HomeMy WebLinkAboutPhase I, Reconnaissance Study310 Hardwood Lane
Princeton, WV 24720
(304) 487‐1510
Wood Education and Resource Center
www.na.fs.fed.us/werc
MEMORANDUM
DATE: July 26, 2011
TO: Lew McCreery, USFS
FROM: Don Marteeny; WES,
CC: Dan Wilson, PE; WES
RE: Seward, AK Project, Assessment Review and District Energy Concept Evaluation
1.0 Overview, Comments on Prefeasibility Study
This memorandum summarizes a review of the DRAFT Preliminary Feasibility Assessment for
Wood Pellet Heating in Seward Alaska (July 11, 2011). As part of the review a concept‐level
analysis of a biomass district energy system serving Kenai Peninsula Borough School District
(Seward Elementary, Middle, and High Schools) and the Providence Seward Mountain Haven
(PSMH) Assisted Living Center was performed. The analysis included both a thermal‐only and a
thermally‐led CHP option. Analysis showed that the biomass district energy options had the
potential to provide $20,000 ‐ $30,000 in positive cash flow in the first year of project
operation. The analysis was performed at a conceptual level, and a site visit was not conducted.
Detailed study is required as the project progresses from the concept stage. This section
provides comments on the report, and the remainder of the memorandum presents the results
of the biomass district energy analysis.
1. A biomass district energy system utilizing wood chips has a similar payback to pellet
options identified for individual buildings in the Preliminary Feasibility Assessment. It is
recommended that a biomass district energy system be included as an option for
analysis as the project moves forward. The high school would be the key load for the
project, and addition of other buildings should be evaluated for cost benefit.
2. Further evaluation of the existing building heating systems may yield opportunities for
equipment upgrades and use of VFD controlled pumps to improve efficiency and reduce
energy costs.
3. The pool load is a significant base load and should be identified and included in the
analysis of a biomass system involving the high school.
4. Additional analysis requires the following information:
a) Fuel oil usage, building areas, and a description of heat loads at the PSMH facility.
b) Details on pool size, operating conditions and schedule, and HVAC equipment.
c) Wood chip and pellet availability and cost.
d) Details on building envelopes and future plans for renovation or expansion.
e) Information on potential hot water piping routes, geotechnical, ownership, etc.
Seward, AK Project, Assessment Review and District Energy Concept Evaluation July 26, 2011
Wood Education and Resource Center
www.na.fs.fed.us/werc
2
2.0 Summary of District Energy System Analysis
Altogether, the eight (8) buildings in the proposed system are estimated to use 160,200 gallons
of fuel oil annually at a cost of $600,750 assuming a fuel oil cost of $3.75/gallon. A 4.5
mmBtu/hr biomass boiler system would offset over 80% of this fuel oil usage producing an
annual savings of $230,000. The addition of a backpressure steam turbine and the installation
of a steam boiler operating at 175 psig in place of a hot water boiler would produce an
additional $40,000 in annual savings from the value of electricity generated. Concept‐level
capital costs are $2.5 million for the heat only system and $2.85 million for the CHP system.
The simple payback is 11 years for the heat only system and 10.5 years for the CHP system
assuming a wood chip cost of $100 per ton. It is recommended that this system be considered
along with the pellet systems presented for the individual school buildings in the “Preliminary
Feasibility Assessment for Wood Pellet Heating in Seward, Alaska” report.
3.0 Current Energy Use and Heating System
The buildings included in this project include Seward Elementary, Middle, and High Schools
(Kenai Peninsula Borough School District), along with the Providence Seward Mountain Haven
(PSMH) assisted living center. The assisted living center consists of a commons along with four
(4) identical residence units. Altogether, the eight (8) buildings use 160,200 gallons of fuel oil
annually at a cost of $600,750. The current fuel use for each building is shown in Table 1.
Table 1 – Annual fuel usage for each building.
Building Fuel Oil Usage
(gal/yr)
Building Footprint
(sf)
Energy Demand
(Btu/sf)
Seward Elementary 19,000 52,199 50,595
Seward Middle School 15,700 37,500 58,195
Seward High School 99,200 75,373 182,941**
PSMH Commons 15,000* 16,000* 130,000
4 PSMH Residences 11,300* 24,000* 65,500
* Fuel usage, building footprint, and energy demand for PSMH facility is estimated.
