HomeMy WebLinkAboutHaines Borough Wood Heat Feasibility Study - Dec 2009 - REF Grant 7071021Paul C. Weisner, P.E.
CE2 Engineers, Inc.
Anchorage, Alaska
Nathan Ratz, P.E.
CTA Architects Engineers
Missoula, Montana
December 2009
Haines Borough Wood Heat Feasibility Study December 2009
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Table of Contents
1.0 EXECUTIVE SUMMARY ................................................................................................ 1
2.0 OVERVIEW OF BIOMASS AND THIS STUDY ............................................................ 3
2.1 Potential of Biomass Energy Systems ............................................................................................. 3
2.2 Biomass System Types/Primer ........................................................................................................ 5
3.0 WOOD FUEL SOURCE .................................................................................................... 6
3.1 Fuel Quality ..................................................................................................................................... 6
4.0 EXISTING BOILER SYSTEMS AND FUEL OIL USE ................................................... 8
4.1 Biomass Boiler Size ....................................................................................................................... 10
5.0 BUILDING AND SITE CONSTRAINTS ........................................................................ 11
6.0 AIR QUALITY ISSUES ................................................................................................... 12
7.0 BIOMASS SYSTEM OPTIONS ...................................................................................... 15
7.1 Wood Fired Boiler Options ............................................................................................................ 16
8.0 COST ESTIMATE AND ECONOMIC ASSUMPTIONS ............................................... 18
8.1 Cost Estimate ................................................................................................................................. 18
8.2 Fuel Displacement ......................................................................................................................... 18
8.3 Wood Fuel Costs ............................................................................................................................ 18
8.4 Additional Energy Costs ................................................................................................................ 18
8.5 Maintenance Costs ......................................................................................................................... 19
8.6 Inflation Assumptions .................................................................................................................... 19
9.0 EVALUATION OF OPTIONS......................................................................................... 20
9.1 Evaluation Metrics ......................................................................................................................... 20
9.2 Evaluation Summary ...................................................................................................................... 20
9.3 Sensitivity Analysis ....................................................................................................................... 21
9.3.1 Fuel Oil and Electricity Inflation Rate and Wood Fuel Cost .................................. 21
9.3.2 Fuel Oil Unit Cost ................................................................................................... 22
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9.3.3 Project Cost ............................................................................................................. 22
10.0 CONCLUSION ................................................................................................................. 23
11.0 FIGURES .......................................................................................................................... 24
List of Figures
Figure 1— Wood and No. 2 Fuel Oil Emissions ...........................................................................12
Figure 2— Floor plan of Central Wood Heat Building .................................................................24
Figure 3— Elevation of Central Wood Heat Building ..................................................................25
Figure 4— Heat system preliminary layout for option A ..............................................................26
Figure 5— Heat system preliminary layout for option B ..............................................................27
Figure 6— Heat system preliminary layout for option C ..............................................................28
List of Tables
Table 1— Economic Summary ........................................................................................................2
Table 2— Fuel Oil Use Summary ...................................................................................................8
Table 3— Connected Boiler Load Summary ...................................................................................9
Table 4— Proposed Biomass Boiler Size ......................................................................................10
Table 5— Expected Emissions Levels for Burning 6,500 Tons of Woody Biomass ....................13
Table 6— Economic Summary ......................................................................................................20
List of Appendices
Appendix A Wood Source Study
Appendix B Air Quality Technical Memorandum
Appendix C Capital Cost Estimate for Various Options
Appendix D Economic Analysis Sheets and Sensitivity Analysis Sheet
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Appendix E “Where Wood Works” Outline
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1.0 EXECUTIVE SUMMARY
The following assessment was commissioned by the Haines Borough to determine the viability
of biomass energy integration at Borough and school buildings in Haines, Alaska. The goal was
to lower heating costs for Borough buildings. The four buildings include the Haines Borough
Administration building, Haines Public Library, Haines School, and Haines School Vocational
Education Building. A fifth building, the Sewage Treatment Plant, was added as an option to see
if it would be economic to include it in the proposed central heating plan.
Fuel resource, quality and infrastructure are all critical to the sustainability of biomass energy
and must be considered carefully before proceeding with a project. Although this assessment is
preliminary in nature and the results must be verified at time of project implementation, it
appears that the fuel resource and infrastructure near Haines are adequate to supply biomass fuel
to the project. After researching the local wood sources and consulting with State Forester Greg
Palmieri, it is apparent that the forest resource, knowledge, infrastructure, and desire exist to
make the fuel supply a reality. Pellet manufacturing doesn’t exist in Southeast Alaska; however
several manufacturers exist in British Columbia and the Pacific Northwest of the lower 48 that
would be capable of providing fuel. In addition, a new wood pellet plant is coming on line in
Fairbanks, and utilizing sawmill waste by manufacturing wood pellets in Craig, Alaska is being
seriously considered for the Southeast Alaska market.
