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HomeMy WebLinkAboutKake Community Biomass Energy Feasibility Study - Sep 2013 - REF Grant 7071087Feasibility of a Woody Biomass Fuel Production and Distribution Business in Kake, Alaska September 2013 Prepared for: The Organized Village of Kake (OVK) On behalf of: Juneau Economic Development Council 612 W Willoughby Avenue, Suite A Juneau, AK 99801 (907) 523-2300 Prepared by: Andrew Haden Wisewood, Inc. 1001 SE Water Avenue, Suite 255 Portland, OR 97214 andrew@wisewood.us Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 1 INTRODUCTION 3 1.1 Options Considered 3 2 DISTRICT ENERGY 3 2.1 Target Customer's Existing Heating Systems 3 2.1.1 Kake City School District 4 2.1.2 Tlingit and Haida Senior Housing Center 4 2.1.3 Bingo Hall 4 2.2 Technology Assessed 4 2.2.1 Technology Description 4 2.2.2 Optimum installed capacity and capacity factor 5 2.2.3 Mechanical Integration 5 2.2.4 Site Considerations 5 2.3 Project Construction and Development Costs 6 2.4 Operations and Maintenance Costs 7 2.5 Heat Sales 7 3 KAKE WOOD SUPPLY ASSESSMENT 7 3.1 Available Timber Lands 7 3.2 Other Wood Resource Opportunities 9 3.3 Existing Infrastructure 10 3.4 Logging Systems and Associated Costs 12 3.5 Self -loader System 12 3.6 Shovel System 12 3.7 Mechanized System 12 3.8 Renewable Resource Sustainability 13 4 PRELIMINARY RECOMMENDATIONS 13 5 ENERGY MODEL 14 6 PROJECT COSTS 18 7 FINANCIAL MODEL 21 8 SITE PH 2 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 1 Introduction Kake, Alaska is a native village of approximately 710 people on the Northwest corner of Kupreanof Island. With no access to natural gas or the Alaskan railroad system, Kake relies on expensive imported fossil fuels for both its electrical power generation and its heating energy. Because Kake is so exposed to fossil fuel price volatility, it seemed to be a community in which a business focused on local production of wood energy for local consumption would be viable. This study represents a portion of the work commissioned by the Juneau Economic Development Council (JEDC), together with Keku Environmental, LLC, an enterprise of the Organized Village of Kake (OVK), to explore different business models that could utilize the forest resources surrounding Kake. 1.1 Options Considered While the larger study looks at a variety of enterprise options for utilizing wood resources by from selling firewood to local homes and other communities in SE Alaska to selling conditioned wood chips to local institutional boilers, the novel concept of selling metered thermal energy was seen as the most innovative and catalytic concept to begin with. This is an idea that may open the door to each of the other potential wood -to -energy concepts considered, and is therefore the focus of this study. Selling heat is seen as advantageous because it addresses the two primary barriers to implementation of wood -to -energy projects: 1) the upfront capital costs required for the design and construction of the systems; and 2) the additional labor requirement for operations and maintenance of wood fired -boilers. By financing the design and construction of the wood -fired boiler systems in Kake via a single entity, and by owning the boilers as a network of energy generation assets managed by a new business dedicated to the fueling and maintenance of the new boiler systems, the sale of thermal energy offers a way to overcome these two primary barriers while offering its customers a stable price for heat. 2 District Energy 2.1 Target Customer's Existing Heating Systems All of the institutional customers that are to be served by the district energy plant and/or future wood -fired boilers are experiencing increased budget pressure due to high heating bills resulting from the use of heating oil for space and domestic hot water heating. Existing energy resources for heating in Kake primarily include heating oil (#1 and 2) and propane. Diesel is imported to the community at a cost of $5.36 per gallon; propane rates were quoted verbally at $3.25-3.75/gallon. Moreover, the physical condition of many of the heating systems in participating institutions indicates that they are ready for replacement, and maintenance