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HomeMy WebLinkAboutHydaburg City Schools Wood Heating Analysis - Draft Wood Heating Feasibility Analysis Preliminary Report December 3, 2010 Hydaburg City Schools Hydaburg, Alaska Prepared for: Hydaburg City School District Prepared by: Alaska Energy Engineering LLC 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net T.R. Miles Technical Consultants 1470 SW Woodward Way Portland, OR, 97225 Tel. 503-292-0107 Fax. 503-292-2919 tmiles@trmiles.com Alaska Energy Engineering LLC Hydaburg City Schools 1 Wood Heating Feasibility Analysis Table of Contents Executive Summary .................................................................................. 1  Introduction ............................................................................................... 2  Life Cycle Cost Analysis .......................................................................... 5  Appendix A Heating System Schematic Diagrams  Appendix B Energy Analysis  Appendix C Life Cycle Cost Analysis  EXECUTIVE SUMMARY The Hydaburg Schools campus consists of an elementary school, high school, and a gymnasium facility, all located in close proximity. Each building has an oil-fired boiler plant that is in good condition. The school district is interesting in converting the schools to wood heating, using wood pellets or chips, to reduce heating costs. Four wood heating options were evaluated: • Baseline – Fuel Oil Boilers (Status Quo) • Alternative 1 – Central Pellet Heating Plant • Alternative 2 – Modular Pellet Heating Plant • Alternative 3 – Distributed Pellet Heating Plants • Alternative 4 – Central Chip Heating Plant A long-term, stable wood fuel supply is essential to converting the facilities to wood heating. Sealaska Corporation has committed to delivering pellets to Hydaburg bimonthly. Viking Lumber in Craig, Alaska has committed to delivering chips to Hydaburg for $75 per ton. This price is much higher than the $30 per ton price for current deliveries to the Craig chip boiler because of higher transportation costs. The wood heating analysis determined that there is little economic incentive to convert the buildings to wood heating. Under most scenarios of modest variations in pellet costs or energy inflation, the Baseline heating system offers the lower life cycle cost. The reason this finding differs markedly from other regions of North America where the use of wood heating is growing is that the Hydaburg Schools will pay higher wood energy costs and higher construction costs than comparable systems in other locales. The findings represent the challenges of converting existing buildings in Southeast Alaska to wood heat. Alaska Energy Engineering LLC Hydaburg City Schools 2 Wood Heating Feasibility Analysis INTRODUCTION This report presents a wood heating analysis for Hydaburg City Schools in Hydaburg, Alaska. The analysis compares the 25-year life cycle cost of retaining the existing fuel oil heating systems with converting to wood heating systems. The intent of this analysis is to determine the lowest cost system for heating the schools. It is performed by Jim Rehfeldt, P.E. of Alaska Energy Engineering LLC with technical assistance by: • Ben Haight, P.E., Haight & Associates, Inc. • Tom Miles, T R Miles Technical Consultants, Inc. The Hydaburg Schools campus consists of an elementary school, high school, and a gymnasium facility, all located in close proximity. Each building has an oil-fired boiler plant that is in good condition. The school district is interesting in converting the schools to wood heating, using wood pellets or chips, to reduce heating costs. An option to utilize a cogeneration wood plant to generate electricity and supply heat is also evaluated. The options for heating the school buildings, which are defined later in greater detail, are: • Baseline – Fuel Oil Boilers (Status Quo): This option retains the existing fuel oil boiler heating systems located in each building. • Alternative 1 – Central Pellet Heating Plant: This option constructs a central heating plant behind the gymnasium and connects the buildings with direct bury hydronic piping. The plant includes a lead pellet boiler and backup fuel oil boilers (relocated from the elementary school). • Alternative 2 – Modular Pellet Heating Plant: This option constructs a modular pellet heating plant behind the gymnasium, connects the buildings with direct bury hydronic piping, and retains the existing fuel oil boiler plants as backup. • Alternative 3 – Distributed Pellet Heating Plants: This option constructs a modular pellet heating system for each building and retains the existing fuel oil boilers as backup. • Alternative 4 – Central Chip Heating Plant: This option constructs a central heating plant behind the gymnasium and connects the buildings with direct bury hydronic piping. The plant includes a lead chip boiler and two backup fuel oil boilers (relocated from the elementary school). The opportunity for Conversion to wood heating will present several challenges to Hydaburg Schools. For the system to succeed, the Owner must take a more active role in keeping the system operating optimally: monitoring the equipment daily and paying attention to the quality of the fuel supply. It will also be important for the community to be proactive on wood supply issues to insure a long-term fuel supply. Hydaburg schools currently contracts for maintenance and repair of the existing fuel oil heating systems at a rate of $80.00 per hour. Conversion to a wood heating system will require more maintenance than needed for the existing fuel oil boilers. Contracted maintenance would be cost prohibitive for wood heating systems that require daily operating and maintenance work, so in-house expertise will be essential to the economics of the system. Alaska Energy Engineering LLC Hydaburg City Schools 3 Wood Heating Feasibility Analysis Methodology The heating options are evaluated using life cycle cost analysis which compares construction, operating, and energy costs of the heating options over a 25-year period. The analysis takes into account energy inflation and the time value of money to compare the total ownership costs of each system. Economic Factors The following economic factors are used in the analysis: • Nominal Interest Rate: The nominal rate of return on an investment, without regard to inflation, is set at 5%. • Inflation Rate: The average inflationary change in prices over time is set at 2% per year. • Economic Period: Set at a 25-year economic period with construction beginning in 2011. Fuel Oil Fuel oil currently costs $3.22 per gallon for a seasonally adjusted blend of #1 and #2 fuel oil. From 1992 to 2006, fuel oil inflation averaged 6.3%. During 2007/2008, prices escalated at 31%, then deescalated at 18% per year. Since 2008, fuel oil inflation has been 7% per year. It is assumed that fuel oil prices will inflate at 6% per year