Elaboration of Technical Project Concept from Sourcing to Production (production, combustion, quality control) of the fuel switch to biomass project in District heating in Kostojevići, Bajina Bašta
Prepared for:
Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Dag-Hammerskjöld Weg 1-5
Postfach/ P.O.Box 5180
65760 Eschborn
Prepared by:
Mr. Marko Milošević
TABLE OF CONTENS
1. EXECUTIVE SUMMARY ...... 7 2. INTRODUCTION ...... 10 3. GENERAL INFORMATION ...... 12 3.1 BAJNA BAŠTA MUNICIPALITY ...... 12 3.2 KOSTOJEVIĆI ...... 14 4. EXISTING HEATING SYSTEM ...... 16 5. BIOMASS MARKET ANALYSES ...... 26 6. TECHNICAL DESIGN CONCEPT ...... 30 7. PRELIMINARY COST ESTIMATES ...... 35 8. PRELIMINARY FINANCIAL ANALYSIS ...... 36 9. PROJECT EVALUATION ...... 38 10. INSTITUTIONAL ANALYSIS ...... 39 10.1 USE OF BIOMASS IN ENERGY SECTOR ...... 39 10.2 ESCO MODEL – Legislation ...... 41 11. INSTITUTIONAL ANALYSIS ...... 45 12. ENERGY EFFICIENCY MEASSURES AND CONCLUSION ...... 48 13. APPENDIX ...... 50
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List of tables
Table 1 - The structure of the territory of the Bajna Bašta Municipality, (Source: http://www.bajinabasta.rs/index.html)...... 13 Table 2 - 2002 and 2001, Bajna Bašta, Population Census data (Source: http://www.bajinabasta.rs/index.html, http://popis2011.stat.rs/?page_id=2162)...... 13 Table 3 - 1991, 2002 and 2001, Kostojevići, Population Census data (Source: http://popis2011.stat.rs/?page_id=2162)...... 14 Table 4 - Basic information about the district heating system and users (Source: information provided by local heating company “BB- Term”)...... 15 Table 5 - Microclimate data (Source: RetScreen International & NASA Software, updated 2014.)...... 16 Table 6 - Installed capacity (Source: information provided by local heating company “BB- Term”)...... 20 Table 7 - Fuel consumption, energy consumption, fuel cost and CO2 emission from season 2007/08 - 2014/15 (Source: Energy bills and data of heating company “BB- Term”)… 21 Table 8 - Energy and costs efficiency indicators...... 24 Table 9 - Requirements for wood chips according to ÖNORM M 7133 ...... 26 Table 10 - The classification of wood chips based on the moisture content according to ÖNORM M 7133 ...... 27 Table 11 - Requirements for wood chips according to CEN/TS 14961:2005, Part 4 ...... 27 Table 12 - Available biomass in municipal Zlatibor district, expressed through the energy value (Source: The study "Potentials and Possibilities of Commercial Use of Wood Biomass for Energy ...... 29 Table 13 - Characteristics of wood chips depending on the type of primary wood ...... 29 Table 14 - Capacity of the district heating system at the end of season 2014/15 ...... 30 Table 15 - Comparative costs of energy produced by low quality biomass and heavy oil ...... 32 Table 16 - Comparative costs of energy produced by high quality biomass and heavy oil ...... 33 Table 17 - Investment costs for project (Source: Own calculations) ...... 35 Table 18 - Operational costs for woodchip boiler (Source: Own calculations) ...... 35 Table 19 - Unit cost heat energy (Source: Own calculations) ...... 38 Table 20 - Energy production costs (Source: Own Calculations) ...... 52
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List of figures
Figure 1 - Location of the Zlatibor District in the territory of the Republic of Serbia (Source:http://commons.wikimedia.org/wiki/File:Zlatibor_district.png) ...... ……………… 12 Figure 2 - Municipalities Belonging to the Zlatibor district (Source: www.381info.com) ...... 12 Figure 3 - Power of District Heating system per hour ...……………………………………………….. 15 Figure 4 - Size of active power per years – comparison ……………………………………………… 21 Figure 5 - Energy production by heavy fuel oil …………………………………………………………. 22 Figure 6 - Fuel cost ………………………………………………………………………………………... 22 Figure 7 - Unite price of energy from heavy fuel oil ……………………………………………………. 23 Figure 8 - CO2 emissions ………………………………………………………………………………… 23 Figure 9 - Forest’s area in the total area of municipalities (Source: Statistical yearbook of Republic of Serbia 2012) ……………………………………………………………………... 28 Figure 10 - State and private forest’s ratio by administrative districts (Source: Statistical yearbook of Republic of Serbia 2012) ………………………………………………………. 28 Figure 11 - Diagram of the annual distribution of the heat capacity of the boiler unit ………………. 31 Figure 12 - Diagram of the annual reduction in installed capacity …………………………………….. 36 Figure 13 - Diagram of the annual reduction of unit consumption ……………………………………. 36 Figure 14 - Planned production of energy in the period 2016 – 2035 ………………………………… 37 Figure 15 - ESCO model – Scheme (Source: Own Calculations) …………………………………….. 42 Figure 16 - Emission CO2 – Comparison to fuel ………………………………………………………… 47 Figure 17 - Costs of Heat Production & Savings ………………………………………………………… 51 Figure 18 - Operational costs & depreciation (Source: Own Calculations) …………………………… 53 Figure 19 - Fuel switch savings – repairing investment and generating income (Source: Own Calculations) …………………………………………………………………………………… 54
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List of pictures
Picture 1 - Building with tank ……………………………………………………………………………... 17 Picture 2 - Tank capacity 100m3 ………………………………………………………………………… 17 Picture 3 - Unloading station ……………………………………………………………………………... 17 Picture 4 - Connection for unloading from tank truck ………………………………………………….. 18 Picture 5 - Boiler room …………………………………………………………………………………….. 18 Picture 6 - Boiler with burner ……………………………………………………………………………... 18 Picture 7 - Daily fuel tank in boiler room ………………………………………………………………… 19 Picture 8 - Circulation pumps for school ………………………………………………………………… 19 Picture 9 - Pipeline in boiler room ……………………………………………………………………….. 20 Picture 10 - Pipeline with damaged insulation …………………………………………………………… 25 Picture 11 - Possible pipeline routes from plot behind the school yard to the old boiler room ……... 33 Picture 12 - Possible position of the future boiler room on the plot behind the school yard ………… 34 Picture 13 - Possible position of the future boiler room on the surface by the main road instead of the existing collapsed building ………………………………………………………………. 34
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List of abbreviations
ESCO - Energy Saving Company CO2 - Carbon Monoxide RS - Republic of Serbia CAPEX - Capital Expenditure OPEX - Operating Expenditure LUC - Leveled Unit Costs (F)IRR - (Financial) Internal Rate of Return (E)IRR - Economy Internal Rate of Return (F)NPV - (Financial) Net Present Value (E)NV - (Economy) Net Present Value
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1. EXECUTIVE SUMMARY
Project assignment is elaboration of technical concept of the fuel switch from existing fuel oil to wood chips in district heating center (DHC) Kostojevići. Boiler plan, as a part of District heating center Kostojevići is owned by the municipality Bajna Bašta, which is assigned to the management of the local heating company “BB-Term”. The present feasibility study has been required by the municipality of Bajna Bašta.
Consumers within DHC are primary school “Dušan Jerković”, medical station Kostojevići as a part of health center “Eveline Haverfield” and residential buildings. Buildings are connected in district heating network with local boiler plan, located in the school yard. Heating costs for primary school and health center are paid by the municipality. The energy costs for heating the primary school and health center in Kostojevići represent a significant item in the budget of municipality.
District heating center was built in 2007.. The construction boiler plant of DHC was financed by the municipality. Boiler plant consists of two independent facilities. In one building there is a boiler room equipped with two boilers, daily fuel tank and circular pumps. In the other building there is a main fuel tank with fuel pump station.
Even though the device is new, combusting of fuel oil produce serious air pollutants products in the micro location. For this reason, the local heating company “BB-term” has been often warned by the Inspectorate for Environmental Protection for the high emission of harmful substances in the exhaust gas and advised the fuel replacement.
The use of natural gas, wood pellets, wood chips and wooden logs has been considered as an alternative to the existing fuel.