costs are continuing to increase. This study looks at the cost of providing each customer with a new low - maintenance heat source at or below the price they currently pay for fossil fuel, and 3 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 aims to understand at what level of subsidization a district energy system could cover its costs, including future replacement, while lowering and stabilizing heating costs for connected customers. Current fossil fuel -burning heating systems provide a direct pathway out of the community for significant amounts of money, and this is will be a consideration that will likely provide additional incentives for these potential customers to convert to a fuel system. By lowering fuel costs, the enterprise could also help its customers redirect existing fuel expenditures toward local employment and land restoration, a district energy system could facilitate positive economic, environmental and social outcomes simultaneously. 2.1.1 Kake City School District The Kake City School District building is heated by a Burnham model V909 #2 oil- fired boiler rated at 1,342 MBH. It replaced a slightly larger Burnham boiler in 2012 that no longer functions but is still in place in the school. The boiler uses a Beckett oil burner rated at 7.0-19.9 GPH and supplies hot water to the school's heat distribution system. Its efficiency is rated at 80%. In 2012 the School used 26,720 gallons of #2 fuel oil. At a current price of $5.36/gallon, the School's heating budget for 2013/14 is over $140,000. 2.1.2 Tlingit and Haida Senior Housing Center The Tlinglit and Haida Senior Housing Center is heated by two Weil -McLain oil -fired boilers rated at 184 MBH each. They use Beckett oil burners, rated at 1.10-2.00 GPH. The boilers were installed in 2006, but Senior Center Staff have had difficulty with them and expressed that they are open to other options. Discussions with maintenance staff indicate an average annual fuel consumption of approximately 4,800 gallons of #2 fuel oil, or $25,000 per year. 2.1.3 Bingo Hall The Kake Bingo Hall is heated by an oil -fired room heater that is estimated to consume 1,200 gallons of oil per year, for a cost of approximately $6,500. The building is used intermittently for events throughout the year. 2.2 Technology Assessed 2.2.1 Technology Description The system assessed is a 400 kW (1,365 MBH) state-of-the-art biomass boiler system capable of burning green biomass with up to 60% moisture content (MC). Wood chip fuel will be stored in a concrete bunker or structural steel bin outfitted with a hydraulic scraper floor reclaim system. Fuel conveyance to the furnace will be accomplished by either large diameter augers or a hydraulic ram feed. The combustion furnace will be a variant of a two -phased direct combustion furnace (with distinct primary and secondary combustion zones) with an active grate (optionally cooled) appropriate for wet fuels up to 60% MC, 4" maximum particle size, and 5% 4 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 maximum ash content. Automatic ignition, flue gas recirculation, oxygen sensor - based combustion controls, and a remote monitoring system will be specified for the system for maximum combustion efficiency. The hot water boiler will be a three -pass fire -tube boiler operating at 30 psi. Automated ash handling and storage will be specified for the system, allowing for the periodic removal of ash from the boiler room for use on local lands as a soil amendment or landfilled. Flue gas cleaning will be via high efficiency multi -cyclone. The boiler system and peripheral equipment will be housed in an insulated metal building with the fuel storage bin outside under cover, located adjacent to the building on the same concrete pad (approximately 1,600 square feet). 2.2.2 Optimum installed capacity and capacity factor Total system capacity will be 1,365 MBH (400 kW) calculated for the combined loads of the buildings selected to be connected to the district system. This is the optimum size for the biomass boiler in this location due to a long, relatively stable maritime weather pattern that allows for excellent base loading of the system. A 1,365 MBH boiler will be able to supply over 95% of the estimated energy demand for the connected buildings. 