for the next 25 years. Inflating today’s cost at 6% results in a price of $3.41 per gallon in 2011. Wood Pellets Pellets are a manufactured product with closest suppliers in Washington, Oregon, and British Columbia. Benefits of using pellets for heating are: • Pellets are comparable to fuel oil in terms of quality, prices are market-based, and the heating systems have similar operating and maintenance requirements. • Manufactured to established standards for heating value and moisture content. • There is potential for local suppliers to manufacturer pellets. Sealaska Corporation is committed to purchasing pellets from the Pacific Northwest and supplying them to Hydaburg at a current price of $300 per short ton. Wood pellet inflation has historically averaged 1% per year. The cost of pellets delivered to Hydaburg will have higher transportation costs, which will inflate with general inflation and fuel oil inflation. To account for these costs, a pellet inflation rate of 2% per year is used. Inflating today’s cost at 2% results in a price of $306 per ton in 2011. Wood Chips Chips are a locally produced material derived from waste wood products, slash, or whole trees. Issues associated with using chips are: • Local resource likely to have greater price stability than fuel oil and pellets. • Wood from Southeast Alaska has a high moisture content, which directly affects the heating value of the material. The chips must be dried to acceptable standards prior to burning. • The chips must meet quality specifications for chip size and moisture content. Chips that are too large can jam the feeder, too small and they inhibit combustion, too wet and they can freeze to the storage bin and reduce heating output. Alaska Energy Engineering LLC Hydaburg City Schools 4 Wood Heating Feasibility Analysis The Viking Lumber Mill in Craig, Alaska currently supplies chips to the Craig chip boiler at a price of $30 per ton. Viking has verbally committed to deliver chips to Hydaburg for $75 per ton; the higher cost is due to increased transportation distance of 30 miles to Hydaburg. The cost of producing wood chips is likely to inflate at the national average of 1% per year. Transportation costs are likely to inflate at a higher rate. To account for these costs, a chip inflation rate of 1.5% per year is used. Inflating today’s cost at 1.5% results in a price of $76.10 per ton in 2011. Sensitivity Analysis Energy prices will have he greatest effect on the life cycle cost of the heating systems. A sensitivity analysis is applied to the findings to see how they change with modest changes in energy prices and inflation. The following differences are evaluated: • Fuel Oil Inflation: A base case of 6% per year is compared to a low case of 4% and a high case of 8%. • Pellet Inflation: A base case of 2% per year is compared to a low case of 1% and a high case of 4%. • Chip Inflation: A base case of 1.5% per year is compared to a high case of 3%. • Pellet Costs: Sealaska Corporation’s pellet distribution company is currently in its startup phase. It is possible that high or low demand will cause them to alter their prices in the future. A base case of $300 per ton is compared to a low case of $275 per ton and $325 per ton Summary of Economic and Energy Factors The following table summarizes the economic and energy factors used in the analysis. Summary of Economic and Energy Factors Factor Base Case Low Case High Case Nominal Discount Rate 5% - - General Inflation Rate 2% - - Fuel Oil Cost $3.22/gal - - Chip Cost $75.00/ton - - Pellet Cost $300/ton $275/ton $325/ton Fuel Oil Inflation 6% 4% 8% Pellet Inflation 2% 1% 3% Chip Inflation 1.5% 1% 2% Alaska Energy Engineering LLC Hydaburg City Schools 5 Wood Heating Feasibility Analysis LIFE CYCLE COST ANALYSIS Cogeneration Option The option of using a cogeneration plant utilizing wood products to produce both electricity and heat was briefly explored, but not fully developed because of the high initial cost and the recurring annual cost for fuel and maintenance. This type of plant burns wood products in the form of pellets, chips, or bricks to produce gas for a reciprocating engine. The engine combined with a generator utilizing commonly manufactured equipment produces electricity. Typically, an engine driven generator utilizes 30 to 33 percent of the energy combusted. The remaining energy is dissipated as heat to the radiator (35 percent), engine radiation (10 percent) and exhaust (25 percent). Of the heat generated, approximately 60 percent of it, or 45 percent of the total energy combusted can be recovered for heating buildings. The math works like this based on general “rules-of-thumb”: • 3 pounds of dry wood product will produce 1 KWh of electrical energy. • A 100 KW generator requires combustion of 300 pounds of wood product every hour to maintain full capacity. • 300 pounds of dry wood product produces 1,500,000 Btu’s of energy (15,000 Btu’s per KWh). • The waste heat provided is 675,000 Btu’s. • One gallon of diesel (135,000 Btu’s) produces approximately 12.5 KWh with a reciprocating engine. This equates to 10,800 Btu’s per KWh; 1,080,000 Btu’s for one hour operation at 100 KW. • The waste heat provided from a 100 KW diesel fired engine is 486,000 Btu’s. • The cost for fuel to power a 100 KW generator based on pellets is $46 per hour. This comes to $0.46 per KWh bare cost for electricity. • The comparable cost of fuel for a diesel driven generator is approximately $28 per hour for the same production. This is $0.28 per KWh bare cost for electricity. • The construction of a gasification type cogeneration system costs approximately $1,000,000 for a 100 KW generator ($10,000 per KW). • Construction of a plant with diesel generators typically cost $1,000 per KW. A 100 KW unit costs approximately $100,000. The initial cost for a wood fuel powered generator is approximately ten times greater than a diesel fired unit. The fuel cost for a wood fuel powered generator is approximately 1.6 times the fuel for a diesel fired generator. Although the waste energy recoverable from a wood fired generator is greater than that from a diesel fired generator (1.4 times), it is not adequate to offset the other costs. Heating System Options The schools are currently heated by individual fuel oil boiler plants. The elementary school and gymnasium have two boilers and the high school has one. Each building has a hydronic distribution system that supplies heating water to the building. The alternatives consider central pellet and chip plants, a modular pellet plant and distributed modular pellet plants. Distributed modular chip plants were not considered due to the high cost to construct chip storage and drying systems for each building, and high operating costs. Alaska Energy Engineering LLC Hydaburg City Schools 6 Wood Heating Feasibility Analysis Baseline: Fuel Oil Boilers (Status Quo) This option retains the existing heating