HomeMy WebLinkAboutNative Village of Nikolai Biomass Energy Preliminary Fesability Assessment 04-09-2012-BIO0
Biomass Energy
Native Village of Nikolai
D a l s o n E n e r g y I n c .
3 0 8 G S t . S t e 3 0 3
A n c h o r a g e , A l a s k a 9 9 5 0 1
907-2 7 7 -7900
4 / 9 / 2 0 1 2
Preliminary Feasibility
Assessment
This preliminary feasibility assessment considers the
potential for heating municipal buildings in Nikolai with
wood.
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 1
Table of Contents
Project Summary ........................................................................................................................................ 2
City: City of Nikolai .................................................................................................................................... 3
Tribe: Nikolai Village, federally-recognized .............................................................................................. 3
Summary of Findings ................................................................................................................................ 0
Wood fuel supply in Nikolai .................................................................................................................... 1
Biomass Energy Operations and Maintenance ............................................................................................. 3
Biomass Harvest Plan ................................................................................................................................ 3
Operations Plan......................................................................................................................................... 4
Community Facilities Information .......................................................................................................... 5
City Buildings ......................................................................................................................................... 5
Community Building ......................................................................................................................... 5
City Lodge ........................................................................................................................................... 5
City Shop ............................................................................................................................................... 5
Kuskokwim School, Yukon-Koyukuk School District ...................................................................... 6
Nikolai Edzeno Village Council Office ............................................................................................... 6
Recommended technology and fuel requirements ............................................................................... 7
Economic feasibility ................................................................................................................................... 9
Initial investment ................................................................................................................................... 9
School ................................................................................................................................................... 9
Kuskokwim School .............................................................................................................................. 10
District ................................................................................................................................................. 11
Operating Assumptions ...................................................................................................................... 12
Operating Costs & Annual Savings ................................................................................................... 13
Financial metrics .................................................................................................................................. 15
Simple payback period .................................................................................................................... 15
Present Value .................................................................................................................................... 15
Net Present Value............................................................................................................................. 16
Internal Rate of Return .................................................................................................................... 16
Life cycle cost analysis (LCCA) for School ................................................................................... 16
Conclusion ................................................................................................................................................ 18
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 2
Supplement: Community Wood Heating Basics ......................................................................................... 20
Wood fuel as a heating option .................................................................................................................... 20
The nature of wood fuels ........................................................................................................................ 20
The basics of wood-fueled heating ........................................................................................................ 21
Available wood heating technology ...................................................................................................... 24
Cordwood Boilers ................................................................................................................................ 24
Bulk Fuel Boilers .................................................................................................................................. 24
District heat loops ................................................................................................................................ 25
Figure 1: Aerial view of Nikolai, Alaska ................................................................................................. 1
Figure 2: Map of Land Ownership Surrounding Nikolai, AK. ........................................................................ 2
Figure 3: Timber Inventory, 1987 ................................................................................................................. 2
Figure 4: Illustration of Unmanaged Wood Harvesting Efforts .................................................................... 3
Figure 5: Illustration of Planned Wood Harvest by Harvest Area and Time Period. .................................... 4
Figure 6: Unloading Fuel Oil from a plane in Nikolai. ......................................................................... 5
Figure 1: Cordwood ..................................................................................................................................... 20
Figure 2: Ground wood chips used for mulch. ............................................................................................ 20
Figure 3: Wood briquettes, as a substitute for cordwood. Cross sections of these briquettes make
“wafers” which can be automatically handled in biomass boiler systems. ................................................ 20
Figure 4: Wood pellets ................................................................................................................................ 20
Project Summary
Dalson Energy was contracted by the Interior Regional Housing Authority (IRHA) and
Tanana Chiefs Conference (TCC) to do a Pre-Feasibility Study (Pre-FS) for a Biomass
Heating System for the Native Village of Nikolai.
The IRHA/TCC Scope of Work stated that a study should be done to assess the pre-
feasibility biomass heating for candidate facilities.
Dalson Energy biomass specialists Thomas Deerfield and Jason Hoke visited the
community on October 20, 2011 for the initial assessment. Deerfield and Hoke made
their assessment based on available data, interviews with local stakeholders and
authorities, observations, and research and review of previous studies done in Nikolai.
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 3
This report was prepared by Thomas Deerfield, Wynne Auld, Jason Hoke, Louise
Deerfield, Tom Miles and Clare Doig.
Contact and interviews with the following individuals in Nikolai assisted in some of the
information gathering. Their contact information is as follows:
City: City of Nikolai
P.O. Box 9145
Nikolai, AK 99691-0045
Phone 907-293-2113
Fax 907-293-2120
E-mail cityofnikolai@yahoo.com
Winchell Ticknor, City Clerk
Tribe: Nikolai Village, federally-
recognized
P.O. Box 9105
Nikolai, AK 99691
Phone 907-293-2311
Fax 907-293-2481
E-mail agnes.tony@tananachiefs.org
Nick Alexia Sr, 1st Chief
nickalexia@hotmail.com
(907) 293-2212
Beverly Gregory, Tribal Administrator
Beverly.gregory@tananachiefs.org
(907) 293-2311
0
Summary of Findings
Currently, many of Nikolai’s municipal buildings are excellent prospects for biomass
heating. Containerized HELE (high-efficiency low-emission) cordwood boilers are
suggested as an expedient way to develop biomass heating plants in Nikolai. The two
identified projects are (1) the Kuskokwim School, and (2) a small District heating system
with the Kuskokwim School as its hub, also serving the Community Hall building,
Lodge, and City Shop.
The project’s success is critically dependent on a Biomass Harvest Plan and an Operations
Plan. These two project plans are discussed in this Pre-Feasibility Analysis. The
Consultant strongly recommends developing these Plans prior to project development.
