HomeMy WebLinkAboutsupport 2 of 2 docs ~ OVK Kake AEA REFG appPreliminary Feasibility Assessment for High
Efficiency, Low Emission Wood Heating
In Kake, Alaska
Prepared for:
Henrich Kadake, Mayor
City of Kake
Eric Gebhart, Superintendent/Principal
Kake School District
Prepared by:
Daniel Parrent,
Wood Utilization Specialist
Juneau Economic Development Council
Submitted May 21, 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 Henrich Kadake,
Mayor, Kake, Alaska and Eric Gebhart, Superintendent/Principal, Kake School District. 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 Community Hall
1.3.2 Kake School
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 The Case for Fuel Purchase Planning and Fuel Storage
6.8 Life Cycle Cost Analysis
Section 7. Economic Feasibility of Bulk Fuel Systems
Section 8. Conclusions
8.1 Community Hall
8.2 Kake School
Footnotes
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Appendices
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 4-3 Bulk Fuel Boiler System Vendors (omitted)
Table 4-4 Bulk Fuel Boilers in Alaska (omitted)
Table 5-1 Comparative Cost of Fuel Oil vs. Wood Fuels
Figure 5-1 Effect of Hemlock Cordwood Price on Cost of Delivered Heat
Figure 5-2 Effect of Hemlock Bulk Fuel Price on Cost of Delivered Heat (omitted)
Table 5-2 Reported Annual Fuel Oil Consumption, Kake Facilities
Table 5-3 Estimate of Heat Required in Coldest 24-Hour Period
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 6-6 Estimated Life Cycle Costs of Cordwood System Alternative
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Key words: HELE, LEHE, bulk fuel, cordwood
ABSTRACT
The potential for heating the Community Hall and School in Kake, AK with high efficiency, low
emission (HELE) cordwood boilers is evaluated for the City of Kake and the Kake School District.
SECTION 1. EXECUTIVE SUMMARY
1.1 Goals and Objectives
• Identify the facilities in Kake 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 basic 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.
• Using an estimate of 10,250 gallons of fuel oil per year for the Community Hall and
20,000 gallons of fuel oil per year for the School, 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
1.3 Assessment Summary and Recommended Actions
1.3.1 Community Hall
• Overview. The Community Hall consists of single structure, approximately 15,000
square feet in size (100x150). It serves a variety of functions, including housing city
administrative offices, bingo hall, kitchen and gymnasium.
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Heat is provided by a single Weil McLain model 1078 boiler, rated at 982 MBH (net), in
fair condition. Supplemental heat (in the Conference Room) is supplied by a small
propane space heater. Domestic hot water is supplied by two 41-gallon Amtrol WH7-
CDW electric water heaters located in the boiler room.
The heat distribution system appears partially compromised. Heat is distributed in the
offices, hallways and restrooms via fin tube baseboard plumbing that appears to be
functional. In the kitchen and bingo hall, heat is provided by ceiling mounted heat
exchangers which either don’t work or overheat the room. There are two very large heat
exchangers in the gymnasium (reportedly installed in 1972), one of which hasn’t worked in
several years; the other works occasionally. Overall, substantial improvements/upgrades to
the heating and/or heat distribution system may be necessary. Consultation with a HVAC
specialist or mechanical engineer is strongly recommended.
The area around the Community Hall is level and there is sufficient space behind the Hall
for a building in which to house a wood-fired boiler. The distance to the existing
mechanical room is minimal.
• Fuel Consumption. The Community Hall is reported to consume approximately 10,250
gallons of #2 fuel oil per year.
• Potential Savings. At the current price of $5.50 per gallon, the City pays approximately
$56,375 per year for fuel oil to heat the Community Hall. The HELE cordwood fuel
equivalent of 10,250 gallons of #2 fuel oil is approximately 114 cords, and at $175 per cord
represents a potential annual fuel cost savings of $36,425 (debt service and non-fuel OM&R
costs notwithstanding).
• Required boiler capacity. The estimated required boiler capacity (RBC) to heat the
Community Hall is approximately 355,525 Btu/hr during the coldest 24-hour period. One
425,000 Btu/hr HELE cordwood boiler could theoretically supply 100% of that RBC
(although this is not necessarily the recommended alternative).
