HomeMy WebLinkAboutTyonek_DJP-final 2008Preliminary Feasibility Assessment for High
Efficiency, Low Emission Wood Heating
In Tyonek, Alaska
Prepared for:
Angela Sandstol
Native Village of Tyonek
Prepared by:
Daniel Parrent,
Wood Utilization Specialist
Juneau Economic Development Council
Submitted June 26, 2008
Notice
This Preliminary Feasibility Assessment for High Efficiency, Low Emission Wood Heating was prepared by
Daniel Parrent, Wood Utilization Specialist, Juneau Economic Development Council for Angela Sandstol,
President, Native Village of Tyonek, Tyonek, AK. This report does not necessarily represent the views of the
Juneau Economic Development Council (JEDC). JEDC, its Board, employees, contractors, and
subcontractors make no warranty, express or implied, and assume no legal liability for the information in this
report; nor does any party represent that the use of this information will not infringe upon privately owned
rights. This report has not been approved or disapproved by JEDC nor has JEDC passed upon the accuracy
or adequacy of the information in this report.
Funding for this report was provided by USDA Forest Service, Alaska Region,
Office of State and Private Forestry
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Table of Contents
Abstract
Section 1. Executive Summary
1.1 Goals and Objectives
1.2 Evaluation Criteria, Project Scale, Operating Standards, General Observations
1.3 Assessment Summary and Recommended Actions
1.3.1 Tyonek Tribal Center
1.3.2 Snack Bar
1.3.3 Boys and Girls Club
1.3.4 Justin Time General Store
1.3.5 District Heating System
Section 2. Evaluation Criteria, Implementation, Wood Heating Systems
2.1 Evaluation Criteria
2.2 Successful Implementation
2.3 Classes of Wood Heating Systems
Section 3. The Nature of Wood Fuels
3.1 Wood Fuel Forms and Current Utilization
3.2 Heating Value of Wood
Section 4. Wood-Fueled Heating Systems
4.1 Low Efficiency High Emission Cordwood Boilers
4.2 High Efficiency Low Emission Cordwood Boilers
4.3 Bulk Fuel Boiler Systems
Section 5. Selecting the Appropriate System
5.1 Comparative Costs of Fuels
5.2(a) Cost per MMBtu Sensitivity – Cordwood
5.2(b) Cost per MMBtu Sensitivity – Bulk Fuels
5.3 Determining Demand
5.4 Summary of Findings and Potential Savings
Section 6. Economic Feasibility of Cordwood Systems
6.1 Initial Investment Cost Estimates
6.2 Operating Parameters of HELE Cordwood Boilers
6.3 Hypothetical OM&R Cost Estimates
6.4 Calculation of Financial Metrics
6.5 Simple Payback Period for HELE Cordwood Boilers
6.6 Present Value, Net Present Value and Internal Rate of Return Values for a Simple HELE
Cordwood Boiler Installation
Section 7. Economic Feasibility of Bulk Fuel Systems
Section 8. Conclusions
References and Resources
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Appendices
Appendix A AWEDTG Evaluation Criteria
Appendix B Recoverable Heating Value Determination
Appendix C List of Abbreviations and Acronyms
Appendix D Wood Fuel Properties
Appendix E Financial Metrics
Appendix F Operational Parameters of HELE Cordwood Boilers
Appendix G Garn Boiler Specifications
List of Tables and Figures
Table 4-1 HELE Cordwood Boiler Suppliers
Table 4-2 Emissions from Wood Heating Appliances
Table 5-1 Comparative Cost of Fuel Oil vs. Wood Fuels
Figure 5-1 Effect of White Spruce Cordwood Price on Cost of Delivered Heat
Table 5-2 Reported Annual Fuel Oil Consumption, Tyonek, AK
Table 5-3 Estimate of Heat Required in Coldest 24-Hour Period
Table 5-4 Estimate of Total Wood Consumption, Comparative Costs and Potential Savings
Table 6-1 Initial Investment Cost Scenarios for Hypothetical HELE Cordwood Systems
Table 6-2 Labor/Cost Estimates for HELE Cordwood Systems
Table 6-3 Summary of Total Annual Non-fuel OM&R Cost Estimates
Table 6-4 Simple Payback Period Analysis for HELE Cordwood Boilers
Table 6-5 PV, NPV and IRR Values for a Simple HELE Cordwood Boiler Installation
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Key words: HELE, LEHE, bulk fuel, cordwood
ABSTRACT
The potential for heating various facilities in Tyonek, Alaska with high efficiency, low emission
(HELE) wood-fired boiler(s) is evaluated for the Native Village of Tyonek (NVT).
Early in 2007, organizations were invited to submit a Statement of Interest (SOI) to the Alaska
Wood Energy Development Task Group (AWEDTG). Task Group representatives reviewed all the
SOIs and selected projects for further review based on selection criteria presented in Appendix A.
AWEDTG representatives visited Tyonek during the fall of 2007 and information was obtained for
the various facilities. Preliminary assessments were made and challenges identified. Potential
wood energy systems were considered for the projects using AWEDTG, USDA and AEA
objectives for energy efficiency and emissions. Preliminary findings are reported.
SECTION 1. EXECUTIVE SUMMARY
1.1 Goals and Objectives
• Identify facilities in Tyonek as potential candidates for heating with wood
• Evaluate the suitability of the facilities and sites for siting a wood-fired boiler
• Assess the type(s) and availability of wood fuel(s)
• Size and estimate the capital costs of suitable wood-fired system(s)
• Estimate the annual operation, maintenance and repair costs of a wood-fired system
• Estimate the potential economic benefits from installing a wood-fired heating system
1.2 Evaluation Criteria, Project Scale, Operating Parameters, General Observations
• This project meets the AWEDTG objectives for petroleum fuel displacement, use of
hazardous forest fuels or forest treatment/processing residues, [apparent] sustainability of
the wood supply, community support, and project implementation, operation and
maintenance.
