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HomeMy WebLinkAbout1 Pre-Feasibility Assessment Final Report_Revised_7-24-12 Pre-Feasibility Assessment for Integration of Wood-Fired Heating Systems Final Report July 24, 2012 Nenana City School District City of Nenana Nenana, Alaska Presented by CTA Architects Engineers Nick Salmon & Nathan Ratz Lars Construction Management Services Rex Goolsby For Toghotthele Corporation Nenana School District City of Nenana In partnership with Fairbanks Economic Development Corporation Alaska Wood Energy Development Task Group Funded by Alaska Energy Authority and U.S. Forest Service 306 W. Railroad, Suite 104 Missoula, MT 59802 406.728.9522 www.ctagroup.com CTA Project: FEDC_FAIRBANKS_NENANA Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers i July 24, 2012 TABLE OF CONTENTS 1.0 Executive Summary ................................................................................................... 1 2.0 Introduction ............................................................................................................... 4 3.0 Existing Building Systems.......................................................................................... 4 4.0 Energy Use ............................................................................................................... 6 5.0 Biomass Boiler Size ................................................................................................... 6 6.0 Wood Fuel Use .......................................................................................................... 8 7.0 Boiler Plant Location and Site Access ....................................................................... 8 8.0 Integration with Existing Heating Systems ............................................................... 10 9.0 Air Quality Permits ................................................................................................... 10 10.0 Wood Heating Options ............................................................................................ 10 11.0 Estimated Costs ...................................................................................................... 11 12.0 Economic Analysis Assumptions ............................................................................. 11 13.0 Results of Evaluation ............................................................................................... 12 14.0 Project Funding ....................................................................................................... 13 15.0 Summary ................................................................................................................. 13 16.0 Recommendation Actions ........................................................................................ 13 Appendixes Appendix A: Preliminary Estimates of Probable Cost ................................................ 4 pages Appendix B: Cash Flow Analysis ............................................................................... 9 pages Appendix C: Site Plan ............................................................................................... 4 pages Appendix D: Air Quality Report ............................................................................... 10 pages Appendix E: Wood Fired Heating Technologies ........................................................ 3 pages Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 1 of 13 July 24, 2012 1.0 Executive Summary The following assessment was commissioned to determine the preliminary technical and economic feasibility of integrating a wood fired heating system at the Nenana School, School Administration, School Warehouse, School Living Center, Nenana Native Council Day Care, Nenana Fire Department, Nenana Water Plant, and the Meda Lord Senior Center in Nenana, Alaska. The following tables summarize the current fuel use and the potential wood fuel use: Table 1.1 - Annual Fuel Use Summary Fuel Avg. Use Current Annual Facility Name Type (Gallons) Cost/Gal. Cost School Fuel Oil 34,000 $3.60 $122,400 School Admin Fuel Oil 1,600 $3.60 $5,760 School Whse. Fuel Oil 4,200 $3.60 $15,120 Student Living Center Fuel Oil 28,800 $3.60 $103,680 NNC Day Care Fuel Oil 4550 $3.60 $16,380 Water Plant Fuel Oil 10700 $3.60 $38,520 Fire Dept. Fuel Oil 3950 $3.60 $14,220 Meda Lord Senior Center Fuel Oil 6566 $4.00 $26,264 Table 1. 