Emission Cordwood Boilers
4.2 High Efficiency Low Emission Cordwood Boilers
4.3 Bulk Fuel Boiler Systems
Section 5. Selecting the Appropriate System
5.1 Comparative Costs of Fuels
5.2(a) Cost per MMBtu Sensitivity – Cordwood
5.2(b) Cost per MMBtu Sensitivity – Bulk Fuels
5.3 Determining Demand
5.4 Summary of Findings and Potential Savings
Section 6. Economic Feasibility of Cordwood Systems
6.1 Initial Investment Cost Estimates
6.2 Operating Parameters of HELE Cordwood Boilers
6.3 Hypothetical OM&R Cost Estimates
6.4 Calculation of Financial Metrics
6.5 Simple Payback Period for HELE Cordwood Boilers
6.6 Present Value, Net Present Value and Internal Rate of Return Values for Various HELE
Cordwood Boiler Installation Options
6.7 Life Cycle Cost Analysis – McGrath School
Section 7. Economic Feasibility of Bulk Fuel Systems
Section 8. Conclusions
8.1 IASD Administration Building
8.2 IASD McGrath School
8.3 Captain Snow Center
Footnotes
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Appendix A AWEDTG Evaluation Criteria
Appendix B Recoverable Heating Value Determination
Appendix C List of Abbreviations and Acronyms
Appendix D Wood Fuel Properties
Appendix E Financial Metrics
Appendix F Operational Parameters of HELE Cordwood Boilers
Appendix G Calculation of Present Value, Net Present Value and Internal Rate of Return
Appendix H Garn Boiler Specifications
List of Tables and Figures
Table 4-1 HELE Cordwood Boiler Suppliers
Table 4-2 Emissions from Wood Heating Appliances
Table 5-1 Comparative Cost of Fuel Oil vs. Wood Fuels
Figure 5-1 Effect of White Spruce Cordwood Price on Cost of Delivered Heat
Table 5-2 Reported Annual Fuel Oil Consumption, in McGrath
Table 5-3 Estimate of Heat Required in Coldest 24-Hour Period, McGrath Facilities
Table 5-4 Estimate of Total Wood Consumption, Comparative Costs and Potential Savings
Table 6-1 Initial Investment Cost Scenarios for Hypothetical Cordwood Systems
Table 6-2 Labor/Cost Estimates for HELE Cordwood Systems
Table 6-3 Summary of Total Annual Non-fuel OM&R Cost Estimates
Table 6-4 Simple Payback Period Analysis for HELE Cordwood Boilers
Table 6-5 PV, NPV and IRR Values for Various HELE Cordwood Boiler Options
Table 6-6a Estimated Life Cycle Costs of Cordwood System Alternative
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Key words: HELE, LEHE, bulk fuel, cordwood
ABSTRACT
The potential for heating various facilities in McGrath, AK with high efficiency, low emission
(HELE) wood-fired boilers is evaluated for the Iditarod Area School District and the City of
McGrath.
Early in 2007, organizations were invited to submit a Statement of Interest (SOI) to the Alaska
Wood Energy Development Task Group (AWEDTG). Task Group members reviewed all the SOIs
and selected projects for further review based on the selection criteria presented in Appendix A.
AWEDTG representatives visited McGrath during the summer of 2007 and information was
obtained for the various facilities. Preliminary assessments were made and challenges identified.
Potential wood energy systems were considered for the projects using AWEDTG, USDA and AEA
objectives for energy efficiency and emissions. Preliminary findings are reported.
SECTION 1. EXECUTIVE SUMMARY
1.1 Goals and Objectives
• Identify the facilities in McGrath as potential candidates for heating with wood
• Evaluate the suitability of the facilities and sites for siting a wood-fired boiler
• Assess the type(s) and availability of wood fuel(s)
• Size and estimate the capital costs of suitable wood-fired system(s)
• Estimate the annual operation and maintenance costs of a wood-fired system
• Estimate the potential economic benefits from installing a wood-fired heating system
1.2 Evaluation Criteria, Project Scale, Operating Parameters, General Observations
• This project meets the AWEDTG objectives for petroleum fuel displacement, use of
hazardous forest fuels or forest treatment/processing residues, sustainability of the wood
supply, community support, and project implementation, operation and maintenance.
• Given fuel oil consumption estimates of 7,500 (IASD Office Building), 29,000 (McGrath
School and warehouse), and 23,500 (Captain Snow Center) gallons per year, these projects
would be considered medium to large in terms of their relative scales.
• Medium and large energy consumers have the best potential for feasibly implementing a
wood-fired heating system. Where preliminary feasibility assessments indicate positive
financial metrics, detailed engineering analyses are usually warranted.
• Cordwood systems are generally appropriate for applications where the maximum heating
demand ranges from 100,000 to 1,000,000 Btu per hour. “Bulk fuel” systems are generally
applicable for situations where the heating demand exceeds 1 million Btu per hour.
However, these are general guidelines; local conditions can exert a strong influence on the
best system choice.
• Efficiency and emissions standards for Outdoor Wood Boilers (OWB) changed in 2006,
which could increase costs for small systems
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1.3 Assessment Summary and Recommended Actions
Three facilities are considered in this report: The Iditarod Area School District (IASD)
Administration Building (which includes IASD Offices, McGrath Library and UAF Museum),
IASD McGrath School, and the City of McGrath’s Captain Snow Center (which includes offices,
health clinic, public safety, washeteria, water plant, and city shop (in a separate building)). Each
major facility will be considered separately as appropriate.
1.3.1. IASD Administration Building
• Overview. The IASD Administration Building is a two-story frame building occupying
approximately 8,000 square feet. Heat is provided by two Armstrong L5B168DC20-1 oil-
fired furnaces, each rated at 166 MBH. One furnace is located on the first floor and another
is located on the second floor. Supplemental heat is provided, as needed, by small electric
space heaters in individual offices.
• Fuel Consumption. The IASD Administration Building consumes approximately 7,500
gallons of #1 fuel oil per year.
• Potential Savings. At the current price of about $5.50 per gallon (June 2008), the IASD will
pay approximately $41,250 per year for fuel oil. The HELE cordwood fuel equivalent of
7,500 gallons of #1 fuel oil is approximately 88 cords, and at $275 per cord represents a
potential annual fuel cost savings of $17,050 (debt service and non-fuel OM&R costs
notwithstanding).