• Given the combined annual fuel oil consumption estimate of 7,050 gallons per year
(Tyonek Tribal Center, 2,800 gpy; Snack Bar, 1,300 gpy; Boys and Girls Club, 1,250 gpy;
Village store, 1,700 gpy) this project would be considered “medium” in terms of its
relative size.
• Medium and large energy consumers have the best potential for feasibly implementing a
wood-fired heating system. Where preliminary feasibility assessments indicate positive
financial metrics, detailed engineering analyses are usually warranted.
• Cordwood systems are generally appropriate for applications where the maximum heating
demand ranges from 100,000 to 1,000,000 Btu per hour. “Bulk fuel” systems are generally
applicable for situations where the heating demand exceeds 1 million Btu per hour.
However, these are general guidelines; local conditions can exert a strong influence on the
best system choice.
• Efficiency and emissions standards for Outdoor Wood Boilers (OWB) changed in 2006,
which could increase costs for small systems.
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1.3 Assessment Summary and Recommended Actions
Four facilities are included in this report:
1.3.1. Tyonek Tribal Center
• Overview. The Tyonek Tribal Center (TTC) occupies approximately 4,500 square feet
and serves as the “nerve center” for Tyonek. The Native Village of Tyonek is the largest
employer in Tyonek as well as the office for social services needs such as assistance with
utilities, education, etc. The tribe has about 30 employees who work in different areas
such as Head Start, Health, Education, Housing, Road Maintenance, and Environmental.
The tribe also has a full administration staff that includes a Tribal Administrator,
Administrative Assistant and 2 full-charge bookkeepers, all of whom are responsible to a
nine member Tribal Council.
Heat is provided to the TTC via a Lennox OF2305-175/210R-4A oil-fired furnace, rated at
186,000 Btu per hour (maximum, gross). This furnace only supplies heat to the large
center room of the building. There is a Toyo stove (out of order in September 2007) and
electric baseboard heat in the conference room, and electric baseboard heat in the offices.
Domestic hot water is provided by a single electric water heater, American (brand), model
E61-50R-045D.
• Fuel Consumption. The Tyonek Tribal Center reportedly consumes 2,800 gallons of #1
fuel oil per year. However, no estimate of electricity usage was available.
• Potential Savings. At the current price of about $6.50 per gallon, the Tyonek Tribal Center
spends approximately $18,200 per year for fuel oil. The HELE cordwood fuel equivalent of
2,800 gallons of #1 fuel oil is approximately 33 cords, and at $225 per cord represents a
potential annual fuel cost savings of $10,775 (debt service and non-fuel OM&R costs
notwithstanding).
• Required boiler capacity. The estimated required boiler capacity (RBC) to heat the TTC is
approximately 72,920 Btu/hr during the coldest 24-hour period. [NOTE: this estimate of
RBC is based solely on the amount of fuel oil consumed.]
• Recommended action regarding a cordwood system. Given the initial assumptions and
cost estimates for the alternatives presented in this report, this project appears to be
reasonably viable. Further consideration is warranted. (See Section 6)
• Recommended action regarding a bulk fuel wood system. Given the relatively small
heating demand, apparent lack of bulk fuel(s), and the probable cost of such a project, a
“bulk fuel” system would not be cost-effective for the Tyonek Tribal Center.
1.3.2. Snack Bar
• Overview. This building is currently unoccupied due to the high cost of heating it. In the
past it has served as a snack bar, adult recreation center, and adult education center. It is
approximately 1,750 square feet in size. At the time of our site visit the building was
locked and inaccessible; information regarding the heating system was not determined.
• Fuel Consumption. The snack bar reportedly consumes 1,300 gallons of #1 fuel oil per
year when it is occupied.
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• Potential Savings. At the current price of about $6.50 per gallon, the Snack Bar would
spend approximately $8,450 per year for fuel oil (based on the assumed 1,300 gpy). The
HELE cordwood fuel equivalent of 1,300 gallons of #1 fuel oil is approximately 15 cords,
and at $225 per cord represents a potential annual fuel cost savings of $5,075 (debt service
and non-fuel OM&R costs notwithstanding).
• Required boiler capacity. The estimated required boiler capacity (RBC) to heat the snack
bar is approximately 34,200 Btu/hr during the coldest 24-hour period.
• Recommended action regarding a cordwood system. Given the initial assumptions and
cost estimates for the alternatives presented in this report, this project appears to be viable.
Further consideration is warranted. (See Section 6)
• Recommended action regarding a bulk fuel wood system. Given the relatively small heating
demand, apparent lack of bulk fuel(s), and the probable cost of such a project, a “bulk fuel”
system would not be cost-effective for the Snack Bar.
1.3.3. Boys and Girls Club
• Overview. The Tyonek Boys and Girls Club occupies approximately 2,400 square feet,
and provides youth services to young people in Tyonek. Heat is provide by a Weil McLain
Gold, P-WTGO-3 oil-fired boiler rated at 100,000 Btu/hour (net), with a firing rate of 0.95
gph. Heat is distributed via fin tube baseboard piping, with (60) 2”x2” fins per foot on ¾”
copper pipe. The fins are heavily damaged throughout the building and need to be
replaced, preferably with something less susceptible to damage. Domestic hot water is
supplied by the same boiler fitted with a “boiler mate” unit.
