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Lidzbark Warmiński heating plant in RETScreen Software Justyna Pawilonis 28 March 2007 Lidzbark...

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Lidzbark Warmiński heating plant in RETScreen Software Justyna Pawilonis 28 March 2007 Lidzbark Warmiński
Transcript

Lidzbark Warmiński heating plant in RETScreen Software

Justyna Pawilonis

28 March 2007

Lidzbark Warmiński

Presentation aims to present results of energy production and life-cycle costs

analysis made for biomass heating plant in Lidzbark Warmiński with the use of

RETScreen Energy Model.

There are a few cases when clean energy technology implementation should be considered:

• Efficiency measures and renewable energy system should be considered any time when is a need for a system that generates heat, power or cooling.

• The best moment for easy clean energy technology incorporation is during a major renovation or new construction.

• The project will be most attractive when conventional energy costs are high. • The role of project stakeholders is significant in demonstration of keen

interest and strong commitment because of people’s resistance and unfamiliarity with biomass technologies.

• It should be verified if the process of procuring permits and approvals is not too difficult.

• Biomass energy technologies tend to have high initial costs, so funding and financing must be available.

• And, for renewable energy system, the availability of a biomass resources is one of the key sactors in a prefeasibility assessment.

RETScreen Biomass Heating Project Model

Clean Energy Project Analysis Software

Biomass Heating Project Model

Click Here to StartDescription & Flow Chart

Colour Coding

Online Manual

WorksheetsEnergy Model

Heating Load & Network

Cost Analysis

Greenhouse Gas Analysis

Financial Summary

Features

Product Data

Weather Data

Cost Data

Currency Options

Sensitivity Analysis

Version 3.1 © Minister of Natural Resources Canada 1997-2005.

Partners

NRCan/CETC - Varennes

Marketplace

Case Studies

e-Textbook

Clean EnergyDecision Support Centre

www.retscreen.net

Training & Support

Internet Forums

http://www.retscreen.net/

• We have used the RETScreen Biomass Heating Project Model to make an investigation of the technical and financial feasibility of biomass heating project. We have made an analysis of the energy production and life-cycle costs of existing biomass heating plant in Lidzbark Warmiński.

• Generally, Ret-Screen model is addressed to investors who have investment cost dilemma. It helps the user, at the very early stage of the project to quickly and simply asses whether the potential for a clean energy project is sufficiently promising to do further investigation or even engineering and development work.

• This simple but useful tool can be utilized for an installation anywhere in the world ranging from individual buildings to large clusters of buildings connected by district heating.

.

Biomass heating plant in Lidzbark Warmiński should supply heat to 7 public buildings:

•Reformatory•Special Educative Centre•Trade School•Secondary School•Residentail building•Technical school•Dormitory

Total heated floor area is about 15 thou. square meters and total pipe length is about 1 kilometer.

Plan of heating infrastructure

Trade School

Special Educative Centre

Reformatory

BIOMASS HEATING

PLANT

•Secondary School

•Residential

building

•Technical school

Dormitory

• To conduct the analysis, we have provided the application’s heating design temperature and the number of heating degree days for each month. The software includes a large database of these parameters for sites around the world. Suwałki is located in the coldest part of Poland so the number of degree-days is quite high and heating design temperature is below 20 degree centigrate.

• We have also indicated the hot water requirement (18%) which was used to specify heating loads that remain constant during the year.

Site conditions (1)

RETScreen® Heating Load Calculation & District Heating Network Design - Biomass Heating Project

Site Conditions EstimateNearest location for weather data SuwalkiHeating design temperature °C -20,5Annual heating degree-days below 18°C °C-d 4 447Domestic hot water heating base demand % 18%Equivalent degree-days for DHW heating °C-d/d 2,7Equivalent full load hours h 2 571

Notes/RangeSee Weather Database

-40.0 to 15.0Complete Monthly Inputs

0% to 25%0.0 to 10.0

Monthly InputsMonth °C-d Month °C-d Month °C-d

(<18°C) (<18°C) (<18°C)January 732 May 189 September 201February 641 June 87 October 357March 586 July 53 November 498April 381 August 71 December 651

Notes/Range

SeeWeather Database

• The heating plant in Lidzbark Warmiński includes biomass heating boiler of 930 kW. Similar biomass boiler works only in winter time as a peak load installation. Optional oil Back-up Heating System can be used.