Natural gas connections are expected to be installed in a long term future since municipality doesn’t have developed gas infrastructure. Natural gas is environmentally friendly fossil fuel, but involves higher investment costs for building of initial connection. Construction of a new boiler room (the old boiler room does not meet the technical requirements) and the cost of heat energy produced from natural gas is lower than the cost of heat generated from the light fuel oil.
Wood products like wood pellet and wood chips are a renewable energy source, easily obtained locally since there is a substantial quantity of it in the district of Zlatibor. These wood fuel products are considered as environmentally friendly fuel. On the other hand it increases local income due to an almost complete local supply chain. The lowest cost of heat production in relation to the considered variants is also an additional benefit, while the investment costs represent the biggest drawback.
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Cost of energy is performed by introducing leveled unit costs of energy production (LUC). Based on the investment and operating costs during the period covered by the depreciation life of a new heating source, the following result has been obtained:
- wood chips LUC = 53,0 EUR/MWh
If comparison of energy is performed based on the operating costs and without investment, during the period covered by the depreciation life, the results have been following:
- light fuel oil = 64,4 EUR/MWh
- wood chips = 45,5 EUR/MWh
Based on these results, the construction of a power plant with boilers for burning wood chips (biomass of forest origin) is proposed.
Prerequisites that must be met for the successful operation of the facility are as follows:
Selection of an appropriate financing model (from own funds, line of credit or public-private partnership); Enter into long-term contracts for the supply of the biomass; Provide autonomy to the fuel storage according to the consumption in the coldest month of the year; During the construction phase train the personnel who would take over the management and maintenance of the boiler plant; Ensure high quality maintenance of the specific equipment in cooperation with the supplier of the equipment.
This investment will achieve the following benefits:
- Lower costs of heat energy,
- Low levels of emission of harmful substances in the exhaust gas,
- Reduction of CO2 emissions - burning wood biomass the CO2 released is "neutral",
- Raising the level of safety and operational availability of the energy block,
- Raising the comfort for all consumers in District heating center Kostojevići.
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Techno-economic indicators of the future energy system with wood chips are as follows:
Heat capacity of boilers 1 x 800 kW Fuel wood chips, M30 according to CEN/TS 14961:2005 (1) General requirements and (4)
Annual production of thermal energy 1.079,65 MWhth /a Annual fuel consumption 348 t/a Efficiency on the threshold of the heat plant 0,92 x 0,85
Annual reduction in CO2 emission 262,19 t/a CAPEX 163.000 € OPEX (the amortization period) 981.444 € LUC 53,00 EUR/MWh
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2. INTRODUCTION
The program ‘Development of a Sustainable Bioenergy Market in Serbia’ (GIZ DKTI) is implemented jointly by the KfW (financing component) and GIZ (technical assistance component). It is funded by the German Federal Ministry for Economic Cooperation and Development (BMZ) under the German Climate Technology Initiative (DKTI). The main implementing partner and beneficiary of the technical assistance (TA) component is the Serbian Ministry of Agriculture, Forestry and Water Management (MAFWM). The general objective of the project is to strengthen capacities and create an enabling environment for the sustainable use of bioenergy in Serbia. The TA component includes the following five activity areas:
1) Policy advice: Assessment of bioenergy potentials and regulatory framework for creating and enabling environment for private sector investment in bioenergy projects etc. 2) Biomass supply: Accompany investments in biomass-fired district heating plants in up to three pilot regions with TA to secure a reliable and cost-effective supply of biomass in a sustainable manner. 3) Efficient firewood utilization at household level: Increase the efficiency of firewood consumption for heating at household level through the promotion of firewood drying and efficient stoves/ovens. 4) Project development: Support in cooperation with the national and international private sector the development and the implementation of feasible bioenergy projects – from biogas or straw combustion plants in the industry sector to wood based heating boilers in private and public buildings. 5) EU-Project BioRES – Regional Supply Chains for Woody Bioenergy: BioRES aims at introducing the innovative concept of Biomass Logistic and Trade Centres (BLTCs) in Serbia, Croatia, and Bulgaria based on cooperation with technology leaders from Austria, Slovenia, Germany, and Finland. The BLTCs as regional hubs will help increasing local supply and demand for wood bioenergy products in these countries.
The development of a biomass supply is required only if there are liable regional consumers of biomass. The district heating center (DHC) in the municipality of Bajina Bašta is planning to realize a fuel switch to wood biomass in location Kostojevići.
As a supporting institution, GIZ DKTI has received a Letter of Expression of Interest signed by the mayor of Serbian municipality Bajina Bašta to declare their demand for guidance, legal and technical assistance in the process of the development of a fuel switch to biomass for district heating in Bajina Bašta. This fuel switch from light oil to biomass should provide savings in the budget of the municipality by strengthening local incomes with local produced wood fuel and should also reduce emissions of the renewed heating system. The municipality currently does not have the financial resources to implement this project and therefore is willing to outsource this activity of sustainable heat generation to an experienced, reliable private partner.
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The aim of the study was selection of suitable technical concept for the production of thermal energy for District heating center Kostojevići that would use biomass in the form of wood chips as fuel instead of heavy fuel (crude) oil.
In addition, it is necessary to estimate the investment costs of the plant, perform economic evaluation of the sustainability of the project and make recommendations regarding methods of financing the project, which can be realized as direct funding or contracting under a public-private partnership.
The study includes the following:
- Assessment of the current energy situation in the DHC Kostojevići regarding heated area, boiler capacity and current performance, energy consumption and cost efficiency, condition of distribution system and connections. - Considering the size and structure of the heated space, capacity and performance of boiler equipment, fuel and energy efficiency of the system, the state of the distribution elements (piping and equipment installed). - Techno-economic analysis of the proposed system for the production of thermal energy by burning biomass (wood chips), which should include:
Proposal of a technical concept of the plant for combustion of wood chips includes the boiler system, fuel feeding system, fuel storage, additional and auxiliary systems for energy distribution to the existing heating installation, taking into account the energy efficiency measures to be implemented in the future.
o The estimation of savings achieved using wood chips as fuel (compared with the existing situation as well as with the use of wood pellets), taking into account fuel costs, plant efficiency, investment and operating costs, cash flow analysis, sensitivity analysis due to changes in fuel prices and the efficiency of boilers. o An assessment of CO2 emissions reduction. o The recommendation concerning the quality and availability of wood chips to supply the plant in the future, taking into account the prices and local suppliers of wood chips. o The assessment recommendation of the legal framework for public procurement i.e. for the implementation of the project through establishing public-private partnership with ESCO contract model. o The assessment of the project sustainability of the project in terms of public interest, impacts on the environment, safety at work, protection of natural and cultural resources and financial impact on the local community budget.
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3. GENERAL INFORMATION
3.1 BAJNA BAŠTA MUNICIPALITY
Kostojevići is located at the foot of the mountain Povlen around 20km from town and center of municipality Bajna Bašta. Bajna Bašta municipality is located in the western part of the Republic of Serbia, administratively belonging to Zlatibor District, and covers an area of 673 km2. Municipality of Bajina Basta extends along the Drina River. It is located 240 km from Belgrade and is located along the border with Bosnia and Herzegovina, from which it is separated by the River Drina. In the town Bajna Bašta town there is Skelani border crossing. Ibar highway is located near the municipality, which is connected by road with Belgrade and Vojvodina, which constitute a significant market for plasma products from this region. Municipalities and town Bajna Bašta are connected by roads of regional significance, over the saddle Debelo Brdo (1090 m above sea level), with Valjevo and further to Belgrade; along the Drina valley towards Ljubovija and Šabac; Kadinjača over the saddle (880 m above sea level) to Uzice. In the southern part of the municipality is a mountain of Tara and it’s national park, the basis of the economy is Hydroelectric Power Plant "Bajina Basta" power of about 1000 MWth.
Figure 1- Location of the Zlatibor District in the territory of Figure 2 - Municipalities the Republic of Serbia (Source: Belonging to the Zlatibor district http://commons.wikimedia.org/wiki/File:Zlatibor_district.png) (Source: www.381info.com)
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Gas distribution network is not developed in the municipality. For heating facilities, District heating system relies on services of the local heating company “BB-term” which use electricity, wood (logs), coal and liquid light and heavy fuel.