• Fuel Consumption. The Boys and Girls Club reportedly consumes 1,250 gallons of #1
fuel oil per year.
• Potential Savings. At the projected price of about $6.50 per gallon, Boys and Girls Club will
spend approximately $8,125 per year for fuel oil. The HELE cordwood fuel equivalent of
1,250 gallons of #1 fuel oil is approximately 15 cords, and at $225 per cord represents a
potential annual fuel cost savings of $4,750 (debt service and non-fuel OM&R costs notwith-
standing).
• Required boiler capacity. The estimated required boiler capacity (RBC) to heat the Boys
and Girls Club would be approximately 32,909 Btu/hr during the coldest 24-hour period,
based on an annual consumption of 1,250 gallons.
• Recommended action regarding a cordwood system. Given the initial assumptions and
cost estimates for the alternatives presented in this report, this project appears to be viable.
Further consideration is warranted. (See Section 6)
• Recommended action regarding a bulk fuel wood system. Given the relatively small heating
demand, apparent lack of bulk fuel(s), and the probable cost of such a project, a “bulk fuel”
system would not be cost-effective for the Tyonek Boys and Girls Club.
1.3.4. Justin Time General Store
• Overview. The general store reportedly occupies 3,600 square feet (I estimated 3,060
during my field visit). At one time, heat was provided by a forced air heating system
(furnace), which is now, apparently, defunct. At the time of our field visit, half the store
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was empty and divided by a curtain. The occupied section was being heated with two
Toyo Laser 73 oil-fired space heaters, with a maximum heat output of 40,000 BTU per
hour (each)
• Fuel Consumption. The general store reportedly consumes 1,700 gallons of #1 fuel oil per
year.
• Potential Savings. At the projected price of about $6.50 per gallon, the general store will
spend approximately $11,050 per year for fuel oil. The HELE cordwood fuel equivalent of
1,700 gallons of #1 fuel oil is approximately 20 cords, and at $225 per cord represents a
potential annual fuel cost savings of $6,550 (debt service and non-fuel OM&R costs
notwithstanding).
• Required boiler capacity. The estimated required boiler capacity (RBC) to heat the General
Store would be approximately 44,525 Btu/hr during the coldest 24-hour period, based on an
annual consumption projection of 1,700 gallons.
• Recommended action regarding a cordwood system. Given the initial assumptions and
cost estimates for the alternatives presented in this report, this project appears to be viable.
Further consideration is warranted. (See Section 6)
• Recommended action regarding a bulk fuel wood system. Given the relatively small heating
demand, apparent lack of bulk fuel(s), and the probable cost of such a project, a “bulk fuel”
system would not be cost-effective for the Justin Time General Store.
1.3.5 District Heating System
While it is possible to install a small individual wood-fired boiler (or wood stove, for that
matter) in/at each of the buildings under consideration, a far more practical solution would be
to install a single, large, centralized heating plant, and then distribute heat to all the nearby
buildings via hot water and insulated, underground plastic tubing. Even though relatively
small, this would be considered a “district heating system,” and could have significant
advantages over individual installations. This is the model I would propose for these
facilities in Tyonek.
SECTION 2. EVALUATION CRITERIA, IMPLEMENTATION, WOOD HEATING SYSTEMS
The approach being taken by the Alaska Wood Energy Development Task Group (AWEDTG)
regarding biomass energy heating projects follows the recommendations of the Biomass Energy
Resource Center (BERC), which advises that, “[T]he most cost-effective approach to studying the
feasibility for a biomass energy project is to approach the study in stages.” Further, BERC advises
“not spending too much time, effort, or money on a full feasibility study before discovering whether
the potential project makes basic economic sense” and suggests, “[U]ndertaking a pre-feasibility
study . . . a basic assessment, not yet at the engineering level, to determine the project's apparent
cost-effectiveness”. [Biomass Energy Resource Center, Montpelier, Vermont. www.biomasscenter.org]
2.1 Evaluation Criteria
The AWEDTG selected projects for evaluation based on criteria listed in Appendix A. The
Tyonek project meets the AWEDTG criteria for potential petroleum fuel displacement, use of
forest residues for public benefit, community support, and the ability to implement, operate and
maintain the project.
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NOTE: The potential to sustainably provide adequate supplies of wood from local forests was not
positively determined. The assumption that such supplies are sufficient is based on information
provided in the original Statement of Interest. If there is any doubt that local supplies of wood are
satisfactory, then such a determination must be made before installing a wood-fired heating
system.
One of the objectives of the AWEDTG is to support projects that would use energy-efficient and
clean-burning wood heating systems, i.e., high efficiency, low emission (HELE) systems.
2.2 Successful Implementation
In general, four aspects of project implementation have been important to wood energy projects in
the past: 1) a project “champion”, 2) clear identification of a sponsoring agency/entity, 3)
dedication of and commitment by facility personnel, and 4) a reliable and consistent supply of fuel.
In situations where several organizations are responsible for different community services, it must
be clear which organization would sponsor and/or implement a wood-burning project. (NOTE:
This is not necessarily the case in Tyonek but this issue should be addressed.)
With manual cordwood systems, boiler stoking and/or maintenance is required for approximately 5
to 15 minutes per boiler several times a day (depending on the heating demand), and dedicating
personnel for the operation is critical to realizing savings from wood fuel use. For this report, it is
assumed that new personnel would be hired or existing qualified personnel would be assigned as
necessary, and that “boiler duties” would be included in the responsibilities and/or job description
of facility personnel.