2 - Annual Wood Fuel Use Summary Chipped/ Fuel Cord Wood Ground Oil Wood Pellets Wood (Gallons) (Cords) (Tons) (Tons) School (S) 34,000 297.1 270.9 373.8 School Admin (SA) 1,600 14.0 12.7 17.6 School Warehouse (SW) 4,200 36.7 33.5 46.2 School Living Center (SLC) 28,800 251.7 229.4 316.6 Nenana Native Council Day Care (DC) 4,550 39.8 36.2 50.0 City Water Plant (WP) 10,700 93.5 85.2 117.6 City Fire Dept (FD) 3,950 34.5 31.5 43.4 Meda Lord Senior Center (ML) 6566 57.4 52.3 72.2 S + SA 35,600 311.1 283.6 391.3 S + SA + SW 39,800 347.8 317.1 437.5 S + SA + SW + DC 44,350 387.6 353.3 487.5 S + SA + SW + DC + WP 55,050 481.1 438.6 605.2 S + SA + SW + DC + WP + FD 59,000 515.6 470.0 648.6 S + SA + SW + DC + WP + FD + SLC 87,800 767.3 699.5 1037.3 S + SA + SW + SLC 68,600 599.5 546.5 754.1 Note: Wood fuel use assumes offsetting 85% of the current energy use. Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 2 of 13 July 24, 2012 Based on the potential wood fuel use, all options except the Meda Lord Senior Center will evaluate wood chip and wood pellet boilers. Because of the smaller fuel use, the Meda Lord Senior Center will evaluate a cord wood boiler system. Wood Chip Boiler Options: A.1: Nenana School only. A.2: Nenana School, Administration Building, and Warehouse. A.3: Nenana School, Administration Building, Warehouse, and NNC Daycare. A.4: Nenana School, Administration Building, Warehouse, NNC Daycare, and Water Plant. A.5: Nenana School, Administration Building, Warehouse, NNC Daycare, Water Plant, and Fire Department. A.6: Nenana School, Administration Building, Warehouse, and Living Center. Wood Pellet Boiler Options: B.1: Nenana School only. Cord Wood Boiler Options: C.1: Meda Lord Senior Center only. The following table summarizes the economic evaluation for each option: Table 1.3 - Economic Evaluation Summary Nenana Biomass Heating System Year 1 NPV NPV 20 Yr 30 Yr Project Operating 30 yr 20 yr B/C B/C ACF ACF YR Cost Savings at 3% at 3% Ratio Ratio YR 20 YR 30 ACF=PC A.1 $1,780,000 $59,208 $2,832,089 $1,616,943 0.91 1.59 $2,303,414 $4,911,172 18 A.2 $1,960,000 $72,175 $3,385,501 $1,940,341 0.99 1.73 $2,761,778 $5,862,829 17 A.3 $2,150,000 $81,506 $3,795,177 $2,177,730 1.01 1.77 $3,098,786 $6,569,425 16 A.4 $2,590,000 $99,342 $4,638,894 $2,656,188 1.03 1.79 $3,780,882 $8,035,572 16 A.5 $2,680,000 $106,772 $4,975,009 $2,849,249 1.06 1.86 $4,055,426 $8,617,079 16 A.6 $2,860,000 $112,808 $5,441,730 $3,085,014 1.08 1.90 $4,399,622 $9,458,385 16 B.1 $1,300,000 $7,206 $1,289,692 $590,490 0.45 0.99 $882,087 $2,389,469 24 C.1 $280,000 -$1,773 $220,868 $88,173 0.31 0.79 $137,198 $423,622 26 Connecting the school with several nearby buildings with a wood fired district heating system appears to be an economically viable project. With the current economic assumptions, the school alone and the school combined with the administration building and the school warehouse don’t quite meet the minimum 20 year B/C ratio of 1.0 However, when adding in the daycare, the water plant, and fire department, all these incremental options have 20 year B/C ratios greater than 1.0. The additional energy saved by connecting several buildings together offsets the significant additional cost of underground piping and pumping costs. The best option was A.6 which connected the Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 3 of 13 July 24, 2012 school with the administration building, the school warehouse, and the student living center. Even with the significant piping costs, the extra pumping energy, and the extra wood fuel needed to offset the heat loss of the long pipe runs, this option remains the strongest relative to the other options. Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 4 of 13 July 24, 2012 2.0 Introduction The following assessment was commissioned to determine the preliminar y technical and economic feasibility of integrating a wood fired heating system at the Nenana School, School Administration, School Warehouse, School Living Center, Nenana Native Council Day Care, Nenana Fire Department, Nenana Water Plant, and the Meda Lord Senior Center in Nenana, Alaska. 