2.2.3 Mechanical Integration Heat distribution will be via factory -insulated underground PEX hot water piping. At each facility, a district energy substation will include a heat exchanger, Btu meter and data logger with telemetric capability to enable billing. Integration with existing heating systems will be made at each substation heat exchanger, which will be plumbed to behave as the lead boiler in a lead -lag configuration, with the existing boiler system fulfilling the lag role. 2.2.4 Site Considerations There is a large unused lot next to the Kake City Schools that is owned by the City of Kake and would be an ideal location for the construction of a District Energy plant. This site would also have room for the addition of future value added processing of wood resources into products such as micro -chips and kiln -dried cordwood. Anticipated barriers include trenching deep enough to lay the insulated PEX pipes below the frost line without encountering hardpan or bedrock. Additionally, due to its remote location, most materials will have be barged in, which can add significant cost. All design work will take into account any locally available skilled labor, and engineering will aim to reduce the amount of concrete and other heavy materials needed for construction. Figure 1. Proposed location of the Kake District Energy plant (in orange) with piping runs to Kake City Schools, Tlingit and Haida Senior Housing Center and Bingo Hall 5 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 I � 2 19 � 3 y ` r US Syn�j? Tweet a \. H1 Aot rfa 19»08 r r 2.3 Project Construction and Development Costs The total project cost is currently projected to be $1,425,000, including all project and development costs. Securing grants for a total of $800,000, or 56.2% of the project, is anticipated, with a construction loan during the construction phase for the remainder, or $625,000. The intent of this funding structure is to leverage a mix of public and private money to fund the construction of the district energy plant. The total project cost includes $1,137,000 in direct capital costs and $288,000 in development costs. The detailed cost estimate (attached) provides a breakdown of all major costs for the project. M. Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 2.4 Operations and Maintenance Costs In the thermal energy sales model, all of the operations and maintenance costs normally borne by the individual building owner are now borne by the district energy plant operator. Therefore the operation and maintenance costs include non- traditional items such as legal, accounting, insurance, replacement reserves, property taxes and lease payments. The projected operating, maintenance and fuel costs are $101,972 in year one. This includes fueling ($68,210 for wood chips; $3,317 for fuel oil), labor ($9,600), electricity ($3,287), as well as maintenance and repair, legal, accounting, insurance, site lease, replacement reserves and property taxes ($17,558). These costs combined would be significantly lower (20% at system start, when modeled at breakeven) than the existing heating, operating, and maintenance costs of connected customers' current systems, and all of the 0&M costs will be funded by the heat bills of the connected customers. 2.5 Heat Sales The three facilities that would receive heat from the proposed biomass energy system include the Kake City Schools, the Tlinglit and Haida Senior Housing Center, and the Bingo Hall. All of these facilities are publically owned and operated. If the city were to own and operate the District Energy system, they would be their own customer, and so could retain any savings gained by the system over its lifetime. Should the system be owned and operated by a third party, which is modeled in the feasibility study's economic analysis, then the city would be the customer, with each of its three facilities connected to the biomass system and their energy use separately metered at each site. Projected thermal energy purchase prices are $33- 35/mmBtu, significantly lower than the current efficiency non -corrected purchase price of $38.56 ($48.20 at 80% efficiency, and not including maintenance costs) 3 Kake Wood