Surface area ha 67,300
Farmland ha 30,145
Forest area ha 32,287
Other ha 4,868
Table 1 - The structure of the territory of the Bajna Bašta Municipality (Source: http://www.bajinabasta.rs/index.html)
The altitude of town Bajna Bašta is 250 - 300 m. It is located at the foot of the mountain Tara, with the mountain peaks, Crni Vrh - 1,591 m and Zborište - 1,544 m above sea level.
The basic meteorological data (average annual values):
- Insulation: 164.7 hours/month, i.e. 1,976.5 hours/year, - The amount of rainfall: 990 mm/year, - Air temperature: 7.8°C, Relative humidity: 75.8 %, - Daily solar radiation on a horizontal surface: 3.76 kWh/m2 day, - Atmospheric pressure: 93.6 kPa, - Wind speed: 2.2 m/s (measured at 10 m from the ground), - Ground temperature: 9.9°C (measured at 0 m).
• The population of the territory of Bajna Bašta:
Number Census year
of 2002 2011
Inhabitants: 29.049 26.043
Households: 9.063 8.972
Table 2 - 2002 and 2001 Population Census data (Source: http://www.bajinabasta.rs/index.html, http://popis2011.stat.rs/?page_id=2162)
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3.2 KOSTOJEVIĆI
Kostojevići village belongs to the municipality Bajina Bašta. According to the census of 2011. in the village were 411 inhabitants. Through the village flows the river Rogačica. The main economic activities are agriculture and fruit production. In the village there is a primary school "Dusan Jerkovic" which has a branch in surrounding neighborhoods. In addition to the primary school in the village there is a local post office and health center within the health center in Bajina Basta "Evelina Haverfield".
• The population of the territory of Kostojevići:
Number Census year
of 1991 2002 2011
Inhabitans: 526 495 411
Table 3 – 1991, 2002 and 2001 Population Census data (Source: http://popis2011.stat.rs/?page_id=2162)
Houses in Kosetojevići are independent facilities. Number of floors is up to two. In addition to independent housing, near school Kostojevići there is a building with 12 apartments.
During the 2007., DHC were built with light fuel boilers boilers with total output 2x700kW. Following the construction of the DHC users of heating system were primary school “Dušan Jerković”, medical station Kostojevići as a part of health center “Eveline Haverfield” and 40 residential buildings, heated surface was 3474m2. Facility for the fuel tank volume 100.000m3 was built during the same period .Fuel tank building contains pumping fuel stations.
Most of the buildings that are connected to the district heating system were built in the period from 1970. to 1980.. These objects in their construction do not have insulation. Buildings that are connected on the district heating system are energy inefficient. Energetic rehabilitation was never performed on these facilities. Houses in Kostojevici are independent and dispersed, and therefore the overall distribution system is 2900m2. The distribution system was constructed of pre-insulated pipes. United length distribution system and a small number of connected customers make this system ineffective.
Since 2007., 12 residential buildings with heating surface of 922 m2 have been switched off from DHC. District heating system currently has connected heating surface of 2.552m2. Surface that is heating in primary school “Dušan Jerković” is 1.128m2, surface that is heating in medical station is 50 m2 and 1.374 m2 .belongs to residential buildings.
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Medical Residential Users Unit School station houses Connected Switch off
Heating surface m2 1.128 50 1.374 2.552 922 Heated volume m3 3.610 130 3.573 7.313 2.397 Power of heating installation kW 278 10 275 562 184,4 specific power per m2 W/m2 246 200 200 220 200 specific power per m3 W/m3 76,9 76,9 76,9 76,9 76,9
Persons Nr. 80 4 75 159 32 Pupils Nr. 49
Employees Nr. 31 4 4
Working days during the week Nr. 5 5 7
Non-working weeks during the Nr. 3 0 0
winter
Working time of DHC 06-21
period of use - house 00-24h 06-16 07-19 06-21
Table 4 - Basic information about the district heating system and users (Source: information provided by local heating company “BB-Term”)
Power per hours
600 553 563 563
500
400 287 275 Power (kW) 300 percent (%)
200 98 100 100 100 51 49
0 6:00 AM 7:00 AM 16:00 PM 19:00 PM 21 PM
Figure 3 – Power of District Heating system per hour
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4. EXISTING HEATING SYSTEM
The district heating system in Kostojevići is in function during whole heating period from September to April. During the heating period the load district heating system depends on the needs of consumers and microclimate conditions.
Energy consumption of district heating systems is greatly influenced by the working time of primary school, which does not require delivery of thermal energy in the afternoon, weekends and school holidays.
Energy costs significantly influence the performance of the heating company and for this reason there is a constant demand for improvement of the efficiency of the district heating system.
The district heating system works with a temperature regime in the range of 90/70°C and the maximum pressure of 6 bar. The system is not equipped with automatic control, so that the monitoring of the system and checking the pressure and temperature is done manually. All buildings that are connected to the district heating system have two-pipe radiator system without heat substations.
Microclimate data
Air Relative Daily Atmospheric Wind Soil Degree temperature humidity insolation pressure speed temperature days
heating (°C) (%) (kWh/m2) (kPa) (m/s) (°C) (°Cd) January -2,2 82,9 1,68 93,7 2,3 -1,8 626 February -1,0 77,8 2,48 93,6 2,3 -0,4 532 March 2,7 72,4 3,49 93,5 2,3 4,4 474 April 6,9 71,1 4,40 93,2 2,4 9,3 333 May 12,1 71,2 5,29 93,4 2,1 14,8 183 June 15,6 72,8 5,79 93,5 1,9 18,8 72 July 17,8 70,9 6,00 93,5 1,8 21,6 6 August 17,7 70,0 5,42 93,5 1,8 21,5 9 September 13,0 76,6 4,22 93,6 2,0 16,2 150 October 9,1 78,1 3,04 93,8 2,1 10,6 276 November 3,3 80,7 1,88 93,7 2,4 4,2 441 December -1,5 85,3 1,39 93,7 2,5 -0,8 605 Year 7,8 75,8 3,76 93,6 2,2 9,9 3.707 Table 5 - Microclimate data (Source: RetScreen International & NASA Software, updated 2014.)
A particular problem is the use of the heavy fuel oil due to the negative environmental effects the combustion produces. Under certain microclimate conditions, the allowed emission limits are certainly exceeded, which could lead to a ban on the heat source.
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The heating company “BB-term” is therefore exposed to the constant pressure to perform conversion of the currently used fuel.
Heavy fuel oil used as fuel may contain up to 3% of sulfur (S) according to the SRPS ISO 8754 Standard and the lower heating value is Hd = 40 MJ / kg, according to DIN51603.
The building in which there is the tank, is the size of 25-4m2. The building can withhold the tank capacity 100m3 and also contains a pump station for fuel oil. The building with tank is right by the building boiler room at a distance of 3m.
Picture 1 – Building with tank
Picture 2 – Tank capacity 100m3 Picture 3 – Unloading station
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The pumping system for unloading tank trucks (unloading station) is located inside facility of main tank. Connection for unloading from tank tracks is located next to facility of main tank. Connection is isolated in the plating of aluminum sheet.
Picture 4 – Connection for unloading from tank truck
Boiler room is located at 5m distance from the building with the main tank. Right next to the boiler room there are two metal chimneys, one for each boiler. Between boiler rooms and buildings with tank there is a pipeline for fuel transport, which is run above ground.
Picture 5 – Boiler room
The oil is pumped out from the tanks and into the daily reservoir located at the entrance to the boiler room. The temperature of the fuel in the daily reservoir is maintained with heat medium and electrical heaters. An electrical boiler of 18kW output power is provided for starter heating of the crude oil.
Picture 6 – Boiler with burner
Boiler – type: SUPERAC 695, I.VAR. Industry, year of production: 2007, thermal power: 700 kW, maximum operating temperature: 110oC, maximum operating pressure: 6 bar, operating range: 90/70o C. Burner: Weishaupt Monarch WM-L20, year of production: 2005.
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Equipment in the boiler room consists of two boilers, two expansion tanks capacity 2x1000l, daily fuel tank and system for water treatment.
From boilers, hot water is distributed to district system and directly to the auxiliary systems, for heating crude.