• 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 viable
and cost-effective. Further consideration is warranted. (See Section 6)
• Recommended action regarding a bulk fuel wood system. Given the relatively small heating
demand and the probable costs of the project, a “bulk fuel” system is not cost-effective for the
Kake Community Hall.
1.3.2 Kake School
• Overview. The Kake School consists of several distinct entities, but all, except the Band
Room, are heated from a central source. There are approximately 100 students in Head
Start and K through 12th grade.
Heat is provided by a pair of Burnham boilers outfitted with Power Flame model CR2-OA
burners rated at 52.3 nominal boiler horsepower (approx. 3.5 MMBH), each. Heat is
distributed by a variety of means. Domestic hot water is supplied by two 119-gallon
Amtrol model WHS 120Z CDW electric water heaters located in the central boiler room.
There is an additional 190 gallon Ajax Boiler Co. model VG3004MW hot water tank
located in the Elementary school building.
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The area around the school is level to gentle. The best apparent location for a wood-fired
boiler would be in the space currently occupied by the Band Room building, which could
be relocated. There is suitable space nearby for wood storage.
• Fuel Consumption. The Kake School is reported to consume approximately 20,000
gallons of #2 fuel oil per year.
• Potential Savings. At the current price of $5.50 per gallon, the Kake School District spends
approximately $110,000 per year for fuel oil. The HELE cordwood fuel equivalent of 20,000
gallons of #2 fuel oil is approximately 222 cords, and at $175 per cord represents a potential
annual fuel cost savings of $71,150 (debt service and non-fuel OM&R costs notwithstan-
ding.)
• Required boiler capacity. The estimated required boiler capacity (RBC) to heat the Kake
School facility is approximately 693,370 Btu/hr during the coldest 24-hour period. One
950,000 Btu/hr HELE cordwood boiler could theoretically supply 100% of that RBC
(although this is not necessarily the recommended alternative).
• 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 viable
and cost-effective. Further consideration is warranted. (See Section 6)
• Recommended action regarding a bulk fuel wood system. Given the relatively small heating
demand and the probable costs of the project, a “bulk fuel” system is probably not cost-
effective for the Kake School.
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 Kake projects meet the basic 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 wood supply from forest fuels or local processing
residues appears adequate and matches the application. Currently, there are no significant supplies
of “bulk fuel” (bark, sawdust, chips and planer shavings).
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.
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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 Kake 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 in/around Kake. And although there is
little timber harvesting or processing activity currently taking place, the existing infrastructure
appears sufficient to support the proposed projects with the cooperation of Kake Tribal Corp.,
Sealaska, and/or the USDA Forest Service . For this report, it is assumed that wood supplies are
sufficient to meet the demand.
2.3 Classes of Wood Energy Systems
There are, basically, two classes of wood energy 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
Wood fuels around Kake generally take the form of cordwood. There is relatively little in the way
of sawmill residues (slabwood, sawdust, shavings, bark and chips) and there is no local supply of
bulk pellets.
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.
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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.
A variety of species can be found in/around Kake, including Sitka spruce, western hemlock, alder,
and limited amounts of red and yellow cedar; hemlock is the most common. For this report,
hemlock cordwood at 30 percent moisture content (MC30), calculated on the wet weight basis (also
called green weight basis), is used as the benchmark.
The HHV of hemlock at 0% moisture content (MC0) is 8,515 Btu/lb1. The GHV at 30% moisture
content (MC30) is 5,961 Btu/lb.
The RHV for cordwood (MC30) is calculated at 13.26 million Btu per cord, and the DHV, which
is a function of boiler efficiency (assumed to be 75%), is 9.942 million Btu per cord. The delivered
heating value of 1 cord of hemlock cordwood (MC30) equals the delivered heating value of 90.05
gallons of #2 fuel oil when burned at 75% conversion efficiency.
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
Most 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. 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.
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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 were installed near Kasilof on the Kenai Peninsula.
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. It is important to remember that wood fired boilers are not entirely smokeless; even very
efficient wood boilers may smoke for a few minutes on startup.4,15
10
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 virtually non-existent in Kake, the cost of bulk fuel systems being so
high (i.e., $1 million and up), and the relatively small heating demand for the facilities under
consideration, the discussion of bulk fuel boiler systems has been omitted from this report.