3.0 Existing Building Systems The School District is responsible for the School, School Administration, School Warehouse, and Student Living Center. The City of Nenana is responsible for the Water Plant and Fire Department. The Nenana Native Council is responsible for the Day Care and the Alaska Interior Regional Housing Authority is responsible for the Meda Lord Senior Center. There is a high level of cooperation amongst all the organizations and by extension with the Toghotthele Native Corporation which currently operates a lumber mill and is capable of providing chipped or ground wood fuel for use in future wood fired boiler projects. The Nenana School is a wood framed and steel stud building constructed in 1955 and expanded in 1966 and 1986. The gymnasium is a wood framed and steel stud building constructed in 1972 and was connected to the main school during the 1986 addition. The entire facility is approximately 70,860 square feet. There are two boiler rooms in the facility: one in the original school building and one in the gym. In a major mechanical system retrofit to occurred approximately 15 years ago, new heating water mains were installed throughout the facility, and the boilers were re-piped to provide heat to this main loop. That work allows any boiler to provide heat to the entire facility. In the original building boiler room there are two 2,503,000 Btu/hr output hot water boilers. These boilers appear to be approximately 15 years old and are in good condition. In the gym boiler room there are two 950,000 Btu/hr output hot water boilers. These boilers appeared to be original to the gym construction and are in fair condition. Each boiler room has a large approximately 500 gallon indirect domestic hot water heater using boiler water as the heating source. The Nenana School Administration Building is a wood framed modular building constructed in 2005. The facility is approximately 2,480 square feet and is heated by a 196,000 Btu/hr output hot water boiler. The boiler is original to the building and in good condition. The heating system infrastructure is original to the building and in good condition. The Nenana School Warehouse is a prefabricated metal building with interior insulation on metal wall panels on a concrete slab on grade constructed in 1982. The facility is approximately 6,500 square feet and is heated by one 236,000 Btu/hr output and one 212,000 Btu/hr output hot water boilers. Domestic hot water is provided by a 30 gallon electric water heater rated at 5.5 KW input. One boiler is original to the building and is in fair condition, and the other boiler is new, installed within the past year. The heating system infrastructure is original to the building and in fair condition. The Nenana Student Living Center is a wood framed dormitory building constructed in 2002 with approximately 88 sleeping rooms and 44 shared restroom/shower facilities. The facility is approximately 32,700 square feet and is heated by a 1,372,000 Btu/hr output hot water boiler. Domestic hot water is provided by a 623,000 Btu/hr fuel oil fired hot water heater with a 85 gallon storage tank. The existing boiler and hot water heater are original Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 5 of 13 July 24, 2012 to the building and in good condition. The heating system infrastructure is original to the building and in good condition. The Nenana Water Plant is a wood framed building constructed in the mid 1970’s and houses equipment required to store, heat, and pump the community water system. The facility is approximately 5,000 square feet and utilizes a 1,110,000 Btu/hr output hot water boiler. The existing boiler is original to the building and is in fair condition. The heating system infrastructure is original to the building and in fair condition. The Nenana Fire Department is a metal building constructed in early 1980’s. The facility is approximately 4,000 square feet and is heated by two 272,000 Btu/hr output hot water boilers. Domestic