Picture 7 – Daily fuel tank in boiler room
District heating system contains three different sections. One part of the pipeline system is connected to the primary school. The circulation in the pipe system for primary school is realized through a pair of independent pumps. Switching on and off the heating in the school is regulated by the circulator pump.
Picture 8 – Circulation pumps for school
Pumps – type: BMH 60/340_65T, DAB.
Circulation of hot water in the other sections of pipe system is distributed by single circulation pump. These pumps are located on the overpressure side of pipeline system. For better circulation on the reversion side of pipeline system there is a third pair of pumps.
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Insulation on pipes in the boiler room and on connection pipes of district heating system is mostly damaged or missing, causing large heat losses. Repair of the insulation around the pipeline would save significant amounts of funds and the system would be more efficient.
Since the construction of the district heating system in 2007., every year there is a change in the number of users. In the first season of 2007/08 to the district heating system was connected 1.928 m2 of heating surface and 438kW power of installation.
The largest installed capacity of the system is achieved in the seasons 2009/10 and 2010/11 when it was recorded 3.474 m2 of heating surface and 747kW power of installation. At the beginning of the season 2015/16 to the district heating connection is 2.552 m2 of heating surface and 562kW power of installation.
Picture 9 – Pipeline in boiler room
The main reasons why users decided to be excluded from the heating system are high costs and the movement of the population. In previous seasons, there were not a large number of complaints on the quality of heating.
Size of active power (data obtained from the Departments of the company „BB-Term“)
Heating season Unit 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Heating surface m2 2.424 3.474 3.474 3.324 3.209 2.906 2.686 2.552 Heated volume m3 6.980 9.710 9.710 9.320 9.021 8.233 7.661 7.312 Capacity of heating kW 537 747 747 717 694 633 589 562 installation specific power per m2 W/m2 221 215 215 216 216 218 219 220 Table 6 – Installed capacity (Source: information provided by local heating company “BB-Term”)
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Size of active power
10,000
8,000
6,000
4,000
2,000
0 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 Heating sezon
Heating surface (m2) Heated volume (m3) Power of installation (kW)
Figure 4 – Size of active power per years – comparisons
Heating season 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 average Installation 537 747 747 717 694 633 589 562 653 (kW) Energy (kWh) 794.554 888.765 1.159.875 1.050.918 1.221.195 994.220 920.426 867.877 987.229
Fuel (kg) 73.600 82.300 107.400 97.300 113.100 92.100 85.200 80.400 91.425
Fuel cost (€) 29.440 32.920 32.220 62.272 76.908 56.181 42.600 28.140 45.085 Emission CO2 226.688 253.484 330.792 299.684 348.348 283.668 262.416 247.632 281.589 (kg) Unit consup. 1.480 1.190 1.553 1.466 1.760 1.570 1.562 1.543 1.516 (kWh/kW)
Table 7 – Fuel consumption, energy consumption, fuel cost and CO2 emission from season 2007/08 to 2014/15 (Source: Energy bills and data of heating company “BB-Term”)
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Energy production (kWh)
1,400,000 1,221,195 1,159,875 1,200,000 1,050,918 987,229 994,220 920,426 888,765 1,000,000 867,877 794,554 800,000
600,000
400,000
200,000
0 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 average Sezon
Figure 5 – Energy production by heavy fuel oil
Fuel cost (€)
76,908 80,000
70,000 62,272 56,181 60,000 42,600 45,085 50,000 32,920 40,000 32,220 29,440 28,140 30,000
20,000
10,000
0 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 average Sezon
Figure 6 – Fuel cost
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Unit price of energy (€/MWh)
70 63 59 57 60 46 50 45 37 37 40 32 28 30
20
10
0 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 average Sezon
Figure 7 – Unite price of energy from heavy fuel oil
Emision CO2 (kg)
330,792 348,348 350,000 299,684 283,668 281,589 300,000 262,416 253,484 247,632 226,688 250,000
200,000
150,000
100,000
50,000
0 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 average Sezon
Figure 8 – CO2 emissions
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Energy efficiency indicators for season 2007/08 to 2014/15 were calculated based on the collected data,:
Energy Efficiency Indicators Specific annual heat Specific annual gross cost energy consumption of heat energy Unit (kWh/m2a) (€/ m2 a) 2007/08 327,79 12,15 2008/09 255,83 9,48 2009/10 333,87 9,27 2010/11 316,16 18,73 2011/12 380,55 23,97 2012/13 342,13 19,33 2013/14 342,68 15,86 2014/15 340,08 11,03 average 329,89 14,98 Table 8 – Energy and costs efficiency Indicators
Presented analysis shows that the average annual consumption of 330 kWh/m2 is extremely inefficient compared to the recommendation of the Government of the Republic of Serbia of 140 KWh/m2, or 235% higher than the recommended value, or compared to EU recommendations for the consumption of thermal energy for heating of residential buildings is 65 kWh/m2.
On the basis of energy efficiency indicators district heating system in Kostojević is very inefficient. The energy efficiency of the district heating system depends on the efficiency of the following systems:
- System for the production of thermal energy - heat source
- Piping systems for hot water distribution
- The heating system in the buildings connected to the district heating system, as well as energy efficiency of buildings.
For production, thermal energy systems use boilers on light fuel oil. System was built in 2007. and it is an energy-efficient but not economically viable system. Pipeline for hot water distribution is an energy- ineffective for the following reasons:
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- Large distribution network lengths 2,9 km
- A small number of buildings connected to the system
- There is no system of regulating the flow in the distribution system.
- Non-existent or damaged insulation on the connections of pipes in the distribution system.
Picture 10 – Pipeline with damaged insulation
Buildings are without thermal insulation, without the possibility of regulating the heating system and without the control of the air temperature, which make this system energy inefficient. The energy efficiency measures undertaken for the purpose of thermal insulation reconstruction on buildings will certainly lead to a reduction in heating energy consumption.
The district heating system Kostojević is economically unsustainable because it is energy inefficient and because of the high cost of fuel light fuel oil. The increase in energy and economics efficiency of distribution systems heating company “BB-Term” may be affected by the:
- Executing the replacement of a heat source that will use cheaper fuel. - Insulation of piping system where insulation doesn’t exist or it is damaged. - Incorporate systems for controlling the flow in the system piping distribution system.
Biomass as fuel instead of light oil will be made higher economic efficiency and less environmental pollution.
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5. BIOMASS MARKET ANALYSES
Biomass represents a renewable energy source, which is defined as the organic matter of vegetable or animal origin (wood, straw, vegetable residues from agricultural production, manure, organic fraction of communal solid waste). Biomass is used in combustion processes and converted in power plants into the heat, electricity or both heat and electricity. Biomass is used for the production of liquid and gaseous fuels. Only the biomass of wood origin in the form of wood chips will be considered as a part of this study.
Biomass is one of the renewable sources of energy and as such is considered to be CO2 neutral. Since biomass combustion emits exact amount of carbon dioxide as the plant binds during the process of photosynthesis during growth, in that sense coefficient of carbon dioxide emissions of biomass equals zero. However, this information is valid only when it’s accompanied by urine afforestation, otherwise CO2 emissions should be taken into account.
Wood chips are intended as the biomass for combustion in boiler plants. The quality of wood chips was defined by the standard for solid fuel CEN / TS 14961: 2005 (1) General Requirements, and (4) Wood chips for non-industrial use. In addition to that, the national standards are applied too. The following table shows the requirements defined by the standards in Austria:
Wood chips ÖNORM M Standard 7133 2 Amax = 5 cm Particles size L = 12 cm (max 5% - 16 cm) Moisture W10 – W50 content 50% max Bulk density < 350 kg/m3 2,81-3,89 Calorific value MWh/kg Table 9 - Requirements for wood chips according to ÖNORM M 7133
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W20 W30 W35 W40 W50 Moisture W< 20% ≤ 30% ≤ 35% ≤ 40% ≤ content 20% W<30% W<35% W<40% W<50%
Table 10 - The classification of wood chips based on the moisture content according to ÖNORM M 7133
Dimensions The fracture> 80% Fine fracture Rough fracture <1% (mm) by weight <5% P16 3,15 ≤ P ≤ 16 mm < 1 mm >45 mm, and < 85mm P45 3,15 ≤ P ≤ 45 mm < 1 mm > 63 mm P63 3,15 mm ≤ P ≤ 63 mm < 1 mm > 100 mm 3,15 mm ≤ P ≤ 100 P100 mm < 1 mm > 200 mm Moisture (%) M20 ≤ 20% Dried Suitable for M30 ≤ 30% storage Limited for M40 ≤ 40% storage M55 ≤ 55% Unsuitable for storage M60 ≤ 60% Wet Ash content (%) A 0.7 ≤ 0,7% A 1.5 ≤ 1,5% A 3.0 ≤ 3,0% A 6.0 ≤ 6,0% A 10.0 ≤ 10,0%
Table 11 – Requirements for wood chips according to CEN/TS 14961:2005, Part 4
The territory of the municipality of Bajina Bašta is covered by forests to total area of the municipality in the range of 40-60%. Some municipalities within the District of Zlatibor, such as the municipality of Nova Varos, are covered by forests in the range of 60-70% of the total area. Half of the forest within the district of Zlatibor is owned by the state and the rest is privately owned.