Although the small District is more financially attractive, it is also more challenging in
terms of both infrastructure and operations. Therefore, the Consultants recommend first
installing the School’s system; ultimately, a 350,000 BTU boiler could serve both the
School and the associated District upon build out.
Boiler
Size
(BTU/hr)
Capital
Cost
Annual
Operations
Cost, Yr. 1
Annual
Cash
Savings,
Yr. 1
Simple
Payback,
Yrs.
NPV IRR
School 350,000 $298,000 $32,000 $20,800 14.3 $336,700 5%
District 350,000 $478,000 $42,800 $41,500 11.5 $671,000 7%
The Consultants also recommend undertaking weatherization on the Tribal Council
office. This recommendation is derived directly from feedback from Tribal Council staff.
The next step is to present the findings of this pre-feasibility study to IRHA and TCC.
As service providers to the Village of Nikolai, they will help determine the next steps
forward.
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 1
Figure 1: Aerial view of Nikolai, Alaska
Wood fuel supply in Nikolai
In 1987 Tanana Chiefs Conference completed a timber inventory of the ANCSA Native
village lands around Nikolai. The village corporation, MTNT, Limited, owns
approximately 69,120 acres, of which approximately 20,300 acres are forested, holding
an estimated 46.254 million cubic feet of saw timber and pole timber. Much of this
material could be considered woody biomass suitable for wood fueled heating systems.
Doyon, Limited, the regional corporation, is the other major landowner in the region, as
indicated by Figure 2: Map of Land Ownership Surrounding Nikolai, Alaska.
While these inventory figures
indicate a substantial timber
resource, sites supporting tree
growth are widely distributed
and may be difficult to access
because of the area
characteristics and the lack of
existing roads. The Village is
located along a major river
system with expansive low
elevation wetlands, resulting
in widely distributed higher
elevation sites that support
tree growth. These factors
impact the economics of fuel
availability, which in turn impacts the size and fuel demand for a wood fueled heating
system in the community. Additional considerations include 1) the landowner’s
contractual agreement for harvest and compensation for the resource, 2) public
acceptance of larger scale timber harvest than has been experienced in recent history,
and 3) total project (from timber harvest to operation of the heating system) economic
feasibility.
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 2
Figure 2: Map of Land Ownership Surrounding Nikolai, AK.
Figure 3: Timber Inventory, 1987
Results of Tanana Chiefs Conference timber inventories:
Nikolai (1987)Acres Cubic Feet Board Feet
(thousands)
Saw Timber Types: (10.5"+ d.b.h.)
White Spruce 3,246 10,903,000 35,745
Cottonwood 227 688,000 1,996
Mixed White Spruce/Hardwood 5,813 15,047,000 47,149
Subtotal 9,286 26,638,000 84,890
Pole timber Types: (4.5" - 10.5" d.b.h.)
White Spruce 563 2,487,000 7,732
Cottonwood 523 11,659,000 22,796
Hardwood 6,700 2,216,000 3,256
Mixed White Spruce/Hardwood 705 1,499,000 4,470
Black Spruce 2,562 1,755,000 2,841
Subtotal 11,053 19,616,000 41,095
Total 20,339 46,254,000 125,985
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 3
The timber inventory was conducted thirty-five years prior to this report, so in addition
to potential growth, other changes to the forest such as wildfire and insect infestations
may have caused changes to the availability or suitability of the timber resources for
harvest for a particular purpose. It will be critically important for updated inventory
information and maps to be developed as a base for harvest planning.
Biomass Energy Operations and Maintenance
Biomass Harvest Plan
Wood cutting is a subsistence activity in almost all interior villages adjacent to forest
land. This subsistence resource must be carefully managed or biomass energy projects
may be detrimental to the Community.
If biomass harvests are unmanaged, the natural tendency is to harvest the most
accessible wood supply first, as illustrated below. The effect is increased scarcity and
rising harvest cost, and, consequently, biomass fuel costs, for both the project and
household woodcutters. This puts community members’ energy security and the
project’s success at risk.
The project’s success depends on a well-developed and executed Harvest Plan. The
Harvest Plan accounts for the biomass harvests over the project lifetime, at least 20
years. It may also designate areas for Personal Use (household wood cutting). The
Harvest Plan also describes who is responsible for executing the Harvest Plan, and how
access will be managed. Please see figure below.
Figure 4: Illustration of Unmanaged Wood Harvesting Efforts
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 4
The first step in harvest planning will be to secure the permission and cooperation of
the affected landowner(s). This may include the community council, the ANCSA
village corporation, Native allotment owners, the regional corporation, and even in
some instances the State, Bureau of Land Management, or US Fish & Wildlife Service.
Because the project’s success is critically dependent on a Biomass Harvest Plan, the
Consultant strongly recommends developing this Plan prior to project development.
Operations Plan
In many Villages biomass boiler projects will depend on collaboration among a variety
of entities, including contract wood cutters, the boiler technician, building owners and
operators, forest landowners, and various governmental entities.
A strategy for collecting biomass, paying wood suppliers, allocating costs among heat
users, and operating and maintaining the boiler and heat distribution system is crucial
to the project’s success. Persons responsible for each task must be identified.
Because the project’s success is critically dependent on an Operations Plan, the
Consultant strongly recommends developing this Plan prior to project development.
Figure 5: Illustration of Planned Wood Harvest by Harvest Area and Time Period.
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 5
Community Facilities Information
The institutional heating opportunities considered for this report were the Kuskokwim
School, City Council building, Lodge, and City Shop. These buildings are located within
an area approximately 5 acres. The Tribal Council building was also considered but,
because of very low heat load, an existing forced air system, and no access to other
candidate buildings, was not evaluated further.