The forest industry infrastructure in/around Tyonek is not well-developed, except that past timber
harvesting and other resource development activities created access to remaining forest lands and
resources. For this report, it is assumed that wood supplies are sufficient to meet the demand.
2.3 Classes of Wood Heating Systems
There are, basically, two classes of wood heating systems: manual cordwood systems and
automated “bulk fuel” systems. Cordwood systems are generally appropriate for applications
where the maximum heating demand ranges from 100,000 to 1,000,000 Btu per hour, although
smaller and larger applications are possible. “Bulk fuel” systems are systems that burn wood chips,
sawdust, bark/hog fuel, shavings, pellets, etc. They are generally applicable for situations where the
heating demand exceeds 1 million Btu per hour, although local conditions, especially fuel
availability, can exert strong influences on the feasibility of a bulk fuel system.
Usually, an automated bulk fuel boiler is tied-in directly with the existing oil-fired system. With a
cordwood system, glycol from the existing oil-fired boiler system would be circulated through a
heat exchanger at the wood boiler ahead of the existing oil boiler. A bulk fuel system is usually
designed to replace 100% of the fuel oil used in the oil-fired boiler, and although it is possible for a
cordwood system to be similarly designed, they are usually intended as a supplement, albeit a large
supplement, to an oil-fired system. In either case, the existing oil-fired system would remain in
place and be available for peak demand or backup in the event of downtime in the wood system.
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SECTION 3. THE NATURE OF WOOD FUELS
3.1 Wood Fuel Forms and Current Utilization
Currently, wood fuels in Tyonek will generally be in the form of cordwood; there is limited
availability of sawmill residues and no bulk fuel supplies. Residential use of cordwood has
increased significantly in the past 18 months due to sharply higher fuel oil costs. Given that higher
demand, prices for firewood have gone up accordingly.
3.2 Heating Value of Wood
Wood is a unique fuel whose heating value is quite variable, depending on species of wood, moisture
content, and other factors. There are also several recognized ‘heating values’: high heating value
(HHV), gross heating value (GHV), recoverable heating value (RHV), and deliverable heating value
(DHV) that may be assigned to wood at various stages in the calculations.
For this report, white spruce cordwood at 30 percent moisture content (MC30), calculated on the
wet weight basis (also called green weight basis), is used as the benchmark. [It should be noted
that other species are also present, including black spruce, white birch, cottonwood/poplar, willow
and aspen. And although white spruce is used as the “benchmark”, any species of wood can be
burned in a cordwood system; the most critical factor being moisture content, not species.]
The HHV of white spruce (0% moisture content (MC0)) is 8,890 Btu/lb1. The GHV at 30%
moisture content (MC30) is 6,223 Btu/lb.
The RHV for white spruce cordwood (MC30) is calculated at 12.22 million Btu per cord, and the
DHV, which is a function of boiler efficiency (assumed to be 75%), is 9.165 million Btu per cord.
The delivered heating value of 1 cord of white spruce cordwood (MC30) equals the delivered
heating value of 85.5 gallons of #1 fuel oil when the wood is burned at 75% conversion efficiency.
A more thorough discussion of the heating value of wood can be found in Appendix B and
Appendix D.
SECTION 4. WOOD-FUELED HEATING SYSTEMS
4.1 Low Efficiency High Emission (LEHE) Cordwood Boilers
Outdoor wood boilers (OWBs) are relatively low-cost and can save fuel but most have been
criticized for low efficiency and smoky operation. These could be called low efficiency, high
emission (LEHE) systems and there are dozens of manufacturers. The State of New York
instituted a moratorium in 2006 on new LEHE OWB installations due to concerns over emissions
and air quality5. Other states are also considering or have implemented new regulations.6,7,8,9 But
since there are no federal standards for OWBs (wood-fired boilers and furnaces were exempted
from the 1988 EPA regulations10), OWB ratings are inconsistent and can be misleading. Standard
procedures for evaluating wood boilers do not exist, but test data from New York, Michigan and
elsewhere showed a wide range of apparent [in]efficiencies and emissions among OWBs.
In 2006, a committee was formed under the American Society for Testing and Materials (ASTM)
to develop a standard test protocol for OWBs11. The standards included uniform procedures for
determining performance and emissions. Subsequently, the ASTM committee sponsored tests of
three common outdoor wood boilers using the new procedures. The results showed efficiencies as
10
low as 25% and emissions more than nine times the standard for industrial boilers. Obviously,
these results were deemed unsatisfactory and new OWB standards were called for.
In a news release dated January 29, 200712, the U.S. Environmental Protection Agency announced
a new voluntary partnership agreement with 10 major OWB manufacturers to make cleaner-
burning appliances. The new, Phase 1 standard calls for emissions not to exceed 0.60 pounds of
particulate emissions per million Btu of heat input. The Phase 2 standard, which will follow 2
years after Phase 1, will limit emissions to 0.30 pounds per million Btus of heat delivered, thereby
creating an efficiency standard as well.
To address local and state concerns over regulating OWB installations, the Northeast States for
Coordinated Air Use Management (NeSCAUM), and EPA have developed model regulations that
recommend OWB installation specifications, clean fuel standards and owner/operator training.
(http://www.epa.gov/woodheaters/ and http://www.nescaum.org/topics/outdoor-hydronic-heaters)
Implementation of the new standard will improve air quality and boiler efficiency but will also
increase costs as manufacturers modify their designs, fabrication and marketing to adjust to the
new standards. As a result, some low-end models will no longer be available.
4.2 High Efficiency Low Emission (HELE) Cordwood Boilers
In contrast to low efficiency, high emission cordwood boilers there are a few units that can
correctly be considered high efficiency, low emission (HELE). These systems are designed to burn
cordwood fuel cleanly and efficiently.