Supply Assessment 3.1 Available Timber Lands There are approximately 30,000 acres of road -accessible young growth forest approximately evenly split between the US Forest Service (USFS), SEALASKA Corporation and Kake Tribal Corporation (KTC). There are approximately 11,000 acres of old -growth timber lands that are considered suitable for logging near existing roads, the vast majority of which occurs on USFS lands. Approximately two-thirds of the young -growth and old -growth timber lands are ground operable (slopes < 35%); the rest would require cable logging systems. Age classes of the young -growth stands range from 15-50 years and site productivity is highly variable. Many of these stands are in need of pre -commercial thinning (especially on KTC lands) and wildlife habitat enhancement. Some of these lands could be available for commercial thinning in the next 20 years. Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 Old -growth stands that are suitable for logging near the Kake road system are generally low volume (10-20 MBF/acre) and tend to include a high percentage of defect (> 30%). Although the stands with high defect would likely still be suitable for biomass wood products, these conditions reduce the economic viability of a combination sawlog and biomass operation. There are currently 26 MMBF of NEPA cleared old -growth timber that the USFS can make available through timber sales near Kake. Round-trip haul times for this timber are approximately 1.5 hours. Photo 1. Example of relatively high value roadside old -growth from the Central Kupreanof Timber Sale. Units that have a component of yellow cedar are the most likely to provide opportunities for a combined sawlog and biomass operation. Photo 2. Example of —40 year old roadside young growth stand. This stand was pre - commercially thinned in the 1980s to 12' x 12' spacing and could easily support a second thinning entry that would result in improved wildlife habitat while providing approximately 5- 10 MBF/acre of low-grade wood as a byproduct. There are approximately 3,000 acres of this forest type within a one -hour round trip from Kake. 8 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 3.2 Other Wood Resource Opportunities There is an unknown, but likely considerable, volume of cull wood that is already decked near both private and public land road systems. Personal communications from the CEO of KTC suggest that 5-10 MMBF is available near a small section of road that is within 20 minutes of town. There is a large amount of "pre -commercial" thinning scheduled on both public and private lands near Kake. Although the feasibility of using thinning waste has not been demonstrated in Southeast Alaska, this report sketches out a system that should be economical within 200 feet of the road and that we are confident would provide access to enough material to jump-start this operation. Photo 3. Cull wood left from historical logging operations. It is also worth considering the option of Red Alder cultivation for long-term biomass feasibility. Red Alder forests could be generated and maintained in suitable sites through ground harvest and ground scarification and would result in a fast-growing, easy -to -access and higher -Btu wood resource that also adds biodiversity values. If the production of wood heat products develops so that it is economically feasible to meet potential export markets in Sitka and Juneau, it would likely be necessary to start looking at nearby Kuiu Island for additional timber lands. 9 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 Photo 4. Roadside alder stands are common in areas that were tractor logged in the 1960s and 1970s. 3.3 Existing Infrastructure There are approximately 250 miles of logging road connected to the Kake road system. Although much of this road is currently not navigable because of storage operations (culverts and bridges removed) and a lack of brushing, there is still a very extensive system that can be considered suitable as a "wood basket" for a heating products business. As a general indicator, it is worth noting that approximately 75% of the USFS road system is currently considered open and available for logging operations (approximately 120 