plants. The scope includes: • Retain the two elementary school boilers. • Retain the two gymnasium boilers. • Retain the one high school boiler. Alternative 1: Central Pellet Heating Plant This alternative replaces the existing heating plants with a central pellet boiler plant located behind the gymnasium. The central plant consists of a pellet boiler and two fuel oil boilers relocated from the elementary school. The boilers are connected in a primary/secondary piping system. Distribution piping is installed through the gymnasium with direct bury branches to the high school and gymnasium. It is likely that this alternative would be the optimal pellet heating plant if the campus was being newly constructed because it centralizes and simplifies the heating system. Pellets offer a stable fuel quality and is supplied via a keep-full contract. While operating and maintenance requirements are higher than the Baseline, it has the least equipment of the wood heating options. The scope includes: • Construct a boiler room behind the gymnasium. • Install a 1,000 MBH (300 kW) pellet boiler and auger system in the new building. • Install a 75 ton pellet silo. A 75 ton storage capacity is required for bimonthly deliveries, which is the delivery frequency Sealaska Corporation can initially meet. • Remove the fuel oil boilers and fuel tanks from the high school and elementary school • Remove the fuel oil boilers from the gymnasium. • Relocate the elementary school boilers to the new boiler room and extend the gymnasium fuel oil piping to the boilers. • Connect the boilers in a primary/secondary piping system. Install distribution piping through the gymnasium with direct bury branches to the high school and elementary school. A heat exchanger in each boiler room separates the glycol distribution system from the building system. Alternative 2: Modular Pellet Heating Plant This alternative constructs a modular pellet boiler plant behind the gymnasium and retains the fuel oil boilers in each building. Distribution piping is installed through the gymnasium with direct bury branches to the high school and gymnasium. This alternative reduces construction costs by using a less expensive modular pellet boiler plant and retaining the fuel oil boiler plants in each building for backup. There is more equipment to maintain and controls are required in each building to interface the pellet plant with the building boilers. The scope includes: • Construct a modular 1,000 MBH (300 kW) pellet boiler plant and auger system behind the gymnasium. • Install a 75 ton pellet silos. A 150 ton storage capacity is required for quarterly deliveries, which is the delivery frequency Sealaska Corporation can meet. Alaska Energy Engineering LLC Hydaburg City Schools 7 Wood Heating Feasibility Analysis • Retain the heating systems in the elementary school, gymnasium, and high school. • Install distribution piping through the gymnasium with direct bury branches to the high school and elementary school. A heat exchanger in each boiler room separates the glycol distribution system from the building system. Alternative 3: Distributed Pellet Heating Systems This alternative constructs modular pellet boiler systems, including pellet storage, at each building. The pellet and fuel oil boilers are connected in a primary/secondary piping configuration. A control system operates the boilers in a lead/lag/standby configuration. The alternative utilizes gangs of smaller, less expensive pellet boilers to heat each building and eliminates the distribution system. The system has more equipment to maintain and higher maintenance costs. The scope includes: • Construct a 500 MBH (145 kW) modular pellet boiler plant and auger system with 30 ton silo for the elementary school. Retain the fuel oil boilers for backup. • Construct a 190 MBH (55 kW) modular pellet boiler plant and auger system with 15 ton silo for the high school. Retain the fuel oil boiler for backup. • Construct a 425 MBH (125 kW) modular pellet boiler plant and auger system with 30 ton silo for the gymnasium. Retain the fuel oil boilers for backup. Alternative 4: Central Chip Heating Plant This alternative replaces the existing heating plants with a central chip boiler plant located behind the gymnasium. The central plant consists of a chip boiler and two fuel oil boilers relocated from the elementary school. The boilers are connected in a primary/secondary piping system. Distribution piping is installed through the gymnasium with direct bury branches to the high school and gymnasium. This alternative represents the optimal chip heating plant for a newly constructed campus because it centralizes and simplifies the heating system. It utilizes locally produced wood chips rather than imported energy. The scope includes: • Construct a boiler room behind the gymnasium. • Install a 1,800 MBH (540 kW) chip boiler and auger system in the new building. • Construct a chip storage bin with chip drying system supplying warm air through the bin floor. The chip boiler has a higher capacity (540 kW) than the pellet boiler (300 kW) to supply the chip drying system. • Remove the fuel oil boilers and fuel tanks from the high school and elementary school • Remove the fuel oil boilers from the gymnasium. • Relocate the elementary school boilers to the new boiler plant and extend the gymnasium fuel oil piping to the boilers. • Connect the boilers in a primary/secondary piping system. Install distribution piping through the gymnasium with direct bury branches to the high school and elementary school. A heat exchanger in each boiler room separates the glycol distribution system from the building system. Alaska Energy Engineering LLC Hydaburg City Schools 8 Wood Heating Feasibility Analysis Construction Costs The existing fuel oil boiler heating systems (Baseline) are in good condition and do not require an initial investment to retain them for the next 25-years. Converting the buildings to wood heat will require an investment from $1,510,000 to $2,960,000. This investment includes the wood heating plant, retaining backup fuel oil plants, and, for the Central Plant options, constructing a building and installing distribution pipelines to the High School and Elementary School. The cost estimates are based on the work being performed by off-island contractors. Wood heating systems are emerging systems in Southeast Alaska and the estimates recognize that bidders may include costs for installing unfamiliar systems in a remote community. The cost estimates also include mobilization and demobilization of equipment and personnel and lodging and per diem. The following table summarizes the construction costs. Construction Cost Estimates Baseline Alternative 1 Alternative 2 Alternative 3 Alternative 4 Fuel Oil Boilers Central Pellet Modular Pellet Distributed Modular Central Chip Cost (Status Quo) Boiler Plant Boiler Plant Pellet Boilers Boiler Plant Mobilization $ 0 $ 