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Figure 9 – Forest’s area in the total area Figure 10 – State and private forest’s by ratio
of municipalities by administrative districts
(Source: Statistical yearbook of Republic of Serbia 2012)
On the territory of the Zlatibor District in the study "Potentials and Possibilities of Commercial Use of Wood Biomass for EnergyProduction and Economic Development of the Municipalities Nova Varoš, Priboj and Prijepolje", 2009, author: prof. dr Branko Glavonjić, was conducted to establish the availability of wood waste from the sawmill industry and forestry in the neighboring municipalities of Nova Varoš, Priboj and Prijepolje. Results of the study showed that the following quantities are available to meet energy needs:
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Available energy value of biomass Municipalities annually MWh/a toe/a Nova Varoš 19.904,8 1.715,9 Priboj 8.840,4 762,1 Prijepolje 26.882,6 2.317,4 Total 55.627,8 4.795,4
Table 12 - Available biomass in municipal Zlatibor district, expressed through the energy value (Source: The study "Potentials and Possibilities of Commercial Use of Wood Biomass for Energy Production and Economic Development of the Municipalities Nova Varoš, Priboj and Prijepolje", 2009., author: prof. dr Branko Glavonjić, is a publication issued by the Faculty of Forestry of the University of Belgrade, Ministry of Agriculture, Forestry and Water Management of the Republic of Serbia, Directorate of Forests and UNDP).
Biomass of wood origin in the form of pellets placed on the market was not acceptable for analysis due to the high purchase price. In the domestic market transactions are performed on a small scale between manufacturers and wholesale where price reaches 180 EUR / t. Depending on the time of purchase, end customers pay between 200 and 220 EUR / t. The advantage of pellets is higher bulk density, which means lower transportation costs and smaller storage for the same amount of fuel in terms of energy produced.
Some of the benefits of wood chips compared to wood pellets are lower prices and a lower level of wood processing. As a source of wood for processing into wood chips, waste wood can also be used and it can be obtained by cleaning the river Drina upstream from the hydroelectric power plant "Bajina Basta".
Moisture Energy value Bulk density Cost Wood chips (%) (kWh/m3) (bulk-kg/m3) (€/t) 30-40 940-1200 350-430 43-47
Table 13 - Characteristics of wood chips depending on the type of primary wood
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6. TECHNICAL DESIGN CONCEPT
At the end of the heating season 2014/15 demand capacity of the heating system was:
Heating surface Heated volume Power of heating installation specific power per m2 m2 m3 kW W/m2 2.552 7.312 562 220
Table 14 – Capacity of the district heating system at the end of season 2014/15
According to the previous census in the village Kostojevići, population growth in next decade is not expected. Population is mainly engaged in agriculture industrial facilities aren’t present in the village. Planning reserves in heat capacity for further accession, maximum capacity of the heating system of 600kW should be adopted.
The required installed power of boiler, taking into account the overall level of efficiency of the heating system is:
QC 600 Q 767kW B 0.782
QB (kW) Installed boiler capacity
QC (kW) Net consum (capacity)
η System efficiency
η = ηB · ηC
ηB = 0,92 Boiler efficiency
ηC = 0,85 Efficiency of district heating system
The calculated heat demand would be covered by installing boiler for biomass combustion of nominal heat output 800 kW.
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Heating Capacity (kW) - Heat Load Curve 850
750
650
550
450 0 500 1000 1500 2000 2500 3000 Heating hours per year
Figure 11 – Diagram of the annual distribution of the heat capacity of the boiler unit
The number of hours of boiler operation can be determined using Sochinsky formula:
m 0 • 10 Q 1 1 Q 0 max b
Qmin 0 Qmax
Qm m Qmax
• Q - heating capacity at the time,
- time,
Qmin - minimum heating capacity of boiler
Qmax - maximum heating capacity of boiler
Qm - required capacity
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If all the objects that are off would be reconnected to the district heating system, the expected maximum of the required heat capacity would reach 750 kW net, which means, considering the overall level of efficiency of the system and a power reserve of approximately 30% that it would be necessary to install boilers of total capacity 1000 kW. Boilers for biomass would settle 100% of the current needs of the system. In the case of reconnection facilities that were disconnected from the system, required power would be provided from existing boilers. Existing boilers would serve as a backup in case of problems supplying the fuel for biomass boiler.
Required annual amount of biomass in the form of wood chips M30 according to CEN/TS 14961:2005,Part 4, is:
QB q 7671516 t M C 415 H d 2800 a
H d - Calorific value of wood chips (kWh/t)
QB - Required capacity with the degree of efficiency of the system (kW) q - Average value of unit consumption for seven years (kWh/kW)
Caloric Required Average of unit Fuel mass Unit price Annual fuel cost value capacity consumption (t) (€/t) (€) (kWh/t) (kW) (kWh/kW) Biomass 2.800 415 45 18.687 Heavy 767 1.516 10.800 108 430 46.296 oil Table 15 – Comparative costs of energy produced by low quality biomass and heavy oil
Biomass and fuel oil are comparison calculation is based on: - The average energy consumption for the last seven years from 1516 kWh / kW. - Required heating capacity of 767kW from heat sources. This capacity is calculated on the basis of current heat consumption of 562kW.
On the basis of these data, it is necessary to produce yearly consumption of 1.163 MWh. The production costs of the heat energy generated by burning wood chips are up to 16,07 EUR/MWh. Wood chips with higher calorific value and lower moisture level would produce energy with lower reference price if used as fuel.
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Caloric Required Average of unit Fuel Unit price value capacity consumption Annual fuel cost (€) mass (t) (€/t) (kWh/t) (kW) (kWh/kW) Biomass 3.400 342 45 15.390 Heavy 767 1.516 12.000 97 430 41.666 oil Table 16 – Comparative costs of energy produced by high quality biomass and heavy oil
In the case more quality wood chips are used as fuel, production costs of thermal energy would be 13,23 €/MWh. The production cost of heat energy, when using heavy oil depending on the fuel quality, is in the range from 35,8 to 39,8 €/MWh.
Based on presented calculations, reference price of heat energy from wood chips is 14,65 €/MWh and the reference price of thermal energy from heavy oil is 37.8 €/MWh.
The heat source consists of boiler for burning biomass of nominal heat capacity of 800 kW. The existing boilers on heavy oil that have total power of 2x700kW would be used as a backup source and in case of covering peak loads. The temperature regime in the boiler circuit is 90/70oC. The maximum operating pressure is 6 bar. Minimum return temperature in the boiler is 65oC. It is planned to install a buffer- tank with volume of 5 m3 in order to optimize the work of the heating source. Circulation pumps are located between the boilers and the buffer-tank, as well as three-way mixing valves with the aim to ensure protection of the cold parts of the boilers.
For the purposes of technical calculation, the documentation on the boiler TTP-600 made by “Topling-heating Belgrade” was used, including the additional mechanisms for fuel feeding, exhaust gas extraction and handling ash. For the purpose of circulation between the buffers in the new boiler house and the beginning of the pipes of the distribution system in the old boiler room, circulation pump in the space of a new boiler is planned. Circulation would be via underground pre-insulated heating pipes with a length up to 50m.