Air emissions associated with biomass energy need to be addressed very early in the design
process. An overview of the factors and recommended approach to air quality permitting is
provided in the appendix of this report. This overview was developed by a nationally recognized
environmental engineering firm specifically for this assessment. It was found that the emissions
from a proposed woody-biomass plant would be similar to that of the existing fuel oil used
presently for heating. Particulate matter emissions (PM10 and PM2.5), which can affect people
with respiratory problems, can be reduced to very low levels with the use of electrostatic
precipitators.
The metrics of feasibility for this assessment include technical feasibility, the net present value
of each project option, and other extenuating factors that were identified during the course of
assessment.
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The following table summarizes the economic analysis for base options considered.
Table 1 — Economics Summary
Year 1 NPV NPV
Project Operating 30 yr 20 yr ACF YR
Option Cost Savings at 3% at 3% YR 30 ACF=PC
Option A.1A Main Campus $2,673,000 $22,821 $2,335,846 $1,116,128 $4,274,093 25
Option A.1.B Campus and Boiler Plant Location B $2,770,000 $22,821 $2,335,846 $1,116,128 $4,274,093 26
Option A.1.C Adding Sewer Plant to Campus and
Boiler Plant Location C $3,196,000 $17,710 $2,284,993 $1,055,333 $4,218,911 27
Option A.2A Campus Less Vocational Education $2,549,000 $21,621 $2,250,020 $1,072,870 $4,119,428 25
Option A.3A School Building Only Less Vocational
Education $2,289,000 $17,098 $1,926,455 $909,790 $3,536,340 26
Option A.4A Adding A Larger Load Such as DOT
to Campus $3,196,000 $30,570 $3,204,906 $1,518,980 $5,876,662 24
Option B.1 Campus with Pellet Boiler and Boiler
Plant Location A $2,258,000 -$25,562 $926,646 $176,661 $1,972,273 >30
Conclusion
With the present fuel oil price per gallon, consumption of fuel oil, and the high capital costs of
integrating a biomass heating system into multiple boiler rooms, this project is challenged.
Currently the 30 year NPV of the annual savings does not equal the initial project cost and the
ACF equals the 30 year NPV in year 25. The project economics are greatly affected by fuel oil
cost and inflation. If fuel oil approaches $3.75 per gallon, or the long term fuel oil cost inflation
rate approaches 8% (as opposed to 6%), then the project becomes much more viable. If
additional fuel oil loads can be added to the system (for a total displacement of at least 65,000
gallons) with reasonable integration costs, the project becomes more viable. Recent projects in
the western continental US of similar scope of integration have had better economics. This is
mainly due to the fact that the cost of construction is less in the lower 48 (nearly 30%), and also
because chipped wood fuel can be purchased between $40 and $60 per ton.
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2.0 OVERVIEW OF BIOMASS AND THIS STUDY
This feasibility study was commissioned by the Haines Borough to determine the viability of a
woody biomass-fired central heating system for certain Borough-owned buildings in downtown
Haines.
Economics of alternatives for the use of woody-biomass to displace 90% of the fuel oil used for
the Borough Administration Building, Library, School, and Vocational Education Building.
Possible wood fuel sources, their economics, environmental, and social factors with their
use
Existing mechanical systems, and how they would be integrated into the new heating
system
Building and site constraints that affect the design of a new woody biomass-fired heating
system
Air quality issues that need to be addressed with the use of a woody biomass-fired
heating system
Types of different biomass heating systems and layouts that could be used in Haines
Evaluation of the three proposed alternative systems, with an option of tying the existing
sewage treatment plant into the central heating system.
The results of this study would be a conceptual design of the biomass heating system, along with
a capital cost estimate for the selected alternative.
Once the Haines Borough has this information, it can then make an informed decision whether or
not to go on to the next step and develop the design of the system for eventual construction,
when funding permits.
2.1 Potential of Biomass Energy Systems
Biomass energy systems hold great potential to reduce energy costs, derive energy from local
sources, and reduce the net carbon footprint for certain projects while playing a role in active
forest management. That said, implementation of biomass energy has a set of complexities that
are important to consider in every project. Failure to satisfy any one or more of these issues may
result in a project of marginal success, or outright failure. This set of preliminary assessments
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attempts to address the feasibility of implementing biomass in biomass energy integration at
Borough and school buildings in Haines, Alaska. For every biomass project considered, an
objective approach to addressing the following points is required:
Fuel resource. Adequate fuel resources must exist in a reasonably local manner. In
Southeast Alaska, this means that fuel must be logistically feasible to procure for a
reasonable cost. For all projects considered, the fuel resource can be accessed by either
truck from selected sources or ocean transport for Southeast Alaska island sources. Fuel
logistics will involve bulk truck or barge delivery / stock-pile of fuel, or pre-conditioned
fuel delivered in shipping containers. Chip fuel for these projects is likely to be derived
from Southeast Alaska providers. Pellet fuels can only be accessed from British
Columbia, the Pacific Northwest of the Lower 48 States at this time, though a Fairbanks
pellet plant is presently under completion and startup. Specific fuel resource issues are
discussed in the option assessments.