200,000 $ 160,000 $ 230,000 $ 200,000 Heating Building 0 250,000 0 0 340,000 Heating Plant 0 1,680,000 1,250,000 1,280,000 2,000,000 Distribution 0 420,000 470,000 0 420,000 Total $ 0 $ 2,550,000 $ 1,880,000 $ 1,510,000 $ 2,960,000 The Baseline system requires no initial construction costs to continue heating the buildings. Alternative 3 has the lowest wood heating construction costs because it does not have a distribution system and uses smaller, less expensive, modular pellet boilers. The tradeoff is that there is more installed equipment that must be maintained. This is an important factor for a rural community like Hydaburg that does not have spare parts or expertise in close proximity. Operating Costs Operating costs include labor and materials to operate, maintain, and replace the heating systems over the 25-year period. Hydaburg schools currently contracts for maintenance and repair of the existing fuel oil heating systems at a rate of $80.00 per hour. Contracted maintenance would be cost prohibitive for wood heating systems that require daily operating and maintenance work. It is assumed that in-house labor at a fully loaded cost of $42.00 per hour if a wood heating system is constructed. Operating Labor The existing fuel oil boilers operate the majority of the year without daily oversight. Wood boilers, however, require daily checks. • Fuel Oil Boilers: None • Pellet Boiler: ½ hour per day to check boiler and auger operation. • Chip Boiler: 2 hours daily to check boilers, clear fuel feed issues, and remove slag from grating. Alaska Energy Engineering LLC Hydaburg City Schools 9 Wood Heating Feasibility Analysis Maintenance All boilers require annual maintenance to clean the firebox, maintain burners, and check components. • Fuel Oil Boilers: 12 hours per year to clean the tubes and tune the burner. • Pellet Boiler: 48 hours per year to clean the tubes and maintain the boiler and augers. • Chip Boiler: 80 hours per year to clean the tubes and maintain the boiler and augers. • Pumps: $200 per year for maintenance and periodic replacement. Replacement Periodic replacement of boilers and pumps will be necessary to keep the heating systems operational. • Fuel Oil Boiler Plants 1. Elementary School Boilers: Remaining service life of 25 years; no replacement. 2. High School Boilers: Remaining service life of 20 years; replace in Year 20. 3. High School Fuel Tank: Remaining service life of 10 years; replace in Year 10. 4. Gymnasium Boilers: Remaining service life of 10 years; replace in Year 10. • Pellet and Chip Boiler: Expected service life of 18 years; replace in Year 18. • Augers: Expected service life of 10 years; replace in Year 10 and Year 20. Summary The following table provides a comparison of operating, maintenance, and replacement costs for the heating options. Operating Cost Estimates Baseline Alternative 1 Alternative 2 Alternative 3 Alternative 4 Fuel Oil Boilers Central Pellet Modular Pellet Distributed Modular Central Chip Cost (Status Quo) Boiler Plant Boiler Plant Pellet Boilers Boiler Plant Yearly Costs Operating $ 0 $ 8,000 $ 8,000 $ 23,000 $ 31,000 Maintenance 6,000 10,000 11,000 21,000 11,000 Total $ 6,000 $ 18,000 $ 19,000 $ 44,000 $ 42,000 Life Cycle Cost (25-year) Operating $ 0 $ 130,000 $ 130,000 $ 400,000 $ 540,000 Maintenance 100,000 170,000 190,000 370,000 200,000 Replacement 80,000 270,000 240,000 120,000 310,000 Total $ 180,000 $ 580,000 $ 580,000 $ 890,000 $ 1,050,000 The wood heating systems have significantly higher operating costs than the existing fuel oil boilers. The central plant options have lower operating costs than the distributed boiler option, because it has less equipment. The chip boiler operating costs are the greatest due to significantly higher operating and maintenance requirements. Alaska Energy Engineering LLC Hydaburg City Schools 10 Wood Heating Feasibility Analysis Energy Costs Energy Costs An energy analysis was performed to estimate the annual heating load and purchased energy requirement of each heating option. • For the pellet boiler options, it is assumed that the pellet boiler will supply 95% of the heating load and the fuel oil boilers will supplement during cold weather and during maintenance periods. • For the chip boiler options, it is assumed that the chip boiler will supply 90% of the heating load and the fuel oil boiler will supplement during cold weather and during maintenance periods. It is also assumed that 15% of the input energy will be consumed drying the chips. • Distribution losses are assumed to be 5% for the central plant options. The energy analysis also includes electric consumption of the boilers, augers, dryers, and induction fans, which is a relatively minor contributor to overall energy costs. Energy analysis calculations are provided in Appendix B. The following table summarizes the energy consumption and costs of each option. Energy Consumption Fuel Oil Pellets Chips 2011 Life Cycle Heating Option (gallons) (tons) (tons) Energy Cost Energy Cost Baseline: Fuel Oil Boilers (Status Quo) 37,500 - - $128,000 $3,630,000 Alternative 1: Central Pellet Boiler Plant 1,970 259 - $110,000 $2,100,000 Alternative 2: Modular Pellet Boiler Plant 1,880 266 - $110,000 $2,100,000 Alternative 3: Distributed Pellet Boiler Systems 1,880 253 - $97,000 $1,830,000 Alternative 4: Central Chip Boiler Plant 3,750 - 640 $101,000 $2,040,000 The above table shows that in the first year, wood heating with pellets and chips offers an energy cost savings of 20% and 32%, respectively. The difference becomes greater in future years due to higher fuel oil inflation (6%) than pellet (2%) and chip (1.5%) inflation. Thus the pellet and chip systems have life cycle energy savings of 48% and 52%, respectively. The following table illustrates how energy costs are predicted to increase over time. $0  $100,000  $200,000  $300,000  $400,000  $500,000  $600,000  2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Energy Cost Comparison Baseline: Fuel Oil Boilers (Status Quo) Alternative 1:  Central Pellet Boiler Plant Alternative 4:  Central Chip Boiler Plant Alaska Energy Engineering LLC Hydaburg City Schools 11 Wood Heating Feasibility Analysis Life Cycle Cost Analysis A life cycle cost analysis determined that the Baseline Fuel Oil Boilers (Status Quo) have a remarkably lower life cycle cost than the wood heating options. This heating option has the lowest construction costs and the lowest operating costs. The wood heating systems have lower energy costs, but the energy savings could not offset their higher construction and maintenance costs. The following table shows the life cycle cost comparison. Spreadsheets with detailed breakdowns of the costs are included in Appendix C. Life Cycle Cost Comparison Baseline Alternative 1 Alternative 2 Alternative 3 Alternative 4 Fuel Oil Boilers Central Pellet Central Chip Modular Pellet Distributed Pellet Cost (Status Quo) Boiler Plant Boiler