**High school energy demand includes heat for indoor pool.
Each building is equipped with a pair of hot water fuel oil boilers for full redundancy. The three
school buildings use a hot water distribution system with air handlers throughout the building.
Domestic hot water generation is included in the hot water distribution system for all of the
buildings along with pool heating at the high school. The PSMH residences use a radiant in‐floor
heating system. The boilers also generate hot water through two (2) indirect fired hot water
heaters and provide heat to sidewalks for ice and snow management during the winter season.
The only information available regarding the heating system at PSMH Commons at the time of
this analysis was that it supplied a portion of the domestic hot water in addition to space
heating. A 70 gallon direct fired hot water is also onsite. The manufacturer, installation date,
capacity, and assumed efficiency of the heating systems are summarized in Table 2. The
condition of all equipment in the schools was noted as good to excellent condition. The state of
the PSMH equipment was unknown at the time of this analysis.
Seward, AK Project, Assessment Review and District Energy Concept Evaluation July 26, 2011
Wood Education and Resource Center
www.na.fs.fed.us/werc
3
Table 2 – A summary of the heating systems in each building.
Building Number
of Boilers
Boiler
Manufacturer
Boiler
Installation
Date
Capacity
per Boiler
(mBtu/hr)
Assumed
Efficiency
Seward Elementary 2 Kewanee 1989 1,704 77%
Seward Middle
School 2 Hurst 2005 1,876 77%
Seward High School 2 Cleaver‐
Brooks
1983 1,983 77%
PSMH Commons 2 Burnham Unknown 1,167 72%
4 PSMH Residences 8 Burnham Unknown 260 72%
mBtu/hr = thousand Btu per hour
3.0 Proposed Biomass System
A 4.5 mmBtu/hr wood chip fueled biomass boiler could supply over 80% of the heat demand.
Fuel oil would be used to satisfy the summer domestic hot water and pool heating loads along
with providing backup to meet peak demands. This would require 2,509 tons of wood chips and
32,040 gallons of fuel oil annually. The resulting potential energy savings for each building is
shown in Table 3 below. Altogether, this presents a total estimated system savings of $230,000
annually.
Table 3 – Annual energy savings for by building.
Building Annual Energy
Savings
Seward Elementary $27,200
Seward Middle School $22,500
Seward High School $142,000
PSMH Commons $21,500
4 PSMH Residences $16,800
Total $230,000
The estimated capital investment for a 4.5 mmBtu/hr hot water system is $2.5 million including
the boiler, fuel handling system, boiler housing, and 3,500 feet of underground distribution
piping. Adding the capability for backpressure steam CHP adds $350,000 to the overall cost for
a total of $2.85 million and requires an additional 200 tons of wood chips annually. This
additional cost includes a steam boiler rated at 200 psig that operates at 175 psig coupled to a
backpressure steam turbine/generator. The steam pressure is reduced by the turbine from 175
psig to 5 psig. This capability introduces another $40,000 in annual savings for the electricity
generated. This value assumes that all of the $0.15/kWh retail electric cost is recovered.
Further investigation into the ability to utilize electric onsite and net metering rules in Alaska is
required to verify the actual value of electric generated.
Seward, AK Project, Assessment Review and District Energy Concept Evaluation July 26, 2011
Wood Education and Resource Center
www.na.fs.fed.us/werc
4
Financial analysis was performed on each of the options. Simple payback was calculated and a
cash flow analysis was performed assuming financing of capital costs over 20 years at 5%.
Avoided costs for replacement of conventional heating equipment were not calculated as part
of the cash flow analysis, and would improve the overall economics of the systems. The details
of the cash flow analyses are attached to this memorandum. Table 4 shows the results of the
financial analyses.
Table 4 – Financial analysis results.
Configuration Simple Payback
Period (yrs) 1st Year Cash Flow 25‐yr Present
Value
Heat only 11 $19,089 $3,454,191
CHP 10.5 $27,468 $4,080,159
Table 5 displays the assumptions used in the analysis.
Table 5 – Assumptions used in analysis.