Site technical requirements. Site requirements include:
1. Logistics of fuel delivery. Trucks, typically 40 ft. chip tractor-trailers or trailer
mounted shipping containers need to be able to access the site easily.
2. Type of existing mechanical system and the complexity of biomass integrating to
this system.
3. Space requirements to implement a biomass energy plant. These systems are
space intensive and are difficult to implement on some constrained sites.
Air Quality and Emissions Permitting.Although modern biomass systems are clean
burning and capable of meeting the vast majority of air quality permitting requirements,
permitting requirements must always be checked early in the project assessment process.
Refer to Section 6 Air Quality Issues for a discussion.
Economic Criteria: The economics of biomass are quite dependent on the displacement
of a significant amount of fossil fuel energy. The definition of a “significant amount” of
fuel varies depends on the cost of that fuel and the counterbalancing cost of project
implementation.
1. The cost of energy is critical as well. Propane and fuel oil offer the best
economics, but in many areas of the country, natural gas displacement can offer
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adequate economic leverage to make projects work. All existing boilers in this
assessment are fuel oil based.
2. The cost of biomass fuel varies on location, available infrastructure, and type of
fuel.
3. Biomass systems require additional maintenance compared to most systems. This
cost is usually small compared to savings, but must be considered in the course of
assessment.
Operation and Maintenance Requirements. The type of biomass system must match
the existing, or reasonable expansion of, the facilities maintenance staff’s capabilities.
System maintenance requirements vary greatly in complexity and need to be matched to
each situation carefully. The Borough has competent and capable maintenance staff.
Project Owner and Staff project support. Biomass implementation is capital intensive
and requires physical modification to the facility and its site. The support of the
leadership of the affected buildings is critical to a successful project.
2.2 Biomass System Types/Primer
Biomass projects take several different forms. For purposes of this assessment, the technologies
will be categorized as green chip or pellet. A detailed primer discussing these technologies is
available online at: http://www.fleci.org/docs/WhereWoodWorks-Online.pdf, and is also
available in Appendix E.
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3.0 WOOD FUEL SOURCE
3.1 Fuel Quality
The success of all biomass projects is very dependent upon the quality of fuel that is used in the
plant. Many sources of biomass exist in Alaska and the West and the quality varies widely.
Often inexpensive and possibly free fuels are used in heating plants, causing inadequate
performance from the plant in terms of energy and emissions output and dramatically increased
maintenance and repair expense. The poor performance is often incorrectly placed on the
heating plant equipment.
It is imperative that the quality of the fuel be maintained as a standard. This fuel also may be
processed by either chipping or grinding. Generally the minimum fuel quality is expected to be
derived from chipped or ground whole trees. The following guidance is provided for specifying
fuel quality.
3.1.1 Whole Tree Fuel Specification Points (Southeast Alaska):
Target Moisture Content 40% after drying
Minimum Btu’s/lb (wet weight) 4,500 (HHV)
Target Chip Size 2” x 2” x ¼“ (Local infrastructure specific)
A maximum of 10% shall be 4 inches or larger in any dimension
A maximum of 10% shall be smaller than 1/16”
Minimal wood flour or dust is allowed.
Total Ash Content Maximum 8% (dry matter basis)
Alkali Mineral Content of Ash Maximum 0.3 lbs/MMBtu
The likely forest resource is a mix of spruce, hemlock, and cedar, with hemlock being the
preferred species. A primary concern with fuel supply in Southeast Alaska is management of the
fuel’s moisture content. The higher the moisture, the more of the woody-biomass it takes to
drive off the moisture in the fuel, and the less useful heat is available. At the time of processing,
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chipped product is at 58% moisture content at one Southeast operation. This fuel will dry to
about 20% less than that if stored and aerated once or twice in a covered environment. It will be
imperative that all fuel suppliers be required to shelter fuel supply from rain and develop
processes to deliver fuel that meets the above specification. In addition to moisture content
control before delivery, it is recommended that provision for in-plant drying systems be designed
for all chip plants in Southeast Alaska.