• Required boiler capacity. The estimated required boiler capacity (RBC) to heat the IASD
Administration Building is approximately 258,052 Btu/hr during the coldest 24-hour period.
• Recommended action regarding a cordwood system. Given the initial assumptions and
cost estimates for the alternatives presented in this report, this project appears to be
reasonably viable. Further consideration is warranted. (See Section 6)
• Recommended action regarding a bulk fuel wood system. Given the relatively small heating
demand, apparent lack of ready fuel supply, and the probable costs of the project, a “bulk
fuel” system is not cost-effective for the IASD Administration Building.
1.3.2. IASD McGrath School
• Overview. The McGrath School occupies approximately 32,500 square feet and provides
instruction for approximately 50 students. Heat is provided by two 5-year old Burnham
V1107 boilers, each rated at 1,114 MBH (net) with maximum firing rates of 11 gallons per
hour (each). Heat is distributed via a 4-zone glycol loop. The building and boilers appear
to be in good condition and well-maintained. Domestic hot water is supplied by an older
PVI Industries 20-G-250-A-O (model) 250-gallon, oil-fired water heater. An adjacent
warehouse occupies approximately 3,200 square feet and has its own heating system,
although details were not recorded.
• Fuel Consumption. The McGrath School is reported to consume approximately 26,000
gallons of #1 fuel oil per year, and the warehouse uses approximately 3,000 gallons.
• Potential Savings. At the current price of about $5.50 per gallon (June 2008), the IASD
McGrath School will pay approximately $159,500 per year for fuel oil (including fuel for the
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warehouse). The HELE cordwood fuel equivalent of 29,000 gallons of #1 fuel oil is
approximately 340 cords, and at $275 per cord represents a potential annual fuel cost savings
of $66,000 (debt service and non-fuel OM&R costs notwithstanding).
• Required boiler capacity. The estimated required boiler capacity (RBC) to heat the McGrath
School is approximately 966,060 Btu/hr during the coldest 24-hour period.
• Recommended action regarding a cordwood system. Given the initial assumptions and
cost estimates for the alternatives presented in this report, this project appears to be
economically and operationally viable. Further consideration is warranted. (See Section 6)
• Recommended action regarding a bulk fuel wood system. Given the apparent lack of ready
fuel supply, and the probable costs of the project, a “bulk fuel” system is not cost-effective
for the IASD McGrath School.
1.3.3. Captain Snow Center
• Overview. The City of McGrath’s Captain Snow Center is a two-story frame building,
approximately 30 years old, occupying approximately 12,000 square feet. It is a multi-
purpose facility housing city offices, the health clinic, public safety, washeteria and water
treatment plant. The city’s shop/garage is a small, separate structure located on the same
site. Also located on the same site is the McGrath fuel tank farm.
Heat to the Captain Snow Center and clinic is provided by two Burnham PF-37 boilers,
each rated at 457.4 MBH (net) with a maximum firing rate of 4.6 gallons per hour (each).
The water treatment plant utilizes one Weil-McLain PL-586-WF boiler rated at 940 MBH
(gross) with a maximum firing rate of 8.25 gallons per hour. This boiler also pre-heats air
going into the Captain Snow Center. There are three small heat exchangers that are
scheduled for replacement in the near future. Domestic hot water and washeteria water is
supplied by a single 85-gallon Bock 541E oil-fired water heater. The details regarding the
heating system in the shop/garage were not recorded.
• Fuel Consumption. The Captain Snow Center, excluding the water treatment plant,
reportedly consumes 14,000 to 15,000 gallons of #1 fuel oil per year. The water treatment
plant reportedly consumes 6,500 to 7,000 gallons of #1 fuel oil per year, and the
shop/garage consumes approximately 1,900 to 2,000 gallons of #1 fuel oil per year, for a
total of 22,400 to 24,000 gallons per year (an average figure of 23,500 is used in the
report).
• Potential Savings. At the current price of about $5.50 per gallon, the City will pay
approximately $129,250 per year for fuel oil for the Captain Snow Center (inclusive of all
facilities). The HELE cordwood fuel equivalent of 23,500 gallons of #1 fuel oil is
approximately 275 cords, and at $275 per cord represents a potential annual fuel cost savings
of $53,625 (debt service and non-fuel OM&R costs notwithstanding).
• Required boiler capacity. The estimated required boiler capacity (RBC) to heat the Captain
Snow Center is approximately 738,616 Btu/hr during the coldest 24-hour period.
• Recommended action regarding a cordwood system. Given the initial assumptions and
cost estimates for the alternatives presented in this report, this project appears to be
economically and operationally viable. Further consideration is warranted. (See Section 6)
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• Recommended action regarding a bulk fuel wood system. Given the apparent lack of ready
fuel supply, and the probable costs of the project, a “bulk fuel” system is not cost-effective
for the Captain Snow Center.
SECTION 2. EVALUATION CRITERIA, IMPLEMENTATION, WOOD HEATING SYSTEMS
The approach being taken by the Alaska Wood Energy Development Task Group (AWEDTG)
regarding biomass energy heating projects follows the recommendations of the Biomass Energy
Resource Center (BERC), which advises that, “[T]he most cost-effective approach to studying the
feasibility for a biomass energy project is to approach the study in stages.” Further, BERC advises
“not spending too much time, effort, or money on a full feasibility study before discovering whether
the potential project makes basic economic sense” and suggests, “[U]ndertaking a pre-feasibility
study . . . a basic assessment, not yet at the engineering level, to determine the project's apparent
cost-effectiveness”. [Biomass Energy Resource Center, Montpelier, Vermont. www.biomasscenter.org]
2.1 Evaluation Criteria
The AWEDTG selected projects for evaluation based on the criteria listed in Appendix A. The
McGrath projects meet the AWEDTG criteria for potential petroleum fuel displacement, use of
forest residues for public benefit, use of local processing residues, sustainability of the wood
supply, community support, and the ability to implement, operate and maintain the project.
In the case of a cordwood boiler system, the potential wood supply from forest resources or local
processing residues appears adequate and matches the application. Currently, “bulk fuel” (sawdust,
wood chips, bark, planer shavings, pellets, etc.) is very limited or non-existent in/around McGrath,
and therefore is not a viable fuel for consideration.
One of the objectives of the AWEDTG is to support projects that would use energy-efficient and
clean burning wood heating systems, i.e., high efficiency, low emission (HELE) systems.