hot water is provided by a 40 gallon electric water heater rated at 4.5 KW input. The existing boilers are approximately 9 years old and in good condition. The heating system infrastructure is original to the building an in fair condition. The building was not reviewed during the field visit because CTA had gathered data during a trip to Nenana in December, 2011. The feasibility assessment of the facility is included in this report. The Meda Lord Senior Center is a wood framed building constructed in 1993. The facility is approximately 13,000 square feet and is heated by three 488,000 Btu/hr output hot water boilers. Domestic hot water is provided by a 155 gallon indirect water heater using boiler water as the heating source. The existing boilers are original to the building and in fair condition. The heating system infrastructure is original to the building and in fair condition. Facilities Dropped from Feasibility Study The Nenana Library was not reviewed during the field visit due to the small size and low fuel use. Facilities Added to Feasibility Study The Nenana Native Council Day Care was added to the potential facilities during the site visit. The building is a wood framed building constructed in 2006. The facility is approximately 6,500 square feet and is heated by a 347,000 Btu/hr output hot water boiler. Domestic hot water is provided by a 120 gallon indirect water heater using boiler water as the heating source. The existing boiler is original to the building and is in good condition. The heating system infrastructure is original to the building and in good condition. Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 6 of 13 July 24, 2012 4.0 Energy Use Fuel use summaries for the facilities were provided and the following table summarizes the data: Table 4.1 - Annual Fuel Use Summary Fuel Avg. Use Current Annual Facility Name Type (Gallons) Cost/Gal. Cost School Fuel Oil 34,000 $3.60 $122,400 School Admin Fuel Oil 1,600 $3.60 $5,760 School Whse. Fuel Oil 4,200 $3.60 $15,120 Student Living Center Fuel Oil 28,800 $3.60 $103,680 NNC Day Care Fuel Oil 4550 $3.60 $16,380 Water Plant Fuel Oil 10700 $3.60 $38,520 Fire Dept. Fuel Oil 3950 $3.60 $14,220 Meda Lord Senior Center Fuel Oil 6566 $4.00 $26,264 Electrical energy consumption will increase with the installation of the wood fired boiler system because of the power needed for the biomass boiler components such as augers, conveyors, draft fans, etc. and the additional pumps needed to integrate into the existing heating systems. The cash flow analysis accounts for the additional electrical energy consumption and reduces the annual savings accordingly. 5.0 Biomass Boiler Size The following table summarized the connected load of fuel fired boilers and domestic water heaters: Table 5.1 - Connected Boiler Load Summary Likely Peak System Output Load Peak MBH Factor MBH School Boiler A Fuel Oil 2503 0.66 1652 Boiler B Fuel Oil 2503 0.66 1652 Boiler C Fuel Oil 950 0.66 627 Boiler D Fuel Oil 950 0.66 627 Total 6906 4558 School Admin Boiler Fuel Oil 196 1.00 196 School Warehouse Boiler Fuel Oil 236 0.67 158 Boiler Fuel Oil 212 0.67 142 Total 300 School Living Center Boiler Fuel Oil 1372 1.00 1372 DWH Fuel Oil 623 1.00 623 Total 1995 Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 7 of 13 July 24, 2012 Table 5.1 - Connected Boiler Load Summary Nenana NC Day Care Boiler Fuel Oil 347 1.00 347 City Water Plant Boiler Fuel Oil 1110 1.00 1110 City Fire Dept Boiler Fuel Oil 272 0.60 163 Boiler Fuel Oil 272 0.60 163 Total 326 Meda Lord Sr. Center Boiler 1 Fuel Oil 488 0.66 322 Boiler 2 Fuel Oil 488 0.66 322 Boiler 3 Fuel Oil 488 0.66 322 Total 1464 966 Total Of All Buildings 13010 9799 Typically a wood heating system is sized to meet approximately 85% of the typical annual heating energy use of the building. The existing heating boilers would be used for the other 15% of the time during peak heating conditions, during times when the biomass boiler is down for servicing, and during swing months when only a f ew hours of heating each day are required. Recent energy models have found that a boiler sized at 50% to 60% of the building peak load will typically