HomeMy WebLinkAbout8-12-2012 Deering CommentsMayor
Stephanie
Scott
Haines
Borough,
Alaska
12
August
2012
Dear
Mayor
Scott,
Following
our
discussions
regarding
my
(and
others)
concerns
about
the
Alaska
Energy
Engineering
(AEE)
report
studying
the
feasibility
of
wood
pellet
boilers
for
several
Borough
buildings,
Mr.
Darsie
Culbeck
asked
if
I
could
briefly
evaluate
the
potential
of
converting
the
Chilkat
Center
to
pellet
heat.
I
spent
a
few
hours
this
weekend
on
that
effort.
Pease
note
that
the
following
document
does
not
reflect
a
position
of
the
United
States
Coast
Guard.
I
am
providing
this
analysis
as
a
private
citizen
with
a
strong
interest
in
our
regional
energy
strategy.
On
1
October
I
will
be
moving
from
the
Coast
Guard
to
the
Forest
Service
on
a
one-‐year
special
assignment
to
lead
the
development
of
a
regional
biomass
energy
strategy.
This
effort
is
a
‘warm-‐up’
for
that
larger
assignment.
I
have
no
financial
stake
in
the
biomass
industry,
and
no
financial
stake
in
the
outcome
of
the
Haines
decision.
I
am
not
being
financially
compensated
for
this
analysis.
I
must
preface
this
exercise
with
several
significant
caveats:
1. I
have
never
been
the
Chilkat
Center.
I
have
limited
knowledge
about
its
heating
systems
or
energy
performance.
All
of
my
analysis
is
based
on
a
few
pieces
of
known
data
and
some
(hopefully)
reasonable
assumptions.
For
that
reason
I
have
attempted
to
lean
toward
the
conservative
side
with
my
estimates.
2. The
AEE
report
states
that
the
replacement
of
the
heating
system
would
likely
cost
about
$400,000,
and
the
lifecycle
cost
would
be
about
$600,000,
but
it
provides
little
analysis
and
no
calculations
to
support
those
statements.
Note
that
the
AEE
report
also
finds
that
pellet
heat
would
be
cost
effective
based
on
current
energy
usage.
3. Based
on
online
drawings,
it
appears
that
the
Chilkat
Center
is
roughly
20,000
gross
square
feet
in
size.
That
is
what
I
based
equipment
sizing
on.
A
25%
deviation
in
either
direction
won’t
significantly
change
the
results.
4. I
assumed
that
adequate
3-‐phase
electrical
service
was
available
at,
or
could
be
brought
into
the
building
at
a
reasonable
expense.
5. I
also
assumed
that
the
electric
utility
could
provide
short-‐term
backup
heating
energy
as
necessary
year-‐around
(though
perhaps
not
economically).
I
also
assumed
that
it
could
easily
provide
for
all
of
the
building’s
heating
load
during
the
summer,
when
the
hydro
system
was
likely
to
have
excess
capacity
going
to
waste.
6. The
AEE
report
refers
to
recent
energy
assessments
of
the
building
that
indicate
that
the
building
is
not
operating
in
an
efficient
mode.
I
have
not
seen
those
reports
but
I
made
allowances
for
increased
building
efficiency
in
my
analysis,
and
generally
assumed
a
20%
heating
energy
reduction,
which
can
be
modified
to
suit
reality
in
the
spreadsheet
included.
In
general,
efficiency
improvements
yield
the
largest
payback
on
an
investment,
so
should
be
pursued
first
if
possible.
7. I
used
a
delivered
pellet
price
of
$338
per
ton.
This
is
the
price
that
was
awarded
last
week
in
the
Defense
Logistics
Agency’s
Coast
Guard
pellet
contract
for
AIRSTA
Sitka.
The
contract
was
competitively
advertised,
with
multiple
bidders.
Sealaska
was
not
the
winning
supplier.
Even
if
the
original
study
price
of
$360/ton
is
used,
the
results
do
not
significantly
change.
8. I
have
accepted
the
AEE
inflation
rate
assumptions
for
oil
and
pellets,
though
there
has
been
considerable
debate
as
to
whether
they’re
suitable.
For
the
purposes
of
my
rough
analysis
they’re
‘close
enough’.
9. And
finally,
this
analysis
was
conducted
over
a
few
brief
hours
during
the
weekend.
It
almost
certainly
contains
errors
and
oversights,
despite
my
best
efforts.
It
has
been
briefly
peer
reviewed
by
an
engineer
colleague.