Plant Boiler Plant Boiler Plants Construction Costs $ 0 $ 2,550,000 $ 1,880,000 $ 1,510,000 $ 2,960,000 Annual Costs 180,000 580,000 580,000 890,000 1,050,000 Energy Costs 3,630,000 2,100,000 2,100,000 1,830,000 2,040,000 Present Worth $ 3,810,000 $ 5,230,000 $ 4,560,000 $ 4,230,000 $ 6,050,000 Alternative 3 has the lowest life cycle cost of the wood heating options. This alternative is based on using multiple wood boilers to heat the Elementary School and Gymnasium. This increases the amount of equipment and complexity of the system, which is never desirable in a remote community. While the economic analysis has captured the costs associated with more equipment, there is an added risk associated with a more complex system. The chip option has a considerably higher life cycle cost than all the other options. This result is somewhat counterintuitive as the chips are a local energy source and have the lowest energy cost. The high costs of operating and maintaining a chip plant, including drying the chips, causes this option to be cost prohibitive. The use of wood as a heating source is increasing in North America, primarily because of energy cost savings. The finding that there is no economic incentive for this application does not directly challenge this trend, but does speak to significant realities of wood heating, generally in Southeast Alaska, and specifically constructing the systems in the remote community of Hydaburg. These realities, in the order of important are: • Energy Costs 1. Wood pellets are 33% more expensive in Southeast Alaska and are subject to greater price volatility due to imbedded transportation energy. In the Pacific Northwest, the delivered cost is $200 per ton, Sealaska Corporation is quoting $300 per ton. It is also likely that pellet inflation will be higher in Southeast Alaska due to higher transportation costs. The life cycle cost difference, if this project was in the Pacific Northwest, is approximately $480,000. 2. Wood chips delivered by Viking Lumber to Hydaburg are 250% more expensive than the chips delivered to Craig. This increase represents the added transportation costs to deliver to Hydaburg (36 miles) instead of Craig (6 miles). Reducing the chip costs to $30 per ton would decrease the life cycle cost of the chip options by $490,000. Alaska Energy Engineering LLC Hydaburg City Schools 12 Wood Heating Feasibility Analysis • Construction Costs: Southeast Alaska has higher construction costs, especially in remote communities where contractors must include shipping, transportation and per diem costs. These higher costs must be offset by energy savings, which are reduced by higher wood energy costs. • Existing Construction: The economics of converting to wood heat are also challenged by the generally good condition of the existing fuel oil heating plants, which heavily favors retaining the status quo. If this analysis was comparing new construction or if the existing heating plants were due for replacement, the wood heating systems would compete much better. All three of these factors result in the wood heating systems have higher life cycle costs than the status quo. Sensitivity Analysis A sensitivity analysis was applied to the findings to see how modest variations in pellet prices and energy inflation affect the findings. The table below shows the findings. Sensitivity Analysis – Life Cycle Cost Baseline Alternative 1 Alternative 2 Alternative 3 Alternative 4 Fuel Oil Boilers Central Pellet Modular Pellet Distributed Modular Central Chip Case (Status Quo) Boiler Plant Boiler Plant Pellet Boilers Boiler Plant Base Case 1 $ 3,810,000 $ 5,070,000 $ 4,420,000 $ 4,160,000 $ 5,750,000 Low Pellet Cost, 275/ton $ 3,810,000 $ 4,950,000 $ 4,310,000 $ 4,050,000 $ 5,750,000 High Pellet Cost, $325/ton $ 3,810,000 $ 5,190,000 $ 4,540,000 $ 4,270,000 $ 5,750,000 Low FO Inflation, 4% $ 2,960,000 $ 5,070,000 $ 4,420,000 $ 4,160,000 $ 5,750,000 High FO Inflation, 8% $ 4,980,000 $ 5,070,000 $ 4,420,000 $ 4,160,000 $ 5,750,000 Low Pellet Inf, 1% $ 3,810,000 $ 4,920,000 $ 4,270,000 $ 4,020,000 $ 5,750,000 High Pellet Inf, 3% $ 3,810,000 $ 5,240,000 $ 4,600,000 $ 4,320,000 $ 5,750,000 Low Chip Inf, 1% $ 3,810,000 $ 5,070,000 $ 4,420,000 $ 4,160,000 $ 5,710,000 High Chip Inf, 2% $ 3,810,000 $ 5,070,000 $ 4,420,000 $ 4,160,000 $ 5,800,000 1. Pellets @ 300/ton, Pellet Inflation @ 2%, Fuel Oil Inflation @ 6%, Chip Inflation @ 1.5% Note: Bold indicates lowest life cycle cost The sensitivity analysis shows that for modest changes in pellet costs of energy efficiency, the Status Quo has the lowest life cycle cost. The only scenario where this is not true is the high fuel oil inflation case. As such, the findings are not overly sensitive to modest variations in energy costs and inflation. To add perspective to the sensitivity analysis, the following scenarios were evaluated: • If pellets cost $227 per ton instead of $300, the Baseline and Alternative 3 would have equivalent life cycle costs. • If the chips were free instead of $75 per ton, the Baseline option would still have a lower life cycle cost than Alternative 4. • If pellet and chip inflation was 0%, the Baseline option would still have the lowest life cycle cost. The sensitivity analysis indicates that under moderate changes in pellet costs and energy inflation, the Baseline system has the lowest life cycle cost. Alaska Energy Engineering LLC Hydaburg City Schools Wood Heating Feasibility Analysis Appendix A Heating System Schematic Diagrams Alaska Energy Engineering LLC Hydaburg City Schools Wood Heating Feasibility Analysis Appendix B Energy Analysis Alaska Energy Engineering LLC CALCULATIONS 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Annual Energy Requirements HEATING PLANT SIZING Wood Boilers Exist Building MBH Factor Plant MBH Plant kW Factor Wood kW Elementary 660 69% 457 134 75% 145 High School 250 69% 173 51 75% 55 Gymnasium 570 69% 394 116 75% 125 1,480 1,024 300 325 Existing Elementary School Boiler MBH Size Boiler 1 886 60% Boiler 2 886 60% 1,772 120% ENERGY ANALYSIS Baseline: Fuel Oil Boilers (Status Quo) Gallons LHV, kBtu/gal Gross MMBtu Efficiency Net, MMBTU 37,500 130 4,875 70% 3,413 Alternative 1: Central Pellet Boiler Plant Heating Energy Pellet Boiler (Lead) Net, MMBTU % Load MMBtu/ton Net, tons Dry/Dist Efficiency Gross Tons 3,413 95% 16.0 203 5% 82% 259 Fuel Oil Boilers (lag/standby) Net, MMBTU % Load LHV, kBtu/gal Net, gallons Dry/Dist Efficiency Gross, gallons December 3, 2010 Central Plant Individual Bldgs 3,413 5% 130.0 1,313 5% 70% 1,969 Electric Energy MMBtu MBH Hours Wood Boiler Hours 3,242 1,024 3,800 Equipment HP kW Annual Hours kWh De-ashing System 0.5 0.5 365 170 Pneumatic tube cleaning system 5.0 4.7 52 242 Induced draft fan 15.0 14.0 3,800 53,149 Silo auger 5.0 4.7 3,800 17,716 Feed auger 1.5 1.4 3,800 5,315 Pumping Energy GPM Head η, pump BHP η, motor Hours kWh Wood Boiler Pump 100 20 55% 1.2 90.0% 8,322 8,486 Fuel Oil