City Buildings
Currently the City hosts 3 buildings
which were considered in this study. A
list of City buildings, and heating system
descriptions, follow:
Community Building
Lodge
Shop
Community Building
The Community Building holds the
Clinic, Post Office, City Offices, Library,
and Washateria. The complex uses two
(2) 156 MBH Armstrong forced air
furnaces (model number L5B168DC20-
1). The Community Building burns about 3,000 gallons of oil per year. This includes fuel
oil consumption of the domestic hot water tank.
City Lodge
The City Lodge uses a forced-air fuel oil furnace to heat five guest rooms. The furnace is
old and will likely have to be replaced in the near future; however, it operates reliably.
The Lodge is heated year-round. Over the last 12 months, the Lodge used
approximately 1,400 gallons of fuel oil. This includes fuel oil consumption of the
domestic hot water tank.
City Shop
The City Shop currently has no electricity or heat. However, t he City is trying to obtain
utility service to the Shop. It is approximately 1,400 square feet.
Figure 6: Unloading Fuel Oil from a plane in Nikolai.
Photo Credit: Alaska Division of Community and Regional
Affairs
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 6
Kuskokwim School, Yukon-Koyukuk School District
Nikolai’s “Top of the Kuskokwim” is part of the Iditarod Area School District. The
School is a K-12 facility and has 20 students. The School is the largest fuel oil consumer
in the village. Currently the School uses two (2) Burnham v9a fuel oil boilers, each with
a maximum capacity of 4.2 gallons per hour. Except on the very coldest days, only one
boiler operates. The boilers were purchased new about five years ago. The Schoo is
outfitted with a hydronic heating system, which distributes heat from the boilers using
a water-glycol mixture. The School uses about 7,500 gallons of Fuel Oil #1 per year.
The School is comprised of two buildings, the main school building and a gymnasium.
Together, the two buildings are about 9,600 square feet.
Building Name Tribal
Council
Office
Community
Building
City Lodge Kuskokwim
School
City Shop
Annual Gallons (Fuel Oil #1) 1,000 3,000 1,400 7,500 Not heated
Building Usage Year-round Year-round Year-round August -
May
Year-round
Heat Transfer Mechanism Forced air Forced air Forced air Hydronic
boiler
n/a
Heating infrastructure need
replacement?
No No Yes No n/a
Nikolai Edzeno Village Council Office
The Tribal Office is a former house which has been converted to an office building. The
building is outfitted with a new forced-air fuel oil furnace, which burns less than 1,000
gallons of fuel oil per year. The forced air system is supplemented by three (3) electric
space heaters and occasional wood heat. The two-story building has a woodstove
positioned on the first story and an exhaust pipe distributing some heat up through the
second story.
The Office is deeply in need of an energy efficiency upgrade. People working there
expressed strong physical discomfort during cold weather periods, especially when the
wind blows. The Client mentioned draft and poor windows specifically. The Consultant
passed this information on to the IRHA, which stated that Nikolai was slated for
weatherization in 2014.
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 7
Additionally, Chief Nick Alexia Sr. expressed a strong interest in reduced electric utility
costs through solar panels, other renewables, and efficiencies on behalf of the
Community. While wood heating is sufficient for the households, electricity costs
remain a heavy burden. The Consultant inquired with IRHA1 regarding renewable
electric assistance opportunities, and passed pertinent information back to Chief Alexia.
Recommended technology and fuel requirements
The recommended system design is a pre-fabricated, modular, containerized wood
biomass boiler unit. These types of systems are produced by GARN, TARM USA and
others. The GarnPac has about 350,000 BTU output and is currently being employed in
Thorne Bay. This type of system design is recommended because it is reliable, uses an
accessible fuel, cordwood, and it is a modular unit and therefore has lower installation
cost and financing advantages. The Consultant recommends adding providers of these
units, Garn/Dectra, TARM, Greenwood, and similar system manufacturers, to the list
of potential equipment providers.
To complete this prefeasibility analysis, the Consultant has chosen a representational
boiler, the GarnPac containerized unit. A district loop with one (1) GarnPac boilers (or
equivalent systems) could service the Kuskokwim School, or a small district including
the School, City Lodge, and City Shop (“District”). Fuel Oil would be retained to meet
peak demand and as back up in every project building.
Other communities operating HELE cordwood boilers of a similar size, such as Dot
Lake and Ionia, report 2 cordwood stokings per day and 0.125 – 0.5 FTE2 (Full-time
equivalent employee) per boiler.
1 Email exchange and phone call with Jennifer Maguire, IRHA. May 14, 2012.
2 Nicholls, David. 2009. Wood energy in Alaska—case study evaluations of selected facilities. Gen. Tech. Rep. PNW-
GTR-793. Portland, OR: U.S. Department of Agriculture, Forest Service, Pacific Northwest Research Station. 33 p.
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 8
Initial project development costs for a wood heating system costs may include:
Capital costs: boiler, hydronic pipe and other hardware, wood storage shelter,
fuel-handling equipment, shipping costs.
Engineering: storage design, plumbing integration, fuel-handling infrastructure.3
Permitting: no permits required. In lieu of permits, all regulations must be met.
Installation: Site work, installation, and integration into existing system.
Fuel storage: storage building, firewood chutes, or preparation of existing
storage room.
System building: (if required).
Ongoing operational costs may include:
Financing: Principal and interest payments from project debt, or profits from
project equity investment. In Village projects, financing costs likely do not apply.
Wood fuel purchases.
Amortization costs: capital equipment and other infrastructure.4 When projects
are grant financed, amortization does not apply.
Operations and Maintenance (O&M) labor.
3 Not all projects require engineering design.
4 Cash and accrual basis are two different accounting methods for project investment. Accrual accounting
amortizes project investment over the project lifetime (“lifecycle costs”). This method results in monies to
reinvest in new equipment at the end of its lifetime. Cash basis is simply on the dollars spent to operate,
maintain, and finance the project.