Picture 11 – Possible pipeline routes from plot behind the school yard to the old boiler room
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Picture 12 – Possible position of the future boiler room on the plot behind the school yard
For the purposes of biomass boiler it will be necessary to build a new facility size 50-60m2 and useful height 4m. Right next to the building where the boiler is, also facility for storage of the fuel - wood chips is required. Storage with sufficient capacity to ensure operation in the coldest month of the winter season needs to be set at the power plant. Taking into account the relative ratio of days with temperatures above 0 degrees Celsius in December and January and the entire winter season, the conclusion is that the storage capacity should be sufficient to provide 48% of the energy required for the season, i.e. 160t of wood chips of M30 moisture. The storage volume is 460 m3 (gross volume 15 m x 15 m x 5 m).
Picture 13 – Possible position of the future boiler room on the surface by the main road instead of the existing collapsed building
Two locations can be planned as a location for a new boiler room. The first location is on the free space behind the school yard. The second location is on the surface by the main road, in place of the existing collapsed object which should be removed. Both locations are owned by the municipality and depending on urban plans, one option can be chosen.
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7. PRELIMINARY COST ESTIMATES
The preliminary cost estimate includes investment and operating costs annually. Costs of investment include procurement of equipment and boilers, necessary civil works, mechanical works and electrical works on the construction of a new boiler plant and connecting the new system to the existing distribution system.
Position Investment costs - Description (€) Access road and landscaping plots for the new building and for the route of new 1. 10.000 pipeline. 2. Construction of the fuel storage facility and new boiler room 15.000 3. Energy plant, mechanical and electrical equipment works (except boilers) 10.000 4. Biomass boilers and associated equipment 800 kW 70.000 5. Chimneys 8.000 6. Reconstruction of the existing installation for heat distribution 5.000 7. Connecting installations (new and old boiler room) 20.000 8. Documentation, construction management, commissioning of the plant. 15.000 9. Unforeseen costs 10.000 CAPEX (Capital Expenditure) 163.000
Table 17 – Investment costs for project (Source: Own calculations)
Position Operational costs - Description Unit Cost 1. Maintenance % CAPEX / a 1,0 2. Electricity - costs of the plant kWhel. / MWhht. 70 3. Employee – Labor costs € / a 15.000 4. Removal and disposal of ash € / t 30 5. Chemical treatment of circulating water € / MWhht. 0,5 6. Biomass cost, quality M30 € / MWhht. 14,65 7. Heavy oil cost € / MWhht. 37,80 8. The costs of facilities servicing € / a 500 9. Insurance costs % CAPEX / a 0,5 10. Depreciation of equipment and installations % / a 5 11. Depreciation of buildings % / a 1 12. Boiler efficiency % 92 13. Efficiency on the threshold of boiler room % 91 14. Decreasing of energy consumption % / a 1 Table 18 – Operational costs for woodchip boiler (Source: Own calculations)
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8. PRELIMINARY FINANCIAL ANALYSE
Financial analysis is completed to assess the future reduction of installed heat consumption for residential buildings. Reducing of heat consumption in residential buildings by 1% per year is projected due to increasing energy efficiency in buildings, negative natural growth and expected population migration to larger cities.
Installed capacity (kW)
760 740 720 700 680 660
Figure 12 – Diagram of the annual reduction in installed capacity
Sustainability of the plant will be analyzed for a period of 20 years. Consumption of thermal energy in the future will depend on local climate change. Reduction in thermal energy consumption per unit of installed capacity due to local climate change will be 0.1% per annum.
Unit consumption (kWh/kW)
1,520 1,510 1,500 1,490 1,480 1,470
Figure 13 – Diagram of the annual reduction of unit consumption
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As a consequence of the reduction in installed capacity, unit power consumption will decrease and lead to decrease in total energy consumption annually. If we assume that the costs of heating plants are approximately the same in the case of heavy fuel oil, we can conclude that biomass yields fast return on invested funds.
Producet heat energy (MWh)
1,150
1,100
1,050
1,000
950
Figure 14 – Planned production of energy in the period 2016 – 2035.
More detailed techno-economic and financial calculations and diagrams are given in the Appendix. For the purpose of analyzing the sustainability of the boiler room containing boilers for combustion of biomass, the costs of producing energy by combustion of heavy fuel oil (the current situation) were taken as a reference.
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9. PROJECT EVALUATION
Based on the collected data on the performance of the district heating systems Kostojevići, an analysis of the existing situation and the construction of a new boiler room containing boilers for combustion of wood biomass were proposed. Comparing the normalized unit price of thermal energy (Table 16,17), the scenario of using biomass is the most appropriate given the lowest cost of energy production.
The observed period of the plant operation is selected according to the depreciation period of boilers. On the basis of investment costs (Table 17) and operational costs (Table 18) the economic indicators will be calculated in economic study.
Unit cost heat energy Unit Value The investment value - Capex € 163.000 Annual production of heat energy (first year of operation) MWh / a 1.129 Total heat production (20 years) MWh 21.593 The operation value (20 years) - Opex € 981.444 LUC - Levelized Unit Costs € / MWh 53,0 Table 19 – Unit cost heat energy (Source: Own calculations)
Economic indicators can be defined investment plan are: - (F) IRR - (Financial) Internal Rate of Return - (E) IRR - (Economy) Internal Rate of Return - (F) NPV - (Financial) Net Present Value - (E) NPV - (Economy) Net Present Value
Techno economic figures for period from nest 20 years that are shown in the appendix are:
- Costs of Heat Production & Savings - Operational costs & depreciation - Fuel switch savings – repairing investment and generating income
It is necessary to take into account the rise in price of fossil fuels in the future. The use of biomass for energy purposes makes users more energy independent of disruptions in fossil fuels market.
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10. INSTITUTIONAL ANALYSES
10.1 USE OF BIOMASS IN ENERGY SECTOR
Directive No. 2009/28 / EU promotes the use of energy from renewable energy sources. It sets binding national goals for the overall share of energy from renewable sources in final energy consumption (less than 20%), as well as the share of RES in transport (10% of energy from renewable sources in transport by 2020).
In order to support investments in renewable energy sources, the Republic of Serbia has passed a number of laws and bylaws relating to the use of biomass and other renewable energy sources. These are the following acts:
- Energy Law (Official Gazette of the Republic of Serbia 57/2011, 80/2011- corr, 93/2012 and 124/2013),
- Energy Sector Development Strategy of the Republic of Serbia by 2015 (Official Gazette of the Republic of Serbia 44/2005),
- Amendments and Additions to the Energy Sector Development Strategy by 2015 for the period 2007-2012 (Official Gazette of the Republic of Serbia 99/2009),
- Law on Planning and Construction (Official Gazette of the Republic of Serbia 72/2009, 81/2009-corr, 64/2010 – Decision of the Constitutional Court, 24/2011, 121/2012, 42/2013 – Decision of the Constitutional Court, 50/2013 – Decision of the Constitutional Court, 98/2013 – Decision of the Constitutional Court),
- Law on Environmental Protection (Official Gazette of the Republic of Serbia 135/2004, 36/2009, 36/2009 and other law, 72/2009 and other law, 43/2011 – Decision of the Constitutional Court),
- The Law on The Strategic Assessment of Environmental Impact (Official Gazette of the Republic of Serbia 135/2004 and 88/2010),
- Law on the Assessment of Environmental Impact (Official Gazette of the Republic of Serbia 135/2004 and 36/2009),
- Law on Integrated Prevention and Control of Environmental Pollution (Official Gazette of the Republic of Serbia 135/2004),
- Law on Waste Management (Official Gazette of the Republic of Serbia 36/2009 and 88/2010),
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- Law on Air Protection (Official Gazette of the Republic of Serbia 36/2009),
- Law on the Ratification of the Kyoto Protocol to the UN Framework Convention on Climate Change (Official Gazette of the Republic of Serbia – International Contracts, 88/2007 and 38/2009 and other laws),
Law on the Ratification of the Treaty Establishing the Energy Community between the European Community and the Republic of Albania, Bulgaria, Bosnia and Herzegovina, Croatia, Former Yugoslav Republic of Macedonia, Montenegro, Romania, Republic of Serbia and the UN Mission in Kosovo in accordance with UN Security Council Resolution 1244 (Official Gazette of the Republic of Serbia 62/2006) - National Strategy of Sustainable Development (Official Gazette of the Republic of Serbia 57/2008),
- Introduction of Cleaner Production Strategy in the Republic of Serbia (Official Gazette of the Republic of Serbia 17/2009).
