ELABORATION OF TECHNICAL PROJECT CONCEPT OF THE

FUEL SWITCH TO BIOMASS IN MEDVEĐA

INCLUDING ECONOMICAL EVALUATION AND

RECOMMENDATIONS FOR IMPLEMENTATION STRUCTURE OF

DISTRICT HEATING GRID

Prepared for:

Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

Dag Hammarskjöld Weg 1-5

Postfach/ P.O.Box 5180

65760 Eschborn

Prepared by:

K.R.B. Consulting & agency

Starovlaška 89

32250 Ivanjica

September 2017

2

Table of Contents

1. EXECUTIVE SUMMARY ........................................................................................................... 7

2. INTRODUCTION .................................................................................................................... 10

3. PROJECT LOCATION ............................................................................................................ 12

4. EXISTING HEATING SYSTEMS............................................................................................. 15

5. BIOMASS MARKET ANALYSIS.............................................................................................. 32

6. TECHNICAL DESIGN CONCEPT ............................................................................................ 37

6.1 TECHNICAL SOLUTIONS AND SIZING THE BOILER .......................................................... 37

6.2 HEATING PLANT, LOCATION AND FACILITIES .................................................................. 42

6.3 CONCEPT OF DISTRICT HEATING NETWORK................................................................... 44

6.3.1 CONCEPT OF DISTRICT HEATING NETWORK……….. ................................................... 44

6.3.2 SCHEME OF DISTRICT HEATING NETWORK…… ..................................................... …...45

6.3.3 CONCEPT OF HEATING SUBSTATIONS .......................................................................... 55

7. PRELIMINARY COST ESTIMATES ........................................................................................ 57

8. PRELIMINARY FINANCIAL ANALYSIS .................................................................................. 61

9. PROJECT EVALUATION ........................................................................................................ 63

10. LEGAL FRAMEWORK ........................................................................................................... 64

11. ENVIRONMENTAL IMPACT .................................................................................................. 65

12. ENERGY EFFICIENCY MEASURES AND CONCLUSION .................................................... 68

13. ANNEX .................................................................................................................................. 70

3

List of tables Table 1 - Public buildings in Medveđa .......................................................................................... 7

Table 2 -The structure of fertile land ........................................................................................... 13

Table 3 - Data on population of Medveđa from 1961 to 2011 ..................................................... 14

Table 4 - Data on population of the town of Medveđa from 1961 to 2011 ................................... 14

Table 5 - Microclimate data for the City of Medveđa .................................................................. 15

Table 6 - Data on premises of the Technical school and the Sports hall .................................... 16

Table 7 - Data on premises of the Medveđa Police station ......................................................... 18

Table 8 - Data on the facility of primary school ‘Gornja Jablanica’ .............................................. 19

Table 9 - Data on the premises of Health center ‘Medveđa’ ....................................................... 21

Table 10 - Data on the premises of the Cultural center ‘Medveđa’ ............................................... 23

Table 11 - Data on the facility of Social welfare center ................................................................. 24

Table 12 - Data on the facility of the Kindergarten ‘Mladost’ ......................................................... 24

Table 13 - Data on the facility of the Municipality ......................................................................... 26

Table 14 - Overview of data on the analyzed facilities and consumption ...................................... 28

Table 15 - Current situation, energy and fuel consumption, price, CO2 emission ......................... 29

Table 16 - Requirements for wood chips according to SRPS EN ISO 17225-4:2015 ................... 32

Table 17 - The classification of wood chips based on the moisture content according to

SRPS EN ISO 17225-4 .............................................................................................. 32

Table 18 - Requirements for wood chips according to SRPS EN ISO 17225-4:2015 ................... 33

Table 19 - Data on forests provided by SE ‘Srbijašume’, FE ‘Šuma’, Leskovac ........................... 33

Table 20 - The energy potential of green chips from forestry, with wood waste from sawmill

industry, in the municipalities of Nova Varos, Priboj and Prijepolje............................. 35

Table 21 - The energy potential of biomass from FE ‘Šuma’, Leskovac ....................................... 35

Table 22 - Characteristics of wood chips depending on the percentage of moisture .................... 36

Table 23 - Unit price of wood chips depending on the type of wood quality wood ........................ 37

Table 24 - Comparative analysis of the costs of currently used fuels in Medveđa and costs of

biomass ..................................................................................................................... 37

Table 25 - Calculated capacity of future heating plant .................................................................. 39

Table 26 - Sizing the pipe network by routes ................................................................................ 53

Table 27 - Calculation of operation point of network pump ........................................................... 54

Table 28 - Selection of substations in the facilities ....................................................................... 56

Table 29 - Investment costs ......................................................................................................... 57

Table 30 - Operational costs ........................................................................................................ 59

Table 31 - Costs of energy production ......................................................................................... 61

Table 32 - Unit costs of heating energy ........................................................................................ 63

4

List of figures

Figure 1 - Location of the Jablanica District ................................................................................ 12

Figure 2 - Municipalities of the Jablanica District in the territory of the Republic of Serbia .......... 12

Figure 3 - Energy consumption per fuel types– current situation ................................................ 29

Figure 4 - CO2 emission per fuel types– current situation ........................................................... 30

Figure 5 - Annual energy costs per fuel types– current situation ................................................ 30

Figure 6 - Unit price of energy per fuel type– current situation ................................................... 31

Figure 7 - Share of forest’s area in the total area of the Serbian municipalities .......................... 34

Figure 8 - State and private forests per Municipalities and Districts............................................ 34

Figure 9 - Annual energy costs per fuel types- comparison with biomass................................... 38

Figure 10 - Unit price of energy per fuel type- comparison with biomass ...................................... 38

Figure 11 - Diagram of the annual distribution of the heat capacity of the heating plant ............... 40

Figure 12 - Situation plan of heating plant .................................................................................... 42

Figure 13 - Disposition of drawings of the heating network per numbers ...................................... 45

Figure 14 - Drawing No 1 of the heating network ......................................................................... 46

Figure 15 - Drawing No 2 of the heating network ......................................................................... 47

Figure 16 - Drawing No 3 of the heating network ......................................................................... 48

Figure 17 - Drawing No 4 of the heating network ......................................................................... 49

Figure 18 - Drawing No 5 of the heating network ......................................................................... 50

Figure 19 - Drawing No 6 of the heating network ......................................................................... 51

Figure 20 - Drawing No 7 of the heating network ......................................................................... 52

Figure 21 - Scheme of compact substation DSA 1 Mini Danfoss .................................................. 55

Figure 22 - Substation DSA 1 Mini Danfoss…………………………………………………………….56

Figure 23 - Substation DSP-MAXI Danfoss .................................................................................. 56

Figure 24 - Emission of CO2 per a fuel type ................................................................................. 67

Figure 25 - Comparative analysis of costs of heating energy and savings ................................... 71

Figure 26 - Savings from fuel switch ............................................................................................ 72

Figure 27 - Operational costs and depreciation ............................................................................ 73

Figure 28 - Comparison of total costs of the existing system, new heating system and

new system supported by KfW Credit ........................................................................ 74

Figure 29 - Cash flow balance...................................................................................................... 75

5

List of photos Photo 1 - Sports hall .................................................................................................................. 16

Photo 2 - Wood log storage beside the Sports hall ..................................................................... 16

Photo 3 - Sports hall, back yard view ......................................................................................... 16

Photo 4 - Solid fuel boiler, 2x750kW .......................................................................................... 17

Photo 5 - Hot water collector ...................................................................................................... 17

Photo 6 - Technical school ‘Nikola Tesla’ ................................................................................... 17

Photo 7 - Damaged radiator, reduced power .............................................................................. 17

Photo 8 - Police station, central facility ....................................................................................... 18

Photo 9 - Facility with classrooms .............................................................................................. 18

Photo 10 - Facility with service workshop and garage .................................................................. 18

Photo 11 - Primary school ‘Gornja Jablanica’ ............................................................................... 19

Photo 12 - Entrance to the boiler room ......................................................................................... 19

Photo 13 - Wood log storage of the Primary school ..................................................................... 19

Photo 14 - Solid fuel boiler, 2x500kW .......................................................................................... 20

Photo 15 - Valves and equipment behind the boilers ................................................................... 20

Photo 16 - Cleaning pit and non-insulated chimney connection ................................................... 20

Photo 17 - Health center ‘Medveđa’ ............................................................................................. 21

Photo 18 - Light oil fuel boiler, 465-580kW ................................................................................... 21

Photo 19 - Hot water collector with damaged insulation ............................................................... 22

Photo 20 - Old circulation pumps ................................................................................................. 22

Photo 21 - Hot water tank with additional electric heater .............................................................. 22

Photo 22 - Facility of the Cultural center ...................................................................................... 23

Photo 23 - Theater hall in the Cultural center ............................................................................... 23

Photo 24 - Oil radiator heater ....................................................................................................... 23

Photo 25 - Facility of Social welfare center................................................................................... 24

Photo 26 - Facility of Kindergarten ‘Mladost’ ................................................................................ 25

Photo 27 - Light oil fuel boiler, 90-120kW ..................................................................................... 25

Photo 28 - Prefabricated chimney with damaged insulation ......................................................... 25

Photo 29 - Hot water collector in a good condition ....................................................................... 25

Photo 30 - The building of the Medveđa Municipality ................................................................... 26

Photo 31 - Boiler room in the building of the Municipality ............................................................. 26

Photo 32 - Solid fuel boiler ........................................................................................................... 27

Photo 33 - Wood log storage for the building of the Municipality .................................................. 27

Photo 34 - Local sawmill and wood drying company .................................................................... 35

Photo 35 - Cadastral parcel No 2341/2 ........................................................................................ 42

Photo 36 - Pre-insulated pipes for the district heating network ..................................................... 44

6

List of abbreviations

AMSL - above mean sea level

CAPEX - Capital Expenditure

CO2 - Carbon Dioxide

€ - Euro (currency)

(E) IRR - (Economy) Internal Rate of Return

(E) NV - (Economy) Net Present Value

FE - Forest enterprise

(F) IRR - (Financial) Internal Rate of Return

(F) NPV - (Financial) Net Present Value

LUC - Levelled Unit Costs

OPEX - Operating Expenditure

RS - Republic of Serbia

SE - State enterprise

7

1. EXECUTIVE SUMMARY

This study elaborates technical concept of a fuel switch in public buildings in Medveđa municipality

and introduction of biomass as a fuel, as well as the installation of a biomass boiler and construction

of district heating network.

Table 1 shows public buildings in Medveđa and heating related data:

No Institution

Type of Heating

fuel area

estimated capacity

m2 kW

1 Technical school ‘Nikola Tesla’ Wood

3,464 719

2 Sports hall 1,828 474

3 Police station, Medveđa Heavy oil 1,510 259

4 Primary school ‘Gornja Jablanica’ Wood 3,380 723

5 Health centre ‘Medveđa’ Light fuel oil 1,600 256

6 Cultural centre Electric heaters 1,320 227

7 Social welfare centre Electric heaters 50 8

8 Kindergarten ‘Mladost’ Light fuel oil 700 120

9 Building of the Medveđa municipality Wood 1,000 190

Total: 14,852 2,976

Table 1 - Public buildings in Medveđa

As shown in Table 1, public buildings currently have various heating systems and use different types

of fuel to obtain thermal energy. All of these heating systems and boilers are functional, but in a poor

condition. These systems are economically and energy inefficient, expensive to maintaining and

servicing. Furthermore, they are big pollutants.

