Market demand for wood fuels and potential users

Supporting public sector investment in wood energy

Steve Luker

Wood is the major source

for all renewable

energy generation

in the EU = 59%

Source: UN Economic Commission for Europe 2008

The role of wood energy

In mostly 89%

wood

11% plant and animal biomass,

Waste, landfill gas etc

Out mostly heat

Fuel costs drive the wood energy sector

In 2011

Oil costs (62 cents/litre)

= €60/MWh

Wood costs (€89/tonne)

= €27/MWh

So wood under half the cost of oil

Where does wood energy work?

Regional Hospital

Lesiure centre

Secondary school

Primary school

Typical UK house

Passive home

4000

2500

1500

250 10 1

Typical energy use in MWhs per year

Known wood chip opportunities

Sites Boiler capacity

Cost Wood pa Annual savings

Carbon saved

FTE Jobs

All 10 8,521KWs €5.6 million 7,500 tonnes

€600,000 6,350 tonnes

17

Average per site

852KWs €560,000 750 tonnes €60,000 635 tonnes 1.7

About 30 sites reviewed within the public sector estate

10 schemes being taken forward

In hospitals, educational institutes and leisure centres

Retro-fitting wood boiler systems

What can go wrong?

Integration of fuel supply with system design

Poor planning and design

No plan for operation and maintenance

Commissioning and handover

Training for the site staff

Cost effective maintenance

and back up services

Better to buy heat?

No investment cash

Energy Services Contracts (ESCOs) can solve this

What is an ESCO?

The (wood energy) supplier designs and installs the wood energy system, finances it, operates it and provides metered heat. This overcomes the problems.

One integrated supplier for fuel and equipment

One expert designer

One supplier of O&M

No capital outlay

Risks low in retro fit situation

Who provides ESCOs

They are partnerships:

Installers/suppliers/energy companies

Banks and finance providers

Local wood chip suppliers

Local service engineers

Local hauliers

Possible ESCO companies

Aurora Energy Ltd

North Kerry Wood Chip

Justen Energitcknik/Igneus

Clearpower

Imperative Energy

John Sisk/Wood Energy

Dalkia

Rural Generation

Econergy

Irish Utilities

What a 15yr ESCO looks like

Medium heat user (small hospital, large leisure centre or school for example)

Current oil use 277,000 litres a year

Costing €172,000 a year (2012)

By 2026 that might be €341,000 a year (@5%)

Do nothing not a good option (even without new carbon taxes)

What a 15yr ESCO looks like

925KW wood boiler

Costs €885,000 inc of finance and planning

790 tonnes a year of wood chips

Operational costs:

So €1,951,832 of simple savings (ex finance/profit!) over 15 years

Year 0&M Wood chips Back up oil Total costs

2012 Oil €172,000

2012 Wood €3,815 €68,672 €17,239 €89,726

15yr Wood €70,957 €1,325,069 €371,984 €1,768,010

15 yr Oil €3,719,842

What an ESCO looks like

The average monthly savings =

Higher revenue savings if:

Capital allowances are used

Faster rises than 1.5% between oil/wood

Over 15 year contracts

Profit under 20%

Monthly capex Monthly heat Monthly cost inc profit

Monthly ‘do-nothing’

€4,935 €9,822 €17,708 €20,665

The fuel supply chain to meet this new market

Finally carbon savings