SECTION 5. SELECTING THE APPROPRIATE SYSTEM
Selecting the appropriate heating system is, primarily, a function of heating demand. It is generally
not feasible to install automated bulk fuel systems in/at small facilities, and it is likely to be
impractical to install cordwood boilers at very large facilities. Other than demand, system choice
can be limited by fuel availability, fuel form, labor, financial resources, and limitations of the site.
The selection of a wood-fueled heating system has an impact on fuel economy. Potential savings
in fuel costs must be weighed against initial investment costs and ongoing operating, maintenance
and repair (OM&R) costs. Wood system costs include the initial capital costs of purchasing and
installing the equipment, non-capital costs (engineering, permitting, etc.), the cost of the fuel
storage building and boiler building (if required), the financial burden associated with loan interest,
the fuel cost, and the other costs associated with operating and maintaining the heating system,
especially labor.
5.1 Comparative Costs of Fuels
Table 5-1 compares the cost of #2 fuel oil to hemlock cordwood (MC30). In order to make
reasonable comparisons, costs are provided on a “per million Btu” (MMBtu) basis.
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Table 5-1. Comparative Cost of Fuel Oil vs. Wood Fuels
FUEL RHVa
(Btu)
Conversion
Efficiencya
DHVa
(Btu)
Price per unit
($)
Cost per MMBtu
(delivered, ($))
5.00/gal 45.29
5.50 49.818 Fuel oil, #2,
(per 1 gallon) 138,000 80% 110,400
6.00 54.348
150/cord 15.088
175 17.602 Hemlock,
(per 1 cord, MC30) 13.26 million 75% 9.942 million
200 20.117
Notes:
a from Appendix D
5.2(a) Cost per MMBtu Sensitivity – Cordwood
Figure 5-1 on the next page illustrates the relationship between the price of hemlock cordwood
(MC30) on the horizontal axis, and the cost of delivered heat on the vertical axis, (i.e., the slanted
line). For each $10 per cord increase in the price of cordwood, the cost per million Btu increases
by $1.055. 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 #2 fuel oil at $5.00, $5.50 and $6.00 per gallon ($45.29, $49.818 and $54.348 per million
Btu respectively).
At high efficiency, heat from hemlock cordwood (MC30) at $495.50 per cord is equal to the cost of
#2 fuel oil at $5.50 per gallon (i.e., $49.82 per MMBtu). At 75% efficiency and $175 per cord, a
high-efficiency cordwood boiler will deliver heat at about 35% of the cost of #2 fuel oil at $5.50
per gallon ($17.602 versus $49.82 per MMBtu). Figure 5-1 indicates that, at a given efficiency,
savings increase significantly with decreases in the delivered price of cordwood and/or with
increases in the price of fuel oil.
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Cost ($) per MMBtu as a Function of
Cordwood Cost
0.00
10.00
20.00
30.00
40.00
50.00
60.00
100 150 200 250 300 350 400 450 500 550
Cordwood cost, $ per cordCost ($) per MMBtu
Fuel Oil at $6.00 per gallon
Fuel Oil at $5.50 per gallon
Fuel Oil at $5.00 per gallon
Figure 5-1. Effect of Hemlock Cordwood Price on Cost of Delivered Heat
5.2(b) Cost per MMBtu Sensitivity – Bulk Fuels
Not included in this report
5.3 Determining Demand
Table 5-2 shows the reported approximate amount of fuel oil used by the facilities in Kake.
Table 5-2. Reported Annual Fuel Oil Consumption, Kake Facilities
Reported Annual Fuel Consumption Facility Gallons Cost ($) @ $5.50/gallon
Community Hall 10,250 56,375
Kake School 20,000 110,000
TOTAL 30,250 166,375
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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 Kake facilities was compared with heating demand based on
heating degree days (HDD) to determine the required boiler capacity (RBC) for heating during the
coldest 24-hour period (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
Facility Fuel Oil Used
gal/yeara
Heating
Degree Daysd Btu/DDc Design
Tempd F
RBCe
Btu/hr
Installed
Btu/hra
Community Hall 10,250 8,527 133,189 1
(Juneau, AK) 355,525 982,000
Kake School 20,000 8,527 259,880 1
(Juneau, AK) 693,370 3,501,485
Table 3-7 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 greater than the
demand for the coldest day. The installed capacity at the Community Hall falls within this range
while the installed capacity at the Kake School appears to be about five times greater than the
demand for the coldest day.