Material should be aged in the landing for 3-12 months in whole tree piles. Tree felling,
skidding, and fuel processing methods should minimize introduction of dirt and rocks. Fuel
should be processed directly into the sheltered cover at the time of chipping. If fuel is ground,
the fuel should be double ground and sized. It is imperative that the biomass system supplier
understand that ground fuel may be used in the plant as material handling for ground fuel can be
significantly different than that for chipped-fuel-only plants. Fuel needs to be free of all foreign
materials such as rocks, soil, ice, paint, glue, etc.
In Appendix A, different possible sources of woody biomass were examined. The sources were:
Wood chips derived from timber in the Haines State Forest
Wood chips delivered to Haines from the Dimok Timber mill, near Haines Junction,
Yukon Territory, Canada
Wood chips derived from sawmill slabs from Tok sawmills
Wood chips (sawdust) from Viking Lumber sawmill, near Craig, Alaska.
Wood pellets from various sources ranging from the Pacific Northwest, western Canada,
and Alaska.
From the wood source study, it appears that utilizing wood chips derived from timber in the
Haines State Forest was a viable option. In addition, for the purposes of this study, wood chips
from this source were expected to be 50% moisture on average, wet basis.
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4.0 EXISTING BOILER SYSTEMS AND FUEL OIL USE
The four buildings that were investigated are the Haines Borough Administration building,
Haines Public Library, Haines School, and Haines School Vocational Education Building. An
optional fifth building was examined and that was the Sewage Treatment Plant. All the
buildings, except the Sewage Treatment Plant utilize fuel oil fired hot water boilers for the
building heat. The Sewage Treatment Plant has three fuel oil fired furnaces to heat the building.
A summary of the annual fuel oil use and boiler output sizes is shown in the following tables:
Table 2 — Fuel Oil Use Summary
Building Fuel Oil Use - Average
Gallons $/Gal Cost
School 36,414 $2.87 $ 104,508
Vocational Education 1,200 $2.87 $ 3,444
Administration 1,221 $2.87 $ 3,504
Library 3,303 $2.87 $ 9,480
Sewer Treatment Plant 7,000 $2.87 $ 20,090
Total 49,138 $ 120,936
Total less Sewage Plant 42,138 $ 100,846
Total less Sewage Plant and Voc.
Ed. 40,938 $ 97,402
Administration & Library Total 4,524 $ 12,984
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Table 3 — Connected Boiler Load Summary
Peak Likely Sys.
Output Load Peak
MBH Factor MBH
School Boiler 1 1632 0.67 1093
Boiler 2 1632 0.67 1093
Boiler 3 1632 0.67 1093
School Total 4896 3280
Vocational Education Boiler 219 1.0 219
Administration Boiler 133 1.0 133
Library Boiler 1 515 0.7 361
Boiler 2 515 0.7 361
Library Total 1030 721
Main Campus Total 6278 4353
Main Campus Total less Voc. Ed. 6059 4134
Administration and Library Total 1163 854
Sewage Treatment
Plant Furnace 1 87 1.00 87
Furnace 2 250 1.00 250
Furnace 3 250 1.00 250
Sewage Treatment Plant Total 587 587
Campus Total Plus Sewage Treatment Plant 6865 4940
All existing boiler systems were preliminarily investigated for integration of a secondary heat
supply (districted biomass). In all cases, integration to the boilers with a de-coupled loop
appears possible. This approach allows the existing boiler plants to operate as decentralized
redundancy, backing up a new central biomass plant districted to the listed facilities. Other
facilities may be added to a district system. The scope of extension used for this analysis was
limited to the above buildings, extension to addition loads can be incrementally assessed as they
would likely have minimal effect on the infrastructure “backbone” analyzed herein.
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4.1 Biomass Boiler Size
Unless the facility has a constant heating load throughout the year, sizing the biomass boiler at
the peak heating load is not recommended. Biomass boilers do not modulate down well, and do
not operate at peak efficiency at low loads. We recommend sizing the biomass boiler to offset
approximately 90% of the annual heating energy use of a building or facility. The existing
heating systems would be used for the other 10% of the time during peak heating conditions and
when the biomass boiler is down for servicing. Recent energy models of similar buildings have
found that a boiler sized at 50% to 60% of the building peak load will handle approximately 90%
of the boiler run hours. The following table summarizes the likely peak loads for each building
and then factors in the biomass boiler factor of 0.6 to estimate the likely biomass size that would
supplant approximately 90% of the heat energy. The table also shows the estimated required
flow rate to distribute the heat to each building and the corresponding required pipe size.
