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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