Assumptions:
16.2 MMBTU/ Cord White Spruce
0.1250 MMBTU per gallon Oil #1
Annual
Gallons
Annual
MMBTU
Annual
Cords* for
Biomass/
Oil system
Annual Fuel Oil
gallons for Biomass/
Oil system
Kuskokwim School 7,500 938 48 1,093
District 11,900 1,488 81 2,270
Community Center 3,000 375
City Lodge 1,400 175
City Shop 930**116
* Based on Dalson Energy Heating Degree Day data model
** Assumed 40 watts/m2 applied to shop space. Space is
currently unheated and currently uses 0 gallons of fuel oil.
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 9
Fossil fuel purchases and labor.5
Economic feasibility
Initial investment
School
The Kuskokwim School has an estimated Capitalization Cost of $298,000.
The District, including Kuskokwim School, Community Center, Lodge, and Shop has an
estimated Capitalization Cost of $478,000.
See charts below for cost estimates and sources. Full feasibility analysis and/or bids
would provide more detailed numbers.
8 The existing oil heat infrastructure will be retained for supplement heat and back-up. Therefore, the
fossil fuel system has ongoing O&M costs, albeit lower than if used as the primary heat source.
10
Kuskokwim School
Kuskokwim School
System Size (estimated net BTU/ hr)350,000
Capitalization costs Footnote
Capital equipment
GarnPac FOB Minnesota, qty. (1)100,000$ A A Dectra Corp estimate
Freight to Nikolai 15,000$ B B Crowley & Lynden Transport estimates, 4/17/12
Boiler Integration 50,000$ C C Dalson Energy estimate
subtotal 165,000$
Commissioning and training 4,000$ D D Alaskan Heat Technologies estimate
Project Management and Design
Engineering/ design 50,000$ E E Dalson Energy estimate
Permitting 2,000$ F F Dalson Energy estimate
Project Management 50,000$ G G Dalson Energy estimate
sub-total 271,000$
Contingency (10%)27,100$
Total 298,100$
Footnotes
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 11
District
District
System Size (estimated net BTU/ hr)350,000
Capitalization costs Footnote
Capital equipment
GarnPac FOB Minnesota 100,000$ A A Dectra Corp estimate
Freight to Nikolai 15,000$ B B Crowley & Lynden Transport estimates 4/17/12
Boiler Integration 50,000$ C C Dalson Energy estimate
District loop main 94,405$ D D RET Screen analysis
Water to Air exchangers 45,000$
subtotal 304,405$
Commissioning and training 4,000$ E E Alaskan Heat Technologies estimate
Project Management and Design
Engineering/ design 75,000$ F F Dalson Energy estimate
Permitting 2,000$ G G Dalson Energy estimate
Project Management 50,000$ H H Dalson Energy estimate
sub-total 435,405$
Contingency (10%)43,541$
Total 478,946$
Footnotes
12
Operating Assumptions
The following assumptions are embedded in all financial analyses in this assessment. They include crucial project variables, s uch as the
price of fuel oil, wood fuel, and labor operating costs. See chart below.
Assumptions for project buildings Kuskokwim School District Footnotes Footnotes
Total MMBTU per year 938 1,338 A A Estimates of annual fuel gallon useage, from year 2011
% load served by wood fuel 84%90 B B Dalson Energy HDD analysis
% load served by fuel oil 15%9 C C Dalson Energy HDD analysis
Total Cordwood per year (cords)48 74 D D Dalson Energy HDD analysis
Total Fuel Oil #1 per year (gal)1,098 997 E E Dalson Energy HDD analysis
Price per cord 250$ 250$ F F City provided
Price per gallon 7$ 7$ G G City provided
Biomass labor hours per year 600 780 H H
Oil labor hours per year 45 45 I I Dalson Energy estimate
Price per hour of labor 18 18 J J City provided
Biomass preventative maintenance supplies cost 66$ 66$ K K
Oil nozzles and filters 250$ 250$ L L Dalson Energy estimate
Biomass boilers (lifetime operating hours)60,000 60,000 M M Dalson Energy estimate
Biomass boilers (operating hours per year)3,000 3,900
Biomass refractories (lifetime operating hours)45,000 45,000 N N
Oil boiler (lifetime operationg hours)60,000 60,000 O O Dalson Energy estimate
Electricity ($/kWh)0.84$ 0.84$ P P Estimated $0.63/kWh
Electricity Consumption (biomass system)1,800 2,600 Q Q
Amount financed
Term
Rate
Estimated 1 kWe consumption per hour for boiler fan when
operating. Estimated 1800 hours uptime for School;
Estimated 2600 hours uptime for District.
Subject to full feasibility study
Estimated 3 hours per day, 300 days per year per boiler.
Consistent with Dot Lake and Ionia Ecovillage cordwood
boiler labor requirements.
Information from Alaskan Heat Technologies. Chemicals max
at $250/ yr. Gasket kit at $75. Refractory replaced every 15
years at $500 -- $1,000.
Based on Information from Alaskan Heat Technologies. Entire
refractory replacement after 15 years of operation
13
Operating Costs & Annual Savings
The following analyses estimate the operating costs and annual savings from installing biomass heating districts at the
Kuskokwim School and District. These financial summaries do not include any financing costs but they do include
amortization of project equipment, known as lifecycle costs. Lifecycle costs are accrued over the project lifetime and,
when the equipment has fulfilled its useful life, monies are available to purchase the next syst em. Accrual-based
accounting is standard practice.
Special attention should be given to designing an investment and operating structure that suits the system owners and
operators. Third party financing, ownership, and O&M (Operations and Maintenance) services may be available. The
selected technology provider should provide the training services to equip any daily operator with the knowledge and
skills to safely and reliably operate the biomass system.