• Peak heating load is the sum of the peak heating loads for each building in district heating system. We have specified the peak heating load for each building on a per unit floor area basis. RET-Screen suggest values for this based on the heating design temperature and level of insulation in the building.

• Total heating energy demand of this system (5 941 MWh) was estimated by multiplying the peak heating load by the number of equivalent full load hours calculated on the basis of heating design temperature and the number of heating degree days for each month.

• Biomass boiler cover almost 100% of heat demand but only about 80% of peak heating load. It means that the buildings’ residents must accept lower interior temperatures (more probable) or use auxiliary (e.g. electric) heating equipment during a few coldest days.

Site conditions (2)RETScreen® Energy Model - Biomass Heating Project Training & Support

Site Conditions Estimate Notes/RangeProject name Biomass Project See Online ManualProject location Lidzbark Warmiński, PolandNearest location for weather data Suwalki Complete HL & Network sheet

Number of buildings building 7Total pipe length m 1 030Heating energy demand MWh 5 941

GJ 21 389Peak heating load kW 2 311

MW 2,311

System Characteristics Estimate Notes/RangeSystem type - Biomass

Biomass Heating SystemBiomass fuel type - Wood high HVMoisture content on wet basis of biomass % 60% 0% to 55%As-fired heating value of biomass MJ/t 6 433 10,800 to 15,900Biomass boiler(s) capacity (1 boiler) kW 930 See Product DatabaseBiomass boiler(s) manufacturer FeroliBiomass boiler(s) model Legna Block NT 800Biomass boiler(s) seasonal efficiency % 80% 60% to 90%Biomass energy delivered MWh 5 077Percentage of peak heating load % 40,2%Percentage of total heating energy demand % 85,4%

Peak Load Heating SystemPeak load system fuel type - BiomassSuggested biomass boiler capacity kW 1 381 75 to 1,000Biomass boiler capacity kW 930 75 to 1,000Biomass boiler seasonal efficiency % 80% 60% to 90%Peak energy delivered MWh 818Percentage of peak heating load % 40,2%Percentage of total heating energy demand % 13,8% The peak heating load is not met

Back-up Heating System (optional)Suggested back-up heating system capacity kW 930 75 to 3,000Back-up heating system capacity kW 830 75 to 3,000

Annual Energy Production WHR Biomass Peak (Bio) Total Notes/RangePercentage of peak heating load % 0,0% 40,2% 40,2% 80,5%Heating capacity kW 0 930 930 1 860

MW 0,000 0,930 0,930 1,860Equivalent full output hours h 0 5 459 880 -Capacity factor % 0,0% 62,3% 10,0% -Percentage of total heating energy demand % 0,0% 85,4% 13,8% 99,2%Heating energy delivered MWh 0 5 077 818 5 895

GJ 0 18 276 2 945 21 221Biomass requirement t - 3 551 572 4 124

Complete Cost Analysis sheet

System Design Graph

0%

20%

40%

60%

80%

100%

120%

Load(Power)

Demand(Energy)

WHR Biomass Peak

Building clusters Base Case Heating System 1 2 3 4 5 6 7

Heated floor area per building cluster m² 15 112 3 315 4 964 2 540 1 584 1 882 627 200Number of buildings in building cluster building 7 1 1 1 1 1 1 1Heating fuel type(s) - - Other Other Other Other Other Other OtherHeating system seasonal efficiency % - 45% 45% 45% 45% 45% 45% 45%

Heating Load CalculationHeating load for building cluster W/m² - 75 200 140 140 200 140 140Heating energy demand MWh 5 941 639 2 552 914 570 968 226 72Total peak heating load kW 2 311 249 993 356 222 376 88 28

• The pipe size was calculated automatically. The RETScreen model helped in the preliminary sizing and costing of district heating piping networks. Total district heating network costs were about 514 thou. złotych (ca. 130 000 euro).