Offered technical solution envisages construction of following:

- Central boiler room with biomass (wood chips) heated boilers

- District heating network

- Heating substations, where delivered heating energy would be measured, and which would

serve to managing consumption of heating energy in particular buildings.

Construction of a new boiler room is envisaged in the industrial zone on the right bank of the

Jablanica River. Total capacity of the boilers is 3.5 MW: capacity of one boiler is 1,500kW, and of

8

the other is 2,000kW. It is planned to place boilers, equipment, daily wood chips storage in the

building with area of 400m2. Wood chips storage planned in 750m2 area building with capacity of

1,470m3 or 440t, sufficient for 8 weeks in the coldest period of a year of operations. It is also planned

construction of a storage for wood chips with capacity sufficient for supply during two coldest months

in a year.

Considering workforce requirements, it is planned engagement of one highly technically educated

employed. Workers with lower qualifications would be replaced from existing assignments in the

facilities that will be included in a fuel switch project.

Planned capacity of district heating network is sufficient for the public buildings, as well as for

potential connection to additional, smaller consumers.

Full load hours in public buildings in Medveđa are low (719 kWh/kW) due to the heating during

working hours only. The fuel switch project would enable better utilization of the facilities of the

Sports hall and of Cultural centre in terms of providing commercial services, such as renting, thus

generating additional income.

There are forests at territory of the Municipality of Medveđa and the Jablanica District sufficient to

provide biomass for district heating plant. In addition, biomass can be purchased as residues from

orchards and private forests. In such way, local community could close the circle of production and

consumption of heating energy.

Estimated investment value for implementation of this project is 1,217,800 €. Expected period of

return of investment is 14 years from the start of operations.

If the investment were financed from KfW Bank's program, with grant of 20%, grace period of 5

years and a repayment period of 10 years, the positive business results would be achieved after 12

years from the start of operations.

Prerequisites for successful operations of the plant are following:

‒ Selection of an appropriate financing model (from own funds, credit line or public-private

partnership)

‒ Enter into long-term contracts for the supply of the biomass

‒ Ensuring sufficient fuel storage supply covering consumption in the coldest month of the year

‒ During the construction phase, train personnel who would take over management and

maintenance of the boiler plant

‒ Ensure high quality maintenance of the specific equipment in cooperation with the supplier

of the equipment.

This investment will achieve the following benefits:

‒ Lower costs of heating energy

‒ Low emission of harmful substances in the exhaust gases

‒ Reduction of CO2 emissions – combustion of wood biomass releases CO2 ‘neutral’

‒ Raising the comfort of all future consumers of the Medveđa district heating

9

Techno-economic indicators of the future energy system with wood chips are as follows:

Heat capacity of boilers Woodchips boiler 1,500 + 2,000 kW

Fuel

Woodchips

M30 according to

SRPS EN ISO 17225-1:2015, and

SRPS EN ISO 17225-4:2015

Annual production of thermal energy 2,140 MWhth /a

Annual fuel consumption Woodchips 885 t/a

Efficiency on the threshold of the heat plant 0.90 x 0.92

Annual reduction in CO2 emission 227.53 t/a

CAPEX 1,217,800 €

OPEX (the amortization period) 1,962,532 €

LUC 74.60 EUR/MWh

10

2. INTRODUCTION

The program ‘Development of a Sustainable Bioenergy Market in Serbia’ (GIZ DKTI) is implemented

jointly by the KfW (financing component) and GIZ (technical assistance component). It is funded by

the German Federal Ministry for Economic Cooperation and Development (BMZ) under the German

Climate Technology Initiative (DKTI). The main implementing partner and beneficiary of the

technical assistance (TA) component is the Serbian Ministry of Agriculture, Forestry and Water

Management (MAFWM). The general objective of the project is to strengthen capacities and create

an enabling environment for the sustainable use of bioenergy in Serbia. The TA component includes

the following five activity areas:

1) Policy advice: Assessment of bioenergy potentials and regulatory framework for creating and

enabling environment for private sector investment in bioenergy projects etc.

2) Biomass supply: Accompany investments in biomass-fired district heating plants in up to

three pilot regions with TA to secure a reliable and cost-effective supply of biomass in a

sustainable manner.

3) Efficient firewood utilization at household level: Increase the efficiency of firewood

consumption for heating at household level through the promotion of firewood drying and

efficient stoves/ovens.

4) Project development: Support in cooperation with the national and international private sector

the development and the implementation of feasible bioenergy projects – from biogas or straw

combustion plants in the industry sector to wood based heating boilers in private and public

buildings.

5) EU-Project BioRES – Regional Supply Chains for Woody Bioenergy: BioRES aims at

introducing the innovative concept of Biomass Logistic and Trade Centres (BLTCs) in Serbia,

Croatia, and Bulgaria based on cooperation with technology leaders from Austria, Slovenia,

Germany, and Finland. The BLTCs as regional hubs will help increasing local supply and

demand for wood bioenergy products in these countries.

The development of a biomass supply is required only if there are liable regional consumers of

biomass. As a supporting institution, GIZ DKTI has received a Letter of Expression of Interest signed

by the mayor of Serbian municipality Medveđa to declare their demand for guidance, legal and

technical assistance in the process of the development of a fuel switch of public buildings in

Medveđa to biomass. Heating grid will have to be planned.

This fuel switch from existing fuels (electricity, wood, light fuel oil, heavy fuel oil) to biomass should

provide savings in the budget of the municipality by strengthening local incomes with local produced

wood fuel and should reduce emissions of the renewed heating system.

The aim of this study is to establish technical concept for switching to biomass heating, the

installation of a wood chip heating plant including storage recipient and design of the distribution

system including grid and substations.

In addition, it is necessary to estimate the investment costs of the plant, distribution system, perform

financial evaluation of savings from woodchip heating system (compared to current situation)

regarding fuel costs, efficiency, investment and operation costs, cash-flow analysis through savings

11

and sensitivity analysis regarding fuel prices, investment cost and boiler efficiency.

The study includes the following:

- Assessment of the current energy situation in public buildings in Medveđa regarding

heated area, boiler capacity and current performance, energy consumption and cost

efficiency, condition of distribution system and connections.

- Techno-economic analysis of the proposed system for the production of thermal energy

by burning biomass (wood chips), and distribution system with heating grid and

substations which should include:

Proposal of a technical concept for central woodchip heating system including

boiler, feeding system, storage unit and grid installation taking into consideration

future efficiency measures in the buildings.

Financial evaluation of savings from woodchip heating system (compared to

current situation) regarding fuel costs, efficiency, investment and operation

costs, cash-flow analysis through savings and sensitivity analysis regarding fuel

prices, investment cost and boiler efficiency.

An assessment of CO2 emissions reduction.

The recommendation concerning the quality and availability of wood chips to

supply the plant in the future, taking into account the prices and local suppliers

of wood chips.

Technical concept and preliminary design for heating grid in Medveđa,

substations and further necessary equipment, including losses, connected to

planned biomass plant.

Estimation of overall investment costs for the heating grid, substations and

further necessary equipment.

Financial evaluation of heat prices compared to current situation taking into

account fuel costs, efficiency, investment and operation costs

12

Figure 1 - Location of the Jablanica District

Figure 2 - Municipalities of the Jablanica District in the territory of the Republic of Serbia

in the territory of the Republic

3. PROJECT LOCATION

The Jablanica District expands in the south-eastern parts of Serbia at the area of 2,769 km2. It

borders the Pčinja District to the South; the Republic of Bulgaria to the East; the Kosovo to the West;

and the Districts of Toplica, Nišava, and Pirot to the North. The Jablanica District is named after the

River Jablanica, which flows throughout the District. The largest city and administrative centre is

Leskovac. The Jablanica District consists of the City of Leskovac, and the Municipalities of: Bojnik,

Lebane, Medveđa, Vlasotince, and Crna Trava.

1 2

The Municipality of Medveđa has the area of 524 km², with 34 local communities at 42 settlements

covered by 39 cadastre municipalities. Average population density is 20.52 inhabitants/ km². There

are 7,382 people living in the villages of this municipality, while 3,378 people live at the urban area.

Most of the settlements are suffering of inadequate road connection to the centre of the municipality.

Main road between Leskovac and Priština runs through Medveđa.

Medveđa Municipality is one of the least developed municipalities in the Republic of Serbia. The

most promising industry is mining. There are lead, zinc, and a gold mine ‘Lece’.

There are big potentials for the development of cattle breeding and of fruit growing. Beside primary

agricultural production, there are developed wood processing and food processing industries. There

is particular potential in the processing of products of nature, such as: mushrooms, forest fruits, fruit

and vegetable, as well as in the processing of milk.

1 http://jablanicki.okrug.gov.rs/?lang=sr 2 Ibid

13

Main tourist potential of the Medveđa municipality is Sijarinska Banja, located at 10 km from

Medveđa, 50 km from Leskovac, and 90 km from Niš. Sijarinska Banja is situated at riverbanks of

the River Jablanica, at foothill of the Mountain Goljak, at 520 m above sea level. Healthy

environment and 18 springheads rich with minerals are greatest tourist potentials. Each of the

springheads has different physicochemical composition and temperature; and they are all spreading

at a length of 800 m.

The Municipality of Medveđa belongs to the group of hilly-mountainous municipalities, due to 95%

of such type of terrain. Forests are covering large part of the municipal territory. State owned forests

are covering 6,227 ha, with dominant beech and oak forests.

Surface area of Fertile land ha 33,279

Arable land ha 9,189

Orchards ha 1,209

Forests ha 7,090

Meadows and pastures ha 15,791

Table 2 -The structure of fertile land

in the Medveđa municipality3

Medveđa belongs to hilly-mountainous area (95% of the area is between 400- 1,000 m above sea

level), with distinct deep river basins. The lowest elevation points of the terrain are below 400 m

AMSL in the basin of the River Jablanica; the highest elevation points are on the mountains Radan

and Majdan (1,376 m AMSL); and the most widespread are altitudinal areas in interval 600- 800 m

AMSL (44% of total area). Beside dominant lower and medium mountainous areas (mountains

Goljak, Radan, Majdan), the municipal territory is characterized by ramified basins of rivers

Jablanica, Lepaštica, Banjska, and Tulov. Climate is moderate continental with cold winters. Basic

meteorological data (average annual values) of the Jablanica District are following:

- Insolation: 160.9 hours/month, i.e. 1,930.7 hours/year

- The amount of rainfall: 752 mm/year

- Air temperature: 11.1°C, Relative humidity: 72.4 %

- Daily solar radiation on a horizontal surface: 3.75 kWh/m² day

- Atmospheric pressure: 93.2 kPa

- Wind speed: 1.4 m/s (measured at 10 m from the ground)

- Ground temperature: 10.6°C

- Degree day heating: 2,625

- Heating days: 181

- Average temperature during heating days: 5.5°C

Medveđa is oriented north-south. Right bank of the Jablanica River is designed as industrial zone.

Within the zone, there is electric power station, deserted facility of the factory ‘Termovent’, and the

3 http://www.medvedja.org.rs/images/stories/download/Medvedja_profil_SRB.pdf

14

location of once planned boiler room for the needs of the Medveđa. Between rivers of Jablanica

and Lepaštica, there is a part of urban core with storey or multi-storey houses, and public buildings.

On the left bank of River Lepaštica, there is residential part with maximum five-storey buildings.