Savings are calculated on both a cash and accrual basis.
Biomass
Oil 52,500 Wood fuel 12,000$
Labor 810$ Labor 10,800$
Supplies 250$ Preventative maintenance supplies 66$
Lifecycle 1,500$ Electricity 1,512$
Lifecycle 14,905$
Financing subject to feasibility
Fuel Oil (supplement)
Oil 7,686$
Labor 405$
Supplies 250$
Lifecycle 225$
Total Annual O&M Costs (accural basis)55,060$ Total Annual O&M Costs (accural basis)47,849$ 7,211$ Accrual
Total Annual O&M Costs (cash basis) 53,560$ Total Annual O&M Costs (cash basis) 32,719$ 20,841$ Cash
O&M Costs Fuel Oil O&M Costs: Biomass + Fuel Oil (supplement)
Kuskokwim School
Annual Savings
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 14
Biomass
Oil 83,300 Wood fuel 18,500$
Labor 810$ Labor 14,040$
Supplies 250$ Supplies 66$
Lifecycle 2,750$ Electricity 2,184$
Lifecycle 31,131$
Financing subject to feasibility
Fuel Oil (supplement)
Oil 6,979$
Labor 810$
Supplies 250$
Lifecycle 24,750$
Total Annual O&M Costs (accural basis)87,110$ Total Annual O&M Costs (accural basis)98,711$ (11,601)$ Accrual
Total Annual O&M Costs (cash basis) 84,360$ Total Annual O&M Costs (cash basis) 42,829$ 41,531$ Cash
O&M Costs Fuel Oil O&M Costs: Biomass + Fuel Oil (supplement)
District
Annual Savings
15
Financial metrics
The following financial analyses are entirely reliant on the preceding assumptions and
O&M models. These same models can be refined to reflect more sophisticated financial
profiles if additional study is warranted.
Simple payback period
Present Value
The prefeasibility Scope of Work does not allow building a full economic model with
escalation rates of fuel, labor, and supplies cost. Present value analysis is completed on
the basis of the savings demonstrated in this section.
Kuskokwim School District
Initial Investment 298,100$ 478,946$
Cash savings, Year 1 20,841$ 41,531$
Simple Payback (Years)14.3 11.5
SIMPLE PAYBACK
5.50%
10
Initial investment 298,100$ Initial investment 478,946$
20,841$ 41,531$
Kuskokwim School District
Interest Rate per Month 0.46%0.46%
Number of Payments in project lifetime 120 120
Payment per month (2,484)$ (3,991)$
Future Value (cash value of new project)20,841$ 41,531$
Payments at end of period = 0 0 0
Present Value $216,861 $343,773
Equation Values
Future value (cash value of new project)
Assumptions
Present Value
Kuskokwim School
Interest Rate
Term (years)
Future value (cash value of new project)
District
16
Net Present Value
The prefeasibility Scope of Work does not allow building a full economic model with escalation rates of fuel, labor, and supp lies cost.
Net present value analysis is completed on the basis of the savings demonstrated in Year 1, generally inflating at 1.5% per year.
Internal Rate of Return
The prefeasibility Scope of Work does not allow building a full economic model with escalation rates of fuel, labor, and supp lies cost.
IRR analysis is completed on the basis of the savings demonstrated in this section.
Life cycle cost analysis (LCCA) for School
3.50%
1.50%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 NPV
Kuskokwim School 20,841$ 21,153$ 21,471$ 21,793$ 22,120$ 22,451$ 22,788$ 23,130$ 23,477$ 23,829$ 24,187$ 24,549$ 24,918$ 25,291$ 25,671$ 26,056$ 26,447$ 26,843$ 27,246$ 27,655$ $336,700
District 41,531$ 42,154$ 42,786$ 43,428$ 44,079$ 44,740$ 45,412$ 46,093$ 46,784$ 47,486$ 48,198$ 48,921$ 49,655$ 50,400$ 51,156$ 51,923$ 52,702$ 53,492$ 54,295$ 55,109$ $670,964
Net Present
Value
Discount Rate
General Inflation Rate
1.50%
Year 0 1 2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 IRR
Kuskokwim School (298,100)$ 20,841$ 21,153$ 21,793$ 22,120$ 22,451$ 22,788$ 23,130$ 23,477$ 23,829$ 24,187$ 24,549$ 24,918$ 25,291$ 25,671$ 26,056$ 26,447$ 26,843$ 27,246$ 27,655$ 5%
District (478,946)$ 41,531$ 42,154$ 43,428$ 44,079$ 44,740$ 45,412$ 46,093$ 46,784$ 47,486$ 48,198$ 48,921$ 49,655$ 50,400$ 51,156$ 51,923$ 52,702$ 53,492$ 54,295$ 55,109$ 7%
Internal Rate of Return General Inflation Rate
District:Yukon Koyukuk
School:Kuskokwim School
Project: Biomass Boiler
Project No. NA
Study Period:20
Discount Rate: 3.50%
Life Cycle Costs of Project Alternatives
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 17
Alternative #1 (low)Alternative #2 (high)
Initial Investment Cost 271,000$ 298,100$
O&M and Repair Cost 691,942$ 682,328$
Replacement Cost 50,257$ 75,385$
Residual Value 25,128$ 15,077$
Total Life Cycle Cost 1,038,327$ 1,070,890$
GSF of Project 29,916 29,916
Initial Cost/ GSF 9.06$ 9.96$
LCC/ GSF 34.71$ 35.80$
YEAR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Discount Rate 3.50%
Gen'l Inflation for O&M 1.50%
NPV
O&M $691,942 42,829$ 43,472$ 44,124$ 44,786$ 45,457$ 46,139$ 46,831$ 47,534$ 48,247$ 48,971$ 49,705$ 50,451$ 51,207$ 51,976$ 52,755$ 53,547$ 54,350$ 55,165$ 55,992$ 56,832$
Replacement $50,257 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 100,000
Residual $25,128 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 50,000
Discount Rate 3.50%
Gen'l Inflation for O&M 1.50%
NPV
O&M $682,328 42,829$ 42,829$ 43,472$ 44,124$ 44,786$ 45,457$ 46,139$ 46,831$ 47,534$ 48,247$ 48,971$ 49,705$ 50,451$ 51,207$ 51,976$ 52,755$ 53,547$ 54,350$ 55,165$ 55,992$
Replacement $75,385 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 150,000
Residual $15,077 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 30,000
Alt. 1
Alt 2
18
Conclusion
The village of Nikolai has significant opportunities for biomass heating, owing to the high cost of fuel
oil, accessible cordwood supply, and existing institutional heat loads that could be adequately served
by one or more biomass boilers.