Biomass Action Plan 2010-2012 defines the following projects in the Republic of Serbia:
- Synchronization of Serbian technical standards on biomass and bio-waste with the EU,
- Biofuels market development project – assessment of biomass availability,
- Development of policy for long-term supplies of biomass,
- Feasibility Study to justify collection of wood waste from forestry in Serbia,
- Development of certification of sustainable biofuels/bioenergy in line with EU standards,
- Development of a network of sustainable cities/regions in Serbia,
- Developing communication strategies for renewable energy in Serbia,
- Training for successful project proposals for EU funds,
- Demonstration projects related to biomass in line with the best practice of the EU,
- Production of a manual (guidelines) for applying for financial support from banks – best experiences.
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10.2 ESCO MODEL – Legislation
Costs of investments relating to the use of renewable energy are relatively high and in the time of global economic crisis, especially in the countries with transition economy, that can be discouraging to potential users. Unfortunately, the power plants are at the end of their working life, and in the absence of funds, investors give priority to preserving the reliability of energy supply without thinking much about the effectiveness of the system or the environmental problems that arise in combustion of fossil fuels.
Solution for this situation may be in the construction of a modern and energy-efficient plant, with the increased share of renewable energy sources by the use of commercial credit lines or contracting energy services (ESCO model).
The Republic of Serbia has introduced the possibility of contracting energy services in the legal framework through the Law on Public-Private Partnership and Concessions (published in the Official Gazette of the Republic of Serbia No. 88/2011) and through the Law on Efficient Use of Energy (published in the Official Gazette of the Republic of Serbia No. 25/2013). Energy services may include energy audits, design, construction, and reconstruction, repair and maintenance of facilities, as well as the management and control of energy usage.
The legislation stipulates that energy services can be provided only on the basis of agreements made on energy service. Energy services are provided by a specialized company under the general name of ESCO (Energy Service Company). The agreement on the provision of energy services is concluded in writing and shall contain detailed provisions on:
1) Purchaser of energy services,
2) Supplier of energy services,
3) a third party if it participates in the financing of energy services,
4) contractual object or objects,
5) performance criteria,
6) the reference period in respect of which the energy saving is calculated,
7) energy consumption during the reference period,
8) measures to improve energy efficiency, contracted energy savings and procedures for the determination of energy savings,
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8) the method of financing measures to improve energy efficiency,
9) the method of determining and paying for provision on energy services,
10) the period for which the contract is concluded,
11) other rights and obligations of the parties.
The funds for the energy services, in part or in full, are provided by the supplier (ESCO), from its own resources, investment funds or commercial credit lines.
Figure 15 – ESCO model – Scheme (Source: Own Calculations)
The obligations of the users of the energy services are as follows: - Making all required information about the plants, installations and processes available, - Paying the service to ESCO in accordance with the contract.
Obligations of ESCO: - Market research, - Perform energy audits to identify potential savings, - Manage the project, - Make project documents, - Provide technical monitoring of the implementation
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If ESCO does not provide its own resources, then it provides funding through banks or investment funds. The banks and investment funds ensure financial instruments (financial assets or guarantees).
Users of energy services obtain the following benefits:
- Lower energy costs in general, i.e. lower costs of energy per unit (depending on the contract), - Placement of available resources in the production, the services from their own core business or in the money market, - Upon the expiration of the contract they claim the ownership of the investment (power plant) under the terms of the contract.
ESCO's benefits are:
- A profit gained through savings in production and sale of energy to the client, in accordance with the contract, - Optionally, profit gained through sale or purchase of the investment, in accordance with the contract.
Banks or investment funds can achieve:
- Profit gained through placement of funds, - Optionally, the profit realized through savings in production and sale of energy, in accordance with the contract, - Optionally, the profit gained through sale or purchase of the investment, in accordance with the contract.
Advantages of a possible public-private partnership in this project are:
- The Institute transfers the investment to ESCO, which creates additional opportunities for the Institute to finance other projects, - Ensuring the operational availability of the energy block without which the Institute would not be able to provide services in the area of primary activity, - Increase the quality of heating due to the fact that the private sector is sensitive to market competition and public opinion,
- Lower total cost of the project implementation of public-private partnerships, as private partners are generally more efficient in business, - Risk sharing in relation to the project's success, - Increase of own revenues, improving the image of partners and the impact on the public, depending on the goals when deciding on the implementation of the project.
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A model of a public-private partnership that is applicable to this project:
- DBFO (Design – Build – Finance – Operate), which means that the private partner designs, finances, constructs and manages the operation of the power plant, and after the expiration of the contract period, depending on the contract, the ownership of the energy block is transferred to the holder of a public office with or without compensation to the value of plant minus the amount of depreciation.
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11. INSTITUTIONAL ANALYSIS
Zone of influence of the project is the area where the biomass is collected, prepared for transportation and transported from the immediate surroundings of the Kostojevići village, which may be registered as the environmental impact of noise, vibration, emissions of particulate matter from the exhaust gases, etc.
During the construction of the plant adverse impacts on the local environment may occur as a result of construction and installation works. Particularly negative impact would represent preparing the area for the construction of the boiler room and storage of wood chips as it is necessary to clear and level the ground. Implementation of these activities involves cutting a dozen coniferous trees or demolition of existing derelict building. Construction works will cause noise and vibration generated by using construction machinery as well as increased dust emissions due to works on the excavation of foundations, leveling the field and the development of access roads. All of the above effects are not of great intensity and are relatively short in duration. The area in which the works will be carried out will be protected by the building site fence so that all adverse environmental impacts outside of the borders will be negligible.
Prior to the commencement of works, the Investor is required to prepare a study on the organization of the site which will display the work areas, corridors for internal transport, temporary storage of equipment and materials, landfill waste during construction, manner and place of storage of flammable and hazardous materials. The study will show the connection to the outside infrastructure and installations, usage of protective agents, the method of evacuation of solid and liquid waste and other specific measures to be taken to reduce risks to health and safety of the personnel engaged as well as the protection of the environment.
During the operation of the energy block, the harmful substances contained in the exhaust gases will exert the greatest impact on the environment. In addition to dust from the fuel, the exhaust gas also contains solid particles. Adding a cyclone device as a part of a boiler for combustion of biomass would have effects on the following:
- Nitrogen oxides (NOx) in the case of combusting low moisture biomass. The temperature of combustion is high in this case and NOx content is significantly higher than in case of combusting biomass with high percentage of moisture. - Sulfur oxides (SOx) are low because of the low sulfur content in the biomass, - Carbon dioxide (CO2) is considered neutral because the biomass is considered a renewable energy source so that the entire amount of the carbon emitted in the exhaust gas has been previously taken from the environment in which the tree grew
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- Carbon monoxide (CO) in practical terms does not occur due to the construction of the boilers and constant monitoring of the combustion process.
In any case, the planned power plant should replace the existing one in which the burning heavy fuel oil (crude oil) is extremely unfavorable for boiler installations within residential areas.
The construction itself does not require a significant amount of water. While in operation, the power plant does not have losses and uncontrolled water runoff except in the cases of an emergency breakdown situations. These situations are extremely rare with this kind of plants, so it is safe to say that there is no risk of environmental pollution, as well of pollution of surface and groundwater.
The existing sewerage system is able to accept the waste water that may be of atmospheric origin, waters from washing facilities and equipment with a negligible content of oils and fats, waste and sanitary sewage. In the cases of discharging the installations, a coolant tank is used with a fat separator and after the deposition water is discharged into the sewer system.
The exhaust gases contain solid particles of ash, which are retained in the cyclone device prior to the introduction into the chimney and discharging into the atmosphere. A metal cartridge is placed into the cyclone where the separated ash is deposited. Also, the boiler unit has a cartridge for the disposal of ash that occurs as a solid residue of the combustion process. The total amount of ash deposited is 8 t/a, i.e. between 20 and 50 kg per day during the heating season. The ash will be deposited in a safe place and once a week transported to the landfill under a contract with the local utility company. The amount of ash is relatively small and does not represent a risk to the environment.