Population of the administrative municipality Medveđa

Number Census year

of 1961 1971 1981 1991 2002 2011

Inhabitants: 24,244 20,792 17,219 13,368 10,760 7,438

Households: 4,390 4,134 4,033 3,650 3,500 2,608

Table 3 - Data on population of Medveđa from 1961 to 20114

Population of the town of Medveđa

Number Census year

of 1961 1971 1981 1991 2002 2011

Inhabitants: 2,443 2,928 3,070 3,587 3,378 3,236

Table 4 - Data on population of the town of Medveđa from 1961 to 20115

Residential buildings are heated by wood stoves or by electricity. Most of public buildings are heated

by own boiler rooms, and smaller buildings are heated by electricity.

The most significant energy potential, which ensures sustainable development, is the use of

biomass. As agriculture and forestry are primary industries, they represent a good basis for the

collection of biomass with the purpose of solving the energy needs of public and residential buildings

in the town. Solution for energy requirements of buildings is based on the development of district

heating network and installation of the biomass boiler.

The problem is the fact that the planning acts do not include the construction of a central heating

source using forest biomass as a fuel, and thus as the part of energy efficiency measures. The

planning acts do not include the heating network, so the first step in establishing the heating system

and using biomass is the modification of the planning acts, the development strategy and general

regulation plan of Medveđa.

4 The Census of Population, Households and Dwellings in the Republic of Serbia, 2011 http://popis2011.stat.rs/?page_id=2134 5 Ibid.

15

4. EXISTING HEATING SYSTEMS

Institutions of the Medveđa municipality and other public institutions those are of the importance to

the residents of the municipality are located in separate buildings in the town. In these buildings,

heating is enabled through individual radiator systems with existing individual boilers using wood,

heavy oil, and light fuel oil. The management of the boiler rooms is carried out by qualified personnel

in each of the institutions with an individual boiler room. In some of the objects, electric heaters are

used.

Particular problem is the use of the heavy and light fuel oil, which combustion produces negative

environmental effects. Under certain microclimate conditions, the allowed emission limits would

certainly be exceeded, which could lead to a closure of the heat source.

In all of the buildings, radiator heating systems are designed for temperature regime of 80/60°C and

the outdoor design temperature for the town of Medveđa is -17.4°C.

Microclimate data

Air temperature

Relative humidity

Daily insolation

Atmospheric pressure

Wind speed

Soil temperature

(°C) (%) (kWh/m2) (kPa) (m/s) (°C)

January -0.2 82.0 1.69 93.4 1.2 -2.1

February 1.4 75.4 2.49 93.2 1.4 -0.2

March 6.1 67.8 3.47 93.1 1.8 4.7

April 10.9 67.5 4.22 92.9 1.7 10.0

May 16.1 68.7 5.15 93.1 1.6 16.0

June 19.8 66.5 6.10 93.1 1.5 20.3

July 21.6 64.3 6.28 93.1 1.5 23.1

August 21.3 65.0 5.53 93.2 1.4 22.9

September 16.4 71.7 4.14 93.3 1.3 17.8

October 11.7 76.9 2.77 93.5 1.1 11.3

November 6.1 80.3 1.70 93.3 1.2 4.3

December 1.1 83.4 1.34 93.4 1.2 -1.0

Year 11.1 72.4 3.75 93.2 1.4 10.6

Table 5 - Microclimate data for the City of Medveđa6

6 RET Screen International & NASA Software, updated 2014

16

Analysis of heating system in Technical school and in the Sports hall

Technical school and the Sports hall are both heated from one boiler room.

No Institution Heated

area Heating capacity

Calculated consumption

(m2) (kW) (kWh/a)

1 Technical school ‘Nikola Tesla’ 3,464 719 432,188

2 Sports hall 1,828 379 126,631

Total 5,292 1,193 558,819

Table 6 - Data on premises of the Technical school and the Sports hall

Boiler room is located in the building of the Sports hall, which is connected to the building of the

Technical school by the hall. Space in front of the boiler room is used as wood storage. Open

expansion tanks are set on the sides of the chimney (see Photo 3). Equipment in the boiler room is

outdated, but functional. The system for chemical preparation of water does not work.

Photo 1 - Sports hall

Photo 3 - Sports hall, back yard view

Photo 2 - Wood log storage

beside the Sports hall

17

Photo 4 - Solid fuel boiler, 2x750kW

Photo 5 - Hot water collector

There are two boilers heated by solid fuel (wood) in the boiler room, with capacity of 2x750kW,

produced by ‘Eko-Star’, Knjaževac. There is hot water collector in the boiler room with connection

lines for the following: the radiator heating system in the school; radiator heating system in the sports

hall; the system for heating sanitary water; and air conditioner for air heating system of the Sports

hall.

Photo 6 - Technical school ‘Nikola Tesla’

Several years ago, there was the radiator heating system freeze failure in the Technical school.

After this failure, the radiator heating system was not fixed, but only repaired by dismantling

malfunctioning radiators, and replacing them with the radiators smaller than necessary. Since the

heating system had not been repaired after the failure, it is not possible to reach the designed air

temperatures in the School premises; therefore, new radiators should be installed where necessary.

Photo 7 - Damaged radiator, reduced power

18

Analysis of heating system in the Police station

No Institution Heated

area Heating capacity

Calculated consumption

(m2) (kW) (kWh/a)

1 Police station Medveđa 1,510 259 410,620

Total 1,510 259 410,520

Table 7 - Data on premises of the Medveđa Police station

Police station in Medveđa is located in three facilities. The boiler room is located in central facility.

Central facility, facility with classrooms, and facility with service workshop and the garage, are

heated from the boiler room with mazut-heated boilers. Heating system is two-pipe radiator system

without thermostatic valves.

Photo 1 - Police station, central facility

Photo 10 - Facility with service workshop and garage

Photo 9 - Facility with classrooms

19

Analysis of heating system in primary school

No Institution Heated

area Heating capacity

Calculated consumption

(m2) (kW) (kWh/a)

1 Primary school ‘Gornja Jablanica’ 3,380 723 434,592

Total 3,380 723 434,592

Table 8 - Data on the facility of primary school ‘Gornja Jablanica’

Primary school ‘Gornja Jablanica’ is heated from the boiler room located within the school building.

There are two solid fuel heated boilers with power of 2x500kW, produced by ‘Šukom’, Knjaževac.

Water circulates through circulation pumps, which are installed behind the boilers, at hardly

accessible place. There is an open expansion tank. Space in front of the boiler room is used as

wood storage.

Photo 3 - Primary school ‘Gornja Jablanica’

Photo 4 - Wood log storage of the Primary school

Boiler room is small, which disables safe work. There is not enough space in front of the boilers for

loading wood and cleaning the boilers. Connection points of the boilers to the heating system are

located behind the boilers. Access to revision openings for the chimney cleaning, to the valves, and

to circulation pumps is difficult due to a lack of space. Heating system is two-pipe radiator system

without thermostatic valves.

Photo 2 - Entrance to the boiler room

20

Photo 6 - Solid fuel boiler, 2x500kW

Photo 7 - Cleaning pit and non-insulated chimney connection

Photo 5 - Valves and equipment behind the boilers

21

Analysis of heating system in Health centre ‘Medveđa’

No Institution Heated

area Heating capacity

Calculated consumption

(m2) (kW) (kWh/a)

1 Health centre ‘Medveđa’ 1,600 256 355,131

Total 1,600 256 355,131

Table 9 - Data on the premises of Health centre ‘Medveđa’

Health centre ‘Medveđa’ is heated by the boiler that uses light oil as a fuel. The boiler room is located

in the basement of the building, and this is the boiler room for the facilities of the Health centre, as

well as for the Cultural centre. There is one light oil-heated boiler, model Šukomaks 60, of 465-

580kW. There is an empty space in the boiler room at which there was second boiler, dismantled

after the failure.

Photo 8 - Health centre ‘Medveđa’

Photo 9 - Light oil fuel boiler, 465-580kW

There is the system for central preparation of hot water in the facility of Health centre, so heating

energy is used also for heating technical water during winter. Radiator heating systems of the Health

centre and Cultural centre, as well as the system of heating sanitary water are connected to the hot

water collector in the boiler room.

22

Photo 10 - Hot water collector with damaged insulation

Heating system in the facilities of the Health centre and the

Cultural centre is two-pipe radiator system without thermostatic

valves. Radiator heating system in the Cultural centre is not

working. Heating installations in the boiler room are functional,

but they are in a bad and neglected condition.

Photo 20 - Old circulation pumps

Photo 11 - Hot water tank with additional electric heater

23

Analysis of heating system in the Cultural centre

No Institution Heated

area Heating capacity

Calculated consumption

(m2) (kW) (kWh/a)

1 Cultural centre 1,320 227 173,606

Total 1,320 227 173,606

Table 10 - Data on the premises of the Cultural centre ‘Medveđa’

In the facility of the Cultural centre, there is radiator-heating system, which is connected to the boiler

room in the Health centre by hot water pipe. After the failure of the boiler, heating of the Cultural

centre had been turned off. The facility of the Cultural centre is used by several organizations, such

as the Office of the Ombudsman, Tourist organization ‘Medveđa’, Library, Radio station ‘Medveđa’.

Facility of the Cultural centre is heated with electric heaters according to the needs of each of these

organizations.

Photo 12 - Facility of the Cultural centre

Photo 24 - Oil radiator heater

Photo 23 - Theater hall in the Cultural center

24

Analysis of heating in system in the Social welfare centre

No Institution Heated

area Heating capacity

Calculated consumption

(m2) (kW) (kWh/a)

1 Social welfare centre 50 8 5,006

Total 50 8 5,006

Table 11 - Data on the facility of Social welfare centre

Facility of the Social welfare centre is a single

storey building without installation of the

heating system. It is heated by electric heaters.

The building has been recently reconstructed

and rehabilitated in a manner to become

energy efficient building.

Photo 25 - Facility of Social welfare centre

Analysis of heating system in the facility of Kindergarten ‘Mladost’

No Institution Heated

area Heating capacity

Calculated consumption

(m2) (kW) (kWh/a)

1 Kindergarten ‘Mladost’ 700 120 83,431

Total 700 120 83,431

Table 12 - Data on the facility of the Kindergarten ‘Mladost’

Kindergarten ‘Mladost’ has its own radiator heating system and the boiler room in the basement of

the facility. There is one boiler, model Šukom-Primula 99, using light heating oil as a fuel, with

capacity of 90-120kW. There is no system for automatic operations of the boiler. There is

prefabricated chimney with steel structure. The chimney is in a bad condition because there is no

insulation, which causes problems while the system is heated; furthermore, there is condensation

in exhaust gases. Condensation of exhaust gases damages the boiler and the chimney and shortens

their lifetime. System for maintenance of the pressure has two membrane expansion water tanks

with capacity of 2x35l.

25

Photo 14 - Facility of Kindergarten “Mladost”

Photo 28 - Prefabricated chimney with damaged insulation

The boiler is connected to the radiator heating system through

the hot water collector with connections. Installations in the boiler

room are insulated, outdated, functional, and in a good condition.

After recent reconstruction and adaptation of the facade, the

facility became energy efficient. There is two-pipe radiator

heating system without thermostatic valves in the facility.

Photo 29 - Hot water collector in a good condition

Photo 13 - Light oil fuel boiler, 90-120kW

26

Analysis of heating system in the building of the Medveđa Municipality

No Institution Heated area Heating capacity

Calculated consumption

(m2) (kW) (kWh/a)

1 Building of the Medveđa Municipality 1,000 190 118,889

Total 1,000 190 118,889

Table 13 - Data on the facility of the Municipality

The building of the Medveđa Municipality has its own radiator heating system connected to the boiler

room located in the building. There is one solid fuel (wood) heated boiler without technical data, in

the boiler room.