miles). Data for SEALASKA and KTC road systems was not available at the time of this report but it is likely that a smaller percentage of corporation land roads are currently drivable. Considerable additional road access could also be developed by brushing alone. There is limited logging equipment currently operating in Kake. Between one and three operations exist, each of which operates sporadically and is generally limited to forests very near existing roads (less than 200 feet). Wood waste from these operations is currently nominal. One local operator (K. Merry) suggested that he could provide up to 4 MBF per day given suitable timberlands. There are approximately 3,600 acres of suitable old -growth timber lands within 200 feet of existing USFS roads. 10 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 Figure 2. Map showing Kake area ownerships, suitable old -growth, young -growth age classes and operability. Kake -_, Basic Forest Inventory Data <, r for Kake Biomass Feasibility �l 0 5 N Miles r iP 1,1 Operability Young Growth Age Classes Ground Operable 0 10 years or younger — Roads ® 10-20 years old Land Status 20-30 years old • <all other values> 30-40 years old • US Forest Service • 40 years and older ® SEALASKA Regional Corp. Suitable Old -growth ED Kake Village Corp. • USFS SUitable Old -growth 11 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 3.4 Logging Systems and Associated Costs For the purposes of this report we have assessed logging costs for three scenarios: 1) hand fall and buck with a shortlogger self -loader; 2) hand fall and buck with shovel skidding and a long log truck; and 3) mechanized fall, buck and skid with a long log truck. Each scenario includes all costs necessary to deliver round logs to a processing facility within a two-hour round trip from Kake (Table 1) and assumes a high degree of defect in old -growth stands. Longer -span cable logging systems are considered uneconomical and unsustainable for the Kake road system at this time. 3.5 Self -loader System Existing logging and delivery capacity in Kake is restricted to very short -span cable systems and short log self -loader trucks. These systems can access only a fraction of the total wood basket available near Kake but they may be satisfactory for initial business start-up. The costs included in Table 1 are based on a phone conversation with a Kake resident who runs a local logging operation. 3.6 Shovel System One of the most common and economical forms of old -growth logging in Southeast Alaska today is the shovel logging system. This system is capable of operating on lands with slopes less than 35% on well -drained sites and less than 20% on wetter sites. There is a small track -hoe in Kake that would be suitable for service as a shovel if a grapple -head were added; otherwise this system would have to be mobilized from outside the community. The costs included in Table 1 were generated using the USFS Tongass Logging Cost Calculator (Petaisto 2012). 3.7 Mechanized System Logging for biomass operations using a mechanized feller is the second -most economical approach. These systems are being used in numerous locations throughout the world, including the Chugach National Forest in Alaska. The same small track -hoe cited above may be suitable for use as a mechanical feller with the appropriate head attachment; otherwise this system would have to be mobilized from outside the community. For the purposes of this report the costs included in Table 1 were generated using the USFS Tongass Biomass Treatment Calculator (Hemphill 2011). 12 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 Table 1. Logging costs considered for biomass heat feasibility in the community of Kake. Logging Short -span + Self loader Partial Cut Shovel System for Sawlog+ Biomass Forest Type Old -growth < 200' from road Cost per CCF $352 Cost per cord $303 Old -growth 10Mbf/acre Merch. $156 $117 Shovel System for mostly Biomass Low grade Old -growth 15Mbf/acre $239 $205 Mechanized Thin (1/3 BA) Young -growth (avg. 12" dbh. X 70') $199 $171 3.8 Renewable Resource Sustainability This section of the report estimates that the total wood supply necessary to meet all commercial heating needs in Kake is approximately 1,000 