Cordwood is an accessible and sustainable biomass supply in the Village so long as a Biomass
Harvest Plan is appropriately developed and executed. Because the project’s success is critically
dependent on a Biomass Harvest Plan, the Consultant strongly recommends developing this Plan prior
to project development. Additionally, because the project’s success is critically dependent on an
Operations Plan, the Consultant strongly recommends developing this Plan prior to project
development.
All projects examined in this pre-feasibility report show positive NPV and cash savings, which
suggests that development may be warranted. A small district heating facility serving the School,
Community Center, Lodge, and Shop is the most financially attractive project; however, the School is
most easily adaptable to the biomass system and serves as the single largest heat load. Because the
same boiler size could serve the district as could serve the School, the Consultant recommends first
developing the School project. The School District could iron out Harv est and Operations Plans on
the smaller project first.
Some work will have to be done to adapt the load centers with the hydronic heat loop, and these
adaptations have not been fully assessed. Additionally, hot water boilers will need to be connected to
the District Heat loop.
There remain other significant energy opportunities in Nikolai, notably weatherization of the Tribal
Building and solar energy or electric efficiency initiatives across the Community.
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 19
Consultant/Authors of this report:
Dalson Energy is a Renewable Energy Consulting and Technology Research firm based in
Anchorage. Dalson staff and partners have decades of experience in construction project
management, project development consulting and renewable energy technology research. Dals on
teams with licensed engineers, architects and designers in Alaska, Canada and Lower 48.
Dalson Energy has worked with Alaska Energy Authority, Alaska Center for Energy & Power,
University of Alaska Fairbanks, Washington State CTED (Community Trade & Economic
Development) and California Energy Commission on biomass energy technology research.
Dalson’s President, Thomas Deerfield, has been involved in biomass energy RD&D since 2001,
winning grants and managing projects with NREL (National Renewable Energy Labs), USFS (US
Forest Service), and CEC (California Energy Commission).
Thomas managed the field-testing of biomass CHP systems, including the first grid-connected
biomass gasification CHP system in the US. (2007). Thomas coordinated the design and creation of
the first prototype Biomass “Boiler in a Box” in Alaska, in 2010. That Garn -based system is now
deployed in Elim, in the Bering Sea region.
Thomas founded Shasta Energy Group (SEG), a 501c3 nonprofit, and managed wind energy research,
biomass energy feasibility studies, energy efficiency for buildings, and hydronic heating system
research design and development (RD&D). He also initiated a rural economic development think
tank and has engaged his writing skills to assist many other renewable energy project initiatives.
Wynne Auld is a Biomass Energy Specialist with Dalson Energy. She focuses on assessing and
developing woody biomass energy projects. Over the past few years, she has supported the business
development of integrated biomass energy campuses in Oregon and Idaho, especially related to their
energy initiatives. Her efforts have included marketing Campus biomass heating products to major
wholesalers and retail buyers, and planning and developing Campus sort yards and small-scale CHP.
Wynne also specializes in assisting commercial and municipal building managers in assessing the
feasibility of biomass heating, and implementing their projects. She works to ensure vibrant rural
communities through sustainable natural resource utilization.
20
Supplement: Community Wood Heating Basics
Wood fuel as a heating option
When processed, handled, and combusted appropriately, wood fuels are
among the most cost -effective and reliable sources of heating fuel for
communities adjacent to forestland.
Compared to other heating energy fuels, wood fuels are characterized by
lower energy density and higher associated transportation and handling
costs. This low bulk density results in a shorter viable haul distance for
wood fuels compared to fossil fuels. However, this “limit” also creates an
advantage for local communities to utilize locally-sourced wood fuels, while
simultaneously retaining local energy dollars and excercising local resource
management.
Most Interior villages are particularly vulnerable to high energy prices
because the region has over 13,500 heating degree days6 (HDD) per year –
160% of Anchorage’s HDDs, or 380% of Seattle’s HDDs. For many
communities, wood-fueled heating lowers fuel costs. For example,
cordwood sourced at $250 per cord is just 25% of the cost per MMBTU as
fuel oil #1 sourced at $7 per gallon. Besides the financial savings, local
communities benefit from the multiplier effect of circulating fuel money in
the community longer, more stable energy prices, job creation, and more
active forest management.
In all the Interior villages studied, the community’s wood supply and
demand are isolated from outside markets. Instead, the firewood market is
influenced by land ownership, existing forest management and ecological
conditions, local demand and supply, and the State of Alaska Energy
Assistance program.
The nature of wood fuels
Wood fuels are specified by moisture content, granulometry, energy density,
ash content, dirt and rocks, and fines and coarse particles. Each of these
characteristics affects the wood fuel’s handling characteristics, storage
requirements, and combustion process. Fuels are considered higher quality
6 Heating degree days are a metric designed to reflect the amount of energy needed to heat the
interior of a building. It is derived from measurements of outside temperature.