Table 4 — Proposed Biomass Boiler Size
Likely Biomass Flow
System Biomass Boiler Rate Estimated
Peak Boiler Size at 30° dT Pipe
MBH Factor MBH GPM Size
School 3280 0.6 1968 131 4"
Voc. Ed 219 0.6 131 9 1-1/2"
Administration 133 0.6 80 5 1"
Library 721 0.6 433 29 2-1/2"
Sewer Treatment Plant 587 0.6 352 23 2-1/2"
Proposed Campus Total 4353 2612 174 4"
Proposed Campus Total Less Voc. Ed 4134 2481 165 4"
Administration & Library Total 854 512 34 2-1/2"
Proposed Campus Plus Sewer Plant 4940 2964 198 4"
p
For this assessment the boiler size that meets this criterion for the entire campus (less the Sewage
Treatment Plant) would be approximately 2,600,000 Btu/hr.
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5.0 BUILDING AND SITE CONSTRAINTS
The central wood-chip-fired heating plant has site requirements for its successful, economic, safe
and aesthetic operation. These requirements are:
1. A central location to minimize pipe runs to buildings. Long pipe runs mean higher
capital costs, higher operating costs because of increased pumping requirements, and
additional heat losses.
2. A boiler building location that will provide easy access for chip trucks to deliver product
to the chip bin in the boiler building. It should be relatively easy for the trucks to deliver
their product in an area of low traffic, both in vehicles and people.
3. Building location should be close the school building, if possible, because that is where
the bulk of the heat load is located.
4. The building should be far enough away from the school complex so as not to be a hazard
or an attractive nuisance to children.
5. Consideration must be made for the inclusion of an exhaust stack of up to 50-ft high for
proper dissipation of exhaust gasses. Air quality, as well as aesthetics must be considered
in the placement of this stack.
6. The building should be located so as not to be an aesthetic detriment to the downtown
area. It is an industrial building, so its placement should be carefully considered, so as
not to detract from the character of area.
The Haines Borough owns the land where the boiler building and piping would be located, so
that site control for these improvements is not a concern. However if the boiler building is
located across the main State highway, say near the Sewage Treatment Plant, then additional
expenses and effort will be needed to permit and horizontally bore for heat pipe crossing the
highway.
Alternative layouts for the central heating system are shown in Figures 4, 5, and 6 in Section 11.
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6.0 AIR QUALITY ISSUES
Air quality is an important consideration in using woody biomass-fired heating systems. We
want to keep the amount of harmful emissions below the levels currently set by EPA, and below
what we can reasonably expect will be future levels set by EPA. Retrofitting pollution control
equipment can be problematic and expensive, so anticipating future requirements is a prudent
thing to do.
Resource Systems Group of White River Junction, Vermont, was tasked with assessing air
quality issues for a proposed central wood chip-fired boiler system at Haines. Their technical
memorandum is found in Appendix B.
Before replacing 90% of fuel oil with wood chips, it is important to see the effect on emissions.
Figure 1 below shows a comparison of wood and No. 2 fuel oil emissions for selected pollutants.
Figure 1 — Wood and No. 2 Fuel Oil Emissions
Note that emissions are similar between the two fuels except for carbon monoxide and
particulate matter, which have levels higher than that of fuel oil. Carbon monoxide levels are
low, but can be minimized by careful tuning of the combustion process at the wood boiler.
Levels of particulate matter, especially PM 10 (particulate matter less than 10 micron size) are of
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serious concern because they can produce respiratory problems, especially in young children and
adults with respiratory problems, such as asthma. The higher levels of PM10 can be brought
down to similar levels as that of fuel oil by use of an ESP (electrostatic precipitator) in the
exhaust stream between the boiler outlet and the stack. Note the low level of PM10 in the bar
graph that is similar to that of fuel oil by use of an ESP.
We will assume a heat output of 6.5 million BTU/hr (MMBTU/hr), 50% moisture in the wood
chips from local hemlock, bole wood chips with bark, and a boiler efficiency of 65%. Heat input
would be
(6.5 million BTU/hr)/0.65 efficiency = 10 million BTU/hr input.
This is about 2.5 times what is projected in this study for Haines. The amount of annual
emissions at this level will be examined, and compared as to what is allowed by current
regulations. For State permit thresholds, a minor source permit must be considered for systems
whose design heat output exceeds 350,000 BTU/hr. Table 5 below from the technical
memorandum shows the emission thresholds for various pollutants:
Table 5 — Expected Emission Levels for Burning of 6,500 Tons of Woody Biomass
The level of estimated uncontrolled emissions for all pollutants is less than 16% of the permit
threshold, with the exception of PM10, which is right at the threshold. The actual amount of
wood chips burned would be about 800 tons/6500 tons x 100 = 12.3%, so technically, an ESP
added to the exhaust stream would not be required. However, it would be prudent to add it now,
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as there is a high likelihood that this pollutant will be more strictly controlled by EPA in the
future. All other pollutants listed would not require additional emissions controls.