2.2 Successful Implementation
In general, four aspects of project implementation have been important to wood energy projects in
the past: 1) a project “champion”, 2) clear identification of a sponsoring agency/entity, 3)
dedication of and commitment by facility personnel, and 4) a reliable and consistent supply of fuel.
In situations where several organizations are responsible for different community services, it must
be clear which organization(s) would sponsor or implement a wood-burning project. (NOTE: This
is not necessarily the case with the projects in McGrath but this issue should be addressed.)
With manual systems, boiler stoking and/or maintenance is required for approximately 5-15
minutes per boiler several times a day (depending on the heating demand), and dedicating
personnel for the operation is critical to realizing savings from wood fuel use. For this report, it is
assumed that new personnel would be hired or existing personnel would be assigned as necessary,
and that “boiler duties” would be included in the responsibilities and/or job description of facility
personnel.
There is some pre-existing forest industry infrastructure and activity in/around McGrath, although
additional harvesting and processing capacity would probably have to be developed in order to
supply wood on a scale as would be necessary for the success of the proposed projects (i.e., 700
cords per year). The wood supply must be verified before embarking upon a wood-fired boiler
construction project.
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2.3 Classes of Wood Energy Heating Systems
There are, basically, two classes of wood energy heating systems: manual cordwood systems and
automated “bulk fuel” systems. Cordwood systems are generally appropriate for applications
where the maximum heating demand ranges from 100,000 to 1,000,000 Btu per hour, although
smaller and larger applications are possible. “Bulk fuel” systems are systems that burn wood chips,
sawdust, bark/hog fuel, shavings, pellets, etc. They are generally applicable for situations where the
heating demand exceeds 1 million Btu per hour, although local conditions, especially fuel
availability, can exert strong influences on the feasibility of a bulk fuel system.
Usually, an automated bulk fuel boiler is tied-in directly with the existing oil-fired system. With a
cordwood system, glycol from the existing oil-fired boiler system would be circulated through a
heat exchanger at the wood boiler ahead of the existing oil boiler. A bulk fuel system is usually
designed to replace 100% of the fuel oil used in the oil-fired boiler, and although it is possible for a
cordwood system to be similarly designed, they are usually intended as a supplement, albeit a large
supplement, to an oil-fired system. In either case, the existing oil-fired system would remain in
place and be available for peak demand or backup in the event of downtime in the wood system.
SECTION 3. THE NATURE OF WOOD FUELS
3.1 Wood Fuel Forms and Current Utilization
Currently, wood fuels in McGrath will generally be in the form of cordwood or large unprocessed
sawmill residues (i.e., slab wood). Residential use of cordwood has increased significantly in the
past 18 months due to sharply higher fuel oil costs. Given that higher demand, prices for firewood
have gone up accordingly.
Currently there is no local supply of bulk fuel (wood chips, sawdust, bark, pellets, etc.), and the
cost of mobilizing that capacity and producing such fuel would probably be prohibitive.
Furthermore, the cost of a bulk fuel heating system (over $1 million) would probably preclude it
from being cost-effective in the McGrath applications.
3.2 Heating Value of Wood
Wood is a unique fuel whose heating value is quite variable, depending on species of wood, moisture
content, and other factors. There are also several recognized ‘heating values’: high heating value
(HHV), gross heating value (GHV), recoverable heating value (RHV), and deliverable heating value
(DHV) that may be assigned to wood at various stages in the calculations.
For this report, white spruce cordwood at 30 percent moisture content (MC30) calculated on the
wet weight basis (also called green weight basis), is used as the benchmark. [It should be noted
that other species are also present, including black spruce, birch, cottonwood/poplar, willow and
aspen. And although white spruce is used as the “benchmark”, any species of wood can be burned
in cordwood fuel systems; the most critical factor being moisture content, not species.]
The HHV of white spruce at 0% moisture content (MC0) is 8,890 Btu/lb1. The GHV at 30%
moisture content (MC30) is 6,223 Btu/lb.
The RHV for white spruce cordwood (MC30) is calculated at 12.22 million Btu per cord, and the
DHV, which is a function of boiler efficiency (assumed to be 75%), is 9.165 million Btu per cord.
The delivered heating value of 1 cord of white spruce cordwood (MC30) equals the delivered
heating value of 85.5 gallons of #1 fuel oil when the wood is burned at 75% conversion efficiency.
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A more thorough discussion of the heating value of wood can be found in Appendix B and
Appendix D.
SECTION 4. WOOD-FUELED HEATING SYSTEMS
4.1 Low Efficiency High Emission (LEHE) Cordwood Boilers
Many outdoor wood boilers (OWBs) are relatively low-cost and can save fuel, but most have been
criticized for low efficiency and smoky operation. These could be called low efficiency, high
emission (LEHE) systems and there are dozens of manufacturers. The State of New York
instituted a moratorium in 2006 on new LEHE OWB installations due to concerns over emissions
and air quality5. Other states are also considering regulations6,7,8,9 or have already implemented
them. But since there are no standards for OWBs (wood-fired boilers and furnaces were exempted
from the 1988 EPA regulations10), OWB ratings are inconsistent and can be misleading. Standard
procedures for evaluating wood boilers do not exist, but test data from New York, Michigan and
elsewhere showed a wide range of apparent [in]efficiencies and emissions among OWBs.
In 2006, a committee was formed under the American Society for Testing and Materials (ASTM)
to develop a standard test protocol for OWBs11. The standards included uniform procedures for
determining performance and emissions. Subsequently, the ASTM committee sponsored tests of
three common outdoor wood boilers using the new procedures. The results showed efficiencies as
low as 25% and emissions more than nine times the standard for industrial boilers. Obviously,
these results were deemed unsatisfactory and new boiler standards were called for.
In a news release dated January 29, 200712, the U.S. Environmental Protection Agency announced
a new voluntary partnership agreement with 10 major OWB manufacturers to make cleaner-
burning appliances. The new phase-one standard calls for emissions not to exceed 0.60 pounds of
particulate emissions per million Btu of heat input. The phase-two standard, which will follow 2
years after phase-one, will limit emissions to 0.30 pounds per million Btus of heat delivered,
thereby creating an efficiency standard as well.
To address local and state concerns over regulating OWB installations, the Northeast States for
Coordinated Air Use Management (NeSCAUM), and EPA have developed model regulations that
recommend OWB installation specifications, clean fuel standards and owner/operator training.
