Innovative solutions for solid, gaseous and liquid biomass production and use EUBIONET Biomass Heat Entrepreneurship in Finland Eija Alakangas VTT Processes CONVENTIONAL WOOD HEATING BIOMASS HEAT ENTREPRENEUR Wood harvesting Wood harvesting Chipping Transport Transport Chipping Heat distribution Operation and Heat distribution management of the plant Operation and management of the plant Service Investments Service Investments Jyväskylä, March 2003 Contents 1. Introduction..................................................................................................................4 2. Heating entrepreneurship - new business concept.......................................................4 3. Promoting heat enterpreneurship .................................................................................6 4. Different models of heat entrepreneurship ..................................................................7 5. Fuel harvesting and combustion technology................................................................9 6. Competition promotes biomass heat entrepreneur concept .......................................13 7. Results of the competition .........................................................................................15 8. Presentation of the winners........................................................................................22 8.1 Winners of the year 2000 .................................................................................22 8.1.1 Tuupovaara Energy Co-operative...............................................................22 8.1.2 Heat Entrepreneur Pertti Peltomäki ............................................................24 8.1.3 Perho Energy Co-operative selected as the Pro-Heat Entrepreneur ...........26 8.2 Winners of the year 2001 .................................................................................29 8.2.1 Energy from forests in Kyyjärvi Municipality ...........................................29 8.2.2 Farmenergi AB develops technology .........................................................32 8.2.3 Inkoo makes energy from rotten wood.......................................................34 8.3 Winners of the year 2002 .................................................................................36 8.3.1 Tapani Brofeldt operating as a heat entrepreneur in Hämeenkoski municipality ................................................................................................36 8.3.2 Askola Forest Management Association ....................................................39 8.3.3 Municipality of Vöyri employing bioenergy for heating ...........................43 9. Conclusions................................................................................................................47 APPENDICES App. A Contact information of the winners and organisers of the Competition: Biomass Heat Entrepreneur of the Year 2 Preface EUBIONET – European Bioenergy Networks consolidates the activities of sub- networks for solid, gaseous and liquid biofuels. The major aims of the networks are knowledge and experience sharing, information dissemination, and knowledge and knowhow transfer in the bioenergy sector. Besides that, the networks also detect barriers and define strategies to overcome them and promote contacts between operators, planners and public organisations at all levels. Activities include events, publications, meetings, study tours and contacts to key bioenergy organisations in Europe. The present report is part of the work of the national work carried out for the EUBIONET in Finland. The report is based on the Competition: Biomass Heat Entrepreneur of the Year, which was organised during 2000–2002 by Finnish Ministry of Trade and Industry, Motiva and VTT (as a part of AFBnet and EUBIONET projects). The aim of the competition was to promote new business idea especially in rural areas. The jury for the Competition was represented by following wood energy organisations: Mr Aimo Aalto, Ministry of Trade and Industry, Energy Department; Mrs Eija Alakangas, VTT (secretary); Mr Veli-Matti Alanen, Pirkanmaa Forestry Centre; Mr Tage Fredriksson, Wood Energy Association; Mr Martti Honkasalo, Satakunta Polytechnics; Mrs. Kirsti Kärkkäinen, Motiva; Mr Kalevi Luoma, Association of Finnish Municipalities; Mr Markku Paananen and Mrs. Kirsi Knuuttila, BENET- network; Mr Asko Puhakka, Northern Carelia Polytechnics; Mr Juha Rautanen (chair), Motiva Oy; and Mr Harri Solmio and Mr Seppo Tuomi, TTS Institute. Mrs. Eija Alakangas has written this report. Mr Petri Halonen and Mr Pertti Frilander have evaluated questionnaires and made descriptions of the winners in Finnish. Mr Tage Fredriksson from Wood Energy Association has written description of Askola