An exhaust stack approximately 2.5 times the building height would be recommended, so that
the exhaust stream is smoothly dissipated without being driven down on nearby buildings and
areas. This would need to be further investigated during design, but for preliminary planning,
the exhaust stack should be about 50-ft tall.
At present, it does not appear that Haines is subject to inversion, PM10, and PM2.5 pollution
issues of the type experienced in Juneau. However, this should be further explored in the design
phase.
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7.0 BIOMASS SYSTEM OPTIONS
Six wood chip boiler options were analyzed along with one wood pellet boiler option. The wood
chip boiler options were divided by boiler plant location. See the Building and Site Constraints
section for further discussion on the different boiler plant site locations.
For all options a stand-alone boiler plant was assumed (see Figures 2 and 3 in Section 11). The
plant concept is a slab on grade building with concrete walls up to 4’-0” to allow for a solid
durable surface to push chips against. The remaining portion of the building would be a metal
building system. Chips would be on one side of the plant and the concept is for a chip van (40 ft
trailer) with a live bottom floor to back into the chip storage side and slowly pull out as the chips
unload. Approximately 30 tons of chips could be stored. On average, it is estimated one
delivery per week would be needed, however, during peak heating periods two to three deliveries
per week may be required.
A travelling auger would run near the floor of the chip storage and pull the chips onto a conveyor
which would then elevate and fill a metering bin. Because the chips are anticipated to be around
the 50% MC range, the concept would be for a small air handling unit to blow warm air through
an enlarged metering bin to handle any chip drying that would be required. The main heating
water system pumps and associated air separator and expansion tank would also be located in the
boiler plant. The current concept is to isolate the district system with the existing building
systems. This will require a heat exchanger and injection pump in each boiler room. The main
reason to isolate the district system is for redundancy. If all the systems are piped together and a
catastrophic leak happens in the district piping, all the building systems would drain and all
heating would be lost at the buildings. Isolating the systems allows the existing heating systems
to heat the buildings in the case of a problem with the district piping.
The installation of a green chip heating plant is a capital-intensive endeavor. Maximizing the
load connected to the capital investment is a sound strategy to optimize the economics. For this
project it means the installation of an extensive district heating system as described in the
Building and Site Constraints portion of this report. A district piping concept was developed to
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arrive at cost information for this assessment. The following are the options explored in this
assessment.
7.1 Wood Fired Boiler Options
Option A.1A
The boiler plant is located in location A (see Figure 4 in Section 11), and district piping
interconnects with the Borough Administration building, the Public Library, the School, and the
Vocational Education building.
Option A.2A
The boiler plant is located in location A (see Figure 4 in Section 11), and district piping
interconnects with the Borough Administration building, the Public Library, and the School only
– no connection to the Vocational Education building.
Option A.3A
The boiler plant is located in location A (see Figure 4 in Section 11), and district piping
interconnects with the School only – no connection to the Vocational Education building.
Option A.4A
The boiler plant is located in location A, and district piping interconnects with the Borough
Administration building, the Public Library, the School, the Vocational Education building, and
some other high fuel use facility (perhaps DOT). This option was not developed in great detail,
but was established to determine the effect of adding a larger load to a campus system.
Option A.1B
The boiler plant is located in location B (see Figure 5 in Section 11), and district piping
interconnects with the Borough Administration building, the Public Library, the School, and the
Vocational Education building.
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Option A.1C
The boiler plant is located in location C (see Figure 6 in Section 11), and district piping
interconnects with the Borough Administration building, the Public Library, the School, the
Vocational Education building, and the Sewer Treatment Plant. The costs for this option include
adding new piping through the plant and replacing the fuel oil furnaces with hot water unit
heaters.
WOOD PELLET BOILER OPTION
Option B.1
The boiler plant is located in location A (see Figure 4 in Section 11), and district piping
interconnects with the Borough Administration building, the Public Library, the School, and the
Vocational Education building. The boiler plant is half the size of a pellet plant because chip
storage is no longer necessary. An exterior pellet silo would be utilized for this option.
CORDWOOD-FIRED HEATING SYSTEM OPTION
Because of the relatively large connected load of the proposed plant, the anticipated high volume
of wood fuel used, and the high level of labor required to supply fuel and tend to the heating
units, the cordwood-fired heating system option was not pursued.
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8.0 COST ESTIMATE AND ECONOMIC ASSUMPTIONS
8.1 Cost Estimate
The cost estimates are at a preliminary design level and are based on RS Means and bid data
from recent biomass projects. The estimates are shown in Appendix C. The estimates assume
the new biomass boiler system heating water loop is isolated from each building with heat
exchangers and also assumes a small chip drying air handler will be installed in the boiler plant.