Item Value and Units Source
Fuel oil heat content 139,000 Btu/gal WERC assumption
Wood chip heat content 7.1 mmBtu/ton WERC assumption
Fuel oil price $3.75/gal Reported value
Wood chip price $100/ton Reported value
Biomass boiler efficiency 71% WERC assumption
Steam heat content 1000 Btu/lb WERC assumption
Average number of HDD 9,188 USFS Report*
Average temperature 35.5 °F National Weather
Service**
Electricity generated per 1000
lb steam 23 kWh WERC assumption
Value of electricity $0.15/kWh US EIA***
Financing Period 20 years WERC Assumption
Financing Rate 5% WERC Assumption
*Parrent, Daniel. “Preliminary Feasibility Assessment for Wood Pellet Heating in
Seward Alaska” US Forest Service. 7/11/11.
**National Weather Service Website:
http://pafc.arh.noaa.gov/climate/climPage.php?pId=temp
***US EIA Website:
http://www.eia.gov/cneaf/electricity/st_profiles/e_profiles_sum.html
Attachment A1Concept‐level Financial AnalysisHeat‐OnlySeward, Alaska Project7/26/2011Input Variables Value Units YearReduction in Fuel Oil/Electric Costs Biomass Fuel Costs Additional O&M Costs for Biomass System Financing Payments Net Cash Flow Cash Flow Present Value Cumulative Cash Flow (Present Value) Amount Financed 2,500,000 $ 1 480,600$ (250,905)$ (10,000)$ (200,606)$ 19,089$ 19,089$ 19,089$ Finance Period 20 # years 2 499,824$ (258,432)$ (10,300)$ (200,606)$ 30,486$ 29,598$ 48,686$ Interest Rate 0.05 decimal 3 519,817$ (266,185)$ (10,609)$ (200,606)$ 42,417$ 39,982$ 88,668$ Fuel Oil Offset 128,160 gal/yr 4 540,610$ (274,170)$ (10,927)$ (200,606)$ 54,905$ 50,246$ 138,914$ Fuel Oil Price 3.75$ $/gal 5 562,234$ (282,396)$ (11,255)$ (200,606)$ 67,977$ 60,397$ 199,311$ Electric Offset‐ kWh 6 584,723$ (290,867)$ (11,593)$ (200,606)$ 81,657$ 70,438$ 269,749$ Electric Price 0.15$ $/kWh 7 608,112$ (299,593)$ (11,941)$ (200,606)$ 95,972$ 80,375$ 350,124$ Wood Chip Usage 2509 tons/yr 8 632,437$ (308,581)$ (12,299)$ (200,606)$ 110,950$ 90,213$ 440,337$ Biomass Price 100.00$ $/ton 9 657,734$ (317,839)$ (12,668)$ (200,606)$ 126,621$ 99,956$ 540,293$ Oil/Elec Inflation Rate 0.04 decimal 10 684,044$ (327,374)$ (13,048)$ (200,606)$ 143,016$ 109,610$ 649,902$ Biomass Inflation Rate 0.03 decimal 11 711,405$ (337,195)$ (13,439)$ (200,606)$ 160,165$ 119,178$ 769,080$ General Inflation Rate 0.03 decimal 12 739,862$ (347,311)$ (13,842)$ (200,606)$ 178,102$ 128,665$ 897,744$ Additional O&M Costs 10,000 $/yr 13 769,456$ (357,730)$ (14,258)$ (200,606)$ 196,862$ 138,075$ 1,035,819$ 14 800,234$ (368,462)$ (14,685)$ (200,606)$ 216,480$ 147,413$ 1,183,232$ 15 832,244$ (379,516)$ (15,126)$ (200,606)$ 236,995$ 156,682$ 1,339,914$ 16 865,533$ (390,901)$ (15,580)$ (200,606)$ 258,446$ 165,887$ 1,505,800$ 17 900,155$ (402,629)$ (16,047)$ (200,606)$ 280,873$ 175,031$ 1,680,831$ 18 936,161$ (414,707)$ (16,528)$ (200,606)$ 304,319$ 184,118$ 1,864,949$ 19 973,607$ (427,149)$ (17,024)$ (200,606)$ 328,828$ 193,152$ 2,058,101$ 20 1,012,552$ (439,963)$ (17,535)$ (200,606)$ 354,447$ 202,136$ 2,260,237$ 21 1,053,054$ (453,162)$ (200,606)$ 399,285$ 221,075$ 2,481,311$ 22 1,095,176$ (466,757)$ (200,606)$ 427,813$ 229,970$ 2,711,282$ 23 1,138,983$ (480,760)$ (200,606)$ 457,617$ 238,827$ 2,950,109$ 24 1,184,542$ (495,182)$ (200,606)$ 488,754$ 247,647$ 3,197,756$ 25 1,231,924$ (510,038)$ (200,606)$ 521,280$ 256,435$ 3,454,191$ Present Value 3,454,191$ WERC US Forest Service Wood Education and Resource CenterDate Printed: 7/26/2011