Photo 30 - The building of the Medveđa Municipality

The boiler is in extremely bad condition. During previous years,

there had been several boiler failures and discharges of water

from the system. Water circulation pump is set above the boiler.

Set in this way, the pump without division valves is

inappropriate for managing and servicing.

Photo 15 - Boiler room in the

building of the Municipality

27

Photo 16 - Solid fuel boiler

There is masonry chimney with numerous cracks, which causes

problems while the system is heated; furthermore, there is

condensation in exhaust gases. Condensation of exhaust gases

damages the boiler and the chimney and shortens their lifetime.

There is an open water expansion tank in the facility. Wood

storage is under the porch near the boiler room.

Photo 17 - Wood log storage for the building of the Municipality

28

Overall analysis

Based on the displayed, heating systems differ by fuel type and by the type and number of users.

Heating systems with electric heaters in buildings are not connected to a separate line of electricity.

Due to the complex heating system, it is not possible to collect data of energy consumption;

therefore, energy consumption is calculated according to the following:

yeHDDtt

QH

epi

C

24

H - Estimated consumption (kWh)

QC - Capacity of heating installation (kW)

ti - internal temperature (20°C)

tep - external project temperature (-15°C) HDD - Degree days of heating (2,599)

e - correction for the effect of wind and heating switch

y - correction for the effect of daily consumption profile

Based on these equations calculated values are shown in the following table:

No

Institution Boiler room

Time of

Day

s o

f

op

era

tio

n

Type of Operation A Q q

Calculated

Energy From to consumption

H h m2 kW W/m2 kWh/a

1 Technical school ‘Nikola Tesla’ In the building

of sport hall Wood

7 16 122 3,464 719 208 432,188

2 Sports hall 8 12 122 1,828 474 259 126,631

3 Police station Medveđa

In the building Heavy oil 6 20 181 1,510 259 172 410,620

4 Primary school ‘Gornja Jablanica’

In the building Wood 7 16 122 3,380 723 214 434,592

5 Health centre ‘Medveđa’ In the building

of health centre

Light fuel oil

6 20 181 1,600 256 160 355,131

6 Cultural centre Local el. Heaters

7 16 127 1,320 227 172 173,606

7 Social welfare centre

Local el. Heaters

7 16 127 50 8 160 5,006

8 Kindergarten ‘Mladost’

In the building Light fuel

oil 6 16 127 700 120 171 83,431

9 Building of the Municipality

In the building Wood 7 16 127 1,000 190 190 118,889

14,852 2,976 200 2,140,093

Table 14 - Overview of data on the analysed facilities and consumption

29

Current situation Unit Energy produce by

Total Heavy oil

Light Fuel oil Electricity Wood

Energy consumption

Annual (kWh) 410,620 438,561 178,611 1,112,300 2,140,093

Unit (kWh/m2) 272 191 130 115 144

Emission CO2 (kg) 114,152 122,797 58,942 23,358 319,250

Efficiency of system (%) 83% 85% 98% 63%

Consumption of fuel (t, m3) 43 45 1,681

Heated area (m2) 1,510 2,300 1,370 9,672 14,852

Unit fuel price (€/t, €/kWh, €/m3) 410 1,020 0.09 36

Annual energy cost (€) 17,638 45,763 16,075 60,533 140,009

Unit price of energy (€/m2) 11.68 19.90 11.73 6.26 9.43

(€/MWh) 42.95 104.35 90.00 54.42 65.42

Table 15 - Current situation, energy and fuel consumption, price, CO2 emission

Facilities of public institutions are very energy-inefficient. This is presented by power density, which

is 200 W/m2. Reasons to that are building structure and purpose of the facilities. Facilities with higher

floor-to-floor heights, such as the Municipal building and the Sports hall, bear bigger thermal load

(over 190 W/m2). Compact buildings with smaller heights, with glass surfaces, and smaller surface

of the facade, such as the Medveđa Health centre and Social welfare centre, bear thermal load of

160 W/m2.

Figure 1 - Energy consumption per fuel types– current situation

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Heavy oil Light fuel oil Electricity Wood Total

410,620 438,561

178,611

1,112,300

2,140,093

Consumption of energy (kWh)

30

Figure 2 - CO2 emission per fuel types– current situation

Figure 3 - Annual energy costs per fuel types– current situation

Demand for heating energy in any facility is determined by working hours of the tenant of the facility.

Due to the heating during working hours only, the heating energy consumption of 144 kWh/m2 is

low. If the facilities would be used longer than during working hours, annual consumption of heating

energy would be over 200 kWh/m2, which is extremely high value.

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Heavy oil Light fuel oil Electricity Wood Total

114,152 122,797

58,942

23,358

319,250

Emmision CO2 (kg)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Heavy oil Light fuel oil Electricity Wood Total

17,638

45,763

16,075

60,533

140,009

Annual energy cost (€)

31

Figure 4 - Unit price of energy per fuel type– current situation

According to energy efficiency indicators, local heating systems in Medveđa are very inefficient.

Energy efficiency of local heating systems depends on efficiency of following systems:

- System for production of heating energy- heating energy source

- Pipe systems for distribution of hot water

- Heating systems in the buildings

- Energy efficiency of the buildings

Systems for production of heating energy with boilers that use mazut, fuel oil, or electricity as a fuel,

are energy efficient, but economically unsustainable systems. Almost all of the buildings in

Medveđa, except for Kindergarten ‘Mladost’ and Social welfare centre, are not thermally insulated;

there is neither the control of the heating system, nor the control of the air temperature, which makes

all of these buildings and their heating systems inefficient. It is recommended the implementation of

energy efficiency measures aimed to reconstructing thermal insulation of the buildings, which would

certainly result in reduced consumption of heating energy.

Boilers using solid fuel, mazut, and oil as fuel, are inacceptable in central city area due to

environmental pollution and high CO2 emissions.

Increase of energy, economic, and environmental efficiencies of heating systems in public buildings

in Medveđa could be achieved through following activities:

- Installation of central boiler for the city, which will use cheaper fuel with low CO2 emissions

- Establishment of remote district heating system for all city zones

- Connection of larger number of residential buildings to the remote district heating system

aimed to better utilizing remote heating system used during longer working hours.

Using biomass as a fuel instead of mazut, fuel oil, and electricity, will result in higher economic

efficiency of the system, as well as in decrease of environmental pollution.

0.00

20.00

40.00

60.00

80.00

100.00

120.00

Heavy oil Light fuel oil Electricity Wood Averge

11.6819.90

11.736.26 9.43

42.95

104.35

90

54.4265.42

Unit price of energy (€/m2),(€/MWh)

(€/m2) (€/MWh)

32

5. BIOMASS MARKET ANALYSIS

Biomass represents a renewable energy source, which is defined as the organic matter of vegetable

or animal origin (wood, straw, vegetable residues from agricultural production, manure, organic

fraction of communal solid waste). Biomass is used in combustion process and converted in power

plants into the heat, electricity, or both- heat and electricity. Biomass is used for the production of

liquid and gas fuels. Only the biomass of wood origin in the form of wood chips will be considered

as a part of this study.

Biomass is one of the renewable sources of energy and as such is considered as CO2 neutral. Since

biomass combustion emits exact amount of carbon dioxide as the plant binds during the process of

photosynthesis during growth, in that sense coefficient of carbon dioxide emissions of biomass

equals zero. However, this information is valid only when exploitation of biomass is accompanied

by a forestation, otherwise CO2 emissions should be taken into account.

Wood chips are intended as the biomass for combustion in heating plants. The quality of wood chips

is defined by the standard for solid fuel SRPS EN ISO 17225-1:2015, and SRPS EN ISO 17225-

4:2015 determines the fuel quality classes and specifications of graded wood chips. The following

table shows the requirements defined by the standards in Serbia:

Table 16 - Requirements for wood chips according to SRPS EN ISO 17225-4:2015

Table 17 - The classification of wood chips based on the moisture content according to

SRPS EN ISO 17225-4

Wood chips

Standard SRPS EN ISO 17225-1:2015

SRPS EN ISO 17225-4:2015

Particles size

Amax = 6 cm2

L = 10 cm (max 10% - 35cm)

Moisture content W10 – W60

suitable: 40% max

Bulk density < 350 kg/m3

Calorific value 2.80-3.40 kWh/kg

M10 M15 W20 W25 W30 W35 W40

Moisture content %

M<10 10<M≤15 15<M≤20 20<M≤25 25<M≤30 30<M≤35 35<M≤40

33

Dimensions (mm)

The fracture >60% by weight

Fine fracture Rough fracture Maximum particle length

P16 3.15 ≤ P ≤ 16 mm < 3.15 mm < 15% <6% > 31.5 mm < 45 mm

P31 3.15 ≤ P ≤ 31.5 mm < 3.15 mm < 10% <6% > 45 mm < 150mm

P45 3.15 ≤ P ≤ 45 mm < 3.15 mm < 10% <10% > 63 mm < 200mm

Moisture (%)

M10 ≤ 10%

Dried M15 ≤ 15% M20 ≤ 20% M25 ≤ 25%

Suitable for storage M30 ≤ 30%

M35 ≤ 35% Limited for storage

M40 ≤ 40%

M50 ≤ 50% Unsuitable for storage M55 ≤ 55%

M60 ≤ 60% Wet

Ash content (%)

A 0.5 ≤ 0.5%

A 0.7 ≤ 0.7%

A 1.0 ≤ 1.0%

A 1.5 ≤ 1.5%

A 2.0 ≤ 2.0%

A 3.0 ≤ 3.0%

Table 18 - Requirements for wood chips according to SRPS EN ISO 17225-4:2015

Total forest area in the municipality of Medveđa is 7,090 ha. The forest area covers 14% of the

territory of the municipality; the degree of utilization of resources is far below the national average.

State owned forests represent 71%, and privately owned forests are 29% of total forest area in the

municipality. Forest enterprise ‘Šuma’, Leskovac, manages following forest administration offices:

Vučje, Predejane, Vlasotince, Medveđa, Lebane, and Crna Trava, with total forest area of 37,026

ha.