Table 4-1 lists four HELE cordwood boiler suppliers, two of which have units operating in Alaska.
HS Tarm/Tarm USA has a number of residential units operating in Alaska, and a Garn boiler
manufactured by Dectra Corporation is used in Dot Lake, AK to heat several homes and the
washeteria, replacing 7,000 gallons per year (gpy) of #2 fuel oil.14 Two Garn boilers were recently
installed in Tanana, AK (on the Yukon River) to provide heat to the washeteria and water plant,
and two were installed near Kasilof on the Kenai Peninsula.
Table 4-1. HELE Cordwood Boiler Suppliers
Btu/hr ratings Supplier
EKO-Line 85,000 to 275,000 New Horizon Corp
www.newhorizoncorp.com
Tarm 100,000 to 198,000 HS Tarm/Tarm USA
www.tarmusa.com/wood-gasification.asp
Greenwood 100,000 to 300,000 Greenwood
www.GreenwoodFurnace.com
Garn 350,000 to 950,000 Dectra Corp.
www.garn.com
Note: Listing of any manufacturer, distributor or service provider does not constitute an endorsement.
Table 4-2 shows the results for a Garn WHS 1350 boiler that was tested at 157,000 to 173,000 Btu
per hour using the new ASTM testing procedures, compared with EPA standards for wood stoves
and boilers. It is important to remember that wood fired boilers are not entirely smokeless; even
very efficient wood boilers may smoke for a few minutes on startup.4,15
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Table 4-2. Emissions from Wood Heating Appliances
Appliance Emissions
(grams/1,000 Btu delivered)
EPA Certified Non Catalytic Stove 0.500
EPA Certified Catalytic Stove 0.250
EPA Industrial Boiler (many states) 0.225
GARN WHS 1350 Boiler* 0.179
Source: Intertek Testing Services, Michigan, March 2006.
Note: *With dry oak cordwood; average efficiency of 75.4% based upon the high heating value (HHV) of wood
4.3 Bulk Fuel Boiler Systems
The term “bulk fuel” as used in this report refers, generically, to sawdust, wood chips, shavings,
bark, pellets, etc. Since the availability of bulk fuel is non-existent around Tyonek, the cost of bulk
fuel systems is so high (i.e., $1 million and up), and the relatively small heating demand for the
facilities under consideration, the discussion of bulk fuel boiler systems has been omitted from this
report.
SECTION 5. SELECTING THE APPROPRIATE SYSTEM
Selecting the appropriate heating system is, primarily, a function of heating demand. It is generally
not feasible to install automated bulk fuel systems in/at small facilities, and it is likely to be
impractical to install cordwood boilers at very large facilities. Other than demand, system choice
can be limited by fuel availability, fuel form, labor, financial resources, and limitations of the site.
The selection of a wood-fueled heating system has an impact on fuel economy. Potential savings
in fuel costs must be weighed against initial investment costs and ongoing operating, maintenance
and repair (OM&R) costs. Wood system costs include the initial capital costs of purchasing and
installing the equipment, non-capital costs (engineering, permitting, etc.), the cost of the fuel
storage building and boiler building (if required), the financial burden associated with loan interest,
the fuel cost, and the other costs associated with operating and maintaining the heating system,
especially labor.
5.1 Comparative Costs of Fuels
Table 5-1 compares the cost of #1 fuel oil to white spruce cordwood (MC30) In order to make
reasonable comparisons, costs are provided on a “per million Btu” (MMBtu) basis.
Table 5-1. Comparative Cost of Fuel Oil vs. Wood Fuels
FUEL RHVa
(Btu)
Conversion
Efficiencya
DHVa
(Btu)
Price per unit
($)
Cost per MMBtu
(delivered, ($))
6.50/gal 60.634
7.00 65.299 Fuel oil, #1,
(per 1 gallon) 134,000 80% 107,200
per gallon 7.50 69.963
200/cord 21.822
225 24.55 White spruce,
(per 1 cord, MC30)
12.22
million 75% 9.165
million 250 27.278
Notes:
a from Appendix D
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5.2(a) Cost per MMBtu Sensitivity – Cordwood
Figure 5-1 illustrates the relationship between the price of white spruce cordwood (MC30) and the
cost of delivered heat, (the slanted line). For each $10 per cord increase in the price of cordwood,
the cost per million Btu increases by $1.091. The chart assumes that the cordwood boiler delivers
75% of the RHV energy in the cordwood to useful heat and that oil is converted to heat at 80%
efficiency. The dashed lines represent #1 fuel oil at $6.50, $7.00 and $7.50 per gallon ($60.634,
$65.299 and $69.963 per million Btu respectively).
At high efficiency, heat from white spruce cordwood (MC30) at $555.71 per cord is equal to the
cost of #1 fuel oil at $6.50 per gallon (i.e., $60.634 per MMBtu), before considering the cost of the
equipment and operation, maintenance and repair (OM&R) costs. At 75% efficiency and $225 per
cord, a high-efficiency cordwood boiler will deliver heat at about 40.5% of the cost of #1 fuel oil at
$6.50 per gallon ($24.55 versus $60.634 per MMBtu). Figure 5-1 indicates that, at a given
efficiency, savings increase significantly with decreases in the delivered price of cordwood and/or
with increases in the price of fuel oil.