The operation of the boilers and electric motor drives in the boiler room is a source of constant noise and vibration. All equipment that emits noise and vibration is located within the area of the boiler room so that the sound is largely absorbed by the walls of the building. After commissioning the boiler room measures will be taken out to eliminate or bring the noise down to an acceptable level according to the Law on the protection of environmental noise (published in the Official Gazette of the Republic of Serbia No. 36/2009 and 88 / 2010). According to the above mentioned Act, the maximum allowable noise level is 35 dB (A) during the day and 30 dB (A) at night.
The user of this space will adopt certain measures to minimize the negative impact on the environment. These measures will apply to the control of air emissions, as well as to the management of wastewater, solid waste and noise.
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Emission CO2, Compare to fuel
350,000 300,000 250,000 200,000 150,000 100,000 50,000
0
2022 2016 2017 2018 2019 2020 2021 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Average
Emision CO2 (kg) - Heavy oil Emision CO2 (kg) - Biomass
Figure 16 – Emission CO2 – Compare to fuel
If the biomass for combustion is obtained by deforestation and without reforestation, an emission of CO2 by biomass combustion would be six times less than from the combustion of heavy oil. If the biomass for combustion provide from wood waste or from forestation than reduction of CO2 emissions would be lower by 300t per year.
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12. ENERGY EFFICIENCY MEASSURES AND CONCLUSION
Based on indicators of energy efficiency and the calculated specific energy consumption for heating, due to inefficiently connected buildings in energy terms, great length of the piping and the small overall power of connected buildings, the heating system in Kostojevići is not effective.
Increase in energy efficiency of connected objects will have the greatest influence on the increase in energy efficiency of district heating system. Based on indicators of energy efficiency classification of objects connected to the district heating system, the building energy class belongs to "G" group. The goal for the coming period is to take appropriate measures for increasing energy efficiency, so that the energy consumption for heating buildings reduces the level of energy to level "E" or below 160 kWh/m2a. Implementation of energy efficiency measures must be planned, organized and carried out in several stages. At the low level of energy efficiency of district heating systems, in addition to low energy efficiency of connected objects, users are not able to manage the consumption of thermal energy in accordance with their needs. The first step is to perform a revision of the pipe connections and to install the systems for measurement and control of demand for each facility. Installing a system for controlling the delivery of heat according to the needs of consumers will reduce the supply of thermal energy and thus the loss of heat will be also reduced.
Activities undertaken during the preparation of this study included the preliminary energy audit of parts of the district heating system. The next step is to analyze the collected data, calculate the energy indicators and propose measures for energy efficiency with an estimate of investment costs and possible effects of implementation. In the next phase, a decision should be made on the implementation of selected measures or packages of measures followed by implementation of selected package. The last phase is the monitoring and analysis of the effects.
Key issues that can be identified by energy audits are:
- Insulation damage to the joints of pipeline of distribution heating system which leads to accumulation of atmospheric water and penetration of humidity into the structure of pre-insulated pipeline, accelerating further damage, reducing thermal insulation and reduces the quality of supplied energy,
- The lack of heating substations for each connected facility with high-quality automatic control which leads to unbalanced supply and irrational use of thermal energy,
- Water loss in distribution system,
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- The absence of insulating layers in the construction of exterior walls and roofing in buildings that are connected to the district heating system,
- Damage to the installation, which may affect the operational availability of the technical systems,
- The absence of calorimeters for measuring thermal energy in the connected buildings
- The absence of the tariff system for the collection of thermal energy to the measured consumption.
After identifying potential savings and undertaking appropriate measures, the effects of the savings will be achieved through:
- Lower heating costs,
- Reduction of fuel consumption,
- Reduction of CO2emmissions,
- Reduction of environmental pollution,
- Increased comfort and quality of services,
- Reduced costs of fuel and maintenance.
The building sector in Serbia is particularly important, because it accounts for about 40% of total energy consumption, with a trend for further growth. This high energy consumption means that the potential energy and environmental savings in the building sector are the largest. Most of the energy is consumed for space heating, although in recent years, increased consumption is recorded for cooling in summer. For this reason, special attention should be paid to the quality of the insulation structures, good carpentry and optimal functionality of the heating and cooling installations.
One measure of energy efficiency that brings significant benefits is the use of renewable energy sources, in this case, the use of biomass for heat production. The effects of great importance are also environmental benefits, increased comfort of users and image of local heating company “BB-term” as a socially responsible collective.
Financing the construction of the boiler room containing boilers for combustion of biomass is possible by engaging its own funds, withdrawal of favorable credit lines specially designated for projects in the field of energy efficiency and use of renewable energy sources, or the establishment of public-private partnership under ESCO model.
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13. APPENDIX
50
Cost of fuel for production of heat energy and saving (€) 45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Heavy oil 42,690 42,490 42,290 42,091 41,892 41,693 41,495 41,297 41,100 40,903 40,706 40,509 40,313 40,118 39,922 39,727 39,532 39,338 39,144 38,950 Wood chips 16,545 16,468 16,390 16,313 16,236 16,159 16,082 16,005 15,929 15,853 15,776 15,700 15,624 15,548 15,472 15,397 15,321 15,246 15,171 15,096 Saving 26,145 26,022 25,900 25,778 25,656 25,535 25,413 25,292 25,171 25,050 24,930 24,809 24,689 24,569 24,450 24,330 24,211 24,092 23,973 23,855
Figure 17 – Costs of Heat Production & Savings
ENERGY PRODUCTION COSTS (EUR)
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Biomass 16.545 16.468 16.390 16.313 16.236 16.159 16.082 16.005 15.929 15.853 Ash 1.093 1.088 1.083 1.078 1.073 1.067 1.062 1.057 1.052 1.047 Electricity 7.906 7.869 7.832 7.795 7.758 7.721 7.684 7.648 7.611 7.575 Water 565 562 559 557 554 552 549 546 544 541 Summary 26.108 25.986 25.864 25.742 25.620 25.499 25.378 25.257 25.136 25.015 Employee – Labor costs 15.000 15.000 15.000 15.000 15.000 15.000 15.000 15.000 15.000 15.000 Maintenance 1.630 1.630 1.630 1.630 1.630 1.630 1.630 1.630 1.630 1.630 Insurance costs 815 815 815 815 815 815 815 815 815 815 Summary 17.445 17.445 17.445 17.445 17.445 17.445 17.445 17.445 17.445 17.445 Depreciation 6.719 6.712 6.705 6.698 6.691 6.684 6.677 6.670 6.664 6.657 Total costs 50.272 50.143 50.014 49.885 49.757 49.628 49.500 49.372 49.244 49.117
2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Biomass 15.776 15.700 15.624 15.548 15.472 15.397 15.321 15.246 15.171 15.096 Ash 1.042 1.037 1.032 1.027 1.022 1.017 1.012 1.007 1.002 997 Electricity 7.538 7.502 7.465 7.429 7.393 7.357 7.321 7.285 7.249 7.213 Water 538 536 533 531 528 525 523 520 518 515 Summary 24.895 24.775 24.655 24.535 24.416 24.296 24.177 24.058 23.940 23.821 Employee – Labor costs 15.000 15.000 15.000 15.000 15.000 15.000 15.000 15.000 15.000 15.000 Maintenance 1.630 1.630 1.630 1.630 1.630 1.630 1.630 1.630 1.630 1.630 Insurance costs 815 815 815 815 815 815 815 815 815 815 Summary 17.445 17.445 17.445 17.445 17.445 17.445 17.445 17.445 17.445 17.445 Depreciation 6.650 6.643 6.636 6.629 6.623 6.616 6.609 6.602 6.595 6.589 Total costs 48.990 48.863 48.736 48.609 48.483 48.357 48.231 48.106 47.980 47.855 Table 20 – Energy production costs (Source: Own Calculations)
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Operational costs & Depreciation (€) 60,000
50,000
40,000
30,000
20,000
10,000
0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
Biomass Extra energy Employe – Labor costs Maintenance & Insurance costs Depreciation
Figure 13 – Operational costs & depreciation (Source: Own Calculations)
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250,000 Fuel switch saving (€)
200,000
150,000
100,000
50,000
0
-50,000
-100,000
-150,000 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 TotalCashFlow x103 -141,3 -119,8 -98,41 -77,15 -56,01 -35,00 -14,12 6,624 27,24547,73868,10288,338108,44128,42148,28168,00187,60207,07226,42245,64
Figure 15 – Fuel switch savings – repairing investment and generating income (Source: Own Calculations)
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