Attachment A2Concept‐level Financial AnalysisCHPSeward, Alaska Project7/26/2011Input Variables Value Units YearReduction in Fuel Oil/Electric Costs Biomass Fuel Costs Additional O&M Costs for Biomass System Financing Payments Net Cash Flow Cash Flow Present Value Cumulative Cash Flow (Present Value) Amount Financed 2,850,000 $ 1 542,060$ (270,900)$ (15,000)$ (228,691)$ 27,468$ 27,468$ 27,468$ Finance Period 20 # years 2 563,742$ (279,027)$ (15,450)$ (228,691)$ 40,574$ 39,392$ 66,860$ Interest Rate 0.05 decimal 3 586,292$ (287,398)$ (15,914)$ (228,691)$ 54,289$ 51,173$ 118,033$ Fuel Oil Offset 128,160 gal/yr 4 609,743$ (296,020)$ (16,391)$ (228,691)$ 68,641$ 62,817$ 180,849$ Fuel Oil Price 3.75$ $/gal 5 634,133$ (304,900)$ (16,883)$ (228,691)$ 83,659$ 74,330$ 255,179$ Electric Offset 409,731 kWh 6 659,498$ (314,047)$ (17,389)$ (228,691)$ 99,371$ 85,718$ 340,897$ Electric Price 0.15$ $/kWh 7 685,878$ (323,469)$ (17,911)$ (228,691)$ 115,807$ 96,987$ 437,884$ Wood Chip Usage 2709 tons/yr 8 713,314$ (333,173)$ (18,448)$ (228,691)$ 133,001$ 108,142$ 546,026$ Biomass Price 100.00$ $/ton 9 741,846$ (343,168)$ (19,002)$ (228,691)$ 150,985$ 119,189$ 665,215$ Oil/Elec Inflation Rate 0.04 decimal 10 771,520$ (353,463)$ (19,572)$ (228,691)$ 169,794$ 130,133$ 795,348$ Biomass Inflation Rate 0.03 decimal 11 802,381$ (364,067)$ (20,159)$ (228,691)$ 189,464$ 140,979$ 936,327$ General Inflation Rate 0.03 decimal 12 834,476$ (374,989)$ (20,764)$ (228,691)$ 210,032$ 151,732$ 1,088,058$ Additional O&M Costs 15,000 $/yr 13 867,855$ (386,239)$ (21,386)$ (228,691)$ 231,539$ 162,396$ 1,250,455$ 14 902,569$ (397,826)$ (22,028)$ (228,691)$ 254,024$ 172,978$ 1,423,433$ 15 938,672$ (409,761)$ (22,689)$ (228,691)$ 277,531$ 183,481$ 1,606,914$ 16 976,219$ (422,053)$ (23,370)$ (228,691)$ 302,105$ 193,909$ 1,800,823$ 17 1,015,268$ (434,715)$ (24,071)$ (228,691)$ 327,791$ 204,268$ 2,005,091$ 18 1,055,878$ (447,756)$ (24,793)$ (228,691)$ 354,638$ 214,562$ 2,219,653$ 19 1,098,113$ (461,189)$ (25,536)$ (228,691)$ 382,696$ 224,794$ 2,444,447$ 20 1,142,038$ (475,025)$ (26,303)$ (228,691)$ 412,019$ 234,969$ 2,679,416$ 21 1,187,719$ (489,276)$ (228,691)$ 469,753$ 260,091$ 2,939,506$ 22 1,235,228$ (503,954)$ (228,691)$ 502,583$ 270,163$ 3,209,669$ 23 1,284,637$ (519,072)$ (228,691)$ 536,874$ 280,190$ 3,489,860$ 24 1,336,023$ (534,645)$ (228,691)$ 572,687$ 290,176$ 3,780,035$ 25 1,389,464$ (550,684)$ (228,691)$ 610,088$ 300,123$ 4,080,159$ Present Value 4,080,159$ WERC US Forest Service Wood Education and Resource CenterDate Printed: 7/26/2011