Size and cost of DH piping networks

District Heating Network Design Estimate/Total Design Criteria

Design supply temperature °C 95Design return temperature °C 70Differential temperature °C 25

Main Distribution LineMain pipe network oversizing % 20%Pipe sections Load Length Pipe size Is the Building cluster supplied by this pipe section? (yes/no)

(kW) (m) (mm) 1 2 3 4 5 6 7Section 1 604 120 DN 100 Yes No Yes No No No NoSection 2 1 202 270 DN 125 Yes No Yes Yes Yes No NoSection 3 1 318 100 DN 125 Yes No Yes Yes Yes Yes YesSection 4 993 5 DN 125 No Yes No No No No NoSection 5 -Section 6 -Section 7 -Section 8 -Section 9 -Section 10 -Section 11 -Section 12 -Section 13 -

Total pipe length for main distribution line m 495 Secondary Distribution Lines

Secondary pipe network oversizing % 10% Secondary distribution pipes length per building cluster (m)Length of pipe section m 535 300 0 10 35 10 100 80Pipe size mm DN 65 DN 125 DN 80 DN 65 DN 80 DN 50 DN 32

District Heating Network CostsTotal pipe length m 1 030Costing method - FormulaEnergy transfer station(s) connection type - DirectMain distribution line pipe cost factor - 0,50Secondary distribution line pipe cost factor - 0,50Exchange rate PLN/CAD 2,50

ETS and secondary distribution pipes costs per building cluster ($)Secondary distribution line pipe cost - 219 868PLN 129 750PLN -PLN 4 775PLN 15 138PLN 4 775PLN 38 750PLN 26 680PLN

Main Distribution Line Pipe Cost by Pipe Size CategoriesSummary of main distribution line pipe size mm DN 32 DN 40 DN 50 DN 65 DN 80 DN 100 DN 125Summary of main distribution line pipe length m - - - - - 120 375Summary of main distribution line pipe cost - 294 188PLN - - - - - PLN 64 500 PLN 229 688

Total district heating network costs - 514 055PLN Return to Energy Model sheet

• The detailed breakdown of initial and annual costs was made on the basis of data delivered by the heating plant operator. Total initial costs amounted to almost 2 million zlotych (about half million euro) and annual operation costs were about 0,59 million złotych (150 thou. euro).

Initial &

annual costs

Initial Costs (Credits) Unit Quantity Unit Cost Amount Relative Costs Quantity Range Unit Cost RangeFeasibility Study

Site investigation p-h 10 40PLN 400PLN - -Biomass resource assessment p-h 20 40PLN 800PLN - -Preliminary design p-h 10 -PLN -PLN - -Report preparation p-h 5 -PLN -PLN - -Travel and accommodation p-trip 1 500PLN 500PLN - -Other - Feasibility study Cost 0 -PLN -PLN - -Credit - Feasibility study Credit 0 -PLN -PLN - -

Sub-total: 1 700PLN 0,1%Development

Contract negotiations p-h 5 40PLN 200PLN - -Permits and approvals p-h 5 40PLN 200PLN - -Project financing p-h 40 40PLN 1 600PLN - -Project management p-h 10 -PLN -PLN - -Travel and accommodation p-trip 2 500PLN 1 000PLN - -Other - Development Cost 0 -PLN -PLN - -Credit - Development Credit 0 -PLN -PLN - -

Sub-total: 3 000PLN 0,2%Engineering

Site and building design p-h 1 40PLN 40PLN - -Energy system design p-h 320 105PLN 33 600PLN - -Tenders and contracting p-h 3 40PLN 120PLN - -Construction supervision p-h 100 40PLN 4 000PLN - -Other - Engineering Cost 0 -PLN -PLN - -Credit - Engineering Credit 0 -PLN -PLN - -