accommodate 85% of the boiler run hours. Several projects are under consideration in Nenana, therefore the boiler size will vary with each option as noted below. Table 5.2 - Proposed Biomass Boiler Size Likely Biomass System Biomass Boiler Peak Boiler Size MBH Factor MBH School (S) (Option 1) 4558 0.6 2735 School Admin (SA) 196 0.6 118 School Warehouse (SW) 300 0.6 180 School Living Center (SLC) 1995 0.6 1197 Nenana Native Council Day Care (DC) 347 0.6 208 City Water Plant (WP) 1110 0.6 666 City Fire Dept (FD) 326 0.6 196 Meda Lord Senior Center (ML) 966 0.6 580 S + SA 4754 0.6 2852 S + SA + SW (Option 2) 5054 0.6 3032 S + SA + SW + DC (Option 3) 5401 0.6 3241 S + SA + SW + DC + WP (Option 4) 6511 0.6 3907 S + SA + SW + DC + W P + FD (Option 5) 6838 0.6 4103 S + SA + SW + DC + WP + FD + SLC 9799 0.6 5879 S + SA + SW + SLC (Option 6) 7049 0.6 4229 Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 8 of 13 July 24, 2012 A district system around the school will be evaluated. Stand-alone systems for the Student Living Center and the Meda Lord Senior Center will also be evaluated since these buildings are so far from the school. 6.0 Wood Fuel Use The types of wood fuel available in the area include cord wood, wood pellets, and chipped/ground wood fuel. The estimated amount of wood fuel needed of each wood fuel type for each building was calculated and is listed below: Table 6.1 - Annual Wood Fuel Use Summary Chipped/ Fuel Cord Wood Ground Oil Wood Pellets Wood (Gallons) (Cords) (Tons) (Tons) School (S) 34,000 297.1 270.9 373.8 School Admin (SA) 1,600 14.0 12.7 17.6 School Warehouse (SW) 4,200 36.7 33.5 46.2 School Living Center (SLC) 28,800 251.7 229.4 316.6 Nenana Native Council Day Care (DC) 4,550 39.8 36.2 50.0 City Water Plant (WP) 10,700 93.5 85.2 117.6 City Fire Dept (FD) 3,950 34.5 31.5 43.4 Meda Lord Senior Center (ML) 6566 57.4 52.3 72.2 S + SA 35,600 311.1 283.6 391.3 S + SA + SW 39,800 347.8 317.1 437.5 S + SA + SW + DC 44,350 387.6 353.3 487.5 S + SA + SW + DC + WP 55,050 481.1 438.6 605.2 S + SA + SW + DC + WP + FD 59,000 515.6 470.0 648.6 S + SA + SW + DC + WP + FD + SLC 87,800 767.3 699.5 1037.3 S + SA + SW + SLC 68,600 599.5 546.5 754.1 Note: Wood fuel use assumes offsetting 85% of the current energy use. The amount of wood fuel shown in the table is for offsetting 85% of the total fuel oil use. The moisture content of the wood fuels and the overall wood burning system efficiencies were accounted for in these calculations. The existing fuel oil boilers were assumed to be 80% efficient. Cord wood was assumed to be 20% moisture content (MC) with a system efficiency of 65%. Wood pellets were assumed to be 7% MC with a system efficiency of 70%. Chipped/ground fuel was assumed to be 30% MC with a system efficiency of 65%. The primary project is the school. As can be seen from the potential wood fuel use, the volume of wood is such that a cord wood system is not really practical and further analysis will look at pellet and chipped/ground fuel options. A cord wood only system for the Meda Lord Senior Center will be evaluated since it would be a stand-alone system. Toghotthele Corporation owns 138,000 acres of land, of which most of it is forested. There are also State lands around Nenana. With some recent wild fires, there is some desire in the area to thin some of the forests around the city to create fire breaks. The agricultural area to the west is also planned to be opened up in the next few years, and there will be Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 9 of 13 July 24, 2012 significant amount of wood to be removed as this land is developed. Toghotthele is actively managing their land and is currently logging some of it. They are looking into purchasing more logging equipment and even a chipper. If a biomass project was to develop, Toghotthele would likely be the entity to provide the wood. Wood pellets are also available from Superior Pellet Fuels out of North Pole and can be trucked down the Parks Highway. There appears to be a sufficient supply of wood fuel to support a wood fired boiler for this community. The unit fuel costs for fuel oil and the different fuel types were calculated and