Pre-Feasibility Analysis of Biomass Fuelled Cogeneration Unit for Port Hope Simpson Final Report
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Pre-Feasibility Analysis of Biomass Fuelled Cogeneration Unit for Port Hope Simpson Final Report 107555.00 ● Final Report ● September 2010 ISO 9001 Registered Company Prepared for: Prepared by: Newfoundland and Labrador Forestry Training Association Contents Executive Summary ............................................................................................................................ 1 CHAPTER 1 Introduction .............................................................................................................. 4 CHAPTER 2 Port Hope Simpson Load ............................................................................................ 5 2.1 Electrical Loads ................................................................................................................... 5 2.2 Thermal Loads ..................................................................................................................... 6 CHAPTER 3 Potential Plant Sites – Preferred Site and Layout ......................................................... 9 CHAPTER 4 Fuel Availability and Costs ........................................................................................ 11 4.1 Biomass Combustion Technologies .................................................................................. 12 CHAPTER 5 Talbott BG100 .......................................................................................................... 14 5.1 Current Model................................................................................................................... 14 5.2 Next Generation Model .................................................................................................... 16 5.3 Other Talbott’s Models ..................................................................................................... 17 CHAPTER 6 Other Available Technologies ................................................................................... 18 6.1 Grate Combustion ............................................................................................................. 18 6.2 Fluidized Bed Combustion ................................................................................................ 19 6.3 Gasification ....................................................................................................................... 20 6.4 External Brayton Cycle ...................................................................................................... 22 6.5 Ericsson Cycle .................................................................................................................... 22 6.6 Technology Summary ....................................................................................................... 23 CHAPTER 7 Financial Analysis ..................................................................................................... 24 7.1 Capital Costs ...................................................................................................................... 24 7.2 Operating Costs................................................................................................................. 25 7.2.1 Regulatory Review ................................................................................................ 25 7.3 Incentives Available .......................................................................................................... 26 7.3.1 Green Energy Incentive Programs ........................................................................ 26 7.4 Sensitivity Analysis ............................................................................................................ 27 7.5 Ownership Models ............................................................................................................ 28 7.5.1 Private for Profit ................................................................................................... 28 7.5.2 Community Based ................................................................................................. 28 7.5.3 Sawmill Industry Renewal ..................................................................................... 29 CHAPTER 8 Conclusions and Recommendations.......................................................................... 31 CBCL Limited Contents i Appendices A NL Hydro Energy Purchase Information B Wood Chipper Brochures C Base Case Financial Analysis Spreadsheets D Proe Power Systems Information E Community Map CBCL Limited Contents ii EXECUTIVE SUMMARY The purpose of this report is to evaluate the feasibility of installing a small biomass fuelled cogeneration system in the south-eastern Labrador town of Port Hope Simpson. Cogeneration refers to the simultaneous production of two forms of energy, in this case electricity and hot water. Electricity in Port Hope Simpson is currently provided by Newfoundland and Labrador Hydro (NL) by using diesel generators. This is very expensive power to produce and is sold to the retail consumer at a considerable subsidy. NL Hydro has a policy that allows them to purchase electricity from third party generators in non-interconnected areas. The rate they will pay is a function of NL Hydro’s cost of production and is based on a “Share the Savings” principle. Appendix A includes this policy document. The maximum price NL Hydro will pay for purchased electricity under this policy is 90% of their avoided equivalent fuel cost which is determined annually based on their average fuel cost for the year. For 2009, NL Hydro’s equivalent fuel cost in Port Hope Simpson was $0.22/kWh. The maximum possible price they would pay for electricity from the new cogeneration system is therefore $0.198/kWh. Biomass cogeneration is a well established technology that is widely used in industrial applications such as pulp and paper mills and sawmills where an abundant and cheap source of biomass is available as a by-product of mill operations. Other areas where biomass cogeneration is sometimes feasible are remote areas that have adequate fibre resources and expensive imported fuel such as Labrador. The benefits of using locally harvested wood biomass for electrical and thermal energy production are numerous. The local economy benefits by providing jobs in the construction, operation and maintenance of the biomass cogeneration systems. The money stays in the local economy; Will provide employment in the forestry sector for harvesting, processing and transporting the biomass; and Local energy costs are less dependent on world prices for fossil fuels. This report looks at the technical concepts of a cogeneration plant as well as a preliminary business model. CBCL Limited Executive Summary 1 The proposed cogeneration concept would see a biomass fired combustion system as produced by Talbott’s Biomass Generators of Stafford U.K. The Talbott’s system is based on a modified external Brayton cycle that uses compressed fresh air as the energy production medium. The Brayton cycle has been in existence for over a century and is a proven concept. While efficiencies are generally lower than for internal combustion cycles, this disadvantage is usually overcome due to flexibility and lower cost of the fuel. An advantage of this system over a more standard biomass fired boiler and steam turbine system is that air is considered a non lethal gas and this type of plant does not require full time operator supervision according to the NL Boiler, Pressure Vessel, and Compressed Gas Regulations (see Section 7.2.1). While Talbott’s have had commercial units in service for more than three (3) years, they are currently revising the design of the BG 100, the unit proposed for Port Hope Simpson, to address some operational problems. They are currently working on development of a smaller 25 kW and a larger 250 kW unit and don’t expect to be in production of the new BG 100 for over a year. During our meetings with Talbott’s it was agreed that a unit should not be installed in a remote community like Port Hope Simpson until commercial versions of the new BG 100 have been in service successfully for at least one year, pushing back the earliest in service date to most likely late 2012 or 2013. Capital and operating cost estimates were developed with the assistance of Talbott’s personnel based on their projected pricing and the operational cost data from existing BG 100 installations. With the only potential source of sawmill residue as a fuel source for the cogeneration plant out of business, the fuel supply for the plant was assumed to be provided by local firewood suppliers at their regular retail price of $75 - $100 per cord. The community lacks a commercial wood chipper required to process the fuel to the uniform chip size required for use in the plant. The capital and operating costs of this equipment adds further to the fuel cost. Thermal customers for the 200 kWt of hot water heat from the plant are assumed to be the current health clinic and the school since both use hot water heating systems and are the closest large heating loads to the preferred plant site. The new school is also adjacent to the plant site and may become a future thermal customer. Financial analysis was performed using two potential ownership models; a community owned not for profit model and a privately owned for profit model. Based upon a discount rate of 10%, we determined net present value for the project over a twenty (20) year horizon. Analysis shows that the community owned model yields a slightly positive NPV while the privately owned