(http://www.epa.gov/woodheaters/ and http://www.nescaum.org/topics/outdoor-hydronic-heaters)
Implementation of the new standard will improve air quality and boiler efficiency but will also
increase costs as manufacturers modify their designs, fabrication and marketing to adjust to the
new standards. Some low-end models will no longer be available.
4.2 High Efficiency Low Emission (HELE) Cordwood Boilers
In contrast to low efficiency, high emission cordwood boilers there are a few units that can
correctly be considered high efficiency, low emission (HELE). These systems are designed to burn
cordwood fuel cleanly and efficiently.
Table 4-1 lists four HELE cordwood boiler suppliers, two of which have units operating in Alaska.
HS Tarm/Tarm USA has a number of residential units operating in Alaska, and a Garn boiler
manufactured by Dectra Corporation is used in Dot Lake, AK to heat several homes and the
washeteria, replacing 7,000 gallons per year (gpy) of #2 fuel oil.14 Two Garn boilers were recently
installed in Tanana, AK (on the Yukon River) to provide heat to the washeteria and water plant,
and two more were recently installed near Kasilof on the Kenai Peninsula.
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Table 4-1. HELE Cordwood Boiler Suppliers
Btu/hr ratings Supplier
EKO-Line 85,000 to 275,000 New Horizon Corp
www.newhorizoncorp.com
Tarm 100,000 to 198,000 HS Tarm/Tarm USA
www.tarmusa.com/wood-gasification.asp
Greenwood 100,000 to 300,000 Greenwood
www.GreenwoodFurnace.com
Garn 350,000 to 950,000 Dectra Corp.
www.dectra.net/garn
Note: Listing of any manufacturer, distributor or service provider does not constitute an endorsement.
Table 4-2 shows the results for a Garn WHS 1350 boiler that was tested at 157,000 to 173,000
Btu/hr using the new ASTM testing procedures, compared with EPA standards for wood stoves and
boilers. However, it should be noted that wood fired boilers are not entirely smokeless; even very
efficient wood boilers may smoke for a few minutes on startup.4,15
Table 4-2. Emissions from Wood Heating Appliances
Appliance Emissions (grams/1,000 Btu delivered)
EPA Certified Non Catalytic Stove 0.500
EPA Certified Catalytic Stove 0.250
EPA Industrial Boiler (many states) 0.225
GARN WHS 1350 Boiler* 0.179
Source: Intertek Testing Services, Michigan, March 2006.
Note: *With dry oak cordwood; average efficiency of 75.4% based upon the high heating value (HHV) of wood
Cordwood boilers are suitable for applications from 100,000 Btu/hr to 1,000,000 Btu/hr, although
both larger and smaller applications are possible.
4.3 Bulk Fuel Boiler Systems
The term “bulk fuel” refers, generically, to sawdust, wood chips, shavings, bark, pellets, etc. Since
the availability of bulk fuel is very limited or non-existent in McGrath, the cost of bulk fuel
systems being so high (i.e., $1 million and up), and the relatively small heating demand for the
facilities under consideration (i.e., less than 1 million Btu per hour), the discussion of bulk fuel
boiler systems has been omitted from this report.
SECTION 5. SELECTING THE APPROPRIATE SYSTEM
Selecting the appropriate heating system is, primarily, a function of heating demand. It is generally
not feasible to install automated bulk fuel systems in/at small facilities, and it is likely to be
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impractical to install cordwood boilers at very large facilities. Other than demand, system choice
can be limited by fuel availability, fuel form, labor, financial resources, and limitations of the site.
The selection of a wood-fueled heating system has an impact on fuel economy. Potential savings
in fuel costs must be weighed against initial investment costs and ongoing operating, maintenance
and repair (OM&R) costs. Wood system costs include the initial capital costs of purchasing and
installing the equipment, non-capital costs (engineering, permitting, etc.), the cost of the fuel
storage building and boiler building (if required), the financial burden associated with loan interest,
the fuel cost, and the other costs associated with operating and maintaining the heating system,
especially labor.
5.1 Comparative Costs of Fuels
Table 5-1 compares the cost of #1 fuel oil to white spruce cordwood (MC30). In order to make
reasonable comparisons, costs are provided on a “per million Btu” (MMBtu) basis.
Table 5-1. Comparative Cost of Fuel Oil vs. Wood Fuels
FUEL RHVa
(Btu)
Conversion
Efficiencya
DHVa
(Btu)
Price per unit
($)
Cost per MMBtu
(delivered, ($))
5.00/gal 46.642
5.50 51.306 Fuel oil, #1,
(per 1 gallon) 134,000 80% 107,200
per gallon 6.00 55.970
250/cord 27.278
275 30.005 White spruce,
(per 1 cord, MC30)
12.22
million 75% 9.165
million 300 32.733
Notes:
a from Appendix D
DHV = RHV x Conversion Efficiency
5.2(a) Cost per MMBtu Sensitivity – Cordwood
Figure 5-1 illustrates the relationship between the price of white spruce cordwood (MC30) and the
cost of delivered heat, (the slanted line). For each $10 per cord increase in the price of cordwood,
the cost per million Btu increases by $1.091. The chart assumes that the cordwood boiler delivers
75% of the RHV energy in the cordwood to useful heat and that oil is converted to heat at 80%
efficiency. The dashed lines represent #1 fuel oil at $5.00, $5.50 and $6.00 per gallon ($46.642,
$51.306 and $55.970 per million Btu respectively).
At high efficiency, heat from white spruce cordwood (MC30) at $470.22 per cord is equal to the
cost of #1 fuel oil at $5.50 per gallon (i.e., $51.306 per MMBtu), before considering the cost of the
equipment and operation, maintenance and repair (OM&R) costs. At 75% efficiency and $275 per
cord, a high-efficiency cordwood boiler will deliver heat at less than 59% of the cost of #1 fuel oil
at $5.50 per gallon ($30.005 versus $51.306 per MMBtu). Figure 5-1 indicates that, at a given
efficiency, savings increase significantly with decreases in the delivered price of cordwood and/or
with increases in the price of fuel oil.