Sub-total: 37 760PLN 1,9%Energy Equipment

Biomass heating system (1 boiler) kW 930 513PLN 477 499PLN - -Biomass equipment installation kW 930 213PLN 197 951PLN - -Transportation project 1 5 000PLN 5 000PLN - -Other - Energy Equipment Cost 1 64 200PLN 64 200PLN - -Credit - Energy Equipment Credit 0 -PLN -PLN - -

Sub-total: 744 650PLN 38,2%Balance of Plant

Biomass peak load heating system kW 930 513PLN 477 499PLN - -Back-up heating system kW 830 28PLN 23 489PLN - -Energy transfer station(s) building 7 - -PLN - -Secondary distribution line pipe m 535 - 219 868PLN - -Main distribution line pipe m 495 - 294 188PLN - -Building and yard construction m² 88 1 466PLN 128 400PLN - -Equipment installation p-h 2 000 25PLN 50 000PLN - -Transportation project 0 -PLN -PLN - -Existing heating system Credit 1 32 100PLN (32 100)PLN - -Existing building and equipment Credit 1 -PLN -PLN - -

Sub-total: 1 161 343PLN 59,5%Miscellaneous

Overhead p-h 10 200PLN 2 000PLN - -Training p-h 10 50PLN 500PLN - -Contingencies % 0% 1 950 953PLN -PLN - -

Sub-total: 2 500PLN 0,1%Initial Costs - Total 1 950 953PLN 100,0%

Annual Costs (Credits) Unit Quantity Unit Cost Amount Relative Costs Quantity Unit CostO&M

Property taxes/Insurance project 0 -PLN -PLN - -Spare parts burner 1 4 500PLN 4 500PLN - -O&M labour p-h 6500 6PLN 37 700PLN - -Travel and accommodation p-trip 4 400PLN 1 600PLN - -General and administrative project 1 54 000PLN 54 000PLN - -Other - O&M Cost 0 -PLN -PLN - -Credit - O&M Credit 0 -PLN -PLN - -Contingencies % 1% 97 800PLN 489PLN - -

Sub-total: 98 289PLN 16,6%Fuel/Electricity

Biomass t 4 124 110,0PLN 453 585PLN - -Parasitic electricity kWh 81 973 0,500PLN 40 987PLN - -

Sub-total: 494 572PLN 83,4%Annual Costs - Total 592 861PLN 100,0%

Periodic Costs (Credits) Period Unit Cost Amount Interval Range Unit CostRefractory insulation Cost 2 yr -PLN -PLN - -

-PLN - --PLN - -

• The investment was supported by a grant which covered almost 50% of the investment.(Incentives/Grants)

• The most important initial cost is energy equipment (about 50% make boilers’ costs).

• The most important operation cost is fuel cost (about 70%) (Annual Costs and Debt)

Financial SummaryAnnual Energy Balance

Project name Biomass Project Electricity required MWh 82,0 Project location Lidzbark Warmiński, Poland Incremental electricity demand kW - Renewable energy delivered MWh 5 895 Net GHG reduction tCO2/yr #DZIEL/0!Heating energy delivered MWh 5 895Cooling energy delivered MWh - Net GHG emission reduction - 10 yrs tCO2 #DZIEL/0!Heating fuel displaced Net GHG emission reduction - 20 yrs tCO2 #DZIEL/0!