Forest farm Forest area

Total volume of wood

Annual growth

Annual increment

Šuma-Leskovac ha m3 m3/ha m3

Vučje 6,225 1,595,439 6.3 25,864

Predejane 7,451 1,731,259 5.7 27,106

Vlasotince 4,176 618,613 4.6 7,447

Medveđa 6,227 941,291 3.7 12,695

Lebane 5,331 1,110,531 4.9 17,730

Crna Trava 7,616 1,439,458 4.9 17,996

Total 37,026 7,436,591 30.1 108,838

Table 19 - Data on forests provided by SE ‘Srbijašume’, FE ‘Šuma’, Leskovac7

7 http://www.srbijasume.rs/leskovac.html

34

Figure 7 - Share of forest’s area in the

total area of the Serbian municipalities

Figure 8 - State and private forests

per Municipalities and Districts

8 9

Calculation of the potential of forest waste in the municipality of Medveđa is based on the study

‘Potentials and Possibilities of Commercial Use of Wood Biomass for Energy Production and

Economic Development of the Municipalities Nova Varoš, Priboj and Prijepolje’10. This Study was

carried out as the analysis of the availability of wood waste from the sawmill industry and forestry in

the municipalities of Nova Varoš, Priboj and Prijepolje. The results showed that following amounts

are available to meet energy needs:

8 Statistical Yearbook of the Republic of Serbia 2012 9 Ibid. 10 ‘Potentials and Possibilities of Commercial Use of Wood Biomass for Energy Production and Economic Development of the Municipalities Nova Varoš, Priboj and Prijepolje’, 2009, author: Branko Glavonjić, PhD

35

Nova Varoš Priboj Prijepolje Total

Forest (ha) 22,400 30,400 44,000 96,800

Wood waste volume (m3)

Chips from forestry 3,100 4,300 5,400 12,800

Wood industry 9,364 1,194 11,739 22,297

Total 12,464 5,494 17,139 35,097

Wood waste mass (t)

Chips from forestry 1,813.5 2,515.5 3,159.0 7,488

Wood industry 5,477.9 1,137.2 6,867.3 13,482

Total 7,291 3,653 10,026 20,970

Annually available energy value (MWh/a)

Chips from forestry 4,003.2 5,532.2 6,950.0 16,485

Wood industry 15,901.6 3,308.2 19,932.6 39,142

Total 19,905 8,840 26,883 55,628

Table 20 - The energy potential of green chips from forestry, with wood waste from sawmill industry, in the municipalities of Nova Varos, Priboj and Prijepolje11

Calculated energy value of forest waste, without the waste of the sawmill industry of SE ‘Srbijašume'

and FE ‘Šuma’, Leskovac (which is not far from the municipality of Medveđa) is shown in the table

below:

Area

Forest area

Wood waste

Annually available energy

Ha m3 t MWh/a

Prijepolje, Priboj, Nova Varoš 96,800 35,097 20,970 55,628

FE ‘Šuma’, Leskovac 37,026 13,425 8,021 21,278

Table 21 - The energy potential of biomass from FE ‘Šuma’, Leskovac12

In the Jablanica District, many companies are producing wooden packaging; there are also sawmills,

wood drying companies and production of furniture. In the near future, in the municipality of

Medveđa, there is planned an investment from Slovenia into a wood pellet plant and the production

of wood packaging.

Photo 34 - Local sawmill and wood drying company

11 Ibid. 12 Own calculation

36

Biomass of wood origin in the form of pellets available on the market is not suitable for analysis due

to the high purchase price. Some of the benefits of wood chips compared to wood pellets are lower

prices and lower level of wood processing. Domestic market transactions are performed on a small

scale between manufacturers and wholesalers, where price reaches 180 €/t of wood pellets.

Depending on the time of purchase, end customers pay between 200 and 220 €/t. The advantage

of pellets is higher bulk density, which means lower transportation costs and smaller storage for the

same amount of fuel in terms of energy produced. Due to lower processing degree than pellet, wood

chips have lower price, but higher percentage of moisture, which affects its energy value, bulk

density, and price. Characteristics and unit price of wood chips depending on the percentage of

moisture are presented in the table.

Wood chips Moisture Energy value Bulk density Cost

(%) (kWh/m3) (bulk-kg/m3) (€/t)

30-40 940-1,200 300-350 45-60

Table 22 - Characteristics of wood chips depending on the percentage of moisture

37

6. TECHNICAL DESIGN CONCEPT

6.1 TECHNICAL SOLUTIONS AND SIZING THE BOILER

Aimed to decreasing fuel costs for heating public buildings in the Medveđa municipality, it is

designed the concept of the construction of central boiler room with biomass- wood chips heated

boiler, remote district heating pipe system, and substations. Comparative analysis of annual fuel

costs in existing systems, and in case of using wood chips is shown in the Table 24. Following Table

shows variation of energy value and unit price of energy, depending on percentage of moisture. Due

to large contact surface, wood chips easily exchanges moisture with environment, which affects its

energy value and unit price of energy.

Moisture

Caloric value

Unit price

(%) (kWh/t) (€/t) (€/kWh)

Biomass, wood chips

30 3,400 53

0.016

40 2,800 0.019

Table 23 - Unit price of wood chips depending on the type of wood quality wood

Unit Energy produce by

Biomass Heavy oil

Light Fuel oil Electricity Wood Total

Energy consumption

(kWh) 410,620 438,561 178,611 1,112,300 2,140,093 2,140,093

Emission CO2 (kg) 114,152 122,797 58,942 23,358 319,250 0

Efficiency of system

(%) 83% 85% 98% 63% 0 83%

Increase for heating up the system

(%) 0% 0% 0% 0% 5%

Consumption of fuel

(t), (m3) 43 45 0 1,681 885

Heated area (m2) 1,510 2,300 1,370 9,672 14,852 14,852

Unit fuel price (€/t), (€/kWh),

(€/m3) 410 1,020 0.09 36 53

Annual energy cost

(€) 17,638 45,763 16,075 60,533 140,009 46,909

Unit price of energy

(€/m2) 11.68 19.90 11.73 6.26 9.43 3.16

Unit price of energy

(€/MWh) 42.95 104.35 90.00 54.42 65.42 21.92

Table 24 - Comparative analysis of the costs of currently used fuels in Medveđa and costs of biomass

Based on collected data, calculated annual fuel costs in buildings used by public institutions in

Medveđa are estimated to be around 140,000 €. If the analysed facilities used biomass-wood chips

for heating, annual fuel costs would come to amount of approximate 47,000 €. The use of biomass

for the heating of analysed facilities can reduce annual fuel costs by the amount of 90,000-95,000 €.

38

Figure 5 - Annual energy costs per fuel types- comparison with biomass

Figure 6 - Unit price of energy per fuel type- comparison with biomass

The program of switching existing fuels with biomass in buildings used by public institutions of

Medveđa requires a complex analysis in order to select the best technical and economic solutions.

Facilities of public institutions are dispersed all around the town, so replacement of individual boilers

requires the construction of a new central biomass boiler room with pipe system for district heating.

Switching from existing fuels to a new biomass heated boilers is not technically feasible, given the

following:

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Heavy oil Light fuel oil Electricity Wood Total

17,638

45,763

16,075

60,533

140,009

9,0019,613

3,915

24,382

46,911

Annual energy cost (€)

Existing fuel (€) Biomass, ships (€)

0.00

20.00

40.00

60.00

80.00

100.00

120.00

Heavy oil Light fuel oil Electricity Wood Biomass

11.6819.90

11.736.26 3.16

42.95

104.35

90

54.42

21.92

Unit price of energy (€/m2),(€/MWh)

(€/m2) (€/MWh)

39

- Lack of space for boilers

- Lack of storage space for fuel

Even if technical solutions for the establishment of individual boiler rooms in each building did exist,

the cost of such solution would be unjustifiably high.

The solution of this problem is the establishment of a new biomass plant and the district heating

network. Construction of district heating network should enable the connection of the considered

public facilities, with the possibility of connecting residential buildings in the future. This district

heating system represents an investment in infrastructure.

The required installed capacity of the boiler and level of efficiency of the heating system is calculated

using the formula:

C

B

QQ

QB (kW) Installed boiler capacity

QC (kW) Net consume (capacity)

η System efficiency

η = ηB · ηC

ηB Boiler efficiency

ηC Efficiency of district heating system

τ Simultaneity factor

The calculated heat demand would be covered by installing heating plant of nominal heat output

presented in the next table:

Capacity Qc ηB ηC τ

Calculate QB

Sizing of the boiler

(kW) (kW) (kW)

2.976 0,9 0,92 0,9 3.235 3.500

Table 25 - Calculated capacity of future heating plant

40

Figure 7 - Diagram of the annual distribution of the heat capacity of the heating plant

The number of hours of boiler operations can be determined using Sochinsky formula:

max

1

0

0

0

11 QQ

m

b

max

min0

Q

Q

maxQ

Qmm

Q - heating capacity at the time,

- time,

minQ - minimum heating capacity of boiler

maxQ - maximum heating capacity of boiler

mQ - required capacity

During winter, every heating system is a subject to great fluctuations that depend on the weather

and user’s habits. The maximum output power is utilized very shortly during periods of very cold

weather. Regularly, the boiler is operating for long intervals of time at low load. Therefore, it is

important for the boiler to be operated efficiently during off-peak periods. This can be achieved in

one of the following ways:

0

1000

2000

3000

4000

0 500 1000 1500 2000 2500 3000 3500

kW

Working hours

Heating Capacity (kW) - Heat Load Curve

41

1. The biomass boiler can provide the maximum capacity, while a buffer (a hot water tank) covers

short-term load fluctuations and ensures that the boiler can be operated efficiently during off-peak

periods. This solution has the advantage that only one fuel is required.

2. Combination of more biomass boilers. More boilers increase the reliability of supply and ensure

that the heating operates efficiently, even in off-peak periods.

Optimal model for biomass plant would be the solution with two wood chips heated boilers, 2000kW

+ 1500kW, and hot water tank. The smaller boiler of 1500kW would be used at higher outside

temperatures. In this way, the system would be efficient even in lower operating modes. Existing

boilers in aforementioned facilities would serve as a backup solution.

Comparison of biomass and existing fuels is based on the full load hours of 719 kWh/kW. This

consumption value implies that the heating systems are in a maintenance mode after working hours

and in schools during winter holidays. According to this data, it is necessary to produce yearly

consumption of 2,140 MWh. The unit production cost of the heating energy, according to the solution

with wood chips as a fuel, is about 21.92 €/MWh. Current unit cost for buildings described in this

study, with existing heating systems, is up to 65.42 €/MWh.

42

6.2 HEATING PLANT, LOCATION AND FACILITIES

The plot intended for the construction of a new power plant is located on a part of cadastral plot

2341/2 CM Medveđa with surface of 4,000m2. The location is in the industrial zone on the right bank

of the Jablanica River.

Figure 8 - Situation plan of heating plant

Photo 18 - Cadastral parcel No 2341/2

43

Planned facilities:

Building A:

- Space to install biomass boilers, 120 m2 is needed for installation of following boilers:

a) one boiler with capacity of 1,500 kW. Space necessary for operations of such boiler

has following dimensions: width x length x height = 6,2 x 9,2 x 4,8m

b) one boiler with capacity of 2,000kW. Space necessary for operations of such boiler

has following dimensions: width x length x height = 6,8 x 9,2 x 5,8m

The rest of a space is manipulative space for access to maintaining and safe passage.

- Space to install daily tank of woodchips, 100 m2 and capacity of 40 m3, i.e. 12 t, and

space for daily fuel storage sufficient for 3 days of operations.

- The area of processing equipment (buffers, pumps, collectors) of 130 m2

- Office space of 50 m²

Building B:

- Wood chips storage, area of 750 m2, and minimal useful height of 6 m. Capacity of the

storage is 1470 m3, or 440 t of wood chips, which is average 8 weeks consumption in the

coldest period of a year.

The total area of buildings is 1,150 m2 (120+100+130+50+750 m2) and the degree of availability of

cadastral parcel is 29%.

The heat source consists of two boilers for combustion of biomass with total nominal thermal

capacity of 3,500 kW: one boiler with capacity of 2,000kW, and other boiler of 1,500kW. In the plant

with two boilers, stable operations are ensured with low outdoor temperatures, as well as with higher

outdoor temperatures. In cases of higher outdoor temperatures, one boiler can provide sufficient

heating, without the risk of cooling entire system. The regime of the boiler temperature is 100/70°C.

Maximum operating pressure is 6 bars. The minimum temperature return to boiler is 60°C. It is

planned to install a buffer tank with volume of 50 m3 in order to optimize the operation of the heat

source. Circulator pumps are located between the boiler and buffer tank, as well as three-way mixing

valve in order to provide protection for the cold parts of boilers.