equalized to dollars per million Btu ($/MMBtu) to allow for direct comparison. The Delivered $/MMBtu is the cost of the fuel based on what is actually delivered to the heating system, which includes all the inefficiencies of the different systems. The Gross $/MMBtu is the cost of the fuel based on raw fuel, or the higher heating value and does not account for any system inefficiencies. The following table summarizes the equalized fuel costs at different fuel unit costs: Table 6.2 - Unit Fuel Costs Equalized to $/MMBtu Net Gross System System Delivered Gross Fuel Type Units Btu/unit Efficiency Btu/unit $/unit $/MMBtu $/MMBtu Fuel Oil gal 134500 0.8 107600 $3.60 $33.46 $26.77 $4.00 $37.17 $29.74 $4.50 $41.82 $33.46 Cord Wood cords 16173800 0.65 10512970 $200.00 $19.02 $12.37 $250.00 $23.78 $15.46 $300.00 $28.54 $18.55 Pellets tons 16400000 0.7 11480000 $300.00 $26.13 $18.29 $350.00 $30.49 $21.34 $400.00 $34.84 $24.39 Chips tons 10800000 0.65 7020000 $75.00 $10.68 $6.94 $100.00 $14.25 $9.26 $125.00 $17.81 $11.57 7.0 Boiler Plant Location and Site Access None of the existing boiler rooms are large enough to fit a new biomass boiler so a new stand alone boiler plant would be required. The existing gravel parking lot west of the Administration building has been identified as the preferred location for a central heating plant. A stand alone plant for the Meda Lord Senior Center would be located on the west side of the building. Any type of biomass boiler system will require access by delivery vehicles, typically 40 foot long chips vans or some similar type of trailer. Wood fuel is likely to be chipped or ground by the Toghotthele Native Corporation and delivered to a central boiler plant. The proposed plant location includes access from three adjacent streets and is in close proximity to each of the potential facilities with the exception of the Student Living Center and the Meda Lord Senior Center. Nenana is on the Parks Highway, so highway access is good. Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 10 of 13 July 24, 2012 8.0 Integration with Existing Heating Systems Integration of a wood fired boiler system would be relatively straight forward in each location. The field visit confirmed the location of each boiler room in order to identify an approximate point of connection from a district heating loop to each existing building. Connections would typically be achieved with artic pipe extended to the face of each building, and extended up the exterior surface of the building in order to penetrate exterior wall into the boiler room. Once hot supply and return piping enters the existing boiler room it would be connected to existing supply and return lines in appropriate locations in order to utilize existing pumping systems within each building. 9.0 Air Quality Permits Resource System Group has done a preliminary review of potential air quality issues in the area. Interior Alaska is prone to meteorological conditions that create thermal inversions, which are unfavorable for the dispersion of emissions. Since this plant will be located at a school and is also located in the populated area, the air quality will likely be scrutinized and modeling of emissions, the stack height, and of air pollution control devices is recommended. Due to the high percentage of “calms” during the winter in interior Alaska, all options at the school include the cost of an electrostatic precipitator (ESP). The proposed boiler size at this location is small enough, that the boiler is not likely to require any State or Federal permits. See the air quality memo in Appendix D. 10.0 Wood Heating Options The technologies available to produce heating energy from wood based biomass are varied in their approach, but largely can be separated into three types of heating plants: cord wood, wood pellet and wood chip/ground wood fueled. See Appendix E for these summaries. Based on the potential wood fuel use, all options except the Meda Lord Senior Center will evaluate wood chip and wood pellet boilers. Because of the smaller fuel use, the Meda Lord Senior Center will evaluate a cord wood boiler system. Wood Chip Boiler Options: A.1: Nenana School