Boiler Pump 89 20 55% 1.1 90.0% 438 397 Secondary Pumps (Average) 65 40 50% 1.8 92.0% 8,760 12,496 97,972 Page 1 Alaska Energy Engineering LLC CALCULATIONS 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Annual Energy Requirements December 3, 2010 Alternative 2: Modular Pellet Boiler Plant Heating Energy Pellet Boiler (Lead) Net, MMBTU % Load MMBtu/ton Net, tons Dry/Dist Efficiency Gross Tons 3,413 95% 16.0 203 5% 80% 266 Fuel Oil Boilers (lag/standby) Net, MMBTU % Load LHV, kBtu/gal Net, gallons Dry/Dist Efficiency Gross, gallons 3,413 5% 130.0 1,313 0% 70% 1,875 Electric Energy MMBtu MBH Hours Wood Boiler Hours 3,242 1,024 3,800 Equipment HP kW Annual Hours kWh De-ashing System 0.5 0.5 365 170 Pneumatic tube cleaning system 5.0 4.7 52 242 Induced draft fan 15.0 14.0 3,800 53,149 Silo auger 5.0 4.7 3,800 17,716 Feed auger 1.5 1.4 3,800 5,315 Pumping Energy GPM Head η, pump BHP η, motor Hours kWh Wood Boiler Pump 100 20 55% 1.2 90.0% 8,322 8,486 Secondary Pumps (Average) 65 40 50% 1.8 92.0% 8,760 12,496 97,574 Alternative 3: Distributed Pellet Boiler Systems Heating Energy Pellet Boiler (Lead) Net, MMBTU % Load MMBtu/ton Net, tons Dry/Dist Efficiency Gross Tons 3,413 95% 16.0 203 0% 80% 253 Fuel Oil Boilers (lag/standby) Net, MMBTU % Load LHV, kBtu/gal Net, gallons Dry/Dist Efficiency Gross, gallons 3,413 5% 130.0 1,313 0% 70% 1,875 Electric Energy MMBtu MBH Hours Wood Boiler Hours 3,242 1,024 3,800 Equipment HP kW Annual Hours kWh Pneumatic tube cleaning system 1.5 1.4 52 73 Induced draft fan 7.0 6.5 3,800 24,803 Silo auger 6.0 5.6 3,800 21,260 Feed auger 1.5 1.4 3,800 5,315 Pumping Energy GPM Head η, pump BHP η, motor Hours kWh Wood Boiler Pump 100 20 55% 1.2 90.0% 8,322 8,486 59,936 Page 2 Alaska Energy Engineering LLC CALCULATIONS 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Annual Energy Requirements December 3, 2010 Alternative 4: Central Chip Boiler Plant Chip Boiler (Lead) Net, MMBTU % Load MMBtu/ton Net, tons Dry/Dist Efficiency Gross Tons 3,413 90% 8.0 384 20% 72% 640 Fuel Oil Boilers (lag/Standby) Net, MMBTU % Load LHV, kBtu/gal Net, gallons Efficiency Gross, gallons 3,413 10% 130.0 2,625 70% 3,750 Electric Energy MMBtu MBH Hours Wood Boiler Hours 3,686 1,809 2,445 HP kW Annual Hours kWh De-ashing System 0.5 0.5 365 170 Pneumatic tube cleaning system 5.0 4.7 52 242 Induced draft fan 15.0 14.0 2,445 34,201 Chip drying fan 20.0 18.7 4,380 81,687 Silo auger 5.0 4.7 2,445 11,400 Feed auger 1.5 1.4 2,445 3,420 Pumping Energy GPM Head η, pump BHP η, motor Hours kWh Wood Boiler Pump 120 20 55% 1.5 90.0% 8,322 10,183 Fuel Oil Boiler Pump 89 20 55% 1.1 90.0% 438 397 Secondary Pumps (Average) 80 40 50% 2.2 92.0% 8,760 15,379 Total kWh 157,081 $0  $100,000  $200,000  $300,000  $400,000  $500,000  $600,000  2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 Baseline: Fuel Oil Boilers (Status Quo) Alternative 1:  Central Pellet Boiler Plant Alternative 4:  Central Chip Boiler Plant Page 3 Alaska Energy Engineering LLC Hydaburg City Schools Wood Heating Feasibility Analysis Appendix C Life Cycle Cost Analysis Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Baseline: Fuel Oil Boilers (Status Quo) Basis Economic Factors Energy Inflation Study Period (years) 25 Fuel Oil 6.0% Nominal Discount Rate 5.0% Electricity 4.0% General Inflation 2.0% Pellets 2.0% Real Discount Rate 2.9% Construction Costs Qty Unit Base Cost Year 0 Cost None 1LS 0 $0 Contingencies General Contractor Overhead and Profit 30% $0 Owner + A/E Costs 20% $0 Estimating contingency 15% $0 Total Construction Costs $0 Operating Costs Years Qty Unit Base Cost Present Value Fuel oil boiler maintenance, 5 @ 12 hrs/yr 1 - 25 60 hrs 80.00 $84,134 Maintenance supplies 1 - 25 1 LS 1,000.00 $17,528 Replace gymnasium boilers 10 - 10 1 LS 90,000.00 $67,352 Replace high school fuel tank 10 - 10 1 LS 15,000.00 $11,225 Replace high school boiler 20 - 20 1 LS 50,000.00 $28,002 December 3, 2010 Year 0 0 0 0 Replace high school boiler 20 20 1 LS 50,000.00 $28,002 Salvage gymnasium boilers 25 - 25 1 LS -20,000.00 ($9,690) Salvage high school boilers 25 - 25 2 LS -15,428.57 ($14,950) Total Operating Costs $180,000 Energy Costs Years Qty Unit Base Cost Present Value Fuel Oil 1 - 25 37,500 gals 3.41 $3,627,959 Electricity 1 - 25 0 kWh 0.21 $0 Wood Pellets 1 - 25 0 ton 306.00 $0 Wood Chips 1 - 25 0 ton 76.10 $0 Total Energy Costs $3,630,000 $3,810,000Present Worth Page 1 Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Alternative 1: Central Pellet Boiler Plant Basis Economic Factors Energy Inflation Study Period (years) 25 Fuel Oil 6.0% Nominal Discount Rate 5.0% Electricity 4.0% General Inflation 2.0% Pellets 2.0% Real Discount Rate 2.9% Construction Costs Qty Unit Base Cost Year 0 Cost General Mobilization / Demobilization Vehicle ferry 12 ea 200 $2,400 Driver time 12 ea 660 $7,920 Airfare: Ketchikan to Craig 12 rt 275 $3,300 Travel time 12 ea 220 $2,640 Lodging Room rental 3 months 2,000 $6,000 Daily travel time (Craig to Hydaburg) 360 MD 220 $79,200 Food allowance 360 MD 25 $9,000 Heating Plant Building Site preparation, excavation, grading, backfill 1 ls 15,000 $15,000 Building, 24x16 384 sqft 200 $76,800 December 3, 2010 Year 0 0 0 0 0 0 0 0 0 Building, 24x16 384 sqft 200 $76,800 Mechanical 1 ls 20,000 $20,000 Electrical 1 ls 30,000 $30,000 Heating Plant Wood Heating Plant 1 ls 750,000 $750,000 Wood boiler and appurtenances Chimney and breaching One 75 ton silos Ash removal system Air compressor Control system Silo and feed auger system Electrical from control panel to boiler Startup, commissioning Silo foundation 1 ls 10,000 $10,000 Install elementary school boilers 2 ls 6,000 $12,000 Chimneys 3 ea 4,000 $12,000 Primary heating loop, 4" 1 ls 100,000 $100,000 Primary pumps 3 ea 1,500 $4,500 Secondary pumps w/ VFD 2 ea 4,500 $9,000 Controls Boiler controls 1 ls 8,000 $8,000 Primary pumps 6 pts 1,500 $9,000 Secondary pumps 8 pts 1,500 $12,000 Heating plant 6 pts 1,500 $9,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Page 1 Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Alternative 1: Central Pellet Boiler Plant December 3, 2010 Construction Costs Qty Unit Base Cost Year 0 Cost Distribution Gymnasium 3" HS and 3" HR in Gym 400 lnft 60 $24,000 Exterior wall penetration 1 ea 4,500 $4,500 High School Excavate and surface repairs (paving, grass, sidewalks, etc) 810 sqft 25 $20,250 Direct bury 2" HS and 2" HR 135 lnft 240 $32,400 Exterior wall penetration 1 ea 4,500 $4,500 Elementary School Excavate and repair surfaces 900 sqft 25 $22,500 Direct bury 3" HS and 3" HR 150 lnft 280 $42,000 Exterior wall penetration 1 ea 4,500 $4,500 Buildings Elementary School Remove boilers (relocate to Gym Boiler Room) 2 ea 3,000 $6,000 Remove chimney and patch roof penetration 1 ea 5,000 $5,000 Remove 1,000 gallon underground fuel tank and piping 1 ea 5,000 $5,000 Reconfigure building piping, connect with HX, controls 1 ea 15,000 $15,000 High School Remove boiler 1 ea 3,000 $3,000 Remove chimney and patch roof penetration 1 ea 3,500 $3,500 Remove 500 gallon aboveground fuel tank and piping 1 ea 1,500 $1,500 Year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Remove 500 gallon aboveground fuel tank and piping 1 ea 1,500 $1,500 Reconfigure building piping, connect with HX, controls 1 ea 12,000 $12,000 Replace circulating pump 1 ea 2,000 $2,000 Gymnasium Remove boilers, 568 MBH 2 ea 2,500 $5,000 Remove chimney and patch roof penetration 1 ea 5,000 $5,000 Reconfigure building piping, connect with HX, controls 1 ea 15,000 $15,000 Connect fuel oil piping to relocated boilers 1 ea 3,000 $3,000 Contingencies General Contractor Overhead and Profit 30% $427,023 Owner + A/E Costs 20% $370,087 Estimating contingency 15% $333,078 Total Construction Costs $2,550,000 0 0 0 0 0 0 0 0 0 0 Page 2 Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Alternative 1: Central Pellet Boiler Plant December 3, 2010 Operating Costs Years Qty Unit Base Cost Present Value Pellet boiler maintenance Daily, 0.5 hours per day 1 - 25 183 hrs 42.00 $134,351 Annual, 3 days / 2 people 1 - 25 48 hrs 42.00 $35,336 Pellet boiler contracted maintenance 1 - 25 1 ls 5,000 $87,639 Pellet boiler replacement 18 - 18 1 ls 562,500 $333,825 Pellet boiler salvage value 25 - 25 1 ls -164,063 ($79,484) Auger replacement 10 - 10 1 ls 15,000 $11,225 Auger replacement 20 - 20 1 ls 15,000 $8,401 Auger salvage value 25 - 25 1 ls -7,500 ($3,634) Fuel oil boiler maintenance, 2 @ 12 hrs/yr 1 - 25 24 hrs 42.00 $17,668 Pump maintenance, 1 - 25 5 pumps 200.00 $17,528 Maintenance supplies 1 - 25 1 ls 800.00 $14,022 1 - 25 $0 Total Annual Costs $580,000 Energy Costs Years Qty Unit Base Cost Present Value Fuel Oil 1 - 25 1,969 gals 3.41 $190,468 Electricity 1 - 25 97,972 kWh 0.24 $520,305 Wood Pellets 1 - 25 259 ton 306.00 $1,391,558 Wood Chips 1 - 25 0 ton 76.10 $0 Total Energy Costs $2 100 000Total Energy Costs $2,100,000 $5,230,000Present Worth Page 3 Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Alternative 2: Modular Pellet Boiler Plant Basis Economic Factors Energy Inflation Study Period (years) 25 Fuel Oil 6.0% Nominal Discount Rate 5.0% Electricity 4.0% General Inflation 2.0% Pellets 2.0% Real Discount Rate 2.9% Construction Costs Qty Unit Base Cost Year 0 Cost General Mobilization / Demobilization Vehicle ferry 9 ea 200 $1,800 Driver time 9 ea 660 $5,940 Airfare: Ketchikan to Craig 9 rt 275 $2,475 Travel time 9 ea 220 $1,980 Lodging Room rental 2 months 2,000 $4,000 Daily travel time (Craig to Hydaburg) 270 MD 220 $59,400 Food allowance 270 MD 25 $6,750 Heating Plant Modular Heating Plant Module with Wood Heating Plant 1 ls 661,500 $661,500 Wood boiler and appurtenances 0 December 3, 2010 Year 0 0 0 0 0 0 0 Wood boiler and appurtenances Chimney and breaching One 75 ton silo Ash removal system Air compressor Control system Feed auger system Piping and elecrical, single point connection Startup, commissioning Undergound heating supply and return piping 20 lnft 400 $8,000 Electrical service, 208v/ 3-phase, 45A 1 ls 15,000 $15,000 Building and silo foundation 1 ls 15,000 $15,000 Distribution Gymnasium 3" HS and 3" HR in Gym 400 lnft 60 $24,000 Exterior wall penetration 1 ea 4,500 $4,500 0 0 0 0 0 Page 1 Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Alternative 2: Modular Pellet Boiler Plant December 3, 2010 Construction Costs Qty Unit Base Cost Year 0 Cost High School Excavate and surface repairs (paving, grass, sidewalks, etc) 810 sqft 25 $20,250 Direct bury 2" HS and 2" HR 135 lnft 240 $32,400 Exterior wall penetration 1 ea 4,500 $4,500 Elementary School Excavate and repair surfaces 900 sqft 25 $22,500 Direct bury 3" HS and 3" HR 150 lnft 280 $42,000 Exterior wall penetration 1 ea 4,500 $4,500 Buildings Elementary School Reconfigure building piping, connect with HX, controls 1 ea 40,000 $40,000 High School Reconfigure building piping, connect with HX, controls 1 ea 25,000 $25,000 Replace circulating pump 1 ea 2,000 $2,000 Gymnasium Reconfigure building piping, connect with HX, controls 1 ea 40,000 $40,000 Connect fuel oil piping to relocated boilers 1 ea 3,000 $3,000 Contingencies General Contractor Overhead and Profit 30% $313,949 Owner + A/E Costs 20% $272,089 Estimating contingency 15% $244,880 Total Construction Costs $1 880 000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Year Total Construction Costs $1,880,000 Operating Costs Years Qty Unit Base Cost Present Value Pellet boiler maintenance Daily, 0.5 hours per day 1 - 25 183 hrs 42.00 $134,351 Annual, 3 days / 2 people 1 - 25 48 hrs 42.00 $35,336 Pellet boiler contracted maintenance 1 - 25 1 ls 5,000 $87,639 Pellet boiler replacement 18 - 18 1 ls 496,125 $294,433 Pellet boiler salvage value 25 - 25 1 ls -144,703 ($70,105) Auger replacement 10 - 10 1 ls 15,000 $11,225 Auger replacement 20 - 20 1 ls 15,000 $8,401 Auger salvage value 25 - 25 1 ls -7,500 ($3,634) Replace high school fuel tank 10 - 10 1 ls 15,000.00 $11,225 Fuel oil boiler maintenance, 5 @ 12 hrs/yr 1 - 25 60 hrs 42.00 $44,170 Pump maintenance, 1 - 25 2 pumps 200.00 $7,011 Maintenance supplies 1 - 25 1 ls 1,000.00 $17,528 Total Annual Costs $580,000 Page 2 Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Alternative 2: Modular Pellet Boiler Plant December 3, 2010 Energy Costs Years Qty Unit Base Cost Present Value Fuel Oil 1 - 25 1,875 gals 3.41 $181,398 Electricity 1 - 25 97,574 kWh 0.23 $496,603 Wood Pellets 1 - 25 266 ton 306.00 $1,426,347 Wood Chips 1 - 25 0 ton 76.10 $0 Total Energy Costs $2,100,000 $4,560,000Present Worth Page 3 Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Alternative 3: Distributed Pellet Boiler Plants Basis Economic Factors Energy Inflation Study Period (years) 25 Fuel Oil 6.0% Nominal Discount Rate 5.0% Electricity 4.0% General Inflation 2.0% Pellets 2.0% Real Discount Rate 2.9% Construction Costs Qty Unit Base Cost Year 0 Cost General Mobilization / Demobilization Vehicle ferry 14 ea 200 $2,800 Driver time 14 ea 660 $9,240 Airfare: Ketchikan to Craig 14 rt 275 $3,850 Travel time 14 ea 220 $3,080 Lodging Room rental 3.5 months 2,000 $7,000 Daily travel time (Craig to Hydaburg) 414 MD 220 $91,080 Food allowance 414 MD 25 $10,350 Buildings Elementary School Wood Heating Plant, 145 kW Wood boiler and appurtenances 1 ls 128,750 $128,750 0 December 3, 2010 Year 0 0 0 0 0 0 0Wood boiler and appurtenances 1 ls 128,750 $128,750 30 ton silo 1 ls 37,500 $37,500 Piping and elecrical, single point connection 1 ls 5,000 $5,000 Building 1 ls 30,000 $30,000 Undergound heating supply and return piping 20 lnft 350 $7,000 Electrical service, 12 kW 1 ls 15,000 $15,000 Building and silo foundation 1 ls 10,000 $10,000 Reconfigure building piping, connect wood boiler, controls 1 ea 50,000 $50,000 High School Wood Heating Plant, 55 kW Wood boiler and appurtenances 1 ls 51,250 $51,250 15 ton silo 1 ls 25,000 $25,000 Piping and elecrical, single point connection 1 ls 5,000 $5,000 Building 1 ls 20,000 $20,000 Undergound heating supply and return piping 20 lnft 350 $7,000 Electrical service, 10 kW 1 ls 5,000 $5,000 Building and silo foundation 1 ls 10,000 $10,000 Reconfigure building piping, connect wood boiler, controls 1 ea 30,000 $30,000 Relocate 500 gallon fuel oil tank 1 ea 2,500 $2,500 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Page 1 Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Alternative 3: Distributed Pellet Boiler Plants December 3, 2010 Construction Costs Qty Unit Base Cost Year 0 Cost Gymnasium Wood Heating Plant, 125 kW Wood boiler and appurtenances 1 ls 128,750 $128,750 One 30 ton silo 1 ls 37,500 $37,500 Piping and elecrical, single point connection 1 ls 5,000 $5,000 Building 1 ls 30,000 $30,000 Undergound heating supply and return piping 20 lnft 350 $7,000 Electrical service, 12 kW 1 ls 5,000 $5,000 Building and silo foundation 1 ls 10,000 $10,000 Reconfigure building piping, connect wood boiler, controls 1 ea 50,000 $50,000 Contingencies General Contractor Overhead and Profit 30% $251,895 Owner + A/E Costs 20% $218,309 Estimating contingency 15% $196,478 Total Construction Costs $1,510,000 Operating Costs Years Qty Unit Base Cost Present Value Pellet boiler maintenance Daily, 0.5 hours per day, each plant 1 - 25 548 hrs 42.00 $403,053 Annual, 2 days / 2 people, each plant 1 - 25 96 hrs 42.00 $70,672 Pellet boiler contracted maintenance 1-25 1ls 10,000 $175,278 Year 0 0 0 0 0 0 0 0 0 0 0 Pellet boiler contracted maintenance 1 25 1 ls 10,000 $175,278 Pellet boiler replacement 18 - 18 1 ls 154,375 $91,616 Pellet boiler salvage value 25 - 25 1 ls -30,017 ($14,543) Replace high school fuel tank 10 - 10 1 ls 15,000.00 $11,225 Auger replacement 10 - 10 3 ea 8,000 $17,961 Auger replacement 20 - 20 3 ea 8,000 $13,441 Auger salvage value 25 - 25 3 ea -2,667 ($3,876) Fuel oil boiler maintenance, 5 @ 12 hrs/yr 1 - 25 60 hrs 42.00 $44,170 Primary Pump maintenance 1 - 25 7 pumps 200.00 $24,539 Maintenance supplies 1 - 25 1 ls 3,500.00 $61,347 1 - 25 $0 Total Annual Costs $890,000 Energy Costs Years Qty Unit Base Cost Present Value Fuel Oil 1 - 25 1,875 gals 3.41 $181,398 Electricity 1 - 25 59,936 kWh 0.22 $291,780 Wood Pellets 1 - 25 253 ton 306.00 $1,358,426 Wood Chips 1 - 25 0 ton 76.10 $0 Total Energy Costs $1,830,000 $4,230,000Present Worth Page 2 Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Alternative 4: Central Chip Boiler Plant Basis Economic Factors Energy Inflation Study Period (years) 25 Fuel Oil 6.0% Nominal Discount Rate 5.0% Electricity 4.0% General Inflation 2.0% Chips 1.5% Real Discount Rate 2.9% Construction Costs Qty Unit Base Cost Year 0 Cost General Mobilization / Demobilization Vehicle ferry 12 ea 200 $2,400 Driver time 12 ea 660 $7,920 Airfare: Ketchikan to Craig 12 rt 275 $3,300 Travel time 12 ea 220 $2,640 Lodging Room rental 3 months 2,000 $6,000 Daily travel time (Craig to Hydaburg) 360 MD 220 $79,200 Food allowance 360 MD 25 $9,000 Heating Plant Building Site preparation, excavation, grading, backfill 1 ls 25,000 $25,000 Building with chip storage, 24x24,576 sqft 200 $115,200 0 0 December 3, 2010 Year 0 0 0 0 0 0 0 Building with chip storage, 24x24,576 sqft 200 $115,200 Mechanical 1 ls 20,000 $20,000 Electrical 1 ls 30,000 $30,000 Heating Plant Wood Heating Plant 1 ls 882,000 $882,000 Wood boiler and appurtenances Chimney and breaching Ash removal system Air compressor Control system Feed auger system Electrical from control panel to boiler Startup, commissioning Chip drying system inc perforated floor 1 ls 55,000 $55,000 Install elementary school boilers 2 ls 6,000 $12,000 Chimneys 3 ea 4,000 $12,000 Primary heating loop, 4" 1 ls 100,000 $100,000 Primary pumps 3 ea 1,500 $4,500 Secondary pumps w/ VFD 2 ea 4,500 $9,000 Controls Boiler controls 1 ls 8,000 $8,000 Primary pumps 6 pts 1,500 $9,000 Secondary pumps 8 pts 1,500 $12,000 Heating plant 6 pts 1,500 $9,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Page 1 Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Alternative 4: Central Chip Boiler Plant December 3, 2010 Construction Costs Qty Unit Base Cost Year 0 Cost Distribution Gymnasium 3" HS and 3" HR in Gym 400 lnft 60 $24,000 Exterior wall penetration 1 ea 4,500 $4,500 High School Excavate and surface repairs (paving, grass, sidewalks, etc) 810 sqft 25 $20,250 Direct bury 2" HS and 2" HR 135 lnft 240 $32,400 Exterior wall penetration 1 ea 4,500 $4,500 Elementary School Excavate and repair surfaces 900 sqft 25 $22,500 Direct bury 3" HS and 3" HR 150 lnft 280 $42,000 Exterior wall penetration 1 ea 4,500 $4,500 Buildings Elementary School Remove boilers (relocate to Gym Boiler Room) 2 ea 3,000 $6,000 Remove chimney and patch roof penetration 1 ea 5,000 $5,000 Remove 1,000 gallon underground fuel tank and piping 1 ea 5,000 $5,000 Reconfigure building piping, connect with HX, controls 1 ea 15,000 $15,000 High School Remove boiler 1 ea 3,000 $3,000 Remove chimney and patch roof penetration 1 ea 3,500 $3,500 Remove 500 gallon aboveground fuel tank and piping 1 ea 1,500 $1,500 0 0 0 0 0 0 0 0 0 0 0 0 0 Year 0 0 Remove 500 gallon aboveground fuel tank and piping 1 ea 1,500 $1,500 Reconfigure building piping, connect with HX, controls 1 ea 12,000 $12,000 Replace circulating pump 1 ea 2,000 $2,000 Gymnasium Remove boilers, 568 MBH 2 ea 2,500 $5,000 Remove chimney and patch roof penetration 1 ea 5,000 $5,000 Reconfigure building piping, connect with HX, controls 1 ea 15,000 $15,000 Connect fuel oil piping to relocated boilers 1 ea 3,000 $3,000 Contingencies General Contractor Overhead and Profit 30% $494,643 Owner + A/E Costs 20% $428,691 Estimating contingency 15% $385,822 Total Construction Costs $2,960,000 0 0 0 0 0 0 0 0 0 0 Page 2 Alaska Energy Engineering LLC Life Cycle Cost Analysis 25200 Amalga Harbor Road Tel/Fax: 907.789.1226 Juneau, Alaska 99801 alaskaenergy@earthlink.net Hydaburg Schools Wood Heating Analysis Alternative 4: Central Chip Boiler Plant December 3, 2010 Operating Costs Years Qty Unit Base Cost Present Value Chip boiler maintenance Daily, 2 hours per day 1 - 25 730 hrs 42.00 $537,403 Annual, 1 week / 2 people 1 - 25 80 hrs 42.00 $58,894 Chip boiler contracted maintenance 1 - 25 1 ls 5,000 $87,639 Chip boiler replacement 18 - 18 1 ls 661,500 $392,578 Chip boiler salvage value 25 - 25 1 ls -192,938 ($93,473) Auger replacement 10 - 10 1 ls 15,000 $11,225 Auger replacement 20 - 20 1 ls 15,000 $8,401 Auger salvage value 25 - 25 1 ls -7,500 ($3,634) Fuel oil boiler maintenance, 2 @ 12 hrs/yr 1 - 25 24 hrs 42.00 $17,668 Pump maintenance, 1 - 25 5 pumps 200.00 $17,528 Maintenance supplies 1 - 25 1 LS 1,000.00 $17,528 1 - 25 $0 Total Annual Costs $1,050,000 Energy Costs Years Qty Unit Base Cost Present Value Fuel Oil 1 - 25 3,750 gals 3.41 $362,796 Electricity 1 - 25 157,081 kWh 0.25 $868,979 Wood Pellets 1 - 25 0 ton 306.00 $0 Wood Chips 1 - 25 640 ton 76.10 $807,044 Total Energy Costs $2 040 000Total Energy Costs $2,040,000 $6,050,000Present Worth Page 3