How woodheat can be cost effective – good practices Key stakeholders Workshop New Forest, England, 9-10 March, 2011 Jyrki Raitila VTT Technical Research.

How woodheat can be cost effective – good practices

Key stakeholders Workshop

New Forest, England, 9-10 March, 2011Jyrki RaitilaVTT Technical Research Centre of Finland

210/04/23

Co-operative

310/04/23

General

Strengths Strong local

commitment Resources from

members (fuel, labor) Benefits to local

community Shared risks

Challenges Usually learning by

doing – lack of expertise

Easy to stay as a passive member

Locality limits growth (unless more customers in the same community)

410/04/23

Vakkalämpö co-operative

Basic facts Nominal output 0.7 MW (Ariterm

boiler) – district heating Annual heat production 2,500

MWh Fuels: 95 % wood chips (1,500

m3-solid = 1,200 tonnes), 5 % oil (15,000 liters)

Investment 250,000 € (2002) By municipality

Operation of the heating plant and fuel supply outsourced to the co-operative

510/04/23

Vakkalämpö (2)

Members 3 farmers and a local forestry society

(association of forest owners) Forestry society gives forest management

advise to forest owners and assists in forest management operations and in wood sales may organize harvesting operations

Fuel supply Forestry society supplies 80 % of the

fuel, farmers 20 % Mechanized harvesting chains Mainly whole trees from cleanings and

thinnings (= low value wood) Both forestry society and farmers

employ entrepreneurs for fuel supply operations

610/04/23

Vakkalämpö (3)

Business New contract for plant operation

and fuel supply each year between the municipality and co-operative

Fuel suppliers are paid according to the energy content of the supplied woodfuel (€/MWh)

Vakkalämpö is paid according to the amount of energy (MWh) supplied to the municipality

Members gain a separate payment for running the plant (paid by the hour)

Chipping with a tractor powered chipper (Kesla)

710/04/23

Vakkalämpö (4)

Cost effectiveness Wood fuel supply chains mostly in the hands of trained

professionals Wood fuel harvesting chains integrated into round wood

supply (same machines and operators) Reliable heating system, easy to maintain Good contracts through tendering and experience Customer pays for heat or for the calorific value of wood

(MWh)

810/04/23

Kuortaneen energiaosuuskunta (KEO)

Basic facts Three plants with the following nominal

outputs: 1 MW (district heating, boiler by Sykäke), 0.7 MW (old people’s home, boiler by Ariterm), 0.3 MW (church retreat center, boiler by Ariterm)

Annual heat production 6,000 MWh Fuels: 2,400 m3-solid (= 1,900 tonnes) of

wood chips, 450 m3-bulk of sod peat, 180 tonnes of wood briquettes, 30 tonnes of reed canary grass and 25,000 liters of oil

Operation of the heating plant and fuel supply outsourced to the co-operative

910/04/23

KEO (2)

Members 10 farmers and woodland owners

Fuel supply Members supply 1/3 of the wood chips, other

local woodland owners the rest Mechanized harvesting chains Mainly whole trees from cleanings and

thinnings (= low value wood), some stem wood too

Most harvesting is organized by a local forestry society, chipping by a local contractor

Wood briquettes from own mill and reed canary grass from local farmers Baled reed canary grass

1010/04/23

KEO (3)

Business Long term contract with the municipality

and church Fuel suppliers are paid according to the

energy content of the supplied fuel (€/MWh)

Members get a better price for wood fuel

Customers pay a one time connection fee, monthly basic fee and for used energy (€/MWh)

KEO sells wood briquettes also As the business has increased, they

have hired a managerAn Adelmann BP550 wood briquette machine

1110/04/23

KEO (4)

Cost effectiveness All biomass fuels come from the same region, wood

fuels within 25 km Harvesting outsourced to professionals Reliable heating system, easy to maintain, yet

flexibility to use various biomasses Good fuel selection, ’dry’ fuels (briquettes and peat)

can be blended when more heat is needed Customer pays for heat or the calorific value of wood

(MWh)

1210/04/23

Small heating enterprise

1310/04/23

General

Strengths Use own machines,

skills and other resources

Flexible Business oriented

(contracts, service, effectiveness)

Challenges Learning by doing –

including mistakes Often limited to place Limited resources

(capital in particular) Financial and technical

risks

1410/04/23

Ekowatti Oy (Ltd.)

Basic facts Nominal output 1 MW (Ariterm boiler) Annual heat production 4,000 MWh Fuels: 95 % wood chips, 80 % from

forest and 20 % from wood residues (2,600 m3-solid = 2,000 tonnes), 5 % oil (25,000 liters)

Investment 500,000 € (2004) By themselves

Sell heat on a turnkey basis

1510/04/23

Ekowatti (2)

Owners Owner of a small window frame workshop Metsäpirkka Ky – harvesting and forest

management company Bookkeeping company Building maintenance company

Fuel supply Metsäpirkka supplies 80% of the fuel, the

window frame workshop 20% Mechanized and manual harvesting

chains Mainly whole trees from cleanings and

thinnings (= low value wood) Employ local entrepreneurs for fuel supply

operations

1610/04/23

Ekowatti (3)

Business Long term contract with

customers, all customers in an industrial area

Fuel suppliers are paid according to the energy content of the supplied fuel (€/MWh)

Customers pay a one time connection fee, monthly basic fee and for used energy

1710/04/23

Ekowatti (4)

Cost effectiveness Owners have a good mix of different skills and expertise Wood fuel supply chains in the hands of one of the

owners (professional in forestry) Cost and quality management easy

Proven boiler technology, reliable company delivered the plant

Long term contracts and solid customers Customer pays for heat (MWh)

1810/04/23

Large energy and biofuel companies

1910/04/23

General

Strengths Usually enough

resources ($, £, €) Business oriented,

experienced Can operate in a large

area

Challenges Lack of local

commitment – have to win local trust in small communities

High demands for profit

SME heating might be too small for them

2010/04/23

Vapo Oy (Ltd.)

Vapo is the leading supplier of local and renewable fuels, bioelectricity and bioheat, and environmental business solutions in the Baltic Sea region

The Group has five business areas: Local Fuels, Heat and Power, Pellets, Garden and Environment, and Vapo Timber Oy

Tailored heating solutions based on local biofuels in Finland Photo: Vapo Oy

2110/04/23

Vapo (2)

Small and medium sized heating business Network of local heating plants

Invested by Vapo or the customer Several business models

Turnkey, Vapo in charge of the whole supply chain of heat (like a heating entrepreneur) – Vapo can buy old heating facilities

Heating and fuel supply outsourced to Vapo – Vapo rents the plant and network

Fuel supply outsourced to Vapo Franchising

Fuel supply Wood pellets from own mills Other solid biomass fuels from their own supply chains Use contractors and thus avoid investments in own

machines

Photo: Vapo Oy

2210/04/23

Large companies and bigger SMEs

Cost effectiveness Use a subcontracting model

Effective network No own capital in machines

Use their own expertise in organizing business and contracting Can effectively add value to bulk products and optimize the

use of raw materials (e.g. timber, wood fuel) Operate in the whole country and can compete effectively

2310/04/23

VTT creates business from technology