Caveat
emptor.
The
two
boilers
at
the
Chilkat
Center
have
reached
the
end
of
their
operational
lives.
The
approach
proposed
by
AEE
is
to
replace
the
two
existing
oil
boilers
inside
the
building
with
new
oil
boilers,
and
then
add
another
pellet
boiler
in
a
container
exterior
to
the
building.
The
AEE
report
largely
used
the
same
approach
for
the
other
Haines
Borough
buildings.
As
has
been
pointed
out
in
my
comments
on
the
AEE
report,
along
with
comments
by
the
Forest
Service
and
Alaska
Energy
Authority,
the
AEE
approach
does
not
yield
an
optimal
solution
for
Haines,
for
numerous
reasons.
I
recommend
consideration
of
a
different
approach:
Remove
both
oil
boilers
and
replace
them
with
a
single
wood
pellet
boiler
and
a
single
electric
boiler,
both
contained
inside
the
Chilkat
Center
mechanical
room
(assuming
space
permits).
While
a
pellet
boiler
may
be
somewhat
larger
than
a
comparable
oil
boiler,
an
electric
boiler
is
much
smaller,
so
space
should
not
be
an
issue.
A
pellet/electric
hybrid
offers
several
advantages.
Pellet
fuel
is
by
far
the
lowest
cost
energy
of
the
three
sources
evaluated
here,
and
should
be
the
preferred
fuel
source
for
most
of
the
heating
demand.
However,
during
periods
of
low
heating
demand,
such
as
late
spring,
summer,
and
early
fall,
a
combustion
boiler
(pellet
or
oil)
is
not
operating
in
its
most
efficient
mode,
with
short
cycling
and
a
significant
proportion
of
jacket
heat
losses.
At
those
times
an
electric
boiler
shines,
as
it
operates
at
near
100%
efficiency
regardless
of
load.
The
Coast
Guard
has
taken
this
approach
with
its
conversion
to
pellet
heating
in
Sitka
–
it
has
added
an
electric
boiler
for
summer
heating
demand,
when
the
electric
utility
has
spare
capacity
going
to
waste
over
the
dam
spillway.
During
the
warmer
months,
the
electric
boiler
could
be
used
exclusively
to
meet
the
buildings
heating
demand.
While
electric
rates,
at
$0.25/kWh,
are
fairly
high,
the
actual
heating
demand
during
the
5
warmest
months
only
represents
19%
of
the
total
annual
heating
load,
based
on
Haines
climate
data.
The
period
of
transition
to
electric
heat
is
entirely
under
the
control
of
the
facility
manager,
and
can
be
adjusted
based
on
a
number
of
factors
such
as
available
excess
hydropower
(in
coordination
the
Haines
electric
utility),
the
current
weather,
the
current
cost
of
pellets
and
electricity,
planned
maintenance
on
one
of
the
boilers,
etc.
As
the
building
staff
learns
the
new
configuration,
they
will
be
able
to
optimize
its
operations
for
best
economics.
I
assumed
that
a
simple,
inexpensive
control
system
would
be
adequate
to
shift
duties
between
the
two
boilers,
and
a
trained
facility
operator
could
make
intelligent
decisions.
In
the
winter,
the
electric
boiler
could
provide
peaking
supply
during
the
few
instances
where
the
pellet
boiler
could
not
meet
the
heating
demand
during
extreme
cold
spells.
This
would
allow
the
pellet
boiler
to
be
sized
to
a
smaller
capacity,
thus
reducing
capital
costs
and
increasing
boiler
efficiency.
Note
that
shifting
to
electric
heat
for
several
months
out
of
the
year
provides
an
additional
benefit.
Electric
boilers
are
nearly
maintenance-‐free.
Besides
daily
checks
of
the
system
as
part
of
normal
facility
rounds,
electric
boilers
require
little
‘care
and
feeding’.
By
idling
the
pellet
boiler
for
possibly
5
months
per
year,
that
significantly
reduces
overall
annual
maintenance
expenses,
to
below
that
of
the
status
quo
oil
boilers.
Note
that
the
AEE
report
indicates
(Fig.
1:
Cost
of
Heat
Comparison)
that
electric
heating
in
Haines
is
projected
to
become
less
expensive
than
the
cost
of
oil
heating
in
around
13
years,
so
installing
an
electric
boiler
is
consistent
with
longterm
trends.
If
additional
hydro
capacity
comes
online
in
Haines
in
the
future,
resulting
in
decreased
electrical
rates
and
increased
capacity,
the
electric
boiler
is
in
position
to
take
advantage
of
it.