Figure 8: Ground wood chips
used for mulch.
Figure 7: Cordwood
Figure 10: Wood pellets
Figure 9: Wood briquettes, as a
substitute for cordwood. Cross
sections of these briquettes make
“wafers” which can be automatically
handled in biomass boiler systems.
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 21
if they have lower moisture, ash, dirt, and rock contents; consistent granulometry; and higher energy
density.
Many types of fuel quality can be used in wood heating projects so long as the infrastructure
specifications match the fuel content characteristics. Typically, lower quality fuel will be the lowest
cost fuel, but it will require more expensive storage, handling, and combustion infrastructure , as well
as additional maintenance.
Projects in interior Alaska must be designed around the availability of wood fuels. Some fuels can be
manufactured on site, such as cordwood, woodchips, and briquettes. The economic feasibility of
manufacturing on site can be determined by a financial assessment of the project; generally speaking,
larger projects offer more flexibility in terms of owning and operating harvesting and manufacturing
equipment, such as a wood chipper, than smaller projects.
It is unlikely that interior communities will be able to manufacture pellets, from both a financial,
operational, and fuel sourcing perspective. However, some interior communities may be able to
manufacture bricks or firelogs made from pressed wood material. These products can substitute for
cordwood in woodstoves and boilers, while reducing supply pressure on larger diameter trees than
are generally preferred for cordwood. At their simplest, brick presses are operated by hand , but
require chipped, dry fuel.
The basics of wood-fueled heating
Biomass heating systems fit into two typical categories: first, stoves and fireplaces that heat space
directly through convection and radiation by burning cordwood or pellets; second, hydronic systems
where the boiler burns cordwood, woodchips or pellets to heat l iquid that is distributed to radiant
piping, radiators or heat exchangers. The heated liquid is distributed out to users, then returned to
the heat source for re-heating.
Hydronic systems are appropriate for serving individual buildings, or multiple buildings with
insulated piping called heat loops. Systems that serve multiple buildings are called district heating
loops. District heating is common in Europe, where larger boilers sometimes serve entire villages.
Biomass boilers are dependent on the compatibility of the chosen fuel, handling system, and
combustion system. General categories for typically available biomass fuel systems follow:
Batch load solid chunk boiler
Semi-automated or fully-automated chipped or ground biomass boilers
Fully-automated densified-fuel boiler, using pellets, bricks, or pucks
The system application is typically determined by size of heat load, available wood fuels, and
available maintenance personnel. General categories for heat load and wood fuel follow:
Loads < 1 MMBTU often use cordwood or pellet boilers
Loads > 1MMBTU often use pellet or woodchip boilers
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 22
Loads > 10MMTU often use hog-fuel (mixed ground wood)
Each wood fuel type has different handling requirements and is associated with different emission
profiles. For example, industrial systems greater than 10 MMBTU often require additional particulate
and emission controls because of the combustion properties of hog-fuel.
One category of system that is particularly appropriate for remote rural communities is cordwood
boilers. Cordwood boilers are batch-loaded with seasoned cordwood. A significant advantage to
cordwood is that very little infrastructure is needed to manufacture or handle the heating fuel. At its
most basic, cordwood can be “manufactured” with a chainsaw (or handsaw) and an ax, and residents
of rural communities are often accustomed to harvesting wood to heat their homes and shops.
Harvesting in most Interior villages is accomplished with ATV’s, river skiffs, sleds and dog teams,
and snow machines. Since cordwood systems are batch loaded by hand, they do not require
expensive automated material handling systems. Covered storage is required; such storage may be as
simple as an existing shed or a vented shipping container, rather than newly constructed storage
structures.
Challenges to cordwood include higher labor costs associated with manual loading. Some LEHE (low
efficiency, high emission) technologies such as Outdoor Wood Boilers (OWBs) have been criticized
for their high emissions and excessive wood consumption.
Cordwood systems are typically less than 1 MMBTU. However, if needed, some types of cordwood
boilers can be “cascaded,” meaning multiple boilers can meet heat demand as a single unit. However,
above a certain heat load, automated material handling and larger combustion systems become
viable.
Woodchip systems can be automated and thereby less labor intensive. However, woodchip systems
have significantly higher capital costs than both cordwood and pellet systems. Additionally, a
reliable stream of woodchips typically depends on a regionally active forest products manufacturing
base in the area, and active forest management. In most Interior communities, institutional heating
with woody biomass does not justify the purchase of log trucks, harvesting, handling, and
manufacturing equipment.
Pellet systems are the most automated systems, and have lower capital equipment costs than
woodchip systems. Lower costs are due to the smaller size of required infrastructure and simplified
handling and storage infrastructure. However, pellet fuel and other densified fuels tend to be more
expensive than other wood fuels, and require reliable access to pellet fuels.
For any system, the mass of feedstock required annually is determined by three parameters:
1) Building heat load
2) Net BTU content of the fuel
3) Efficiency of the boiler system
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 23
Building heat loads are determined by square footage, orientation a nd usage, as well as energy
efficiency factors such as insulation, moisture barriers and air leakage. Usage is particularly
important because it influences peak demand. For example, a community center which is used only a
few times per month for events, and otherwise kept at a storage temperature of 55 d. F, would have a
much different usage profile than a City Office which is fully occupied during the work day and
occasionally during evenings and weekends.
Building heat load analysis, including the building usage profile, is a particularly important part of
boiler right-sizing. A full feasibility analysis would conduct analyses that optimize the return on
investment (ROI) of systems. Typically, optimizing a biomass project’s ROI depends on a
supplementary heating system, such as an oil fired system, to meet peak demand and prevent short -
cycling of the biomass boiler. Full feasibility analyses may not be necessary for small projects,
especially for those employing cordwood boilers.