Cost ($) per MMBtu as a Function of
Cordwood Cost
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
150 200 250 300 350 400 450 500 550 600 650
Cordwood cost, $ per cordCost ($) per MMBtu
Fuel Oil at $7.50 per gallon
Fuel Oil at $7.00 per gallon
Fuel Oil at $6.50 per gallon
Figure 5-1. Effect of White Spruce Cordwood Price on Cost of Delivered Heat
5.2(b) Cost per MMBtu Sensitivity – Bulk Fuels
Not included in this report
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5.3 Determining Demand
Table 5-2 shows the reported approximate amount of fuel oil used by various facilities in Tyonek,
Alaska.
Table 5-2. Reported Annual Fuel Oil Consumption, Tyonek, AK
Reported Annual Fuel Consumption Facility Gallons Cost ($) @ $6.50/gallon
Tribal Center 2,800 18,200
Snack Bar 1,300 8,450
Boys and Girls Club 1,250 8,125
General Store 1,700 11,050
TOTAL 7,050 45,825
Wood boilers, especially cordwood boilers, are often sized to displace only a portion of the heating
load since the oil system will remain in place, in standby mode, for “shoulder seasons” and peak
demand. Fuel oil consumption for the Tyonek facilities was compared with heating demand based
on heating degree days (HDD) to determine the required boiler capacity (RBC) for heating only on
the coldest 24-hour day (Table 5-3). While there are many factors to consider when sizing heating
systems it is clear that, in most cases, a wood system of less-than-maximum size could still replace
a substantial quantity of fuel oil and save money.
Typically, installed oil-fired heating capacity at most sites is two-to-four times the demand for the
coldest day. It appears that the Tyonek facilities generally fall within this range, although the
heating capacity of the heating system at the Snack Bar is unknown and the capacity of the
supplemental electric heat at the Tribal Center is unknown.
Manual HELE cordwood boilers equipped with special tanks for extra thermal storage can supply
heat at higher than their rated capacity for short periods. For example, while rated at 950,000
Btu/hr (heat into storage), a Garn WHS 3200 can store more than two million Btu, which,
theoretically, would be enough to heat all four of the Tyonek facilities during the coldest 24-hour
period for about 11 hours (2,064,000 ÷ 182,629).
Table 5-3. Estimate of Heat Required in Coldest 24-Hour Period
Facility
Fuel Oil
Used
gal/yeara
Heating
Degree
Daysd
Btu/DDc Design
Tempd F
RBCe
Btu/hr
Installed
Btu/hra
Tribal Center 2,800 19,491 72,920 186,000 (gross)
plus supplemental
electric
Snack Bar 1,300 9,049 34,200 Unknown
Boys and Girls Club 1,250 8,701 32,909 100,000 (net)
General Store 1,700 11,834 44,525 80,000 (gross)
TOTAL 7,050
9,742
(Anchorage
data)
49,075
-24
(Ninilchik
data)
182,629 366,000 (known)
14
Table 5-3 Footnotes:
a From SOI and site visit; net total Btu/hr
b NOAA, July 1, 2005 through June 30, 2006:
ftp://ftp.cpc.ncep.noaa.gov/htdocs/products/analysis_monitoring/cdus/degree_days/archives/Heating%20degree%20Days/Monthly%20City/2006/jun%202006.txt
c Btu/DD= Btu/year x oil furnace conversion efficiency (0.85) /Degree Days
d Alaska Housing Manual, 4th Edition Appendix D: Climate Data for Alaska Cities, Research and Rural Development
Division, Alaska Housing Finance Corporation, 4300 Boniface Parkway, Anchorage, AK 99504, January 2000.
e RBC = Required Boiler Capacity for the coldest Day, Btu/hr= [Btu/DD x (65 F-Design Temp)+DD]/24 hrs
According to these calculations (Table 5-3), it appears that the Tyonek facilities could, technically,
supply 100% of their heating needs with one or more high efficiency low emission cordwood
boilers. Consultation with a qualified engineer is strongly recommended.
5.4 Summary of Findings and Potential Savings Table 5-4 summarizes the findings thus far: annual fuel oil usage, range of annual fuel oil costs, estimated annual wood fuel requirement, range of estimated annual wood fuel costs, and potential gross annual savings for the facilities in Tyonek. [Note: potential gross annual fuel cost savings do not consider capital costs and non-fuel operation, maintenance and repair (OM&R) costs.] Table 5-4. Estimate of Total Wood Consumption, Comparative Costs and Potential Savings Fuel Oil Used gal/yeara Annual Fuel Oil Cost (@ $ ___ /gal) Approximate Wood Requirementb Annual Wood Cost (@ $ ___ /unit) Potential Gross Annual Fuel Cost Savings ($) CORDWOOD SYSTEMS 6.50/gal 7.00/gal 7.50/gal W. spruce, MC30, CE 75% 200/cord 225/cord 250/cord Low Medium High Tribal Center 2,800 18,200 19,600 21,000 32.7 cds 6,540 7,358 8,175 10,025 12,243 14,460 Snack Bar 1,300 8,450 9,100 9,750 15.2 cds 3,040 3,420 3,800 4,650 5,680 6,710 Boys and Girls Club 1,250 8,125 8,750 9,375 14.6 cds 2,920 3,285 3,650 4,475 5,465 6,455 General Store 1,700 11,050 11,900 12,750 19.9 cds 3,980 4,478 4,975 6,075 7,423 8,770 TOTAL 7,050 45,825 49,350 52,875 82.4 cds 16,480 18,540 20,600 25,225 30,810 36,395 NOTES: a From Table 5-2 b From Table D-3, Appendix D
SECTION 6. ECONOMIC FEASIBILITY OF CORDWOOD SYSTEMS
6.1 Initial Investment Cost Estimates
DISCLAIMER: Short of having an actual Design & Engineering Report prepared by a team of architects
and/or professional engineers, actual costs for any particular system at any particular site cannot be
positively determined. Such a report is beyond the scope of this preliminary assessment. However, a
hypothetical, though hopefully realistic, system scenario is offered as a means of comparison. Actual costs,
assumptions and “guess-timates” are identified as such, where appropriate. Recalculations of financial
metrics, given different/updated cost estimates, are relatively easy to accomplish.