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Cost ($) per MMBtu as a Function of
Cordwood Cost
0.000
10.000
20.000
30.000
40.000
50.000
60.000
100 150 200 250 300 350 400 450 500
Cordwood cost, $ per cordCost ($) per MMBtu
Fuel Oil at $6.00 per gallon
Fuel Oil at $5.50 per gallon
Fuel Oil at $5.00 per gallon
Figure 5-1. Effect of White Spruce Cordwood Price on Cost of Delivered Heat
5.2(b) Cost per MMBtu Sensitivity – Bulk Fuels
Not included in this report
5.3 Determining Demand
Table 5-2 shows the reported approximate amount of fuel oil used by the facilities in McGrath.
Table 5-2. Reported Annual Fuel Oil Consumption in McGrath
Reported Annual Fuel Consumption Facility Gallons Cost ($) @ $5.50/gallon
IASD Administration Bldg 7,500 41,250
IASD McGrath School 29,000 159,500
Captain Snow Center 23,500 129,250
TOTAL 60,000 330,000
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Wood boilers, especially cordwood boilers, are often sized to displace only a portion of the heating
load since the oil system will remain in place, in standby mode, for “shoulder seasons” and peak
demand. Fuel oil consumption for the McGrath facilities was compared with heating demand
based on heating degree days (HDD) to determine the required boiler capacity (RBC) for heating
only on the coldest 24-hour day (Table 5-3). While there are many factors to consider when sizing
heating systems it is clear that, in most cases, a wood system of less-than-maximum size could still
replace a substantial quantity of fuel oil.
Table 5-3. Estimate of Heat Required in Coldest 24-Hour Period, McGrath Facilities
Facility Fuel Oil Used
gal/yeara
Heating
Degree Daysd Btu/DDc Design
Tempd F
RBCe
Btu/hr
Installed
Btu/hra
IASD Admin.
Bldg. 7,500 55,167 258,052 332,000
McGrath School 29,000 213,311 996,060 2,228,000
Captain Snow
(excluding shop) 21,500
14,574
158,145
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738,616 1,854,800
Notes:
a From SOI and site visit; net total Btu/hr
b NOAA, July 1, 2005 through June 30, 2006:
ftp://ftp.cpc.ncep.noaa.gov/htdocs/products/analysis_monitoring/cdus/degree_days/archives/Heating%20degree%20Days/Monthly%20City/2006/jun%202006.txt
c Btu/DD= Btu/year x oil furnace conversion efficiency (0.85) /Degree Days
d Alaska Housing Manual, 4th Edition Appendix D: Climate Data for Alaska Cities, Research and Rural Development
Division, Alaska Housing Finance Corporation, 4300 Boniface Parkway, Anchorage, AK 99504, January 2000.
e RBC = Required Boiler Capacity for the coldest Day, Btu/hr= [Btu/DD x (65 F-Design Temp)+DD]/24 hrs
Typically, installed oil-fired heating capacity at most sites is two-to-four times the demand for the
coldest day, and this is generally true for the facilities in McGrath. However, the installed capacity
at the IASD Administration Building appears to be well-below that general guideline, which may
explain the need for supplemental heat on very cold days.
Manual HELE cordwood boilers equipped with special tanks for extra thermal storage can supply
heat at higher than their rated capacity for short periods. For example, while rated at 950,000
Btu/hr (heat into storage), a single Garn WHS 3200 can store more than 2 million Btu, which
would be enough to heat the IASD Administration Building during the coldest 24-hour period for
nearly 8 hours (2,064,000 ÷ 258,052).
* Btu/hr into storage is extremely fuel dependent. The data provided for Garn boilers by Dectra Corp. are based
on the ASTM standard of split, 16-inch oak with 20 percent moisture content and reloading once an hour.
5.4 Summary of Findings and Potential Savings Table 5-4 summarizes the findings thus far: annual fuel oil usage, range of annual fuel oil costs, estimated annual wood fuel requirement, range of estimated annual wood fuel costs, and potential gross annual savings for the facilities in McGrath. [Note: potential gross annual fuel cost savings do not consider capital costs and non-fuel operation, maintenance and repair (OM&R) costs.] Table 5-4. Estimate of Total Wood Consumption, Comparative Costs and Potential Savings Annual Fuel Oil Cost (@ $ ___ /gal) Approximate Wood Requirementb Annual Wood Cost (@ $ ___ /unit) Potential Gross Annual Fuel Cost Savings ($) Fuel Oil Used gal/yeara 5.00/gal 5.50/gal 6 .00/gal W. spruce, MC30, CE 75% 250/cord 275/cord 300/cord Low Medium High IASD Admin. Bldg. 7,500 37,500 41,250 45,000 88 22,000 24,200 26,400 11,100 17,050 23,000 McGrath School 29,000 145,000 159,500 174,000 340 85,000 93,500 102,000 43,000 66,000 89,000 Captain Snow Center 23,500 117,500 129,250 141,000 275 68,750 75,625 82,500 35,000 53,625 72,250 Total 60,000 300,000 330,000 360,000 703 175,750 193,325 210,900 89,100 136,675 184,250 NOTES: a From Table 5-2 b From Table D-3, Fuel Oil Equivalents; 85.5 gallons per cord (MC30)
SECTION 6. ECONOMIC FEASIBILITY OF CORDWOOD SYSTEMS
6.1 Initial Investment Cost Estimates
DISCLAIMER: Short of having an actual Design & Engineering Report prepared by a team of architects
and/or professional engineers, actual costs for any particular system at any particular site cannot be
positively determined. Such a report is beyond the scope of this preliminary assessment. However, several
hypothetical, though hopefully realistic, system scenarios are offered as a means of comparison. Actual
costs, assumptions and “guess-timates” are identified as such, where appropriate. Recalculations of
financial metrics, given different/updated cost estimates, are relatively easy to accomplish.
Wood heating systems include the cost of the fuel storage building (if necessary), boiler building
(if necessary), boiler equipment (and shipping), plumbing and electrical connections (including
heat exchangers, pumps, fans, and electrical service to integrate with existing distribution systems),
installation, and an allowance for contingencies.
Before a true economic analysis can be performed, all of the costs (investment and OM&R) must
be identified, and this is where the services of qualified experts are necessary.
Table 6-1 (on the next page) presents hypothetical scenarios of initial investment costs for
cordwood systems in a medium heating demand situation. Three alternatives are presented.
Buildings and plumbing/connections are the most significant costs besides the boiler(s). Building
costs deserve more site-specific investigation and often need to be minimized to the extent possible
to achieve favorable financial returns, especially at smaller facilities. Piping from the wood-fired
boiler is another area of potential cost saving. Long plumbing runs and additional heat exchangers
substantially increase project costs. The exorbitant cost of hard copper pipe normally used in
Alaska now precludes its use in most applications. If plastic or PEX® piping is used significant
cost savings may be possible.