The estimates also include a live bottom chip van into the total project cost.
8.2 Fuel Displacement
For the purpose of this investigation it is assumed that 90% of the existing annual fuel oil
consumption could be offset by the use of wood chip fired boiler.
8.3 Wood Fuel Costs
The cost of wood chips was assumed to be $85/ton (see fuel resource inventory portion of this
report). The biomass boiler efficiency was assumed to be 70%. The wood chips were assumed
to be Hemlock at approximately 50% moisture content, yielding a heating value of 3700 Btu/lb.
The 50% moisture content value was used because even with chip drying components being
added to the biomass system, the heat energy needed to dry the chips will come from the boiler
itself, and this lower heating value takes into account this loss of efficiency of the plant, even if
the chips fed into the boiler are at a lower moisture content.
8.4 Additional Energy Costs
Electrical energy consumption is projected to increase with the installation of the wood fired
boiler. Equipment with electric motors include conveyors, augers, a compressor, and the heating
hot water system pumps. The cash flow analysis accounts for the additional electrical energy
consumption and reduces the annual savings associated with using the wood fired boiler plant
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rather than the fuel oil boilers. The power use is based on historical data from a wood fired
boiler plant in Darby, Montana and estimated heating system pump use.
8.5 Maintenance Costs
Based on discussions with other biomass system users, system manufacturers, and estimates of
operator time required, additional operation and maintenance time on average of 5 hours per
week were assumed. The cost of this over a 40 week operation period at $20/hour was used for
the analysis. In addition, experience has shown that the first two heating seasons have extra
maintenance time as the system “bugs” are worked out and the maintenance staff learns the
system. The analysis includes an additional 3 hours per week for the first two years to account
for this learning curve. Since an electrostatic precipitator is assumed to be used, and additional 1
hour per week of maintenance was added to the analysis for this.
8.6 Inflation Assumptions
The O&M inflation rate was assumed to be 2%. The escalation rate for fuel oil and electricity
was assumed to be 6%. Recent price volatility has made projections difficult. DOE now
predicts a slight plateau and a long term escalation rates between 3% and 11%. Fuel cost
escalation for wood based fuels was estimated at 3% annually. 3.0% was used for the Net
Present Value (NPV) discount rate. Any options which included a financing component
assumed interest rates of 5.0% for a term of 10 years. The principle and interest payments are
based on single annual payments, resulting in slightly higher payments than those associated
with a similar loan with monthly payments.
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9.0 EVALUATION OF OPTIONS
9.1 Evaluation Metrics
The project was evaluated using a 30-year cash flow analysis. Net Present Value (NPV) at year
20 and year 30 was calculated as was Accumulated Cash Flow (ACF) in year 30. The net
present value is a calculation of the net present value of an investment by using a discount rate
and a series of future payments (negative values) and income (positive values). The NPV is
based on the net annual cash flow series. The year the ACF equaled the capital cost was also
calculated. Accumulated Cash Flow should also be considered an avoided cost rather than a
pure savings because the savings are usually not allowed to accumulate.
9.2 Evaluation Summary
The table below summarizes the results of this assessment.
Table 6 — Economic Summary
Year 1 NPV NPV
Project Operating 30 yr 20 yr ACF YR
Option Cost Savings at 3% at 3% YR 30 ACF=PC
Option A.1A Main Campus $2,673,000 $22,821 $2,335,846 $1,116,128 $4,274,093 25
Option A.1.B Campus and Boiler Plant Location B $2,770,000 $22,821 $2,335,846 $1,116,128 $4,274,093 26
Option A.1.C Adding Sewer Plant to Campus and
Boiler Plant Location C $3,196,000 $17,710 $2,284,993 $1,055,333 $4,218,911 27
Option A.2A Campus Less Vocational Education $2,549,000 $21,621 $2,250,020 $1,072,870 $4,119,428 25
Option A.3A School Building Only Less Vocational
Education $2,289,000 $17,098 $1,926,455 $909,790 $3,536,340 26
Option A.4A Adding A Larger Load Such as DOT
to Campus $3,196,000 $30,570 $3,204,906 $1,518,980 $5,876,662 24
Option B.1 Campus with Pellet Boiler and Boiler
Plant Location A $2,258,000 -$25,562 $926,646 $176,661 $1,972,273 >30
y
The strongest option appears to be A.1A, the main campus with the new boiler plant located in
location A (off of 5th Ave.). This option has the best 30 year NPV and 30 year ACF (dismissing
Option A.4A – see discussion below). Detailed economic summary sheets for each of these
options can be found in Appendix D.