For the purposes of technical calculation, the documentation was used made by ‘Topling-heating

Beograd’, including additional mechanisms for feeding fuel, extracting exhaust gases and ash. For

the purposes of circulation in the distribution system, circulation pump with inconstant flow and

pressure sensors is planned.

It is necessary to build the appropriate facility for biomass boilers and processing equipment, with

the useful area of 250 m², and with necessary height of the boiler room. Next to the building with the

boiler, facility for the storage of fuel - wood chips is needed.

44

6.3 CONCEPT OF DISTRICT HEATING NETWORK

6.3.1 CONCEPT OF DISTRICT HEATING NETWORK

Heating network is designed to connect aforementioned public buildings, and to enable the future

connection of residential buildings. The pipe network consists of pre-insulated steel pipes that are

installed directly in the prepared soil. Distribution network will contain chambers with bulkhead

valves.

Photo 19 - Pre-insulated pipes for the district heating

network13

The quality of the pipes corresponds to 1.0254 i.e. P235

TR1 according to EN10217 T1 (or St.37.0 of the

technical requirements and delivery conditions

according to DIN1626). The operating temperatures at

the threshold of the heat source are:

- The flow temperature is 100℃,

- The return temperature is 70℃

The difference in altitude between the highest point of

the town (on the outskirts) and the lowest point is less

than 20 m, so the lowest required operating pressure in

the pipeline is 6 bar.

Before designing the heating network, it is necessary to

prepare a document on the municipal level, which will

define the Medveđa construction strategy and direction

of the future development of the town centre.

Concept plan of the heating network is preliminary, and designed for the planning of the budget

expenditures.

13 Source: Website of the company Konvar d.o.o., Belgrade

45

6.3.2 SCHEME OF DISTRICT HEATING NETWORK

Based on the position of public institution buildings, as well as on the position of the main town

streets, residential buildings and individual houses, heating network plan would be:

Figure 9 - Disposition of drawings of the heating network per numbers

46

Figure 10 - Drawing No 1 of the heating network

47

Figure 11 - Drawing No 2 of the heating network

48

Figure 12 - Drawing No 3 of the heating network

49

Figure 13 - Drawing No 4 of the heating network

50

Figure 14 - Drawing No 5 of the heating network

51

Figure 15 - Drawing No 6 of the heating network

52

Figure 16 - Drawing No 7 of the heating network

53

Dimensions of heating pipes for the network calculated with the planned reserve for future additions to the network:

Within the analysis, heating network is divided by the routes and transparent points, as shown on the drawings:

Type Route Distance Capacity of Unit price of network

of from to heat substations Dimension Total

route (m) (kW)

main A B 200 150 DN40 120 24,000

main B D 70 180 DN50 130 9,100

main D F 125 430 DN80 175 21,875

main F H 20 980 DN125 265 5,300

main H K 380 1,780 DN150 310 117,800

main K M 75 2,080 DN150 310 23,250

main M O 310 3,380 DN200 465 144,150

connection C 10 30 DN40 120 1,200

connection E 25 250 DN50 130 3,250

connection G 100 550 DN80 175 17,500

connection J 60 800 DN100 220 13,200

connection L 40 300 DN65 145 5,800

connection N 50 1,300 DN125 265 13,250

TOTAL 399,675

Table 26 - Sizing the pipe network by routes

According to the prices of units needed to construct a network of pre-insulated pipes, the costs of the construction of heating network are estimated to 400,000 €. The additional costs of the construction of the chamber with necessary fittings and installation of the fittings increase estimation for 10%, leading to total costs of the heating network of 440,000 €.

Q - The amount of heat transported by the pipeline

w - Velocity of flow of the working fluid

ρ - Density of the working fluid

cp - Specific heat capacity

Δθ - Temperature difference

p

incw

QD

4

54

Calculation of operating point of the network pump is shown in the following Table:

Flow Lenght Speed

from to diemeter wall unit total friction local TOTAL

kW l/h m mm mm m/s Pa/m kPa kPa kPa

O M 3.380 99.661 310 273,0 6,3 0,520 9,23 2,861 1,966 4,827

M K 2.080 61.330 75 273,0 6,3 0,320 3,61 0,3 0,3 0,618

K J 1.780 52.484 380 219,1 5,9 0,432 8,53 3,2 0,6 3,876

J G 980 28.896 20 219,1 5,9 0,238 2,71 0,1 0,2 0,246

G F 430 12.679 70 219,1 5,9 0,104 0,57 0,0 0,1 0,093

F D 430 12.679 55 88,9 3,2 0,659 61,30 3,4 1,5 4,845

D B 180 5.307 70 60,3 2,9 0,632 95,70 6,7 1,4 8,055

B A 150 4.423 200 48,3 2,6 0,843 226,77 45,4 2,4 47,761

MAX: 99.661 SUM: 70,3

10% 9.966 Security increase: 25% 17,6

Total for calculate: 109.627 heat excanger: 30

Adopted value: 110.000 (l/h) reserve: 10

Total for calculate: 127,9

Adopted for calc. (kPa): 130

Route Dimension of pipe Pressure dropCapacity

Table 27 - Calculation of operation point of network pump

The operating point of the network pump (or a pair of network pumps, depending on the solution

adopted in the preliminary design) is as follows:

- V = 110 m3/h

- H = 130 kPa

The operating point is selected on a basis of the pressure drop in the hydraulically least favourable

heating substation.

Aimed to saving electricity for pumping the working fluid, it is necessary to incorporate the engine

frequency controls in order to optimize the operation of network pumps and synchronize it with the

actual required thermal energy to be delivered to the consumer.

55

6.3.3 CONCEPT OF HEATING SUBSTATIONS District heating transfer stations provide the link between district heating suppliers and the customers’ systems. They incorporate the necessary equipment to tailor the supplied heat to the needs of the user. Indirect connections (in which district heating and in-house systems are hydraulically isolated) incorporate components to separate the systems (heat exchanger), to limit the flow volume, regulate the secondary supply temperature and measure the energy consumption. Substations are designed for installation in already existing boiler rooms. The existing boilers will be reviewed in terms of functionality. Those that do not meet the minimum requirements for safe operations will be removed from the substations (i.e. from the existing boiler rooms). Those that meet the minimum technical requirements will remain as a backup heat source in case when, for any reason, the heating system goes into breakdown of operational mode; or to serve as back up heating source if there is an increase of heat consumption that cannot be foreseen at this moment. The operating pressure in the primary part of the substation will be up to 6 bars max., and will

correspond to the parameters of the heating network, while the temperature range will be 100/70℃ in the primary part and 80/60℃ in the secondary part. The further development of the heating system, with a focus on the connection of residential buildings, would involve the installation of heating substations of the packet type in each building, with identical operating parameters as for heating substations in public institutions or business facilities.

1- External sensor 2- Thermometer 3- Manometer 4- Sensor 5- Air vent 6- Drainage 7- Prim. Connection DHW 8- Safety thermostat 9- Connection to expansion 10- Controller 11- Strainer 12- Heat meter 13- Ball valve 14- Safety valve 15- Heat exchanger

Figure 17 - Scheme of compact substation DSA 1 Mini Danfoss14

14 www.danfoss.com

56

Figure 18 - Substation DSP-MAXI Danfoss

Figure 19 - Substation DSA 1 Mini Danfoss15 16

Substations models DSP-MAXI are designed for power stronger than 100 kW. Substations DSA1-Mini are designed to power up to 100 kW and can be mounted on the wall. Heat substation should be dimensioned according to the size of the heat loss of the building. The reconstruction of the existing boiler rooms should be executed in a way that does not change the working fluid distribution system and the heating substation is connected to the existing supply and return collectors. The existing circulation pumps should be replaced by more energy-efficient units with motors of variable frequency, in order to achieve savings in power consumption and reduce heat dissipation in the buildings.

No Institution Position on the

drawing

Type of No of subst.

Power Price substation

(kW) (€)

1 Technical school ‘Nikola Tesla’ N-1 DSP-MAXI-32 2 400 12,000

2 Sports hall N-2 DSP-MAXI-12 2 250 10,000

3 Police station, Medveđa L-3 DSP-MAXI-22 1 300 5,500

4 Primary school ‘Gornja Jablanica’ J-4 DSP-MAXI-32 2 400 12,000

5 Health centre ‘Medveđa’ G-5 DSP-MAXI-22 1 300 5,500

6 Cultural centre G-6 DSP-MAXI-12 1 250 5,000

7 Social welfare centre C-7 DSA 1-30 1 30 3,500

8 Kindergarten ‘Mladost’ A-8 DSP-MAXI-11 1 150 4,300

9 Building of the Medveđa municipality

E-9 DSP-MAXI-12 1 250 5,000

TOTAL: 62,800

Table 28 - Selection of substations in the facilities

15 www.danfoss.com 16 Ibid.

57

7. PRELIMINARY COST ESTIMATES

The task of this study has a number of levels:

‒ Fuel switch to biomass of existing heating systems in public buildings in Medveđa, by

construction of the central biomass heating plant

‒ Construction of district heating distribution system to connect the public buildings

Fuel switch to biomass of heating systems in public buildings in Medveđa should provide lower costs

of heating energy, reduce CO2 emissions, contribute to environmental protection, and enhance local

economic development in terms of growing and processing biomass. Implementation of the project

should provide savings in the Medveđa municipal budget, and thus a quick return of the investment.

The preliminary cost estimates includes annual investment and operating costs. Investment would

include the purchase of equipment and boilers, necessary construction works, mechanical works,

and electrical works on the construction and installation of a new boiler, the heating network, heating

substations; and connecting the buildings to the new distribution system.

Position Investment costs - Description (€)

1. Access road and landscaping plots for the new building and for the route of new pipeline.

40,000

2. Construction of a technical bridge for pipes over the Jablanica river 10,000

3. Construction of the new boiler room the total area 400m2 80,000

4. Construction of the fuel storage facility area 750m2 40,000

5. Energy plant, mechanical and electrical equipment works (except boilers) 70,000

6. Biomass boilers and associated equipment 1,500+2,000kW 375,000

7. Chimneys 15,000

8. Construction of heating grid - distribution network 440,000

9. Heating substations for public administration buildings 62,800

10. Adaptation of spaces for heating substations in public buildings 15,000

11. Drum wood chipper 10,000

12. Documentation, construction management, commissioning of the plant and heating grid

40,000

13. Unforeseen costs 20,000

CAPEX (Capital Expenditure) 1,217,800

Table 29 - Investment costs17

The composition of operational costs (OPEX) is diverse and affected by many factors. In order to

calculate operational costs, there will be reviewed analysis of all annual expenses.

After reconstruction, energy rehabilitation and modernization of the buildings, it is expected

reduction of annual energy consumption for 0.1%.

For the period of 10 years, the price of heating wood is assumed to increase from 23%.