cords, or 1,550 green tons, annually. The table below summarizes the available data for suitable old -growth and young -growth forests near Kake. The two right-hand columns estimate the number of years of supply available from the local wood basket based on clearcut and partial cut scenarios (20 MBF/acre and 10 MBF/acre, respectively). Renewable resource supply from the local land base appears to be sustainable and provides room for the existing residential heat market and future growth. Table 2. Natural resource availability for biomass heat feasibility in the community of Kake. Timber Supply NUSFSAcres UKTCAcres USEALASKAAcres UTotals a Estimated Years of Supply using Clearcut a Estimated Years of Supply using Partial Cut U Old -growth Ground 6,839 541 0 7,380 96 48 YG GRND 40 yrs+ 2,961 143 729 3,104 40 20 YG GRND 30-40 yrs 2,137 4,674 2,860 6,811 89 44 YG GRND 20-30 yrs 952 2,164 614 3,116 41 20 YG GRND 10-20 yrs 1,467 2,224 486 3,691 48 24 YG GRND 10 yrs or less 96 0 0 96 1 1 Totals 14,452 91746 4,689 24,198 315 158 4 Preliminary Recommendations As the broader study of which this district energy feasibility study is part has progressed, from looking at small scale stick -fired boilers systems, to small and medium scale conditioned "Micro -chip" boilers for individual buildings, and finally to district energy, it has became apparent that some form of institutional structure is needed to both establish this new form of renewable heating in the community and to host and develop the technical competence needed to fuel, operate and maintain the new heating systems. By creating a new entity that finances, owns, operates and maintains the wood -fired on behalf of their customers, and sells thermal energy as a service, the major barriers to adoption of wood energy in Kake can be overcome in a systematic way. In the process, a new institution will be formed that offers durable local employment while enhancing forest restoration on Tribal and National Forest lands, for decades to come. If successful, this project will create a replicable model for deployment of biomass thermal energy technology in other Southeast Alaskan communities. 13 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 5 Energy Model 14 LO LO r� N 0 M O O O Q N c W 3 N 3 0 3 = o V w 3 r 3 M c M O m a O m m R c _ o a w c � a U J = J npo J �O C w �0 O � C N Z LLI to /O t o li N 0 w o n Zo'�N s W LL U bN0 W °o a Y 3 w m N M V M N O m Cj r 0 LP V m W LO N, W N r m m Cl) M N t+) (A (A O m .�-I o I M m 3g N p O LO a N W L00 cq Oj m M N " 0) t0 O O V cq O m N 0LO m LO O m O O m O M r1 H3 10 c m w e r 0 MC� M a C (D E c a `m o 3 v r1 m m 1— r1 O r1 m m m r1 c M m cj N O) V O t0 M N t` m I N M LO LO LO 7 Lq M M N c-I c-I a` c c_ O m E s O U m m E g LO ci m m 0 00 LO tp V LO m N V V 00 M 00 N N C W w a' L m .-1 LO 1-1 m m O 00 LO m V LO m I-i N V M� N N� c � C C w r W O O T O T p O p (U L N Q O b00 O Z ❑ W T N ID 0 a ao 3 (C) m <b 3 O � Cl) o a S m �d d w` U N M. a � N d � 4 Ln y O O M o C6 M N m T CL = j a" o 0 O s d 3 T y U W Z O J N J � z � w - > z o 0 Q MAz> w Q co Y s m M Y Y Q O U � U ZT/0E/8 ZT/EZ/8 ZT/9T/8 ZT/6/8 ZT/Z/8 ZT/9Z/L ZT/6T/L ZT/ZT/L ZT/9/L ZT/8Z/9 ZT/TZ/9 ZT/bT/9 " ZT/L/9 L ZT/T£/9 ZT/bZ/9 Q FT/LT/9 m ZT/OT/9 ZT/E/9 UZT/9Z/b ZT/6T/b m Q ZT/ZT/b O 0 ZT/9/b a 5 ZT/6Z/£ ZT/ZZ/£ Q% m Z ZT/9T/£ ao - ZT/8/£ 3 _ ZT/T/£ b.A ZT/EZ/Z w is ZT/9T/Z ■ i ZT/6/Z O- - - ZT/Z/Z m C ) ZT/9Z/T a R ZT/6T/T J c m O ZT/ZT/T = J - ZT/s/T ++ 16 co TT/6Z/ZT N TT/ZZ/ZT TT/9T/ZT a) TT/8/ZT 4� (o TT/T/ZT ETT/bZAT ++ TT/LT/TT LU TT/OT/TT TT/E/TT TT/LZ/OT TT/OZ/OT TT/£T/OT TT/9/OT TT/6Z/6 TT/ZZ/6 TT/9T/6 TT/8/6 0 TT/T/6 0 0 0 0 0 N N ci (HEW) pueuaaQ ci leaH AjjnOH a�ieaany N U J J J H Z cW C 2) Z a)/o W LL U N C C N Z ❑ m W U jL U Y -b ?V,3 W °o u5 Y 3: W M V 7 d N M O m O M m O 2 O � U 3 N ` Q 3 J Z O d = O C o _E CL d N O £ 4) ~ W O N 0 U N a m = cC o E O J w o 2 d � U Q n � d m N r W O M v�i O O O N O O O o v�i N (HSW) O O O puewaa;BOH N O O O O O O O O O o u�i pa;ewi S3 3 8 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 6 Project Costs 18 KEKU ENVIRONMENTAL, LLC Project Costs - Detailed Boiler Option Wood -Fired District Energy System Output 1,365 MBH Fuel Type Forestry Residuals Construction Costs Orig. Date 22-Aug-13 