Wood heating systems include the cost of the fuel storage building (if necessary), boiler building
(if necessary), boiler equipment (and shipping), plumbing and electrical connections (including
heat exchangers, pumps, fans, and electrical service to integrate with existing distribution systems),
installation, and an allowance for contingencies.
Before a true economic analysis can be performed, all of the costs (investment and OM&R) must
be identified, and this is where the services of qualified experts are necessary.
Table 6-1 (next page) presents a hypothetical scenario of initial investment costs for a cordwood
system in a medium-sized heating demand situation. It should be noted, however, that this scenario
is strictly hypothetical. The solution presented here is not necessarily the best, correct, or only
configuration; consultation with qualified professionals is strongly recommended.
Buildings and plumbing/connections are the most significant costs besides the boiler(s). Building
costs deserve more site-specific investigation and often need to be minimized to the extent
possible. Piping from the wood-fired boiler is another area of potential cost saving. Long
plumbing runs and additional heat exchangers substantially increase project costs. The exorbitant
cost of hard copper pipe normally used in Alaska now precludes its use in most applications. If
plastic or PEX® piping is used significant cost savings may be possible.
Allowance for indirect non-capital costs such as engineering and contingency are most important
for large systems that involve extensive permitting and budget approval by public agencies. This
can increase the cost of a project by 25% to 50%. For the examples in Table 6-1, a 25%
contingency allowance was used.
NOTES:
a. With the exception of the list prices for Garn boilers, all of the figures in Table 6-1 are
gross estimates.
b. The cost estimates presented in Table 6-1 do not include the cost(s) of any upgrades,
repairs, or improvements to the existing heating/heat distribution system currently in place.
16
17
Table 6-1. Initial Investment Cost Scenarios for Hypothetical HELE Cordwood Systems
Fuel oil consumption, gallons per
year
7,050
(All Tyonek facilities)
Required boiler capacity (RBC),
Btu/hr 182,629
Garn model (1) WHS 3200
Rating -Btu/hr e 950,000 Cordwood boiler
Btu stored 2,064,000
Building and Equipment (B&E) Costs, $ (for discussion purposes only)
Fuel storage buildinga
(fabric bldg, gravel pad, $30 per sf)
49,800
(83 cds @ 20 sf/cd)
Boiler building @ $150 per sf
(minimum footprint w/concrete pad)b
30,000
(10’x20’)
Boilers
Base pricec
Shippingd
Bush delivery d
32,900
2,500
2,000
Plumbing and electricald 30,000
Installationd 20,000
Subtotal - B&E Costs 167,200
Contingency (25%)d 41,800
Grand Total 209,000
Notes:
a A cord occupies 128 cubic feet. If the wood is stacked 6½ feet high, the area required to store the wood is 20 square feet per cord.
b Does not allow for any fuel storage within the boiler building
c List price, Alaskan Heat Technologies, April 2008
d “guess-timate”; for illustrative purposes only
e Btu/hr into storage is extremely fuel dependent. The data provided for Garn boilers by Dectra Corp. are based on the ASTM standard of split, 16-inch oak
with 20 percent moisture content and reloading once an hour.
6.2 Operating Parameters of HELE Cordwood Boilers
A detailed discussion of the operating parameters of HELE cordwood boilers can be found in
Appendix F.
6.3 Hypothetical OM&R Cost Estimates
The primary operating cost of a cordwood boiler, other than the cost of fuel, is labor. Labor is
required to move fuel from its storage area to the boiler building, fire the boiler, clean the boiler
and dispose of ash. For purposes of this analysis, it is assumed that the boiler system will be
operated every day for 210 days (30 weeks) per year between mid-September and mid-April.
Table 6-2 presents labor/cost estimates for various HELE cordwood systems. A detailed analysis of
labor requirement estimates can be found in Appendix F.
18
Table 6-2. Labor/Cost Estimates for HELE Cordwood Systems
System (1) WHS 3200
(83 cds/yr)
Total Daily labor (hrs/yr)a
(hrs/day X 210 days/yr) 115.5
Total Periodic labor (hrs/yr)b
(hrs/wk X 30 wks/yr) 41.25
Total Annual labor (hrs/yr)b 20
Total labor (hrs/yr) 176.75
Total annual labor cost ($/yr)
(total hrs x $20) 3,535
Notes:
a From Table F-2
b From Appendix F
There is also an electrical cost component to the boiler operation. An electric fan creates the
induced draft that contributes to boiler efficiency. The cost of operating circulation pumps and/or
blowers would be about the same as it would be with the oil-fired boiler or furnaces in the existing
heating system.
Lastly there is the cost of wear items, such as fire brick, door gaskets, water treatment chemicals,
etc. For the following example, a value of $1,000 per boiler is used.
Table 6-3. Summary of Total Annual Non-Fuel OM&R Cost Estimates
Cost/Allowance ($)
Item (1) WHS 4400
(83 cds/yr)
Labor 3,535
Electricitya 480
Maintenance/Repairs 1,000
Total non-fuel OM&R ($) 5,015
Notes:
a Electrical cost based on a formula of horsepower x kWh rate x operating time. Assumed kWh rate = $0.65
6.4 Calculation of Financial Metrics
Biomass heating projects are viable when, over the long run, the annual fuel cost savings generated
by converting to biomass are greater than the cost of the new biomass boiler system plus the
additional operation, maintenance and repair (OM&R) costs associated with a biomass boiler
(compared to those of an oil- or gas-fired boiler or furnace).