Allowance for indirect non-capital costs such as engineering and contingency are most important
for large systems that involve extensive permitting and budget approval by public agencies. This
can increase the cost of a project by 25% to 50%. For the examples in Table 6-1, a 25%
contingency allowance was used.
NOTES:
a. With the exception of the list prices for Garn boilers, all of the figures in Table 6-1 are
gross estimates.
b. The cost estimates presented in Table 6-1 do not include the cost(s) of any upgrades or
improvements to the existing heating/heat distribution system currently in place.
16
Table 6-1. Initial Investment Cost Scenarios for Hypothetical HELE Cordwood Systems
Fuel oil consumption
(gallons per year)
(IASD Admin Bldg)
7,500
(McGrath School)
29,000
(Captain Snow Center)
23,500
Required boiler capacity (RBC),
Btu/hr 258,052 996,060 738,616
(#) Garn model (1) Garn WHS 3200 (3) WHS 3200
(combined capacity)
(2) WHS 3200
(combined capacity)
Rating -Btu/hr e 950,000 2,850,000 1,900,000 Cordwood boiler
Btu stored 2,064,000 6,192,000 4,128,000
Building and Equipment (B&E) Costs, $ (for discussion purposes only)
Fuel storage buildinga
(fabric bldg, gravel pad, $25 per s.f.)
44,000
(88 cds @ 20 s.f./cd)
170,000
(340 cds @ 20 s.f./cd)
137,500
(275 cds @ 20 s.f./cd)
Boiler building @ $150 per sf
(minimum footprint w/concrete pad)b
30,000
(10’x20’)
90,000
(30’x20’)
60,000
(20’x20’)
Boilers
Base pricec
Shipping to Fairbanksd
Bush delivery d
32,900
4,500
2,000
98,700
13,500
6,000
65,800
9,000
4,000
Plumbing and electricald 35,000 70,000 80,000
Installationd 17,500 35,000 40,000
Subtotal - B&E Costs 165,900 483,200 396,300
Contingency (25%)d 41,475 120,800 99,075
Grand Total 207,375 604,000 495,375
Notes:
a A cord occupies 128 cubic feet. If the wood is stacked 6½ feet high, the area required to store the wood is 20 square feet (s.f.) per cord.
b Does not allow for any fuel storage within the boiler building
c List price, Alaskan Heat Technologies, April 2008
d “guess-timate”; for illustrative purposes only
e Btu/hr into storage is extremely fuel dependent. The data provided for Garn boilers by Dectra Corp. are based on the ASTM standard of split, 16-inch oak
with 20 percent moisture content and reloading once an hour.
6.2 Operating Parameters of HELE Cordwood Boilers
A detailed discussion of the operating parameters of HELE cordwood boilers can be found in
Appendix F.
6.3 Hypothetical OM&R Cost Estimates
The primary operating cost of a cordwood boiler, other than the cost of fuel, is labor. Labor is
required to move fuel from its storage area to the boiler building, fire the boiler, clean the boiler
and dispose of ash. For purposes of this analysis, it is assumed that the boiler system will be
operated every day for 210 days (30 weeks) per year between mid-September and mid-April.
Table 6-2 presents labor/cost estimates for various HELE cordwood systems. A detailed analysis of
labor requirement estimates can be found in Appendix F.
17
Table 6-2. Labor/Cost Estimates for HELE Cordwood Systems
IASD Admin Bldg McGrath School Captain Snow Center
System (1) WHS 3200 (3) WHS 3200 (2) WHS 3200
Total Daily labor (hrs/yr)a
(hrs/day X 210 days/yr) 62.16 239.4 193.6
Total Periodic labor (hrs/yr)b
(hrs/wk X 30 wks/yr) 44.1 170.1 137.7
Total Annual labor (hrs/yr)b 20 60 40
Total labor (hrs/yr) 126.26 469.5 371.3
Total annual labor cost ($/yr)
(total hrs x $20) 2,525.20 9,390.00 7,426.00
Notes:
a From Table F-2
b From Appendix F
There is also an electrical cost component to the boiler operation. An electric fan creates the
induced draft that contributes to boiler efficiency. One estimate predicted that, at $0.30 per kWh,
the cost of operating the fan would be approximately $100-$200 per boiler per year4 depending to a
large extent on the heating load. The cost of operating circulation pumps and/or blowers would be
about the same as it would be with the oil-fired boiler or furnaces in the existing heating system.
Lastly there is the cost of wear items, such as fire brick, door gaskets, and water treatment
chemicals. This has been suggested at $300-$500 per year4.
Table 6-3. Summary of Total Annual Non-Fuel OM&R Cost Estimates
Cost/Allowance ($)
IASD Admin Bldg McGrath School Captain Snow Center Item
(1) WHS 3200 (3) WHS 3200 (2) WHS 3200
Labor 2,525.20 9,390.00 7,426.00
Electricity 393.36 1,514.95 1,225.25
Maintenance/Repairs 400.00 1,200.00 800.00
Total non-fuel OM&R ($) 3,318.56 12,104.95 9,451.25
6.4 Calculation of Financial Metrics
Biomass heating projects are viable over the long run, when the annual fuel cost savings generated
by converting to biomass are greater than the cost of the new biomass boiler system plus the
additional operation, maintenance and repair (OM&R) costs associated with a biomass boiler
(compared to those of a fossil fuel boiler or furnace).
Converting from an existing boiler to a wood biomass boiler (or retrofitting/integrating a biomass
boiler with an existing boiler system) requires a greater initial investment and higher annual
18
OM&R costs than for an equivalent oil or gas system alone. However, in a viable project, the
savings in fuel costs (wood vs. fossil fuel) will pay for the initial investment and cover the
additional OM&R costs in a relatively short period of time. After the initial investment is paid off,
the project continues to save money (avoided fuel cost) for the life of the boiler. Since inflation
rates for fossil fuels are typically higher than inflation rates for wood fuel, increasing inflation rates
result in greater fuel cost savings and thus greater project viability.17
The potential financial viability of a given project depends not only on the relative costs and cost
savings, but also on the financial objectives and expectations of the facility owner. For this reason,
the impact of selected factors on potential project viability is presented using the following metrics:
Simple Payback Period
Present Value (PV)
Net Present Value (NPV)
Internal Rate of Return (IRR)
Life Cycle Cost (LCC)
Total initial investment costs include all of the capital and non-capital costs required to design,
purchase, construct and install a biomass boiler system in an existing facility with an existing
furnace or boiler system.