Financial Parameters

Avoided cost of heating energy PLN/MWh 142,8 Debt ratio % 10,0%RE production credit PLN/kWh - Debt interest rate % 3,0%RE production credit duration yr 15 Debt term yr 5 RE credit escalation rate % 2,0%GHG emission reduction credit PLN/tCO2 - Income tax analysis? yes/no YesGHG reduction credit duration yr 10 Effective income tax rate % 19,0%GHG credit escalation rate % 2,0% Loss carryforward? - YesRetail price of electricity PLN/kWh 0,500 Depreciation method - Straight-lineDemand charge PLN/kW - Depreciation tax basis % 97,7%Energy cost escalation rate % 2,0% Depreciation rate % 30,0%Inflation % 2,0% Depreciation period yr 20 Discount rate % 7,0% Tax holiday available? yes/no NoProject life yr 20 Tax holiday duration yr 5

Project Costs and Savings

Initial Costs Annual Costs and DebtFeasibility study 0,1% PLN 1 700 O&M PLN 98 289 Development 0,2% PLN 3 000 Fuel/Electricity PLN 494 572 Engineering 1,9% PLN 37 760 Debt payments - 5 yrs PLN 42 600 Energy equipment 38,2% PLN 744 650 Annual Costs and Debt - Total PLN 635 461 Balance of plant 59,5% PLN 1 161 343 Miscellaneous 0,1% PLN 2 500 Annual Savings or Income

Initial Costs - Total 100,0% PLN 1 950 953 Heating energy savings/income PLN 848 601 Cooling energy savings/income PLN -

Incentives/Grants PLN 955 000 RE production credit income - 15 yrs PLN - GHG reduction income - 10 yrs PLN -

Annual Savings - Total PLN 848 601 Periodic Costs (Credits)# Refractory insulation PLN - Schedule yr # 2,4,6,8,10,12,14,16,18,20 # PLN - Schedule yr # 0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0# PLN - Schedule yr # 0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0,0

End of project life - PLN - Schedule yr # 20

Financial Feasibility

Pre-tax IRR and ROI % 30,7% Calculate GHG reduction cost? yes/no NoAfter-tax IRR and ROI % 22,3% GHG emission reduction cost PLN/tCO2 Not calculatedSimple Payback yr 3,9 Project equity PLN 1 755 857 Year-to-positive cash flow yr 5,0 Project debt PLN 195 095 Net Present Value - NPV PLN 1 649 426 Debt payments PLN/yr 42 600 Annual Life Cycle Savings PLN 155 694 Debt service coverage - 6,12 Benefit-Cost (B-C) ratio - 1,94 RE production cost ¢/kWh in construction

See HL & Network sheet

• The Internal Rate of Return is quite high and amounts to about 22%. (Financial Feasibility)

• The Net Present Value is positive and rather high (over 1,6 mill złotych)=(400 thous euro).

• The cumulative cash-flow becomes to be positive in the beginning of the fifth year of operation.

Cumulative Cash Flows GraphCumulative Cash Flows Graph

Biomass Heating Project Cumulative Cash FlowsBiomass Project, Lidzbark Warmiński, Poland

Total Initial Costs: PLN 1 950 953 Net average GHG reduction (tCO2/yr): #DZIEL/0!

IRR and ROI: 22,3% Year-to-positive cash flow: 5 yr Net Present Value: PLN 1 649 426

Cu

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• The project profitability is highly dependant on operation (annual) costs (mainly fuel) and assumed avoided costs of heating energy.

• Initial costs play a moderate role and debt related costs seem to be hardly significant.

Net Present Value - NPV

Sensitivity Analysis for Net Present Value - NPV

Avoided cost of heating energy (PLN/MWh)Initial costs 128,5 135,7 142,8 150,0 157,1

(PLN) 1649425,9 -10% -5% 0% 5% 10%1 755 857 -10% 958 375 1 390 263 1 822 151 2 254 040 2 685 9281 853 405 -5% 872 012 1 303 900 1 735 789 2 167 677 2 599 5651 950 953 0% 785 650 1 217 538 1 649 426 2 081 314 2 513 2022 048 500 5% 699 287 1 131 175 1 563 063 1 994 951 2 426 8392 146 048 10% 612 924 1 044 812 1 476 700 1 908 589 2 340 477