only. A.2: Nenana School, Administration Building, and Warehouse. A.3: Nenana School, Administration Building, Warehouse, and NNC Daycare. A.4: Nenana School, Administration Building, Warehouse, NNC Daycare, and Water Plant. A.5: Nenana School, Administration Building, Warehouse, NNC Daycare, Water Plant, and Fire Department. A.6: Nenana School, Administration Building, Warehouse, and Living Center. Wood Pellet Boiler Options: B.1: Nenana School only. Cord Wood Boiler Options: C.1: Meda Lord Senior Center only. All wood chip and pellet options assume a central boiler plant is used and located next to the Administration building. All “A” options assume a new stand-alone boiler plant is Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 11 of 13 July 24, 2012 constructed to house the boiler and chip storage. Option B.1 assumes a new stand-alone boiler plant is constructed to house the boiler with an exterior silo or silos. The cord wood boiler option would be installed in a freestanding building with interior cordwood fuel storage. 11.0 Estimated Costs The total project costs are at a preliminary design level and are based on RS Means and recent biomass project bid data. The estimates are shown in the appendix. These costs are conservative and if a deeper level feasibility analysis is undertaken and/or further design occurs, the costs may be able to be reduced. 12.0 Economic Analysis Assumptions The cash flow analysis assumes fuel oil at $3.60/gal, electricity at $0.28/kwh, wood pellets delivered at $325/ton, and wood chips delivered at $75/ton. The fuel oil, electricity, and cord wood costs were based on utility bills and reports form the end users. Chipped and ground wood fuel costs are estimates based on Toghotthele Corporation’s estimates of delivered costs. Pellet costs were obtained from Superior Pellet Fuels. It is assumed that the biomass boiler would supplant 85% of the estimated heating use, and the existing heating systems would heat the remaining 15%. Each option assumes the total project can be funded with grants and non obligated capital money. The following inflation rates were used: O&M - 2%, Fossil Fuel – 5%, Wood Fuel – 3%, Discount Rate for NPV calculation – 3%. The fossil fuel inflation rate is based on the DOE EIA website. DOE is projecting a slight plateau with a long term inflation of approximately 5%. As a point of comparison, oil prices have increased at an annual rate over 8% since 2001. The analysis also accounts for additional electrical energy required for the wood fired boiler system as well as the system pumps to distribute heating hot water to the buildings. Wood fired boiler systems also will require more maintenance, and these additional maintenance costs are also factored into the analysis. In the different central plant options, there are significant runs of underground pipe to connect to the City Water Plant and to the Student Living Center. The amount of heat energy lost in these long runs was estimated and the additional required heating energy was added to the boiler plant load, that is, the boiler plant was assumed to burn more chips to accommodate the piping heat losses. Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 12 of 13 July 24, 2012 13.0 Results of Evaluation The following table summarizes the economic evaluation for each option: Table 13.1 - Economic Evaluation Summary Nenana Biomass Heating System Year 1 NPV NPV 20 Yr 30 Yr Project Operating 30 yr 20 yr B/C B/C ACF ACF YR Cost Savings at 3% at 3% Ratio Ratio YR 20 YR 30 ACF=PC A.1 $1,780,000 $59,208 $2,832,089 $1,616,943 0.91 1.59 $2,303,414 $4,911,172 18 A.2 $1,960,000 $72,175 $3,385,501 $1,940,341 0.99 1.73 $2,761,778 $5,862,829 17 A.3 $2,150,000 $81,506 $3,795,177 $2,177,730 1.01 1.77 $3,098,786 $6,569,425 16 A.4 $2,590,000 $99,342 $4,638,894 $2,656,188 1.03 1.79 $3,780,882 $8,035,572 16 A.5 $2,680,000 $106,772 $4,975,009 $2,849,249 1.06 1.86 $4,055,426 $8,617,079 16 A.6 $2,860,000 $112,808 $5,441,730 $3,085,014 1.08 1.90 $4,399,622 $9,458,385 16 B.1 $1,300,000 $7,206 $1,289,692 $590,490 0.45 0.99 $882,087 $2,389,469 24 C.1 $280,000 -$1,773 $220,868 $88,173 0.31 0.79 $137,198 $423,622 26 The benefit