Forest Management Association. Mr Esa Kallio has compiled results from the questionnaires into Excel sheets. Report is available on the EUBIONET website: http://eubionet.vtt.fi Jyväskylä, March 2003 Eija Alakangas, co-ordinator of the EUBIONET 3 1. Introduction Finnish municipalities have long traditions in investing in wood fuel plants. In the end of 1960´s, when the major cities started to build up district heating networks and CHP plants. Main fuel was milled peat or wood fuels in inland cities and coal and natural gas in coastal area. In the beginning of the 1990´s some municipalities started also to invest in biomass heating systems for municipal buildings like schools, old-age homes etc (output < 1 MWth). At the same time farmers established new form of rural enterprises, so called ´heat entrepreneurs´. This means that they were supplying customers with heat produced from wood fuels. The mode of operation is such that the entrepreneur mainly carries the responsibility for looking after heating of municipal real estates and wood fuel supply. The heating entrepreneur produces the fuel or buys industrial wood residues from local wood processing industry, and carries out the heating, operation and maintenance work at the heating plant. The entrepreneur is paid for services rendered on the basic of the amount of heat generated. The price of heat is usually bound to the price of light fuel oil. This report describes the situation of the biomass heat entrepreneurship in Finland. VTT Processes has collected information as a part of the ALTENER funded projects: EUBIONET and AFBnet. This report is mainly based on the results gathered from the Competition of the Heating Entrepreneur of the Year, which was organised in co- operation with EUBIONET, Finnish Ministry of Trade and Industry and Motiva Oy. 2. Heating entrepreneurship - new business concept Heat entrepreneur/enterprise is a single entrepreneur, a co-operative, a limited liability company or an entrepreneur consortia, which sells heat. The heating enterprise typically operates locally and the main fuel is wood. The fuel comes from the entrepreneur's own forest or from local forest owners or wood processing industry. The heat entrepreneur operates the heating plant and earns an income based on the amount of produced heat. First three plants started operation in 1992 (Fig. 1). In the end of 2002 more than 140 plants, where heat enterpreneurship (total heat output 63 MWth) is practised in Finland. Most of the plants are located in the western part of Finland. Almost 40 of these plants are district heating plants with an average output of 1.1 MWth. About 100 plants are smaller plants for heating large buildings (average output 220 kWth). It has been estimated that annual wood fuel consumption of these plants is 200 000–250 000 loose m3 (160–200 GWh). The employment effect of these plants is 140 man-years annually. 4 Every megawatt employs two persons. TTS Institute estimates that a total potential of the plants will be 900 and total output of 300 MWth in 2005. The target of the “Heat Entrepreneur Finland” project is to build 50 new plants. 600 500 400 300 200 135 106 87 100 67 50 3 6 16 24 36 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Figure 1. State of the biomass heat entrepreneurs in Finland in 2002 and estimation for 2007 (number of entrepreneurs). Potential is marked by red colour and target by blue colour. Source: “Heat Entrepneurship Finland”project. Several organisations have been active in promoting heat enterpreneurship in Finland. Mainly the municipalities are in the key role in establishment of enterprises. Municipalities have public buildings, e.g. schools, old-age homes, which need heating. Municipalities can buy these services from local entrepreneurs. From the point of view of municipalities, among the advantages connected to heat enterpreneurship based on wood fuel are the following: • increase use of local labour and create new business opportunities • supply of local raw material for energy and decrease of CO2 emissions • increase energy security and supply in the municipality • reliability of heating of municipal buildings 5 • savings in costs in energy production and protection of the environment. Furthermore, the fact that the money previously been spent on oil now circulates locally promoting local livelihoods and also increases the amount of locally taxable incomes was considered important at the municipal level. The Heat Entrepreneur Finland (“Lämpöyrittäjä Suomi”) project estimates that about 45–55 % of the production and transportation costs will be circulated back to municipality. The heat enterpreneurship offers extra income especially to farmers, who have otherwise • unmerchantable timber in their woodlands;