Avoided cost of heating energy (PLN/MWh)Annual costs 128,5 135,7 142,8 150,0 157,1

(PLN) 1649425,9 -10% -5% 0% 5% 10%533 575 -10% 1 389 113 1 821 001 2 252 889 2 684 777 3 116 665563 218 -5% 1 087 381 1 519 269 1 951 158 2 383 046 2 814 934592 861 0% 785 650 1 217 538 1 649 426 2 081 314 2 513 202622 504 5% 483 918 915 806 1 347 694 1 779 582 2 211 471652 147 10% 182 186 614 074 1 045 963 1 477 851 1 909 739

Debt ratio (%)Debt interest rate 9,0% 9,5% 10,0% 10,5% 11,0%

(%) 1649425,9 -10% -5% 0% 5% 10%2,7% -10% 1 648 170 1 649 397 1 650 624 1 651 850 1 653 0772,9% -5% 1 647 632 1 648 828 1 650 025 1 651 222 1 652 4193,0% 0% 1 647 092 1 648 259 1 649 426 1 650 593 1 651 7603,2% 5% 1 646 552 1 647 688 1 648 825 1 649 962 1 651 0993,3% 10% 1 646 010 1 647 117 1 648 224 1 649 330 1 650 437

Debt term (yr)Debt interest rate 4,5 4,8 5,0 5,3 5,5

(%) 1649425,9 -10% -5% 0% 5% 10%2,7% -10% 1 665 614 1 673 495 1 650 624 1 658 408 1 665 4842,9% -5% 1 665 122 1 673 011 1 650 025 1 657 818 1 664 9023,0% 0% 1 664 629 1 672 525 1 649 426 1 657 228 1 664 3193,2% 5% 1 664 135 1 672 039 1 648 825 1 656 636 1 663 7343,3% 10% 1 663 640 1 671 552 1 648 224 1 656 042 1 663 149

Risk Analysis for Net Present Value - NPV

Parameter Unit Value Range (+/-) Minimum MaximumAvoided cost of heating energy PLN/MWh 142,8 20% 114,3 171,4Initial costs PLN 1 950 953 20% 1 560 762 2 341 143Annual costs PLN 592 861 50% 296 430 889 291Debt ratio % 10,0% 5% 9,5% 10,5%Debt interest rate % 3,0% 50% 1,5% 4,5%Debt term yr 5 0% 5 5

Impact on Net Present Value - NPV

Effect of increasing the value of the parameter

Click here to Calculate Risk Analysis

Sorte

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-1,000 -0,800 -0,600 -0,400 -0,200 0,000 0,200 0,400 0,600

Debt term

Debt ratio

Debt interest rate

Initial costs

Avoided cost of heating energy

Annual costs

• Assuming the level of confidence at 90% the expected NPV should be in the range of -300 thous till 3.4 million zlotych.

• The most probable NPV is at the level of about 2 million złotych and the average expected value is on the level of about seventeen hundred (1.7 mill) zlotych.

• The risk of achieving a negative NPV is rather low (less than 5%).

Distribution of NPV

Median PLN 1 664 167Level of risk % 10%Minimum within level of confidence PLN -312 609Maximum within level of confidence PLN 3 380 610

Distribution of Net Present Value - NPV

Net Present Value - NPV (PLN)

Minimum Maximum5,0% 5,0%

PLN -312 609 PLN 1 664 167 PLN 3 380 610

MedianLevel of confidence = 90%

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-2 282 563 -1 561 921 -841 278 -120 636 600 007 1 320 649 2 041 291 2 761 934 3 482 576 4 203 218

Fre

qu

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Conclusion

• The most important risk is high instability of biomass prices.

• In general, project looks quite promissing and overall investment

risk seems not to be very high.

EC Baltic Renewable Energy CenterInstitute for Fuels and Renwable Energy

Jagiellońska 55 str., build. 603-301 Warsaw

POLANDTel: +48 22 51-00-235

www.ecbrec.pl


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