Rev. Date 30Sep-13 Version 3.9.7 Contact Andrew Haden Phone (503) 706-6187 Email andrew@wisewood.us Site Preparation and Demolition SF 4,000 $ 2 0 $ $ $ $ 8,000 0.6% Excavation CY 590 $ 40 0 $ $ $ $ 23,600 1.7% Concrete (Building, Equipment and Fuel Bunker) CY 90 $ 500 320 $ 5,000 $ 45,000 $ 24,000 $ 74,000 5.2% Boiler Building (Pre-engineered Steel) SF 1,600 $ 30 320 $ - $ 48,000 $ 24,000 $ 72,000 5.1% Subtotal Civil/Structural: 640 $ 5,000 $ 93,000 $ 48,000 $ 177,600 12.5% Mechanical Installation Fuel Storage and Conveyanc Walking floor, width=4,5m, length=10,Om EA 1 $ 29,000 80 $ 3,000 $ 29,000 $ 6,000 $ 38,000 2.7% Hydraulic stoker, length=4,5m EA 1 $ 22,000 40 $ - $ 22,000 $ 3,000 $ 25,000 1.8% Wood chip fuel bunker retaining wall EA 1 $ 8,000 16 $ - $ 8,000 $ 1,200 $ 9,200 0.6% Subtotal: 136 $ 3,000 $ 59,000 $ 10,200 $ 72,200 5.1% Biomass Boiler JEW Wood Chip -Fired Hot Water Boiler (1365 MBH) EA 1 $ 265,000 160 $ 3,000 $ 265,000 $ 12,000 $ 280,000 19.7% Hot Water Storage Tank (700 gal.) EA 1 $ 25,000 40 $ - $ 25,000 $ 3,000 $ 28,000 2.0% Breeching and Stack (12") FT 40 $ 400 16 $ $ 16,000 $ 1,200 $ 17,200 1.2% Boiler Pumps EA 2 $ 1,250 16 $ $ 2,500 $ 1,200 $ 3,700 0.3% Boiler Piping FT 50 $ 30 32 $ $ 1,500 $ 2,400 $ 3,900 0.3% Subtotal: 264 $ 3,000 $ 310,000 $ 19,800 $ 332,800 23.4% Piping and Plumbing Buried 3" Preinsulated PEX (School Loop) FT 400 $ 90 160 $ 2,000 $ 36,000 $ 12,000 $ 50,000 3.5% Trenching and Backfill (2-Pipe) FT 200 $ 20 80 $ 5,000 $ 4,000 $ 6,000 $ 15,000 1.1% Buried 2.5" Preinsulated PEX Twin (Senior Cntr.) FT 500 $ 55 200 $ - $ 27,500 $ 15,000 $ 42,500 3.0% Buried 1" Preinsulated PEX Twin (Bingo Hall) FT 200 $ 35 80 $ $ 7,000 $ 6,000 $ 13,000 0.9% Trenching and Backfill Single Pipe (Thermal Twin) FT 700 $ 15 80 $ $ 10,500 $ - $ 10,500 0.7% PEX Vaults EA 2 $ 1,500 40 $ $ 3,000 $ 3,000 $ 6,000 0.4% PEX Fittings EA 60 $ 50 40 $ $ 3,000 $ 2,070 $ 5,070 0.4% DE Meter EA 3 $ 10,000 24 $ $ 30,000 $ 1,800 $ 31,800 2.2% Utilties-Water FT 200 $ 25 32 $ $ 5,000 $ 2,400 $ 7,400 0.5% UtiltiesSewer FT 200 $ 30 32 $ $ 6,000 $ 2,400 $ 8,400 0.6% Subtotal: 768 $ 7,000 $ 132,000 $ 50,670 $ 189,670 13.3% Mechanical Contr Per Diem 146 Man Days $150.00 $21,900 $21,900 1.5% Travel 29.2 Man Weeks $300.00 $8,760 $8,760 0.6% Subtotal: $ - $ - $ 30,660 $ 30,660 2.2% Subtotal Mechanical Installation 1,168 $ 13,000 $ 501,000 $ 111,330 $594,670 41.8% Electrical Control Wiring 160 $ 12,000 $ 13,600 $ 25,600 1.8% Power Distribution 80 $ 15,000 $ 6,800 $ 21,800 1.5% Subtotal Electrical 240 $ - $ 27,000 $ 20,400 $47,400 3.3% Boiler Permit $ 500 0.0% Building Permit $ 3,500 0.2% Electrical Permit $ 1,000 0.1% Subtotal Permitting $5,000 0.4% Miscellaneous Freight to Project Site $ 20,000 1.4% Subtotal Miscellaneous $20,000 1.4% All materials contained in this document are the intellectual property of Wisewood, Inc. and are provided exclusively to Client. Copyright© 2013, Wisewood, Inc. All rights reserved. Uncertainty (Construction) Construction Contingency Unlisted Items Allowance 8.0% 3.0% $ $ 67,574 4.7% 25,340 1.8% Subtotal Direct Costs 2,048 $ 18,000 $ 621,000 $ 179,730 $ 937,584 65.9% Contractor Costs of Direct Costs General Conditions 4.0% $ 37,503 2.6% Overhead 1.0% $ 9,376 0.7% Profit 10.0% $ 93,758 6.6% Liability Insurance 1.8% $ 16,408 1.2% Construction All Risk Insurance 0.6% $ 6,814 0.5% Payment & Performance Bond 3.0% $ 34,276 2.4% Subtotal Contractor Costs 21.1% $198,136 13.9% Subtotal Construction Costs $ 1,135,719 79.8% Project Development Costs Engineering, Procurement and Contruction ` %Tot. Cost Civil/Mechanical/Structural Engineering 10.0% $ 113,572 8.0% Project Management 4.0% $ 45,429 3.2% Construction Management 4.0% $ 45,429 3.2% Testing, Training and Start-up Assistance 3.0% $ 34,072 2.4% Subtotal: $ 238,501 16.8% Finance and Accounting �EII % Tot. Cost Legal $ 10,000 0.7% Accounting $ 5,000 0.4% Finance Package Consulting and Fees 3.0% $ 34,072 2.4% Subtotal: $ 49,072 3.4% Subtotal Development Costs $ 287,573 20.2% All materials contained in this document are the intellectual property of Wisewood, Inc. and are provided exclusively to Client. Copyright © 2013, Wisewood, Inc. All rights reserved. All materials contained in this document are the intellectual property of Wisewood, Inc. and are provided exclusively to Client. Copyright© 2013, Wisewood, Inc. All rights reserved. Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 7 Financial Model 21 KEKU ENVIRONMENTAL, LLC Wood -Fired District Energy Sources and Uses of Funding 30-Sep-13 Version 3.9.7 Construction Period Sources of Funding = Total % of Total Construction Period Grant $ 800,000 56% Construction Loan $ 623,292 44% Total Sources of Funding $ 1,423,292 100% Uses of Funding _ Total % of Total Construction Costs $ 1,135,719 80% Development Costs $ 287,573 20% Total Uses of Funding $ 1,423,292 100% Funding Surplus (Gap) $ 0.0% Construction Period Financing Assumptions Construction Loan Amount $ 623,292 Interest Rate 6% Term (Months) 12 W - o off_ Contact Andrew Haden Phone (503) 706-6187 Email andrew@wisewood.us Permanent Period Sources of Funding Total Permanent Period Equity $ 0% Permanent Period Grants $ 0% Permanent Debt: Senior Loan Subtotal Permanent Debt Total Sources of Funding Senior Loan - Amount Interest Rate Term (Years) Debt Service (Annual) DCR $ 623,291.92 100.0% $623,292 100.0% $ 623,292 100.0% $ 623,292 5% 20 $33,257 1.60 All materials contained in this document are the intellectual property of Wisewood, Inc. and are provided exclusively to Client. Copyright© 2013, Wisewood, Inc. All rights reserved. KEKU ENVIRONMENTAL, LLC Wood -Fired District Energy VV E—V�� OO OO D_ Stabilized -Year Operating Proforma Contact Andrew Haden 30-Sep-13 Phone (503) 706-6187 Version 3.9.7 Email andrew@wisewood.us Existing Fossil Heating System Operating Cost Existing Oil Bill 175379 per year Maintenance labor (school) $ 0.50 FTE Salary $ 30,000.00 per year Maintenace cost (Senior Center, Bingo Hall) $ 3,600.00 pe year Existing Heating Cost, Total $ 193,979 Wood -Fired District Energy Heat Price Estimated Reduction in Fuel Bill of Connected Facilities 20.00% $ 38,796 District Energy Heat Price, Total $ 155,183 Proposed District Energy System Operating and Maintenance Cost Remaining Heating Oil Heating Oil Use (Peak and Low Load) 86 mmBtu per Year Heating Oil Cost $ 38.56 per mmBtu Subtotal: $ 3,317 Wood Wood Use 544 Green Tons per year Wood Use 4,457 mmBtu per Year Wood Fuel Cost $ 15.30 per mmBtu (@ 50% MC) Wood Fuel Cost $ 125.48 per Green Ton (@ 50% MC) Subtotal: $ 68,210 Electricity - Annual Operations Max Boiler Output Average Boiler Output Maximum Electrical Draw Average Electrical Draw Annual Use Electricity Cost 2868 Hours/Year 1,365 MBH 828 MBH 3 kWh 1.8 kWh/Hour 5,217 kWh $0.63 per kWh Subtotal: $ 3,287 Parts and Labor W Labor needs 8 Hours per Week 40 Weeks per Year 320 Hours per Year Labor Cost $ 30.00 per Hour All materials contained in this document are the intellectual property of Wisewood, Inc. and are provided exclusively to Client. Copyright* 2013, Wisewood, Inc. All rights reserved. Subtotal: $ 9,600 Reserves for boiler replacement 1.5% of Boiler Cost $ 4,200 Maintenance and Repair Parts $ 2,000 Subtotal: $ 6,200 Legal $ 300 Accounting $ 300 Insurance Cost 0.25% of Project Cost $ 3,558 Site Lease Fee $300.00 per Month $ 3,600 Annual Property Taxes $ 3,600 Subtotal: $ 11,358 Total Proposed Heating System Operating Costs $ 101,972 EBITDA $ 53,212 Debt Service Senior Loan $49,361 Total Debt Service $49,361 All materials contained in this document are the intellectual property of Wisewood, Inc. and are provided exclusively to Client. Copyright* 2013, Wisewood, Inc. 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Nameplate for Burnham boiler at Kake City Schools Boiler Model Number Number of Sections Jacket Length (inches) it V903 3 18-1i4 --- _ -- V904 - 4 24-1/4 --- V905 5 30-1/4 `--- V906 6 36-1 /4 - - - V907 7 42-1/4 =059 V968 - 8 48-1/4 1110 - _V909= 9 54 1/4 1342 _ V910 10 60 1 /4 1528 11 66-1/4 1714 _V911_- V912 12 72-1/4 1900 To determine boiler size, count the number of sections or measure the jacket length. 30 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 Photo 7. Weil -McLain Boilers at the Tlingit and Haida Senior Housing Center 31 Feasibility of Wood -Fired District Energy for Kake, Alaska September 2013 Photo 8. Nameplate for Weil McLain hot water boiler at the Senior Housing Center All photos: Wisewood, Inc. 11141111111 a 11 _ 32