Options A.1B and A.1C looked at alternate locations for the boiler plant. The capital cost
increased for A.1B because larger pipe ran longer distances and since there was no additional
fuel oil saved, the economics deteriorated. Option A.1C had increased capital cost from the need
to directional drill under the Haines Highway, longer runs of large pipe, and also because new
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piping had to be installed in the Sewage Treatment Plant. Even though addition fuel oil was
saved from the Sewage Treatment Plant, it was not enough to offset the increased capital cost
and the economics also deteriorated.
Options A.2A and A.3A looked at ways to reduce the project costs by eliminating some of the
integration work. Option A.2A reduced the capital cost by not connecting to the vocational
education building, and Option A.3A was the lowest project cost for chip systems because all
integration was eliminated except for the school alone (the largest fuel oil user). In both cases,
however, even though the capital costs were reduced, there was also an associated reduction in
fuel oil savings and the economics did not improve.
Option A.4A was created to see if adding a theoretical large nearby fuel oil consumer would be
beneficial. No particular user was targeted, although the DOT site may be a possibility. The
costs for this are very conceptual (because it is a theoretical user) and it was assumed that 58,500
gallons of fuel oil was displaced (compared to 37,924 gallons in A.1A). The additional capital
cost offset the larger savings and the economics only slightly improved.
Option B.1 looked at a pellet boiler plant in location A. This option had the lowest capital cost
because the building size was reduced significantly because a silo replaced the chip storage area
and the pellet boiler system is cheaper than a chip system. However, with the current estimated
price for pellets delivered to Haines, there is no fuel cost savings. In fact, at this time it will cost
more to burn pellets than fuel oil, therefore, this option is not currently economically viable.
9.3 Sensitivity Analysis
Additional analysis was performed on Option A.1A to determine the sensitivity to varying some
of the economic factors. The first factors adjusted were the fuel oil and electricity inflation rate
and the wood fuel cost. The fuel oil unit cost was then varied. Finally the project cost was
adjusted. A table summarizing the results of the sensitivity analysis can be found in Appendix
D.
9.3.1 Fuel Oil and Electricity Inflation Rate and Wood Fuel Cost
The wood fuel cost was evaluated at $65/ton, $75/ton and $85/ton. When the wood fuel cost was
varied, the effect was minimal. The NPV and ACF decreased approximately 10% per for every
increase of $10 per ton. The fuel oil and electricity inflation rate was evaluated at 5%, 6%, 8%
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and 11%, basically spanning the range DOE has estimated for long term inflation on fuel oil.
Varying the fuel oil and electricity inflation rate had a significant effect. The NPV and ACF
increased between 35% and 40% for each percent increase in fuel oil inflation rate. This factor
had the greatest single effect on the economics.
9.3.2 Fuel Oil Unit Cost
The fuel oil unit cost was evaluated at $3.25, $3.75, $4.25, and $5.00 per gallon. Varying the
fuel oil unit cost had a moderate effect. The NPV and ACF increased approximately 25% for
each 15% increase in fuel oil unit cost.
9.3.3 Project Cost
The project cost was evaluated at 90%, 80%, and 70% of the estimated base cost and also at
$1,400,000 and $1,000,000. Varying the project cost only affected the simple payback and the
year in which ACF equaled the project cost and these changes had a minimal effect. This
analysis indicates the project begins to become a strong project if the project costs can be
reduced at least 30% (the NPV is 25% greater than the project cost at this point, although the
year in which ACF equaled the project cost was still over 20 years (22).
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10.0 CONCLUSION
With the present fuel oil price per gallon, consumption of fuel oil, and the high capital costs of
integrating a biomass heating system into multiple boiler rooms, this project is challenged.
Currently the 30 year NPV of the annual savings does not equal the initial project cost and the
ACF equals the 30 year NPV in year 25. The project economics are greatly affected by fuel oil
cost and inflation. If fuel oil approaches $3.75 per gallon, or the long term fuel oil cost inflation
rate approaches 8% (as opposed to 6%), then the project becomes much more viable. If
additional fuel oil loads can be added to the system (for a total displacement of at least 65,000
gallons) with reasonable integration costs, the project becomes more viable. Recent projects in
the western continental US of similar scope of integration have had better economics. This is
mainly due to the fact that the cost of construction is less in the lower 48 (nearly 30%), and also
because chipped wood fuel can be purchased between $40 and $60 per ton.
.
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11.0 FIGURES
Figure 2 — Floor plan of Central Wood Heat Building
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Figure 3 — Elevation of Central Wood Heat Building
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Figure 4 — Heat system preliminary layout for option A
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Figure 5 — Heat system preliminary layout for option B
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Figure 6 — Heat system preliminary layout for option C