Converting from an existing boiler to a wood biomass boiler (or retrofitting/integrating a biomass
boiler with an existing boiler system) requires a greater initial investment and higher annual
OM&R costs than for an equivalent oil or gas system alone. However, in a viable project, the
19
savings in fuel costs (wood vs. fossil fuel) will pay for the initial investment and cover the
additional OM&R costs in a relatively short period of time. After the initial investment is paid off,
the project continues to save money (avoided fuel cost) for the life of the boiler. Since inflation
rates for fossil fuels are typically higher than inflation rates for wood fuel, increasing inflation rates
result in greater fuel cost savings and thus greater project viability.17
The potential economic viability of a given project depends not only on the relative costs and cost
savings, but also on the financial objectives and expectations of the facility owner. For this reason,
the impact of selected factors on potential project viability is presented using the following metrics:
Simple Payback Period
Present Value (PV)
Net Present Value (NPV)
Internal Rate of Return (IRR)
Total initial investment costs include all of the capital and non-capital costs required to design,
purchase, construct and install a biomass boiler system in an existing facility with an existing
furnace or boiler system.
A more detailed discussion of Simple Payback Period, Present Value, Net Present Value and
Internal Rate of Return can be found in Appendix E.
6.5 Simple Payback Period for HELE Cordwood Boilers
Table 6-4 presents a Simple Payback Period analysis for hypothetical multiple HELE cordwood
boiler installations.
Table 6-4. Simple Payback Period Analysis for HELE Cordwood Boilers
(1) WHS 3200
(83 cds/yr)
Fuel oil cost,
$ per year @ $6.50 per gallon
45,825
(7,050 gal)
Cordwood cost
$ per year @ $225 per cord
18,675
(83 cds)
Annual Fuel Cost Savings, $/yr 27,150
Total Investment Costs b, $ 209,000
Simple Paybackc, yrs 7.7
Annual, Non-fuel OM&R costsa 5,015
Net Annual Savings ($)
(Annual Cash Flow) 22,135
Notes:
a From Table 6-3
b From Table 6-1
c Total Investment Costs divided by Annual Fuel Cost Savings
6.6 Present Value (PV), Net Present Value (NPV) and Internal Rate or Return (IRR)
Values for a Simple HELE Cordwood Boiler Installation
Table 6-5 presents PV, NPV and IRR values for hypothetical various HELE cordwood boiler
installations.
20
Table 6-5. PV, NPV and IRR Values for a Simple HELE Cordwood Boiler Installation
(1) WHS 3200
(83 cds/yr)
Discount Ratea (%) 3
Time, “t”, (years) 20
Initial Investment ($)b 209,000
Annual Cash Flow($)c
(Net Annual Savings) 22,135
Present Value
(of expected cash flows, $ at “t” years) 329,313
Net Present Value ($ at “t” years) 120,313
Internal Rate of Return
(% at “t” years) 8.53
With a real discount rate of 3.00% and after a span of 20 years, the projected cash flows are worth $329,313 today (PV), which is greater
than the initial investment of $209,000. The resulting NPV of the project is $120,313 and the project achieves an internal rate of return of
8.53% at the end of 20 years. Given the assumptions and cost estimates, this alternative appears financially and operationally feasible.
Notes:
a real discount (excluding general price inflation) as set forth by US Department of Energy, as found in NIST publication NISTIR 85-3273-22 (Rev 5/08),
Energy Price Indices and Discount Factors for Life Cycle Cost Analysis, April 2008
b From Table 6-1
c Equals annual cost of fuel oil minus annual cost of wood minus annual non-fuel OM&R costs (i.e., Net Annual Savings)
SECTION 7. ECONOMIC FEASIBILITY OF BULK FUEL SYSTEMS
The discussion of bulk fuel systems is not included in this report
SECTION 8. CONCLUSIONS
This report discusses conditions found “on the ground” at four facilities in Tyonek, Alaska, and
attempts to demonstrate, by use of a realistic, though hypothetical, example, the feasibility of
installing a high efficiency, low emission cordwood boiler to heat these facilities.
The facilities in Tyonek consist of four buildings that could be served by a single cordwood boiler
(i.e., small district heating system). These facilities are described in greater detail in Section 1.3,
and include:
1. Tyonek Tribal Center
2. Snack Bar
3. Boys and Girls Club
4. Justin Time General Store
In terms of siting a central heat plant, the best location appears to be on the site of an unoccupied,
dilapidated structure that was once someone’s home. Apparently that property is still privately
owned; nonetheless it appears to be the best location, from a strictly practical standpoint.
Furthermore, it is quite possible that the Post Office could also be served by a central heat plant
21
located on this site. Other locations (for a central heat plant) are more challenging due to the
presence of local roads, topographical conditions, and/or excessive distances from the heat plant to
the other buildings. Other than finding a suitable location, there does not appear to be any other
significant geo-physical constraints for the construction of a central heating plant. .
Typically, the greater the amount of fuel oil displacement, the better the cost-effectiveness of a given
project. The proposed, small district heating system is typical of most medium-sized wood-fired
heating projects. The financial metrics are strong, with a simple payback period of less than 8 years
and an internal rate of return of 8.5 percent. However, all of these metrics are predicated on two
assumptions: 1) that sufficient volumes of wood can be provided at a reasonable cost and 2) that
someone will tend the boilers. Failure on either count will compromise the success of the project(s).