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 Community Hall during the coldest 24-hour period for nearly 6 hours
(2,064,000 ÷ 355,525). However, this is not necessarily the correct or optimum boiler
configuration. Consultation with a qualified engineer is strongly recommended.
* 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 Community Hall and School. [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. Hemlock, MC30, CE 75% 150/cord 175/cord 200/cord Low Medium High Community Hall 10,250 51,250 56,375 61,500 114 17,100 19,950 22,800 28,450 36,425 44,400 Kake School 20,000 100,000 110,000 120,000 222 33,300 38,850 44,400 55,600 71,150 86,700 Total 30,250 151250 166375 181500 336 50,400 58,800 67,200 84,050 107,575 131,100 NOTES: a From Table 5-2 b From Table D-3, Fuel Oil Equivalents; 90.05 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 (next page) presents hypothetical scenarios of initial investment costs for cordwood
systems in medium to large heating demand situations. 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. 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 Cordwood Systems
Kake Facilities
Community Hall Kake School
Fuel oil consumption
(gallons per year) 10,250 20,000
Required boiler capacity (RBC),
Btu/hr 355,525 693,370
Cordwood boiler
Model
Rating - Btu/hr
Btu stored
(1) Garn WHS 3200
950,000
2,064,000
(2) Garn WHS 2000
850,000 combined
2,544,000 combined
(2) Garn WHS 3200
1,900,000 combined
4,128,000 combined
Building and Equipment (B&E) Costs (for discussion purposes only), $
Fuel storage buildinga
(fabric bldg, gravel pad, $20 per s.f.)
45,600
(114 cords, 2280 s.f.)
88,800
(222 cords, 4400 s.f.)
Boiler building @ $125 per s.f.
(minimum footprint, w/concrete pad)b
25,000
(10’ x 20’)
32,000
(16’ x 16’)
50,000
(20’ x 20’)
Boilers
Base pricec
Shippingd
32,900
6,000
29,800
6,000
65,800
12,000
Plumbing/connectionsd 10,000 12,000 15,000
Installationd 15,000 17,000 20,000
Subtotal - B&E Costs 134,500 132,400 251,600
Contingency (25%)d 33,625 33,100 62,900
Grand Total 168,125 165,500 314,500
Notes:
a A cord occupies 128 cubic feet. If the wood is stacked 6½ feet high, the area required to store the wood is 20 square feet per cord.
b Does not allow for any fuel storage within the boiler building
c List price, Dectra Corp, May 2006 NOTE: Dectra Corp does not publish a list price for the WHS 4400. The price quote for a WHS 4400 is an estimate.
d “guess-timate”; for illustrative purposes only
6.2 Operating Parameters of HELE Cordwood Boilers
A detailed discussion of the operating parameters of HELE cordwood boilers can be found in
Appendix F.
6.3 Hypothetical OM&R Cost Estimates
The primary operating cost of a cordwood boiler, other than the cost of fuel, is labor. Labor is
required to move fuel from its storage area to the boiler building, fire the boiler, clean the boiler
and dispose of ash. For purposes of this analysis, it is assumed that the boiler system will be
operated every day for 210 days (30 weeks) per year between mid-September and mid-April.
17
Table 6-2 presents labor/cost estimates for various HELE cordwood systems. A detailed analysis of
labor requirement estimates can be found in Appendix F.
Table 6-2. Labor/Cost Estimates for HELE Cordwood Systems
Community Hall Kake School
(1) Garn WHS 3200 (2) Garn WHS 2000 (2) Garn WHS 3200
Total Daily labor (hrs/yr)a
(hrs/day X 210 days/yr) 160.44 187.96 195.42
Total Periodic labor (hrs/yr)b
(hrs/wk X 30 wks/yr) 57 111
Total Annual labor (hrs/yr)b 20 40 40
Total labor (hrs/yr) 237.44 284.96 346.42
Total annual labor cost ($/yr)
(total hrs x $20) 4,748.80 5,699.20 6,928.40
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. 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-$500 per boiler per year4.