Likewise
if
other,
currently
unforeseen,
electrical
power
generation
sources
develop.
Investing
in
new
oil
boilers,
which
will
remain
in
place
for
the
next
30
years,
is
an
investment
in
a
future
almost
guaranteed
to
yield
much
higher
heating
expenditures.
The
subject
of
redundancy
was
a
key
discussion
of
the
AEE
report.
The
report
provided
fully
redundant
solutions
for
each
building
when
looking
at
pellet
heating,
as
required
in
the
contract
RFP.
The
AEE
approach
for
each
Haines
Borough
building
was
to
include
or
replace
the
existing
oil
boilers,
and
then
add
pellet
boilers
in
an
exterior
container
or
building,
and
as
noted
above,
that
was
the
approach
recommended
by
AEE
for
the
Chilkat
Center.
Unfortunately,
the
AEE
report
failed
to
provide
a
redundant
solution
when
the
report
evaluated
the
status
quo
situation,
meaning
most
buildings
only
ended
up
with
one
boiler,
as
they
previously
had.
This
led
to
a
highly
skewed
lifecycle
cost
comparison
between
a
one-‐boiler
and
a
two-‐
boiler
system.
Not
surprisingly,
a
single
boiler
costs
less
than
two
boilers
when
it
comes
to
capital
costs
and
maintenance
expenses.
An
‘apples-‐to-‐apples’
comparison
would
have
added
a
second
oil
boiler
in
an
exterior
container
for
the
status
quo
option
–
the
lifecycle
costs
would
likely
have
been
significantly
different
then.
In
my
approach
to
the
Chilkat
Center,
the
electric
boiler
would
be
capable
of
providing
100%
backup
heat.
Obviously,
at
$0.25/kWh,
it
would
not
be
desirable
to
run
the
electric
boiler
for
long
periods
during
the
winter.
That
might
also
add
undesirable
load
on
the
electric
utility.
But
a
backup
system
is
not
intended
for
longterm
usage,
with
the
concept
being
that
the
primary
boiler
would
be
brought
back
online
promptly.
Another
backup
option
that
the
Coast
Guard
has
adopted
at
AIRSTA
Sitka
appears
to
have
promise
for
Haines.
We
have
purchased
a
portable,
trailer-‐mounted
oil
boiler,
complete
with
an
onboard
oil
tank.
This
boiler
is
sized
to
meet
the
largest
building’s
heating
demand.
We
have
plumbed
quick
disconnects
into
each
building’s
heat
distribution
system
(a
simple
&
inexpensive
modification)
which
allows
us
to
quickly
plug
in
the
portable
boiler
in
the
event
of
a
primary
boiler
failure.
We
are
even
considering
modifying
other
Coast
Guard
buildings
outside
of
Sitka
with
this
feature
so
if
we
experience
a
boiler
failure
we
can
quickly
transport
the
portable
boiler
to
the
location
via
ferry
or
C130
airplane.
Haines
could
use
this
same
approach.
Purchase
a
single
portable
boiler
(oil
or
pellet)
large
enough
to
meet
the
load
of
the
Chilkat
Center
(or
other
large
building),
and
then
equip
all
of
the
Borough
buildings
(Administration,
Library,
Vocational
Ed,
High
School,
Chilkat
Center…)
with
connection
fittings
to
accommodate
it.
The
boiler
could
be
drained
of
water
when
not
in
use,
or
stored
in
a
heated
structure,
so
the
use
of
glycol,
and
the
associated
complexities
of
heat
exchangers
and
pump
systems
could
be
avoided.
By
meeting
this
critical
backup
function
with
the
portable
boiler,
it
would
decouple
that
role
from
the
pellet
boilers,
allowing
them
to
replace
the
existing
oil
boilers
inside
the
buildings,
thus
greatly
reducing
the
capital
and
lifecycle
costs
of
the
pellet
boiler
solution.
My
expectation
is
that
the
pellet
boiler
solution
would
then
have
the
lowest
lifecycle
cost
for
every
building,
even
including
the
purchase
of
the
portable
boiler.
Haines
would
also
benefit
by
owning
a
highly
flexible
backup
heating
solution,
which
might
be
applicable
to
several
other
facilities
in
Haines.
Installing
electric
boilers
in
each
building
could
also
satisfy
the
backup
requirement,
while
providing
off-‐season
heating
efficiency
opportunity.