A more detailed discussion of Simple Payback Period, Present Value, Net Present Value and
Internal Rate of Return can be found in Appendix E.
6.5 Simple Payback Period for HELE Cordwood Boilers
Table 6-4 presents a Simple Payback Period analysis for hypothetical multiple HELE cordwood
boiler installations.
Table 6-4. Simple Payback Period Analysis for HELE Cordwood Boilers
IASD Admin Bldg McGrath School Captain Snow Center (1) WHS 3200 (3) WHS 3200 (2) WHS 3200
Fuel oil cost
($ per year @ $5.50 per gallon) 41,250 159,500 129,250
Cordwood cost
($ per year @ $275 per cord) 24,200 93,500 75,625
Annual Fuel Cost Savings ($) 17,050 66,000 53,625
Annual, Non-fuel OM&R costsa 3,319 12,105 9,451
Net Annual Savings ($)
(Annual Cash Flow) 13,731 53,895 44,174
Total Investment Costs ($)b 207,375 604,000 495,375
Simple Payback (yrs)c 12.16 9.15 9.24
Notes:
a From Table 6-3
b From Table 6-1
c Total Investment Costs divided by Annual Fuel Cost Savings
19
6.6 Present Value (PV), Net Present Value (NPV) and Internal Rate or Return (IRR)
Values for Various HELE Cordwood Boiler Installation Options
Table 6-5 presents PV, NPV and IRR values for hypothetical various HELE cordwood boiler
installations.
Table 6-5. PV, NPV and IRR Values for Various HELE Cordwood Boilers Options
IASD Admin Bldg McGrath School Captain Snow Center (1) WHS 3200 (3) WHS 3200 (2) WHS 3200
Discount Ratea (%) 3
Time, “t”, (years) 20
Initial Investment ($)b 207,375 604,000 495,375
Annual Cash Flow($)c
(Net Annual Savings) 13,731 53,895 44,174
Present Value
(of expected cash flows, $ at “t” years) 204,283 801,822 657,198
Net Present Value ($ at “t” years) -3,092 197,822 161,823
Internal Rate of Return
(% at “t” years) 2.84 6.29 6.28
See Note # _ below 1 2 3
Notes:
a real discount (excluding general price inflation) as set forth by US Department of Energy, as found in NIST publication NISTIR 85-3273-22, Energy
Price Indices and Discount Factors for Life Cycle Cost Analysis, April 2007
b From Table 6-1
c Equals annual cost of fuel oil minus annual cost of wood minus annual non-fuel OM&R costs (i.e., Net Annual Savings)
Note #1. With a real discount rate of 3.00% and after a span of 20 years, the projected cash flows are worth $204,283
today (PV), which is less than the initial investment of $207,375. The resulting NPV of the project is -$3,092, which
means that the project, given the stated assumptions and cost estimates, will not achieve the stated return [i.e., 3%] at the
end of 20 years. However, the internal rate of return IS positive (2.84%), and given that this report is only a pre-
feasibility assessment, this option could “pencil out” given “real” numbers.
Note #2. With a real discount rate of 3.00% and after a span of 20 years, the projected cash flows are worth $801,822
today (PV), which is greater than the initial investment of $604,000. The resulting NPV of the project is $197,822 and
the project achieves an internal rate of return of 6.29% at the end of 20 years. Given the assumptions and cost estimates,
this alternative appears financially and operationally feasible.
Note #3. With a real discount rate of 3.00% and after a span of 20 years, the projected cash flows are worth $657,198
today (PV), which is greater than the initial investment of $495,375. The resulting NPV of the project is $161,823 and
the project achieves an internal rate of return of 6.28% at the end of 20 years. Given the assumptions and cost estimates,
this alternative appears financially and operationally feasible.
6.7 Life Cycle Cost Analysis – McGrath School
The National Institute of Standards and Technology (NIST) Handbook 135, 1995 edition, defines
Life Cycle Cost (LCC) as “the total discounted dollar cost of owning, operating, maintaining, and
disposing of a building or a building system” over a period of time. Life Cycle Cost Analysis
(LCCA) is an economic evaluation technique that determines the total cost of owning and
operating a facility over a period of time. Alaska Statute 14.11.013 directs the Department of
Education and Early Development (EED) to review school capital projects to ensure they are in the
20
best interest of the state, and AS 14.11.014 stipulates the development of criteria to achieve cost
effective school construction.19
While a full-blown life cycle cost analysis is beyond the scope of this preliminary feasibility
assessment, an attempt is made here to address some of the major items and run a rudimentary
LCCA using the Alaska EED LCCA Handbook and spreadsheet.
According to the EED LCCA Handbook, the life cycle cost equation can be broken down into three
variables: the costs of ownership, the period of time over which the costs are incurred
(recommended period is 20 years), and the discount rate that is applied to future costs to equate
them to present costs.
There are two major costs of ownership categories: initial expenses and future expenses. Initial
expenses are all costs incurred prior to occupation (or use) of a facility, and future expenses are all
costs incurred upon occupation (or use) of a facility. Future expenses are further categorized as
operation costs, maintenance and repair costs, replacement costs, and residual value. A
comprehensive list of items in each of these categories is included in the EED LCCA Handbook.
The discount rate is defined as, “the rate of interest reflecting the investor’s time value of money”,
or, the interest rate that would make an investor indifferent as to whether s/he received payment
now or a greater payment at some time in the future. NIST takes the definition a step further by
separating it into two types: real discount rates and nominal discount rates. The real discount rate
excludes the rate of inflation and the nominal discount rate includes the rate of inflation.19 The
EED LCCA Handbook and spreadsheet focuses on the use of real discount rates in the LCC
analysis.
To establish a standard discount rate for use in the LCCA, EED adopted the US Department of
Energy’s (DOE) real discount rate. This rate is updated and published annually in the Energy Price
Indices and Discount Factors for Life Cycle Cost Analysis – Annual Supplement to NIST
Handbook 135 (www1.eere.energy.gov). The DOE discount and inflation rates for 2008 are as
follows:
Real rate (excluding general price inflation) 3.0%
Nominal rate (including general price inflation) 4.9%
Implied long term average rate of inflation 1.8%
Other LCCA terms
Constant dollars: dollars of uniform purchasing power tied to a reference year and exclusive of
general price inflation or deflation
Current dollars: dollars of non-uniform purchasing power, including general price inflation or
deflation, in which actual prices are stated
Present value: the time equivalent value of past, present or future cash flows as of the beginning of
the base year.