Biomass boiler efficiencies vary from 60% to 80%, depending on the manufacturer and the field
conditions of the equipment. The efficiency is strongly influenced by the BTU value and MC
(moisture content) of the fuel. Wood fuels with greater than 50% MC generally result in lower
efficiency systems, because some energy is used to drive off moisture from the fuel during the
combustion process. The reduction in energy output is mathematically equal; 50% MC generally
means 50% reduction in potential BTU value.
Like other combustion-based energy systems, woody biomass boilers produce emissions in the
combustion process. Compared to fossil fuels (coal, natural gas, and fuel oil), wood fuel emissions
are low in nitrogen oxides (NOx); carbon monoxide (CO, a product of incomplete co mbustion); sulfur
dioxide (SO2); and mercury (Hg). Because these compounds are all products of the forest and CO
would release naturally during the process of decay or wildfire, they generally do not concern
regulatory agencies. For emission control agencies, the real interest is particulate matter (PM)
emissions, which affect the air quality of human communities. Some wood systems are extremely
sophisticated, producing less than 0.06 lb/ MMBTU of PM.
Effective methods of PM control have been developed to remove most of the particles from the
exhaust air of wood combustion facilities. These include introduction of pre-heated secondary air,
highly controlled combustion, and PM collection devices.
Biomass boiler systems typically integrate a hot water storage tank, or buffer tank. The storage tank
prevents short cycling for automated boilers and improves efficiency and performance of batch -fired
systems, by allowing project buildings to draw on the boiler’s hot water long after the combustion
process. The GarnPac boiler design incorporates hot water storage into the boiler jacket itself, storing
approximately 2,200 gallons of hot water. Other boilers are typically installed with a separate hot
water storage tank.
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 24
Available wood heating technology
This section will focus generally on manufacturers of the types of technology discussed previously.
Cordwood Boilers
High Efficiency Low Emission (HELE) cordwood boilers are designed to burn cordwood fuel cleanly
and efficiently.
Cordwood used at the site will ideally be seasoned to 25% MC (moisture content) and meet the
dimensions specified by the chosen boiler. The actual amount of cordwood used would depend on
the buildings’ heat load profile, and the utilization of a fuel oil system as back up.
The following table lists three HELE cordwood boiler suppliers, all of which have units operating in
Alaska. Greenwood and TarmUSA, Inc. have a number of residential units operating in Alaska, and
several GARN boilers, manufactured by Dectra Corporation, are used in Tanana, Kasilof, Dot Lake,
Thorne Bay and other locations to heat homes, Washaterias, and Community Buildings.
HELE Cordwood Boiler Suppliers
Vendor Btu/hr ratings Supplier
Tarm 100,000 to 198,000 Tarm USA
www.tarmusa.com
Greenwood 100,000 to 300,000 Greenwood
www.greenwoodusa.com
GARN 250,000 to 700,000 Dectra Corp.
www.dectra.net/garn
Note: These lists are representational of available systems, and are not inclusive
of all options.
Bulk Fuel Boilers
The term “bulk fuel” refers to systems that utilize wood chips, pellets, pucks, or other loose
manufactured fuel. Numerous suppliers of these boilers exist. Since this report focuses on village -
scale heating, the following chart outlines manufacturers of chip and pellet fuel boilers < 1 MMBTU.
HELE Bulk Fuel Boiler Suppliers
Vendor Btu/hr ratings Supplier
Froling
35,800 to 200,000; up to 4 can be
cascaded as a single unit at
800,000 BTU
Tarm USA
www.tarmusa.com
KOB 512,000 – 1,800,000 BTU (PYROT
model)
Ventek Energy Systems Inc.
peter@ventekenergy.com
Dalson Energy Inc. – Nikolai Preliminary Feasibility Assessment 25
Binder 34,000 BTU – 34 MMBTU BINDER USA
contact@binder-boiler.com
Note: These lists are representational of available systems, and are not inclusive
The following is a review of Community Facilities being considered for biomass heating. The
subsequent section will recommend a certain type of biomass heating technology, based on the
Facility information below.
District heat loops
District heat loops refers to a system for heating multiple buildings from a central power plant. The
heat is transported in a piping system to consumers in the form of hot water or steam.
These are the key factors that affect the cost of installing and operating a district heating system7:
Heat load density.
Distance between buildings. Shorter distances between buildings will allow use of smaller
diameter (less expensive) pipes and lesser pumping costs.
Permafrost. In the Interior, frozen soil could affect construction costs and project feasibility.
Aboveground insulated piping may be preferred to underground piping, such as the
cordwood system recently installed in Tanana, Alaska.
Piping materials used. Several types of tubing are available for supply and return water. Pre-
insulated PEX tubing may be the preferred piping material for its flexibility and oxygen
barrier.
District loop design. Water can be piped in one direction (i.e., one pipe enclosed) or two
directions (two pipes enclosed) for a given piping system. Design affects capital costs and
equality of heat distribution.
Other considerations. Pump size, thermal load (BTUs per hour), water temperature, and
electrical use are other variables.
For the purposes of this study, the consultants have chosen to estimate the costs of district heat loops
using the RET Screen, a unique decision support tool developed with the contribution of numerous
experts from government, industry, and academia. The software, provided free-of-charge, can be
used worldwide to evaluate the energy production and savings, costs, emission reductions, financial
viability and risk for various types of Renewable-energy and Energy-efficient Technologies (RETs),
including district heat loops from biomass.
7 Nicholls, David; Miles, Tom. 2009. Cordwood energy systems for community heating in Alaska—an
overview. Gen. Tech. Rep. PNW-GTR-783. Portland, OR: U.S. Department of Agriculture, Forest
Service, Pacific Northwest Research
Station. 17 p.