Successful small and medium scale wood heating Key stakeholders Workshop New Forest, England, 9-10 March, 2011 Jyrki Raitila VTT Technical Research Centre.

Successful small and medium scale wood heating

Key stakeholders Workshop

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

210/04/23

History and background of small and medium sized woodheat in Finland

Started with small boilers (100-300 kW) in early 90’s Municipalities invested in bioheat systems Forest owners/farmers and co-operatives supplied wood chips

Supplied heat mainly for municipal buildings Municipalities were key players in establishment of heating

enterprises Later in the 90’s farmers started becoming heat entrepreneurs

themselves They realized it is the best way to add value to wood chips

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Small and medium size enterprises (SME)

The number of sites has grown from 3 plants in 1992 to 455 in 2009

53 % managed by co-operative or limited companies, the rest by single entrepreneurs or a network of entrepreneurs (2009)

29 % were district heating plants, the rest single building heating plants (2009)

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Number ofheatingsites

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SMEs today

The total heat capacity 250 MW (2009)

Annual growth 10% Average boiler capacity 550 kW,

growing Number of industrial customers

increasing 1,000,000 loose-m3 (300,000

tonnes) of wood chips (7 % of the total in Finland)

One plant needs 2,100 loose-m3 (700 tonnes) of chips on average

Heating container. Photo: Megakone Oy

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Wood fuel resources

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Wood is the best fuel source for SME plants

Ownership of forests favors wood heating and entrepreneurship

Private Farmer based Family forests Many forest owners are

entrepreneurs already Used to play an

important role in the owner’s economy

• Vast resources in our forests

• Finland has strong forest industry

• Uses and generates the most of wood based energy

• Effective supply chains of wood

• Use of wood energy in other sectors is growing fast

• Effective co-firing with other solid fuels

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Forest management

Long silvicultural tradition ’Green gold’ – renewable Good management to maximize profit and

benefit – like taking care of your investment Government incentives for management

Subsidies for silviculture Subsidies for some investments Subsidies for planning Tax deductions

Effective management ensures good timber quality

Best revenues from timber sales Price of wood fuel on the increase

Photo: Martti Kuusinen, Tapio

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Effective harvesting technology and methods

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Supply chains

Small diameter trees from thinnings

• Pre-commercial and first thinnings; 30-60 m3/ha (25-50 tonnes)

• Small trees are normally used at heating plants

• Forest machines smaller, agricultural machines can be used too

Small harvester with an accumulating felling head

Chipping with a tractor powered chipper

Different feed stocks

• Logging residues, stumps, non-merchantable wood – large plants

• Small trees – small and medium sized heating plants

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Good business models and heating technology

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Value chain in the forest energy business

Buying of stand

Chipping at roadside

Road transport

Logging

Bundling and forest transport

Forest transport of loose residues

Chipping at plant

Combustion for energy

Chipping at terminal

3 10 13 16 18 45

€/MWh

In each business model it is important to consider which part(s) of the value chain one wants to deal with.

Source: Sikanen 2009, University of Joensuu

1210/04/23

Examples of forest energy business models in Finland

CHIPPING AND SHREDDING/GRINDING AND TRANSPORT

Companies are specialized in using terminal-sized machines or effective chippers

Based on contract work Transport often provided

CHIPPING AND TRANSPORT Companies are specialized in chipping and transporting of

chips Customers are heating plants and organizations supplying

fuel for plants

(BUYING) + HARVESTING + CHIPPING + TRANSPORT Specialized in harvesting, chipping and transporting

energy wood

(BUYING) + HARVESTING + CHIPPING + TRANSPORT + PRODUCTION AND SUPPLY OF HEAT

Turnkey basis = management of the whole value chain Heating entrepreneurship

Source: Sikanen 2009, University of Joensuu

1310/04/23

Heating technology

Reliable domestic boiler technology

Flexibility of fuels; blends, quality variation

Easy to run and maintain

Turnkey contracts; different parts of the system match each other

Good service Enable unmanned operation

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Incentives

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Investment grants and subsidies

Government can give max 35% investment grants to strategic and/or rural heating plant investments

Harvesting of small trees subsidized for silvicultural reasons

Chips made from small wood very good fuel for small heating plants

No tax on energy generated with renewables (CHPs receive bonus)

Strong R&D work supported by the government and companies

A Ponsse harwarder. Photo: Ponsse Oy

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Observations & suggestions

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Woodfuel supply chains

Right equipment and machines Mechanization should depend on volumes

and markets Good training needed for operators Networking and contracting

Every supplier does not need to own machines

Integration with round wood harvesting More volume and efficiency

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Storage

Feed stock Proper seasoning of

woodfuel before processing

Only short time storage as chips (biodegrading of chips)

Chips Easy access

to stores Good, robust

conveyors

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Boilers: Sizing and technology

Sizing in Finland: 60-70 % of max output

Smaller investment Better efficiency of boiler If sized to max capacity,

summertime use difficult Simple robust technology in

Finland Easy to maintain More flexibility in fuels

Good control and monitor system

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Quality management

Wood chip supply Good (proper) raw

materials Good harvesting chains Good chippers Good storage pay for energy (MWh)

Apply standards Agree on control methods Keep it simple and practical

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Business models

Key questions Who invests? Who operates? Who gains profit?

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Business models (2)

Large energy companies Strong business and know-how, a lot of own capital High demand for profit, low local involvement

Municipal energy companies Strong local involvement and decision making Profit goes to municipality

Local small enterprises Use own machines and resources (additional income) Learn by doing, limited to scale

Co-operatives Strong local involvement and wide ownership Raw materials in ’own hands’ Limited to place, usually many passive members

Source: Asko Puhakka, PKAMK

2310/04/23

VTT creates business from technology