17 Own calculations

58

Based on the forecast of the World Bank18, expected variations of fuel prices in a period of 10 years

are following:

- Liquid fuels: 57% - Wood chips 23%

Description Unit 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Heat energy consumption

(MWh/a) 2,140 2,139 2,138 2,137 2,136 2,135 2,134 2,133 2,132 2,130

Wood chips consumption

(t) 885 885 884 884 883 883 882 882 882 881

Price of wood chips

(€/t) 53 54 55 57 58 59 61 62 63 65

Unit price of energy from wood chips

(€/MWh) 21.92 22.41 22.92 23.44 23.97 24.51 25.06 25.63 26.21 26.80

Heavy fuel oil price

(€/t) 410 433 458 484 512 541 572 604 639 675

Light fuel oil price

(€/t) 1,020 1,078 1,140 1,205 1,273 1,346 1,422 1,504 1,589 1,680

Electricity price (€/MWh) 0.09 0.09 0.09 0.10 0.10 0.10 0.10 0.11 0.11 0.11

Wood price (€/m3) 36 37 38 39 39 40 41 42 43 44

Unit price of energy from existing fuels

(€/MWh) 65.42 67.95 70.59 73.36 76.25 79.28 82.44 85.76 89.24 92.88

Maintenance of equipment and installation

% CAPEX / a 0.50 0.50 0.50 0.50 0.50 1.00 1.00 1.00 1.00 1.00

Cost (€/a) 4,739 4,739 4,739 4,739 4,739 9,478 9,478 9,478 9,478 9,478

Insurance % CAPEX / a 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

Cost (€/a) 6,001 5,891 5,784 5,680 5,580 5,482 5,388 5,296 5,208 5,123

Electricity - costs of the plant

kWhel / MWhth

2 2 2 2 2 2 2 2 2 2

Cost (€/a) 385 395 404 414 424 435 445 456 467 479

Labour costs (€/a) 6,700 6,801 6,903 7,006 7,111 7,218 7,326 7,436 7,548 7,661

Removal and disposal of ash

(t/a) 17.7 17.7 17.7 17.7 17.7 17.7 17.6 17.6 17.6 17.6

Cost of Removal and disposal of ash

(€/a) 531 539 547 554 563 571 579 587 596 604

Chemical treatment of circulating water

Volume (m3) 155 180 180 180 180 180 180 180 180 180

Losses (m3 / a) 5 5 5 5 10 10 10 10 10 15

Unit price (€/m3) 3.00 3.03 3.06 3.09 3.12 3.15 3.18 3.22 3.25 3.28

Cost (€/a) 23 27 28 28 56 57 57 58 58 89

Depreciation of equipment and installations

% / a 3 3 3 3 3 3 3 3 3 3

Cost (€/a) 20,034 19,433 18,832 18,231 17,630 17,029 16,428 15,827 15,226 14,625

Depreciation of buildings

% / a 1 1 1 1 1 1 1 1 1 1

Cost (€/a) 2,600 2,574 2,548 2,522 2,496 2,470 2,444 2,418 2,392 2,366

18 World Bank Commodity Forecast Price Data, July 2015

59

Description Unit 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038

Heat energy consumption

(MWh/a) 2,129 2,128 2,127 2,126 2,125 2,124 2,123 2,122 2,121 2,120

Wood chips consumption

(t) 881 880 880 879 879 878 878 878 877 877

Price of wood chips

(€/t) 65 66 67 67 68 69 69 70 71 72

Unit price of energy from wood chips

(€/MWh) 27.07 27.34 27.61 27.89 28.17 28.45 28.74 29.02 29.31 29.61

Heavy fuel oil price (€/t)

682 689 696 703 710 717 724 731 739 746

Light fuel oil price (€/t)

1,697 1,714 1,731 1,748 1,766 1,783 1,801 1,819 1,837 1,856

Electricity price (€/MWh) 0.12 0.12 0.12 0.12 0.13 0.13 0.13 0.14 0.14 0.14

Wood price (€/m3) 45 45 46 46 46 47 47 48 48 49

Unit price of energy from existing fuels

(€/MWh) 93.95 95.03 96.13 97.24 98.37 99.51 100.67 101.85 103.04 104.24

Maintenance of equipment and installation

% CAPEX / a 1.50 1.50 1.50 1.50 1.50 2.00 2.00 2.00 2.00 2.00

Cost (€/a) 14,217 14,217 14,217 14,217 14,217 18,956 18,956 18,956 18,956 18,956

Insurance % CAPEX / a 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

Cost (€/a) 5,042 4,963 4,887 4,815 4,746 4,679 4,616 4,557 4,500 4,446

Electricity - costs of the plant

kWhel / MWhth 2 2 2 2 2 2 2 2 2 2

Cost (€/a) 491 503 515 528 541 554 567 581 595 610

Labour costs (€/a) 7,776 7,892 8,011 8,131 8,253 8,377 8,502 8,630 8,759 8,891

Removal and disposal of ash

(t/a) 17.6 17.6 17.6 17.6 17.6 17.6 17.6 17.6 17.5 17.5

Cost of Removal and disposal of ash

(€/a) 613 622 631 640 650 659 669 678 688 698

Chemical treatment of circulating water

Volume (m3) 180 180 180 180 180 180 180 180 180 180

Losses (m3 / a) 15 15 15 15 20 20 20 20 20 20

Unit price (€/m3) 3.31 3.35 3.38 3.41 3.45 3.48 3.52 3.55 3.59 3.62

Cost (€/a) 89 90 91 92 124 125 127 128 129 130

Depreciation of equipment and installations

% / a 3 3 3 3 3 3 3 3 3 3

Cost (€/a) 14,024 13,423 12,822 12,221 11,620 11,019 10,418 9,817 9,216 8,615

Depreciation of buildings

% / a 1 1 1 1 1 1 1 1 1 1

Cost (€/a) 2,340 2,314 2,288 2,262 2,236 2,210 2,184 2,158 2,132 2,106

Table 30 - Operational costs19

Estimation of operational costs (OPEX) predicts that after first 10 years, prices will stabilize and

19 Own calculations

60

achieve small growth of 1% annually.

In following 10 years, it is expected wood chips price increase up to 65€/t. After this period, the price

would continue growing per 1% annually. For the price of electricity, it is foreseen annual growth at

a rate of 2.5%.

Insurance costs are estimated for all of facilities, equipment, and installations built by the investment.

Considering workforce, it is planned engagement of one highly technically educated employed.

Workers with lower qualifications would be replaced from existing assignments in the facilities that

are the subject of this study. Salaries costs would increase per annual rate of 1.5%.

Costs of cleaning exhaust systems and ash disposal are proportional to quantity of ash (2%) in

burned wood chips. Unit price of these costs would increase per annual rate of 1.5%.

61

8. PRELIMINARY FINANCIAL ANALYSIS

Sustainability of the plant will be analysed for a period of 20 years. Variations of operational costs

according to the structure for a period of 20 years are shown in tabular form. Analysis of operational

costs considers forecasts of price variations for each item.

Preliminary financial analysis consists of the table of costs of energy production, and following

figures, (enclosed in the Annex): comparative analysis of costs of heating energy and savings;

savings resulted by a fuel switch; operational costs and depreciation; comparison of total costs of

the existing and a new heating system; and cash flow.

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Biomass - wood chips 46,909 47,945 49,004 50,086 51,193 52,323 53,479 54,660 55,868 57,102

Ash 531 539 547 554 563 571 579 587 596 604

Electricity 385 395 404 414 424 435 445 456 467 479

Water 23 27 28 28 56 57 57 58 58 89

Summary 47,848 48,905 49,982 51,083 52,236 53,385 54,561 55,762 56,989 58,274 Employee – Labour costs 6,700 6,801 6,903 7,006 7,111 7,218 7,326 7,436 7,548 7,661

Maintenance 5,664 5,664 5,664 5,664 5,664 10,773 10,773 10,773 10,773 10,773

Insurance costs 5,638 5,540 5,444 5,351 5,262 5,175 5,091 5,009 4,931 4,856

Summary 18,002 18,004 18,011 18,021 18,037 23,166 23,190 23,218 23,252 23,289

Depreciation 20,234 19,664 19,094 18,524 17,954 17,384 16,814 16,244 15,674 15,104

Total costs 86,084 86,573 87,087 87,628 88,226 93,935 94,564 95,224 95,915 96,667

2029 2030 2031 2032 2033 2034 2035 2036 2037 2038

Biomass - wood chips 57,644 58,191 58,744 59,302 59,865 60,433 61,007 61,586 62,171 62,761

Ash 613 622 631 640 650 659 669 678 688 698

Electricity 491 503 515 528 541 554 567 581 595 610

Water 89 90 91 92 124 125 127 128 129 130

Summary 58,837 59,406 59,981 60,562 61,179 61,771 62,369 62,973 63,584 64,200 Employee – Labour costs 7,776 7,892 8,011 8,131 8,253 8,377 8,502 8,630 8,759 8,891

Maintenance 16,067 16,067 16,067 16,067 16,067 21,731 21,731 21,731 21,731 21,731

Insurance costs 4,783 4,713 4,646 4,582 4,521 4,462 4,407 4,354 4,304 4,257

Summary 28,626 28,672 28,724 28,780 28,840 34,570 34,640 34,715 34,794 34,879

Depreciation 14,534 13,964 13,394 12,824 12,254 11,684 11,114 10,544 9,974 9,404

Total costs 101,997 102,043 102,099 102,165 102,273 108,025 108,123 108,232 108,351 108,482

Table 31 - Costs of energy production20

Financial analysis shows that future plant can generate positive cash flow after the period of 14

years from the start of operations. Such long period needed to achieving the sustainability of the

project is caused by high initial investment costs and by low full load hours (719 kWh/kW) in public

buildings.

20 Own calculations

62

Low biomass price, compared to currently used fuels, would enable better utilization of public

buildings- the Sports hall and the Cultural centre, to the general benefit of local community.

Offered technical solution provides to the municipality the establishment of a sustainable heating

system, which would increase the quality of life, and create a positive impact to the environment.

If the investment was financed from KfW Bank's program, with grant of 20%, grace period of 5 years

and a repayment period of 10 years, the positive business results would be achieved after 12 years

from the start of operations.

63

9. PROJECT EVALUATION

Evaluation of the project is based on the collected and calculated data; costs of the construction of

the biomass plant with two wood chips heated boilers and district heating system; and operational

costs (OPEX). Analysis included variations of fuel prices and operational costs throughout whole

period of analysis.

Based on investment costs (Table 29) and operating costs for the period of 20 years (Table 30)

economic indicators are given in the Table 31 above. Economic indicators necessary for the

investment plan are following:

‒ (F) IRR - (Financial) Internal Rate of Return ‒ (E) IRR - (Economy) Internal Rate of Return ‒ (F) NPV - (Financial) Net Present Value ‒ (E) NPV - (Economy) Net Present Value ‒ DR - Discount Rate

Unit costs of heating energy Unit Value

The investment value – Capex € 1,217,800

Annual production of heat energy (first year of operation) MWh / a 2,140

Total heat production (20 years) MWh 42,599

The operation value (20 years) - OPEX € 1,960,532

LUC - Levelled Unit Costs € / MWh 74.6

NPV € 134.083

DR % 1

IRR % 1.027

Sensitivity to changes in the price of fuel (biomass) IRR%

Price biomass decreased 5% 1.343%

Price biomass increased 5% 0.706%

Price biomass increased 10% 0.380%

Price biomass increased 15% 0.268%

Table 32 - Unit costs of heating energy21

Based on the results of the analysis of techno-economic indicators, it is concluded that the

investment in the construction of a new biomass plant with district heating system for public buildings

in Medveđa is acceptable.

IRR = 1.027% > DR = 1 %

Financial indicators of sustainability are stable related to change of the price of biomass. Increase

of the price of biomass, more than calculated, even up to 5% would affect sustainability of the

project, and such increase would prolong a period of the return of the investment. Increase of the

prices of fossil fuels and of electricity, more than calculated, would affect shortening a period of the

return of the investment to less than 14 years.