NOTE: When using the real discount rate in present value calculations, costs must be expressed in
constant dollars. When using the nominal discount rate in present value calculations, costs must be
expressed in current dollars. In practice, the use of constant dollars simplifies LCCA, and any
change in the value of money over time will be accounted for by the real discount rate.
21
LCCA Assumptions
As stated earlier, it is beyond the scope of this pre-feasibility assessment to go into a detailed life
cycle cost analysis. However, a limited LCCA is presented here for purposes of discussion and
comparison.
Time is assumed to be 20 years, as recommended by EED
The real discount rate is 3%
Initial expenses as per Table 6.1
Future expenses as per Table 6.3
Replacement costs – not addressed
Residual value – not addressed
Cordwood Boiler Alternatives
Alternative 1 represents the existing oil-fired boiler systems. The initial investment was assumed
to be $50,000. The operation costs included 29,000 gallons of #1 fuel oil at $5.50 per gallon and
40 hours of labor per year at $20 per hour. The annual maintenance and repairs costs were
assumed to be $1,000 and no allowances were made for replacement costs or residual value.
NOTE: The value of the existing boiler system ($50,000), the amount and cost of labor (40 hours,
$800), and maintenance and repair costs ($1,000) are fictitious, but are held constant for
comparative purposes as appropriate.
Alternative 2 represents the existing oil-fired boiler systems, which would remain in place, plus the
installation of three Garn WHS 3200 wood fired boilers. The initial investment was assumed to
be $654,000, which includes the hypothetical value of the existing oil-fired boilers (valued at
$50,000 as per Alternative 1) plus the initial investment cost of the Garn boiler system ($604,000,
as per Table 6-1). The operation costs include 340 cords of fuelwood at $275 per cord and 469.5
hours of labor per year at $20 per hour (as per Table 6-2). The annual utility, maintenance and
repair costs were assumed to be $2,714.95 (as per Table 6-3) for the system and no allowances
were made for replacement costs or residual value.
The hypothetical EED LCCA results for the McGrath School cordwood boiler alternative are
presented in Table 6-6.
Table 6-6. Estimated Life Cycle Costs of Cordwood System Alternative
Alternative 1
(existing boilers)
Alternative 2
(existing boilers plus HELE cordwood boilers)
Initial Investment Cost $50,000 $654,000
Operations Cost $2,384,859 $1,530,743
Maintenance & Repair Cost $14,877 $40,392
Replacement Cost $0 $0
Residual Value $0 $0
Total Life Cycle Cost $2,449,737 $2,225,135
22
SECTION 7. ECONOMIC FEASIBILITY OF BULK FUEL SYSTEMS
The term “bulk fuel” refers, generically, to sawdust, wood chips, shavings, bark, pellets, etc. Since
the availability of bulk fuel is virtually non-existent in Kake, the cost of bulk fuel systems being so
high (i.e., $1 million and up), and the relatively small heating demand for the facilities under
consideration, the discussion of bulk fuel boiler systems has been omitted from this report.
SECTION 8. CONCLUSIONS
This report discusses conditions found “on the ground” at the IASD Administration Building,
IASD McGrath School, and Captain Snow Center in McGrath, Alaska, and attempts to
demonstrate, by use of realistic, though hypothetical examples, the feasibility of installing high
efficiency, low emission cordwood boilers to heat these facilities.
Wood is a viable heating fuel in a wide range of institutional applications, however, below a certain
minimum and above a certain maximum, it may be impractical to heat with wood, or it may require
a different form of wood fuel and heating system. The difference in the cost of heat derived from
wood versus the cost of heat derived from fuel oil is significant, as illustrated in Table 5-1. It is
this difference in the cost of heat, resulting in monetary savings that must “pay” for the
substantially higher investment and OM&R costs associated with wood-fuel systems.
McGrath Facilities
Three facilities in McGrath were identified as potential heating projects: the Iditarod Area School
District (IASD) Administration Building, the IASD McGrath School, and the City of McGrath’s
Captain Snow Center. Each is analyzed in this report.
8.1. The IASD Administration Building is small to medium-sized in terms of its energy
usage; consuming a reported 7,500 gallons of #1 fuel oil per year. It is a fair example of a
small to medium-sized facility reasonably suitable to a HELE cordwood boiler installation.
With a single large HELE boiler consuming 88 cords of wood per year and being fired
approximately 3 times per day, the simple payback period would be 12.16 years given current
fuel costs and a cordwood boiler installation costing around $207,375. The present value, net
present value and internal rate of return after 20 years, assuming a discount rate of 3%, are
$204,283, -$3,092 and 2.84% respectively. This project is marginally cost-effective, but
nonetheless warrants closer scrutiny by a professional engineer.
8.2. The IASD McGrath School (and warehouse) is large in terms of its energy usage;
consuming a reported 29,000 gallons of #1 fuel oil per year. It is a good example of a facility
apparently suitable to a HELE cordwood boiler installation.
With three large HELE boilers consuming a total of 340 cords per year and being fired
approximately 4 times per day, the simple payback period would be 9.15 years given current
fuel costs and a cordwood boiler installation costing around $604,000. The present value, net
present value and internal rate of return after 20 years, assuming a discount rate of 3%, are
$801,822, $197,822 and 6.29% respectively. The theoretical difference in life cycle costs
between the currently installed system and a wood-fired system is nearly $225,000 over 20
years. Closer scrutiny of this project by qualified professionals appears justified.
23
8.3. The Captain Snow Center is also large in terms of its energy usage, consuming an
average of 23,500 gallons of #1 fuel oil per year. It is another good example of a facility
apparently suitable to a HELE cordwood boiler installation.
With a pair of large HELE boilers consuming a total of 275 cords per year and being fired 4 to
5 times per day, the simple payback period would be 9.24 years given current fuel costs and a
cordwood boiler installation costing around $495,375. The present value, net present value and
internal rate of return after 20 years, assuming a discount rate of 3%, are $657,198, $161,823
and 6.28% respectively. Closer scrutiny of this project by qualified professionals appears
justified.