to cost ratio (B/C) takes the net present value (NPV) of the net energy savings and divides it by the construction cost of the project. A B/C ratio greater than or equal to 1.0 indicates an economically advantageous project. Accumulated cash flow (ACF) is another evaluation measure that is calculated in this report and is similar to simple payback with the exception that accumulated cash flow takes the cost of financing and fuel escalation into account. For many building owners, having the accumulated cash flow equal the project cost within 15 years is considered necessary for implementation. If the accumulated cash flow equals project cost in 20 years or more, that indicates a challenged project. Positive accumulated cash flow should also be considered an avoided cost as opposed to a pure savings. Because a school is part of this project, a life cycle cost analysis following the req uirements of the State of Alaska Department of Education & Early Development was completed and the data is summarized in the following table: Table 13.2 - Life Cycle Costs of Project Alternatives Alternate #1 Alternate #2 Existing Boiler Wood Chip Boiler (A.2) Initial Investment Cost $0 $1,960,000 Operations Cost $3,360,393 $854,631 Maintenance & Repair Cost $0 $56,725 Replacement Cost $0 $0 Residual Value $0 $0 Total Life Cycle Cost $3,360,393 $2,871,356 Pre-Feasibility Assessment for Nenana School and City of Nenana Integration of Wood-Fired Heating Systems Nenana, Alaska CTA Architects Engineers Page 13 of 13 July 24, 2012 14.0 Project Funding The Nenana City School District and the City of Nenana may pursue a biomass project grant from the Alaska Energy Authority. The Nenana City School District and the City of Nenana could also enter into a performance contract for the project. Companies such as Siemens, McKinstry, Johnson Controls and Chevron have expressed an interest in participating in funding projects of all sizes throughout Alaska. This allows the facility owner to pay for the project entirely from the guaranteed energy savings, and to minimize the project funds required to initiate the project. The scope of the project may be expanded to include additional energy conservation measures such as roof and wall insulation and upgrading mechanical systems. 15.0 Summary Connecting the school with several nearby buildings with a wood fired district heating system appears to be an economically viable project. With the current economic assumptions, the school alone and the school combined with the administration building and the school warehouse don’t quite meet the minimum 20 year B/C ratio of 1.0 However, when adding in the daycare, the water plant, and fire department, all these incremental options have 20 year B/C ratios greater than 1.0. The additional energy saved by connecting several buildings together offsets the significant additional cost of underground piping and pumping costs. The best option was A.6 which connected the school with the administration building, the school warehouse, and the student living center. Even with the significant piping costs, the extra pumping energy, and the extra wood fuel needed to offset the heat loss of the long pipe runs, this option remains the strongest relative to the other options. Additional sensitivity analysis has been performed and is attached. Using option A.6 as the basis of the analysis, the B/C ratio will exceed 1.0 if wood fuel prices stay below $85/ton. The analysis also shows that a central plant with a pellet boiler is not viable, nor is a stand- alone cord wood boiler system for the Meda Lord Senior Center. Recommended Actions Most grant programs will likely require a full feasibility assessment. A full assessment would provide more detail on the air quality issues, wood fuel resources, review the pipe routing and potential underground conflicts, and develop a schematic design of the boiler plant including wood storage size, and schematic design of the heating systems integration. These schematic designs will also help obtain more accurate costs. Since several options appear to be viable, more investigation should be engaged to determine the best project to proceed with.