Following
are
my
findings.
Pease
note
that
I
didn’t
run
them
at
various
inflation
scenarios,
simply
using
the
‘base
case’
numbers
except
as
noted.
Life
Cycle
Cost
Comparison
–
Chilkat
Center
Heating
System
Construction
Operating
Energy
Total
LCC
Status
Quo:
Renew
Two
Oil
Boilers
$250,000
$111,825
$1,161,027
$1,522,852
Pellet
&
Electric
boiler
$345,153
$53,458
$740,139
$1,129,023
I
hope
you
will
find
this
analysis
helpful.
Please
note,
again,
that
it’s
based
on
numerous
assumptions
that
could
not
be
validated
over
a
short
weekend.
If
you
provide
me
additional
information
regarding
the
Chilkat
Center,
I
can
endeavor
to
update
it
more
fully.
I
am
providing
my
spreadsheet,
which
you
are
free
to
modify
in
an
attempt
to
find
your
optimal
solution.
Regardless,
before
making
any
final
decisions
on
your
path
forward,
I
recommend
bringing
in
an
independent
third
party
to
help
evaluate
your
options,
perhaps
as
part
of
the
design
process.
I
would
also
recommend
reevaluating
the
other
AEE
recommendations
from
the
perspective
of
adding
electric
boilers
and/or
a
portable
backup
boiler.
My
belief
is
that
the
lifecycle
costs
will
prove
considerably
more
favorable
for
a
pellet
boiler
solution,
though
I
have
not
performed
a
detailed
lifecycle
cost
analysis
to
confirm
it.
Again,
it
may
be
appropriate
to
have
an
independent
third
party
make
this
evaluation.
Making
longterm
investments
in
oil
heating
is
not
a
prudent
strategy
for
Southeast
communities.
There
is
little
doubt
that
oil
prices
will
continue
to
increase
faster
than
the
rate
of
inflation,
and
will
be
accompanied
by
future
price
shocks
due
to
global
market
and
geopolitical
factors
beyond
Alaskans’
ability
to
predict
or
control.
Investing
in
developing
our
local
energy
resources
is
our
best
hedge
for
the
future.
Biomass
is
an
abundant
and
available
resource
that
has
barely
been
tapped
in
Southeast.
Meeting
a
substantial
portion
of
the
heating
(and
possibly
some
electrical
power)
needs
of
Southeast
Alaska
by
the
responsible
and
sustainable
use
of
biomass
is
entirely
possible.
Failure
to
do
so
will
lead
to
unaffordable
heating
costs
and
unsustainable
loads
on
our
regional
hydropower
resources.
The
development
of
a
regional
or
local
biomass
industry
could
also
lead
to
a
significant
price
reduction
for
biomass
fuel.
As
the
AEE
report
notes,
transportation
accounts
for
56%
of
the
cost
of
wood
pellets,
imported
from
the
Lower
48
and
Canada.
Regionally
produced
pellets
could
greatly
reduce
that
transportation
cost.
As
provided
to
you
previously
by
Dan
Parrent
of
the
Forest
Service,
Tongass
Forest
Enterprises
of
Ketchikan
has
published
a
rate
sheet
quoting
local
Ketchikan
customers
a
fixed,
five-‐year
contract
to
supply
locally
produced
pellets
at
$275/ton,
24%
less
than
the
quoted
price
used
in
AEE’s
report,
and
35%
less
than
the
Chikoot
Indian
Association’s
cost.
Is
it
possible
that
a
similar
‘home-‐grown’
fuel
supply
could
be
developed
for
Haines,
providing
low-‐cost
biomass
fuel
while
creating
local
jobs
and
economic
activity?
The
study
performed
by
AEE
has
yielded
a
significant
side
benefit.
It
has
generated
discussion
within
the
community
about
its
energy
economy.
This
is
a
discussion
that
will
need
to
take
place
in
communities
throughout
Alaska.
No
energy
solution
exists
in
a
vacuum.
Decisions
we
make
about
oil,
hydropower,
biomass,
and
other
potential
energy
supplies
and
utilization
need
to
be
coordinated
throughout
the
community
to
achieve
the
best
outcomes.
The
decisions
made
by
the
Haines
Borough
are
highly
relevant
to
that
discussion.
If
you
have
any
questions
regarding
this
document,
or
if
I
can
be
of
any
further
assistance,
please
don’t
hesitate
to
ask.
Feel
free
to
share
this
as
you
see
fit.
Bob
Deering
Juneau,
AK