21 Own calculations

64

10. LEGAL FRAMEWORK

EU Directive 2009/28/EC promotes the use of energy from renewable energy sources. It sets

binding national goals for the overall share of energy from renewable sources in final energy

consumption (less than 20%), as well as the share of RES in transport (10% of energy from

renewable sources in transport by 2020).

In order to support investments in renewable energy sources, the Republic of Serbia adopted a

number of laws and bylaws related to the use of biomass and other renewable energy sources.

These are the following acts:

- Energy Law (Official Gazette of the Republic of Serbia 145/2014)

- Energy Sector Development Strategy of the Republic of Serbia for the period by 2025 with

projections by 2030 (Official Gazette of the Republic of Serbia 101/2015)

- Solid biofuels – Fuel specifications and classes SRPS EN ISO 17225-1,4:2015

- Law on Planning and Construction (Official Gazette of the Republic of Serbia 72/2009,

81/2009-corr, 64/2010 – Decision of the Constitutional Court, 24/2011, 121/2012, 42/2013 –

Decision of the Constitutional Court, 50/2013 – Decision of the Constitutional Court, 98/2013

– Decision of the Constitutional Court)

- Law of efficient energy consumption (Official Gazette of the Republic of Serbia 25/2013)

- Law on Environmental Protection (Official Gazette of the Republic of Serbia 135/2004,

36/2009, 36/2009 and other law, 72/2009 and other law, 43/2011 – Decision of the

Constitutional Court, and 14/2016)

- Law on The Strategic Assessment of Environmental Impact (Official Gazette of the Republic

of Serbia 135/2004 and 88/2010)

- Law on Integrated Prevention and Control of Environmental Pollution (Official Gazette of the

Republic of Serbia 135/2004, 25/2015)

- Law on Waste Management (Official Gazette of the Republic of Serbia 36/2009, 88/2010,

14/2016)

- Law on Air Protection (Official Gazette of the Republic of Serbia 36/2009, 10/2013)

- Law on the Ratification of the Kyoto Protocol to the UN Framework Convention on Climate

Change (Official Gazette of the Republic of Serbia – International Contracts, 88/2007 and

38/2009- other law)

‒ National Renewable Action Plan of the Republic of Serbia (Official Gazette of the Republic of Serbia 53/2013).

65

11. ENVIRONMENTAL IMPACT

Implementation of the project affects the area where the biomass is collected, prepared for transportation, and transported at territory of the Medveđa municipality and at territory of the immediate surroundings. The environmental impact may be registered as noise, vibration, emissions of particulate matter from the exhaust gases, etc. During the construction of the plant, adverse impacts on local environment may occur due to

construction and installation works. Particularly negative impact would produce preparation works

for the construction of the boiler room and storage of wood chips where it would be necessary to

clear and level the ground. Construction works will cause noise and vibration generated by using

construction machinery, as well as increased dust emissions due to the works on the excavation of

foundations, levelling the ground, and the construction of access roads. All of the effects listed above

are of low intensity, and relatively short in duration. The construction site will be surrounded by the

fence, so adverse environmental impacts outside of the fence will be negligible.

Prior to the beginning of works, the Investor is required to prepare a study on the organization of the

site which will display the work areas, corridors for internal transport, temporary storage of

equipment and materials, temporary site landfill, manner and place of storage of flammable and

hazardous materials. The study will show the connection to the outside infrastructure and

installations, usage of protective agents, the method of disposal of solid and liquid waste and other

specific measures, which will be implemented to reduce risks to health and safety of the personnel

engaged; as well as environment protection actions.

During the operations of the energy block, the harmful substances contained in the exhaust gases

will exert the highest impact on the environment. In addition to dust from the fuel, the exhaust gas

also contains solid particles. Adding a cyclone device as a part of a boiler for combustion of biomass

would have effects on the following:

- Nitrogen oxides (NOx) in the case of combusting low moisture biomass: the temperature of

combustion is high in this case, and NOx content is significantly higher than in case of

combusting biomass with high percentage of moisture

- Sulphur oxides (SOx) are low because of the low sulphur content in the biomass

- Carbon dioxide (CO2) is considered neutral because the biomass is a renewable energy

source, so that the entire amount of the carbon emitted in the exhaust gas has been previously

taken from the environment in which the tree grew

- Carbon monoxide (CO) in practice does not occur due to the structure of the boilers and

constant monitoring of the combustion process.

In any case, the planned biomass plant should replace the existing local boilers which use fuel oil,

wood and electricity, and which are extremely unfavourable for the environment.

The heating plant itself does not require a significant amount of water. While in operation, the heating

plant does not have losses and uncontrolled water runoff except in the cases of emergencies

(failures). Such situations are extremely rare with this type of plants, so it is safe to say that there

66

is no risk of environmental pollution, as well as of pollution of surface and/ or groundwater.

The existing sewerage system is able to accept the wastewater that may be of atmospheric origin;

from washing facilities and equipment with a negligible content of oils and grease; waste and

sanitary sewage. In the cases of discharging the installations, a coolant tank is used with a grease

separator, and after the deposition, water is discharged into the sewer system.

The exhaust gases contain solid particles of ash, which are retained in the cyclone device prior to

entering the chimney and discharged into the atmosphere. A metal cartridge is placed into the

cyclone where the separated ash is deposited. In addition, the boiler unit has a cartridge for the

disposal of ash that occurs as a solid residue of the combustion process. The total amount of ash

deposited is 42 t/a, i.e. between 200 and 250 kg per day during the heating season. The ash will be

disposed in a safe place and once a week transported to the landfill under a contract with the local

utility company. The amount of ash is relatively small and does not represent a risk to the

environment.

The operations of the boilers and electric motor drives in the boiler room represent a source of

constant noise and vibration. All equipment that emits noise and vibration is located within the area

of the boiler room so that the sound is quite absorbed by the walls of the building. After

commissioning the boiler room, the measures will be implemented to eliminate or reduce the noise

to the acceptable level according to the Law on the protection of environmental noise22. According

to this Law, the maximum allowable noise level is 35 dB (A) during the day and 30 dB (A) during

night.

The user of this space will implement specific measures to minimize the negative impact on the

environment. These measures will be applied to the control of air emissions, as well as to the

management of wastewater, solid waste and noise.

Thermal energy for public institutions in the municipality of Medveđa is obtained from different

types of fuel, so the production of CO2 is different for each heat source. Existing heating systems

in public buildings in Medveđa produce up to 320 t of CO2 annually.

22 Official Gazette of the Republic of Serbia No 36/2009 and 88/2010

67

Figure 20 - Emission of CO2 per a fuel type

If the biomass for combustion were obtained by deforestation and without reforestation, an emission

of CO2 by biomass combustion would be 3.5 times less than from the combustion of heavy oil. If the

biomass for combustion were provided from wood waste or from forestation, then reduction of CO2

emissions would be lower for 320 t per year.

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

20

31

20

32

20

33

20

34

20

35

20

36

20

37

20

38

Ave

rage

Emission CO2 (kg), Comparasion to fuel

Emision CO2 (kg) - Existing fuel Emision CO2 (kg) - Biomass

68

12. ENERGY EFFICIENCY MEASURES AND CONCLUSION

Public buildings in the Medveđa municipality are heated by electric heaters or by light fuel oil, mazut,

or wood used as a fuel in individual boiler rooms located in the buildings. These heating systems

require high fuel expenses and a lot of engagement on purchase and storing the fuel; as well as on

regular maintenance and servicing.

Heating systems that use wood as a fuel (Technical school ‘Nikola Tesla’ and Primary school ‘Gornja

Jablanica’) are very inert, requiring long period of gradual warming of facilities, as well as long period

of cooling. There is no reliable regulation system of water temperature in these systems.

Furthermore, during the heating period, there is a lot of work on firing and cleaning the boilers, which

is a big expense. Described heating systems that use wood as a fuel are very inefficient for the

following reasons:

‒ low efficiency of the boilers;

‒ large storage area necessary for storing the fuel;

‒ there is no reliable regulation system of the temperature;

‒ frequent work interruptions due to the cleaning of the boilers.

Heating systems that use light fuel oil and mazut have higher level of automation in terms of

maintaining water temperature. In spite of higher efficiency- compared to wood heated systems,

they are big pollutants, and the fuel expenses are high for such systems.

Facilities heated by electricity are energy very inefficient, even though the heating is easily

managed, and desired air temperatures are easily reached.

In respect to the above, the existing heating systems in public buildings in Medveđa are energy very

inefficient, and they require high expenses related to the following: the purchase of the fuel;

maintenance; servicing. Furthermore, these systems are big environmental pollutants.

Construction of central boiler room with biomass heated boilers of 3,5MW and of heating network

will enable sustainable, cheaper, more reliable, manageable, and ecologically acceptable heating

system to public buildings in Medveđa. Heating systems in the buildings would be connected to the

district heating network in the heating substations, which would enable measuring of delivered

heating energy and management of consumption in accordance with the requirements of specific

facility.

Construction of biomass heating plant and of district heating network will enable following:

‒ lower costs of the heating,

‒ reduction of fuel consumption,

‒ reduction of CO2 emission,

‒ reduction of environmental pollution,

‒ increased comfort, and increased quality of services,

‒ decrease of a fuel expense and of maintenance costs.

69

There are forests at territory of the Municipality of Medveđa and the Jablanica District sufficient to

provide biomass for district heating plant. In addition, biomass can be purchased as residues from

orchards and private forests. In such way, local community could close the circle of production and

consumption of heating energy.

70

13. ANNEX

71

Figure 21 - Comparative analysis of costs of heating energy and savings

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038

Existing fuels x 103 138,2 140,9 143,6 146,4 149,3 152,2 155,1 158,2 161,2 164,4 167,6 170,9 174,2 177,6 181,0 184,6 188,2 191,8 195,6 199,4

Wood chips x 103 46,90 47,94 49,00 50,08 51,19 52,32 53,47 54,66 55,86 57,10 57,64 58,19 58,74 59,30 59,86 60,43 61,00 61,58 62,17 62,76

Saving x 103 91,29 92,95 94,64 96,36 98,10 99,88 101,6 103,5 105,4 107,3 109,9 112,7 115,4 118,3 121,2 124,1 127,2 130,2 133,4 136,6

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

220,000Comparative analysis of cost heat energy and saving - (€)

72

Figure 22 - Savings from fuel switch

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038

Saving x 103 91,2 92,9 94,6 96,3 98,1 99,8 101, 103, 105, 107, 109, 112, 115, 118, 121, 124, 127, 130, 133, 136,

Saving from fuel switch - (€)

73

Figure 23 - Operational costs and depreciation

0

20,000

40,000

60,000

80,000

100,000

120,000

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038

Operational costs and Depreciation - (€)

Biomass - wood chips Extra energy Employee – Labor costs Maintenance & Insurance costs Depreciation

74

Figure 24 - Comparison of total costs of the existing system, new heating system and new system supported by KfW Credit

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038

Total costs of Existing sistems - CAPEX+OPEX - KfW Credit (€)

Existing heating sistems CAPEX+OPEX KfW Credit

75

Figure 25 - Cash flow balance

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038

TotalCashFlow x103 -1,28 -1,22 -1,15 -1,07 -998, -915, -826, -730, -628, -518, -409, -298, -185, -70,2 47,43 164,6 284,0 405,8 529,8 656,1

-1,500,000

-1,000,000

-500,000

0

500,000

1,000,000

Cash flow balance - (€)