HomeMy WebLinkAboutRenewable Energy cost calculation summaryGalena Renewable Alternative Energy Project
Revised 7/1/2009
At this point in time I am comfortable that I have the Capitol cost’s for this
project nailed down as close as they can get short of starting the actual
engineering for the specifics of this project.
This is the Capitol Cost’s break down :
Boiler & Generator & associated equipment $4,000,000 +/- 10%
Building for Boiler 3,000 sq.ft. @ $400/sq.ft. $1,200,000 +/- 20%
Civil engineering & project management $ 750,000 +/- 20%
Timber harvest & Chipping equipment $2,400,000 +/- 10%
Freight for all components & equipment $ 500,000 +/- 20%
2 green houses and heat & lights to them $ 200,000 +/- 30%
Subtotal range $7.9 million to $ 10.2 million
For Proforma purposes let’s use $10 million
Simple amortization of a $10 million loan at 6% for 20 years gives you a
monthly payment of Aprox $72,000 / month for the capitol cost’s x 12
months gives an annual cost of debt repayment of $864,000.00
Now lets look at fuel costs:
Wood chipping operation will include the following equipment:
Feller Buncher
Chipper, whole tree, track mounted
2 quadra track tractors to pull track mounted dumping chip bins
Loader with chip bucket to move chips into building
Service/Fuel truck for daily maintenance of equipment
So that is 6 pieces of equipment requiring 5 operators and 1 oiler/mechanic to
fuel and maintain the equipment
Cost per 10hr shift: fuel @ $5/gallon x 600 gallons = $3,000.00
6 operators x 10 hrs x $35/hr x 1.6 load = $3,360.00
1 foreman x 10hrs x $45/hr x 1.6 load = $ 720.00
Parts & consumables = $ 500.00
Per shift cost’s subtotal = $7,580.00
Estimated production rate of 30 ton’s per hour. To obtain 23,000 ton’s of
chips; 23,000tons divided by 30 ton’s /hr = 766 hours divided by 10hrs/shift
equals 76.6 shifts so your direct cost for 23,000 tons of chips is:
76.6 shifts x $7,580/shift = $580,628.00 + seasonal costs:
Insurance + $ 45,000.00
Depreciation on equipment + $ 30,000.00
Royalty for biomass + $100,000.00
Permitting + $ 25,000.00
Total Annual fuel cost’s = $ 780,628.00
I believe this is conservative initially with shorter hauls and may be closer as
the haul distance increases over the years.
New Boiler Plant O & M
Now lets go through the O & M costs for the new boiler & generator:
Utility Foreman 50% @ $40/hr x 1.6 load x 1040hrs = $66,560.00
Pipefitter/mechanic @ $40/hr x 1.6 load x 2080hrs = $133,120.00
Operators 4ea @ $30/hr x 1.6 load x 2080hrs = $399,360.00
Materials and Supplies and depreciation = $300,000.00
Total O & M cost annually = $899,040.00
Total Annualized Cost’s of New Operation
Capitol Cost’s $ 864,000.00
Biomass Fuel cost’s $ 780,628.00
O & M $ 899,040.00
Grand Total Annual $ 2,543,682.00
Divided by 12 gives $ 212,000.00 monthly cost’s
Projected Revenue Stream
Electrical sales: hourly average load 800kw x 24hr/day x 30days x
.30cents/kw = $ 172,800.00 monthly
Steam sales: current load uses 30,000gallons of fuel per month for
10 months = 30,000gal x 10 months x 123000btu/gallon x .80%
efficiency = aprox 30,000 Mbtu divided by 12 months =
2,500Mbtu / month x $20/ Mbtu = $50,000.00 monthly
Total revenue stream = $222,800.00 monthly
SUMMARY
So the numbers above show that this project is viable based on the
numbers and the logic used above to arrive at the cost’s & revenues shown.
Please note that this shows an ROI return on investment of 9.5% . This
would put our cost for utilities at an enviable rate if crude does what everyone
expects it to do which is continue to climb over the next few years. There are
still some variables that need to be looked at as this project moves forward,
such as moisture content of the chips after being in the heated supply building
for a period of time prior to burning and the actual production rate of the
biomass harvesting operation. Also any cost’s associated with using the supply
building for chip storage. Also note that if some grant funds can be brought to
the project to reduce the capitol cost the revenue stream could be reduced.
Also don’t forget that the City would need to add .10 to .20 cents per kwh for
maintaining the electrical distribution system and continuing to do the
monthly billing and maintenance of existing plants for back up purposes. The
same is true for the steam distribution system if the City is involved in the
maintenance of that piping system as well as the billing for that utility. I have
not included the cost for adding a pellet mill at this point in time but from the
fuel cost section above I think a person could develop the cost for pellets
pretty easily.
We have had one work session to review this work and I continue to revise
some of the numbers as we get more information from the engineers helping
us with these projections.