Table 6-3. Summary of Total Annual Non-Fuel OM&R Cost Estimates
Cost/Allowance ($) Item (1) Garn WHS 3200 (2) Garn WHS 2000 (2) Garn WHS 3200
Labor 4,748.80 5,699.20 6,928.40
Electricity 609.17 1,904.06 1,186.45
Maintenance/Repairs 500.00 700.00 1,000.00
Total non-fuel OM&R ($) 5,857.97 8,303.26 9,114.85
6.4 Calculation of Financial Metrics
Biomass heating projects are viable when, over the long run, 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).
18
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
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) (Kake School only)
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
(1) Garn WHS 3200 (2) Garn WHS 2000 (2) Garn WHS 3200
Fuel oil cost
($ per year @ $5.50 per gallon) 56,375 110,000
Cordwood cost
($ per year @ $175 per cord) 19,950 38,850
Annual Fuel Cost Savings ($) 36,425 71,150
Annual, Non-fuel OM&R costsa 5,858 8,303 9,115
Net Annual Savings ($)
(Annual Cash Flow) 30,567 28,122 62,035
Total Investment Costs ($)b 168,125 165,500 314,500
Simple Payback (yrs)c 4.62 4.54 4.42
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
(1) Garn WHS 3200 (2) Garn WHS 2000 (2) Garn WHS 3200
Discount Ratea (%) 3
Time, “t”, (years) 20
Initial Investment ($)b 168,125 165,500 314,500
Annual Cash Flow($)c
(Net Annual Savings) 30,567 28,122 62,035
Present Value
(of expected cash flows, $ at “t” years) 454,760 418,384 922,924
Net Present Value ($ at “t” years) 286,635 252,884 608,424
Internal Rate of Return
(% at “t” years) 17.45 16.14 19.13
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 $454,760
today (PV), which is greater than the initial investment of $168,125. The resulting NPV of the project is $286,635 and
the project achieves an internal rate of return of 17.45% at the end of 20 years. Given the assumptions and cost estimates,
this alternative appears financially and operationally feasible.
Note #2. With a real discount rate of 3.00% and after a span of 20 years, the projected cash flows are worth $418,384
today (PV), which is greater than the initial investment of $165,500. The resulting NPV of the project is $252,884 and
the project achieves an internal rate of return of 16.14% at the end of 20 years. While these metrics are somewhat less
favorable than alternative 1, given the assumptions and cost estimates, this alternative still appears quite feasible and may
provide improved operational parameters.
Note #3. With a real discount rate of 3.00% and after a span of 20 years, the projected cash flows are worth $922,924
today (PV), which is greater than the initial investment of $314,500. The resulting NPV of the project is $608,424 and
the project achieves an internal rate of return of 19.13% at the end of 20 years. Given the assumptions and cost estimates,
this alternative appears financially and operationally feasible.
6.7 The Case for Fuel Purchase Planning and Fuel Storage
Too often, a fuel storage building is omitted from a project in order to save the initial investment cost
and improve the cost-effectiveness of the project. This is FALSE ECONOMY. The importance of a
fuel storage building cannot be stressed enough, especially in southeast Alaska. With good planning,
fuel could be purchased a year or more in advance and be given sufficient time to dry, while incurring
no additional cost. And a fuel storage building can pay for itself in less time than the boiler!
20
Protected from the elements and provided with good air circulation, it is not unreasonable to expect
split and well-stacked cordwood to achieve moisture contents in the neighborhood of fiber saturation
point (approximately 23% on the wet weight basis). The difference in heating value between hemlock
cordwood at MC30 (partially air-dried) and hemlock cordwood at MC23 (well air-dried) is notable –
about 13 percent more recoverable heat value (RHV) in the drier wood, which amounts to about
1,700,000 Btu per cord. And instead of a cord replacing 90.05 gallons of #2 fuel oil, it can now
replace 101.5 gallons.
For the Community Hall, this would mean that instead of having to buy 114 cords per year, that fuel
requirement becomes 101 cords, a savings of 13 cords and $2,275 per year (at $175 per cord). The
implications for the Kake School are even greater: instead of having to buy 222 cords per year, that
fuel requirement becomes 197 cords, a savings of 25 cords and $4,375 per year (at $175 per cord).
NOTE: There is also a labor cost savings that can be realized due to fewer boiler stokings, less ash
removal/disposal, and less fuel handling.
The opposite is also true. Cordwood left exposed to the elements in southeast Alaska will not dry
much at all and may, in fact, gain moisture. The difference in total RHV Btu value between a cord of
hemlock at MC30 (partially air-dried) and a cord of hemlock at MC50 (“green”) is more than 4.84
million Btu. The wetter wood has roughly 63.5% of the heating value of the drier wood. In terms of
its #2 fuel oil equivalence, the value is 57.16 gallons per cord at MC50 compared to 90.05 gallons per
cord at MC30.
For the Community Hall it would mean that instead of having to buy 114 cords (MC30) per year, that
cordwood equivalent becomes 179 cords (“dead green”), an increase of 65 cords and $11,375 per year
(at $175 per cord). The implications for the Kake School are even greater: instead of having to buy
222 cords, that cordwood equivalent becomes 350 cords, an increase of 128 cords and $22,400 per
year (at $175 per cord). NOTE: There is also a labor cost increase that would have to be incurred due
to more frequent boiler stokings, more ash removal/disposal, and additional fuel handling.
Finally, cordwood purchased in the “off-season” can often be purchased at a discount from the
heating season price. A seasonal discount of $25 per cord may be possible to negotiate, and could
save an additional $2,850/yr in the case of the Community Hall and $5,550/yr at the School.
In summary:
Community Hall: 179 cords of green wood per year at $175 = $31,325 versus 101 cords of
dried wood per year at $150 = $15,150. Savings between green wood bought during the
heating season and green wood purchased during the off-season and allowed to dry: $16,175.
Given a fuel storage building costing $57,000 ($45,600 plus 25% contingency) as shown in
Table 6-1, the simple payback would be about 3.5 years.
Kake School: 350 cords of green wood per year at $175 = $61,250 versus 197 cords per year
at $150 = $29,550. Savings between green wood bought during the heating season and green
wood purchased during the off-season and allowed to dry: $31,700. Given a fuel storage
building costing $111,000 ($88,800 plus 25% contingency) as shown in Table 6-1, the simple
payback would be about 3.5 years.
21
6.8 Life Cycle Cost Analysis
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
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 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.
22
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.
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 20,000 gallons of #2 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 two Garn WHS 3200 wood fired boilers. The initial investment was assumed to be
$364,500, 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 ($314,500, as per
Table 6-1). The operation costs include 222 cords of fuelwood at $175 per cord and 346.42 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 $2,186.45 (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 Kake School cordwood boiler alternative are presented
in Table 6-6.
23
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 $364,500
Operations Cost $1,648,424 $681,067
Maintenance & Repair Cost $14,877 $32,529
Replacement Cost $0 $0
Residual Value $0 $0
Total Life Cycle Cost 1,713,302 1,078,096
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 Community Hall and School in Kake,
Alaska, and attempts to demonstrate, by use of realistic, though hypothetical examples, the
feasibility of installing high efficiency, low emission cordwood or bulk fuel wood 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.
Kake Facilities
Two facilities in Kake were identified as potential heating projects. The first consists of the
Community Hall and the second is the Kake School. Each is analyzed in this report.
8.1. The Community Hall is medium-sized in terms of its energy usage; consuming a reported
10,250 gallons of #2 fuel oil per year. It is a good example of a medium-sized facility suitable
to a HELE cordwood boiler installation.
With a single large HELE boiler being fired approximately 4 times per day, the simple payback
period would be 4.62 years given current fuel costs and a cordwood boiler installation costing
24
around $168,000. The present value, net present value and internal rate of return after 20
years, assuming a discount rate of 3%, are $454,760, $286,635 and 17.45% respectively.
8.2. The Kake School is medium to large in terms of its energy usage; consuming a reported
20,000 gallons of #2 fuel oil per year. It too is a good example of facility apparently suitable to
a HELE cordwood boiler installation.
With a pair of large HELE boilers being fired approximately 4 times per day, the simple
payback period would be 4.4 years given current fuel costs and a cordwood boiler installation
costing around $314,500. The present value, net present value and internal rate of return after
20 years, assuming a discount rate of 3%, are $922,924, $608,424 and 19.13% respectively.
The theoretical difference in life cycle costs between the currently installed system and a
wood-fired system is more than $635,000 over 20 years.
Closer scrutiny of these projects by qualified professionals appears justified.